<PAGE>
As filed with the Securities and Exchange Commission on December 16, 1999.
Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PORT ARTHUR FINANCE PORT ARTHUR COKER SABINE RIVER NECHES RIVER
CORP. COMPANY L.P. HOLDING CORP. HOLDING CORP.
(Exact Name of (Exact Name of (Exact Name of (Exact Name of
Registrant Issuer Registrant Registrant Parent Registrant
as Specified in Its Guarantor as Guarantor as Guarantor as
Charter) Specified in Its Specified in Its Specified in Its
Charter) Charter) Charter)
DELAWARE DELAWARE DELAWARE
DELAWARE (State or other (State or other (State or other
(State or other jurisdiction of jurisdiction of jurisdiction of
jurisdiction of incorporation or incorporation or incorporation or
incorporation or organization) organization) organization)
organization) 6411 6411 6411
6411 (Primary Standard (Primary Standard (Primary Standard
(Primary Standard Industrial Industrial Industrial
Industrial Classification Code Classification Code Classification Code
Classification Code Number) Number) Number)
Number) 43-1857413 43-1857408 43-1857411
36-4308506 (I.R.S. Employer (I.R.S. Employer (I.R.S. Employer
(I.R.S. Employer Identification Identification Identification
Identification Number) Number) Number)
Number) ---------------
Ken W. Isom
1801 S. Gulfway Drive
Office No. 36
Port Arthur, Texas 77640
(409) 982-7491
(Address, including zip code, and telephone number, including area code, of
registrant issuer's and registrant parent guarantor's principal executive
offices)
(Name, address, including zip code, andtelephone number, including area code,
of agent for service)
---------------
With a copy to: Edward P. Tolley III, Esq. Simpson Thacher & Bartlett 425
Lexington Avenue New York, New York 10017 (212) 455-2000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act Registration number of the earlier effective
Registration Statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Registration Statement number of the earlier effective Registration Statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Class of Amount Maximum Aggregate Amount of
Securities To Be to be Offering Price Offering Registration
Registered Registered Per Note Price(1) Fee
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12.50% Senior Secured
Notes due 2009 of Port
Arthur
Finance Corp........... $255,000,000 100% $255,000,000 $67,320
- ------------------------------------------------------------------------------
Guarantee of 12.50% Se-
nior Secured Notes due
2009 by Port Arthur
Coker Company L.P...... $255,000,000 100% $255,000,000 (2)
- ------------------------------------------------------------------------------
Guarantee of 12.50% Se-
nior Secured Notes due
2009 by Sabine River
Holding Corp........... $255,000,000 100% $255,000,000 (2)
- ------------------------------------------------------------------------------
Guarantee of 12.50% Se-
nior Secured Notes due
2009 by Neches River
Holding Corp........... $255,000,000 100% $255,000,000 (2)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate fee for the guarantees is payable.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion dated December 16, 1999
Prospectus
$255,000,000
Port Arthur Finance Corp.
Offer to Exchange All Outstanding 12.50% Senior Secured Notes due 2009 for
12.50% Senior Secured Notes due 2009, which have been registered under the
Securities Act of 1933
Unconditionally Guaranteed Jointly and Severally by Port Arthur Coker Company
L.P., Sabine River Holding Corp. and Neches River Holding Corp.
The Exchange Offer
The Exchange Notes
. Port Arthur Finance Corp. . The terms of the
will exchange all exchange notes to be
outstanding notes that issued in the exchange
are validly tendered and offer are substantially
not validly withdrawn for identical to the
an equal principal amount outstanding notes,
of exchange notes that expect that the exchange
are freely tradeable. notes will be freely
tradeable.
. You may withdraw tenders
of outstanding notes at
any time prior to the
expiration of the
exchange offer.
. The exchange offer
expires at 5:00 p.m., New
York City time, on ,
2000, unless extended. We
do not currently intend
to extend the expiration
date.
You should consider carefully the risk factors beginning on page 24 of this
prospectus before participating in the exchange offer.
-----------
If you are a broker-dealer and you receive exchange notes for your own
account, you must acknowledge that you will deliver a prospectus in connection
with any resale of such exchange notes. By making such acknowledgment, you will
not be deemed to admit that you are an "underwriter" under the Securities Act
of 1933. Broker-dealers may use this prospectus, as it may be amended or
supplemented from time to time, in connection with any resale of exchange notes
received in exchange for outstanding notes when such outstanding notes were
acquired by the broker-dealer as a result of market-making activities or other
trading activities. We will make this prospectus available to any broker-dealer
for use in any such resale for a period of up to 120 days after the date of
this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
-----------
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements.......... ii
Prospectus Summary.................. 1
Risk Factors........................ 24
Use of Proceeds..................... 34
Financing Plan...................... 35
Capitalization...................... 37
Selected Financial Information...... 38
Management's Discussion and Analysis
of Financial Condition............. 39
The U.S. Petroleum Refining Industry
and Refinery Configuration......... 43
Existing Port Arthur Refinery and
The Refinery Upgrade Project....... 47
Coker Gross Margin Support Mechanism
in Our Long Term Crude Oil Supply
Agreement.......................... 48
Our Coker Project................... 50
Security Ownership of Certain
Owners............................. 59
Ownership Structure and Related
Party Transactions................. 60
Principal Project Participants...... 63
Management.......................... 66
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Description of Our Principal
Project Documents.............. 68
The Exchange Offer.............. 107
Description of the Notes........ 117
Description of Our Principal
Financing Documents............ 122
Book-Entry; Delivery and Form... 151
Special Legal Aspects........... 152
U.S. Federal Income Tax
Consequences of the Exchange
Offer.......................... 153
Plan of Distribution............ 154
Legal Matters................... 155
Experts......................... 155
Independent Engineer............ 156
Independent Market Consultant... 156
Available Information........... 156
Index to Financial Statements... F-1
Annex A-Additional Information
Regarding Clark Refining &
Marketing...................... A-1
Annex B-Independent Engineer's
Report......................... B-1
Annex C-Crude Oil and Refined
Product Market Report.......... C-1
</TABLE>
------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different from that contained in this document. This
document may be used only where it is legal to sell these securities. The
information in this document may be accurate only on the date of this document.
i
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. Words such as "expects," "intends," "plans," "projects," "believes,"
"estimates" and similar expressions typically identify such forward-looking
statements.
Even though we believe our expectations regarding future events are based on
reasonable assumptions, forward-looking statements are not guarantees of future
performance. There are many reasons why actual results could, and probably
will, differ from those contemplated in our forward-looking statements. These
include, among others, changes in:
. industry-wide refining margins;
. crude oil and other raw material costs, embargoes, industry expenditures
for the discovery and production of crude oil, military conflicts
between, or internal instability in, one or more oil-producing
countries, and governmental actions;
. market volatility due to world and regional events;
. availability and cost of debt and equity financing;
. labor relations;
. U.S. and world economic conditions;
. supply and demand for refined petroleum products;
. reliability and efficiency of our operating facilities. There are many
hazards common to operating oil refining. Such hazards may include
equipment malfunctions, plant construction/repair delays, explosions,
fires, oil spills and the impact of severe weather;
. actions taken by competitors which may include both pricing and
expansion or retirement of refinery capacity;
. the enforceability of our contracts;
. civil, criminal, regulatory or administrative actions, claims or
proceedings and regulations dealing with protection of the environment;
and
. other unpredictable or unknown factors not discussed.
Because of all of these uncertainties and others, you should not place undue
reliance on our forward-looking statements.
ii
<PAGE>
PROSPECTUS SUMMARY
In this prospectus, Port Arthur Coker Company L.P. and Port Arthur Finance
Corp. are referred to collectively as "we," "our," "ours" and "us" unless the
reference is specifically to Port Arthur Coker Company L.P. or Port Arthur
Finance Corp.
The following summary highlights information contained elsewhere in this
document. It does not contain all of the information you should consider before
investing in the notes. You should read this entire prospectus carefully.
Overview
Port Arthur Coker Company was formed as a Delaware limited partnership in May
1999 to develop, construct, own, operate and finance a new 80,000 barrel per
stream day delayed coking unit, a 35,000 barrel per stream day hydrocracker and
a 417 long tons per day sulfur complex and related assets currently under
construction at the Port Arthur, Texas refinery of our affiliate Clark Refining
& Marketing, Inc. In this offering circular, we refer to this equipment,
collectively with all of its associated contracts and infrastructure, as "our
Coker Project." Our Coker Project is part of a coordinated project with Clark
Refining & Marketing and Air Products and Chemicals, Inc. We refer to these
coordinated projects collectively in this offering circular as the "Refinery
Upgrade Project." The Clark Refining & Marketing portion of the Refinery
Upgrade Project includes modifications to their crude unit and hydrotreaters.
Clark Refining & Marketing will lease these units to us. In this offering
circular, we refer to these leased units, together with our Coker Project, as
"our Heavy Oil Processing Facility." The Air Products portion of the Refinery
Upgrade Project consists of a new hydrogen supply plant that will supply
hydrogen for our Heavy Oil Processing Facility. Our Heavy Oil Processing
Facility will upgrade lower-cost heavy sour crude oil into higher-value refined
products.
The following diagram illustrates the various projects to be completed as
part of the Refinery Upgrade Project.
Refinery Upgrade Project
<TABLE>
<CAPTION>
Clark portion of Refinery Air Products portion of
Upgrade Project Our Coker Project Refinery Upgrade Project
- ------------------------- ----------------- ------------------------
<S> <C> <C>
. Funded by Clark . Funded by us . Funded by Air Products
Refining & Marketing
and leased to us . Construction of new coker, . Construction of hydrogen
hydrocracker and sulfur supply plant
complex
. Crude unit modification, . Fixed price construction contract . Provides hydrogen to us;
other revamps and with guaranteed completion dates hydrogen, steam and
supporting infrastructure electricity to Clark
Refining & Marketing
. Reimbursable construction . Long term crude oil supply
contract agreement with coker gross
margin support mechanism
</TABLE>
1
<PAGE>
Port Arthur Finance Corp., a wholly owned subsidiary of Port Arthur Coker
Company, was incorporated in Delaware in July 1999 for the purpose of issuing
the outstanding notes and borrowing under our bank credit facilities, as agent
on behalf of Port Arthur Coker Company, and transferring the proceeds of the
issuance of notes and borrowing under our bank credit facilities to Port Arthur
Coker Company pursuant to an intercompany note. Port Arthur Coker Company is
using the proceeds to fund a portion of the costs of the development and
construction of our Coker Project. Port Arthur Coker Company is owned 1% by its
general partner, Sabine River Holding Corp., and 99% by its limited partner,
Neches River Holding Corp. Both partners were incorporated in Delaware in May
1999. Each of Port Arthur Coker Company, Sabine River and Neches River have
unconditionally guaranteed, on a joint and several basis, all the obligations
of Port Arthur Coker Company under the outstanding notes and will
unconditionally guarantee, on a joint and several basis, all the obligations of
Port Arthur Finance under the exchange notes.
Ownership Structure
[Flowchart of Ownership Structure]
Sabine River is owned 90% by Clark Refining Holdings Inc. and 10% by
Occidental Petroleum Corporation. After giving effect to the approximately $135
million in equity contributions committed to be made in connection with our
Coker Project, Clark Refining Holdings will be owned, indirectly through
subsidiaries, by Blackstone Capital Partners III Merchant Banking Fund L.P. and
its affiliates with an approximately 82% interest, and by Occidental with an
approximately 17% interest. As of October 31, 1999, approximately $55.4 million
of these equity commitments had been funded. We are an affiliate of Clark
Refining & Marketing because Clark Refining Holdings owns 100% of the capital
stock of Clark USA, Inc., which in turn owns 100% of the capital stock of Clark
Refining & Marketing.
In order to strengthen the credit quality of the notes, we and our
contractual arrangements have been structured in a manner designed not to be
consolidated with Clark Refining Holdings, Clark USA or Clark Refining &
Marketing in a bankruptcy of any of these entities. As such, you will have
recourse only to us, Sabine River and Neches River and not to any of our other
direct or indirect owners with respect to our obligations on the notes.
Our principal executive offices are located at 1801 S. Gulfway Drive, Office
No. 36, Port Arthur, Texas 77640. Our telephone number is (409) 982-7491.
2
<PAGE>
Our Coker Project
Rationale for Our Coker Project. Blackstone and Clark Refining Holdings have
been pursuing a strategy of positioning Clark Refining Holdings as a leading
independent refiner in the United States by selectively increasing its refining
capacity through acquiring refining assets, improving the productivity of its
existing refineries and divesting non-core assets. The Refinery Upgrade Project
is an important element of this strategy. Purvin & Gertz, the independent
engineer, expects that the Refinery Upgrade Project will transform the Port
Arthur refinery into one of the five most competitive refineries on the U.S.
Gulf Coast.
The Refinery Upgrade Project was initiated for the following reasons:
. Port Arthur refinery's suitability for a heavy oil upgrade. Clark
Refining Holdings believes the Port Arthur refinery is well-suited to be
upgraded to process significantly more heavy sour crude oil. Its Gulf
Coast location is close to the major heavy sour crude oil producers and
permits waterborne deliveries of oil. In addition, because the Port
Arthur refinery was originally designed and operated as a much larger
facility, it has the scale and much of the infrastructure and processing
capability to support an upgraded operation. As a result, Clark Refining
Holdings believes the Refinery Upgrade Project can be undertaken at a
lower capital cost than at many other U.S. Gulf Coast refineries.
. Crude oil cost reduction. Clark Refining Holdings expects to be able to
reduce crude oil costs at the Port Arthur refinery by increasing the
quantities of heavy sour crude oil processed at the Port Arthur refinery
from 20% to 80% of capacity. Heavy sour crude oil typically sells at a
discount when compared with light sweet crude oil because heavy sour
crude oil is more difficult to process.
. Increased cash flow. Purvin & Gertz expects us to generate approximately
$228 million of annual average operating cash flows over the initial 11-
year operating period of our Coker Project. Clark Refining Holdings
expects Clark Refining & Marketing also to generate incremental cash
flow as a result of the Refinery Upgrade Project.
. Margin support. We believe we will benefit from a coker gross margin
support mechanism in our long term crude oil supply agreement with
P.M.I. Comercio Internacional, a subsidiary of Petroleos Mexicanos, also
known as PEMEX, the Mexican national oil company and guarantor of P.M.I.
Comercio Internacional's obligations. This mechanism is designed to
moderate the fluctuations of our coker gross margin, which is the
differential between the price for intermediate refined products from
our coking operations and the cost of coker feedstocks. This mechanism
is based on a formula that is intended to be an approximation for coker
gross margin and is designed to provide for a minimum average coker
gross margin over the first eight years following completion of the
Refinery Upgrade Project. Purvin & Gertz believes the mechanism will
serve as a suitable method of stabilizing our coker gross margin
fluctuations and that the mechanism equates to an approximate $5.94
heavy/light differential when applied to 1987 to 1998 prices.
General Description. The Refinery Upgrade Project will allow our Heavy Oil
Processing Facility to process an average of 200,000 barrels per stream day of
crude oil. At least 150,000 barrels per stream day of heavy sour crude oil will
be purchased from P.M.I. Comercio Internacional under our long term crude oil
supply agreement. All of the output of our Heavy Oil Processing Facility will
be purchased by our affiliate, Clark Refining & Marketing, under a long term
product purchase agreement. Construction of our Coker Project and the entire
Refinery Upgrade Project is expected to be mechanically complete around
November 2000, and we expect to begin commercial operation around January 2001.
3
<PAGE>
Principal Participants and their Roles in our Coker Project. The table below
lists some of the principal participants in our Coker Project.
Blackstone................ Blackstone Capital Partners III Merchant Banking
Fund L.P. and its affiliates, who collectively are
one of our indirect owners as well as the
controlling shareholder of Clark Refining Holdings
and its affiliates. Blackstone has made equity
contributions of $49.9 million to our Coker Project
to date and is committed to make additional equity
contributions of approximately $71.6 million to our
Coker Project. Blackstone is a private equity fund
with approximately $4 billion of committed equity
capital.
Occidental................ Occidental Petroleum Corporation, one of our
indirect owners. Occidental has made equity
contributions of $5.5 million to our Coker Project
to date and is committed to make additional equity
contributions of approximately $8 million to our
Coker Project.
Clark Refining & Clark Refining & Marketing, Inc., our affiliate,
Marketing................ will manage our Heavy Oil Processing Facility,
purchase all our products and lease us our Heavy
Oil Processing Facility sites and ancillary units.
Clark Refining Holdings... Clark Refining Holdings Inc., one of our indirect
owners.
Foster Wheeler USA........ Foster Wheeler USA Corporation, a subsidiary of
Foster Wheeler Corporation and responsible for the
engineering, procurement and construction of our
Coker Project.
Foster Wheeler Foster Wheeler Corporation, the guarantor of Foster
Corporation.............. Wheeler USA's payment and performance obligations
under the construction contract for our Coker
Project.
P.M.I. Comercio P.M.I. Comercio Internacional, S.A. de C.V., a
Internacional............ subsidiary of PEMEX and our long term supplier of
heavy sour crude oil.
PEMEX..................... Petroleos Mexicanos, the parent of P.M.I. Comercio
Internacional and the guarantor of P.M.I. Comercio
Internacional's obligations under our long term
crude oil supply agreement.
Air Products.............. Air Products and Chemicals, Inc., our hydrogen
supplier.
4
<PAGE>
Key Project Contracts. The chart below depicts some of the key contracts
relating to the construction and operation of our Coker Project and our Heavy
Oil Processing Facility which are described in more detail below.
[Flow chart of Key Coker Project Contracts and parties thereto]
Construction of Our Coker Project. We entered into a contract for the
engineering, procurement and construction of our Coker Project with Foster
Wheeler USA in July 1999. Under this construction contract, Foster Wheeler USA
will continue to engineer, design, procure equipment for, construct, test and
oversee start-up of our Coker Project and integrate our Coker Project with the
Port Arthur refinery. Under the construction contract, we will pay Foster
Wheeler USA a fixed price of approximately $544 million of which $157.1 million
was credited to us for amounts Clark Refining & Marketing had already paid
Foster Wheeler USA for work performed on our Coker Project prior to August
1999. We purchased this work in progress from Clark Refining & Marketing when
we issued the outstanding notes. Our construction contract does not cover the
work to be undertaken by Clark Refining & Marketing as part of the Refinery
Upgrade Project. Clark Refining & Marketing has contracted separately with
Foster Wheeler USA to perform the majority of such work.
Under our construction contract, Foster Wheeler USA must demonstrate that our
Coker Project is mechanically complete and ready for start-up by March 2001. In
addition, Foster Wheeler USA must fulfill all its obligations under the
construction contract and demonstrate achievement of specified guarantees of
capacity and reliability for our Coker Project by December 2001. If Foster
Wheeler USA demonstrates achievement of mechanical completion of our Coker
Project prior to our target date of November 2000, it will receive an early
completion bonus.
If our Coker Project is not mechanically complete and ready for start-up by
January 2001 or Foster Wheeler USA has not demonstrated achievement of 100% of
its guarantee of reliability for our Coker Project by that date, it must pay us
delay damages. The amount of these delay damages is capped at $70 million. In
addition, if Foster Wheeler USA fails to demonstrate achievement of 100% of its
capacity and reliability guarantees for our Coker Project, it still may fulfill
its obligations under the construction contract by making specified buydown
payments to us, if Foster Wheeler USA demonstrates achievement of 95% of their
reliability
5
<PAGE>
guarantee for our Coker Project and specified minimum capacities for each of
our new units. These buydown payments are capped at $75 million. Foster Wheeler
USA may be liable for damages under the construction contract up to 100% of the
contract price. This liability cap, however, does not apply to damages arising
out of Foster Wheeler USA's indemnification obligations.
Work on our Coker Project is well advanced. As of September 1999, 98% of
major equipment procurement, 91% of total materials procurement and 86% of
detailed design and engineering were complete and construction was well
underway. Construction activities to date have included site preparation,
foundations and footings installation, major equipment installation and pipe
rack construction. In June 1999, the six coke drums for our new delayed coking
unit arrived at the Port Arthur refinery and by October 1999 were all installed
in their support structures. In September 1999, approximately 260 people were
working on design and engineering and approximately 450 people are working on
construction of our Coker Project.
As part of the Refinery Upgrade Project, Air Products will construct and own
a new hydrogen supply plant at the Port Arthur refinery on land leased from
Clark Refining & Marketing. This new hydrogen supply plant is expected to
supply hydrogen to us, as well as hydrogen, steam and electricity to Clark
Refining & Marketing, for use at the Port Arthur refinery. Air Products is
obligated to ensure that the hydrogen supply plant is ready to operate no later
than December 2000, when our Heavy Oil Processing Facility is first expected to
need hydrogen.
Our Operations. Clark Refining & Marketing has agreed to provide us with
services necessary to complete our Coker Project and to operate the Heavy Oil
Processing Facility. Under our services and supply agreement, the services to
be performed by Clark Refining & Marketing include, among others, the
following:
. oversight of the construction of our new units and other equipment and
performance of our obligations under our construction contract with
Foster Wheeler USA, other than our payment obligations;
. operation and maintenance of the ancillary units and equipment that we
are leasing from Clark Refining & Marketing;
. management of the operation and maintenance of our new processing units
and other equipment at the Port Arthur refinery;
. management of our crude oil purchases and transportation of our crude oil
to the Port Arthur refinery; and
. supply of other required feedstocks, materials and utilities.
In addition, under our services and supply agreement Clark Refining &
Marketing has a right of first refusal to require us to process crude oil for
them in an amount equal to approximately 20% of the processing capacity of our
Heavy Oil Processing Facility. In exchange, we will receive processing fees
from Clark Refining & Marketing.
Our Supply of Crude Oil. We expect to receive the heavy sour crude oil to be
processed by our Heavy Oil Processing Facility from P.M.I. Comercio
Internacional under our long term crude oil supply agreement. PEMEX has
guaranteed P.M.I. Comercio Internacional's obligations under our long term
crude oil supply agreement.
Our long term crude oil supply agreement includes a mechanism designed to
minimize the effect of adverse refining cycles and to moderate the fluctuations
of our coker gross margin. This mechanism contains a formula that is intended
to be an approximation for coker gross margin and is designed to provide for a
minimum average coker gross margin over the first eight years following
completion of the Refinery Upgrade Project, if it is completed by July 2001.
This eight year period will be shortened by any period of delay in completion
of the Refinery Upgrade Project beyond July 2001 unless the delay is caused by
events beyond our reasonable control.
Sale of Our Refined Products. We have entered into a product purchase
agreement with Clark Refining & Marketing for the sale of all refined and
intermediate products produced by our Heavy Oil Processing Facility. Under our
product purchase agreement, Clark Refining & Marketing is obligated to accept
and pay for all our products and has a limited right to request that we produce
a specified mix of products.
6
<PAGE>
Our Financing Plan
We estimate that we will need approximately $715 million to pay all of the
costs of developing, constructing, financing and commissioning our Coker
Project. Of this amount, approximately $255 million has been raised from the
sale of the outstanding notes, approximately $325 million will come from our
secured construction and term loan facility provided by commercial banks and
institutional lenders and approximately $135 million will come from equity
contributions by Blackstone and Occidental. The construction and term loan
facility is split into a Tranche A of $225 million with a term of 7.5 years and
a Tranche B of $100 million with a term of 8 years. Under specified
circumstances, the aggregate amount of the construction and term loan facility
may be reallocated between the tranches with our consent, which may not be
unreasonably withheld. In November 1999, the lenders under our construction and
term loan facility requested that we reallocate $5 million from Tranche A to
Tranche B. We expect this reallocation to occur in January 2000. Also, under
specified circumstances, the bank arrangers, with our consent, which may not be
unreasonably withheld, may increase the margin on the construction and term
loan facility upon a reaffirmation from Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group of our then current rating after giving effect
to such increase. In addition, we have obtained a $75 million secured working
capital facility from commercial banks, which banks include some of the same
commercial banks that provide the construction and term loan facility. We are
in the process of replacing $40 million of our working capital facility with an
insurance product. Clark Refining & Marketing and Air Products will be
responsible for the completion of, and bear all the costs of, the portions of
the Refinery Upgrade Project to be undertaken by them. Clark Refining &
Marketing's portion of the Refinery Upgrade Project includes modifications of
some ancillary units and equipment which we are leasing from Clark Refining &
Marketing under the facility and site lease.
Under our long term crude oil supply agreement, we are required to give
P.M.I. Comercio Internacional letters of credit or an equivalent financial
guaranty insurance policy to secure our obligation to pay for Maya that we
purchase. We have fulfilled this requirement with a $150 million oil payment
guaranty insurance policy from Winterthur International Insurance Company.
Winterthur is also providing us with a separate $60 million debt service
reserve insurance policy that will initially take the place of cash funding in
the debt service reserve account for five years following commencement of
commercial operations of our Heavy Oil Processing Facility. We expect that this
insurance policy will be phased out as our debt service reserve account is
funded through scheduled contributions or from excess cash flows. The following
table sets forth our expected sources and uses of funds.
<TABLE>
<CAPTION>
Amounts
------------------------
(in millions of dollars)
<S> <C>
Sources
Construction and term loans......................... $325
The outstanding notes............................... 255
Equity contributions................................ 135
----
Total Sources......................................... $715
====
Uses
Construction contract............................... $544
Coker Project contingency........................... 28
Net interest during construction.................... 89
Start-up, development, asset acquisition and other
construction costs................................. 22
Financing costs, legal and other transaction costs.. 32
----
Total Uses............................................ $715
====
</TABLE>
7
<PAGE>
Summary of Terms of the Exchange Offer
On August 19, 1999, Port Arthur Finance completed the private offering of the
outstanding notes. References to "notes" in this prospectus are references to
both outstanding notes and the exchange notes.
Port Arthur Finance, Port Arthur Coker Company, Sabine River Holding Corp.
and Neches River Holding Corp. entered into a registration rights agreement
with the initial purchasers in the private offering in which we agreed to
deliver to you this prospectus and Port Arthur Finance agreed to complete the
exchange offer within 270 days after the date of original issuance of the
outstanding notes. In the exchange offer, you are entitled to exchange your
outstanding notes for exchange notes which are identical in all material
respects to the outstanding notes except that:
. the exchange notes have been registered under the Securities Act,
. the exchange notes are not entitled to certain registration rights under
the registration rights agreement, and
. certain contingent interest rate provisions are no longer applicable.
The Exchange Offer.......... Port Arthur Finance is offering to exchange up to
$255 million aggregate principal amount of
exchange notes for up to $255 million aggregate
principal amount of outstanding notes.
Outstanding notes may be exchanged only in
integral multiples of $1,000.
Resale...................... Based on an interpretation by the staff of the
Securities and Exchange Commission, the
Commission, set forth in no-action letters issued
to third parties, we believe that the exchange
notes issued pursuant to the exchange offer in
exchange for outstanding notes may be offered for
resale, resold and otherwise transferred by you
(unless you are an "affiliate" of Port Arthur
Finance within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that you are
acquiring the exchange notes in the ordinary
course of your business and that you have not
engaged in, do not intend to engage in, and have
no arrangement or understanding with any person
to participate in the distribution of the
exchange notes.
Each participating broker-dealer that receives
exchange notes for its own account pursuant to
the exchange offer in exchange for shares of
outstanding notes that were acquired as a result
of market-making or other trading activity must
acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes.
See "Plan of Distribution."
Any holder of outstanding notes who
. is an affiliate of Port Arthur Finance
. does not acquire exchange notes in the
ordinary course of its business, or
. tenders in the exchange offer with the
intention to participate, or for the purpose
of participating, in a distribution of
exchange notes,
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cannot rely on the position of the staff of the
Commission enunciated in Exxon Capital Holdings
Corporation, Morgan Stanley & Co. Incorporated or
similar no-action letters and, in the absence of
an exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with the
resale of the exchange notes.
Expiration Date; Withdrawal
of Tenders..................
The exchange offer will expire at 5:00 p.m., New
York city time, on , 2000, or such later date
and time to which Port Arthur Finance extends it
(the expiration date). A tender of outstanding
notes pursuant to the exchange offer may be
withdrawn at any time prior to the expiration
date. Any outstanding notes not accepted for
exchange for any reason will be returned without
expense to the tendering holder promptly after
the expiration or termination of the exchange
offer.
Certain Conditions to the
Exchange Offer..............
The exchange offer is subject to customary
conditions, which Port Arthur Finance may waive.
Please read the section captioned "The Exchange
Offer Certain Conditions to the Exchange Offer"
of this prospectus for more information regarding
the conditions to the exchange offer.
Procedures for Tendering
Outstanding Notes...........
If you wish to accept the exchange offer, you
must complete, sign and date the accompanying
letter of transmittal, or a facsimile of the
letter of transmittal, according to the
instructions contained in this prospectus and the
letter of transmittal. You must also mail or
otherwise deliver the letter of transmittal, or a
facsimile of the letter of transmittal, together
with the outstanding notes and any other required
documents to the exchange agent at the address
set forth on the cover page of the letter of
transmittal. If you hold outstanding notes
through The Depository Trust Company, DTC, and
wish to participate in the exchange offer, you
must comply with the Automated Tender Offer
Program procedures of DTC, by which you will
agree to be bound by the letter of transmittal.
By signing, or agreeing to be bound by, the
letter of transmittal, you will represent to us
that, among other things:
. any exchange notes that you receive will be
acquired in the ordinary course of your
business;
. you have no arrangement or understanding with
any person or entity to participate in the
distribution of the exchange notes;
. if you are a broker-dealer that will receive
exchange notes for your own account in
exchange for outstanding notes that were
acquired as a result of market-making
activities, that you will deliver a
prospectus, as required by law, in connection
with any resale of such exchange notes; and
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<PAGE>
. you are not an "affiliate," as defined in Rule
405 of the Securities Act, of Port Arthur
Finance or, if you are an affiliate, you will
comply with any applicable registration and
prospectus delivery requirements of the
Securities Act.
Special Procedures for If you are a beneficial owner of outstanding
Beneficial Owners........... notes which are not registered in your name, and
you wish to tender such outstanding notes in the
exchange offer, you should contact the registered
holder promptly and instruct such registered
holder to tender on your behalf. If you wish to
tender on your own behalf, you must, prior to
completing and executing the letter of
transmittal and delivering your outstanding
notes, either make appropriate arrangements to
register ownership of the outstanding notes in
your name or obtain a properly completed bond
power from the registered holder.
Guaranteed Delivery
Procedures..................
If you wish to tender your outstanding notes and
your outstanding notes are not immediately
available or you cannot deliver your outstanding
notes, the letter of transmittal or any other
documents required by the letter of transmittal
or comply with the applicable procedures under
DTC's Automated Tender Offer Program prior to the
expiration date, you must tender your outstanding
notes according to the guaranteed delivery
procedures set forth in this prospectus under
"The Exchange Offer--Guaranteed Delivery
Procedures."
Consequences of Failure to
Exchange....................
All untendered outstanding notes will continue to
be subject to the restrictions on transfer
provided for in the outstanding notes and in the
indenture. In general, the outstanding notes may
not be offered or sold, unless registered under
the Securities Act, except pursuant to an
exemption from, or in a transaction not subject
to, the Securities Act and applicable state
securities laws. Other than in connection with
the exchange offer, Port Arthur Finance does not
currently anticipate that it will register the
outstanding notes under the Securities Act.
U.S. Federal Income Tax
Considerations..............
The exchange of outstanding notes for exchange
notes in the exchange offer will not be a taxable
event for U.S. federal income tax purposes. See
"Tax Considerations--Certain United States
Federal Income Tax Considerations."
Use of Proceeds............. We will not receive any cash proceeds from the
issuance of exchange notes pursuant to the
exchange offer.
Exchange Agent.............. HSBC Bank USA is the exchange agent for the
exchange offer. The address and telephone number
of the exchange agent are set forth in the
section captioned "Exchange Offer--Exchange
Agent" of this prospectus.
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Summary of Terms of the Exchange Notes
Issuer.................... Port Arthur Finance Corp., as agent acting on
behalf of Port Arthur Coker Company L.P.
Guarantors................ Port Arthur Coker Company L.P., Sabine River
Holding Corp. and Neches River Holding Corp.
Securities Offered........ $255 million in principal amount of 12.50% senior
secured notes due 2009.
Maturity Date............. January 15, 2009.
Interest Payment Dates.... January 15 and July 15 of each year, commencing on
January 15, 2000.
Scheduled Principal We are required to pay principal of the notes on
Payments................. each January 15 and July 15, commencing July 15,
2002, as follows:
<TABLE>
<CAPTION>
Percentage of Principal
Payment Date Amount Payable
------------ -----------------------
<S> <C>
July 15, 2002......................... 1.70%
January 15, 2003...................... 1.70%
July 15, 2003......................... 4.10%
January 15, 2004...................... 4.10%
July 15, 2004......................... 6.00%
January 15, 2005...................... 6.00%
July 15, 2005......................... 9.10%
January 15, 2006...................... 9.10%
July 15, 2006......................... 9.10%
January 15, 2007...................... 9.10%
July 15, 2007......................... 7.90%
January 15, 2008...................... 7.90%
July 15, 2008......................... 12.10%
January 15, 2009...................... 12.10%
</TABLE>
Initial Average Life of
the Notes................
Approximately 7.0 years.
Form and Denomination..... We will issue the exchange notes in global form in
minimum denominations of $100,000 or any integral
multiple of $1,000 in excess thereof.
Ranking................... The notes:
. are senior secured indebtedness;
. are equivalent in right of payment to all our
existing and future senior indebtedness; and
. rank senior to any of our subordinated
indebtedness.
Limited Recourse The obligations to pay principal of, and interest
Obligations.............. and premium, if any, on the notes are solely the
obligations of us, Sabine River and Neches River.
You will not have any recourse against our other
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owners and affiliates, including Clark Refining &
Marketing, Clark USA, Clark Refining Holdings,
Blackstone and Occidental, for any failure by any
of us, Sabine River or Neches River to satisfy
obligations under the notes.
Collateral................ Payment of the outstanding notes and our other
senior debt is, and the exchange notes when issued
will be, secured by security interests in
substantially all of our assets, including the
following:
. the delayed coker, the vacuum gas oil
hydrocracker and the sulfur recovery complex;
. our leasehold interest in our Heavy Oil
Processing Facility sites, the crude unit, the
vacuum tower and the naphtha and two distillate
hydrotreaters;
. all of our interests in crude oil and
intermediate and refined products;
. all our accounts, except for an operating account
for short term expenses;
. the partnership interests in Port Arthur Coker
Company;
. the capital stock of Port Arthur Finance;
. all our rights in our equity contribution
agreements;
. all rights in all our major contracts, including
our long term crude oil supply agreement with
P.M.I. Comercio Internacional, our construction
contract with Foster Wheeler USA and our services
and supply agreement and product purchase
agreement with Clark Refining & Marketing; and
. to the extent permitted by law, all our rights in
governmental permits and licenses.
Collateral Sharing........ The collateral is shared equally and ratably with
the other senior lenders, any replacement senior
lenders and the oil payment insurers in the manner
described in "Description of Our Principal
Financing Documents--Common Security Agreement."
Redemption at our Option.. We may choose to redeem some or all of the notes at
any time, without the consent of noteholders, at a
redemption price equal to:
. 100% of the unpaid principal amount of notes
being redeemed, plus
. accrued and unpaid interest, if any, on the notes
being redeemed, up to but excluding the date of
redemption, plus
. a make-whole premium which is based on the rates
of treasury securities with average lives
comparable to the average life of the remaining
scheduled payments of principal of the notes plus
75 basis points.
Mandatory Redemption...... If we receive specified mandatory prepayment
proceeds, including specified insurance and other
recovery proceeds from casualty events,
condemnation compensation and late payments to the
extent not needed for payments of interest, and
buydown payments from Foster
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Wheeler USA, we will be required to redeem all our
outstanding senior debt (including the notes) on a
ratable basis. The redemption price for the notes
will be equal to:
. 100% of the unpaid principal amount of notes
being redeemed, plus
. accrued but unpaid interest, if any, on the notes
being redeemed, up to but excluding the date of
redemption.
Operating Flow of Funds... After completion of our Coker Project, we will
deposit our operating revenues into our project
revenue account and will disburse these funds each
month to pay our operating expenses, including
crude oil purchases, debt service and other
obligations, and to fund our reserve accounts, as
required by our common security agreement. Seventy-
five percent of the funds remaining in the project
revenue account after making these disbursements
will be used to repay our construction and term
loans and the remaining funds will be used to repay
any drawings under the debt service reserve
insurance policy and to fund the debt service
reserve account. After any amount outstanding under
the debt service reserve insurance policy has been
repaid and the debt service reserve account is
fully funded, remaining funds will be transferred
to a distribution account.
Distribution We may not make any distributions to our owners
Restrictions.............. from our distribution account unless, among other
things:
. final completion of our Coker Project has
occurred;
. immediately after giving effect to the
partnership distribution, no default or potential
default has occurred and is continuing; and
. immediately after giving effect to the
partnership distribution, our debt service
reserve account, our PMI premium reserve account,
our principal and interest accrual account, our
tax reserve account, our oil purchase reserve
account and our major maintenance account are
fully funded, and we have paid all our project
expenses and mandatory capital costs, and (1) our
debt service coverage ratio for the historical 12
month period ending on the date the partnership
distribution is made and (2) the projected debt
service coverage ratio for the 12 month period
beginning on the first day after the partnership
distribution is made, in each case is not less
than 1.6:1.0, or 1.35:1.0 if the notes then have
an investment grade credit rating by both
Standard & Poor's and Moody's.
Common Security We, Sabine River and Neches River have entered into
Agreement................. a common security agreement with the collateral
trustee, the bank lenders administrative agent, the
oil payment insurers administrative agent, the
indenture trustee and the depositary bank. The
common security agreement sets forth common
representations, warranties, covenants, a common
security package for the benefit of the secured
parties, events of default and remedies relating to
our Coker Project and common conditions to
disbursement of senior loans. The terms of the
common security agreement are discussed in
"Description of Our Principal Financing Documents--
Common Security Agreement."
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<PAGE>
Intercreditor Agreement... The collateral trustee, the bank lenders
administrative agent, the oil payment insurers
administrative agent, the indenture trustee and the
debt service reserve insurer have entered into an
intercreditor agreement. The intercreditor
agreement sets forth the terms and conditions
governing the conduct of the senior lender groups,
the oil payment insurers and the debt service
reserve insurer among each other during the term of
the financing. The terms of the intercreditor
agreement are discussed in "Description of Our
Principal Financing Documents--Intercreditor
Agreement."
Ownership and Control..... Blackstone does not have the right to dispose of
its equity interest in Clark Refining Holdings,
except in the following situations:
Prior to final completion of our Coker Project,
Blackstone may dispose of its equity interest in
Clark Refining Holdings:
. to (1) a transferee that is rated investment
grade by both Standard & Poor's and Moody's after
giving effect to the transfer or to (2) any other
transferee with (a) the affirmative vote of 51%
of bank lenders and (b) the affirmative vote of
51% of noteholders or the reaffirmation by both
Standard & Poor's and Moody's of the then-current
credit rating applicable to the notes, provided
that either Blackstone retains its equity funding
commitment obligations or the transferee assumes
such obligations; or
. by means of a primary or secondary public
offering, a Rule 144A offering or private sale,
so long as Blackstone (1) retains no less than
40% of the total capital stock outstanding of
Clark Refining Holdings or (2) remains the
largest single direct or indirect shareholder of
Clark Refining Holdings and maintains the direct
or indirect right to appoint no fewer than one-
third of the members of the board of directors of
Clark Refining Holdings; provided that in any
case Blackstone retains its obligations to fund
any unfunded commitment.
Following final completion of our Coker Project,
Blackstone may dispose of its equity interest in
Clark Refining Holdings in any manner.
Clark Refining Holdings may not dispose of its
indirect interest in the Port Arthur refinery,
Clark Refining & Marketing or Port Arthur Coker
Company, except that following final completion, it
may dispose of its indirect interest in the Port
Arthur refinery, Clark Refining & Marketing and
Port Arthur Coker Company, in whole but not in
part, to a transferee that is engaged in petroleum
refinery operations or continuous chemical
processes; provided that if the transferee is not
rated investment grade by Standard & Poor's and
Moody's after giving effect to the transfer, (1)
Clark Refining Holdings has obtained the consent of
majority lenders and (2) both rating agencies have
reaffirmed the senior debt rating at or above the
then-current rating; provided further that if the
transfer is other than a transfer of all the shares
of Clark Refining & Marketing or Clark USA, the
transferee assumes all obligations of Clark
Refining & Marketing with respect to our Coker
Project.
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<PAGE>
Any other proposed transfer will require the
consent of requisite lenders.
Additional Senior Debt.... We may incur additional senior debt without the
prior approval of senior lenders subject to
specified conditions. For example, we will be
allowed to incur additional senior indebtedness to:
. finance modifications or improvements which are
necessary to comply with applicable law or as
necessary to operate our Coker Project if:
. no event of default or potential default has
occurred and is continuing;
. after giving effect to the additional senior
debt, the minimum projected debt service
coverage ratio for each remaining calendar
year will not be less than 1.5:1.0; and
. after giving effect to the additional senior
debt, the average annual projected debt
service coverage ratio for all remaining
years will not be less than 2.0:1.0; and
. finance modifications or improvements that are
not necessary to comply with applicable law or to
operate our Coker Project if:
. no event of default or potential default has
occurred and is continuing;
. substantial reliability, as described under
"Description of Our Principal Project
Documents--Construction Contract," has
occurred;
. after giving effect to the additional senior
debt, the minimum projected debt service
coverage ratio for each remaining calendar
year shall not be less than 2.0:1.0;
. after giving effect to the additional senior
debt, the average annual projected debt
service coverage ratio for all remaining
years shall not be less than 2.6:1.0;
. we obtain a confirmation of the then current
credit ratings of the notes by both Moody's
and Standard & Poor's; and
. the aggregate principal amount of all
additional senior debt for our discretionary
capital expenditures does not exceed $20
million at any time that bank senior debt
remains outstanding or $50 million at any
time that no bank senior debt remains
outstanding.
Replacement Senior Debt... We may incur senior debt to replace the initial
senior debt, in whole or in part, without the
consent of the senior lenders or the oil payment
insurers, provided that, among other things:
. the aggregate principal amount of the
replacement senior debt does not exceed the
sum of the amount of senior debt obligations
being paid or prepaid and the unutilized or
canceled part of the senior debt commitments
being replaced;
15
<PAGE>
. the replacement senior debt has a weighted
average life no shorter, and a final maturity
date no earlier, than that of the senior debt
being replaced;
. the projected average debt service coverage
ratio through January 15, 2009, calculated on
a pro forma basis reflecting the incurrence
of the replacement senior debt but not
modifying any of the other assumptions made
in the base case model described in Annex B
to this prospectus, is not less than 2.2:1.0;
and
. we have obtained a reaffirmation of the then
current credit rating of the notes by both
Moody's and Standard & Poor's, provided that
no reaffirmation will be required if the
replacement senior debt is bank senior debt
and bears interest at a rate, or in the case
of a floating rate facility a margin, that is
equal to or lower than that on the bank
senior debt being replaced and no changes
other than the interest rate or margin or
administrative, procedural, mechanical or
other de minimis changes are made,
Any incurrence of replacement senior debt other
than in accordance with these conditions will
require the prior consent of the secured parties.
Debt Service Reserve
Arrangement............... We will be required to provide a debt service
reserve arrangement at the time our Coker Project
is substantially complete in an amount equal to the
next semiannual payment of principal and interest
on our senior debt. Instead of funding a reserve
account with cash at substantial completion, we
have arranged for Winterthur to provide a debt
service reserve insurance policy in the maximum
amount of $60 million for a period of approximately
five years after substantial completion. Payments
would be made under this policy to pay debt service
to the extent that we do not have sufficient funds
available from other sources. The amount of $60
million will automatically be reduced as we make
deposits into the debt service reserve account.
Absence of a Public
Market for the Exchange The exchange notes will generally be freely
Notes .................... transferable but will also be new securities for
which there will not initially be a market.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the
exchange notes. We understand that the initial
purchasers in the private offering of the
outstanding notes intend to make a market in the
exchange notes. However, they are not obligated to
do so, and any market making with respect to the
exchange notes may be discontinued without notice.
16
<PAGE>
Independent Engineer's Report
Purvin & Gertz, Inc., in its role as independent engineer, prepared a report
dated August 10, 1999, which discusses certain technical, environmental and
economic aspects of the Refinery Upgrade Project. This report is set forth in
its entirety as Annex B to this prospectus. Although we set forth below
selected conclusions of Purvin & Gertz regarding our Coker Project, you should
read this report in its entirety. This report includes, among other things,
Purvin & Gertz's projections of operating results, including projected
revenues, expenses and debt service coverage ratios during the period the notes
are scheduled to remain outstanding, a design basis review of our Coker Project
and the Port Arthur refinery and a review of our principal project contracts.
In addition, the report contains a discussion of whether, and the extent to
which, we would be able to operate on a "stand-alone" basis without our
services and supply agreement and product purchase agreement with Clark
Refining & Marketing. Selected conclusions of Purvin & Gertz's report are
summarized below.
Purvin & Gertz's estimates for the Coker Project included herein were not
prepared with a view toward compliance with published guidelines of the
American Institute of Certified Public Accountants or generally accepted
accounting principles. Neither our independent auditors, nor any other
independent accountants, have compiled, examined or performed any procedures
with respect to our or Purvin & Gertz's estimates regarding our Coker Project
contained herein, nor have they expressed any opinion or any form of assurance
on such information or its achievability, and assume no responsibility for, and
disclaim any association with, the aforementioned estimates. These figures
represent Purvin & Gertz's best estimates of operating and financial results of
our Coker Project assuming the completion of our Coker Project and expected
mode of operation.
In Purvin & Gertz's opinion, the Refinery Upgrade Project will transform the
Port Arthur refinery into one of the top five refineries on the Gulf Coast in
terms of competitiveness and heavy crude oil conversion capacity. Based on
their review of the Refinery Upgrade Project, they have reached the following
technical, commercial/marketing and financial conclusions:
Technical
. The design of the major new units to be installed at the Port Arthur
refinery, specifically our delayed coking and the hydrocracker units,
are based on licensed technology that is well-established and
commercially proven.
. The size and configuration of the new process units should integrate
well with the Port Arthur refinery.
. The Refinery Upgrade Project capital cost estimate provided by Foster
Wheeler USA and Clark Refining & Marketing is reasonable and includes
all relevant items based on their review of the estimate.
. The contingency and escalation allowance included in the estimate is
adequate at this stage of the Refinery Upgrade Project.
. The Refinery Upgrade Project schedule of 31 months, from April 1998 to
mechanical completion in November 2000, is achievable.
. There are no apparent site conditions including known underground
obstructions or contamination that would lead to major cost overruns.
. The Refinery Upgrade Project will have a useful life of at least 20
years extending well beyond the term of the debt financing.
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<PAGE>
. Foster Wheeler USA is a reputable engineering contractor experienced in
designing and constructing refining and petrochemical facilities. Foster
Wheeler USA is well qualified for the proposed assignment and has the
resources and financial strength necessary to fulfill their obligations
under our construction contract and their reimbursable construction
contract with Clark Refining & Marketing for their portion of the
Refinery Upgrade Project.
. Our construction contract is favorable to us, is suitable for this type
of financing, and provides adequate protection to us for cost overruns,
completion risk, integration risk and inefficiencies.
. The required performance and reliability tests have been structured to
validate cash flow availability in order to support our anticipated debt
capacity and, if not, to cause Foster Wheeler USA to buydown our debt to
adjust it according to the reduced debt service capacity.
. The liquidated damages cap of $145 million represents up to $70 million
of delay damages and up to $75 million of buydown damages for
inefficiencies and is adequate for this type of project.
. The Clark Refining & Marketing portion of the Refinery Upgrade Project,
including the crude oil unit and hydrotreater modifications and other
offsites and utilities to be undertaken by Foster Wheeler USA are a
group of relatively routine small refinery projects normally carried out
during turnarounds or during refinery operations, are expected to cost
$92 million and will not present a major risk to the successful start-
up, operation and integration of our Coker Project.
. Clark Refining & Marketing is an experienced fuels refinery operator
currently processing Maya, operating two existing cokers at the Port
Arthur refinery and is well qualified to manage operations at the Port
Arthur refinery.
. Clark Refining & Marketing's crude oil import infrastructure and Sun
Pipe Line Company's Nederland terminal and connecting pipelines to the
Port Arthur refinery are adequate to support the volumes of imported
Maya and other crude oil contemplated for the Refinery Upgrade Project's
operation. Several pipeline and terminal alternatives also exist to
deliver crude oil to the Port Arthur refinery if required.
. Air Products is a reliable hydrogen producer and the hydrogen supply
plant will be constructed in a timely manner and will produce the
required hydrogen and utilities. Approximately 50% of the required
hydrogen can be supplied by Air Products via pipeline as a backup, if
necessary.
Commercial and Marketing
. The long term crude oil supply agreement was designed to minimize the
effect of adverse refining cycles, thereby establishing more stable cash
flow for us. In order to effect stable cash flows, our long term crude
oil supply agreement contains a formula that is intended to be an
approximation for coker gross margin and is designed to provide for a
minimum average coker gross margin over the first eight years following
completion of the Refinery Upgrade Project. The mechanism guarantees an
average minimum $15.00 per barrel differential formula related to coker
gross margin via price adjustments on Maya.
. If the differential formula amount is calculated over the August 1987 to
December 1998 period and regressed against the historical West Texas
Intermediate/Maya differential, the mathematical results implies that
the $15 per barrel is equivalent to the West Texas Intermediate/Maya
differential of $5.94 per barrel. This is $0.24 per barrel above the
historical average West Texas Intermediate/Maya differential of $5.70
per barrel over the same period. Purvin & Gertz has reviewed our long
term crude oil supply agreement and believes the mechanism serves as a
suitable method of stabilizing coker gross margin fluctuations.
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<PAGE>
. Clark Refining & Marketing will offtake all the intermediate and final
products produced by our operations and will provide services to us on a
routine contractual basis. Clark Refining & Marketing will be able to
incorporate the products from our operations into the Port Arthur
refinery and has considerable experience in selling finished products
into the Gulf Coast market.
. The product offtake, operation, maintenance and other services provided
under the contracts between Clark Refining & Marketing and Port Arthur
Coker Company contemplate products and services that are priced to
reflect arms-length mechanisms and market-based prices and contain fair
market terms.
. Based on Purvin & Gertz's analysis of the worldwide heavy oil supply and
demand fundamentals and plans and objectives stated by PEMEX and the
Venezuelan national oil company, Purvin & Gertz forecasts that heavy
sour crude oil production will continue to increase through the term of
our financing. The crude oil heavy/light differential is forecast to
average $6.00 per barrel or above in constant 1999 dollars over the same
period. This is equivalent to a $15.16 per barrel coker gross margin as
defined by the differential formula in the long term crude oil supply
agreement. This forecast is consistent with the expectation that coker
projects will continue to develop in an orderly fashion in line with the
expected heavy sour crude oil production increases.
. P.M.I. Comercio Internacional and PEMEX have sufficient Maya reserves to
fulfill the supply obligation under our long term crude oil supply
agreement. The risk of diversion of Maya away from Port Arthur Coker
Company is thought to be minimal because: (1) Mexico is significantly
increasing its production of Maya; (2) the number of other sour crude
oil refineries able to process Maya are very limited; (3) the demand for
heavy sour crude oil outside the United States is small and not expected
to change during the forecast period; and (4) the netback for heavy sour
crude oil shipments to Europe or Asia is low relative to U.S. Gulf Coast
deliveries.
. Although the Refinery Upgrade Project is designed to process Maya as its
primary feedstock, it will have the flexibility to process other similar
quality heavy sour crude oils and will be able to achieve essentially
equivalent economics to the base case projections with minimal changes
to configuration excluding any benefits of the coker gross margin
guarantee in our long term crude oil supply agreement.
. The shutdown of the Port Arthur refinery is an extremely remote
possibility due to its competitiveness post-completion of the Refinery
Upgrade Project.
. The terms of each of the product purchase agreement, the services and
supply agreement, the ground lease and the facility and site lease are
as favorable to Clark Refining & Marketing and to Port Arthur Coker
Company, in all material respects, as terms that would be obtainable at
this time for a comparable transaction or series of similar transactions
in arm's length dealings with a party who is not an affiliate. Payments
to be made by Clark Refining & Marketing to us under the product
purchase agreement and the services and supply agreement are fair
consideration for the products acquired or services received.
. The consideration we paid Clark Refining & Marketing for our assumption
of the long term crude oil supply agreement, our acquisition of work in
progress on our Coker Project and Clark Refining & Marketing's reduction
of the permissable emissions levels under one of its air emissions
permits in order to allow us to obtain our air permit was equal to the
fair market value of these assets. The rental payments Clark Refining &
Marketing received under the ground lease and will receive under the
facility and site lease are equal to the fair market value rental
payments of the property leased.
Financial Projections
. The Purvin & Gertz base case assumes that our new units are operated as
part of the Port Arthur refinery. Assuming a specified price forecast,
estimated average operating cash flow over our initial 11-year operating
period is approximately $228 million and the after-tax cash flows
generated by our operations will be sufficient to repay our debt
obligations, including scheduled principal amortization and interest,
with minimum and average debt service coverage ratios of 2.0:1.0 and
2.4:1.0, respectively.
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. Purvin & Gertz analyzed various sensitivity cases including a backcast
from 1989 to 1998 and concluded that in all cases we can comfortably
meet our debt service obligations. The Independent Engineer's Report
annexed to this prospectus presents the backcast case from 1989 to 1996
because the senior debt has a term of eight years after start-up.
. The PMI surplus reserve account provides liquidity during low coker
margin periods, which is reflected in the backcast case with minimum and
average debt service coverage ratios of almost 1.0:1.0 and 2.0:1.0,
respectively. In 2007 where debt service shortfall amounts to $3.0
million, the PMI surplus reserve account is fully funded with $50
million. In the backcast case without our long term crude oil supply
agreement in place, cash flow shortfall amounts to $5.0 million, with a
debt service reserve account of $37 million and over $100 million of
cash available for debt service.
. The PMI surplus reserve account effectively mitigates the timing issue
of a delay in receiving discounts after prior period surpluses. When
fully funded and combined with the debt service reserve account, these
reserve accounts provide up to 1.25 years of debt service coverage for
our senior debt.
. The proceeds of the total financing combined with the proposed equity
should be sufficient to pay our total estimated Coker Project cost.
. If the Refinery Upgrade Project is designed, constructed, operated and
maintained as currently proposed, we should be capable of meeting or
exceeding the production projections.
. The basis for the estimate of our total costs of operating and
maintaining our Heavy Oil Processing Facility is in accordance with
standard industry practice. The operating and maintenance costs set
forth in the base case projections provide sufficient funds for the
operations and maintenance of our Heavy Oil Processing Facility is
consistent with the operating scenarios presented.
Stand-alone Case
To demonstrate the robustness of the economics of our operations and to
ensure that we can operate independently of Clark Refining & Marketing, Purvin
& Gertz developed a stand-alone case that assumes the following:
. We continue our operations while the rest of the Port Arthur refinery,
other than our Heavy Oil Processing Facility and the other facilities at
the refinery that we have a right to use, discontinues operations;
. We use the full capacity of our Heavy Oil Processing Facility;
. A third-party is operating our Heavy Oil Processing Facility;
. We continue to purchase crude oil under our long term crude oil supply
agreement;
. A third party is marketing all intermediate and finished products from
our Heavy Oil Processing Facility on our behalf; and
. Our rights to possession under the facility and site lease and the
ground lease remain in effect.
In this regard Purvin & Gertz has concluded that:
. From a technical standpoint, we could successfully continue to operate
in a stand-alone mode;
. The modifications necessary to achieve stand-alone operation are
relatively minor and could be achieved within three months;
. The intermediate and finished products produced by us during stand-alone
operation should be readily marketable based on appropriate discounts
for quality to spot market prices to long term off-takers since we are
located in the most liquid refinery products market in the world. These
discounts are applied to specified intermediate products over a 3 year
period to account for the market disruption caused by introducing a
large volume of intermediate products into the market; and
. Even in this extremely unlikely scenario, we will be able to service our
debt obligations after paying all operating expenses as evidenced by
projected minimum and average after tax debt service coverage ratios of
1.1:1.0 and 1.9:1.0, respectively.
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Crude Oil and Refined Product Market Report
Purvin & Gertz, Inc., in its role as our independent marketing consultant,
prepared a crude oil and refined product market forecast report dated July 13,
1999. Purvin & Gertz is an oil and gas industry engineering consulting firm
that has been providing the oil and gas industry with professional consulting
reports for over 50 years. Their report includes price forecasts for crude oil
and refined products, and discusses the effect on our Coker Project of
fluctuations in heavy sour crude oil availability, the costs of heavy sour
crude oil and the prices at which refined products may be sold. This report is
set forth in its entirety as Annex C to this prospectus. Selected conclusions
of Purvin & Gertz's report are summarized below.
General
. The overall level of crude oil prices is set by the cost of production
and supply/demand pressures. If the price is too high, the supply will
increase because of the economic attractiveness of developing new
reserves or producing existing reserves at higher rates. At the same
time, demand is decreased by use of alternative fuels such as coal,
natural gas, or nuclear energy, and/or by conservation efforts. The
resulting imbalance of supply versus demand forces prices back down. In
the same manner, if the price is too low, demand is stimulated,
alternative energy supply development is constrained, and adding new
reserves becomes less economical. Ultimately, the low prices cause
demand to approach capacity limits on production, and the resulting
competition for supply drives prices back up.
. The absolute level of crude oil prices has a very direct impact on the
feasibility of the upstream business, but crude oil price differentials
have a larger impact on the economics of refinery conversion projects.
The heavy/light differential in this report is expressed as the
differential between West Texas Intermediate and Maya.
Heavy/Light Differential
. The heavy/light differential is the result of a complex balance of a
number of factors, such as absolute and relative demand for light and
heavy products, supply of heavy sour crude oil and conversion capacity
supply/demand balance.
. For the period from August 1987 to December 1998, the differential
averaged $5.70 per barrel based on Platt's Oilgram Price report weekly
quotes.
. For the period from January 1988 to March 1999, the six-month period
moving average of the heavy/light differential ranged from a high of
$8.90 per barrel to a low of $3.76 per barrel, heavy/light with an
average of $5.83 per barrel.
. Low oil prices and reduced supplies of heavy sour crude oil relative to
conversion capacity have caused the differential to narrow in late
1998/early 1999. Despite these adverse conditions, the heavy/light
differential averaged about $5.00 per barrel over the past six months.
. The heavy/light differential is expected to widen from 2000 to 2005, and
then remain relatively stable for the remainder of the forecast period.
The differential will widen due to a number of factors, such as:
. a rise in the price of crude oil. All other things being equal,
when the price of crude oil rises the heavy/light differential
will tend to widen;
. a resurgence of strong product demand in Asia, filling conversion
capacity; and
. an increase in the rate of development of heavy sour crude oil
reserves in Mexico, Venezuela, and Canada will rapidly increase
overall heavy feedstock availability and overwhelm conversion
capacity.
. The heavy/light differential over the 2000 to 2020 time period is
forecast to average $6.51 per barrel in real terms and $8.18 per barrel
in nominal terms. While there can be considerable volatility in the
heavy/light differential, the market fundamentals suggest a widening
heavy/light differential, which will be beneficial to us.
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Heavy Crude Oil Availability
. Adequate supplies of heavy sour crude oil are expected to be available
to us throughout the forecast period, given that heavy sour crude oil
production is concentrated in the Western Hemisphere and production is
expected to increase substantially over the life of the Refinery Upgrade
Project.
. Our Heavy Oil Processing Facility has been designed to process Maya
produced by PEMEX. Maya is expected to be abundant given PEMEX's
reserves, production levels and plans to expand production.
. If the Maya is diverted from us, there are alternative supplies.
Although most of the other heavy sour crude oil supplies are generally
heavier than Maya, there are still heavy sour crude oils that could be
used effectively in the new coker unit.
. contracts for Venezuela heavy sour crude oil could probably be
obtained since Venezuela plans to significantly increase its supply
of heavy sour crude oil after 2000.
. contracts for neutral zone crude oil could probably be obtained
since the producers Saudi Arabia and Kuwait are having difficulty
placing their growing supplies.
. The risk of diversion of the Maya contracted to be used in the Port
Arthur refinery is minimal for the following reasons:
. a program to significantly expand production of Maya is currently
underway and the extra supply will be difficult to place in the
market due to the limited capacity of complex refineries required
to process it;
. the netback for heavy sour crude oil shipments to Europe or Asia is
low related to U.S. Gulf Coast deliveries; and
. heavy sour crude oil is run in complex high conversion refineries
and the highest concentration of this type of refinery is found in
the U.S. Gulf Coast.
. The demand for heavy sour crude oil outside the United States is small
and relates primarily to asphalt manufacture, and this is not expected
to change during the forecast period.
. About 75% of the refinery capacity in the U.S. East Coast, Midwest and
Southwest is designed for light sweet and light sour crude oil. The
light sweet refineries can not run heavy, high sulfur crude oil like
Maya due to metallurgy and product specifications. The light sour
refineries already run as heavy a slate as is practical.
. A heavy sour crude oil producer with an equity position in a refinery
will choose to run its own crude oil rather than purchasing from others
such as Mexico. PDVSA, the Venezuelan national oil company, has equity
ownership of over 900,000 barrels per day of refining capacity in the
United States which equals about 30% of the total heavy oil refinery
capacity in the U.S. East Coast, Midwest and Southwest, and is following
an aggressive strategy to secure markets for its heavy sour crude oil in
competition with Mexico.
. Although Mexico could decide to participate in heavy sour crude oil
export cutbacks, the cutbacks are not likely to be large and would be
prorated over all of its customers. Recently announced cutbacks have
been in the 100,000 to 125,000 barrels per day range or about 10% of
exports. The Refinery Upgrade Project would not be materially affected
by cuts of this magnitude.
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Product Demand
. Product demand growth varies from year to year but generally averages
less than 2% annually. Gasoline growth is the key to overall product
growth since it accounts for 40% to 50% of the total. Jet fuel is the
fastest growing product but total demand is relatively small.
Refinery Margins
. Refinery margins for heavy sour crude oil processors are expected to be
significantly higher than for light sweet crude oil refineries. The
Refinery Upgrade Project will move the Port Arthur refinery into the top
tier of Gulf Coast refineries.
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RISK FACTORS
You should carefully consider the following information, together with the
other information in this prospectus, before tendering your outstanding notes.
CONSTRUCTION RISKS
CONSTRUCTION OF OUR COKER PROJECT AND/OR THE REFINERY UPGRADE PROJECT COULD BE
DELAYED FOR REASONS BEYOND OUR CONTROL OR BEYOND OUR CONTRACTORS' CONTROL.
Under a fixed price turnkey construction contract, Foster Wheeler USA has
guaranteed final completion of our Coker Project by December 2001, and under a
separate performance guarantee, Foster Wheeler Corporation has guaranteed
Foster Wheeler USA's performance under this construction contract. Under a
separate contract with Clark Refining & Marketing, Foster Wheeler USA has
agreed to complete Clark Refining & Marketing's portion of the Refinery Upgrade
Project by that date as well. In addition, Air Products has agreed to complete
construction of a hydrogen supply plant at the Port Arthur refinery by December
2000, which is necessary for our Heavy Oil Processing Facility. Other than the
equity commitments of Blackstone and Occidental in the aggregate amount of
approximately $135 million, neither Blackstone nor Occidental is obligated to
cause completion or otherwise provide any completion support. While our Coker
Project is well under way, the construction and timely completion of our Coker
Project and of the entire Refinery Upgrade Project could be delayed for reasons
beyond our control and the control of our contractors, including the following:
. shortages of equipment, materials and labor;
. work stoppages and other labor disputes;
. litigation;
. unanticipated increases in costs;
. adverse weather conditions and natural disasters; and
. accidents.
If any of these events or other unanticipated events occur, the construction
of our Coker Project, the Refinery Upgrade Project and/or the hydrogen supply
plant may be delayed, our Coker Project may cost us more to complete than we
have currently budgeted, or our Coker Project may not perform as well as we
expect it to, which could cause us to be unable to make payments on the notes
and our other debt when due.
WE CANNOT GUARANTEE THAT OUR COKER PROJECT HAS BEEN PROPERLY DESIGNED OR THAT
OUR COKER PROJECT WILL BE SUCCESSFULLY INTEGRATED WITH THE PORT ARTHUR
REFINERY.
The successful operation of our Coker Project is subject to engineering and
design uncertainties. Although a completion test in the construction contract
with Foster Wheeler USA will require that our Coker Project be capable of
operating as an integrated part of the Port Arthur refinery at required
performance levels during the defined test periods, we cannot be sure that our
Coker Project will operate as designed or that it will be integrated
effectively with the Port Arthur refinery. A delay in the successful
integration of our Coker Project with the Port Arthur refinery would materially
affect our ability to generate revenues and make payments on the notes and our
other debt when due.
THE LIQUIDATED DAMAGES THAT WE MAY RECEIVE FROM FOSTER WHEELER USA AND AIR
PRODUCTS FOR CONSTRUCTION DELAYS OR FAILURES TO SATISFY PERFORMANCE
REQUIREMENTS MAY NOT BE SUFFICIENT TO COMPENSATE US FOR OUR RESULTING LOSSES.
Foster Wheeler USA is obligated to pay us liquidated damages in the event of
delays in construction or the failure of our Coker Project to satisfy standards
relating to capacity, efficiency and reliability. Similarly, Air
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Products is obligated to pay us limited liquidated damages in the event the
hydrogen supply plant is not completed on time. However, these liquidated
damages are subject to caps and may otherwise not be sufficient to cover the
losses that we could incur as a result of construction delays or failures to
satisfy performance requirements. As a result, a delay in construction or a
failure of our Coker Project to satisfy performance requirements--
notwithstanding that we may be entitled to receive liquidated damages under our
construction contract or our hydrogen supply agreement--could cause us to be
unable to make payments on the notes and our other debt when due.
IF CONSTRUCTION OF OUR COKER PROJECT IS DELAYED, P.M.I. COMERCIO INTERNACIONAL
MAY BE ABLE TO TERMINATE OUR LONG TERM CRUDE OIL SUPPLY AGREEMENT, WHICH WOULD
CAUSE US TO LOSE THE BENEFIT OF OUR COKER GROSS MARGIN SUPPORT MECHANISM.
Under our long term crude oil supply agreement with P.M.I. Comercio
Internacional, we must complete the Refinery Upgrade Project by January 2001.
We, however, have the right to extend this scheduled completion date
indefinitely by making specified payments to P.M.I. Comercio Internacional. If
we do so and extend this scheduled completion date beyond July 2001, the coker
gross margin support mechanism will terminate in July 2009, unless extended by
an event of force majeure. Therefore, if the completion of the Refinery Upgrade
Project has not occurred for any reason other than an event of force majeure by
July 2001, we will have the benefit of the coker gross margin support mechanism
in our long term oil supply agreement for a period shorter than eight years. If
we do not make payments to extend this scheduled completion date and it is not
extended by an event of force majeure, P.M.I. Comercio Internacional will have
the right to terminate our long term crude oil supply agreement and we would be
liable to P.M.I. Comercio Internacional for damages. If this were to occur, we
would lose the benefit of the coker gross margin support mechanism contained in
our long term crude oil supply agreement, which could impair our ability to
make payments on the notes and our other debt when due.
THE COMPUTER SYSTEMS OF FOSTER WHEELER USA, CLARK REFINING & MARKETING AND
OTHER CONTRACTING PARTIES MAY NOT ACHIEVE YEAR 2000 READINESS.
Many existing computer systems process dates based on only two digits for the
year of a transaction and may be unable to process dates in the year 2000 and
beyond. If not corrected, many computer applications could fail or create
erroneous results on or about January 2000 due to the possible failure of
systems and hardware with embedded applications. We cannot give you any
assurance that the systems of other parties on which we rely in the
engineering, design or construction of our Coker Project, including Foster
Wheeler USA, Clark Refining & Marketing and Air Products, are already or will
be converted in a timely manner. A failure to convert by any of those parties
could impair our ability to complete construction of our Coker Project in a
timely manner.
MARKET RISKS
OUR CASH FLOWS ARE SUBJECT TO FLUCTUATIONS IN THE MARKET PRICES OF CRUDE OIL,
OTHER FEEDSTOCKS AND REFINED PRODUCTS, WHICH ARE BEYOND OUR CONTROL AND WHICH
MAY BE VOLATILE.
Our net operating cash flow will be a function of the cost of heavy sour
crude oil which we purchase and the price at which our refined products may be
sold. The price we must pay at any time for crude oil and the prices paid to us
at any time for our refined products by Clark Refining & Marketing under our
product purchase agreement will be based upon prevailing market prices of
similar commodities. The markets and prices of these commodities are subject to
considerable fluctuation and depend upon many factors beyond our control, such
as the following:
. the aggregate demand for crude oil and refined products, which are
influenced by factors such as the state of the economy and weather
patterns;
. the prices and availability of imports of refined products and
feedstocks;
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. refining industry utilization rates within the industry;
. the prices and availability of alternative products;
. the impact of energy conservation efforts;
. international political and economic events;
. the level of taxation; and
. aggregate refinery capacity in the oil refining industry to convert heavy
sour crude oil into refined products.
Any of these factors could affect the price differential between the price
of heavy sour crude oil and refined products. We cannot guarantee that the
differential will not decrease below the amount needed for us to generate net
cash flow sufficient to make payments on the notes and other debt when due.
THE COKER GROSS MARGIN SUPPORT MECHANISM IN OUR LONG TERM CRUDE OIL SUPPLY
AGREEMENT WITH P.M.I. COMERCIO INTERNACIONAL MAY NOT ADEQUATELY PROTECT US
FROM FLUCTUATIONS IN THE RELATIVE PRICES OF HEAVY SOUR CRUDE OIL AND REFINED
PRODUCTS.
Our long term crude oil supply agreement with P.M.I. Comercio Internacional
includes a coker gross margin support mechanism based on a formula that is
intended to be an approximation for coker gross margin and is designed to
provide for a minimum average coker gross margin over the first eight years
following completion of the Refinery Upgrade Project, assuming we achieve
completion by July 2001. However, this mechanism covers our coker gross
margins, not margins of all products produced by our Heavy Oil Processing
Facility. In addition, the formula incorporates variables based on benchmark
products that are proxies for actual feedstocks and outputs rather than the
feedstocks and outputs themselves. Finally, the relationships among the
variables in the formula could change over time, reflecting a change in the
market for the products, and the agreement provides for adjustments if these
relationships change. We cannot assure you that the coker gross margin support
mechanism will adequately protect us against fluctuations in the relative
prices of heavy sour crude oil and refined products.
THE PROJECTIONS AND ASSUMPTIONS ABOUT OUR FUTURE PERFORMANCE MAY PROVE TO BE
INACCURATE.
We were formed for the purpose of developing, constructing and operating our
Heavy Oil Processing Facility and have no operating history. Moreover, because
our Coker Project is not yet complete, we have no actual operating results. As
a result, the financing of our Coker Project is based upon certain assumptions
and financial projections regarding our revenues and operating, maintenance
and capital costs, including that Clark Refining & Marketing will exercise its
right to utilize our excess processing capacity.
Purvin & Gertz, in its role as an independent consultant, has reviewed the
Refinery Upgrade Project and prepared reports on the technical, environmental
and economic aspects of the Refinery Upgrade Project. These reports are
provided to you as Annexes B and C of this prospectus. The reports set forth
Purvin & Gertz's projections for our operations and include discussions of the
many assumptions utilized by Purvin & Gertz in preparing their projections.
Among the many assumptions used by Purvin & Gertz in developing these
projections are construction costs, operating expenses, market prices of
feedstocks and refined products, repair and maintenance costs, efficiency of
operations, the ability of Clark Refining & Marketing to perform its
contractual obligations, the market for our refined products if Clark Refining
& Marketing defaults in its product purchase obligations, tax payments,
inflation and capital costs.
These assumptions contain significant uncertainties. Although we and Purvin
& Gertz believe that the assumptions made are reasonable, neither we nor
Purvin & Gertz nor any other person assumes any responsibility for their
accuracy. Therefore, we can make no representation about the likely existence
of any particular future set of facts or circumstances. Purvin & Gertz's
projections are not necessarily an indication of our future performance. In
fact, our actual results will differ, perhaps materially, from those
projected. If our actual results are less favorable than those projected, or
if the assumptions Purvin & Gertz used in preparing their financial
projections prove to be incorrect, we may be unable to make payments on the
notes and our other debt when due.
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OPERATING RISKS
WE MAY NOT BE ABLE TO OPERATE ON A "STAND-ALONE" BASIS.
Our Heavy Oil Processing Facility was not designed to operate on a "stand-
alone" basis. Nevertheless, Purvin & Gertz has concluded that in the event of
bankruptcy or other material interruption in the operations of Clark Refining &
Marketing we would be able to operate economically. However, our dependence on
Clark Refining & Marketing would limit our ability to obtain feedstock, deliver
products and obtain other services and supplies from parties unaffiliated with
Clark Refining & Marketing. Thus, we cannot assure you that we would in fact be
able to operate on a stand-alone basis without Clark Refining & Marketing. We
refer you to the independent engineer's report produced by Purvin & Gertz
annexed to this prospectus as Annex B, which contains an analysis of our
ability to operate economically on a stand-alone basis.
OUR OPERATIONS INVOLVE MANY RISKS COMMON TO OTHER SIMILAR INDUSTRIAL
FACILITIES, INCLUDING TECHNOLOGY RISK, OPERATING RISK, AVAILABILITY RISK AND
THE RISK OF EVENTS BEYOND OUR CONTROL.
Our operations will involve many risks, such as the following:
. breakdown or failure of necessary equipment or processes;
. inability to obtain required materials such as Maya and hydrogen;
. inability to dispose of hazardous waste products produced by our
operations;
. the discovery of technological design defects; and
. the occurrence of events beyond our control, such as fires, explosions,
earthquakes, floods and changes in law and eminent domain proceedings.
The occurrence of the kinds of events listed above could significantly
decrease our revenues and/or significantly increase our costs and therefore
impair our ability to make payments on the notes and our other debt when due.
OUR INSURANCE COVERAGE MAY NOT BE ADEQUATE.
We will maintain customary insurance for our operations, including builder's
risk, commercial general liability, business interruption insurance and
contingent business interruption insurance. However, not all operating risks
are insurable and the insurance proceeds applicable to covered risks may not be
adequate to cover lost revenues, increased expenses or other costs related to
these occurrences. In addition, the insurance that we currently have may not be
available in the future at commercially reasonable rates.
OUR OPERATIONS ARE SUBJECT TO SUBSTANTIAL PERMITTING AND REGULATORY
REQUIREMENTS, AND OUR FAILURE TO COMPLY WITH THESE REQUIREMENTS COULD SUBJECT
US TO MATERIAL LIABILITY.
Like many operations in the oil and gas industry, our Coker Project is
required to obtain and maintain certain permits and to comply with constantly
changing provisions in numerous statutes and regulations relating to, among
other things, construction, improvements, business operations, the safety and
health of employees and the public, employment, hiring and anti-discrimination.
These requirements may impose significant additional costs on us, and may even
result in civil or criminal liability. There can be no assurance that we and
our contractors and suppliers will at all times be in compliance with all
applicable statutes and regulations or have all necessary permits in place, nor
can we assure you that we will be able to operate our Coker Project in
accordance with all our permits and approvals. Furthermore, because of the
integration of our Coker Project with the operations of the Port Arthur
refinery, failure by Clark Refining & Marketing to obtain and maintain all
necessary permits or to be in compliance at all times with applicable
regulations also could affect our financial condition or results of operations.
Any of these circumstances could impair our ability to make payments on the
notes and our other debt when due.
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RISKS ASSOCIATED WITH OUR RELIANCE ON CLARK REFINING & MARKETING
WE ARE RELYING ON CLARK REFINING & MARKETING AS OUR SOLE SOURCE OF REVENUE FOR
THE SALE OF OUR REFINED PRODUCTS.
We have entered into a product purchase agreement with Clark Refining &
Marketing pursuant to which Clark Refining & Marketing is obligated to purchase
all of our refined products tendered for delivery. We have not entered into any
arrangements with any other party for the sale of our refined products. Thus,
our source of revenue for the sale of our refined products will be payments by
Clark Refining & Marketing under our product purchase agreement and, if Clark
Refining & Marketing exercises its right of first refusal, processing fees from
Clark Refining & Marketing under our services and supply agreement. You should
note that under our product purchase agreement, Clark Refining & Marketing may
suspend its obligations to purchase our output if specified events beyond the
control of Clark Refining & Marketing occur, such as interruptions in the
delivery of crude oil to the Port Arthur refinery, adverse weather conditions,
labor disputes or changes in law. Furthermore, under specified circumstances,
Clark Refining & Marketing may terminate our product purchase agreement if we
fail to deliver the refined products substantially in accordance with the terms
of the agreement. If any of these events occur, or if Clark Refining &
Marketing should default on its purchase obligations, we and Purvin & Gertz
believe that a third-party market will be available for our refined products.
However, we cannot assure you that our operating margins will be sufficient to
enable us to make payments on the notes and our other debt when due.
WE ARE RELYING ON CLARK REFINING & MARKETING TO MANAGE OUR OPERATIONS.
We have entered into a services and supply agreement with Clark Refining &
Marketing pursuant to which Clark Refining & Marketing will manage our Heavy
Oil Processing Facility. In the event Clark Refining & Marketing fails to
perform its obligations under the services and supply agreement, we would need
to hire additional employees and/or enter into other arrangements to provide
for services and supplies previously provided by Clark Refining & Marketing. We
cannot give you any assurance that such employees and services will be readily
available and will have the skills and capacity necessary to operate our Heavy
Oil Processing Facility, or, if they are available, that they will be available
on terms as favorable as those of our services and supply agreement with Clark
Refining & Marketing. Thus, if Clark Refining & Marketing breaches its
obligations to us, or terminates our services and supply agreement, our
operating expenses could increase materially and we could be unable to make
payments on the notes and our other debt when due.
WE MAY HAVE CONFLICTS OF INTEREST UNDER OUR VARIOUS ARRANGEMENTS WITH CLARK
REFINING & MARKETING.
We have numerous contracts and relationships with Clark Refining & Marketing,
including our services and supply agreement, our product purchase agreement and
various leases. In negotiating these contracts, we and Clark Refining &
Marketing intended to provide terms that are substantially similar to those
that might have been obtained from unaffiliated third parties. However, we
cannot assure you that any of these arrangements actually meet that standard.
Furthermore, in carrying out its obligations under our services and supply,
product purchase and other contracts, including its obligations to resolve
disputes under those contracts, Clark Refining & Marketing may face conflicts
of interest in making decisions that affect us. Although Clark Refining &
Marketing has agreed to carry out its obligations to us in a manner that is
nondiscriminatory to us, as a practical matter our ability to monitor
compliance by Clark Refining & Marketing is limited. As a result, we cannot
guarantee that Clark Refining & Marketing will carry out its obligations to us
in a manner that is nondiscriminatory to us.
THE BANKRUPTCY OF CLARK REFINING & MARKETING COULD CAUSE OUR ASSETS AND
LIABILITIES TO BE CONSOLIDATED WITH THOSE OF CLARK REFINING & MARKETING AND
COULD PREVENT US FROM MAKING PAYMENT ON THE NOTES.
We have taken steps to maintain the legal existence of Port Arthur Coker
Company, Port Arthur Finance, Sabine River and Neches River independent from
that of Clark Refining & Marketing, Clark USA and Clark Refining Holdings.
However, in a bankruptcy filing by Clark Refining & Marketing, Clark Refining
Holdings or Clark USA, a court could, under the doctrine of substantive
consolidation, disregard our separate existence and order the consolidation of
our assets and liabilities with those of Clark Refining & Marketing, Clark
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Refining Holdings and Clark USA. If a court were to reach this conclusion, we
could be prevented from paying amounts due on the notes and our other debt when
due. Furthermore, a court could set aside certain payments previously made by
us to noteholders by finding that the distributions were preferential payments
made in violation of bankruptcy laws. Finally, even if a court were to decide
ultimately that our assets should not be consolidated with those of Clark
Refining & Marketing, Clark Refining Holdings and Clark USA, during the
pendency of the bankruptcy proceeding, we might be prevented from making
payments on the notes and our other debt when due.
We have received an opinion of our counsel to the effect that, subject to
specified facts, assumptions and qualifications, it would not be a proper
exercise by a court of its equitable discretion to disregard our separate
existence and to require the consolidation of our assets and liabilities with
the assets and liabilities of Clark Refining & Marketing, Clark Refining
Holdings or Clark USA in the event of the application of any bankruptcy law to
Clark Refining & Marketing or such affiliates. Notwithstanding this opinion, we
cannot assure you that a court exercising its equitable discretion would not
conclude that our assets and liabilities should be consolidated with those of
Clark Refining & Marketing, Clark Refining Holdings or Clark USA in a
proceeding under any bankruptcy law. The opinion also points out that the risk
of substantive consolidation may be higher in a situation in which unique
assets critical to the business operations and successful reorganization of the
bankrupt company--so called "core assets"--are held by a related entity and
there is relatively little judicial experience with respect to assets that may
be considered "core assets" of a debtor.
RISKS ASSOCIATED WITH OUR RELATIONSHIP WITH P.M.I. COMERCIO INTERNACIONAL
WE ARE HIGHLY DEPENDENT UPON P.M.I. COMERCIO INTERNACIONAL AND PEMEX FOR OUR
SUPPLY OF HEAVY SOUR CRUDE OIL.
Pursuant to our long term crude oil supply agreement, P.M.I. Comercio
Internacional will supply all heavy sour crude oil needed by us. P.M.I.
Comercio Internacional indirectly obtains its supply of heavy sour crude oil
under a separate supply arrangement with Pemex Exploracion y Produccion.
Therefore, P.M.I. Comercio Internacional's ability to deliver heavy sour crude
oil is influenced by the adequacy of Pemex Exploracion's crude oil reserves,
the estimates of which are not precise and are subject to revision at any time.
We have not entered into any other arrangements to supply us with heavy sour
crude oil. In the event P.M.I. Comercio Internacional were to terminate our
long term crude oil supply agreement or default on its supply obligations, we
would lose the benefits of our coker gross margin support mechanism and would
need to obtain heavy sour crude oil from another supplier. If either of these
events were to occur, we cannot guarantee you that an alternative supply of
crude oil would be available. Furthermore, even if we were able to obtain an
alternative supply of heavy sour crude oil, that supply may not be on terms as
favorable as those negotiated with P.M.I. Comercio Internacional. In addition,
the processing of oil supplied by a third party may require changes to our
Heavy Oil Processing Facility, which could require significant unbudgeted
capital expenditures. As a result, our ability to make payments on the notes
and our other debt when due may be impaired.
OUR SUPPLY OF HEAVY SOUR CRUDE OIL FROM P.M.I. COMERCIO INTERNACIONAL COULD BE
INTERRUPTED BY FORCE MAJEURE EVENTS.
P.M.I. Comercio Internacional's obligation to deliver heavy sour crude oil
under our long term crude oil supply agreement may be delayed or excused by the
occurrence of certain conditions and events beyond the control of P.M.I.
Comercio Internacional, such as the following:
. weather-related conditions;
. production or operational difficulties and blockades;
. embargoes or interruptions, declines or shortages of P.M.I. Comercio
Internacional's supply of Maya available for export from Mexico,
including shortages due to increased domestic demand and other national
or international political events; and
. laws, changes in laws, decrees, directives or actions, other than those
that are not common to other similar long term crude oil supply
agreements, of the government of Mexico.
29
<PAGE>
The occurrence of any force majeure event could excuse P.M.I. Comercio
Internacional from delivering heavy sour crude oil, and could therefore require
us to obtain heavy sour crude oil from another source. If this were to occur,
our ability to make payments on the notes and our other debt when due could be
impaired.
The government of Mexico may direct a reduction in our supply of crude oil so
long as that action is taken in common with proportionately equal supply
reductions under other long term crude oil supply agreements and the amount by
which it reduces the quantity of Maya to be sold to us shall first be applied
to reduce quantities of Maya scheduled for sale and delivery to the Port Arthur
refinery under any other crude oil supply agreement with us or any of our
affiliates. Mexico is not a member of the Organization of Petroleum Exporting
Countries, but in 1998 it agreed with the governments of Saudi Arabia and
Venezuela to reduce Mexico's exports of crude oil by 200,000 barrels per day.
In March 1999, Mexico further agreed to cut exports of crude oil by an
additional 125,000 barrels per day. As a consequence, during 1999, PEMEX
reduced its supply of oil under some oil supply contracts by invoking a force
majeure clause based on governmental action similar to one contained in our
long term crude oil supply agreement. We cannot guarantee that PEMEX will not
reduce our supply of crude oil by similarly invoking force majeure in our long
term crude oil supply agreement in the future.
WE MAY NOT BE ABLE TO ENFORCE CIVIL LIABILITIES AGAINST P.M.I. COMERCIO
INTERNACIONAL.
P.M.I. Comercio Internacional is organized under the laws of the United
Mexican States. PEMEX, P.M.I. Comercio Internacional's parent and guarantor of
P.M.I. Comercio Internacional's obligations under our long-term crude oil
supply agreement, is a public entity of the United Mexican States. All or a
substantial portion of the assets of PEMEX and P.M.I. Comercio Internacional
and their respective directors and officers are located outside the United
States. As a result, investors may not be able to serve process within the
United States upon P.M.I. Comercio Internacional, PEMEX or their respective
directors or officers, or to enforce against them, in United States courts, any
judgment based solely upon civil liability provisions of the laws of
jurisdictions other than the United Mexican States.
Furthermore, in some cases, private parties cannot sue governmental
authorities because the governmental authority claims the benefit of what is
known as "sovereign immunity." Although P.M.I. Comercio Internacional has
agreed in our long term crude oil supply agreement, and PEMEX has agreed in our
long term crude oil supply agreement guarantee, not to claim, and has waived,
any immunity from suit or other legal process, subject to some limitations,
there can be no assurance that either P.M.I. Comercio Internacional and/or
PEMEX will actually continue to do so in the future.
ENVIRONMENTAL RISKS
THE PORT ARTHUR REFINERY IS LOCATED ON A CONTAMINATED SITE. IF THE PREVIOUS
OWNERS AND OPERATORS DO NOT FULFILL THEIR REMEDIATION OBLIGATIONS, WE MAY INCUR
SUBSTANTIAL REMEDIATION COSTS.
Environmental laws typically provide that the owners or operators, including
lessees, of contaminated properties may be held liable for their remediation.
Such liability is typically joint and several, which means that any responsible
party can be held liable for all remedial costs, and can be imposed regardless
of whether the owner or operator caused the contamination. The Port Arthur
refinery is located on a contaminated site. Under the 1994 purchase agreement
between Clark Refining & Marketing and Chevron Products USA relating to the
Port Arthur refinery, Chevron retained environmental remediation obligations
regarding pre-closing contamination at over 97% of the refinery site. Clark
Refining & Marketing assumed responsibility for any remediation that is
required in and under the remaining approximately 3% of the refinery site,
which consists of specified areas that extend 25 to 100 feet from active
operating units, including soil and groundwater, and, Clark Refining &
Marketing has estimated its liability for remediation of groundwater and soil
in these areas at $27 million. Chevron is obligated to remediate the
contamination in the areas for which it has retained responsibility as and when
required by law, in accordance with remediation plans negotiated by Chevron and
the applicable federal or state agencies.
30
<PAGE>
No part of our Coker Project site is located within the portion of the Port
Arthur refinery site for which Chevron retains environmental remediation
obligations. We have estimated remedial costs relating to our Coker Project
site, which encompasses less than 50 acres of the total Port Arthur refinery
site surface area, at $1.6 million. Clark Refining & Marketing has agreed to
retain liability regarding contamination existing at the Coker Project site and
has indemnified us against such liabilities. However, if Clark Refining &
Marketing does not fulfill its remediation obligations, we could incur
substantial additional costs in remediating the contamination, which could
impair our ability to make payments on the notes and our other debt when due.
OUR FAILURE TO COMPLY WITH EXISTING AND FUTURE ENVIRONMENTAL LAWS AND
REGULATIONS COULD SUBJECT US TO MATERIAL LIABILITIES OR OTHER SANCTIONS.
Our operations are subject to numerous federal, state and local environmental
laws and regulations, such as those governing discharges to air and water, the
handling and disposal of solid and hazardous wastes and the remediation of
contamination. Although Clark Refining & Marketing has agreed in our services
and supply agreement to manage our Heavy Oil Processing Facility and to comply
at our cost with all applicable environmental laws and regulations, we cannot
guarantee you that this will always be the case. Any failure to comply with
these environmental requirements could subject us to, among other things, civil
liabilities, criminal penalties and the temporary or permanent shutdown of our
operations.
We cannot predict with certainty the future costs of environmental compliance
because of frequently changing compliance standards and technology. We expect
that future regulations or changes in existing environmental laws and
regulations or other interpretation may subject our operations to increasingly
stringent standards. Compliance with these requirements may make it necessary,
at costs that may be substantial, for us to undertake new measures in
connection with the storage, handling, transport, treatment or disposal of
hazardous materials, petroleum by-products and wastes and the remediation of
contamination. The costs of such actions could impair our financial condition,
results of operations or cash flows and accordingly could impair our ability to
make payments on the notes and our other debt when due.
FINANCING RISKS
OUR EQUITY AND DEBT FUNDING SOURCES MAY BE INADEQUATE AND ARE SUBJECT TO
EXTENSIVE CONDITIONS PRECEDENT THAT MAY NOT BE SATISFIED AND MAY CAUSE US TO BE
UNABLE TO PAY OUR CONSTRUCTION COSTS AND OUR DEBT SERVICE OBLIGATIONS.
We expect initial funding commitments to be sufficient to pay amounts owing
to our contractors for the construction of our Coker Project and to fund all
other costs associated with developing, financing, constructing and
commissioning our Coker Project, including an allowance for contingencies.
However, we cannot assure you that no circumstances will arise that will
require additional funding beyond that for which we have obtained commitments.
You should also note that the equity commitments of our sponsors are limited to
approximately $122 million for Blackstone and approximately $13 million for
Occidental, and there is no other recourse to Blackstone or Occidental either
prior to or after completion of our Coker Project. In addition, drawdowns under
many of our funding commitments are subject to extensive conditions precedent,
including the absence of any material adverse changes. We cannot guarantee that
all the applicable conditions precedent for drawdowns under each of our funding
commitments will be satisfied at all times during or after the construction
period. Therefore, we may be unable to draw down these funds, which could cause
us to be unable to meet our payment obligations to our contractors and/or our
debt service obligations.
IF WE DEFAULT ON THE NOTES AFTER COMPLETION, YOUR RECOURSE WILL BE LIMITED TO
THE ASSETS AND CASH FLOWS OF OUR COKER PROJECT.
After completion of our Coker Project, our assets and cash flows from our
operations will be our sole source for repayment of the notes and our other
debt. Except for Sabine River and Neches River, no other owner or other
affiliate of us, including Clark Refining & Marketing, will be responsible for
making payments on the notes or will guarantee in any way the payment of the
notes. In the event that we default in our payment
31
<PAGE>
of amounts due on the notes, we cannot guarantee to you that the proceeds
realized upon a foreclosure and sale of our Coker Project will be sufficient to
pay amounts then outstanding on the notes. Thus, our ability to make payments
on the notes and our other debt when due will be entirely dependent upon our
ability to construct our Coker Project successfully and to operate in a manner
that provides sufficient cash flow to make payment on the notes and our other
debt when due.
THE COLLATERAL SECURING THE NOTES MAY BE INSUFFICIENT TO PAY AMOUNTS DUE ON THE
NOTES IN THE EVENT OF A FORECLOSURE.
The outstanding notes are, and when issued the exchange notes will be,
secured by substantially all our assets and rights and certain other assets and
rights of other parties. You should note, however, that while the guarantee
pursuant to which PEMEX has guaranteed the obligations of P.M.I. Comercio
Internacional under our long term crude oil supply agreement is part of the
collateral, the supply agreement between P.M.I. Comercio Internacional and
Pemex Exploracion is not part of the collateral securing the notes and other
senior debt. In addition, there may be limitations on our ability to create or
perfect security interests in some assets and rights such as governmental
permits or technology licenses.
We cannot assure you that if we default on the notes and you foreclose on and
sell our assets you will receive proceeds to pay all amounts that we owe you on
the notes. Furthermore, your ability to foreclose on the collateral will be
subject to practical problems associated with the realization of the security
interests such as obtaining the requisite secured party consent to foreclose on
the collateral. Although we have implemented procedures to support the validity
and enforceability of the security interests, we cannot assure you that your
collateral trustee will be able to realize upon the collateral without
difficulty or delay. We cannot assure you that if you try to foreclose on our
assets, you will receive all the third-party approvals that you need.
THE COLLATERAL SECURING THE NOTES IS SHARED WITH OUR OTHER SENIOR SECURED
LENDERS, AND THIS MAY CAUSE THE COLLATERAL TO BE AN INSUFFICIENT SOURCE FROM
WHICH TO PAY AMOUNTS DUE ON THE NOTES.
We have substantial other senior secured indebtedness that ranks equally and
ratably with the notes and is entitled to the benefits of a common security
package. Our other senior secured indebtedness includes the following:
. construction and term loan facility;
. working capital facility; and
. reimbursement obligations resulting from payments under the guaranty
insurance policy relating to our payment obligations under our long term
crude oil supply agreement.
The collateral provided for your benefit will be shared, on an equal and
ratable basis, with the other senior secured parties. You will share control
over enforcement of the common security package with all the other senior
lenders. In specified circumstances, the direction of a specified percentage of
all of the senior lenders, including you, will be required to initiate
foreclosure and you should not expect that the noteholders in those
circumstances will themselves constitute the required percentage for control of
that action.
For a substantial period during which the notes will be outstanding, amounts
due to other senior secured parties will also remain outstanding and be secured
by the same collateral. We cannot assure you that, upon the occurrence of an
event of default and acceleration, the exercise of remedies, including
foreclosing on the collateral, would provide funds sufficient to pay all or
even a substantial portion of the outstanding principal and accrued interest on
the notes as well as all amounts due to the other secured parties.
WE MAY INCUR ADDITIONAL DEBT, WHICH MAY REDUCE THE BENEFITS OF THE COLLATERAL.
Subject to the limitations set forth in the common security agreement, we are
permitted to incur additional indebtedness. This additional indebtedness may
rank equally with the notes and share ratably in the collateral that secures
the notes and thus may increase the risk that we will be unable to make
payments on the notes and our other debt when due. This may reduce the benefits
of the collateral to you and your ability to control certain actions taken with
respect to the collateral.
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<PAGE>
THERE IS NO EXISTING MARKET FOR THE EXCHANGE NOTES, AND WE CANNOT ASSURE YOU
THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE EXCHANGE NOTES OR THAT YOU
WILL BE ABLE TO SELL YOUR EXCHANGE NOTES.
There is no existing market for the exchange notes, and there can be no
assurance as to the liquidity of any markets that may develop for the exchange
notes, your ability to sell your exchange notes or the prices at which you
would be able to sell your exchange notes. Future trading prices of the
exchange notes will depend on many factors, including, among other things,
prevailing interest rates, our operating results and the market for similar
securities. We understand that the initial purchasers of the outstanding notes
currently intend to make a market in the exchange notes. However, they are not
obligated to do so and any market making may be discontinued at any time
without notice. We do not intend to apply for a listing of the exchange notes
on any securities exchange or on any automated dealer quotation system.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused volatility in prices. It is possible that the
market for the exchange notes will be subject to disruptions. Any such
disruptions may have a negative effect on you, as a holder of the exchange
notes, regardless of our prospects and financial performance.
IF YOU CHOOSE NOT TO EXCHANGE YOUR OUTSTANDING NOTES, THE PRESENT TRANSFER
RESTRICTIONS WILL REMAIN IN FORCE AND THE MARKET PRICE OF YOUR OUTSTANDING
NOTES COULD DECLINE.
If you do not exchange your outstanding notes for exchange notes under the
exchange offer, then you will continue to be subject to the transfer
restrictions on the outstanding notes as set forth in the offering circular
distributed in connection with the offering of the outstanding notes. In
general, the outstanding notes may not be offered or sold unless they are
registered or exempt from registration under the Securities Act and applicable
state securities laws. Except as required by the registration rights agreement,
we do not intend to register resales of the outstanding notes under the
Securities Act. You should refer to "Prospectus Summary --Summary of the
Exchange Offer" and "The Exchange Offer" for information about how to tender
your outstanding notes.
The tender of outstanding notes under the exchange offer will reduce the
principal amount of the outstanding notes outstanding, which may have an
adverse effect upon, and increase the volatility of, the market price of the
outstanding notes due to a reduction in liquidity.
33
<PAGE>
USE OF PROCEEDS
Port Arthur Finance will not receive any cash proceeds from the issuance of
the exchange notes. In consideration for issuing the exchange notes as
contemplated in this prospectus, Port Arthur Finance will receive in exchange a
like principal amount of outstanding notes, the terms of which are identical in
all material respects to the exchange notes. The outstanding notes surrendered
in exchange for the exchange notes will be retired and canceled and cannot be
reissued. Accordingly, issuance of the exchange notes will not result in any
change in the capitalization of Port Arthur Finance. See "Financing Plan" for a
discussion of the use of proceeds from the sale of the outstanding notes.
34
<PAGE>
FINANCING PLAN
We estimate that the total costs for our Coker Project will be approximately
$715 million. Our sources of funds are described as follows.
Equity Contributions and Commitments
Blackstone and Occidental have agreed to make capital contributions in an
aggregate maximum amount of approximately $135 million under capital
contribution agreements. The lenders of our senior debt have the right to
enforce the obligations of Blackstone and Occidental to make capital
contributions under these agreements.
Under these capital contribution agreements, when we issued the outstanding
notes, Blackstone and Occidental made initial equity contributions in the
aggregate amount of $20 million which flowed down through our ownership
structure to us and have made approximately $35 million in additional equity
contributions since such time. During the remaining construction period,
Blackstone and Occidental will make additional periodic equity contributions in
aggregate amounts of approximately $72 million and approximately $8 million,
respectively. These additional equity contributions will be made on a ratable
basis with drawings under the secured construction and term loan facility
described below to pay for construction costs and will flow down through our
ownership structure to us. Under these capital contribution agreements, if
Blackstone or Occidental is excused by operation of law in a bankruptcy
proceeding of us, either Sabine River, Neches River or Clark Refining Holdings
or, for any other reason, Blackstone and Occidental, will be required either to
make subordinated loans to us or to purchase subordinate participations in the
senior debt, in either case in the amounts of their respective capital
contribution commitments.
Outstanding Notes and Existing Bank Credit Facilities
Approximately $580 million of the budgeted cost of developing, financing and
constructing our Coker Project is being funded with senior debt. Our senior
debt consists of $255 million from the sale of the outstanding notes and $325
million from borrowings under the bank credit facilities described below.
When we issued the outstanding notes, we also entered into a construction and
term loan agreement with a syndicate of lenders establishing a secured
construction and term loan facility. The construction and term loan facility is
split into a Tranche A of $225 million and a Tranche B of $100 million, with
Tranche A loans having a term of 7.5 years and Tranche B loans having a term of
8 years. Under specified circumstances, the aggregate amount of the
construction and term loan facility may be reallocated between the tranches
with our consent, which may not be unreasonably withheld. In November 1999, the
lenders under our construction and term loan facility requested that we
reallocate $5 million from Tranche A to Tranche B. We expect this reallocation
to occur in January 2000. Also, under specified circumstances, the bank
arrangers, with our consent, which may not be unreasonably withheld, may
increase the margin on the construction and term loan facility upon a
reaffirmation from Moody's and Standard & Poor's of our then current rating
after giving effect to such increase. We have also obtained a secured working
capital facility of up to $75 million with a term of up to 7.5 years, $40
million of which we are in the process of replacing with an insurance product
the provider of which would be treated as a senior secured lender.
Port Arthur Finance transferred the net proceeds of the offering of the
outstanding notes to Port Arthur Coker Company pursuant to an intercompany note
and will transfer the proceeds of drawings under the bank credit facilities to
Port Arthur Coker Company pursuant to the intercompany note. Port Arthur Coker
Company has, or will, use such proceeds principally to pay part of the costs of
our Coker Project and certain related items, including (1) amounts payable
under our construction contract, (2) other asset acquisition costs, (3) initial
start-up costs and working capital requirements, (4) financing costs, legal and
other transaction costs, taxes and interest during construction, (5) other
costs and expenses associated with our Coker Project and (6) establishment of a
construction contingency fund. The net proceeds from the sale of the
outstanding notes, after deducting discounts offered to the initial purchasers
and related transaction expenses payable, was approximately $244 million. See
"Financing Plan," "Management's Discussion and Analysis of Financial Condition"
and "Plan of Distribution."
Winterthur Insurance Policies
Winterthur, on behalf of a group of insurers, arranged a $150 million oil
payment guaranty insurance policy to provide payment security for crude oil
purchases by us from P.M.I. Comercio Internacional.
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<PAGE>
In order to accommodate a financing structure that includes the bank credit
facilities, the Winterthur oil payment guaranty insurance policy and the notes,
we have entered into a common security agreement which contains, among other
things, common covenants, representations and warranties, events of default and
remedies applicable to all our senior debt and reimbursement obligations to
Winterthur relating to its oil payment guaranty insurance policy, including the
notes and any loans made under our bank credit facilities. See "Description of
Our Principal Financing Documents--Common Security Agreement."
The following table sets forth the estimated sources and uses of funds in
connection with the development, construction and financing of our Coker
Project through completion and commercial operation of our Heavy Oil Processing
Facility, including the notes. We cannot assure you that these estimates will
correspond to the actual uses of funds to complete our Coker Project. Proceeds
from the sale of the outstanding notes were deposited into an account called
the bond proceeds account and must be applied in accordance with the financing
documents. As required under our construction and term loan facility, the
entire amount of Tranche B loans were drawndown in October 1999 and $35.4
million of additional equity was contributed by Blackstone and Occidental.
These amounts were deposited into an account called the bank loan drawdown and
equity funding account and will be applied in accordance with the financing
documents. See "Description of Our Principal Financing Documents--Common
Security Agreement--Account Structure."
<TABLE>
<CAPTION>
Amounts
------------------------
(in millions of dollars)
<S> <C> <C>
Sources
Construction and term loans................ $325 45.5%
The notes.................................. 255 35.6
Equity contributions(1).................... 135 18.9
---- -----
Total Sources................................ $715 100.0%
==== =====
Uses
Construction contract(2)................... $544 76.1%
Coker Project contingency.................. 28 3.9
Net interest during construction........... 89 12.5
Start-up, development, asset acquisition
and other construction costs(3)........... 22 3.1
Financing costs, legal and other
transaction costs(4)...................... 32 4.4
---- -----
Total Uses................................... $715 100.0%
==== =====
</TABLE>
- --------
(1) Consists of cash equity contributions by Blackstone and Occidental
described under "--Equity Contributions and Commitments" above.
(2) Includes payment to Clark Refining & Marketing for work in progress related
to our Coker Project.
(3) Includes compensation of approximately $2 million to Clark Refining &
Marketing for other assets transferred to us, including our long term crude
oil supply agreement.
(4) Includes discounts offered, and fees and expenses payable to the initial
purchasers and other related expenses, legal services and printing costs.
We believe that the proceeds of the sale of the outstanding notes, equity
contributions and monies borrowed under our construction and term loan facility
will provide sufficient funds to develop, construct and finance our Coker
Project.
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Port Arthur Coker
Company as of September 30, 1999, and as adjusted to give effect to the
issuance and sale of the outstanding notes and the initial equity
contributions, and the application of the estimated proceeds therefrom as
described under "Use of Proceeds." The following table should be read in
conjunction with our selected financial information and the base case financial
model included in Purvin & Gertz's Independent Engineer's Report annexed hereto
as Annex B. See "Selected Financial Information."
<TABLE>
<CAPTION>
September 30,
1999(1)
--------------
(in thousands)
<S> <C>
Construction and Term Loans...................................... $ --
Notes............................................................ 255,000
--------
Total Senior Debt.............................................. 255,000
Equity Contributions........................................... 19,950
--------
Total Capitalization......................................... $274,950
========
</TABLE>
(1) As of October 31, 1999, $100 million of the Tranche B construction and
term loan facility was drawn and additional equity contributions of $35
million were received.
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<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition."
Port Arthur Coker Company and Subsidiary
The selected financial data presented below for Port Arthur Coker Company and
its subsidiary represents our consolidated balance sheet as of September 30,
1999. We are in our development stage and have no operating revenue or
expenses. Accordingly, only balance sheet data is presented, and no ratio of
earnings to fixed charges is presented. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition"
and the consolidated financial statements and related notes included elsewhere
herein.
<TABLE>
<CAPTION>
September 30,
1999
--------------
(in thousands)
<S> <C>
Assets
Cash and cash equivalents..................................... $ 1
Prepaid expenses and other.................................... 1,220
--------
Total current assets........................................ 1,221
Property, plant and equipment, net............................ 314,882
Cash restricted for capital additions......................... 47,836
Other assets.................................................. 757
--------
$364,696
========
Liabilities and Partners' Equity
Accounts payable.............................................. $ 84,647
Payables with affiliates...................................... 607
Accrued expenses and other.................................... 4,492
--------
Total current liabilities................................... 89,746
Long-term debt................................................ 255,000
Partners' capital............................................. 19,950
--------
$364,696
========
</TABLE>
Port Arthur Finance Corp.
We have not included in this prospectus separate financial information for
Port Arthur Finance, however, the consolidated financial statements for Port
Arthur Coker Company include Port Arthur Finance as a consolidated subsidiary.
Its organizational documents do not permit it to engage in any activity other
than issuing the notes and borrowing under our bank credit facilities, and
remitting the proceeds thereof to Port Arthur Coker Company. Port Arthur
Finance has no material assets, no liabilities and no operations as of the date
hereof. In issuing the notes and borrowing under our bank credit facilities, it
is acting as an agent of Port Arthur Coker Company.
Sabine River Holding Corp.
We have not included in this prospectus separate financial information for
Sabine River. Its organizational documents do not permit it to engage in any
activity other than issuing its guarantee of the notes and the bank loans,
acting as a partner of Port Arthur Coker Company and taking any other actions
necessary in connection with the transactions described in this prospectus.
Sabine River has no material assets, no liabilities and no operations as of the
date hereof other than its investment in PACC.
Neches River Holding Corp.
We have not included in this prospectus separate financial information for
Neches River. Its organizational documents do not permit it to engage in any
activity other than issuing its guarantee of the notes and the bank loans,
acting as a partner of Port Arthur Coker Company and taking any other actions
necessary in connection with the transactions described in this prospectus.
Neches River has no material assets, no liabilities and no operations as of the
date hereof other than its investment in PACC.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The following discussion should be read in conjunction with "Selected
Financial Information," "Annex B--Independent Engineer's Report" and "Annex C--
Crude Oil and Refined Products Market Report."
General
We were formed to construct, own or lease, operate and maintain our Heavy Oil
Processing Facility. Since our inception, we have been in the pre-operation
stage and have had no operating revenues. The total cost to us of our Coker
Project, including development, property acquisitions, construction,
capitalized interest, testing and start-up, is estimated to be approximately
$715 million, including allowance for estimated price escalation and
contingencies.
Operations to Date
Clark Refining & Marketing formally initiated the Refinery Upgrade Project in
April 1998 after entering into the long term crude oil supply agreement with
P.M.I. Comercio Internacional in March 1998. Construction began in September
1998. When we issued the outstanding notes, Clark Refining & Marketing assigned
to us all its rights and obligations under the long term crude oil supply
agreement, including the obligation to complete the Refinery Upgrade Project,
and we purchased the work in progress relating to our Coker Project. See
"Description of Our Principal Project Documents--Long Term Crude Oil Supply
Agreement."
The work on our Coker Project is well advanced. As of September 1999, 98% of
major equipment procurement, 91% of total materials procurement and 86% of
detailed design and engineering were complete and construction was well under
way. Construction activities to date have included site preparation,
foundations and footings installation, major equipment installation and pipe
rack construction. In June 1999, the six coke drums for our new delayed coking
unit arrived at the Port Arthur refinery and in October 1999 were installed in
their support structures. In September 1999, approximately 260 people were
working on design and engineering and approximately 450 people are working on
construction of the Refinery Upgrade Project.
Under our construction contract, Foster Wheeler USA is obligated to perform
the engineering, design, procurement, manufacture, construction, erection,
installation and testing of our Coker Project. Under the construction contract,
we are required to pay Foster Wheeler USA the fixed sum of approximately $544
million in installments to be based on their progress in completing our Coker
Project. This payment to Foster Wheeler USA has been reduced by $157.1 million,
the amount Clark Refining & Marketing had already paid Foster Wheeler USA for
work performed to date on our Coker Project.
When we issued the outstanding notes, we used a portion of the proceeds of
our senior debt and equity contributions to make the following payments to
Clark Refining & Marketing:
<TABLE>
<S> <C>
Payment for work in progress related to our Coker Project--con-
struction contract............................................... $157,100,000
Payment for permits and the long term crude oil supply agreement.. 2,175,000
------------
Total........................................................... $159,275,000
============
</TABLE>
Liquidity and Capital Resources
Prior to the completion and commercial operation of our Heavy Oil Processing
Facility, we expect thatthe cash available to us will consist principally of
equity contributions of up to $135 million, proceeds from the offering of the
outstanding notes of $255 million and up to $325 million in proceeds from
borrowings under our bank credit facilities, together with interest earnings on
those amounts. We believe that these amounts are sufficient to fund the
development, construction and financing costs of our Coker Project.
39
<PAGE>
During the operating period, our revenues will include revenues from sales of
products to Clark Refining & Marketing under the product purchase agreement and
processing fees paid by Clark Refining & Marketing under the services and
supply agreement. We have also obtained a working capital facility of up to $75
million from a syndicate of lenders, some of which are the same commercial
banks that are providing the construction and term loan facility. Up to $40
million of our working capital facility may be used to provide the
"Compensating Letter of Credit" required under our long term crude oil supply
agreement. We are in the process of replacing this letter of credit with an
insurance product. The proceeds of any borrowing under this working capital
facility will be used primarily for issuing letters of credit for purchase of
crude oil other than Maya and to meet our other working capital needs.
In order to fulfill our obligation to provide security to P.M.I. Comercio
Internacional for our obligation to pay for shipments of Maya under the long
term crude oil supply agreement, we obtained from Winterthur an oil payment
guaranty insurance policy for the benefit of P.M.I. Comercio Internacional.
This oil payment guaranty insurance policy is in the amount of up to $150
million and will be a source of payment to P.M.I. Comercio Internacional if we
failed to pay P.M.I. Comercio Internacional for one or more shipments of Maya.
Under our senior debt documents, any payments by Winterthur on this policy are
required to be reimbursed by us. This reimbursement obligation to Winterthur
has a priority claim on all of the collateral for the senior debt equal to the
noteholders and holders of our other senior debt, except in certain
circumstances in which it has a senior claim to these parties. We describe
these priorities in greater detail in our description of the Intercreditor
Agreement under "Description of Our Principal Financing Documents--Guaranty
Insurance Policy and Reimbursement Agreement."
Under our senior debt documents, we are also required to establish a debt
service reserve account at the time our Coker Project is substantially complete
in an amount equal to the next semiannual payment of principal and interest
coming due from time to time. In lieu of depositing funds into this reserve
account at substantial completion, we have arranged for Winterthur to provide a
separate debt service reserve insurance policy in the maximum amount of $60
million for a period of approximately five years from substantial completion of
our Coker Project. Payments will be made under this policy to pay debt service
to the extent that we do not have sufficient funds available to make a debt
service payment on any scheduled semiannual payment date during the term of the
policy. The term of the policy commences at substantial completion of our Coker
Project and ends on the tenth semiannual payment date after substantial
completion, unless it terminates early because our debt service reserve account
is funded to the required amount. The maximum liability of Winterthur under its
policy is reduced as we make deposits into the debt service reserve account. On
the sixth semiannual payment date after substantial completion, and on each of
the next four semiannual payment dates, we are required to deposit, out of
available funds for that purpose, $12 million into the debt service reserve
account. In addition, until the debt service reserve account contains the
required amount, we are required to make deposits into the debt service reserve
account equal to all of our excess cash flow that remains after we apply 75% of
excess cash flow to prepay senior debt. Once the debt service reserve account
contains the required amount, the Winterthur policy will terminate.
When we issued the outstanding notes, we obtained business interruption and
contingent business interruption insurance for our Heavy Oil Processing
Facility.
We may also incur additional senior debt or subordinated debt provided that
it complies with the terms and conditions set forth in the common security
agreement. See "Description of Our Principal Financing Documents--Common
Security Agreement."
Accounts
The common security agreement requires that all of our bank accounts, with
the exception of an unsecured account for up to 30 days' operating costs, be
secured for the benefit of our senior lenders, including you. We are required
to maintain separate accounts for specified purposes. Deposits and withdrawals
from these accounts may only be made in accordance with the terms of our
financing documents that specify the order in which our revenues are applied
and the order in which our expenses are paid. We describe these accounts, and
40
<PAGE>
the maximum amounts required to be deposited in them, in greater detail under
"Description of Our Principal Financing Documents--Common Security Agreement--
Account Structure."
Quantitative and Qualitative Disclosures About Market Risk
From time to time, we expect to hold market risk sensitive instruments and
positions, such as our inventory of crude oil and refined products. The market
risk inherent in our market risk sensitive instruments and positions is the
potential loss from adverse changes in commodity prices and interest rates.
None of our market risk sensitive instruments are held for speculative trading.
Commodity Risk
Our feedstocks and refined products are principally commodities and the
pricing of such feedstocks and refined products under our services and supply
agreement and product purchase agreement is intended to reflect market-based
pricing. As a result, our operating cash flows and earnings will be
significantly affected by a variety of factors beyond our control, including
the supply of, and demand for, crude oil, gasoline and other refined products
which, in turn, depend on, among other factors, changes in domestic and foreign
economic conditions, weather patterns, political affairs, crude oil production
levels, the rate of industry investments, the availability of imports, the
marketing of competitive fuels and the extent of government regulations.
Purvin & Gertz, the independent engineer, has set forth in its Independent
Engineer's Report annexed to this prospectus as Annex B, certain analysis of
the impact of the changes in prices of crude oil and refined products on our
operating cash flow. We believe that their analysis has been made on a
reasonable basis.
We expect to utilize limited risk management tools to mitigate risk
associated with fluctuations in petroleum prices on our normal operating
petroleum inventories. We believe this policy is appropriate since inventories
are required to operate the business and are expected to be owned for an
extended period of time. We believe the cost of using such tools to manage
short-term fluctuations outweigh the benefits. In addition, the common security
agreement limits our ability to use those tools.
We may occasionally use strategies to minimize the impact on profitability of
volatility in feedstock costs and refined product prices. These strategies will
generally involve the purchase and sale of exchange-traded, energy-related
futures and options with a duration of six months or less. In addition, we, to
a lesser extent, may use energy swap agreements similar to those traded on the
exchanges, such as crack spreads and crude oil options, to better match the
specific price movements in our markets as opposed to the delivery point of the
exchange-traded contract. These strategies are designed to minimize, on a
short-term basis, our exposure to fluctuations in refining margins. The number
of barrels of crude oil and refined products covered by such contracts will
vary from time to time. These purchases and sales will be closely managed and
be subject to internally established risk standards. The results of these
hedging activities will affect refining costs of sales. We do not intend to
engage in speculative futures or derivative transactions.
Interest Rate Risk
Our long term debt will be subject to interest rate risk. We will manage this
rate risk by maintaining a mix of long term debt with fixed and floating rates.
A 1% change in the fair market value of long term debt would result in a $5.8
million change in the fair value of our long term debt. We will be subject to
interest rate risk on the floating rate bank term debt, but we will have the
ability to call our floating rate debt. Under the common security agreement we
may be required to hedge a substantial portion of our floating rate exposure
under our secured construction and term loan facility.
Year 2000 Readiness
As has been widely reported, many computer systems process dates based on two
digits for the year of a transaction and may be unable to process dates in the
year 2000 and beyond. There are many risks associated
41
<PAGE>
with the year 2000 compliance issue, including, but not limited, to the
possible failure of our systems and hardware with embedded applications. Any
such failure could result in a delay in completing our Coker Project.
The failure of third parties (including our contractors, vendors, utilities
and customers) to remedy year 2000 problems may also cause business
interruptions or shutdowns, financial loss, regulatory actions, reputational
harm or legal liability. In particular, any failures by (1) Clark Refining &
Marketing, which will be responsible for the management of our Heavy Oil
Processing Facility and will purchase all our refined products, (2) Foster
Wheeler USA, as contractor under the construction contract or (3) P.M.I.
Comercio Internacional, as our principal supplier of oil, may have a material
adverse effect on our businesses and operations.
Clark Refining & Marketing began significant efforts to address its exposures
related to the year 2000 issue in 1997 in order to operate and properly process
information after December 31, 1999. Clark Refining & Marketing has expended
$5.2 million from inception of its year 2000 systems remediation program
through September 30, 1999. Clark Refining & Marketing believes that as of
October 1999 its mission critical embedded processors at refineries and mission
critical systems, including hardware and software, were ready for the year
2000. In addition, its mission critical business partners had represented that
their mission critical systems were remediated. In the event Clark Refining &
Marketing incurs year 2000-related problems with its mission critical systems
or processes, contingency plans have been developed to handle such occurrences.
More information on Clark Refining & Marketing's year 2000 program is discussed
in Clark Refining & Marketing's Annual Report on Form 10-K/A for the year ended
December 31, 1998.
The following information concerning Foster Wheeler Corporation is based
solely on and derived solely from their annual report on Form 10-K for the year
ended December 31, 1998, and their quarterly report on Form 10-Q for the third
quarter of 1999, filed with the Commission. We have not conducted any
independent investigation in this regard and therefore cannot assure the
accuracy or completeness of such information.
Foster Wheeler Corporation and its subsidiaries initiated year 2000
activities in 1996. In 1997, a formal year 2000 problem management strategy was
prepared. The primary computerized reporting and control system used by Foster
Wheeler Corporation and most of its subsidiaries, which was provided by J.D.
Edwards, has been confirmed by the vendor to be year 2000 compliant. Although
Foster Wheeler Corporation and its subsidiaries expect to be ready to continue
their business activities without interruption by a year 2000 problem, they
recognize that they depend on outsiders (such as suppliers, contractors and
utility companies) to provide various goods and services necessary for doing
business. Foster Wheeler Corporation has developed a contingency plan for
itself, and has required each of its subsidiaries to do likewise. Each plan
will address alternative arrangements to cope with year 2000 problems caused by
others, and back-up strategies to follow if a subsidiary's software or
equipment does not perform properly, even though it appears now to be year 2000
compliant. Most subsidiaries of Foster Wheeler Corporation completed their
contingency plans by late September 1999 and the few that did not were expected
to complete their plans by the end of November 1999. The failure to correct a
year 2000 problem could result in an interruption in, or a failure of, certain
normal business activities or operations. Foster Wheeler Corporation believes
that the implementation of new business systems and the complete implementation
of the business continuation plan should reduce the possibility of significant
interruptions of normal operation.
We anticipate that our future year 2000 related costs will not have a
material impact on our financial position or results of operations. See "Risk
Factors--Construction Risks."
42
<PAGE>
THE U.S. PETROLEUM REFINING INDUSTRY AND REFINERY CONFIGURATION
Background
The profitability of an oil refinery is determined, in large part, by
refining margins, the spread between prices for refined products such as
gasoline, diesel fuel and jet fuel, and costs of crude oil. The refining margin
is driven by the supply and demand for petroleum commodities. Refinery
profitability is also influenced by the equipment configuration of the
refinery, the refinery's operating cost structure and the refinery's access to
crude oil and refined product markets.
Demand for light refined products (gasoline, diesel, kerosene/jet fuel) grew
at an annual rate of 4.2% from 1960 to 1973, according to the U.S. Department
of Energy. However, demand for light refined products declined by 0.5% per year
from 1973 to 1983. We believe that the combination of high oil prices for
petroleum products due to the oil shocks of the early 1970's and the late
1970's, environmental regulations favoring cleaner burning fuels and gains in
fuel efficiency caused consumption of light refined products to decrease. From
1983 through 1998, light refined product demand increased at a rate of 1.6% per
year and, from 1993 through 1998, at 2.1% per year. We believe the renewed
growth in light refined product demand is due to the expansion of U.S. vehicle
fleet miles driven, increased seat miles flown on U.S. airlines and the reduced
improvement in vehicle fuel efficiency due to consumer preference for light
trucks and sport-utility vehicles.
Demand for heavy refined products (residual and other heavy oil) grew at an
annual rate of 4.0% from 1960 to 1978, according to the U.S. Department of
Energy. We believe that the introduction of regulations restricting the use of
residual oil in the late 1970's drastically reduced demand for residual oil, as
demand decreased from 3 million barrels per day in 1978 to 0.8 million barrels
per day in 1998, an annual decrease of 6.4%. During this same period, overall
heavy refined product demand has decreased at only approximately 1% per year.
From 1965 through 1978, crude oil distillation capacity utilization rates
averaged approximately 89%, according to the U.S. Department of Energy. We
believe that sagging demand for light and heavy refined products was the
primary cause that utilization rates fell to 67% in 1981. U.S. crude oil
distillation capacity decreased from 18.1 million barrels per day in 1980 to
15.9 million barrels per day in 1998, according to the Oil & Gas Journal, as
more than 40% of the refineries in the United States closed during this period.
As a result of this decrease in capacity and the renewed increase in demand,
U.S. crude oil distillation utilization rates increased during the 1980s and
1990s to approximately 95% in 1998. We believe U.S. crude oil distillation
utilization rates may be approaching long term sustainable maximums due to the
requirement for routine maintenance and the likelihood of unplanned downtime.
Industry Outlook
According to Purvin & Gertz, annual growth in refined product demand in the
U.S. is expected to average over 1.2% through 2015. Growth in overall
distillate is expected to average near 2% over the next decade, before slowing
to about 1.5% through the 2010 to 2015 period. Gasoline demand growth is
expected to average 1% through 2015. We believe this growth reflects the
continuing expansion of U.S. vehicle fleet miles driven, increased seat-miles
flown on U.S. airlines with an offset for modest improvements in vehicle
efficiency.
Purvin & Gertz expects that total vehicle miles will increase by
approximately 2.7% per year until the end of the decade. Thereafter, growth in
vehicle miles is expected to average in the 1.7% range through 2015. Demand per
capita for gasoline is expected to decrease over the forecasted period largely
as a result of efficiency improvement and continuing increases in per capita
miles traveled. Purvin & Gertz forecasts that between 1998 and 2015 new car
efficiency will improve by 5.3 miles per gallon.
Purvin & Gertz also expects diesel and jet fuel demand to exhibit the
strongest light refined product demand growth with 2% per year growth
throughout the next decade. Demand for residual fuel is expected to continue
declining trends throughout the next decade. Demand for all other petroleum
products, including other refined products and natural gas liquids, is expected
to increase at a rate of approximately 1.1% during the next 15 years.
43
<PAGE>
The following table summarizes the historical and expected growth patterns in
demand for refined petroleum products.
<TABLE>
<CAPTION>
Annual %
Change
1995 1996 1997 1998 1999 2000 2005 2010 2015 1998-2015
----- ----- ----- ----- ----- ----- ----- ----- ----- ---------
(barrels in millions per day)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Motor Gasoline.......... 7.79 7.89 8.02 8.20 8.39 8.51 8.89 9.42 9.68 1.0%
Kerosene/Jet Fuel....... 1.55 1.64 1.66 1.65 1.70 1.74 1.94 2.13 2.31 2.0%
Diesel Fuel............. 3.21 3.37 3.44 3.44 3.55 3.65 4.03 4.43 4.83 2.0%
Residual Fuel........... 0.85 0.85 0.80 0.82 0.81 0.81 0.78 0.76 0.75 (0.5)%
Other Products.......... 4.33 4.56 4.71 4.57 4.58 4.63 5.01 5.27 5.49 1.1%
----- ----- ----- ----- ----- ----- ----- ----- ----- ----
Total Demand.......... 17.72 18.30 18.62 18.68 19.03 19.35 20.64 22.01 23.06 1.3%
Annual Growth, %........ 0.0% 3.3% 1.7% 0.3% 1.9% 1.7% 1.3% 1.3% 0.9%
Source: Purvin & Gertz.
</TABLE>
Refinery Configurations
Crude oil represents a refinery's largest single operating cost and is
available in a range of prices depending on the equipment required for
processing the crude oil, its potential yield of refined products, and the cost
of transporting the crude oil to the refinery. Lighter and/or sweeter crude oil
is priced higher than heavy and/or sour crude oil because it is easier to
process and yields a higher-valued slate of products such as gasoline, diesel
fuel, jet fuel and petrochemicals.
The types of crude oil a refinery can process, as well as the yield of
refined products from such crude oil, depends on the refinery "configuration."
The configuration of a refinery denotes the number, specific types and the
sequence of processing units. Processing units typically increase the value of
their feedstocks by separating or changing the feedstocks' chemical structure.
A refinery with a simple configuration chooses between running a lighter, more
expensive crude oil to minimize low value residual fuel oil production, or
running a heavier, less expensive crude oil and accepting this low valued
production. Some refineries are unable to process heavy sour crude oil under
any circumstances because of their location and/or design. The most
sophisticated refinery configuration--the heavy coking refinery--can take
advantage of lower priced, heavy sour crude oil while producing relatively
little residual fuel oil and yielding a higher valued mix of products.
44
<PAGE>
Heavy/Light Differential
The economics of crude oil selection compares the discounts offered for lower
quality crude oil to the gain on making higher value products instead of
residual fuel. The refining margin of a heavy coking refinery is highly
sensitive to the dollar per barrel price difference between heavy sour crude
oil, such as Maya, and light sweet crude oil, such as West Texas Intermediate.
This difference is often referred to as the "heavy/light differential." This
measurement provides a reliable indication of the profitability advantage of a
heavy coking refinery because a wider heavy/light differential typically
results in lower cost feedstocks and a higher resulting refinery margin.
According to Purvin & Gertz, from January 1988 through March 1999 the six month
moving average of the heavy/light differential ranged from a high of $8.90 to a
low of $3.76 with an average of $5.83 as shown in the following chart.
[Dollars per Barrel Chart]
According to Purvin & Gertz, in the late 1980s, conversion capacity was fully
utilized with little or no excess capacity. As a result, returns on investment
for refiners motivated new investments in conversion capacity. By the early
1990s, the rate of addition of conversion capacity considerably exceeded the
needed level. Many producers added this capacity with the intention of
processing heavy sour crude into low sulfur diesel and reformulated gasoline.
Many refiners found that the most economic way of accomplishing this was to
combine various refinery modifications made in response to regulatory changes
with expansions of conversion capacity. Since conversion capacity is generally
the most profitable component of a refinery, many refiners believed that
increasing it was the most effective way to maximize returns on product quality
improvement investments. However, because so many refiners recognized the
potential benefit of increasing conversion capacity, an overbuilding of
capacity resulted. The overabundance of conversion capacity drove up demand for
heavy feedstock and resulted in a narrowing of the heavy/light differential
through 1995.
Recovery in the heavy/light differential occurred in 1996 and 1997. Purvin &
Gertz believes that while this recovery was due in part to temporary refinery
operating problems at several major refinery units, which decreased the
availability of conversion capacity, this recovery was primarily driven by the
rising output of heavy sour crude oil in the Western Hemisphere. This
increasing production of heavy sour crude oil resulted in severe price
competition and residual fuel oil oversupply. The differentials reached a peak
late in 1997 and early 1998 due to these factors. In April 1998, the trends
began to reverse and the heavy/light differential began to narrow. This
reversal was brought about by the confluence of a number of factors. These
include the effects of the Asian financial crisis, which reduced demand for
refined products and opened up capacity worldwide. In addition, low oil prices
and high natural gas prices in the United States caused demand for residual
fuel to increase rather dramatically. At the same time, export demand for
residual fuel increased sharply due to El Nino related hydropower shortages in
Mexico.
Although the rate of increase in conversion capacity fell sharply after 1994,
according to Purvin & Gertz several major projects are currently underway. In
addition, several conversion projects are linked to supplies of
45
<PAGE>
heavy sour crude oil from Venezuela and Mexico and are expected to absorb
increases in heavy sour crude oil production. Net additions in recent years
have been at a rate of 2% per year in the United States and nearly 4%
worldwide.
According to Purvin & Gertz, the recent heavy sour crude oil production cuts
by Venezuela and Canada are causing the heavy/light differential to narrow. At
the same time, new conversion capacity is being brought on and is absorbing any
excess heavy feedstock, thereby strengthening heavy feedstock prices and
further narrowing the differential. In addition, high natural gas prices
coupled with low residual fuel oil prices are encouraging the burning of
residual, thereby squeezing the heavy feedstock balance and narrowing the
heavy/light differential even further. Even so, the differential averaged about
$5.00 over the past six months.
Purvin & Gertz believes domestic supply constraints in 1998 increased the
price of West Texas Intermediate above the level which would otherwise be
expected given the global supply-demand balance. These constraints are in the
process of being reversed and are expected to reduce the price of West Texas
Intermediate. Because these supply constraints did not have a significant
impact on the Gulf Coast price of Maya, the heavy/light differential is
expected to contract as West Texas Intermediate prices decline relative to
Maya.
Over the short term, Purvin & Gertz believes that the absolute price of West
Texas Intermediate is likely to remain in the $15 to $20 per barrel range. Low
demand for petroleum caused by the continuation of the Asian financial crisis
will cause Venezuela and other OPEC producers to constrain production in the
short term. Short term production will be further constrained under the terms
of the recent OPEC agreement. Mexico has agreed to constrain exports as well.
These factors will tend to keep the heavy/light differential around $5.00
through 2000.
Purvin & Gertz expects that after the year 2000, the heavy/light differential
will begin to widen again since all of the key factors determining the
heavy/light differential are expected to turn favorable:
. as world economy, particularly Asia, improves, demand will grow rapidly;
. crude oil prices increase as demand increases;
. crude oil production increases, particularly heavy sour crude oil, as
demand for OPEC crude oil increases since OPEC crude oil is generally
heavier;
. Venezuela, Mexico and Canada are expected to expedite heavy oil
production; and
. light product demand and supply of heavy sour crude oil will likely
increase faster than new conversion capacity can be added.
Additional discussion of these conclusions are included in Purvin & Gertz's
Crude Oil and Refined Product Market Forecast provided to you as Annex C.
46
<PAGE>
EXISTING PORT ARTHUR REFINERY
AND THE REFINERY UPGRADE PROJECT
Existing Port Arthur Refinery
The Port Arthur refinery is located in Port Arthur, Texas and is situated on
an approximately 4,000 acre site, of which less than 100 acres are occupied by
active operating units. The Port Arthur refinery has a current rated crude oil
throughput capacity of approximately 232,000 barrels per stream day and the
ability to process 100% sour crude oil, including up to 20% heavy sour crude
oil, and has coking capabilities. The Port Arthur refinery has the ability to
produce jet fuel, 100% low-sulfur diesel fuel, 55% summer reformulated gasoline
and 75% winter reformulated gasoline. The Port Arthur refinery's Texas Gulf
Coast location provides access to numerous cost effective domestic and
international crude oil sources, and its products can be sold in central and
eastern United States as well as in export markets.
In February 1995, Clark Refining & Marketing purchased the Port Arthur
refinery together with certain related terminals, pipelines and other assets
from Chevron U.S.A. Products and some affiliated entities. Clark Refining &
Marketing also acquired legal title to Chevron's chemicals facility and lube
oil distribution facility, which are integrated with the Port Arthur refinery.
The chemicals facility and the lube oil distribution facility are being leased
to, and operated by, Chevron under long term leases providing for a nominal
rent and containing a purchase option in favor of Chevron at a nominal purchase
price. Clark Refining & Marketing also entered into agreements with Chevron and
its affiliates providing for, among other things, various services and the sale
and purchase of various refined products.
Refinery Upgrade Project
The purpose of the Refinery Upgrade Project is to increase the ability of the
Port Arthur refinery to process heavy sour crude oil. The business strategy of
Clark Refining Holdings in undertaking the Refinery Upgrade Project is to earn
a higher margin on processing operations at the Port Arthur refinery and take
advantage of our long term crude oil supply agreement with P.M.I. Comercio
Internacional.
The Refinery Upgrade Project consists primarily of the construction of a new
delayed coking unit, the installation of a new vacuum gas oil hydrocracking
unit, the installation of a new sulfur complex and an expansion of the existing
crude unit. Also included in the scope of the Refinery Upgrade Project are
various improvements to the infrastructure of the existing Port Arthur refinery
and various modifications of existing processing units at the Port Arthur
refinery. The Port Arthur refinery has several important characteristics that
make it attractive for this type of investment, including its Gulf Coast
location which provides excellent access to waterborne deliveries of Mexican
crude oil and the fact that the Port Arthur refinery currently has much of the
infrastructure and processing capability necessary to support an upgraded
operation, which we believe lowers the capital cost.
The following table highlights the expected impact of the Refinery Upgrade
Project on the Port Arthur refinery as a whole. The figures used under the
heading "after" correspond to the data used by Purvin & Gertz in the base case
financial model which is part of their report annexed hereto as Annex B and
represents the combined operations of Clark Refining & Marketing and Port
Arthur Coker Company.
<TABLE>
<CAPTION>
The Port Arthur
Refinery
-----------------------
Before After
Upgrade Upgrade
----------- -----------
<S> <C> <C>
Crude Oil Throughput
Capacity (barrels per
stream day)............ 232,000 250,000
Coker Throughput
Capacity (barrels per
stream day)............ 38,000 80,000
API Gravity............. 34(degrees) 24(degrees)
Sulfur Processing
Capacity............... 1.6% 3.1%
Solomon Complexity
Rating................. 12.2 15.9
Production (barrels per
calendar day).......... 221,700 254,700
</TABLE>
47
<PAGE>
COKER GROSS MARGIN SUPPORT MECHANISM IN
OUR LONG TERM CRUDE OIL SUPPLY AGREEMENT
We believe that we will benefit from the coker gross margin support mechanism
in our long term crude oil supply agreement with P.M.I. Comercio Internacional.
This mechanism is designed to moderate our coker gross margin fluctuations. The
mechanism contains a formula that is intended to be an approximation for coker
gross margin and is designed to provide for a minimum average coker gross
margin during the first eight years following completion of the Refinery
Upgrade Project assuming we achieve completion by July 2001, and thus will not
apply for the entire duration of the notes. The price we pay for Maya will be
the regular price adjusted for a monthly adjustment amount based on the
difference between the differential formula amount and a $15 per barrel
differential guarantee amount. The differential formula amount is calculated as
follows:
Differential formula amount = (0.5 X RUL) + #2FO-(1.5 X #6FO)
Where:
RUL = average of U.S. Gulf Coast market prices for conventional 87
octane unleaded gasoline
#2FO = average of U.S. Gulf Coast market prices for 0.2% sulfur no. 2
fuel oil
#6FO = average of U.S. Gulf Coast market prices for 3% sulfur no. 6
fuel oil
The gasoline and no. 2 fuel oil prices were selected as proxies for the
prices that we can reasonably expect to receive for the light refined products
produced by our coking unit. The no. 6 fuel oil price was selected as a proxy
for coker feedstock prices because of its high degree of historical correlation
with Maya prices. Our long term crude oil supply agreement also has a provision
that is designed to compensate for changes in this historical correlation.
We use the differential formula amount above to calculate the monthly
adjustment amount as follows:
Monthly adjustment amount = (differential formula amount-$15) X 36.6% X
Our Maya delivered
during the month.
This amount is referred to in our long term crude oil supply agreement as a
monthly surplus or shortfall, depending on whether it is a positive or negative
number. This 36.6% factor is used because we expect that every 100 barrels of
Maya processed through our crude unit will yield approximately 36.6 barrels of
coker feedstock.
At the end of each calendar quarter, all monthly adjustment amounts (positive
or negative) are netted under a mechanism set forth in our long term crude oil
supply agreement, resulting in a price adjustment applicable to Maya to be
purchased in the succeeding calendar quarter. The discount applied to the price
of Maya in any quarter may not exceed $30 million. The premium applied to the
price of Maya in any quarter may not exceed the lesser of $20 million or the
net aggregate amount of shortfalls for the prior period. The net adjustment
amount (positive or negative) existing at the end of the period during which
the coker gross margin support is available will be applied over the remaining
term of the agreement, after giving effect to the operation of the differential
mechanism in the last period. The discount we receive in any quarter will not
exceed $30 million and the premium we pay in any quarter will not exceed $20
million.
If the differential formula amount is calculated over the period 1987-1998
and regressed against the historical heavy/light differentials, the
mathematical result implies that the $15 per barrel differential guarantee
amount would correspond to a heavy/light differential of $5.94 per barrel. This
is $0.24 per barrel above the historical average heavy/light differential of
$5.70 per barrel over the same period. Therefore the coker gross margin support
mechanism in our long term crude oil supply agreement would have added to our
coker gross margin during that period.
According to Purvin & Gertz, the price adjustment mechanism in our long term
crude oil supply agreement serves as a suitable method of stabilizing coker
gross margin fluctuations.
48
<PAGE>
Below is a sample quarterly calculation of the operation of the price
adjustment mechanism contained in our long term crude oil supply agreement,
based on the year 2001 price forecast by Purvin & Gertz and assuming quarterly
Maya volume of 13.8 million barrels:
[Chart and Calculation]
See "Description of Our Principal Project Documents--Long Term Crude Oil
Supply Agreement" for a more complete and detailed discussion of our crude oil
supply arrangement. See also "Risk Factors--Market Risks."
49
<PAGE>
OUR COKER PROJECT
Our Coker Project will use delayed coking technology to enable the Port
Arthur refinery to process increased volumes of heavy sour crude oil. The total
expected cost of constructing our new units described below and completing the
additional improvements that comprise our Coker Project is $715 million,
including an allowance for estimated price escalation and contingencies.
Our Portion of the Refinery Upgrade Project
Delayed Coker. Our new 80,000 barrel per stream day delayed coking unit will
be equipped with six coke drums. This unit converts vacuum tower bottoms from
the refinery's crude unit through thermal cracking process into lighter, more
valuable products, principally heavy gas oil that is fed to the hydrocracker,
light gas oil that is blended into distillate after further processing, naphtha
feed for further processing, butane/butylene, propane/propylene and fuel gas.
Petroleum coke is a byproduct of this process and is sold principally for
utility fuel.
According to Purvin & Gertz, delayed coking technology has been utilized for
well over 50 years and is one of the most widely used processes to upgrade low
value heavy residue into higher value light products. Our delayed coking unit
will use a well established and commercially proven Foster Wheeler USA design.
According to Purvin & Gertz, this design has the benefit of the prior
experience of Foster Wheeler USA, which has designed five coker units with a
capacity of 75,000 barrels per day or greater, and it should result in more
favorable product yields and lower operating costs.
Vacuum Gas Oil Hydrocracker. Our new vacuum gas oil hydrocracker is designed
to process 35,000 barrels per day of feedstock consisting of heavy gas oil from
our coking unit and virgin vacuum gas oil and light cycle oil from other
refinery processing units. Our hydrocracker is designed for the conversion of
the heavy feedstock into at least 50% light products. According to Purvin &
Gertz, full hydrocracker conversion of the vacuum gas oil is not required since
Clark Refining & Marketing's existing fluid catalytic conversion unit has the
capacity to convert the remaining vacuum gas oil. This allows our hydrocracker
to have a smaller second stage reactor than is typical for vacuum gas oil
hydrocrackers, which reduces our capital costs.
We will license our hydrocracker design from Chevron Research and Technology
Company which is also providing a process guarantee for our hydrocracker.
According to Purvin & Gertz, vacuum gas oil hydrocracking is a well established
and commercially proven technology, and the expected yields from our new
hydrocracker can be achieved.
Sulfur Recovery Units. Our new sulfur complex will operate in parallel with
existing sulfur recovery units at the Port Arthur refinery to process the
incremental hydrogen sulfide that will result from the processing of increased
quantities of heavy sour crude oil at the Port Arthur refinery. Our sulfur
complex will consist of (1) a new dual train sulfur recovery unit with a total
capacity of 417 long tons per stream day, (2) a new tailgas cleanup unit that
uses licensed technology from Shell Oil Company called Shell Claus Offgas
Treater or "SCOT", (3) a new sour water stripper and (4) a new amine treating
unit.
According to Purvin & Gertz, the technology selected for our new sulfur
recovery complex will result in a well-designed unit with adequate sulfur
removal capacity to support the expected requirements of the Port Arthur
refinery.
Infrastructure Improvements. Our Coker Project will also include the
following additional infrastructure improvements at the refinery:
. interconnecting of process units and utility piping between our units;
. converting existing tanks into coker feed tanks;
. constructing a new dedicated flare for our units;
50
<PAGE>
. constructing a new substation to supply power to our new units;
. constructing a new control unit for our units; and
. installing truck and rail loading facilities for sulfur.
Clark Refining & Marketing's Portion of the Refinery Upgrade Project
In addition to the new processing units described above which comprise our
Coker Project, we are leasing existing processing units from Clark Refining &
Marketing. In connection with this lease, Clark Refining & Marketing is
obligated to make certain modifications and infrastructure improvements during
1999 and 2000 to integrate these existing processing units with our Coker
Project at an estimated cost of up to $120 million. In return, we are obligated
to make rental payments to Clark Refining & Marketing for our use of these
modified units. As of October 1999, Clark Refining & Marketing had expended
approximately $35.8 million towards this commitment. According to Purvin &
Gertz, these modifications to be undertaken by Clark Refining & Marketing are a
group of routine, small refinery projects normally carried out during
turnarounds and do not present a major risk to the successful start-up,
operation or integration of our Coker Project.
Modification of Crude Unit. The existing crude/vacuum unit, which is
presently designed to process 232,000 barrels per stream day of light to medium
sour crude oil, will be modified to process 250,000 barrels per stream day.
These modifications include changes to the process exchangers to provide more
preheat to the crude unit, upgrading the vacuum unit heater and miscellaneous
pumps and piping. These activities will be completed prior to start-up of our
new units. The crude unit revamp design is adequate to support the processing
of the expected increased volume of heavy sour crude oil.
Modification of Hydrotreaters. The existing distillate and kerosene
hydrotreating units at the Port Arthur refinery are being revamped to increase
capacity for handling the higher sulfur distillate products that will be
produced by the increased volume of heavy sour crude oil. These modifications
involve increasing the size of reactors and catalyst volume through replacement
of reactors. In fact, replacement of reactors in one of the hydrotreaters has
already been completed. These modifications will be completed three to six
months prior to start-up of our Coker Project.
Infrastructure Improvements. Clark Refining & Marketing will also undertake
the following additional infrastructure improvements at the refinery:
. interconnecting of process units and utility piping between our and their
units;
. upgrading existing crude handling facilities, including a new crude oil
pumping station;
. expanding the firewater loop;
. upgrading the electrical system; and
. modifying coke handling facilities.
The New Hydrogen Plant
To provide the hydrogen necessary to the Refinery Upgrade Project, Air
Products has agreed to construct a new 100 million standard cubic feet per
stream day hydrogen supply plant at the Port Arthur refinery on land leased
from Clark Refining & Marketing. This new hydrogen supply plant is expected to
enable Air Products to meet its obligations under its hydrogen supply agreement
with us. The Air Products hydrogen supply plant is also expected to supply
hydrogen, steam and electricity to Clark Refining & Marketing for use at the
Port Arthur refinery.
51
<PAGE>
Air Products is obligated to us to ensure that the hydrogen supply plant is
ready to operate no later than December 2000, when our Heavy Oil Processing
Facility is first expected to need hydrogen. Purvin & Gertz believes that this
is achievable and that it is likely that the hydrogen supply plant will be
constructed and ready for start-up before our Coker Project. For a description
of the hydrogen supply agreement, please see "Description of Our Principal
Project Documents--Hydrogen Supply Agreement."
The hydrogen supply plant is being built principally to provide us and Clark
Refining & Marketing with our required supply of hydrogen. The estimated total
cost of constructing the hydrogen supply plant is $125 million and is being
funded by Air Products. We will have no rights, ownership or otherwise,
relating to the hydrogen supply plant.
Process Flow at the Port Arthur Refinery
The following diagram illustrates the major components of the Refinery
Upgrade Project, showing (1) our new processing units, referred to in this
offering circular as the Coker Project, (2) the processing units we are leasing
from Clark Refining & Marketing and which Clark Refining & Marketing is
upgrading and (3) the new hydrogen supply plant that Air Products is
constructing and will own at the Port Arthur refinery.
[Process Flow Chart]
52
<PAGE>
Construction of the Refinery Upgrade Project
The Refinery Upgrade Project was formally initiated in April 1998, and Clark
Refining & Marketing began construction in September 1998 pursuant to a
reimbursable construction contract with Foster Wheeler USA. We purchased the
work in progress under such contract related to our Coker Project in part with
funds from the sale of the outstanding notes and have entered into our
construction contract with Foster Wheeler USA to complete our Coker Project.
For a more detailed summary of this contract, see "Description of Our Principal
Project Documents--Construction Contract."
Pursuant to our services and supply agreement, Clark Refining & Marketing is
managing and supervising the construction of our new units and other equipment
and overseeing the performance of Foster Wheeler USA under our construction
contract. In addition, Clark Refining & Marketing is performing all our
obligations, other than payment obligations, under our construction contract
with Foster Wheeler USA, including all project management and construction
management functions, quality surveillance, performance of start-up activities,
provision of needed water and utilities and provision of all necessary
feedstreams for operation of our Coker Project during start-up and performance
testing. See "Description of Our Principal Project Documents-- Services and
Supply Agreement."
Pursuant to our facility and site lease with Clark Refining & Marketing, if
Clark Refining & Marketing does not complete the upgrades to existing refinery
processing units which we are leasing from them by October 2000, we have the
right to complete these modifications at Clark Refining & Marketing's expense
so that the overall completion of the Refinery Upgrade Project is not delayed.
Clark Refining & Marketing has entered into a reimbursable construction
contract with Foster Wheeler USA for performance of the majority of these
modifications and Clark Refining & Marketing's portion of the other refinery
improvements. These modifications and improvements will be paid for by Clark
Refining & Marketing. Clark Refining & Marketing arranged for its lenders to
provide a standby letter of credit for $97 million to Foster Wheeler USA to
ensure that funds are available for payments to Foster Wheeler USA under its
reimbursable construction contract. Foster Wheeler USA has also agreed not to
draw on the letter of credit for amounts due to it unless Purvin & Gertz, in
its role as independent engineer, has certified that the work related to the
requested drawing has been performed and the amounts requested are due and
payable. As of October 1999, the letter of credit had not been drawn upon. See
"Description of Our Principal Project Documents--Reimbursable Construction
Contract."
The chart below outlines our anticipated time schedule for the Refinery
Upgrade Project:
<TABLE>
<CAPTION>
Event Target Date Start Damages Guaranteed Date
----- -------------- ------------- ---------------
<S> <C> <C> <C>
Coker Project
Project announcement.............. April 1998
Construction start................ September 1998
Financial close................... August 1999
Mechanical completion............. November 2000 January 2001 March 2001
Substantial reliability........... January 2001 January 2001 September 2001
Final completion.................. March 2001 December 2001
Clark Portion of the Refinery
Upgrade Project.................. October 2000
Air Products Project.............. October 2000 December 2000 December 2000
</TABLE>
Operation of our Heavy Oil Processing Facility
Pursuant to our services and supply agreement with Clark Refining &
Marketing, Clark Refining & Marketing will provide to us a number of services
and supplies needed for operation of our Heavy Oil Processing Facility. Clark
Refining & Marketing is required to provide all such services and supplies in
accordance with specified standards, including prudent industry practices.
53
<PAGE>
Operation and Management
Port Arthur Coker Company employees will operate the processing units
comprising our Coker Project. Clark Refining & Marketing will supervise and
train our employees, operate the remaining units comprising our Heavy Oil
Processing Facility and be responsible for the management of our Heavy Oil
Processing Facility. In addition, Clark Refining & Marketing is responsible for
managing our crude oil purchases and the transportation of such oil to the Port
Arthur refinery. Clark Refining & Marketing is also expected to procure and
manage supply contracts on our behalf for (1) the portion of light crude oil
that is necessary for processing heavy crude oil at the refinery and (2) an
alternative supply of crude oil should Maya no longer be available to us
pursuant to our long term crude oil supply agreement with P.M.I. Comercio
Internacional.
Maintenance
Heavy Oil Processing Facility. Clark Refining & Marketing is responsible for
routine, preventative and major maintenance for all portions of our Heavy Oil
Processing Facility. Our Heavy Oil Processing Facility is designed for
continuous operation, and maintenance work will be performed on a regular basis
by Clark Refining & Marketing. In this regard, Clark Refining & Marketing
intends to use monitoring and preventative maintenance measures to ensure
reliable operations with minimal failures and unexpected shutdowns. Maintenance
of our Heavy Oil Processing Facility will require periodic shutdown of various
processing units. In particular, the coker, hydrocracker and sulfur complex
will require three-week shutdowns for maintenance every four years. Every six
months we will set aside a portion of our revenues, to the extent available, to
pay for turnaround expenses expected to be incurred during our next scheduled
maintenance turnaround of the new processing units. See "Description of Our
Principal Financing Documents--Common Security Agreement--Accounts Structure."
Port Arthur Refinery. Clark Refining & Marketing is also obligated under our
services and supply agreement to operate and maintain the other portions of the
Port Arthur refinery owned by it in a manner that ensures its ongoing ability
to perform its obligations to us and that is consistent with specified
standards and the efficient operation of our Heavy Oil Processing Facility. To
remain competitive with other refiners and to preserve operating conditions at
the Port Arthur refinery, Clark Refining & Marketing has invested significant
amounts in the maintenance of the major processing units at the refinery. Clark
Refining & Marketing generally has conducted maintenance turnarounds in
accordance with the refinery's normal maintenance cycles in an effort to
minimize disruptions to the refinery's operations. Clark Refining & Marketing
is expected to continue to coordinate the scheduling and performance of all
maintenance turnarounds of processing units at the Port Arthur refinery,
including turnarounds of units comprising our Heavy Oil Processing Facility, in
accordance with industry standards and in a manner that, when possible,
minimizes operational disruptions to, and economic impact on, when possible,
both Clark Refining & Marketing and us.
Infrastructure and Utilities
We share common utilities and infrastructure with Clark Refining & Marketing
at the Port Arthur refinery. As part of the services provided by Clark Refining
& Marketing pursuant to our services and supply agreement, Clark Refining &
Marketing provides us with utilities and other support services using, among
others, the following refinery facilities:
. the electrical distribution system;
. the steam distribution system;
. the natural and fuel gas distribution system;
. the nitrogen distribution system;
. the waste management and wastewater treating facilities;
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<PAGE>
. the analytical laboratory;
. crude oil storage facilities;
. the refinery pipeline system;
. water and air distribution facilities; and
. warehouse storage.
Other Services and Supplies
Clark Refining & Marketing will also provide us with all feedstocks (other
than crude oil), catalysts, chemicals and other materials necessary for the
operation of our Heavy Oil Processing Facility and a number of other services,
including contract management services, procurement services, personnel
management services, security services and emergency response services.
Processing Arrangements
Under our services and supply agreement, Clark Refining & Marketing also has
a right of first refusal to require us to process crude oil for them in an
amount equal to the portion, if any, of the processing capacity of our Heavy
Oil Processing Facility that exceeds the amount we need to process the Maya
available to us under our long term crude oil supply agreement with P.M.I.
Comercio Internacional or an equivalent amount available to us under an
alternative supply arrangement. Clark Refining & Marketing will pay us a
processing fee for any of its crude oil and other feedstocks that we process
under this right of first refusal. We expect this portion to be approximately
20% of the processing capacity of our Heavy Oil Processing Facility.
Sale of Our Products
Pursuant to our product purchase agreement with Clark Refining & Marketing,
Clark Refining & Marketing is unconditionally obligated to accept and pay for
all final and intermediate products of our Heavy Oil Processing Facility that
we tender for delivery.
Clark Refining & Marketing, as our sole customer, has the right to request
that the Heavy Oil Processing Facility produce a certain mix of products. This
right, however, is subject to specified limitations that are designed to ensure
(1) that we utilize the entire amount of Maya available to us under our long
term crude oil supply agreement or an equivalent amount from an alternative
supplier, (2) that we are able to service the notes and our other debt
obligations on an ongoing basis and (3) that the operations of the Port Arthur
refinery are optimized in a manner that is mutually beneficial to us and Clark
Refining & Marketing and that does not benefit Clark Refining & Marketing at
our expense.
Our Competition and Marketing Environment
We have not entered into any other arrangements for the sale of our refined
products. Thus, our product purchase agreement is our sole source of revenue
from the sale of refined products. According to Purvin & Gertz, however, we are
located in the most liquid refined products market in the world and if Clark
Refining & Marketing no longer meets its purchase obligations to us, our
intermediate and final refined products would be readily marketable to third
parties at somewhat discounted prices. See "Annex B--Independent Engineer's
Report."
We have no crude oil reserves and are not engaged in exploration and
production activities. We will obtain our crude oil requirements pursuant to
our long term crude oil supply agreement with P.M.I. Comercio Internacional, on
the spot market from unaffiliated sources or from Clark Refining & Marketing
pursuant to our services and supply agreement. We believe that we will be able
to obtain adequate crude oil and other feedstocks at generally competitive
prices in the foreseeable future.
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<PAGE>
Our feedstocks and refined products are principally commodities and the
pricing of such feedstocks and refined products under our services and supply
agreement and product purchase agreement is intended to reflect market prices.
As a result, our operating cash flows and earnings will be significantly
affected by a variety of factors beyond our control, including the supply of
and demand for crude oil, gasoline and other refined products which in turn
depend on, among other factors, changes in domestic and foreign economic
conditions, weather patterns, political affairs, crude oil production levels,
the rate of industry investments, the availability of imports, the marketing of
competitive fuels and the extent of government regulations. Also relevant are
seasonal fluctuations with generally stronger operating cash flows and earnings
expected during the higher transportation-demand periods of the spring and
summer and weaker operating cash flows and earnings expected during the fall
and winter.
Our operating cash flows and earnings are also expected to be affected by the
competitive position of the Port Arthur refinery. The refining segment of the
oil industry is highly competitive. Many of the Port Arthur refinery's
principal competitors are owned by integrated multinational oil companies that
are substantially larger than Clark Refining & Marketing. Because of their
diversity, integration of operations, larger capitalization and greater
resources, these major oil companies may be better able to withstand volatile
market conditions, more effectively compete on the basis of price and more
readily obtain crude oil in times of shortages.
Environmental Matters
General
Our operations are subject to extensive federal, state and local
environmental, health and safety laws and regulations, including those
governing discharges to the air and water, the handling and disposal of solid
and hazardous wastes, and the remediation of contamination. The failure to
comply with such laws and regulations can lead to, among other things, civil
and criminal penalties and in certain circumstances the temporary or permanent
curtailment or shutdown of operations. The nature of the refining business
exposes us to risks of liability due to the production, processing, storage and
disposal of materials that can cause contamination or personal injury if
released into the environment. Pursuant to our services and supply agreement,
Clark Refining & Marketing has committed to take actions necessary to cause us
to comply with these laws and regulations.
We expect that the nature of the refining business will make us subject to
increasingly stringent environmental and other laws and regulations that may
increase the costs of operating our Heavy Oil Processing Facility above
currently projected levels. We may be required to make future expenditures to
comply with more stringent standards for air emissions, wastewater discharge
and the remediation of contamination. As our Coker Project is integrated with
the operations of the Port Arthur refinery, any developments in environmental
laws that adversely impact Clark Refining & Marketing's operations could also
adversely affect our financial condition or results of operations. It is
difficult to predict the effect of future developments in these laws and
regulations on our financial condition or results of operations.
We are unaware of any environmental or health and safety liabilities and
expenses that are reasonably likely to have a material adverse effect on our
results of operations but cannot assure you that such liabilities and expenses
will not occur. See also "Risk Factors--Environmental Risks."
Existing Conditions
Environmental laws typically provide that the owners or operators, including
lessees, of contaminated properties may be held liable for their remediation.
Such liability is typically joint and several, which means that any responsible
party can be held liable for all remedial costs, and can be imposed regardless
of whether the owner or operator caused the contamination. The Port Arthur
refinery is located on a contaminated site. Under the 1994 purchase agreement
between Clark Refining & Marketing and Chevron Products USA relating to the
Port Arthur refinery, Chevron retained environmental remediation obligations
regarding pre-closing
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<PAGE>
contamination at over 97% of the refinery site. Clark Refining & Marketing
assumed responsibility for any remediation that is required in and under the
remaining approximately 3% of the refinery site, which consists of specified
areas that extend 25 to 100 feet from active operating units, including soil
and ground water and, encompasses less than 50 acres of the total Port Arthur
refinery site surface area. Clark Refining & Marketing has estimated its
liability for remediation of groundwater and soil in these areas at $27
million. Chevron is obligated to remediate the contamination in the areas for
which it has retained responsibility as and when required by law, in accordance
with remediation plans negotiated by Chevron and the applicable federal or
state agencies.
We evaluated the cost associated with remediation of the groundwater and soil
of the land that we are leasing within the boundaries of the Port Arthur
refinery and estimate remedial costs relating to our Coker Project site at $1.6
million. Clark Refining & Marketing has agreed to retain liability regarding
contamination existing at the Coker Project site and has indemnified us against
such liabilities. However, if Clark Refining & Marketing breaches its
remediation obligations, we could incur substantial additional costs in
remediating the contamination, which could impair our ability to make payments
on the notes and our other debt when due.
We believe that the remediation costs relating to contamination at our Coker
Project site would be deferred until the final decommissioning of our Coker
Project. However, actual remediation costs, as well as the timing of such
costs, are dependent on a number of factors over which neither we nor Clark
Refining & Marketing has control, including changes in applicable laws and
regulations, priorities of regulatory officials, interest from local citizens
groups and development of new remediation methods.
Permits, Applications and Status
In August 1998, Clark Refining & Marketing amended its flexible air emissions
permit from the Texas Natural Resource Conservation Commission to allow Clark
Refining & Marketing to undertake the Refinery Upgrade Project. At our and
Clark Refining & Marketing's request, the Texas Natural Resource Conservation
Commission amended Clark Refining & Marketing's flexible air emissions permit
and issued to us a new air emissions permit in May 1999. As a result, we now
hold an air emissions permit from the Texas Natural Resource Conservation
Commission which covers construction and operation of our new processing units.
Clark Refining & Marketing holds an amended flexible air permit from the Texas
Natural Resource Conservation Commission which covers other processing units
and facilities at the Port Arthur refinery including the processing units that
we are leasing from Clark Refining & Marketing and their other facilities which
we have a right to use. Under applicable environmental regulations, we have the
right to operate such equipment and facilities pursuant to Clark Refining &
Marketing's existing permits. We also have a standby air emissions permit,
which contains a provision permitting such permit to be activated by us to
cover the entire Port Arthur refinery, including such equipment and facilities,
upon notice to the Texas Natural Resource Conservation Commission. Under our
supply and services agreement with Clark Refining & Marketing, we have agreed
not to exercise our rights to activate this permit unless the permit is
required to allow us to continue our operation of our units.
Proposed Gasoline Sulfur Specifications
On May 13, 1999, the United States Environmental Protection Agency published
a proposed rule that would require on a nationwide basis a substantial
reduction in the sulfur content of gasoline. A final rule establishing the new
gasoline sulfur specifications is expected to be finalized by January 2000.
However, according to Purvin & Gertz, with our new hydrocracker and the
existing vacuum gas oil hydrotreater, the Port Arthur refinery will likely only
require additional hydrotreating on certain gasoline blendstock streams to
allow for the production of gasoline meeting the new proposed specifications.
This capital expenditure is expected to be substantially less than $50 million
through the use of idle equipment currently located at the Port Arthur
refinery.
MTBE
Recent concerns regarding groundwater contamination by methyl tertiary butyl
ether, also known as "MTBE," a gasoline additive, have prompted a panel of the
Environmental Protection Agency to recommend that the U.S. Congress enact a ban
on MTBE usage in gasoline. Similarly, the governor of California recently
57
<PAGE>
signed an executive order regarding a ban on MTBE usage in gasoline in the next
few years. If a ban on MTBE usage were to spread throughout the United States,
we would be prohibited from utilizing MTBE in gasoline blends. However, we do
not plan to produce MTBE and Purvin & Gertz has concluded that a ban on MTBE
usage would not have a material effect on our operations and cash flow or the
competitiveness of the Port Arthur refinery.
Insurance
Pursuant to our financing documents, Port Arthur Coker Company is required to
maintain certain minimum insurance in connection with our Coker Project. In
this regard, we are required to keep all our property of an insurable character
insured with such coverage and in such forms and amounts as are customarily
provided for facilities similar in size and type to our Coker Project. Such
insurance includes insurance against sudden and accidental environmental
damage, delay in start-up insurance and business interruption and contingent
business interruption insurance. For more description of the insurance we are
required to maintain, see "Description of Our Principal Financing Documents--
Common Security Agreement--Insurance."
Legal Proceedings
None of Port Arthur Coker Company, Port Arthur Finance, Sabine River nor
Neches River is currently a party to any pending legal proceedings, nor do we
have actual knowledge of any threatened legal proceeding.
Property
Port Arthur Coker Company, Port Arthur Finance and Sabine River lease office
space from Clark Refining & Marketing at 1801 S. Gulfway Drive, Office No. 36,
Port Arthur, Texas 77640, where we have our principal executive offices.
Our Coker Project will be located on a subdivided site totaling less than 50
acres within the Port Arthur refinery. Port Arthur Coker Company has entered
into a long term fully-prepaid ground lease with Clark Refining & Marketing for
such site. Pursuant to such ground lease, Clark Refining & Marketing has also
granted us an easement over the remainder of the Port Arthur refinery which is
owned by Clark Refining & Marketing and the right to use other specified
facilities and equipment at the refinery.
Port Arthur Coker Company is also leasing Clark Refining & Marketing's crude
unit, vacuum tower and one naphtha and two distillate hydrotreaters and the
site on which they are located at the Port Arthur refinery pursuant to a
facility and site lease. Pursuant to this facility and site lease, Clark
Refining & Marketing has also granted us an easement across the remainder of
the Port Arthur refinery property owned by it, a portion of Clark Refining &
Marketing's dock adjacent to the Port Arthur refinery and specified pipelines
and crude oil handling facilities needed to transport crude oil from docking
facilities in Nederland, Texas, to the Port Arthur refinery. Both of these
leases have an initial term of 30 years which may be renewed at our option for
five additional renewal terms of five years each.
Employees
Port Arthur Coker Company expects to employ approximately 50 full-time
employees to operate our new units and to perform accounting services. Port
Arthur Finance, Sabine River and Neches River currently have no employees and
do not expect to have any employees.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN OWNERS
Port Arthur Finance
All of the outstanding capital stock of Port Arthur Finance is owned by Port
Arthur Coker Company.
Port Arthur Coker Company
The following table sets forth information concerning the owners of Port
Arthur Coker Company.
<TABLE>
<CAPTION>
Percent
Nature of of Percent of Total
Name and Address Ownership Interest Ownership Voting Power
---------------- ------------------ --------- ----------------
<S> <C> <C> <C>
Sabine River Holding
Corp. .................... General Partner 1% 100%
1801 S. Gulfway Drive,
Office No. 36
Port Arthur, Texas 77640
Neches River Holding
Corp. .................... Limited Partner 99%(1) 0%
c/o The Corporation Trust
Company
1209 Orange Street
Wilmington, DE 19801
</TABLE>
- --------
(1) All the outstanding capital stock of Neches River Holding Corp. is owned
by Sabine River Holding Corp.
Sabine River
The following table sets forth information concerning the owners of Sabine
River as of the date hereof.
<TABLE>
<CAPTION>
Number of Percent Percent of Total
Name and Address Title of Class Shares of Class Voting Power
---------------- -------------- --------- -------- ----------------
<S> <C> <C> <C> <C>
Clark Refining Holdings
Inc..................... Common 6,136,364 90% 90%
Occidental Petroleum Cor-
poration................ Common 681,818 10% 10%
</TABLE>
Clark Refining Holdings
The following table and the accompanying notes set forth information
concerning the beneficial ownership of the common stock and Class F common
stock of Clark Refining Holdings as of the date hereof: (1) each person who is
known by us to own beneficially more than 5% of the common stock of Clark
Refining Holdings, (2) each director and each executive officer who is the
beneficial owner of shares of common stock of Clark Refining Holdings and (3)
all directors and executive officers as a group.
<TABLE>
<CAPTION>
Number of Percent Percent of Total
Name and Address Title of Class Shares of Class Voting Power(/1/)
---------------- -------------- ---------- -------- -----------------
<S> <C> <C> <C> <C>
Blackstone Management
Associates III
L.L.C.(2) ............. Common 19,428,283 98.3% 78.8%
Occidental Petroleum
Corporation............ Class F Common 6,101,010 100.0% 19.9%
All directors and execu-
tive
officers as a group(2). Common 19,493,939 98.6% 79.0%
</TABLE>
- --------
(1) Represents the total voting power of all shares of common stock
beneficially owned by the named stockholder.
(2) The 19,428,283 shares held by Blackstone are directly held as follows:
15,501,051 shares by Blackstone Capital Partners III Merchant Banking Fund
L.P., 2,760,814 shares by Blackstone Offshore Capital Partners III L.P.
and 1,166,418 shares by Blackstone Family Investment Partnership III L.P.,
of each of which Blackstone Management Associates III L.L.C. is the
general partner having voting and dispositive power.
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<PAGE>
OWNERSHIP STRUCTURE AND RELATED PARTY TRANSACTIONS
Ownership Structure
Port Arthur Coker Company was formed to construct and own our Coker Project,
lease the ancillary equipment and operate and maintain our Heavy Oil Processing
Facility. Port Arthur Finance is a wholly owned subsidiary of Port Arthur Coker
Company whose purpose is to facilitate the financing activities of Port Arthur
Coker Company. Under an agency agreement with, and an intercompany note from,
Port Arthur Coker Company, Port Arthur Finance issued the outstanding notes and
borrowed monies under our bank credit facilities on behalf of Port Arthur Coker
Company and transferred the proceeds of the issuance of the outstanding notes
and is obligated to transfer borrowings under our bank credit facilities to
Port Arthur Coker Company.
Port Arthur Coker Company is owned 1% by our sole general partner, Sabine
River, and 99% by our sole limited partner, Neches River, a wholly owned
subsidiary of Sabine River. Both Sabine River and Neches River were formed
specifically for the purpose of holding our partnership interests. Occidental
and Clark Refining Holdings own 10% and 90%, respectively, of Sabine River.
Clark Refining Holdings is owned indirectly through subsidiaries, by Blackstone
through an approximately 78.8% voting interest, which represents a 75.1%
economic interest, and by Occidental through an approximately 19.9% voting
interest, which represents a 23.6% economic interest. See "Security Ownership
of Certain Owners."
Sabine River Stockholders' Agreement
Clark Refining Holdings and Occidental have entered into a stockholders'
agreement. This agreement restricts the ownership and transfer of shares of
Sabine River and provides a right of first refusal for the benefit of Clark
Refining Holdings in the event that Occidental wishes to transfer its shares of
Sabine River. The Sabine River stockholders' agreement also provides Occidental
with the right to designate one member of the Sabine River board of directors
as long as Occidental maintains a specified ownership level in Sabine River.
The Sabine River stockholders' agreement grants certain additional rights to
Occidental, including rights for Occidental to participate on an equal and
ratable basis in the case of transfers of shares of Sabine River by Clark
Refining Holdings. In addition, it provides Clark Refining Holdings with the
right to require Occidental to sell its shares, on the same terms and
conditions as Clark Refining Holdings, in the case of a sale by Clark Refining
Holdings of all of its shares in Sabine River.
The Sabine River stockholders' agreement provides that, if the board of
directors of Sabine River determines, upon advice of its counsel, that it is no
longer necessary for us, Sabine River and Neches River to be bankruptcy remote,
Occidental may elect to exchange or may be required to exchange shares of
common stock of Sabine River it owns for Class F Common Stock, par value $.01
per share, of Clark Refining Holdings.
Transaction Fee
When we issued the outstanding notes, we used a portion of the proceeds of
our senior debt and equity contributions to pay Clark Refining Holdings
approximately $8 million for services provided to us by Blackstone Management
Partners III L.L.C. in connection with the raising of equity for and
structuring of our Coker Project, and Clark Refining Holdings will pay such fee
to Blackstone Management Partners III L.L.C. at such time and in such manner as
they may agree.
Transfer Restrictions Agreement
We, Sabine River, Neches River, Clark Refining Holdings and Blackstone have
agreed with the agent for the bank lenders, the agent for oil payment insurers
and the indenture trustee, that none of us, Sabine River, Neches River, Clark
Refining Holdings or Blackstone will effect, or permit any affiliate to effect,
any transfer of such party's direct or indirect interest, if any, in us, Clark
Refining & Marketing or the Port Arthur refinery except in limited situations.
See "Description of Our Principal Financing Documents--Transfer Restrictions
Agreement."
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Our Relationship with Clark Refining & Marketing
We are an affiliate of Clark Refining & Marketing because our parent company,
Clark Refining Holdings, owns 100% of the capital stock of Clark USA, which in
turn owns 100% of the capital stock of Clark Refining & Marketing.
Clark Refining & Marketing formally initiated the Refinery Upgrade Project in
April 1998 after entering into the long term crude oil supply agreement with
P.M.I. Comercio Internacional. Construction commenced in September 1998. When
we issued the outstanding notes, we acquired the work in progress on our Coker
Project for $157.1 million. We also paid Clark Refining & Marketing
approximately $2 million for the assumption of the long term crude oil supply
agreement, transfer of employees and its reduction of the permissible emissions
levels under one of its air emissions permits in order to allow us to obtain
our air permit. See "Management's Discussion and Analysis of Financial
Conditions--Operations to Date."
During the operating period, Clark Refining & Marketing will be obligated to
accept and pay for all our products that we tender for delivery under the
product purchase agreement. Clark Refining & Marketing will also provide
operations and maintenance services and will supply required feedstocks for the
operation of our Heavy Oil Processing Facility under the services and supply
agreement. We are leasing the site of our Coker Project from Clark Refining &
Marketing on a long term basis and have prepaid the entire rental amount. We
are also leasing some ancillary units and equipment and have obtained some
related easements from Clark Refining & Marketing, for which we will pay them a
quarterly rent and a monthly operating fee subject to some adjustments under
the facility and site lease beginning at start-up of our Heavy Oil Processing
Facility. Under this lease, Clark Refining & Marketing is also obligated to
undertake certain modifications and additions to the equipment we are leasing.
See "Description of Our Principal Project Documents."
In the opinion of Purvin & Gertz, the terms of each of the product purchase
agreement, the services and supply agreement, the ground lease and the facility
and site lease are as favorable to Clark Refining & Marketing and to Port
Arthur Coker Company, in all material respects, as terms that would be
obtainable at this time for a comparable transaction or series of similar
transactions in arm's length dealings with a person who is not an affiliate. In
the opinion of Purvin & Gertz, payments to be made by Clark Refining &
Marketing to us under the product purchase agreement and the services and
supply agreement are fair consideration for the products acquired or services
received.
In the opinion of Purvin & Gertz, the consideration we paid Clark Refining &
Marketing for our assumption of the long term crude oil supply agreement, our
acquisition of work in progress under the construction contract and Clark
Refining & Marketing's reduction of the permissible emissions levels under one
of its air emissions permits in order to allow us to obtain our air permit is
equal to the fair market value of these assets. According to Purvin & Gertz,
Clark Refining & Marketing the rental payments under both the ground lease and
the facility and site lease are equal to the fair market value rental payments
of the property leased.
Tax Sharing Agreement
Sabine River and Neches River will file a consolidated U.S. federal income
tax return together with Clark Refining Holdings and its other consolidated
subsidiaries. Sabine River and Neches River have entered into a tax sharing
agreement with Clark Refining Holdings and the other members of its
consolidated group pursuant to which they have each agreed to pay to Clark
Refining Holdings their respective share of the Clark Refining Holdings
consolidated group's federal income tax liability, which will be determined on
a separate return basis. Similar provisions also will apply for any state or
local jurisdictions in which we file on a consolidated, combined or unitary
basis together with Clark Refining Holdings or any other member of the Clark
Refining Holdings' group.
Clark Refining Holdings will continue to have all the rights of a parent of a
consolidated group and similar rights provided for by applicable state and
local law, will be the sole and exclusive agent for Sabine River and
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Neches River in any and all matters relating to their consolidated, combined or
unitary income or franchise tax liabilities. In addition, it will have sole and
exclusive responsibility for the preparation and filing of consolidated federal
income tax returns and will have the power, in its sole discretion, to contest
or comprise any asserted tax adjustment or deficiency and to file, litigate or
compromise any claim for refund on our behalf related to such return. During
the period in which Sabine River and Neches River are included in the Clark
Refining Holdings' consolidated group, Sabine River and Neches River could be
liable in the event that any federal tax liability is incurred, but not
discharged, by any other member of the Clark Refining Holdings' consolidated
group.
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PRINCIPAL PROJECT PARTICIPANTS
Except in the case of Blackstone and Clark Refining & Marketing, the
following information is based solely on and derived solely from publicly
available documents which such entities filed with the Securities and Exchange
Commission, such as their annual reports on Form 10-K and quarterly reports on
Form 10-Q and, in the case of PEMEX, its annual report on Form 20-F. These
documents are available to the public and can be inspected and copied at the
public reference facilities maintained by the Commission in Washington, D.C. We
have not conducted any independent investigation of these entities and
therefore cannot assure you of the accuracy or completeness of such
information.
The Blackstone Group L.P.
The Blackstone Group L.P. is a private investment bank based in New York and
was founded in 1985 by its current Chairman, Peter G. Peterson, former Chairman
and CEO of Lehman Brothers and a former U.S. Secretary of Commerce, and its
current President and Chief Executive Officer, Stephen A. Schwarzman, former
Chairman of Lehman Brothers' Mergers & Acquisitions Committee. The Blackstone
Group's main businesses include private equity investing, merger and
acquisition advisory services, restructuring advisory services, real estate
investing, mezzanine investing and asset management.
The firm's current corporate private equity investment vehicle is Blackstone
Capital Partners III, which was the largest private equity fund of its type
raised in 1997 with approximately $4 billion of committed equity capital.
Approximately $2.5 billion of such capital remains uninvested as of the date
hereof. Blackstone Capital Partners III is comprised of Blackstone Capital
Partners III Merchant Banking Fund L.P., a Delaware limited partnership,
Blackstone Offshore Capital Partners III L.P., a Cayman Islands limited
partnership and Blackstone Family Investment Partnership III L.P., a Delaware
limited partnership. Beginning with Blackstone Capital Partners I in 1987,
Blackstone, together with its affiliates, has invested or committed
approximately $3.5 billion of equity in 41 transactions having an aggregate
transaction value of approximately $35.2 billion.
Blackstone has invested in a number of diverse businesses and industries
including heavy industrial (steel, automotive, high performance alloys), other
manufacturing (packaging, toys, wallpaper), cable TV, cellular, services
(including financial services, food services and funeral homes) and
transportation, among others. Blackstone has been a leader in using the private
equity investment format of the "corporate partnership," a joint venture
acquisition between operating companies and Blackstone's principal funds.
Blackstone acquired its interest in the predecessor of Clark Refining
Holdings for $134 million in November 1997 and is committed to invest
approximately $122 million in Clark Refining Holdings as part of our Coker
Project. As of October 31, 1999, Blackstone had contributed $49.9 million
towards this commitment. This investment has made Clark Refining Holdings one
of Blackstone's largest investments. See "Financing Plan--Equity Contributions
and Commitments."
Occidental
Occidental explores for, develops, produces and markets crude oil and natural
gas and manufactures and markets a variety of basic chemicals, including
chlorine, caustic soda and ethylene dichloride (EDC), as well as specialty
chemicals. Occidental conducts its principal operations through two
subsidiaries, Occidental Oil and Gas Corporation and Occidental Chemical
Corporation. Occidental has an interest in the vinyls intermediates business,
including polyvinyl chloride (PVC) and vinyl chloride monomer (VCM), through
its 76% interest in the Oxy Vinyls, LP partnership. Occidental also has an
interest in the petrochemicals business through its 29.5% interest in the
Equistar Chemicals, LP partnership. For the fiscal year ended December 31,
1998, Occidental had $6,596 million in net sales and operating revenues, $325
million in income from continuing operations and $363 million in net income. As
of September 30, 1999, Occidental had total assets of $14,135 million with
stockholders' equity of $3,216 million. Occidental is a Delaware corporation.
Occidental acquired its interest in the predecessor of Clark Refining
Holdings in exchange for rights to future crude oil deliveries that Clark
Refining & Marketing subsequently sold and is committed to invest
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approximately $14 million in Sabine River as part of our Coker Project. As of
October 31, 1999, Occidental had contributed $5.5 million towards this
commitment. See "Financing Plan--Equity Contributions and Commitments."
Clark Refining & Marketing
Clark Refining & Marketing is currently one of the five largest independent
refiners of petroleum products in the United States based on rated crude oil
throughput capacity. Clark Refining & Marketing is a wholly owned subsidiary of
Clark USA, which is a wholly owned subsidiary of Clark Refining Holdings. Clark
Refining & Marketing's four refineries, the Port Arthur refinery, two
refineries in Illinois and one in Ohio, represent an aggregate of over 547,000
barrels per day of rated crude oil throughput capacity. Clark Refining &
Marketing is pursuing a strategy of focusing on refining operations which it
believes will offer higher potential returns. As part of this strategy, in July
1999 Clark Refining & Marketing disposed of its retail operations for gross
proceeds of approximately $230 million and in December 1999, sold fifteen
product terminals for $35 million plus working capital. See "Available
Information" and Annex A hereto for more information regarding Clark Refining &
Marketing.
Foster Wheeler Corporation and Foster Wheeler USA
One of the principal businesses of Foster Wheeler Corporation and its
subsidiaries is the design, engineering and construction of petroleum,
chemical, petrochemical and alternative-fuels facilities and related
infrastructure, including power generation and distributing facilities,
production terminals, pollution control equipment and water treatment
facilities and process plants for the production of fine chemicals,
pharmaceuticals, dyestuff, fragrances, flavors, food additives and vitamins.
For the fiscal year ended December 25, 1998, Foster Wheeler Corporation had
$4,597 million in revenues, $47.8 million in earnings before income taxes and
$31.5 million in net losses. As of September 24, 1999, Foster Wheeler
Corporation had total assets of $3,326.3 million with stockholder's equity of
$531.3 million. Foster Wheeler Corporation is a New York corporation.
Foster Wheeler USA is a wholly owned subsidiary of Foster Wheeler
Corporation. Foster Wheeler USA is not subject to the informational
requirements of the Securities Exchange Act of 1934. The obligations of Foster
Wheeler USA under our construction contract are guaranteed by Foster Wheeler
Corporation.
PEMEX and P.M.I. Comercio Internacional
PEMEX is the largest company in Mexico and one of the largest in the world.
Since 1938, Mexican federal laws and regulations have entrusted PEMEX with the
central planning and management of Mexico's petroleum industry. According to
Petroleum Intelligence Weekly, December 14, 1998, PEMEX is the sixth largest
oil and gas company in the world and the second largest in the Americas,
accounting for nearly 5% of the world's crude oil and condensates production in
1997. In 1998, PEMEX, through P.M.I. Comercio Internacional, sold 1,712
thousand barrels per day of crude oil. PEMEX is a supplier of crude oil to the
United States.
P.M.I. Comercio Internacional, P.M.I. Trading Ltd. and their affiliates
provide PEMEX and a number of independent customers with international trading,
distribution and related services. P.M.I. Comercio Internacional and P.M.I.
Trading Ltd. sell, buy and transport crude oil, refined products and
petrochemicals in world markets. The trading volume of sales and imports of
P.M.I. Comercio Internacional, P.M.I. Trading Ltd. and their affiliates totaled
$9.0 billion in 1998, including $6.4 billion in crude oil sales.
P.M.I. Comercio Internacional has entered into several long term crude oil
supply agreements, including its long term crude oil supply agreement with us,
pursuant to which the purchasers have agreed to undertake
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projects to expand the capacity of their respective refineries to upgrade
residue from Maya. These long term crude oil supply agreements further PEMEX's
strategy to support the export value of Maya in relation to the value of other
grades of crude oil by creating incentives for refiners to invest in new high-
conversion refineries that will be capable of upgrading the relatively large
portion of residue produced from processing Maya in less efficient refining
complex configurations.
Based on its annual report on Form 20-F filed with the Commission, as of
December 31, 1998, as based on an established exchange rate for accounting
purposes of Ps. 9.8650 = U.S.$1.00 at December 31, 1998, PEMEX had total assets
of $42,896 million with equity of $17,599 million, both calculated in
accordance with Mexican generally accepted accounting principles; the amount of
PEMEX's equity calculated in accordance with U.S. generally accepted accounting
principles as of December 31, 1998 was approximately $3,170 million. For the
fiscal year ended December 31, 1998, PEMEX had total revenues of $26,939
million and net losses of $1,028 million, both calculated in accordance with
Mexican generally accepted accounting principles; the amount of PEMEX's net
losses for fiscal year ended December 31, 1998 calculated in accordance with
U.S. generally accepted accounting principles was approximately $2,623 million.
According to its annual report on Form 20-F filed with the Commission, as of
December 31, 1998, PEMEX had proved developed reserves of 12,059 million
barrels of crude oil and natural gas liquids, determined under the Society of
Petroleum Engineers' and World Petroleum Congress' definitions.
P.M.I. Comercio Internacional is not subject to the informational
requirements under the Securities Exchange Act of 1934. The obligations of
P.M.I. Comercio Internacional under our long term crude oil supply agreement
are guaranteed by PEMEX.
Air Products
Air Products has established an internationally recognized industrial gas and
related industrial process equipment business and developed strong positions as
a producer of certain chemicals. The industrial gases business segment of Air
Products recovers and distributes industrial gases such as oxygen, nitrogen,
argon and hydrogen and a variety of medical and specialty gases. Based on its
current report filed with the Commission on Form 8-K in October 1999, for the
fiscal year ended September 30, 1999, Air Products had $5,020.1 million in
sales, $724.7 million in operating income and $450.5 million in net income. As
of March 31, 1999, Air Products had total assets of $8,239.1 million with total
shareholders' equity of $2,950.2 million. Air Products is a Delaware
corporation.
In July 1999, Air Products announced that its board and the boards of L'Air
Liquide S.A. of France and the BOC Group plc, a British industrial gases
company, had agreed to the terms of a recommended offer under which Air
Products and Air Liquide will acquire BOC. The offer will formally commence in
the United States and the United Kingdom upon receipt of the necessary
regulatory approvals, which are expected in the first quarter of the year 2000.
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MANAGEMENT
Directors and Executive Officers
The following table provides information concerning the directors and
executive officers of Port Arthur Finance, Sabine River and Neches River. The
control, management and operation of Port Arthur Coker Company is vested in its
general partner, Sabine River, pursuant to a partnership agreement.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C> <C>
William C. Rusnack...... 55 President and Chief Executive Officer, Director
Bradley D. Aldrich...... 45 Executive Vice President
Maura J. Clark.......... 41 Executive Vice President and Chief Financial Officer
David I. Foley.......... 32 Director
William E. Haynes....... 56 Director
Robert L. Friedman...... 56 Director
Stephen I. Chazen....... 53 Director
</TABLE>
William C. Rusnack was appointed President and Chief Executive Officer and a
Director of Sabine River and Neches River in May 1999, and Port Arthur Finance
in August 1999. He has served as President, Chief Executive Officer, Chief
Operating Officer and a Director of Clark Refining & Marketing and Clark USA
since April 1998, and of Clark Refining Holdings since April 1999. Mr. Rusnack
previously served 31 years with Atlantic Richfield Corporation and was involved
in all areas of its energy business, including refining operations, retail
marketing, products transportation, exploration and production, and human
resources. He most recently served as President of ARCO Products Company from
1993 to 1997 and was President of ARCO Transportation Company from 1990 to
1993. He has served as a Director of Flowserve, a NYSE listed corporation,
since 1993.
Bradley D. Aldrich was appointed Executive Vice President of Port Arthur
Finance, Sabine River and Neches River in May 1999, and Port Arthur Finance in
August 1999. He has served as Executive Vice President--Refining of Clark
Refining & Marketing, since December 1994, and of Clark Refining Holdings since
April 1999. From August 1991 through November 1994, Mr. Aldrich served as Vice
President, Supply & Distribution for CF Industries, Inc., a chemical fertilizer
manufacturer and distributor.
Maura J. Clark was appointed Executive Vice President and Chief Financial
Officer of Sabine River and Neches River in May 1999, and Port Arthur Finance
in August 1999. Ms. Clark also served as a Director of Sabine River and Neches
River from May 1999 through July 1999. She has served as Executive Vice
President--Corporate Development and Chief Financial Officer of Clark Refining
& Marketing and Clark USA since August 1995, and of Clark Refining Holdings
since April 1999. Ms. Clark previously served as Vice President--Finance at
North American Life Assurance Company, a financial services company, from
September 1993 through July 1995.
David I. Foley was appointed Director of Sabine River and Neches River in May
1999, and Port Arthur Finance in August 1999. He has served as a director of
Clark Refining & Marketing and Clark USA since November 1997, and of Clark
Refining Holdings since April 1999. Mr. Foley is a Vice President at The
Blackstone Group L.P., which he joined in 1995. Prior to joining Blackstone,
Mr. Foley was a member of AEA Investors, Inc. and The Monitor Company. He
currently serves on the board of directors of Rose Hills Company.
William E. Haynes was appointed Vice President and a Director of Port Arthur
Finance, Sabine River and Neches River in August 1999. He has served as
Chairman, Chief Executive Officer and a Director of Innovative Valve
Technologies Inc., an industrial valve repair and distribution company, since
May 1997 and as President from March 1997 to October 1998. Mr. Haynes has also
served as President and Chief Executive Officer of Safe Seal, Inc., now a
subsidiary of Innovative Valve Technologies, from November 1996 through March
1997.
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From July 1993 to December 1995, Mr. Haynes served as President and Chief
Executive Officer of LYONDELL-CITGO Refining Company Ltd., a single-asset
refining company. He currently serves on the board of directors of Philip
Services Corp. and Innovative Valve Technologies Inc.
Robert L. Friedman was appointed a Director of Port Arthur Finance, Sabine
River and Neches River in July 1999. Mr. Friedman has served as a Senior
Managing Director of The Blackstone Group L.P. since March 1999. Prior to
joining Blackstone, Mr. Friedman was an attorney with Simpson Thacher &
Bartlett, a New York law firm, since 1967. He was a partner of Simpson Thacher
from 1974 to 1999 and a member of its executive committee for most of that
period. Mr. Friedman currently serves on the board of directors of American
Axle & Manufacturing, Inc., Clark Refining Holdings, Corp Group and Republic
Technologies, Inc.
Stephen I. Chazen was appointed a Director of Sabine River, Neches River and
Port Arthur Finance in July 1999. He has served as a Director of Clark Refining
Holdings since April 1999 and of Clark USA since December 1995. Mr. Chazen has
been Executive Vice President--Corporate Development and Chief Financial
Officer of Occidental Petroleum Corporation since February 1999 and Executive
Vice President--Corporate Development since May 1994. Prior to May 1994, Mr.
Chazen served in various capacities at Merrill Lynch & Co., most recently as
Managing Director. Mr. Chazen currently serves on the Governance Committees of
Equistar Chemicals L.P. and Oxy Vinyls, L.P.
Under the certificates of incorporation of each of Port Arthur Finance,
Sabine River and Neches River each of their boards of directors must consist of
five members including an "independent director" who meets specified criteria
intended to ensure that such person does not have any potential for a direct or
indirect benefit from any activity involving Clark Refining & Marketing or its
affiliates (other than Blackstone, Occidental, Port Arthur Finance, Port Arthur
Coker Company, Sabine River or Neches River). The certificates of incorporation
of these companies also require that each of Port Arthur Finance, Sabine River
and Neches River have a senior officer who meets similar criteria meant to
ensure his or her independence. Mr. Haynes currently serves as both the
independent director and independent officer of Port Arthur Finance, Sabine
River and Neches River. See "Special Legal Aspects."
In addition, under the Sabine River stockholders' agreement Occidental has
the right to designate one member of the Sabine River board of directors as
long as it maintains a specified ownership level in Sabine River. Mr. Chazen
was designated by Occidental to serve on the board of directors of Sabine
River. See "Ownership Structure and Related Party Transactions--Sabine River
Stockholders' Agreement."
Compensation and Employment Contracts
All directors are reimbursed for their reasonable expenses incurred in
attending board and committee meetings. Mr. Haynes has agreed to compensation
equal to $10,000 per year plus an additional fee of $2,500 for each day he
attends meetings or is otherwise performing his duties as a director, including
preparation for the performance of his duties prior to his appointment as
director. We are still in our pre-operation stage and did not exist during
1998. As a result, none of our directors or executive officers received any
compensation or any benefits from us during 1998. During 1999, Mr. Haynes has
received $12,500 in compensation related to his duties as a director.
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DESCRIPTION OF OUR PRINCIPAL PROJECT DOCUMENTS
The following is a summary of selected provisions of the principal documents
related to our Coker Project and should not be considered to be a full
statement of the terms of these agreements. Accordingly, the following
summaries are qualified in their entirety by reference to each agreement,
including the definitions of terms contained therein, and are subject to the
terms of the full text of each agreement. A copy of each of these agreements
has been filed as an exhibit to the registration statement of which this
prospectus is a part. Unless otherwise stated, any reference in this prospectus
to any agreement means such agreement and all schedules, exhibits and
attachments to such agreements, as amended, supplemented or otherwise modified
in effect as of the date hereof.
Long Term Crude Oil Supply Agreement
Clark Refining & Marketing entered into a long term crude oil supply
agreement with P.M.I. Comercio Internacional in March 1998, which was amended
prior to the issuance of the outstanding notes. Simultaneously with the
issuance of the outstanding notes, all the rights and obligations of Clark
Refining & Marketing under this long term crude oil supply agreement, including
the obligation to undertake the Refinery Upgrade Project, were assigned to Port
Arthur Coker Company.
In March 1998 PEMEX entered into a performance guarantee for the benefit of
Clark Refining & Marketing or any assignee thereof under the long term crude
oil supply agreement. Under such performance guarantee, PEMEX has
unconditionally and irrevocably guaranteed the obligations of P.M.I. Comercio
Internacional under the long term crude oil supply agreement.
Purchase and Sale of Maya
We are obligated to buy Maya from P.M.I. Comercio Internacional, and P.M.I.
Comercio Internacional is obligated to sell us Maya. All Maya bought and sold
under our long term crude oil supply agreement is solely for processing by us
at the Port Arthur refinery. Under the long term crude oil supply agreement,
the purchase and acceptance of delivered Maya is referred to as "lifting."
These purchase and sale obligations are determined differently in a start-up
period, a guarantee period and a phase out period. During these periods the
quantity of Maya available to us is described below.
Quantity of Maya Available to Us
Start-Up Period. The start-up period is the period beginning the first day of
the month in which we expect to first introduce feedstock into the new delayed
coking unit and ending on the last day of the month in which completion of the
Refinery Upgrade Project is achieved as described below under "--The Refinery
Upgrade Project--Obligation to Complete the Refinery Upgrade Project."
During the start-up period, the quantity available is the amount of heavy
sour crude oil that we determine we need for start-up and operation of our new
delayed coking unit and our other facilities at the Port Arthur refinery less
the "current capacity decrease" which is 23,553 barrels per stream day. The
current capacity decrease represents the decrease in the amount of heavy sour
crude oil that will be processed through the cokers in service at the time the
long term crude oil supply agreement was signed. The determining periods used
for comparison are (1) March 1997 through December 1997 and (2) the period
beginning with the first month of the start-up period.
Guarantee Period. The guarantee period begins on the earliest date to occur
of (1) the first day following the start-up period, (2) the scheduled
completion date of January 2001, as such date may be
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extended as described below under "--The Refinery Upgrade Project--Obligation
to Complete the Refinery Upgrade Project." and (3) the guarantee date of July
2001, and ends eight years thereafter. The July 2001 guarantee date can be
extended for specified events of force majeure or other acts or events that are
beyond our reasonable control, not the result of our fault or negligence, and
that we have not been able to overcome by exercising reasonable efforts,
including spending funds. Our ability to extend such date due to reason of
force majeure, however, is limited to a total of 365 days.
During the guarantee period, the formula used to determine the quantity of
Maya available to us is as follows: (1) the operating capacity, multiplied by
the "coker fraction" of 0.879, and divided by 0.366 minus (2) 23,553. Operating
capacity is reset every six months and is the average daily volume of
feedstocks processed through the new delayed coking unit during the preceding
six months as stated in an officer's certificate from us. The coker fraction
represents the percentage of the design capacity of our new coking unit
designated for processing feedstocks from heavy crude oil.
If during the guarantee period our requirements for heavy sour crude oil for
processing at the Port Arthur refinery through the new delayed coking unit
exceed the sum of (1) the quantity as determined in the previous paragraph plus
(2) 23,553, then we may notify P.M.I. Comercio Internacional of the excess and
our proposed lifting program for the month. Thereafter, the quantity of Maya
available will be the greater of the quantity for the first month following
such notice and the quantity as determined according to the previous paragraph.
Extension of Guarantee Period. If an event of force majeure affecting the
delivery, lifting or processing of Maya results in a curtailment of processing
at the Port Arthur refinery of more than 25% of the amount of Maya available on
average over any period of 15 or more consecutive days during the guarantee
period, then the guarantee period will be extended by the number of days
necessary for the Port Arthur refinery to process the quantity of Maya not
processed due to such curtailment. If such event of force majeure is a
governmental force majeure, as described below under "--Force Majeure--Purchase
and Sale Related" and no part of the reduction of Maya to be sold and delivered
to us is not applied first to reduce quantities of Maya under other crude oil
supply agreements with us or any of our affiliates, then the 25% threshold
described in the preceding sentence will not be a condition to the extension of
the guarantee period. The aggregate period of all extensions described in this
paragraph cannot exceed 270 days in respect of events of force majeure
affecting the production or delivery of Maya by P.M.I. Comercio Internacional
or the loading terminal facilities, and 365 days in respect of events of force
majeure affecting the lifting, transportation, storage or processing of Maya by
us.
Phase Out Period. After the guarantee period, the quantity of Maya available
will be the amount available in the final month of the guarantee period, as
such amount may be phased out. After the guarantee period, each party has the
option of permanently reducing the amount of Maya available in any month under
the long term crude oil supply agreement upon at least three months prior
notice to the other party. The monthly amount available under the long term
crude oil supply agreement, however, may not be reduced in any three-month
period by more than 25% of the amount available for the last month of the
guarantee period. Moreover, the amount available in any month may not be
reduced to less than 25% of the amount available for the last month of the
guarantee period while any credit or premium remains to be applied to purchases
of Maya due to a shortfall or surplus in differentials described below under
"--Differential Formula and Guarantee."
Remedies for Underlifting
If we lift less than the amount of Maya available in any month, we are
obligated to pay to P.M.I. Comercio Internacional 15% of the regular price,
which is described below under "--Price of Oil," multiplied by the number of
barrels of Maya "underlifted" that month. We, however, will not be liable for
underlifting to the extent that underlifting of the available amount in any
month results from any of the following:
. operational inability of the Port Arthur refinery to process such amount;
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. demonstrated operational reasons concerning loading terminals or tankers
(if the underlifted amount does not exceed 10% of such amount);
. our remedial work or an annual turnaround (if we give P.M.I. Comercio
Internacional the required notice);
. our previous lifting of an amount greater than the available amount in
anticipation of the weather interrupting the supply;
. force majeure as described below under "--Force Majeure--Purchase and
Sale Related"; or
. underdelivery by P.M.I. Comercio Internacional or our actions in response
to an underdelivery by P.M.I. Comercio Internacional.
P.M.I. Comercio Internacional may terminate the long term crude oil supply
agreement because we underlifted only if we underlifted because we purchased
oil in substitution of Maya or because of our failure to pay the amount due for
underlifting. We are liable to P.M.I. Comercio Internacional for any resulting
damages due to such termination subject to the limitations on liability
described below. If we suspend or reduce the amounts that we lift, P.M.I.
Comercio Internacional will not be required to resume delivery of such amount
for three months or the period of suspension, whichever is shorter.
Underdelivery by P.M.I Comercio Internacional
P.M.I. Comercio Internacional is required to maintain the contractual right
to buy Maya from Pemex Exploracion y Produccion for sale to us and the right to
use specified loading terminals for delivering Maya to us. If P.M.I. Comercio
Internacional suspends or reduces its deliveries of Maya, we are not obligated
to resume lifting of such underdelivered amount for three months or the period
of suspension or reduction, whichever is shorter.
Price of Oil
The price of Maya supplied to us will either be the regular price subject to
adjustments as a result of the differential formula calculation or the price
determined by the alternative pricing mechanism described below.
Regular Price. The regular price per barrel in U.S. dollars is determined by
a formula that is equal to (1) 40% of the average of the Platt's prices for
West Texas sour crude oil for a specified five-day period plus (2) 40% of the
average of the Platt's prices for no. 6 fuel oil having 3% sulfur content for
such five-day period plus (3) 10% of the average of the Platt's prices for
light Louisiana sweet crude oil for such five-day period plus (4) 10% of the
average of the Platt's prices for Brent crude oil for such five-day period
minus (5) a pricing adjustment which is currently $3.50. This formula and
actual dollar value of the price adjustment are subject to adjustment by P.M.I.
Comercio Internacional.
For West Texas sour and light Louisiana sweet crude oils, the "Platt's Price"
for any day is the average of the high and low spot prices for such crude oils
as quoted for that day in Platt's Crude Oil Marketwire (Spot Assessment
Section). For Brent crude oil, the Platt's Price for any day is the average of
the high and low spot prices for Brent crude oil as quoted in Platt's Crude Oil
Marketwire (Spot Assessment Section). The quotation to be used is the Dated
Brent Assessment. For no. 6 fuel oil having 3% sulfur content, the Platt's
Price for any day is the average of the high and low spot prices for such fuel
oil as quoted for that day in Platt's Oilgram U.S. Marketscan (U.S. Gulf
Section, Waterborne Column).
The five-day period used to determine the price of Maya for any delivery is
(1) either the day on which the bill of lading is issued for such delivery if
the loading of tankers for such delivery begins within the three-day range for
the arrival of a tanker in the agreed lifting program for the relevant month,
or the middle day of such three-day range if the loading of tankers begins
after the last day of the three-day range plus (2) the two days before such
first day and the two days after such first day, other than Saturdays, Sundays
or other days when the relevant quotations do not regularly appear in the
Platt's publications referred to above.
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Alternative Pricing. If, during any six-month period when the regular price
is in effect, the average volume of sales of Maya at the regular price under
contracts with buyers not affiliated with P.M.I. Comercio Internacional,
including us, that may be terminated by the buyers on three months notice to
P.M.I. Comercio Internacional or less, is below 200,000 barrels per calendar
day, or if the average number of such non-affiliated buyers of Maya was less
than three per month, P.M.I. Comercio Internacional must notify us within 15
days following the end of that six-month period. Following this notice, the
parties are required to meet to discuss and agree on whether an alternative
pricing formula is needed and what the specifics of it should be. In deciding
upon an alternative pricing formula, the parties must apply a detailed
alternative pricing methodology. If the parties do not reach an agreement on an
alternative pricing mechanism within 60 days following the end of the six-month
period, they are required to submit the matter to arbitration.
Reinstatement of Regular Price. Following the establishment of an alternative
pricing mechanism, the price of Maya will return to the regular price if,
during any six-month period that ends after the initial six month period that
the alternative pricing mechanism is in effect, the average volume of sales of
Maya at the regular price under contracts with non-affiliated buyers that may
be terminated upon three months or less prior notice to P.M.I. Comercio
Internacional is equal to or greater than 200,000 barrels per calendar day, and
the average number of such non-affiliated buyers of Maya at the regular price
is equal to or greater than three per month.
Differential Formula and Guarantee
The regular price of Maya which we are required to pay is adjusted subject to
the gross margin support mechanism as described below.
Our gross margin support mechanism, which is referred to in this summary as
the "differential guarantee," is a $15 per barrel minimum average result of the
formula, described in this summary as the differential formula, designed to
serve as a proxy for coker gross margin.
Differential Formula
The "differential formula" is an amount in U.S. dollars per barrel calculated
according to the following formula: (1) the average of the Platt's Prices for
conventional 87 octane unleaded gasoline for that month multiplied by 50% plus
(2) the average of the Platt's Prices for 0.2% sulfur no. 2 fuel oil for that
month minus (3) one and a half times the average of the Platt's Prices for 3%
sulfur no. 6 fuel oil for that month.
The term "Platt's Prices" for any day means (1) the low spot prices for
conventional 87 octane unleaded gasoline or 0.2% sulfur no. 2 fuel oil, as the
case may be, as quoted for that day in Platt's Oilgram Price Report (Spot Price
Assessments, U.S. Gulf Section, Pipeline Column) and converted to U.S. dollars
per barrel, and (2) in the case of no. 6 fuel oil, the low spot prices in U.S.
dollars per barrel for no. 6 fuel oil having 3% sulfur content as quoted for
such day in Platt's Oilgram U.S. Marketscan (U.S. Gulf Section, Waterborne
Column).
In the event that a regular quotation for a particular product or fuel oil
referred to above is suspended or interrupted for any reason in the relevant
publication for fewer than 10 of the days in any month, then the days for which
such quotation is suspended or interrupted are not taken into account in
calculating the average of the Platt's Prices for that product or fuel oil.
Moreover, that average is calculated for only the number of days in such month
that quotations were not suspended or interrupted. In the event that a regular
quotation for a particular product or fuel oil referred to above is suspended
or interrupted for any reason in the relevant publication for 10 or more days
in any month, then the parties are required to meet promptly to discuss and
agree upon an appropriate alternative reference price for calculation of the
differential.
Alternative Differential Calculation
In the event that (a) the absolute value of the arithmetic average, for the
immediately preceding 24 month period, of the difference between (1) the
regular price and (2) the sum of (A) 0.679 multiplied by the price of
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no. 6 fuel oil plus (B) 0.185 multiplied by the sum of the price of
conventional 87 octane unleaded gasoline and the price of 0.2% sulfur no. 2
fuel oil minus (C) 2.874 "Maya proxy" exceeds (b) $0.50 per barrel for any
month, then the price of no. 6 fuel oil to be used in calculating the
Differential beginning in the month following that 24-month period will be
equal to the sum of (A) 1.473 multiplied by the regular price, plus (B) 4.233,
minus (C) 0.272 multiplied by the sum of the price of conventional 87 octane
unleaded gasoline and the price of 0.2% sulfur no. 2 fuel oil. Each of these
fuel oil and gasoline prices are to be determined according to the provisions
described above under "--Differential Formula and Guarantee."
Reinstatement of Differential Calculation
If an alternative differential calculation becomes applicable and thereafter
the absolute value of the arithmetic average, for the immediately preceding 24
month period, of the difference between the regular price and the Maya proxy is
equal to or less than $0.50 per barrel, then the price of no. 6 fuel oil to be
used in calculating the differential beginning in the month following such 24-
month period is as determined according to the formula used for calculating the
differential.
Determination of Surpluses and Shortfalls. A "monthly shortfall" for any
month all or part of which is within the guarantee period, is the amount equal
to the product of (1) $15.00 less the differential for that month, if greater
than zero, multiplied by (2) 36.6% of the monthly quantity of Maya delivered to
us by P.M.I. Comercio Internacional. If P.M.I. Comercio Internacional
underdelivers in any month, however, it will be deemed to have delivered us the
entire amount of Maya available in such month less any deliveries excused for
force majeure.
A "monthly surplus" for any month all or part of which is within the
guarantee period, is the amount equal to the product of (1) the differential
for that month less $15.00, if greater than zero, multiplied by (2) 36.6% of
the quantity delivered to us by P.M.I. Comercio Internacional in that month, as
prorated for any month which is only partly within the guarantee period. In the
event, however, that completion of the Refinery Upgrade Project does not occur
by the guarantee date in July 2001, as such date may be extended by reason of
force majeure, for the purpose of determining any monthly surplus P.M.I.
Comercio Internacional will be deemed to have delivered the entire quantity of
Maya available for such month as if completion had been achieved. In addition,
in the event that we underlift Maya on or after the completion of the Refinery
Upgrade Project then, for the purpose of determining any monthly surplus,
P.M.I. Comercio Internacional will be deemed to have delivered the entire
quantity of Maya available to us in such month less any volume that we have
been excused from underlifting. See "--Remedies for Underlifting" above.
A "quarterly shortfall" with respect to any calendar quarter, is the amount,
if any, by which (1) the sum of the monthly shortfalls in such calendar quarter
exceeds (2) the sum of the monthly surpluses in such calendar quarter.
A "quarterly surplus" with respect to any calendar quarter, is the amount, if
any, by which (1) the sum of the monthly surpluses in such calendar quarter
exceeds (2) the sum of the monthly shortfalls in such calendar quarter.
Credit Interest. "Credit interest" with respect to any calendar quarter is
the amount of interest calculated for such calendar quarter (other than any
period during which processing at the Port Arthur refinery is curtailed due to
a force majeure event that extends the guarantee period) at LIBOR plus 1% on
the sum, if greater than zero, of (1) the aggregate of all credits calculated
pursuant to the provisions described under "--Shortfall in Differentials" below
for all prior calendar quarters, plus (2) the aggregate amount of credit
interest for all prior calendar quarters, minus (3) the aggregate of all
premiums calculated pursuant to the provisions described under "--Surplus in
Differentials" below for all prior calendar quarters.
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Shortfall in Differentials
If at the end of any calendar quarter, all or part of which is within the
guarantee period, there is a quarterly shortfall, we will receive a credit
against the purchase price of Maya delivered in the succeeding calendar
quarter. The credit will be equal to the sum of such quarterly shortfall minus
the amount of the credit that the aggregate of all quarterly surpluses for
prior calendar quarters exceeds the aggregate of all quarterly shortfalls and
credit interest for prior calendar quarters. See "--Reinstatement of
Differential Calculation--Determination of Surpluses and Shortfalls" and "--
Credit Interest."
The sum of such credit plus any credit carryforward from such calendar
quarter minus any premium carryforward from such calendar quarter will be
applied at the rate of $5.00 per barrel of Maya beginning with the first barrel
delivered in such succeeding calendar quarter. The "premium carryforward" is
the amount that has not been applied to Maya delivered in such succeeding
calendar quarter by the end of the calendar quarter plus interest at LIBOR plus
1% calculated for the period of such succeeding calendar quarter. The maximum
credit to be applied in such succeeding calendar quarter is $30 million. If the
sum is less than zero, we must pay a premium on the purchase price of Maya
delivered in the succeeding calendar quarter. The premium is equal to the
positive value of such sum applied at the rate of $5.00 per barrel of Maya
beginning with the first barrel delivered in such succeeding calendar quarter.
The maximum premium to be applied in such succeeding calendar quarter is $20
million.
If, by the end of any such succeeding calendar quarter there remains an
amount which has not been applied as outlined in the preceding paragraph or in
provisions described below under "--Surplus in Differentials," to Maya
delivered in such succeeding calendar quarter, then such remaining amounts,
together with interest at LIBOR plus 1% calculated for the period of such
succeeding calendar quarter, will constitute a credit carryforward from such
succeeding calendar quarter.
If, by the end of any calendar quarter, all or part of which is within the
guarantee period, both the quarterly surplus and the quarterly shortfall equal
zero, and the sum of any credit carryforward minus any premium carryforward is
greater than zero, then we will receive a credit equal to such sum. The credit
is applied at the rate of $5.00 per barrel of Maya, beginning with the first
barrel of Maya delivered in such succeeding calendar quarter. The maximum
aggregate amount that may be applied is $30 million.
Surplus in Differentials
If, by the end of any calendar quarter, all or part of which is within the
guarantee period, the sum of monthly surpluses, exceeds the sum of monthly
shortfalls, there is a "quarterly surplus" in such calendar quarter and we are
required to pay a premium on the purchase price of Maya delivered beginning in
the succeeding calendar quarter. The amount of the premium equals the lesser of
(1) the amount of such quarterly surplus and (2) the amount that the aggregate
of all quarterly shortfalls and credit interest for prior calendar quarters and
such calendar quarter exceeds the aggregate of all quarterly surpluses for
prior calendar quarters.
The sum of (1) such premium, plus (2) any premium carryforward from such
calendar quarter minus (3) any credit carryforward from such calendar quarter
will be applied at the rate of $5.00 per barrel of Maya beginning with the
first barrel delivered in such succeeding calendar quarter. Such sum may be
applied up to a maximum aggregate amount in such succeeding calendar quarter of
$20 million. If the sum is less than zero, we will receive a credit against the
purchase price of Maya delivered in the succeeding calendar quarter. Such
credit will be equal to the positive value of such sum applied at the rate of
$5.00 per barrel of Maya beginning with the first barrel delivered in such
succeeding calendar quarter. The maximum credit that may be applied in such
succeeding calendar quarter is $30 million.
If, by the end of any calendar quarter, all or part of which is within the
guarantee period, both the quarterly surplus and the quarterly shortfall equal
zero, and the sum of any credit carryforward minus any premium carryforward is
less than zero, then we are required to pay a premium. The premium is equal to
the positive value of such sum, applied at the rate of $5.00 per barrel of
Maya, beginning with the first barrel of
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Maya delivered in such succeeding calendar quarter. The premium may be applied
to a maximum aggregate amount in such succeeding calendar quarter of $20
million.
End of Guarantee Period
The net adjustment amount (positive or negative) existing at the end of the
period during which the coker gross margin support is available will be applied
over the remaining term of the agreement, after giving effect to the operation
of the differential mechanism in the last period. However, the discount we
receive in any quarter will not exceed $30 million and the premium we pay in
any quarter will not exceed $20 million.
Payment Terms
We are required to make all payments to P.M.I. Comercio Internacional when
due in immediately available U.S. dollars. Interest accrues daily on the amount
of any overdue payment, commencing on the date that the payment was due. The
rate per annum will be equal to 2% above the prime rate. We are required to
make all payments due P.M.I. Comercio Internacional punctually and without set-
off.
Security for Payment
Under specified circumstance, P.M.I. Comercio Internacional requires us to
provide security for the performance of our payment obligations by means of one
or more stand-by letters of credit or a financial guaranty insurance policy
meeting specified requirements. Such letters of credit or financial guaranty
insurance policy must always equal at least the total amount of all outstanding
invoices under the long term crude oil supply agreement plus 110% of the
estimated value of Maya that we have lifted but for which P.M.I. Comercio
Internacional has yet to issue an invoice. We will meet this obligation by
entering into the oil payment guaranty insurance policy with Winterthur.
Suspension of Deliveries
P.M.I. Comercio Internacional may suspend deliveries of Maya if we do not
make a payment of $100,000 or more that is due P.M.I. Comercio Internacional
under the long term crude oil supply agreement or any other crude oil agreement
between us. P.M.I. Comercio Internacional may also suspend deliveries if we do
not establish and maintain any stand-by letter of credit or financial guaranty
insurance policy that we are required to maintain. If P.M.I. Comercio
Internacional suspends deliveries and we subsequently make the required payment
together with accrued interest then P.M.I. Comercio Internacional is required
to resume deliveries but is not obligated to do so for a period of time equal
to the shorter of the suspension period or three months.
Termination
If we or P.M.I. Comercio Internacional default under our respective purchase
or sale obligations and such default continues for 60 days, the other party may
terminate the long term crude oil supply agreement effective immediately upon
notice.
Force Majeure--Purchase and Sale Related
General. Neither party is liable for any damages that arise from delays or
defaults in performance of the purchase and sale or delivery term provisions of
the long term crude oil supply agreement that are due to force majeure. If
either of us intends to rely on an event of force majeure to suspend our
performance, that party must give prompt notice of the event to the other
party. Force majeure will not relieve us of our obligation to pay for all Maya
delivered or any other amount that we owe to P.M.I. Comercio Internacional
under the long-term crude oil supply agreement.
Event of Force Majeure. Force majeure for these purposes includes any act or
event that prevents or delays either party from performing its obligations if
and to the extent that the act or event is beyond the party's control and is
not due to its fault or negligence, and to the extent that the party was not
able to overcome the consequence of by commercially reasonable efforts,
including spending funds.
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. acts of God or of the public enemy, floods, fire, electrical shortages or
blackouts;
. hostilities, war, blockades or riots;
. strikes or other labor disturbances that are not the result of breach of
a labor contract by the affected party;
. earthquakes, tides, storms or bad weather at the loading terminal;
. breakdown or injury to producing or delivering facilities in Mexico or to
receiving or processing facilities at the Port Arthur refinery;
. interruption, decline or shortage of P.M.I. Comercio Internacional's
supply of Maya available for export from Mexico, including shortage due
to increased domestic demand;
. laws, change in laws, decrees, regulations, orders or other directives or
actions of either general or particular application, other than as may be
directed to aspects of the long term crude oil supply agreement not
common to long term crude oil supply agreements generally, of the
government of Mexico or the government of the United States of America or
any agency thereof that does not include P.M.I. Comercio Internacional,
Pemex Exploracion y Produccion, or any of P.M.I. Comercio Internacional's
other affiliates; and
. ""governmental force majeure," which means the reduction of P.M.I.
Comercio Internacional's Maya deliveries under its contractual
commitments to export customers in general as a result of a direction
from the federal government of Mexico to curtail crude oil exports
despite the availability of Maya for export.
Apportionment. If P.M.I. Comercio Internacional does not have enough Maya
available to export for sale to us and its other customers because of force
majeure, it may not reduce the quantity of Maya that it sells to us by more
than the percentage that it reduces the total amount of its sales of Maya to
other export customers under agreements to supply 50,000 barrels per calendar
day or more of Maya or to its other customers in general if the agreements
account for less than 20% of its exports of Maya. P.M.I. Comercio Internacional
is not required to buy crude oil from another party to sell to us because of an
event of force majeure. If, however, the event is a governmental force majeure,
as described above, then the amount by which it would otherwise reduce the
quantity of Maya to be sold to us shall first be applied to reduce quantities
of Maya scheduled for sale and delivery to the Port Arthur refinery under any
other crude oil supply agreement with us or any of our affiliates.
The Refinery Upgrade Project
Obligation to Complete the Refinery Upgrade Project
Under the long term crude oil supply agreement, we are obligated to complete
the Refinery Upgrade Project by the scheduled completion date of January 2001.
If, however, the Refinery Upgrade Project is not complete by such scheduled
completion date, we may make payments to P.M.I. Comercio Internacional to
extend the scheduled completion date according to a specified formula. Such
payments are expected to equal approximately $400,000 per month for each of the
first six months we choose to extend the scheduled completion date and
approximately $200,000 per month for each month beyond six months that we
choose to extend the scheduled completion date. Such date is subject to
extension for specified events of force majeure or other events beyond our
reasonable control in the same manner as extension of the guarantee date up to
a total of 365 days.
For purposes of the long term crude oil supply agreement and this summary of
such agreement, completion of the Refinery Upgrade Project occurs when:
. all significant aspects of the Refinery Upgrade Project are mechanically
complete and substantially conform to their design plans and
specifications;
. the commission testing of processing units in the Refinery Upgrade
Project is complete; and
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. the Port Arthur refinery and the new delayed coking unit are able to
process at least 80% of their design capacities on average over a 30 day
consecutive period, or, we commence operation of the new delayed coking
unit and other equipment integrated into the Port Arthur refinery that we
own and we and Foster Wheeler USA stop making efforts to achieve those
average processing capacities.
If we fail to extend the scheduled completion date, P.M.I. Comercio
Internacional has the right to terminate the long term crude oil supply
agreement. In such case, we are liable to P.M.I. Comercio Internacional for
their resulting damages, subject to our termination rights described in the
following paragraph and the limitations on liability described below.
Our Right to Terminate the Long Term Crude Oil Supply Agreement
Prior to the first day of the month in which we expect to first introduce
feed into our new delayed coking unit, we may terminate the long term crude oil
supply agreement under the following circumstances:
. If we abandon the Refinery Upgrade Project or decide to continue the
Refinery Upgrade Project without the benefit of the long term crude oil
supply agreement or an alternative supply arrangement, we may terminate
the long term crude oil supply agreement by first giving notice to P.M.I.
Comercio Internacional and within fifteen days paying them a termination
payment. For the purposes of the long-term crude oil supply agreement an
alternative supply arrangement means any contract, agreement or
arrangement, other than the long term crude oil supply agreement,
pursuant to which we, any purchaser of the Port Arthur refinery or any
part thereof, or any affiliate of any of us has the right to purchase, on
a long term basis, any substantial portion of the Port Arthur refinery's
requirements for heavy sour crude oil attributable to the Refinery
Upgrade Project or to any similar upgrade project designed to increase
significantly the Port Arthur refinery's capacity to process heavy sour
crude oil having characteristics similar to Maya; and
. We may also terminate the long term crude oil supply agreement without
abandoning the Refinery Upgrade Project by entering into an alternative
supply arrangement and paying P.M.I. Comercio Internacional the
termination payment described above plus an additional fee equal to their
damages resulting from a breach of the long term crude oil supply
agreement in its entirety.
Limitation of Liability
Neither party is liable for any consequential or punitive damages of any kind
arising out of or in any way connected with the performance, of or failure to
perform, the long term crude oil supply agreement including, but not limited
to, losses or damages resulting from shutdown of plants or inability to perform
sales or any other contracts arising out of or in connection with the
performance or nonperformance of the long term crude oil supply agreement. This
liability limitation is not meant to limit either party's right to recover its
incidental damages or damages associated with the mechanism for adjustment to
our payment obligations described under "--Differential Formula and Guarantee"
above.
Miscellaneous Provisions
Dispute Resolution
If a dispute arises from the long term crude oil supply agreement, the
parties are to seek to settle the dispute through good faith negotiation
between senior executives. If after 60 days the dispute is not settled, either
party may initiate arbitration of the dispute. All disputes arising from the
long term crude oil supply agreement will be settled finally by arbitration
under the Rules of Arbitration and Conciliation of the International Chamber of
Commerce. The arbitration will occur in New York, in English and the
substantive law will be that of the State of New York.
Governing Law
The long term crude oil supply agreement is governed by and interpreted in
accordance with the laws of the State of New York. The United Nations
Convention on the International Sale of Goods will not apply to the long term
crude oil supply agreement.
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Language
English is the language of the long term crude oil supply agreement and
controls over any Spanish language translations.
Entire Agreement
The long term crude oil supply agreement supersedes all prior agreements
between us and our affiliates and P.M.I. Comercio Internacional and its
affiliates except the crude oil sales agreement entered into on January 1,
1990, between P.M.I. Comercio Internacional and Clark Oil & Refining
Corporation (the predecessor company to Clark Refining & Marketing), as amended
and assigned, which remains in force.
Construction Contract
We entered into a contract for engineering, procurement and construction
services with Foster Wheeler USA in July 1999. This construction contract
obligates Foster Wheeler USA to engineer, design, construct, erect, install and
test our Coker Project, to provide procurement services and training support
for us and to oversee start-up, operation and performance testing of our Coker
Project.
Effective Date and Commencement of Work
Foster Wheeler USA did not commence work under the construction contract and
we had no obligation with respect to the construction contract until August
1999 when:
. all other documents related to our Coker Project had been executed and
delivered by all parties;
. the initial issuance of outstanding notes had occurred and we had
sufficient funds available to acquire the work in progress related to our
Coker Project from Clark Refining & Marketing; and
. we delivered a notice to proceed to Foster Wheeler USA.
Contractor's Responsibilities
Scope of Work
The responsibilities of Foster Wheeler USA under the construction contract
include, among other things:
. providing all engineering and design services necessary for the
completion of our Coker Project;
. procuring all labor, materials, equipment, supplies and other services
necessary for completion of our Coker Project except supplies to be
provided by us;
. providing all construction, erection and installation services necessary
for the completion of our Coker Project except services to be provided by
us;
. obtaining all permits necessary for the construction, except permits
provided by us;
. performing all cleanup, removal and disposition services with respect to
hazardous waste and other debris resulting from its work at the
construction site;
. initiating, maintaining and supervising all safety precautions and
programs in connection with performance of the construction contract;
. cooperating with, and overseeing, our start-up of our new processing
units and the operation of our new processing units during start-up and
performance testing;
. carrying out all tests and inspections required under the construction
contract;
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. preparing initial operational guidelines for our new processing units,
cooperating with us in preparation of initial drafts of operation manuals
for our units and ensuring the proper content of final operating manuals;
. providing maintenance and instruction manuals and mechanical catalogs for
our new processing units;
. providing lists of recommended spare parts for our new processing units
and cooperating with us and Purvin & Gertz in its role as independent
engineer to ensure procurement of spare parts; and
. fulfilling Purvin & Gertz's requests for information.
Subcontracting
Foster Wheeler USA may not subcontract any portion of the work to be
performed under the construction contract without our consent. Foster Wheeler
USA will remain responsible for all its obligations under the construction
contract regardless of its reliance on subcontractors. Foster Wheeler USA will
ensure that major subcontract agreements provide that, in the event Foster
Wheeler USA is terminated as contractor, (1) the subcontractor will continue
performance if requested by us and (2) the subcontract may be assigned to us or
to the holders of our senior debt for security on the same terms as the
original agreement.
Assumption of Risk
Prior to execution of the construction contract, Foster Wheeler USA was
performing portions of the work at the construction site pursuant to an interim
reimbursable contract with Clark Refining & Marketing. Foster Wheeler USA has
acknowledged, among other things, that it has examined the construction site
and made independent inquiries into the availability of materials, labor and
other supplies and is satisfied that each is sufficient for performance of its
obligations. Foster Wheeler USA has also acknowledged that we and Clark
Refining & Marketing have provided them certain other information with respect
to existing subsurface conditions and facilities at the construction site and
has agreed that the construction site is satisfactory for performance of the
construction contract. Accordingly, Foster Wheeler USA has assumed price and
schedule risks associated with construction site conditions, except risks
associated with hazardous waste existing at the construction site on the
execution date of the construction contract other than hazardous waste that is
known to us that we have disclosed to Foster Wheeler USA.
Contract Amount and Payment
Fixed Price
As full compensation for performance of its obligations under the
construction contract, we will pay Foster Wheeler USA a fixed price of $544
million. The fixed price is subject to change based on valid change orders, as
described below under "--Changes in Work." This price includes work performed
under Clark Refining & Marketing's existing reimbursable contract with Foster
Wheeler USA through the effective date of the construction contract.
Approximately $157.1 million paid under such contract through July 1999 and
related to our Coker Project has been credited against our fixed contract
price. We are required to make payments to Foster Wheeler USA in monthly
installments based on receipt and approval of invoices from Foster Wheeler USA
and the achievement of certain construction milestones.
Letters of Credit or other Payment Security
As security for its performance under the construction contract, Foster
Wheeler USA has provided us with a letter of credit on the effective date of
the construction contract. Foster Wheeler USA is obligated to maintain one or
more letters of credit with an aggregate amount available for drawings always
equal to at least 10% of amounts actually paid by us to Foster Wheeler USA less
the amount of all prior drawings other than drawings made when the rating of
the issuer of the letter of credit has fallen below the required rating or
final completion
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has not occurred 30 days prior to the expiration of such letter of credit and
it has not been extended or substituted. Foster Wheeler USA has the option to
fulfill its letter of credit obligations, in whole or in part, by either
depositing cash with us pursuant to a cash collateral agreement acceptable to
us or our senior debt holders or by requesting that we withhold amounts that
would otherwise be payable to them under the construction contract.
The issuer of such letter of credit must meet specified standards including,
among others, that it have outstanding unsecured debt rated A or better by
Standard & Poor's or A2 or better by Moody's.
Our Responsibilities
Our responsibilities under the construction contract include, among other
things:
. paying installments of the fixed contract amount upon achievement of
construction milestones;
. providing limited construction services;
. providing water and temporary utilities necessary for Foster Wheeler
USA's performance of the construction contract and providing other
consumables; and
. operating our new processing units and other equipment during start-up
and testing, including supply of necessary feedstreams and disposition of
output, subject to Foster Wheeler USA's right to exercise such
supervision and control as necessary for its performance of the
construction contract.
Independent Engineer
The construction contract entitles the holders of our senior debt to retain
an independent engineer, Purvin & Gertz, who will, among other things:
. review and report on Foster Wheeler USA's monthly status reports;
. review and monitor the performance tests and other tests and inspections
performed by Foster Wheeler USA;
. review and approve applications by Foster Wheeler USA for installment
payments of the contract amount;
. inspect Foster Wheeler USA's performance and any labor, materials and
equipment furnished or used by Foster Wheeler USA;
. approve use by Foster Wheeler USA of non-prototype equipment or
subcontractors not on the pre-approved list of subcontractors; and
. approve achievement of mechanical completion and final completion, each
as described below.
Mechanical Completion and Other Conditions to Performance Testing
Mechanical Completion
Foster Wheeler USA is obligated to achieve mechanical completion of our
Coker Project before commencement of commissioning and start-up of our new
processing units by March 2001, as such date may be extended pursuant to valid
change orders.
Mechanical completion of our Coker Project will occur when the following
have been achieved:
. each physically discrete unit of our Coker Project has been erected and
has passed specified tests;
. Foster Wheeler USA has completed all work under the construction contract
except for minor items and inconsequential defects and deficiencies,
which will be considered punch list items;
. we, Foster Wheeler USA and Purvin & Gertz have agreed to a punch list and
a start-up protocol;
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. our Coker Project can operate safely and meets all requirements of the
construction specifications necessary to begin commissioning and start-up
activities;
. we and Purvin & Gertz have approved a notice of mechanical completion
delivered by Foster Wheeler USA; and
. we have received final operating manuals and maintenance and instruction
manuals from Foster Wheeler USA.
The actual date of mechanical completion will be deemed to occur on one of
the following dates:
. on the date when all requirements for mechanical completion, as described
above, have been achieved;
. on the date when all requirements for mechanical completion are met
except for mechanical completion of our new delayed coking unit, provided
that it is mechanically complete within 14 days of the achievement of all
other conditions to mechanical completion; or
. on the date that is 14 days prior to the date that mechanical completion
of our new delayed coking unit is achieved if mechanical completion of
our new coking unit is achieved more than 14 days after the date that all
other conditions to mechanical completion are achieved.
Commissioning and Start-Up
Once our Coker Project is mechanically complete, we, with the cooperation of
Foster Wheeler USA and Purvin & Gertz, will conduct test runs and other start-
up activities for our Coker Project. Foster Wheeler USA will oversee these
commissioning activities and monitor them to determine whether these activities
are conducted in conformance with the construction contract and the start-up
protocol developed by the parties. Foster Wheeler USA must give us immediate
notice if any commissioning or start-up activities are not conducted in
accordance with such standards. Accordingly, Foster Wheeler USA will not have a
defense to its liabilities under the construction contract based on our use of
improper procedures or other occurrences during this period unless it gives us
such notice.
Performance Testing and Guarantees
Following mechanical completion of our Coker Project, Foster Wheeler USA is
responsible for conducting performance tests to (1) demonstrate achievement of
certain performance guarantees of Foster Wheeler USA, (2) demonstrate
achievement of final completion of our Coker Project and (3) determine damages
for failure to achieve such performance and completion guarantees.
Guaranteed Reliability
Foster Wheeler USA will conduct a reliability test to demonstrate whether
during a continuous 60-day period our new processing units achieve 100% of a
specified guaranteed "daily net margin" while not exceeding the guaranteed
emissions and effluent limits described below. The calculation of the daily net
margin is based on a specified price set for valuing feedstocks processed
during reliability testing, the variable costs of processing such feedstocks
and the products produced by our new units during such testing and is intended
to serve as a proxy to demonstrate whether our new processing units can
reliably generate expected operating margins.
Substantial Reliability
If a reliability test demonstrates that our new processing units have
achieved 95% of the specified guaranteed daily net margin, Foster Wheeler USA
will be deemed to have achieved substantial reliability.
Guaranteed Capacity
Foster Wheeler USA will also conduct a capacity test to demonstrate whether
for a continuous uninterrupted 72 hour period each of our new processing units
achieves specified guaranteed design capacities while not exceeding the
guaranteed emissions and effluent limits.
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Guaranteed Emissions and Effluent Limits
For either a capacity or reliability test to be successful, Foster Wheeler
USA must also demonstrate during such test that operation of our new processing
units will meet specified guaranteed standards for emission of gaseous, liquid
and solid pollutants which are designed to ensure compliance with our air
emissions permit.
Final Completion
Foster Wheeler USA is obligated to achieve "final completion" of our Coker
Project by December 2001 (as such date may be extended pursuant to valid change
orders). Final completion of our Coker Project will occur when, among other
things:
. mechanical completion has been achieved;
. either (1) a reliability test has demonstrated that 100% of the
guaranteed reliability has been achieved and the guaranteed capacities
described above have been achieved or (2) Foster Wheeler USA has
successfully concluded a reliability test demonstrating achievement of
substantial reliability as described above and has paid us the applicable
amounts described below under "--Buydown Payments for Failure to Achieve
Guaranteed Reliability or Capacity";
. Foster Wheeler USA has paid us any late payments that are due to us as
described below under
"--Damages for Delay";
. all punch list items have been completed or the completion of such items
has been temporarily waived by us, with the approval of Purvin & Gertz;
and
. we and Purvin & Gertz have issued a certificate approving Foster Wheeler
USA's notice of final completion.
Damages for Delay
Delay in Achieving Mechanical Completion
If Foster Wheeler USA fails to achieve mechanical completion by January 2001
(as such date may be extended pursuant to valid change orders), they are
obligated to pay us late payments for each day from such date until December
2001 (as such date may also be extended pursuant to valid change orders).
Delay in Achieving Guaranteed Reliability
Without duplication of late payments for delay in achieving mechanical
completion, Foster Wheeler USA is also obligated to pay us late payments for
each day after January 2001 (as such date may be extended pursuant to valid
change orders) that it fails to demonstrate achievement of 100% of the
guaranteed daily net margin.
Amount of Late Payments
Late payments will be calculated on a daily basis. Late payments due each day
will equal one-seventh of the applicable cost factor in the following chart.
After July 2001 late payments will also include a "throughput factor" intended
to replace the loss of expected profits.
<TABLE>
<CAPTION>
Date Cost Factor
---- -----------
<S> <C>
January 1, 2001 -- January 31, 2001.............................. $ 100,000
February 1, 2001 -- March 31, 2001............................... $1,146,250
April 1, 2001 -- June 30, 2001................................... $1,842,500
July 1, 2001 -- September 30, 2001............................... $1,595,000
October 1, 2001 forward.......................................... $2,750,000
</TABLE>
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The throughput factor will be calculated on a daily basis according to the
following formula:
$12.00 * (76,300 less the number of barrels of throughput processed by our
new coker on that day)
76,300 barrels per day is approximately 95% of the design capacity of our new
coking unit.
Operating Revenue Credit Against Late Payments
For each day that Foster Wheeler USA makes late payments to us, we will
provide them a credit against future late payments equal to our operating
revenue for such day. For this purpose our operating revenue is defined as the
difference between our cash revenues and cash expenses attributable to such
day.
Early Completion Bonus
For each day that Foster Wheeler USA achieves mechanical completion prior to
the target date of November 2000 or 60 days prior to guaranteed mechanical
completion, whichever is later, they will receive a bonus payment equal to one-
seventh of $900,000 for each such day during September 2000 and one-seventh of
$600,000 for each such day during October 2000. The total amount of all such
bonuses, however, may not exceed $6 million. In no event will Foster Wheeler
USA receive such bonus payments if it (1) incurs an obligation to make late
payments or payments for failure to achieve its guarantees of capacity or
reliability or (2) fails to achieve final completion of our Coker Project.
Buydown Payments for Failure to Achieve Guaranteed Reliability or Capacity
If Foster Wheeler USA fails to achieve 100% of the guaranteed daily net
margin described above, it will be obligated to make buydown payments according
to a specified formula.
If Foster Wheeler USA fails to achieve 100% of the guaranteed design
capacities it will be obligated to make additional buydown payments to us
according to specified formulas up to a maximum amount of $2 million related to
our new coking unit and up to $5 million related to our new hydrocracker.
Limitations on Liability
Late Payments
Foster Wheeler USA's liability for failing to achieve mechanical completion
by January 2001, as such date may be extended by valid change orders, or
failure to achieve the guaranteed daily net margin by such date is limited to
making the late payments described above. In addition, if Foster Wheeler USA
demonstrates achievement of substantial reliability during a reliability test,
its liability for making late payments to us will be capped at $70 million.
Buydown Payments
Foster Wheeler USA's liability for failing to achieve the guaranteed daily
net margin, the guaranteed standards of emissions and effluent limits or the
guaranteed capacities is limited to making the payments described above under
"Buydown Payments for Failure to Achieve Guaranteed Reliability or Capacity."
In addition, if Foster Wheeler USA demonstrates achievement of substantial
reliability during a reliability test, its liability for making such payments
to us will be capped at $75 million.
Total Damages
Foster Wheeler USA's total liability for damages arising under the
construction contract is capped at 100% of our fixed contract amount. This
liability cap, however, does not apply to any damages arising out of Foster
Wheeler USA's indemnification obligations.
Integration of Other Portions of the Refinery Upgrade Project
Work by Foster Wheeler USA. Foster Wheeler USA bears the risk of successfully
integrating our new units with the remainder of the Port Arthur refinery to the
extent that the refinery is modified or improved
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by the work to be performed by Foster Wheeler USA under its reimbursable
contract with Clark Refining & Marketing. In the event of any defect or
deficiency in such work, the obligation to correct defects or deficiencies is
the responsibility of Foster Wheeler USA and Clark Refining & Marketing.
Work by Us or Clark Refining & Marketing. We and Clark Refining & Marketing
bear the risk of successfully integrating our new units with the remainder of
the Port Arthur refinery to the extent in each case that work on units,
equipment items or systems is performed by Clark Refining & Marketing or us, as
the case may be.
Overall Schedule. Foster Wheeler USA must identify and notify us of the
overall schedule of work to be performed by it under its reimbursable contract
with Clark Refining & Marketing and the work required to be performed by Clark
Refining & Marketing as is required for the integration of our new processing
units with the remainder of the Port Arthur Refinery.
Limitation on Foster Wheeler USA's Defenses. The failure of Foster Wheeler
USA to perform under its reimbursable contract with Clark Refining & Marketing
will not provide a defense to or excuse Foster Wheeler USA from making late
payments or buydown payments in the event it fails to achieve mechanical
completion, final completion or meet its capacity, reliability and emissions
and effluent limit guarantees if:
. Foster Wheeler USA performs the work under the reimbursable contract
with Clark Refining & Marketing with our consent; and
. Clark Refining & Marketing completes its portion of the Refinery Upgrade
Project in a timely fashion and in accordance with the schedule provided
to us by Foster Wheeler USA.
Warranty Provisions
Warranties
Foster Wheeler USA warrants and guarantees to us, among other things, that
(1) all equipment, materials and other items furnished by them will be new and
meet a generally accepted standard of quality applicable to the design and
engineering of oil refinery installations of similar size, type and design to
the Port Arthur refinery, free from improper workmanship and defects and
deficiencies and in conformity with the construction contract, applicable law,
permits and manufacturer's specifications and warranty requirements and (2)
when complete, our Coker Project shall be free of all defects and deficiencies
caused by errors and omissions in engineering and design or otherwise.
Warranty Periods
Foster Wheeler USA's obligations and liabilities with respect to its
warranties under the construction contract extend for the following periods:
<TABLE>
<CAPTION>
Nature of Defect or Deficiency Period of Warranty
------------------------------ ------------------
<S> <C>
Engineering and design errors and omissions and One year after final
defects and deficiencies in the structure and completion
foundations of our Coker Project
A defect or deficiency arising or first The earlier of (1) one year
existing in from discovery and (2) two
the year following final completion and which years after final completion
would not have been revealed by a reasonable
inspection at the end of such year
All others One year after final
completion
</TABLE>
If any machinery, equipment, materials or supplies are replaced during any
warranty period, then the warranty period for such machinery, equipment,
materials or supplies will be extended for one year after
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replacement. Similarly, if any errors, omissions or resulting defects and
deficiencies in engineering design or otherwise are corrected during the last
year of a warranty period, the warranty for the corrected work will be extended
for one year after correction.
Warranty Obligations
During any warranty period Foster Wheeler USA, at its own expense and without
any additional compensation, is obligated to (1) correct promptly any warranted
work performed that is defective or not in conformance with applicable
standards and (2) correct any defects and deficiencies caused by errors and
omissions in engineering and design or otherwise as soon as reasonably possible
after receipt of notice from us specifying such defects and deficiencies.
Subcontractor Warranties
Foster Wheeler USA must obtain guarantees and warranties from subcontractors
on all machinery, equipment, services, materials, supplies and other items used
and installed in connection with the construction contract. Such guarantees and
warranties are to extend for a period of no less than twelve months from start-
up or eighteen months after delivery, whichever occurs first. Upon expiration
of its warranties or termination of the construction contract, Foster Wheeler
USA is obligated to assign all Foster Wheeler USA's rights under subcontractor
warranties to us.
Indemnities
Foster Wheeler USA will indemnify us for damages relating to:
. any personal injury or property damage arising before mechanical
completion and in any way connected with the performance of the work
without regard to whether our negligence or fault is a concurrent or
contributory cause of such damage;
. any breach of representation, warranty or covenant of Foster Wheeler USA;
. any failure by Foster Wheeler USA to comply with any law or governmental
regulation which causes damages to arise before mechanical completion;
. any claimed or actual infringement of intellectual property rights
arising in connection with Foster Wheeler USA's performance of the
construction contract prior to mechanical completion;
. any liabilities arising from hazardous waste brought or created on our
Coker Project site after commencement its work at the site; and
. any liens, claims and demands which arise in connection with work or
materials performed or supplied by Foster Wheeler USA.
We will indemnify Foster Wheeler USA for any liabilities arising from
hazardous waste located at the Coker Project site on or prior to Foster Wheeler
USA's commencement of work at the site or brought or created on the site after
such commencement.
We and Foster Wheeler USA will indemnify each other party against any damages
relating to:
. any personal injury or property damage arising after mechanical
completion and in any way connected with the performance of the
construction contract; and
. any failure of the party to comply with any law or governmental
regulation which causes the damages to arise after mechanical completion.
Insurance and Risk of Loss
Risk of physical loss to the items of work performed by Foster Wheeler USA
under the construction contract remains with Foster Wheeler USA until final
completion is achieved. Until such time, Foster Wheeler
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USA is responsible for obtaining and maintaining the following insurance
coverage for our Coker Project in compliance with the more detailed
requirements of the construction contract:
. workers compensation;
. automobile insurance;
. commercial general liability;
. excess liability insurance;
. marine cargo insurance, including coverage for consequential loss;
. all builders risk insurance;
. delay in start-up insurance; and
. pollution liability coverage for itself and its subcontractors.
Foster Wheeler USA is also responsible for causing subcontractors who are
engaged after the effective date of the construction contract to maintain
insurance including, as applicable, workers compensation, automobile,
equipment, marine, aircraft liability, commercial general liability and excess
liability insurance coverages.
Excuse for Force Majeure or Delay Caused by Us
Force Majeure
Foster Wheeler USA or we may make a claim for excusable delay or failure to
perform under the construction contract if any of the following events of force
majeure occur, which events are beyond the reasonable control of the party
making such claim and such party has given the other party ten days notice of
its knowledge of such event:
. acts of God, natural disasters or other extraordinary weather conditions;
. acts of war, blockade, insurrection, riot, civil disturbance or similar
occurrences or any exercise of the power of eminent domain or other
similar taking by a public or private entity;
. acts of governmental authorities, changes in law or a failure of the
effectiveness of any necessary permit;
. strikes, boycotts or lockouts, except those involving the employees of
Foster Wheeler USA and which are not national or industry-wide;
. a partial or entire delay or failure of utilities; and
. failure of a subcontractor to furnish services or materials when caused
by any of the above events of force majeure.
Delay Caused by Us
Foster Wheeler USA may also make a claim for relief if any of the following
delays occur:
. we suspend Foster Wheeler USA's performance as described below under "--
Termination for Our Convenience and Right to Suspend Work";
. a change in any of the documents related to our Coker Project or our
senior debt obligations that materially and adversely affects Foster
Wheeler USA; or
. a failure by us or Purvin & Gertz to perform our respective obligations
under the construction contract, unless such failure is due to Foster
Wheeler USA's fault, negligence or failure to perform.
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Additional Relief
Should an event of force majeure or delay caused by us occur, relief may
also be provided in the form of a change order. Such change order may provide
for:
. an increase in the fixed contract amount;
. an extension of the dates on which Foster Wheeler USA is required to pay
damages or demonstrate achievement of mechanical completion, substantial
reliability or final completion; or
. a change in the value of Foster Wheeler USA's guarantees of design
capacities, reliability or emissions and effluent limits.
Limitation on Relief and Delay
Any claim by Foster Wheeler USA for any extension of time will not be given
unless the event of force majeure or delay that we caused adversely affects
Foster Wheeler USA's critical path to completion of our Coker Project. Any
excuse for performance will be of no greater scope and no longer duration than
is reasonably required. The non-performing party is obligated to use
reasonable efforts to mitigate or limit damages to the other party.
An event of force majeure will not excuse Foster Wheeler USA from achieving
final completion by the date that is 180 days after the guaranteed final
completion date of December 2001 (as such date may be extended by valid change
orders). No single event of force majeure will excuse Foster Wheeler USA for
delays exceeding 90 days.
Changes in Work
We or Foster Wheeler USA may request additions, deletions or revisions to
Foster Wheeler USA's responsibilities under the construction contract pursuant
to valid change orders that conform to the provisions of the construction
contract. We have broad discretion to make any change in Foster Wheeler USA's
work under the construction contract by designating a change order at any
time. If we initiate a change order, we may also request Foster Wheeler USA to
make a proposal for completing the requested change. Foster Wheeler USA may
not request change orders that adversely affect completion of our Coker
Project or, to our detriment, change the fixed contract amount, the
construction or payment schedule or any of Foster Wheeler USA's performance or
completion guarantees. We have complete discretion to approve or reject any
change order requested by Foster Wheeler USA. Purvin & Gertz must approve any
change order in excess of $0.5 million and change orders, in the aggregate, in
excess of $5 million. You should note that the common security agreement
contains additional limitations on our ability to approve change orders.
Title and Risk of Loss
Title to all drawings, specifications and other technical documents related
to our Coker Project and produced by Foster Wheeler USA and its subcontractors
and all work, materials and equipment performed or supplied under the
construction contract passes to us when payment is made for such items. The
risk of physical loss of such items, however, remains with Foster Wheeler USA
until final completion is achieved.
Our Right to Terminate and Other Remedies
Right to Terminate Construction Contract
We have the right to terminate the construction contract or draw on the
letter of credit described above under "--Contract Amount and Payment--Letters
of Credit or other Payment Security" subject to specified notice requirements
and cure periods, in certain cases including if:
. Foster Wheeler USA or Foster Wheeler Corporation becomes insolvent or
bankrupt;
. Foster Wheeler USA fails to make payments to subcontractors;
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. Foster Wheeler USA persistently or materially disregards or violates
applicable laws or permits;
. Foster Wheeler USA fails to perform in accordance with the terms of the
construction contract;
. Foster Wheeler USA abandons or ceases for a period in excess of 30 days
its performance of the construction contract;
. Foster Wheeler USA fails to perform the construction contract in any way
that prejudices the financing of the our Coker Project;
. Foster Wheeler USA fails to achieve substantial reliability by September
2001, as such date may be extended pursuant to valid changes orders, or
by such later date as agreed to by Purvin & Gertz and the holders of our
senior debt;
. Foster Wheeler USA fails to pay to us any amount due by the date required
for such payment;
. Foster Wheeler USA fails to extend, renew or replace the letter of credit
described above when and as required;
. Foster Wheeler USA otherwise breaches any material provision of the
construction contract;
. the guarantee provided by Foster Wheeler Corporation is no longer in full
force or effect;
. Foster Wheeler USA fails to achieve mechanical completion by March 2001,
as such date may be extended by valid change orders or extended for up to
60 days provided certain conditions are fulfilled, including compliance
with the requirements of our common security agreement; or
. Foster Wheeler USA fails to achieve final completion by December 2001, as
such date may be extended by valid change orders.
Right to Take Over Work
If we choose to terminate the construction contract as provided above, we
also have the right to take over and finish performance of Foster Wheeler USA's
work under the construction contract.
Termination for Our Convenience and Right to Suspend Work
We may terminate the construction contract for our convenience at any time
upon written notice to Foster Wheeler USA. In such case, we will be obligated
to pay (1) Foster Wheeler USA's actual costs reasonably incurred in connection
with performance of the construction contract as of the date of termination,
(2) any other costs actually and directly incurred by Foster Wheeler USA in
demobilizing, canceling subcontracts or withdrawing from our Coker Project site
and (3) the amount of any improper or excessive drawings under the letter of
credit described above.
We also have the right to order Foster Wheeler USA to suspend all or part of
its performance of the construction contract for such period of time as we
desire. In such case, Foster Wheeler USA may make a claim for a change order,
but no such change order will be granted if its performance was or would have
been suspended due to its own fault or if the suspension had no effect on
Foster Wheeler USA's critical path to completion.
Contractor's Right to Terminate
If we are in default in making any payment due Foster Wheeler USA, Foster
Wheeler USA may, on 90 days notice to us and the holders of our senior debt,
terminate the construction contract upon our senior debt holders' failure to
cure such default. In addition, on 30 days notice, Foster Wheeler USA may
suspend its performance until the payment default is cured.
If Foster Wheeler USA terminates the construction contract, its exclusive
remedy is payment of the costs described above under "--Termination for Our
Convenience and Right to Suspend Work." In such case, we have the option to
take over Foster Wheeler USA's performance as described above under "--Our
Right to Terminate and Other Remedies--Right to Take Over Work."
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Governing Law and Dispute Resolution
The construction contract is governed by the laws of the State of New York,
except with respect to mechanic's liens, which are governed by the laws of the
State of Texas.
The construction contract provides a procedure for amicable resolution of
disputes between Foster Wheeler USA and us, including claims of force majeure
and delay caused by us. If such procedure is unsuccessful, the construction
contract provides that claims involving less than $3 million will be decided by
the Construction Industry Arbitration Rules of the American Arbitration
Association and claims exceeding $3 million will be resolved in the Supreme
Court of New York or the Federal District Court for the Southern District of
New York.
Assignment of Construction Contract
We may assign our interest and obligations under the construction contract to
the holders of our senior debt without Foster Wheeler USA's consent. Foster
Wheeler USA may not assign any portion of the construction contract without our
prior written consent.
Services and Supply Agreement
We and Clark Refining & Marketing entered into a services and supply
agreement in August 1999, simultaneously with the issuance of the outstanding
notes. Under the services and supply agreement Clark Refining & Marketing is
obligated to provide us a number of services and supplies needed for completion
of our Coker Project and operation of our Heavy Oil Processing Facility.
Subject to the early termination rights of each party described below, this
services and supply agreement will extend for a term of 30 years.
Obligations of Clark Refining & Marketing
Except to the extent that our employees are to operate our new processing
units and to the extent that we have entered into third party contracts for the
supply of crude oil and hydrogen, Clark Refining & Marketing is obligated to
operate, manage and maintain all components of our Heavy Oil Processing
Facility and provide all necessary feedstocks and other materials in order to
generate the quantity and quality specifications of products required under our
product purchase agreement with them. Clark Refining & Marketing is to provide
such services and supplies in a prudent and efficient manner in compliance
with:
. applicable laws and permits;
. prudent industry practice;
. requirements of applicable warranties and equipment manufacturers'
recommended maintenance procedures;
. the operating manuals, the maintenance and instruction and the mechanical
catalogs to be prepared pursuant to our construction contract;
. all other principal project documents; and
. all documents related to the financing of our senior debt, including the
notes.
Construction Management
Clark Refining & Marketing is managing the construction of our Coker Project
and must cooperate with Purvin & Gertz, in its role as independent engineer, to
ensure the construction of our Coker Project in accordance with our
construction contract with Foster Wheeler USA. In this regard, Clark Refining &
Marketing is obligated to fulfill all our obligations, and perform all our
functions under the construction contract, other than our payment obligations.
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Crude Oil Supply Management
Clark Refining & Marketing will manage our crude oil purchases and the
delivery of our crude oil to the Port Arthur refinery. In this regard, Clark
Refining & Marketing is responsible for:
. coordinating the scheduling and execution of deliveries of our crude oil
to our Heavy Oil Processing Facility;
. supplying us with any additional crude oil required for start-up and
operation of our Heavy Oil Processing Facility prior to final completion
of our Coker Project;
. procuring contract(s) on our behalf for the supply of the light sour
crude oil needed for processing our heavy sour crude oil;
. procuring alternative supplies of other crude oil or feedstocks on our
behalf if the full supply of Maya under our long term crude oil supply
agreement becomes unavailable for any reason;
. hiring tankers on our behalf and at our expense to ship our crude oil to
the Port Arthur refinery and ensuring that before arrival, our crude oil
will not be mixed with any of Clark Refining & Marketing's crude oil in
such shipments; and
. providing all necessary docking, pipeline, handling and storage services
with respect to our crude oil or other feedstocks delivered to our Heavy
Oil Processing Facility.
To the extent that crude oil owned by Clark Refining & Marketing is
delivered to the Port Arthur refinery by the same pipeline as our crude oil,
title to the mixed oil will be allocated according to the respective volume of
crude oil that we and Clark Refining & Marketing each purchase. In addition,
Clark Refining & Marketing has agreed not to grant any liens on crude oil that
it owns that is mixed with our crude oil at the Port Arthur refinery, other
than the granting of purchase money security interests needed to secure
purchases of their crude oil.
Operation and Maintenance
Leased Facilities. Clark Refining & Marketing will operate and maintain the
processing units that we are leasing from them and will manage the processing
of crude oil and other feedstreams by such processing units.
Coker Project Facilities. Clark Refining & Marketing will supervise and
train our operating employees as described below and will otherwise operate
and maintain our new processing units and associated equipment and will manage
the processing of feedstocks by such units.
Other Refinery Facilities. Clark Refining & Marketing is also obligated to
operate and maintain pipelines, interconnections and other Clark Refining &
Marketing equipment at the Port Arthur refinery as needed for the efficient
operation of our Heavy Oil Processing Facility and the production of products
required under our product purchase agreement with them. Clark Refining &
Marketing is also responsible for coordinating the scheduling and performance
of all maintenance, including turnarounds and unscheduled unit shutdowns, at
the Port Arthur refinery to ensure that our Heavy Oil Processing Facility will
produce the products required under our product purchase agreement.
Other Services and Supplies
Clark Refining & Marketing is also responsible for providing all other
services and supplies needed for operation of our Heavy Oil Processing
Facility including, among others:
. coordinating and managing the delivery of all final and intermediate
products from our Heavy Oil Processing Facility in accordance with our
product purchase agreement;
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. scheduling and coordinating deliveries of hydrogen to our Heavy Oil
Processing Facility pursuant to our hydrogen supply agreement with Air
Products and otherwise performing our obligations other than our payment
obligations and exercising our rights under such agreement;
. supplying additional hydrogen and other feedstocks;
. supervising and monitoring all our contracts with third parties, other
than itself and other than agreements related to our debt obligations;
. providing catalysts, chemicals and other consumable materials;
. providing our requirements for electricity, steam, natural gas, fuel gas,
water, compressed air and nitrogen;
. providing waste management, waste water treatment and sulfur and coke
transport services;
. providing alternative sulfur recovery services if our sulfur plant is
unable to process hydrogen sulfide produced by our Heavy Oil Processing
Facility;
. providing computer, radio, phone, analytical, security operations,
engineering, human resources, accounting and emergency response services;
. procuring, managing and storing all spare parts necessary for the
operation of our Heavy Oil Processing Facility;
. procuring and maintaining on our behalf a complete inventory of specified
capital spares needed for our new processing units and ensuring that such
spares are managed and stored in a manner that ensures that they are kept
separate from spares owned by them and are identifiable as our property;
. initiating, maintaining and supervising all environmental, health and
safety precautions programs related to our Heavy Oil Processing Facility;
. purchasing and maintaining required insurance on our behalf;
. determining, procuring and maintaining in effect all licenses, permits
and other governmental approvals; and
. proposing an annual budget and an operating plan and providing quarterly
reports regarding operations of our Heavy Oil Processing Facility.
Our Obligations
We are responsible for employing a specified roster of operational employees
to operate our new processing units and an accounting manager who, among other
things, is responsible for administering our contracts with Clark Refining &
Marketing, our payroll and payment of our senior debt obligations.
Compensation
Leased Facilities
We are obligated to compensate Clark Refining & Marketing for the services
and supplies provided to us by them related to the processing units that we are
leasing from them in the form of the operating fee described below under "--
Facility and Site Lease--Rent Payments--Operating Fee."
Coker Project Facilities
For each service and supply provided to us by Clark Refining & Marketing
related to our new processing units, we are obligated to pay Clark Refining &
Marketing specified monthly fees that, depending on the service or supply
provided, are based on one of the following methods: (1) reimbursable costs
incurred by Clark Refining & Marketing in providing such service or supply; (2)
a flat fee intended to approximate the actual cost to Clark
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Refining & Marketing of providing such service, which is subject to adjustment
for inflation; (3) metered usage of such service multiplied by a formula
intended to approximate a fair market price for providing such service; or (4)
a percentage allocation of the cost to Clark Refining & Marketing for providing
such service for the entire Port Arthur refinery which is intended to
approximate the actual usage of such service by our new processing units.
Alternative Pricing
The pricing of fees for the services and supplies to be provided by Clark
Refining & Marketing may be adjusted during the term of the services and supply
agreement under the following three scenarios.
Change in Applicable Law. If a change in applicable law requires Clark
Refining & Marketing to make capital expenditures or change its operating
procedures and directly results in an increase in the costs to Clark Refining &
Marketing of providing any service or supply to us, we will meet and negotiate
an equitable adjustment to the pricing of such service or supply. Any such
adjustments, however, may not have a material adverse effect on our ability to
pay our senior debt obligations when they become due or payable and will not
become effective until approved by Purvin & Gertz in its role as independent
engineer.
Change in Actual Costs. If either we or Clark Refining & Marketing determine
that the price for any service or supply does not reflect accurately the actual
cost of providing such service or supply, then we will meet to negotiate an
equitable adjustment to the pricing of such service or supply. Any such
adjustments, however, may not have a material adverse effect on our ability to
pay our senior debt obligations when they become due or payable and will not
become effective until approved by Purvin & Gertz in its role as independent
engineer.
Expansion of Refinery Operations. To the extent that any expansion of
operations of Clark Refining & Marketing at the Port Arthur refinery causes an
increase in the pricing of utilities or waste management services to be
provided to us, Clark Refining & Marketing is obligated to reduce the amount
payable by us for such service so that it conforms to the pricing that would
have been in effect if such expansion had not occurred.
Processing of Feedstocks Owned by Clark Refining & Marketing
Construction Period
Prior to start-up and testing of our new processing units under our
construction contract with Foster Wheeler USA, Clark Refining & Marketing has a
right of first refusal which, if exercised, would require us to process crude
oil owned by Clark Refining & Marketing. Clark Refining & Marketing may
exercise these processing rights so long as it pays for all related operating
expenses and processing does not interfere with the performance of the upgrades
and improvements to such leased units, the construction of our Coker Project or
the achievement of the performance guarantees of Foster Wheeler USA related to
our Coker Project and will not adversely affect the reliability or the useful
life of the processing units we are leasing from Clark Refining & Marketing. We
are being compensated for granting these processing rights in the form of a
reduction in the amount of rent that otherwise would have been payable under
our facility and site lease.
Start-up Period
During start-up and performance testing of our Coker Project, Clark Refining
& Marketing will not have any right to require us to process crude oil owned by
Clark Refining & Marketing through our Heavy Oil Processing Facility.
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Post-Completion Period
Ancillary Equipment. After our Coker Project is finally complete, Clark
Refining & Marketing will have a right of first refusal each calendar quarter.
This right of first refusal, if exercised, would require us to process crude
oil owned by Clark Refining & Marketing each day in an amount up to the
portion of the actual capacity of the units in excess of either (1) the
quantity of Maya available to us under the long term crude oil supply
agreement on such day and the light sour crude oil necessary to process such
Maya or (2) if P.M.I. Comercio Internacional has curtailed the amount of Maya
available to us under our long term crude oil supply agreement, the amount of
crude oil sufficient to operate our new coker unit at 80% of its actual
capacity on such day. Clark Refining & Marketing will compensate us in the
form of a processing fee based on the number of barrels of Clark Refining &
Marketing-owned crude oil processed by us each day. The formula for
calculating this fee is intended to approximate the fixed and variable costs
of processing such Clark Refining & Marketing-owned crude oil through our
leased units. If Clark Refining & Marketing does not exercise this right, we
may sell our excess capacity to an alternative purchaser and Clark Refining &
Marketing is obligated to provide such third party the services and supplies
necessary to utilize such capacity.
Coker. Clark Refining & Marketing will also have a right of first refusal
each calendar quarter which, if exercised, would require us to process
feedstocks owned by it each day in an amount up to the excess of the volume
necessary to process the vacuum tower bottoms produced by the processing of
our crude oil through our leased units each day. We may process these
feedstocks through our delayed coking unit or, at our option, through any
other appropriate equipment to which we may have access. Clark Refining &
Marketing will compensate us in the form of a processing fee based on the
number of barrels of Clark Refining & Marketing-owned crude oil processed by
us each day. The formula for calculating this fee is intended to approximate
the fixed and variable costs of processing such Clark Refining & Marketing-
owned crude oil through our new delayed coking unit. If Clark Refining &
Marketing does not exercise this right, we may sell such capacity to an
alternative purchaser and Clark Refining & Marketing is obligated to provide
such third party the services and supplies necessary to utilize such capacity.
Hydrocracker. Clark Refining & Marketing will also have a right of first
refusal each calendar quarter which, if exercised, would require us to process
feedstocks owned by it each day in an amount up to the portion of the actual
capacity of our new vacuum gas oil hydrocracker needed to process gas oil each
day that exceeds the capacity necessary to process the gas oil produced by the
processing of our vacuum tower bottoms through our new delayed coking unit
each day. Clark Refining & Marketing will compensate us in the form of a
processing fee based on the number of barrels of Clark Refining & Marketing-
owned crude oil processed by us each day. The formula for calculating this fee
is intended to approximate the fixed and variable costs of processing such
Clark Refining & Marketing-owned crude oil through our new hydrocracker. If
Clark Refining & Marketing does not exercise this right, we may sell such
capacity, or portion of such capacity, to an alternative purchaser or direct
Clark Refining & Marketing to ensure that such capacity, or portion of such
capacity, is used to process gas oils produced by processing our crude oil
through our leased units. In either case, Clark Refining & Marketing is
obligated to provide us and/or such third party the services and supplies
necessary to utilize such capacity.
Permitted Operational Adjustments
General Modifications
Clark Refining & Marketing may modify the operations of our Heavy Oil
Processing Facility at its discretion as long as the modification does not:
. impede production of the quantity and quality specifications of products
to be provided pursuant to our product purchase agreement with them;
. cause an increase in our reimbursable costs that are payable under the
services and supply agreement which is not offset by a corresponding
increase in amounts payable to us pursuant to the product purchase
agreement;
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. adversely affect the reliability or the useful life of the processing
units comprising our Heavy Oil Processing Facility; or
. have a material adverse effect on our operations, the Heavy Oil
Processing Facility, or the Port Arthur refinery, including a material
adverse effect on our ability to pay or prepay our senior debt
obligations in accordance with the base case financial model included in
the Independent Engineer's Report annexed hereto as Annex B.
Capacity Swaps
If Clark Refining & Marketing meets specified criteria and determines, in
its reasonable business judgment and in conformity with prudent industry
practices, that it is economically and technically prudent to process our
feedstocks through another Clark Refining & Marketing processing unit at the
Port Arthur refinery having substantially the same processing capabilities as
a unit within our Heavy Oil Processing Facility, Clark Refining & Marketing
may substitute the processing capacity of such unit with Clark Refining &
Marketing's unit at our expense.
Alternative Feedstocks
To the extent that operational difficulties involving our leased units cause
their actual capacity to be less than their design capacity, Clark Refining &
Marketing must use commercially reasonable efforts to procure alternative
feedstocks on our and their behalf to (1) operate the other processing units
comprising the Heavy Oil Processing Facility at their actual capacities and
(2) to preserve the relative processing capacities as between us and Clark
Refining & Marketing as would exist if such processing units were operating at
their design capacities. In such event, we will reimburse Clark Refining &
Marketing for all reasonable expenses and expenditures they incur in procuring
such alternative feedstocks on our behalf.
Title to Product Streams
Title to product streams from our Heavy Oil Processing Facility will be
determined on a pro rata basis in proportion to the relative volume of our,
Clark Refining & Marketing's or another third party's crude oil or other
feedstocks processed through our Heavy Oil Processing Facility based on
specified formulas.
Defaults, Termination and Other Remedies
Clark Refining & Marketing Defaults
The following constitute defaults by Clark Refining & Marketing:
. failure to pay us any amount in excess of $250,000 when due that
continues uncured for five days;
. failure to perform substantially any material obligation that remains
uncured for 30 days;
. commencement of insolvency, receivership, reorganization or bankruptcy
proceedings by or against Clark Refining & Marketing, that are not
dismissed within 60 days;
. any material representation or warranty made by Clark Refining &
Marketing is proven incorrect as of the time made or deemed made that
remains uncured for 60 days;
. failure to perform substantially any material obligation under either of
our leases with Clark Refining & Marketing that remains uncured for 30
days; or
. default by Clark Refining & Marketing under the product purchase
agreement.
Subject to any additional requirements of our senior debt documents and
specified cure periods, we may terminate the services and supply agreement
upon a Clark Refining & Marketing default or exercise any other remedies
available to us at law or in equity.
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Our Defaults
Our failure to pay any amount due under the services and supply agreement in
excess of $250,000 that remains uncured for a period of 5 days constitutes a
default by us under the services and supply agreement. If we default under the
services and supply agreement, Clark Refining & Marketing may terminate the
agreement after first giving us and our financing parties 90 days notice and
the opportunity to cure such default.
Specific Performance
The parties have acknowledged that monetary damages may be an inadequate
remedy for a breach of any of the provisions of the services and supply
agreement. In such case the parties will be entitled to specific performance
of the breaching party's obligations and in any action for specific
performance the parties will waive the defense that a remedy at law would be
adequate.
Termination Option
We or Clark Refining & Marketing may terminate the services and supply
agreement if final completion of our Coker Project and completion of the
improvements and upgrades to our leased units does not occur by March 2002.
Force Majeure
If an event of force majeure causes a material adverse effect on a party's
ability to carry out its obligations under the services and supply agreement,
other than the obligation to pay money, such party is obligated to give prompt
notice to the other party. In such case, these obligations so far as they are
affected by such event of force majeure will be suspended during but not
longer than the continuance of such event of force majeure and such further
period thereafter as shall be reasonable in the circumstances.
An event of force majeure is any event or circumstance if (1) such event or
circumstance is beyond the reasonable control of the affected party and (2)
such event or circumstance is not the direct or indirect result of a party's
negligence or the failure of such party to perform any of its obligations
under the services and supply agreement, including, among others:
. any interruption or cessation in delivery of crude oil or other
feedstocks to the Port Arthur refinery;
. acts of God, earthquake, fire, explosion, tornado, hurricane, or other
extraordinary weather conditions more severe than those experienced at
any time in the last 30 years for the geographic area of the Port Arthur
refinery;
. acts of a public enemy, war, blockade, insurrection or riot;
. laws, rules, regulations, orders, judgments or other acts of any
foreign, federal, state or local court, administrative agency,
governmental body or authority;
. strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the
employees of Clark Refining & Marketing; and
. a partial or entire interruption or other failure of (1) the supply of
electricity, water, wastewater treatment, steam, hydrogen or other
utilities to the refinery or any part thereof, or (2) pipeline service,
ship or barge service, dock access or usage or other transportation
facilities.
End of Term Obligations
Following termination of the services and supply agreement, Clark Refining &
Marketing is obligated to:
. cooperate with us so that we are able to continue operating our new
processing units, reclaim goods, equipment and materials, and accomplish
the smooth transition of operations of such units from Clark Refining &
Marketing to us or to a new manager that we engage;
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. execute all documents and take all reasonable steps that we request
needed to assign to and vest in us all rights, benefits, interest and
title in connection with any contracts or obligations that Clark
Refining & Marketing may have undertaken with third parties in
connection with the services and supply agreement;
. deliver to us all materials and documents that are our property; and
. cooperate with us to effect the transfer to us of any permits held by
Clark Refining & Marketing and required for our continuing operation of
the Heavy Oil Processing Facility.
Miscellaneous Provisions
Subcontractors
Clark Refining & Marketing has the right to subcontract any portion of the
services and supplies it is to provide us. Clark Refining & Marketing,
however, will remain primarily responsible for all of its obligations under
the services and supply agreement and we will not be deemed by virtue of any
Clark Refining & Marketing subcontract to have any contractual relationship or
obligation to any Clark Refining & Marketing subcontractors.
Dispute Resolution; Governing Law
If any dispute arises regarding the services and supply agreement, our
senior executives and those of Clark Refining & Marketing are obligated to
meet to resolve the conflict. If we cannot resolve such conflict within
specified time periods, either party may initiate an arbitration proceeding.
Such arbitration will be governed by rules of the American Arbitration
Association and the arbitration will be in New York. The services and supply
agreement is governed by the laws of the State of New York.
Assignments
Clark Refining & Marketing may not assign its rights under the services and
supply agreement without our prior written consent and the consent of the
holders of our senior debt. We may assign our rights to our senior debt
holders as collateral security for our senior debt obligations, but otherwise
we may not assign our rights under the services and supply agreement without
Clark Refining & Marketing's consent and the consent of our senior debt
holders. The assignment of our rights under the services and supply agreement
with respect to specified regulated utilities to any person will not be
effective unless our rights under the facility and site lease and the ground
lease are also assigned to such person.
Product Purchase Agreement
We and Clark Refining & Marketing entered into a product purchase agreement
in August 1999, simultaneously with the issuance of the outstanding notes.
Under this agreement Clark Refining & Marketing has an absolute and
unconditional obligation to accept and actually take delivery of all
intermediate and final products of our Heavy Oil Processing Facility that we
tender for delivery and to pay us for such products in accordance with
specified pricing formulas. Subject to the early termination rights of each
party described below, the product purchase agreement will extend for a term
of 30 years.
Required Product Mix
Unless Clark Refining & Marketing otherwise requests, we are obligated to
use commercially reasonable efforts to meet specified target quantity and
quality specifications of products to be delivered to Clark Refining &
Marketing. We will, however, have no liability for failing to deliver such
target specifications of products.
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Clark Refining & Marketing, as our customer under the product purchase
agreement, may request that we alter the quality and quantity of products
produced by our Heavy Oil Processing Facility. In this case, we are obligated
to use commercially reasonable efforts to meet the requested product
specifications. These adjustments to the product mix produced by our Heavy Oil
Processing Facility, however, are subject to the following conditions:
. in a given calendar month, such adjustments may not cause our leased
equipment to process less than the volume of Maya available to us under
the long term crude oil supply agreement or, if the availability of such
Maya has been curtailed, less than the amount of crude oil or other
feedstocks sufficient to utilize 80% of the actual capacity of our leased
units;
. in a given calendar month, such adjustments may not cause our new delayed
coker to process less than all the vacuum tower bottoms produced by
processing our crude oil through our leased units;
. such adjustments will, in Clark Refining & Marketing's reasonable good
faith judgment, maximize the profitability at the Port Arthur refinery as
a whole and be mutually beneficial to Clark Refining & Marketing and us;
. Clark Refining & Marketing will supply us with the necessary feedstocks
under the services and supply Agreement and make any needed operational
and other adjustments under such agreement to fulfill such request;
. such adjustments will not materially increase our net reimbursable costs
payable under the services and supply agreement and not adversely affect
the reliability, useful life of, or have a material adverse effect on the
physical condition of our Heavy Oil Processing Facility; and
. it is feasible for our Heavy Oil Processing Facility to produce the
quantity and quality of products requested.
Product Prices
The product purchase agreement includes pricing formulas for each product
expected to be produced by our Heavy Oil Processing Facility. These formulas
are intended to reflect fair market pricing of these products and will be used
to determine the amounts payable to us by Clark Refining & Marketing. To the
extent, however, that any of our products are purchased by Clark Refining &
Marketing and immediately resold to a non-affiliated third party, the price
payable to us by Clark Refining & Marketing for such product will be the
purchase price received by Clark Refining & Marketing from such third party
less a specified marketing fee. This fee is intended to be a fair market fee.
We will invoice Clark Refining & Marketing every three calendar days and Clark
Refining & Marketing will be obligated to pay invoices within five calendar
days of receipt.
Price Adjustments for Non-Specification Products
If a material amount of any product produced our the Heavy Oil Processing
Facility fails to meet the target specifications used to develop the pricing
formulas for the product and the failure to meet specifications has a material
adverse affect on the fair market value of such product or any finished
product derived from such product, then we will meet with Clark Refining &
Marketing to negotiate a good faith and equitable adjustment to payments due
us. Any such adjustment, however, will be conditioned on the following:
. that the failure to meet specifications was not caused by a failure of
Clark Refining & Marketing to operate our Heavy Oil Processing Facility
in accordance with its obligations under the services and supply
agreement;
. the non-specification product was not requested by Clark Refining &
Marketing; and
. the adjustment will be effective until Purvin & Gertz, as independent
engineer, issues a certificate approving the reasonableness of such
adjustment.
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If a failure to meet product specifications is due to a design or
construction defect of the Coker Project and the failure is expected to
continue, we will meet with Clark Refining & Marketing to negotiate adjustments
to the applicable formulas in good faith. Such adjustments, however, will not
be effective until Purvin & Gertz, as independent engineer, issues a
certificate approving the reasonableness of such adjustment.
Defaults, Termination and Other Remedies
Clark Refining & Marketing Defaults
The following constitute defaults by Clark Refining & Marketing:
. failure to pay us any amount in excess of $250,000 when due that
continues uncured for five days;
. failure to perform substantially any material obligation that remains
uncured for 30 days;
. commencement of insolvency, receivership, reorganization or bankruptcy
proceedings by or against Clark Refining & Marketing that are not
dismissed within 60 days;
. any material representation or warranty made by Clark Refining &
Marketing is proven incorrect as of the time made or deemed made that
remains uncured for 60 days;
. failure to perform substantially any material obligation under either of
our leases with Clark Refining & Marketing that remains uncured for 30
days; or
. default by Clark Refining & Marketing under the services and supply
agreement.
Subject to the consent of our senior debt holders, we may terminate the
product purchase agreement upon a Clark Refining & Marketing default or
exercise any other remedies available to us at law or in equity.
Our Defaults
Our material failure to deliver products substantially as required under the
product purchase agreement for a period of 60 days constitutes a default under
the product purchase agreement. If a default occurs, Clark Refining & Marketing
may terminate the agreement after first giving us and our senior debt holders
90 days notice and opportunity to cure the default.
Specific Performance
The parties have acknowledged that monetary damages may be an inadequate
remedy for a breach of any of the provisions of the product purchase agreement
and that in such case the parties will be entitled to specific performance of
the breaching party's obligations. The parties have agreed that in any action
for specific performance will waive the defense that a remedy at law would be
adequate.
Termination Option
We or Clark Refining & Marketing may terminate the product purchase agreement
if final completion of our Coker Project does not occur by March 2002.
Force Majeure
If an event of force majeure causes a material adverse effect on a party's
ability to carry out its obligations under the product purchase agreement,
other than the obligation to pay money that party is obligated to give to the
other party prompt notice. In such case the party's obligations so far as they
are affected by such event of force majeure will be suspended during but not
longer than the continuance of such event of force majeure and such further
period thereafter as shall be reasonable in the circumstances. For the purposes
of the product purchase agreement, an event of force majeure will have the same
meaning as it is used in the services and supply agreement. See "--Services and
Supply Agreement--Force Majeure."
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Miscellaneous Provisions
Dispute Resolution; Governing Law
If any dispute arises regarding the product purchase agreement, our senior
executives and those of Clark Refining & Marketing are obligated to meet to
resolve the conflict. If we cannot resolve the conflict within specified time
periods, either party may initiate an arbitration proceeding. The arbitration
will be governed by the rules of the American Arbitration Association and the
arbitration will be in New York. The product purchase agreement is governed by
the laws of the State of New York.
Assignments
Clark Refining & Marketing may not assign its rights under the product
purchase agreement without our prior written consent and the consent of the
holders of our senior debt. We may assign our rights to our senior debt holders
as collateral security for our senior debt obligations, but otherwise we may
not assign our rights under the product purchase agreement without Clark
Refining & Marketing's consent and the consent of our senior debt holders.
Facility and Site Lease
We and Clark Refining & Marketing entered into a facility and site lease in
August 1999, simultaneously with the issuance of the outstanding notes. Under
this lease, we are leasing Clark Refining & Marketing's crude unit and vacuum
tower, two of its distillate hydrotreaters and its naphtha hydrotreater. These
units are located at the Port Arthur refinery. The initial term of this lease
is 30 years. We may renew the lease for five additional five-year terms.
Easement
Clark Refining & Marketing has also granted us a nonexclusive blanket
easement over and under the remaining Port Arthur refinery property necessary
to own, construct and operate our Coker Project and to maintain and operate the
units leased to us.
Ancillary Equipment Upgrade
Construction Obligations
Clark Refining & Marketing is obligated under the facility and site lease to
construct and substantially complete, specified improvements and upgrades to
the processing units we are leasing before October 2000, at its cost and
expense. If Clark Refining & Marketing fails to complete such improvements and
upgrades on time, we may engage our own contractor to complete the work at
Clark Refining & Marketing's expense.
Assignment of Construction Contract
As security for its obligation to perform these improvements and upgrades,
Clark Refining & Marketing has collaterally assigned to us all its right, title
and interest in and to any and all construction, design, engineering or
procurement contracts that it enters into for purpose of completing such
improvements.
Rent Payments
In the opinion of Purvin & Gertz, the following rent payments represent fair
market rental payments for the facility and site lease term.
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Base Rent
After start-up of our Coker Project, we will begin making ongoing quarterly
rent payments to Clark Refining & Marketing equal to approximately $8 million,
or a smaller pro-rated amount in the first quarter when the payments are due.
This rent amount will be adjusted over time in proportion to changes in the
producer price index published by the U.S. Department of Labor.
Operating Fee
As additional rent, we will pay Clark Refining & Marketing an operating fee
each month after start-up of our Coker Project for the services and supplies
provided to us by Clark Refining & Marketing under the services and supply
agreement and related to the on-going operation of our leased units. Such
operating fee is based on the number of barrels of crude oil and other
feedstocks processed through our leased units and is intended to approximate
the fixed and variable costs to Clark Refining & Marketing of providing
services and supplies for such leased units.
This operating fee may be adjusted if Clark Refining & Marketing incurs
increased costs for purchases of catalysts or other consumable materials or
other expenses related to its operation of our leased equipment which are
intended to increase our net revenues. In such circumstances, we and Clark
Refining & Marketing are to negotiate in good faith an equitable adjustment to
the calculation of the operating fee to reflect the increased costs. Any such
adjustment may not have a material adverse effect on our ability to operate in
accordance with the base case financial model and will not become effective
until approved by the independent engineer.
Governing Law
The facility and site lease is governed by the laws of the State of Texas.
Ground Lease
Simultaneously with the issuance of the outstanding notes in August 1999, we
entered into a ground lease with Clark Refining & Marketing. Under this lease,
we are leasing from Clark Refining & Marketing the sites within the Port Arthur
refinery on which our new processing units will be located. The initial term of
the ground lease is 30 years. We may renew the ground lease for five additional
five-year terms.
Easements
Blanket Easement
Clark Refining & Marketing has granted us a nonexclusive easement over and
under the remaining Port Arthur refinery property as necessary to own,
construct and operate our Coker Project and maintain and operate the units
leased to us.
Dock Easement
Clark Refining & Marketing has also granted us a nonexclusive easement over
the docks owned by Clark Refining & Marketing located adjacent to the Port
Arthur refinery for the unloading of cargoes of crude oil and other feedstocks,
loading of products of our new processing units, and the construction and
maintenance of pipes, pumps, valves, gauges and other equipment in connection
with the loading and unloading.
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Oil Transportation Rights
Clark Refining & Marketing has also granted us a nonexclusive easement over
and under pipelines and oil handling facilities needed for the transportation
of crude oil to the Port Arthur refinery from the docking facilities of Sun
Pipe Line Company in Nederland, Texas.
License to use Additional Facilities
Clark Refining & Marketing also granted us a license to use additional
facilities located on the easements that it granted us and that are necessary
for the ongoing operation of our new processing units. These facilities
include, among others, the following locations at the refinery:
. the saturated gas plant;
. an amine treating unit and sour water stripper;
. the wastewater treatment plant;
. specified boiler houses, pump houses, power stations and cooling towers;
. specified storage tanks;
. the lye plant;
. specified crude oil pipelines;
. the hydrogen gathering, gas, steam and electrical systems;
. the flare and control systems; and
. maintenance, storehouse, rail and lab facilities.
Rent Payments
Upon the issuance of the outstanding notes, we paid Clark Refining &
Marketing $25,000 as a full prepayment of rent for the initial 30 year term of
the ground lease. In the opinion of Purvin & Gertz, this is an arm's length
rental payment for the initial term of the ground lease. Rental payments for
any renewal terms for this lease will be determined in accordance with a fair
market rental valuation procedure described in detail in the lease.
End of Term
At the end of the term of the ground lease, we have the option of abandoning
our units in place or dismantling and removing them, provided we repair any
damage to the land done by our dismantling and removal of the units.
Governing Law
The ground lease is governed by the laws of the State of Texas.
Hydrogen Supply Agreement
General
We have entered into a hydrogen supply agreement with Air Products and
Chemicals, Inc. Under the hydrogen supply agreement, Air Products will supply
us the hydrogen produced at the new hydrogen supply plant at the Port Arthur
refinery.
Construction of the Facility
Air Products is obligated to design and construct the hydrogen supply plant
according to agreed upon milestones and specifications. We and the independent
engineer have the right upon reasonable written notice to Air Products to
inspect the ongoing construction of the hydrogen supply plant.
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Term
The initial term of the hydrogen supply agreement will commence on the date
the hydrogen supply plant is installed and "ready for commercial operation,"
and will continue for 246 consecutive months. However, if we begin taking
hydrogen between October 2000 and December 2000, the initial term will be
reduced by six days for each day after October 2000 but before December 2000
that we have begun taking hydrogen. Thereafter, the hydrogen supply agreement
will remain in force from year to year unless terminated in accordance with the
hydrogen supply agreement.
Liquidated Damages for Delay in Construction
If Air Product's hydrogen supply plant fails to be ready for commercial
operation on or before December 2000, then for each day of delay beyond
December 2000 due to Air Product's acts or omissions, Air Products will pay us
liquidated damages of $19,250 for each day of delay up to $1.2 million. If we
are unable to take the hydrogen on December 2000 due to our acts or omissions,
we will pay Air Products liquidated of $38,500 for each day of delay up to
approximately $1.2 million.
Delivery of Hydrogen
Hydrogen meeting required specifications will be delivered by Air Products to
us at a specified location at the Heavy Oil Processing Facility. Title and risk
of loss with respect to hydrogen will pass from Air Products to us at that
delivery point.
Quantities and Pricing of Hydrogen
Air Products will supply and we will purchase all of our requirements for
hydrogen for use by us at the Port Arthur refinery in excess of the amount of
hydrogen produced internally at the Port Arthur refinery up to a maximum
quantity of 80 million standard cubic feet per day at the price of $1.278 per
thousand standard cubic feet. This price is subject to adjustment according to
a formula based on inflation indices. In the event we have requirements for
hydrogen in excess of this maximum daily amount, we may purchase such
additional hydrogen at the price of $1.585 per thousand standard cubic feet. In
the event we wish to increase the maximum daily amount, we and Air Products
will negotiate in good faith the price, terms and conditions for such increase.
Air Products has the right to supply any hydrogen required by us above this
maximum daily amount by matching the terms and conditions obtained by us for
such additional hydrogen requirements from a bona fide third party supplier.
We will pay Air Products for a minimum quantity of hydrogen equal to 5,018.7
million standard cubic feet per calendar quarter, regardless of the quantity of
hydrogen actually taken by us, except for periods of scheduled maintenance
activities of up to 28 days every two years. In the event the maximum daily
amount is increased for any reason, this minimum quantity of hydrogen will be
increased on a proportional basis. Furthermore, Air Products may charge us a
non-consumption charge for shortfalls in our hydrogen purchase activity.
We will also pay Air Products a monthly base facility charge of $81,839. This
price is subject to adjustment pursuant to a formula based on inflation
indices.
In the event the hydrogen supply plant is not operating or its production is
curtailed, Air Products will supply us with our requirements for hydrogen up to
the maximum daily amount, provided hydrogen is available for delivery as
reasonably determined by Air Products from the pipeline network owned and
operated by Air Products or its affiliates. The price for this hydrogen will be
$1.585 per thousand standard cubic feet. These prices are subject to adjustment
pursuant to a formula based on inflation indices.
Performance Guarantee
Air Products guarantees that it will produce and deliver hydrogen requested
by us with a minimum on-stream factor of 98%. "On-stream factor" means the
ratio of total hours in the year during which hydrogen meeting the
specifications was or could have been supplied by Air Products but for the
occurrence of events of
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force majeure or scheduled maintenance outages by Air Products to total number
of hours during that year. For each hour that the on-stream factor is greater
than 98%, a bonus in the amount of $5,200 per hour will be paid by us to Air
Products, and for each hour that the on-stream factor is less than 98%, Air
Products will pay us liquidated damages in the amount of $5,200 per hour. The
maximum amount of the bonus will be $900,000 per year and the maximum amount of
the liquidated damages will be $1.8 million per year.
Air Products is also guaranteeing the performance of specified hydrogen
compressors which are part of the hydrogen supply plant up to specified
performance specifications.
Governmental Requirements
If, in Air Products judgment, the facilities producing hydrogen for delivery
to us must be modified or tests, studies or any other action must be undertaken
with respect to such facilities to comply with any anticipated, proposed or
final regulation, law or other governmental requirement, Air Products or the
hydrogen supply plant owner must take such action following (1) in the case of
a final governmental requirement, consultation with us concerning the
anticipated costs and expenses to confirm that there is not a more cost
effective manner to comply with such final governmental requirement or (2) in
the case of an anticipated or proposed governmental requirement, our consent,
which consent will not be unreasonably withheld. Air Products must also have
given us prompt notice of its knowledge of any proposed governmental
requirement. The costs and expenses of such modifications, tests or other
action, including both fixed and variable costs, additional operating costs,
applicable overheads, general and administrative expenses, financing charges
and a reasonable fee, all in accordance with Air Products's normal accounting
practices, will be promptly reimbursed to Air Products by us as such costs and
expenses are incurred.
Contaminants
It is understood and contemplated by the parties that the hydrogen supply
plant is designed to use utilities and air containing only normal contaminants
and, therefore, if contaminants in the utilities or air, or changes in the
construction or operation of facilities in or about the Port Arthur refinery,
justify the relocation, repair, modification or removal of any equipment
comprising the hydrogen supply plant or the installation of additional
equipment, Air Products will notify us. In such case, at our election, Air
Products will either (1) make the relocation, repair, modification, or removal
or (2) install the additional equipment. We will reimburse Air Products for any
extra costs incurred and a reasonable fee all in accordance with Air Products's
normal accounting practices as such costs are incurred.
Licensing, Permits and Approvals
Each party will obtain, in a timely fashion, and maintain in effect,
including all renewals and updates thereof, any and all professional licenses,
permits or other government approvals necessary to perform its obligations and
any activities related to the hydrogen supply supply agreement, including,
without limitation, air emissions permits from the Texas Natural Resource
Conservation Commission.
Compliance with Law and Prudent Industry Standards
Each party will perform its obligations and any activities related to the
hydrogen supply agreement in compliance with all applicable laws and permits
and in accordance with prudent industry standards, will not undertake any act
or omission which will cause the other party to fail to comply with applicable
laws and permits and will be in accordance with prudent industry standards.
Neither party will undertake any act or omission which would cause or be likely
to cause it or the other party to be subject to regulation as an "electric
utility," "electric corporation," "electrical company," "public utility,"
"retail electric utility" or a "public utility holding company," as such terms
may be revised from time to time, under any applicable laws.
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Taxes
Air Products will bear and pay all federal, state, and local taxes based
upon or measured by its net income, and all franchise taxes based upon its
existence or its general right to transact business. The prices stated in the
hydrogen supply agreement do not include any taxes, charges, or fees other
than as stated in the prior sentence. Any other taxes imposed on the hydrogen
supply plant, the hydrogen supply plant site, the inventory, or upon the
operation or maintenance of the hydrogen supply plant, or upon or measured by
the production, manufacture, storage, sale, transportation, delivery, use or
consumption of hydrogen, such taxes, charges, or fees will be paid directly by
us.
Force Majeure
Neither party will be considered to have defaulted in the performance of its
obligations or to be liable in damages for failure or delay in performance
which is due to force majeure, other than the obligation to pay money,
provided that the excuse of performance will be of no greater scope and no
longer duration than is reasonably required because of the force majeure. For
purposes of the hydrogen supply agreement, "force majeure" will include any
act or event that prevents or delays the performance by either party of its
obligations under the hydrogen supply agreement if and to the extent (1) that
act or event is beyond such party's reasonable control and not the result of
such party's fault or negligence, (2) that party has been unable to overcome
the consequences of such act or event by the exercise of reasonable commercial
efforts, which may include the reasonable expenditure of funds and (3) that
party has given the other party notice within 10 days of the party's knowledge
of the act or event giving rise to the force majeure. Subject to the
satisfaction of the foregoing conditions, force majeure will include, but not
be limited to, the following acts or events, or any similar and equally
serious acts or events which prevent or delay the performance by a party of
its obligations under the hydrogen supply agreement:
. acts of God, fires, explosions, vapor releases, natural disasters,
floods, perils of the sea, lightning or wind;
. acts of the public enemy, wars, sabotage, insurrections, riots, strikes,
boycotts or lockouts (except any such strike, boycott or lockout that
involves Air Products' or our employees and is not national or industry-
wide or is not caused by the other party's employees), vandalism,
blockages or accidents or failure of equipment or machinery;
. acts by Air Products, in the case of us, or acts by us or Clark Refining
& Marketing, in the case of Air Products;
. a determination that such party is subject to regulation as an electric
utility under applicable law regardless of whether delivery of power is
prevented, ability to obtain or maintain any easement, rights-of-way,
permit or license, actions of a court or public authority;
. labor disputes, boycotts; and
. allocation or failure of normal sources of supply of materials,
transportation, energy or utilities or other causes of a similar or
dissimilar nature.
Under no circumstances will inability to pay monies or other economic
difficulty be construed to constitute force majeure, frustration or
impossibility of performance.
The affected party will promptly give notice to the other party and use all
reasonable efforts to remedy its inability to perform. Neither party, however,
will be required to bring to an end any strike or other concerted act of
workers.
Warranty
Air Products warrants that hydrogen delivered to us will conform to the
specification set forth in the hydrogen supply agreement, and that at the time
of delivery Air Products will have good title and right to transfer the same
and that the same will be delivered free and clear of any lien or other
encumbrances.
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Limitation of Liability
Determination of the suitability of the hydrogen furnished for the use by us
is our sole responsibility, and Air Products will have no responsibility for
this determination.
We acknowledged in the hydrogen supply agreement that there are hazards
associated with the use of hydrogen, that we understand such hazards, and that
it is our responsibility to warn and protect our employees and others exposed
to such hazards through our use of hydrogen. We will hold harmless, indemnify
and defend Air Products from and against any liability incurred by Air Products
because those warnings were not made. We have assumed all risk and liability
for loss, damages or injury to persons or to our property or others arising out
of the presence or use of hydrogen or from the failure to make those warnings.
Except as expressly provided in the hydrogen supply agreement, Air Products
will not be liable in contract or tort for any other direct damages. Except in
the case of willful misconduct of Air Products, Air Products will not be liable
in contract or tort for any indirect, special, incidental, or consequential
damages, including by way of illustration and not of limitation, loss of use,
loss of work in process, down time or loss of profits, and such limitation on
damages will survive failure of an exclusive remedy.
Termination
The hydrogen supply agreement may be terminated by either party on account of
any material default of the other in carrying out the terms of the agreement
subject to a 60-day grace period. We will not terminate the hydrogen supply
agreement without the consent of our financing parties.
Either party may terminate the hydrogen supply agreement as of the expiration
of the initial supply term or the expiration of any anniversary date thereafter
by giving not less than 36 months' prior written notice to the other party.
With the consent of Clark Refining & Marketing, we may terminate the hydrogen
supply agreement for lack of requirements for hydrogen following contract year
10 if our management reasonably determines that our use of hydrogen at the Port
Arthur refinery will permanently cease following such determination and Clark
Refining & Marketing concurrently terminates the product supply agreement
between Clark Refining & Marketing and Air Products. Our right of termination
will be exercisable by our giving Air Products 12-months prior written notice
and paying to Air Products a specified termination payment which ranges from
$7.75 million to $54.4 million, depending on the number of years remaining in
the initial term.
Clark Refining & Marketing is a party to a separate contract with Air
Products under which Clark Refining & Marketing purchases electricity, steam
and hydrogen from Air Products and provides utilities to Air Products. If this
contract is terminated, we have the option of assuming Clark Refining &
Marketing's obligations under the contract. If we do not assume this contract,
Air Products will be excused from delivering hydrogen to us.
Assignment
Upon notice to the other party, any or all of a party's rights, title and
interest under the hydrogen supply agreement may be assigned to an affiliate, a
joint venture company in which such party or its affiliate is general partner
or in which such party owns at least 50% of any equity, or to any financial
institution or other entity or groups thereof under the terms of financing
arrangements. In the event of such an assignment other than a collateral
assignment, the assignor will execute for the benefit of the other party a
guarantee or similar agreement guaranteeing the performance of the obligations
under the hydrogen supply agreement by the assignee. If any of our financing
parties or trustees or agents acting on their behalf, or their nominees or
assignees, succeeds to our rights under this hydrogen supply agreement as a
result of foreclosure or similar arrangement in lieu of foreclosure, Air
Products will attorn to and recognize such successor as the buyer under
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the hydrogen supply agreement and that successor will be bound by the terms and
conditions of the hydrogen supply agreement. The hydrogen supply agreement will
not otherwise be assignable or transferable by either us or Air Products
without the prior written consent of the other, which consent will not be
unreasonably withheld. Any attempted assignment or transfer without such
consent will be void.
Dispute Resolution; Governing Law
The parties will endeavor to resolve any dispute arising out of or relating
to the hydrogen supply agreement by mediation under the rules and guidelines of
the American Arbitration Association. Any controversy or claim arising out of
or relating to the hydrogen supply agreement or the breach, termination or
validity of the hydrogen supply agreement, which remains unresolved 45 days
after appointment of a mediator, will be settled by arbitration by three
arbitrators in accordance with the rules and guidelines of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators
may be entered by any court having jurisdiction. The hydrogen supply agreement
will be interpreted in accordance with and governed by the laws of the State of
New York.
Marine Dock and Terminaling Agreement
Clark Refining & Marketing and Sun Pipe Line Company entered into a marine
dock and terminaling agreement in August 1999 under which Sun Pipe Line
delivers crude oil from its Nederland, Texas dock terminal facility to Clark
Refining & Marketing's pipeline located on Sun Pipe Line's property. This
agreement also provides for the delivery of our crude oil.
Term
The marine dock and terminaling agreement will be in effect until August 2000
and will be deemed automatically extended for additional one year periods
unless either party gives six months notice to the other party.
Facilities and Services to be Provided by Sun
Facilities to be Provided by Sun Pipe Line for Clark Refining & Marketing's
Non-exclusive Use
. terminaling facilities consisting of lines, pipes, gauges and berths to
receive and deliver crude oil
. tankage facilities to store crude oil
Services to be Performed by Sun Pipe Line
. receive deliveries of crude oil for Clark Refining & Marketing and its
affiliates at the terminaling facility
. receive, store and deliver crude oil through tanks designated for Clark
Refining & Marketing in accordance with Clark Refining & Marketing's
instructions
Properties of the Crude Oil
Clark Refining & Marketing represents that the crude oil to be delivered to
Sun Pipe Line can be handled in conventional non-heated crude oil tankage and
pipeline systems. The crude oil is required to have properties within specified
limits which include Maya. Sun Pipe Line has the right to test whether the
crude oil conforms with these specifications.
Fees
Sun Pipe Line charges Clark Refining & Marketing the following fees:
. throughput fees of $0.07 per barrel for a monthly average throughput
volume of up to 70,000 barrels per day and $0.06 per barrel for all
throughput in excess of 70,000 barrels per day; and
. a tank rental fee of $0.16 per barrel for 15 days of storage and an
ability to extend to 30 days.
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Force Majeure
In the event either party is unable to carry out its non-monetary obligations
under the marine dock and terminaling agreement due to force majeure, the
obligations of both parties will be suspended during the continuance of the
inability. The term "force majeure" will include, among other things, the
following:
.acts of God, storms, floods, breakage, accident to machinery or lines of
pipe, washouts;
. acts of the public enemy, wars, blockades, insurrections, riots, civil
disturbances, arrests, the order of any court or governmental authority
having jurisdiction, explosions;
.strikes, lockouts or other industrial disturbances; and
. inability to obtain, or unavoidable delay in obtaining, material,
equipment, right of way easements, franchises or permits.
Sun Pipe Line may also require Clark Refining & Marketing to remove a portion
of its crude oil in storage to comply with strategic petroleum reserve
requirements in event of a national emergency.
Title and Responsibility
Title to crude oil delivered to the terminal will always remain with Clark
Refining & Marketing or its affiliates. Sun Pipe Line's custodial
responsibility for the crude oil commences when the crude oil enters the flange
connection of its 30-inch dock line at the discharge line of Clark Refining &
Marketing's vessel. Sun Pipe Line's custodial responsibility terminates upon
Clark Refining & Marketing's receipt at the Doe Manifold preceding Clark
Refining & Marketing's scraper trap with the 32-inch pipeline which continues
to the refinery property.
Assignment
Either party may assign its interests under the marine dock and terminaling
agreement with the consent of the other party. Furthermore, either party may
assign its interests to a subsidiary or affiliated company, provided that the
original party remains liable for full performance. Sun Pipe Line may assign
its interests to a purchaser of the terminal if it or any part should be sold.
Clark Refining & Marketing may assign its interests in connection with any sale
of the Port Arthur refinery or to any lender or collateral trustee in
connection with the financing relating to the construction involving the Port
Arthur refinery.
Governing Law
The marine dock and terminaling agreement is governed by and construed in
accordance with the laws of the State of Texas.
Reimbursable Construction Contract
Clark Refining & Marketing entered into a reimbursable construction contract
with Foster Wheeler USA in March 1998 for construction of the Refinery Upgrade
Project. The reimbursable construction contract was amended in July 1999 to
remove our Coker Project from Foster Wheeler USA's scope of work thereunder and
conform the insurance requirements thereunder to those in the construction
contract for our Coker Project. The scope of work in the reimbursable
construction contract now includes the renovation and upgrade of the crude
unit, vacuum tower and other ancillary equipment required to be performed by
Clark Refining & Marketing under the facility and site lease. Under this
reimbursable construction contract, Clark Refining & Marketing will pay Foster
Wheeler USA based on the actual costs incurred by Foster Wheeler USA plus a
profit margin rather than a fixed-cost basis. Clark Refining & Marketing is
required to maintain a standby letter of credit to ensure that funds are
available for payments to Foster Wheeler USA under the reimbursable
construction contract. The initial amount of the letter of credit was $97
million and is required to be reduced over time by payments made by Clark
Refining & Marketing to Foster Wheeler USA. Foster Wheeler USA has agreed to
draw on the letter of credit and place the proceeds into an escrow account with
the collateral trustee for our senior debt if the letter of credit is not
renewed within 15 days prior to its expiration. Foster Wheeler USA has also
separately agreed with the collateral trustee not to draw on the letter of
credit or withdraw funds from the escrow account unless Purvin & Gertz, in its
role as independent engineer, has certified that the work related to the
requested drawing has been performed and the amounts requested are due and
payable.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
We have entered into a registration rights agreement with the initial
purchasers of the outstanding notes in which we agreed, under certain
circumstances, to file a registration statement relating to an offer to
exchange the outstanding notes for exchange notes. We agreed to use our
reasonable best efforts to cause such registration statement to become
effective within 240 days following the original issue of the outstanding notes
and to pay additional interest on the outstanding notes if the exchange offer
is not consummated within 270 days following the original issue of outstanding
notes. The exchange notes will have terms substantially identical to the
outstanding notes; except that the exchange notes will not contain terms with
respect to transfer restrictions, registration rights and additional interest
for failure to observe certain obligations in the registration rights
agreement. The outstanding notes were issued on August 19, 1999.
Under the circumstances set forth below, we will use our reasonable best
efforts to cause the Commission to declare effective a shelf registration
statement with respect to the resale of the outstanding notes and keep the
statement effective for up to two years after the effective date of the shelf
registration statement. These circumstances include:
. if any changes in law, Commission rules or regulations or applicable
interpretations thereof by the staff of the Commission do not permit us
to effect the exchange offer as contemplated by the registration rights
agreement;
. if any outstanding notes validly tendered in the exchange offer are not
exchanged for exchange notes within 270 days after the original issue of
the outstanding notes;
. if any initial purchaser of the outstanding notes so requests, but only
with respect to any outstanding notes not eligible to be exchanged for
exchange notes in the exchange offer; or
. if any holder of the outstanding notes notifies us that it is not
permitted to participate in the exchange offer or would not receive
fully tradable exchange notes pursuant to the exchange offer.
If we fail to comply with certain obligations under the registration rights
agreement, we will be required to pay additional interest to holders of the
outstanding notes. Please read the section captioned "Registration Rights
Agreement" for more details regarding the registration rights agreement.
Each holder of outstanding notes that wishes to exchange such outstanding
notes for transferable exchange notes in the exchange offer will be required to
make the following representations:
. any exchange notes will be acquired in the ordinary course of its
business;
. such holder has no arrangement with any person to participate in the
distribution of the exchange notes; and
. such holder is not our "affiliate," as defined in Rule 405 of the
Securities Act, or if it is our affiliate, that it will comply with
applicable registration and prospectus delivery requirements of the
Securities Act.
Resale of Exchange Notes
Based on interpretations of the Commission staff set forth in no action
letters issued to unrelated third parties, we believe that exchange notes
issued under the exchange offer in exchange for outstanding notes may be
offered for resale, resold and otherwise transferred by any exchange note
holder without compliance with the registration and prospectus delivery
provisions of the Securities Act, if:
. such holder is not an "affiliate" of Port Arthur Finance within the
meaning of Rule 405 under the Securities Act;
. such exchange notes are acquired in the ordinary course of the holder's
business; and
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. the holder does not intend to participate in the distribution of such
exchange notes.
Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the exchange notes
. cannot rely on the position of the staff of the Commission enunciated in
"Exxon Capital Holdings Corporation" or similar interpretive letters;
and
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.
This prospectus may be used for an offer to resell, resale or other
retransfer of exchange notes only as specifically set forth in this prospectus.
With regard to broker-dealers, only broker-dealers that acquired the
outstanding notes as a result of market-making activities or other trading
activities may participate in the exchange offer. Each broker-dealer that
receives exchange notes for its own account in exchange for outstanding notes,
where such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
Please read the section captioned "Plan of Distribution" for more details
regarding the transfer of exchange notes.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus and
in the letter of transmittal, Port Arthur Finance will accept for exchange any
outstanding notes properly tendered and not withdrawn prior to the expiration
date. Port Arthur Finance will issue $1,000 principal amount of exchange notes
in exchange for each $1,000 principal amount of outstanding notes surrendered
under the exchange offer. Outstanding notes may be tendered only in integral
multiples of $1,000.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the outstanding notes except the exchange notes will be
registered under the Securities Act, will not bear legends restricting their
transfer and will not provide for any additional interest upon failure of Port
Arthur Finance to fulfill its obligations under the registration rights
agreement to file, and cause to be effective, a registration statement. The
exchange notes will evidence the same debt as the outstanding notes. The
exchange notes will be issued under and entitled to the benefits of the same
indenture that authorized the issuance of the outstanding notes. Consequently,
both series will be treated as a single class of debt securities under that
indenture. For a description of the indenture, see "Description of Notes"
below.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of outstanding notes being tendered for exchange.
As of the date of this prospectus, $255 million aggregate principal amount of
the outstanding notes are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of outstanding notes.
There will be no fixed record date for determining registered holders of
outstanding notes entitled to participate in the exchange offer.
Port Arthur Finance intends to conduct the exchange offer in accordance with
the provisions of the registration rights agreement, the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934 and
the rules and regulations of the Commission. Outstanding notes that are not
tendered for exchange in the exchange offer will remain outstanding and
continue to accrue interest and will be entitled to the rights and benefits
such holders have under the indenture relating to the outstanding notes and the
registration rights agreement.
Port Arthur Finance will be deemed to have accepted for exchange properly
tendered outstanding notes when we have given oral or written notice of the
acceptance to the exchange agent. The exchange agent will act as agent for the
tendering holders for the purposes of receiving the exchange notes from us and
delivering
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exchange notes to such holders. Subject to the terms of the registration rights
agreement, Port Arthur Finance expressly reserves the right to amend or
terminate the exchange offer, and not to accept for exchange any outstanding
notes not previously accepted for exchange, upon the occurrence of any of the
conditions specified below under the caption "--Certain Conditions to the
Exchange Offer."
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. It is
important that you read the section labeled "--Fees and Expenses" below for
more details regarding fees and expenses incurred in the exchange offer.
Expiration Date; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City time on ,
2000, unless in its sole discretion, Port Arthur Finance extends it.
In order to extend the exchange offer, Port Arthur Finance will notify the
exchange agent orally or in writing of any extension. Port Arthur Finance will
notify the registered holders of outstanding notes of the extension no later
than 9:00 a.m., New York City time, on the business day after the previously
scheduled expiration date.
Port Arthur Finance reserves the right, in its sole discretion:
. to delay accepting for exchange any outstanding notes;
. to extend the exchange offer or to terminate the exchange offer and to
refuse to accept outstanding notes not previously accepted if any of the
conditions set forth below under "--Certain Conditions to the Exchange
Offer" have not been satisfied, by giving oral or written notice of such
delay, extension or termination to the exchange agent; or
. subject to the terms of the registration rights agreement, to amend the
terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of outstanding notes. If Port Arthur Finance amends the
exchange offer in a manner that it determines to constitute a material change,
Port Arthur Finance will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of outstanding notes of such
amendment.
Without limiting the manner in which it may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the exchange offer, Port Arthur Finance shall have no obligation to publish,
advertise, or otherwise communicate any such public announcement, other than by
making a timely release to a financial news service.
Certain Conditions to the Exchange Offer
Despite any other term of the exchange offer, Port Arthur Finance will not be
required to accept for exchange, or exchange any exchange notes for, any
outstanding notes, and Port Arthur Finance may terminate the exchange offer as
provided in this prospectus before accepting any outstanding notes for exchange
if in its reasonable judgment:
. the exchange notes to be received will not be tradeable by the holder,
without restriction under the Securities Act, the Securities Exchange
Act of 1934 and without material restrictions under the blue sky or
securities laws of substantially all of the states of the United States;
. the exchange offer, or the making any exchange by a holder of
outstanding notes, would violate applicable law or any applicable
interpretation of the staff of the Commission; or
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. any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in Port Arthur Finance's judgment, would reasonably be
expected to impair the ability of Port Arthur Finance to proceed with
the exchange offer.
In addition, Port Arthur Finance will not be obligated to accept for exchange
the outstanding notes of any holder that has not made to it
. the representations described under "--Purpose and Effect of the
Exchange Offer," "--Procedures for Tendering" and "Plan of
Distribution", and
. such other representations as may be reasonably necessary under
applicable Commission rules, regulations or interpretations to make
available to an appropriate form for registration of the exchange notes
under the Securities Act.
Port Arthur Finance expressly reserves the right, at any time or at various
times, to extend the period of time during which the exchange offer is open.
Consequently, it may delay acceptance of any outstanding notes by giving oral
or written notice of such extension to their holders. During any such
extensions, all outstanding notes previously tendered will remain subject to
the exchange offer, and Port Arthur Finance may accept them for exchange. Port
Arthur Finance will return any outstanding notes that it does not accept for
exchange for any reason without expense to their tendering holder as promptly
as practicable after the expiration or termination of the exchange offer.
Port Arthur Finance expressly reserves the right to amend or terminate the
exchange offer, and to reject for exchange any outstanding notes not previously
accepted for exchange, upon the occurrence of any of the conditions of the
exchange offer specified above. Port Arthur Finance will give oral or written
notice of any extension, amendment, non-acceptance or termination to the
holders of the outstanding notes as promptly as practicable. In the case of any
extension, such notice will be issued no later than 9:00 a.m., New York City
time, on the business day after the previously scheduled expiration date.
These conditions are for the sole benefit of Port Arthur Finance and Port
Arthur Finance may assert them regardless of the circumstances that may give
rise to them or waive them in whole or in part at any or at various times in
our sole discretion. If Port Arthur Finance fails at any time to exercise any
of the foregoing rights, this failure will not constitute a waiver of such
right. Each such right will be deemed an ongoing right that Port Arthur Finance
may assert at any time or at various times.
In addition, Port Arthur Finance will not accept for exchange any outstanding
notes tendered, and will not issue exchange notes in exchange for any such
outstanding notes, if at such time any stop order will be threatened or in
effect with respect to the registration statement of which this prospectus
constitutes a part or the qualification of the indenture under the Trust
Indenture Act of 1939.
Procedures for Tendering
Only a holder of outstanding notes may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must:
. complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and mail or deliver
such letter of transmittal or facsimile to the exchange agent prior to
the expiration date; or
. comply with DTC's Automated Tender Offer Program procedures described
below.
In addition, either:
. the exchange agent must receive outstanding notes along with the letter
of transmittal; or
. the exchange agent must receive, prior to the expiration date, a timely
confirmation of book-entry transfer of such outstanding notes into the
exchange agent's account at DTC according to the procedure for book-
entry transfer described below or a properly transmitted agent's
message; or
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. the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "--Exchange Agent" prior to the expiration date.
The tender by a holder that is not withdrawn prior to the expiration date
will constitute an agreement between such holder and Port Arthur Finance in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal.
The method of delivery of outstanding notes, the letter of transmittal and
all other required documents to the exchange agent is at the holder's election
and risk. Rather than mail these items, Port Arthur Finance recommends that
holders use an overnight or hand delivery service. In all cases, holders should
allow sufficient time to assure delivery to the exchange agent before the
expiration date. Holders should not send the letter of transmittal or
outstanding notes to Port Arthur Finance Holders may request their respective
brokers, dealers, commercial banks, trust companies or other nominees to effect
the above transactions for them.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owner's behalf. If such beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the letter of
transmittal and delivering its outstanding notes; either:
. make appropriate arrangements to register ownership of the outstanding
notes in such owner's name; or
. obtain a properly completed bond power from the registered holder of
outstanding notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal described
below must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act, unless the outstanding notes tendered
pursuant thereto are tendered:
. by a registered holder who has not competed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
. for the account of an eligible guarantor institution.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed on the outstanding notes, such
outstanding notes must be endorsed or accompanied by a properly completed bond
power. The bond power must be signed by the registered holder as the registered
holder's name appears on the outstanding notes and an eligible institution must
guarantee the signature on the bond power.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing. Unless waived by us,
they should also submit evidence satisfactory to us of their authority to
deliver the letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution that
is a participant in DTC's system may use DTC's Automated Tender Offer Program
to tender. Participants in the program may, instead of physically completing
and signing the letter of transmittal and delivering it to the exchange agent,
transmit their acceptance of the exchange offer electronically. They may do so
by causing DTC to transfer the outstanding
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notes to the exchange agent in accordance with its procedures for transfer. DTC
will then send an agent's message to the exchange agent. The term "agent's
message" means a message transmitted by DTC, received by the exchange agent and
forming part of the book-entry confirmation, to the effect that:
. DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering outstanding notes that
are the subject of such book-entry confirmation;
. such participant has received and agrees to be bound by the terms of the
letter of transmittal, or, in the case of an agent's message relating to
guaranteed delivery, that such participant has received and agrees to be
bound by the applicable notice of guaranteed delivery; and
. the agreement may be enforced against such participant.
Port Arthur Finance will determine in its sole discretion all questions as to
the validity, form, eligibility (including time of receipt), acceptance of
tendered outstanding notes and withdrawal of tendered outstanding notes. Port
Arthur Finance's determination will be final and binding. Port Arthur Finance
reserves the absolute right to reject any outstanding notes not properly
tendered or any outstanding notes our acceptance of which would, in the opinion
of our counsel, be unlawful. Port Arthur Finance also reserves the right to
waive any defects, irregularities or conditions of tender as to particular
outstanding notes. Port Arthur Finance's interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of outstanding notes must
be cured within such time as Port Arthur Finance shall determine. Although Port
Arthur Finance intends to notify holders of defects or irregularities with
respect to tenders of outstanding notes, neither it, the exchange agent nor any
other person will incur any liability for failure to give such notification.
Tenders of outstanding notes will not be deemed made until such defects or
irregularities have been cured or waived. Any outstanding notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned to the exchange
agent without cost to the tendering holder, unless otherwise provided in the
letter of transmittal, as soon as practicable following the expiration date.
In all cases, Port Arthur Finance will issue exchange notes for outstanding
notes that it has accepted for exchange under the exchange offer only after the
exchange agent timely receives:
. outstanding notes or a timely book-entry confirmation of such
outstanding notes into the exchange agent's account at DTC; and
. a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
By signing the letter of transmittal, each tendering holder of outstanding
notes will represent to Port Arthur Finance that, among other things:
. any exchange notes that the holder receives will be acquired in the
ordinary course of its business;
. the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange notes;
. if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the exchange notes;
. if the holder is a broker-dealer that will receive exchange notes for
its own account in exchange for outstanding notes that were acquired as
a result of market-making activities, that it will deliver a prospectus,
as required by law, in connection with any resale of such exchange
notes; and
. the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of Port Arthur Finance or, if the holder is an
affiliate, it will comply with any applicable registration and
prospectus delivery requirements of the Securities Act.
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Book-Entry Transfer
The exchange agent will make a request to establish an account with respect
to the outstanding notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus; and any financial institution participating
in DTC's system may make book-entry delivery of outstanding notes by causing
DTC to transfer such outstanding notes into the exchange agent's account at DTC
in accordance with DTC's procedures for transfer. Holders of outstanding notes
who are unable to deliver confirmation of the book-entry tender of their
outstanding notes into the exchange agent's account at DTC or all other
documents required by the letter of transmittal to the exchange agent on or
prior to the expiration date must tender their outstanding notes according to
the guaranteed delivery procedures described below.
Guaranteed Delivery Procedures
Holders wishing to tender their outstanding notes but whose outstanding notes
are not immediately available or who cannot deliver their outstanding notes,
the letter of transmittal or any other required documents to the exchange agent
or comply with the applicable procedures under DTC's Automated Tender Offer
Program prior to the expiration date may tender if:
. the tender is made through an eligible institution;
. prior to the expiration date, the exchange agent receives from such
eligible guarantor institution either a properly completed and duly
executed notice of guaranteed delivery, by facsimile transmission, mail
or hand delivery, or a properly transmitted agent's message and notice
of guaranteed delivery:
. setting forth the name and address of the holder, the registered
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered;
. stating that the tender is being made thereby;
. guaranteeing that, within three (3) New York Stock Exchange
trading days after the expiration date, the letter of transmittal,
or facsimile of the letter of transmittal, together with the
outstanding notes or a book-entry confirmation, and any other
documents required by the letter of transmittal will be deposited
by the Eligible Institution with the exchange agent; and
. the exchange agent receives such properly completed and executed letter
of transmittal, or facsimile of the letter of transmittal, as well as
all tendered outstanding notes in proper form for transfer or a book-
entry confirmation, and all other documents required by the letter of
transmittal, within three (3) New York State Exchange trading days after
the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, holders of outstanding notes
may withdraw their tenders at any time prior to the expiration date.
For a withdrawal to be effective:
. the exchange agent must receive a written notice, which may be by
telegram, telex, facsimile transmission or letter, of withdrawal at one
of the addresses set forth below under "--Exchange Agent", or
. holders must comply with the appropriate procedures of DTC's Automated
Tender Offer Program system.
Any such notice of withdrawal must:
. specify the name of the person who tendered the outstanding notes to be
withdrawn
. identify the outstanding notes to be withdrawn, including the principal
amount of such outstanding notes; and
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. where certificates for outstanding notes have been transmitted, specify
the name in which such outstanding notes were registered, if different
from that of the withdrawing holder.
If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit:
. the serial numbers of the particular certificates to be withdrawn; and
. a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless such holder is an eligible institution.
If outstanding notes have been tendered pursuant to the procedure for book-
entry transfer described above, any notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawn outstanding
notes and otherwise comply with the procedures of such facility. Port Arthur
Finance will determine all questions as to the validity, form and eligibility,
including time of receipt, of such notices, and our determination shall be
final and binding on all parties. Port Arthur Finance will deem any outstanding
notes so withdrawn not to have validity tendered for exchange for purposes of
the exchange offer. Any outstanding notes that have been tendered for exchange
but that are not exchanged for any reason will be returned to their holder
without cost to the holder, or, in the case of outstanding notes tendered by
book-entry transfer into the exchange agent's account at DTC according to the
procedures described above, such outstanding notes will be credited to an
account maintained with DTC for outstanding notes, as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn outstanding notes may be retendered by following one of the
procedures described under "--Procedures for Tendering" above at any time on or
prior to the expiration date.
Exchange Agent
HSBC Bank USA has been appointed as exchange agent for the exchange offer.
You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent addressed
as follows:
For Delivery by Registered or Certified Mail: For Overnight Delivery Only or
by Hand:
HSBC Bank USA HSBC Bank USA
140 Broadway--Level A 140 Broadway--Level A
New York, New York 10005-1180 New York, New York 10005-1180
By Facsimile Transmission (for eligible institutions only):
HSBC Bank USA
(212) 658-2292
Attn: Paulette Shaw
Delivery of the letter of transmittal to an address other than as set forth
above or transmission via facsimile other than as set forth above does not
constitute a valid delivery of such letter of transmittal.
Fees and Expenses
Port Arthur Finance will bear the expenses of soliciting tenders. The
principal solicitation is being made by mail; however, we may make additional
solicitation by telegraph, telephone or in person by our officers and regular
employees and those of our affiliates.
Port Arthur Finance has not retained any dealer-manager in connection with
the exchange offer and will not make any payments to broker-dealers or others
soliciting acceptances of the exchange offer. We will, however, pay the
exchange agent reasonable and customary fees for its services and reimburse it
for its related reasonable out-of-pocket expenses.
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Port Arthur Finance will pay the cash expenses to be incurred in connection
with the exchange offer. The expenses are estimated in the aggregate to be
approximately $ . They include:
. Commission registration fees;
. fees and expenses of the exchange agent and trustee;
. accounting and legal fees and printing costs; and
. related fees and expenses.
Port Arthur Finance will pay all transfer taxes, if any, applicable to the
exchange of outstanding notes under the exchange offer. The tendering holder,
however, will be required to pay any transfer taxes (whether imposed on the
registered holder or any other person) if:
. certificates representing outstanding notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
outstanding notes tendered;
. tendered outstanding notes are registered in the name of any person
other than the person signing the letter of transmittal; or
. a transfer tax is imposed for any reason other than the exchange of
outstanding notes under the exchange offer.
If satisfactory evidence of payment of such taxes is not submitted with the
letter of transmittal, the amount of such transfer taxes will be billed to that
tendering holder.
Transfer Taxes
Holders who tender their outstanding notes for exchange will not be required
to pay any transfer taxes. However, holders who instruct Port Arthur Finance to
register exchange notes in the name of, or request that outstanding notes not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder will be required to pay any applicable
transfer tax.
Consequences of Failure to Exchange
Holders of outstanding notes who do not exchange their outstanding notes for
exchange notes under the exchange offer will remain subject to the restrictions
on transfer of such outstanding notes:
. as set forth in the legend printed on the notes as a consequence of the
issuance of the outstanding notes pursuant to the exemptions from, or in
transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws; and
. otherwise set forth in the offering memorandum distributed in connection
with the private offering of the outstanding notes.
In general, you may not offer or sell the outstanding notes unless they are
registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the registration rights agreement, we do not intend to
register resales of the outstanding notes under the Securities Act. Based on
interpretations of the Commission staff, exchange notes issued pursuant to the
exchange offer may be offered for resale, resold or otherwise transferred by
their holders, other than any such holder that is our "affiliate" within the
meaning of Rule 405 under the Securities Act, without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holders acquired the exchange notes in the ordinary course of the
holders' business and the holders have no arrangement or understanding with
respect to the distribution of the exchange notes to be acquired in the
exchange offer. Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the exchange notes:
. could not rely on the applicable interpretations of the Commission; and
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. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.
Accounting Treatment
Port Arthur Finance will record the exchange notes in our accounting records
at the same carrying value as the outstanding notes, which is the aggregate
principal amount, as reflected in our accounting records on the date of
exchange. Accordingly, Port Arthur Finance will not recognize any gain or loss
for accounting purposes in connection with the exchange offer. We will record
the expenses of the exchange offer as incurred.
Other
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.
Port Arthur Finance may in the future seek to acquire untendered outstanding
notes in open market or privately negotiated transactions, through subsequent
exchange offers or otherwise. Port Arthur Finance has no present plans to
acquire any outstanding notes that are not tendered in the exchange offer or to
file a registration statement to permit resales of any untendered outstanding
notes.
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DESCRIPTION OF THE NOTES
General
The outstanding notes were issued and the exchange notes will be issued under
an indenture, dated as of August 19, 1999, among us, Sabine River, Neches
River, HSBC Bank USA, as indenture trustee, and Bankers Trust Company, as
collateral trustee. The indenture contains the full legal text of the matters
described in this section. A copy of the indenture has been filed as an exhibit
to the registration statement of which this prospectus is a part. Upon the
issuance of the exchange notes, or the effectiveness of a shelf registration
statement, the indenture will be subject to and governed by the Trust Indenture
Act of 1939. The terms of the notes include those stated in the indenture and
those made part of the indenture by reference to the Trust Indenture Act.
The following description is a summary of the material provisions of the
notes and the indenture. It does not describe every aspect of the notes. We
urge you to read the notes and the indenture because they, and not this
description, define your rights as holder of the notes.
Principal, Maturity and Interest
We have issued $255 million in principal amount of 12.50% senior secured
outstanding notes due 2009. The notes will mature on January 15, 2009.
The notes bear interest at an annual rate of 12.50%. Interest on the notes
will be paid semiannually on January 15 and July 15 of each year, commencing
January 15, 2000, to holders of record on each January 1 and July 1 preceding
such interest payment dates. Interest on the notes will be computed on the
basis of a 360-day year of twelve 30-day months. The interest rate on the notes
may increase under circumstances described under "Description of Our Principal
Financing Documents--Registration Rights Agreement."
Installments of principal on the notes are payable as follows:
<TABLE>
<CAPTION>
Percentage of Principal
Payment Date Amount Payable
------------ -----------------------
<S> <C>
July 15, 2002.................. 1.70%
January 15, 2003............... 1.70%
July 15, 2003.................. 4.10%
January 15, 2004............... 4.10%
July 15, 2004.................. 6.00%
January 15, 2005............... 6.00%
July 15, 2005.................. 9.10%
January 15, 2006............... 9.10%
July 15, 2006.................. 9.10%
January 15, 2007............... 9.10%
July 15, 2007.................. 7.90%
January 15, 2008............... 7.90%
July 15, 2008.................. 12.10%
January 15, 2009............... 12.10%
</TABLE>
The Guarantees
Port Arthur Coker Company, Sabine River and Neches River have unconditionally
jointly and severally guaranteed to each note holder:
. the due and punctual payment of principal and interest on the notes;
. the performance by Port Arthur Finance of its obligations under the
indenture and other financing documents; and
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. that its guarantor obligations will be as if it were a principal debtor
and obligor and not merely a surety.
The guarantees will be endorsed on and attached to the notes.
Nonrecourse Obligations
The obligations to pay principal of, premium, if any, and interest on the
notes are the obligations of only Port Arthur Finance, Port Arthur Coker
Company, Sabine River and Neches River. None of our other owners, affiliates,
employees, officers, directors or any other person or entity have guaranteed
the notes or have any obligation to make any payments on the notes.
Security
The notes are secured by, among other things:
. the delayed coker, the vacuum gas oil hydrocracker and the sulfur
recovery complex;
. our leasehold interest in our Heavy Oil Processing Facility sites, the
crude unit, vacuum tower and the naphtha and two distillate
hydrotreaters;
. all of our interests in crude oil and intermediate and refined products;
. all our accounts, except for an operating account for short term
expenses;
. the partnership interests in Port Arthur Coker Company;
. the capital stock of Port Arthur Finance;
. all our rights in our equity contribution agreements;
. all rights in all our major contracts, including our long term crude oil
supply agreement with P.M.I. Comercio Internacional, our construction
contract with Foster Wheeler USA and our services and supply agreement
and product purchase agreement with Clark Refining & Marketing; and
. to the extent permitted by law, all our rights in governmental permits
and licenses.
The collateral securing the notes is shared, on an equal and ratable basis,
with the other senior lenders, any replacement senior lenders and other secured
parties.
See "Description of Our Principal Financing Documents--Common Security
Agreement--Scope and Nature of the Security Interest."
Ranking of the Notes
The notes:
. are senior secured indebtedness of Port Arthur Finance;
. rank equivalent in right of payment to all other senior indebtedness of
Port Arthur Finance, Port Arthur Coker Company, Sabine River and Neches
River and our payment obligations under the guaranty insurance policy;
and
. rank senior in right of payment to all existing and future subordinate
indebtedness of Port Arthur Finance, Port Arthur Coker Company, Sabine
River and Neches River.
Redemption at Our Option
We may choose to redeem some or all of the notes at any time, without the
consent of noteholders, at a redemption price equal to 100% of the outstanding
unpaid principal amount of notes being redeemed plus accrued and unpaid
interest, if any, up to but excluding the applicable redemption date plus a
make-whole
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premium. The make-whole premium will be equal to the excess, if positive, of
(1) the present value of all interest and unpaid principal payments scheduled
to be made on the notes (at a discount rate equal to 75 basis points over the
yield to maturity on the U.S. treasury instruments with a maturity as close as
practicable to the remaining average life of the notes) over (2) the unpaid
principal amount of the notes to be redeemed.
Notice of redemption will be mailed by the indenture trustee to each
noteholder at that noteholder's address of record not less than 30 days nor
more than 60 days prior to the date of redemption. On the date of redemption,
the redemption price will become due and payable on each note to be redeemed
and interest thereon will cease to accrue on and after such date.
Mandatory Redemption
If we receive specified mandatory payment proceeds, which includes insurance
proceeds from casualty events, condemnation compensation and late payments (to
the extent not needed to pay interest on the senior debt) and buy-down payments
from Foster Wheeler USA, we are required to redeem all our outstanding senior
debt on an equal and ratable basis. The redemption price for the notes will be
equal to 100% of the unpaid principal amount of notes being redeemed, plus
accrued but unpaid interest, if any, on the notes being redeemed, up to but
excluding the date of redemption. See "Description of Our Principal Financing
Documents--Common Security Agreement--Mandatory Prepayments."
Repurchases by Us
Subject to the terms of the common security agreement, we or our respective
affiliates may at any time purchase the notes in the open market or otherwise
at any price agreed upon between us and the applicable holders. Any note so
purchased by us must be surrendered to the indenture trustee for cancellation
and may not be re-issued or resold.
Transfer and Exchange
A noteholder may transfer or exchange notes only in accordance with and
subject to the restrictions on transfer contained in the indenture.
Satisfaction and Discharge
Under certain circumstances, we can deposit funds with the indenture trustee
sufficient to pay and discharge the indebtedness on any outstanding notes. In
that case, we would cease to have any obligations under the indenture.
Indenture Subject to Common Security Agreement
The indenture trustee has entered into the common security agreement and
certain other financing documents on behalf of all noteholders from time to
time. All rights, powers and remedies available to the indenture trustee and
the noteholders and all future noteholders, under the common security agreement
and such other financing documents are in addition to those under the
indenture. In the event of any conflict or inconsistency between the terms and
provisions of the indenture and the common security agreement, the terms of the
common security agreement govern and control.
Intercreditor Arrangements
In the event that any consent, approval, waiver or other direction of the
senior lenders is sought by the indenture trustee or the collateral trustee
pursuant to the common security agreement and the matter with respect to which
such consent, approval, waiver or direction as sought is a matter that the
indenture trustee is entitled to vote on under the common security agreement as
representative of the noteholders, the indenture trustee, promptly upon the
receipt of notice from the collateral trustee describing the action to be
voted, will be
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obligated to promptly notify the holders and duly convene a meeting of
holders, whose instructions may be conveyed by written consent, to canvass the
holders as to votes to be cast by the indenture trustee regarding the matter.
If no instructions are so issued, the indenture trustee will be obligated to
abstain from voting.
Modification, Amendment and Waiver
The indenture and the notes may be modified without the consent of any
noteholder, including, among other things:
. to evidence the succession of another person to Port Arthur Finance, Port
Arthur Coker Company, Sabine River or Neches River;
. to add to the covenants or events of default for the benefit of the
noteholders;
. to comply with any applicable rules or regulations of any securities
exchange on which the notes may be listed;
. to cure any ambiguity in the indenture or in the notes, to correct or
supplement any provision in the indenture, the notes or any other
financing document which may be defective or inconsistent with any other
provision of the indenture, the notes or any other financing document, or
to make any other provisions with respect to matters or questions arising
under the indenture or the notes, provided that any such action referred
to in this clause does not adversely affect the interests of the
noteholders in any material respect;
. to evidence and provide for the acceptance of appointment by a successor
indenture trustee with respect to the notes;
. to reflect the incurrence of permitted indebtedness under the common
security agreement and the granting of permitted liens pursuant to the
common security agreement; and
. to take any other action which may be taken without the consent of the
noteholders under the financing documents.
Further Issues and Additional Securities
From time to time we may, without notice to or the consent of the holders of
the notes, create and issue further notes ranking equally and ratably with the
notes in all respects, or in all respects except for the payment of interest
accruing prior to the issue date of such further notes or except for the first
payment of interest following the issue date of such further notes, and so
that such further notes will be consolidated and form a single series with the
notes and will have the same terms as to status, redemption or otherwise as
the notes. In addition, we may issue additional debt securities on terms
agreed by us and the underwriters of those securities. In each case described
above we may issue the further notes or additional debt securities pursuant to
a supplemental indenture. The issuance and application of the proceeds of any
additional notes or other securities will be subject to the requirements
applicable to additional senior debt or replacement senior debt in the common
security agreement, described in "Description of Our Principal Financing
Documents--Common Security Agreement--Additional Senior Debt" and "--
Replacement Senior Debt."
Notices and Reports
We are required to give notice to the indenture trustee of any event which
requires that notice be given to the noteholders, in sufficient time for the
indenture trustee to provide such notice to the noteholders in the manner
provided by the indenture. Also, the common security agreement provides that
upon request of a beneficial owner, we will provide directly to such
beneficial owner any financial information regarding us that we are required
to provide to the indenture trustee pursuant to the indenture or the common
security agreement.
The indenture trustee will transmit to noteholders such information,
documents and reports, and their summaries, concerning the indenture trustee
and its actions under the common security agreement as may be required and at
the times and in the manner provided in the common security agreement.
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All notices regarding the notes will be deemed to have been sufficiently
given upon the mailing by first-class mail, postage prepaid, of such notices to
each holder at the address of such holder as it appears in the security
register, in each case not earlier than the earliest date and not later than
the latest date prescribed in the indenture for the giving of such notice. Any
notice so mailed will be deemed to have been given on the date of such mailing.
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DESCRIPTION OF OUR PRINCIPAL FINANCING DOCUMENTS
The following is a summary of selected provisions of our principal financing
agreements and is not considered to be a full statement of the terms of these
agreements. Accordingly, the following summaries are qualified in their
entirety by reference to each agreement, including the definitions of certain
terms contained in these agreements, and are subject to the terms of the full
text of each agreement. A copy of each of these agreements has been filed as
an exhibit to the registration statement of which this prospectus is a part.
Unless otherwise stated, any reference in this prospectus to any agreement
means such agreement and all schedules, exhibits and attachments to such
agreements, as amended, supplemented or otherwise modified in effect as of the
date hereof. Capitalized terms used but not defined in the following summaries
have the respective meanings given to them in the relevant documents. Unless
otherwise noted, all financing documents are governed by and construed in
accordance with the laws of the State of New York.
Common Security Agreement
We, along with Sabine River and Neches River, entered into a common security
agreement, dated as of August 19, 1999, with the collateral trustee, the bank
lenders administrative agent, the indenture trustee, the oil payment insurers
administrative agent and the depositary bank. The common security agreement
contains, among other things, common covenants, representations and
warranties, events of default and remedies applicable to all our senior debt,
including the notes, any loans made under our bank credit facilities and any
reimbursement obligations to Winterthur relating to Winterthur's oil payment
guaranty insurance policy.
Scope and Nature of the Security Interests
All senior lenders rank equally with respect to the common security package.
The oil payment insurers generally rank equally with respect to the common
security package as well. All secured parties share equally and ratably
(calculated on the basis of the amounts outstanding from time to time under
each senior loan or the oil payment guaranty insurance policy described in "--
Oil Payment Guaranty Insurance Policy" below, as the case may be) in the
common security package.
The principal elements of the common security package the secured parties
include:
. all our real property interests and all improvements made on our
property, including our interests under the ground lease and the facility
and site lease and any fixtures on the Coker Project property;
. the 1% general partnership interest in Port Arthur Coker Company held by
Sabine River;
. the 99% limited partnership in Port Arthur Coker Company held by Neches
River;
. all 100% of the capital stock of Port Arthur Finance held by Port Arthur
Coker Company;
. all our rights in our equity contribution agreements;
. all our interests in any of the secured accounts at any time;
. all our interests under all project documents, including any rights we
may eventually have under any spot contracts or sales agreements for the
purchase of crude oil;
. all insurance policies issued to Port Arthur Coker Company and proceeds
we may receive from them;
. all our current and future ownership interests in any machinery,
equipment, intellectual property (to the extent permitted by the
underlying contracts) and other personal property;
. all our interest in any crude oil the title of which has passed to us,
all intermediate oil products produced throughout the refining process
and all refined products and any amounts receivable as a result of the
sale of any of these materials;
. all our interests in any permitted hedging instruments;
. all intercompany loans from Port Arthur Finance to Port Arthur Coker
Company, including the rights of Port Arthur Coker Company to receive
funds and the right of Port Arthur Finance to be repaid; and
. to the extent permitted by law, all our rights in governmental permits
and licenses.
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The secured parties that share equally in the common security package
include:
. the indenture trustee, on behalf of the noteholders;
. lenders under our bank credit facilities and their administrative agents;
. oil payment insurers and their administrative agent; and
. holders of our Additional Senior Debt or Replacement Senior Debt as
described under "--Additional Senior Debt" or "--Replacement Senior Debt"
below.
We, Sabine River and Neches River are required to take all actions necessary,
upon the request of the collateral trustee, to record any mortgage and perfect
any security interests created under the common security agreement. While the
common security agreement is in effect, none of the security interests will be
released unless we obtain the prior consent of all secured parties.
Account Structure
At our direction the collateral trustee has established and will maintain the
following secured accounts at Bankers Trust Company, as the depositary bank in
New York City:
. the Bank Loan Drawdown and Equity Funding Account, into which we are
required to deposit all funds borrowed under any senior loan, other than
proceeds from the issuance of the outstanding notes, along with the
capital contributions by both Blackstone and Occidental;
. the Bond Proceeds Account, into which we deposited the net proceeds from
the issuance of the outstanding notes;
. the Project Revenue Account, into which, among other funds:
. we will deposit, after substantial reliability, all funds in the Bank
Loan Drawdown and Equity Funding Account and the Bond Proceeds
Account, other than any amount we deposit into the Contingency
Reserve Account;
. we will cause each purchaser of our products to make payments
directly;
. we will cause persons making payments under the several project
documents to deposit such payments directly; and
. we will cause purchasers of any of our real or personal property to
deposit such payments directly;
. the PMI Premium Reserve Account, into which we are required to deposit an
amount equal to the quarterly surplus calculated in any quarter and which
we are then required to pay as a premium in the succeeding quarters;
. the Principal & Interest Accrual Account, into which we are required to
deposit funds available in the Project Revenue Account equal to (1) the
amount of principal and interest for senior debt due on the next Payment
Date as described under "--Secured Construction and Term Loan Agreement"
below and (2) on each of the last three or, in specified circumstances,
four Payment Dates, a pro rata share of the aggregate principal amount
then outstanding of the Tranche B loans, for further deposit into the
Tranche B Amortization Account, described below;
. the Tranche B Amortization Account, into which we are required to deposit
the amounts described in clause (2) under the description of the
Principal & Interest Accrual Amount above;
. the Tax Reserve Account, into which we are required to deposit an amount
sufficient to cover our estimated property taxes and also the estimated
share of the income and/or franchise taxes of Sabine River and/or Neches
River or that Sabine River and/or Neches River are required to pay Clark
Refining Holdings under the tax sharing agreement, in either case, in
respect of their allocable share of our taxable income and that are
expected to become due and payable on or before the next two Payment
Dates;
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. the Major Maintenance Account, into which we are required to deposit on
each Payment Date, to the extent that cash is available, an amount equal
to one-eighth, or at our option up to one-sixth, of the estimated major
maintenance expenses that we expect to incur in connection with our next
scheduled maintenance shutdown;
. the P.M.I. Surplus Reserve Account, into which we are required to deposit
and retain funds, to the extent that cash is available, in an amount
equal to any quarterly surpluses that we accrue pursuant to the coker
gross margin support mechanism under our long term crude oil supply
agreement with P.M.I. Comercio Internacional;
. the Debt Service Reserve Account, into which we are required to deposit
and retain funds in an amount that, together with the amount available
under the debt service reserve insurance guarantee described in
"Description of Our Principal Financing Documents--Debt Service Reserve
Insurance Guarantee," equals the aggregate senior debt obligations due
and payable on the immediately succeeding Payment Date;
. the Casualty and Insurance Account, into which we are required to direct
insurers to pay directly any insurance proceeds other than insurance
proceeds resulting from a catastrophic casualty;
. the Catastrophic Casualty Account, into which we are required to direct
insurers to pay directly any insurance proceeds resulting from a
catastrophic casualty;
. the Mandatory Prepayments Account, into which we or the collateral
trustee will deposit sums required to be used for mandatory prepayments;
. the Contingency Reserve Account, into which we may deposit, after we
achieve final completion, any amounts relating to unused budget
contingencies that we may put toward unbudgeted repairs, maintenance,
mandatory capital expenditures or the funding of the Debt Service Reserve
Account; and
. the Distribution Account, into which we are required to deposit any
excess funds that remain after the cash flow is applied in accordance
with the cash flow waterfall described under "--Withdrawals from Accounts
Pre-Default" below.
Also, we may maintain in an unsecured operating account up to 30 days' of our
operating expenses.
Withdrawals from Accounts Pre-Default.
Unless a Default described in "--Remedies" below has occurred and is
continuing, we have the right to direct the collateral trustee to withdraw
funds from the Bank Loan Drawdown and Equity Funding Account and the Bond
Proceeds Account or the Project Revenue Account and apply such funds in the
following order of priority:
First, (1) to pay our operating expenses, (2) to transfer funds into the
operating account in an amount equal to 30 days of our estimated operating
expenses (other than our operating expenses relating to the purchase of
crude oil), as certified by us and (3) thereafter, to transfer funds into
the PMI Premium Reserve Account in an amount equal to the quarterly surplus
received by us in any quarter.
Second, to pay reimbursement obligations described in "Description of Our
Principal Financing Documents--Guaranty Insurance Policy and Reimbursement
Agreement" below then due and payable by us;
Third, to pay senior debt obligations then due and payable by us, other
than the prepayments and repayments described in the tenth priority
position below;
Fourth, to transfer funds to the Principal & Interest Accrual Account in
an amount equal to (1) all senior debt obligations to become due prior to
and including the immediately succeeding Payment Date, less any balance
already in the Principal & Interest Accrual Account and (2) on each of the
last three or, in specified circumstances, four Payment Dates, a pro rata
share of the aggregate principal amount then outstanding of the Tranche B
loans, in the case of clause (2) for further deposit into the Tranche B
Amortization Account;
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Fifth, (1) to transfer funds to the Tax Reserve Account in an amount
equal to the Projected Tax Reserve Amount, less the balance already in the
Tax Reserve Account and (2) to pay a monitoring fee not exceeding $1
million in the aggregate in any calendar year to Blackstone, Clark Refining
& Marketing or any of their designated affiliates;
Sixth, to transfer funds to the Major Maintenance Account in an amount
not less than the minimum major maintenance reserve payment due on the
immediately succeeding Payment Date and not exceeding the maximum major
maintenance reserve payment with respect to such Payment Date;
Seventh, following (1) the incurrence of Additional Senior Debt or (2)
the termination or reduction of the debt service reserve insurance
guarantee, to transfer funds to the Debt Service Reserve Account to the
extent of any debt service reserve shortfall resulting from such incurrence
of Additional Senior Debt, in the case of (1), or any other event or
circumstance, in the case of (2);
Eighth, to transfer funds to the P.M.I. Surplus Reserve Account in an
amount equal to the amount, if any, by which the P.M.I. surplus under the
long term crude oil supply agreement exceeds the balance in the P.M.I.
Surplus Reserve Account, up to an amount not exceeding the net total
positive price adjustment we have received under the long term crude oil
supply agreement up to a maximum amount of $75 million, with the maximum
amount reduced to $50 million upon payment in full of all our construction
and term loans;
Ninth, to pay interest in respect of any amounts we have drawn down under
the debt service reserve insurance guarantee and, on the sixth Payment Date
and each subsequent Payment Date until the aggregate principal amount
available under the debt service reserve insurance guarantee has been
reduced to zero, to transfer $12 million to the Debt Service Reserve
Account, up to the amount of required reserve;
Tenth, after start-up, to prepay the construction and term loans, repay
any principal amounts drawn down under the debt service reserve insurance
guarantee and fund the Debt Service Reserve Account from excess cash flow
as described in "--Mandatory Prepayments--Prepayments of Bank Senior Debt"
and "--Debt Service Reserve Account" below.
Eleventh, after final completion (as defined in the construction
contract), to make Restricted Payments as described in "--Restricted
Payments" below.
In any event, withdrawals from the Project Revenue Account for any purpose
other than those described under "First" above will only be permitted if and to
the extent that the funds then on deposit in the Project Revenue Account exceed
the aggregate amount of all outstanding invoices in respect of our payment
obligations under the long term crude oil supply agreement.
Withdrawals from Accounts During the Continuance of a Default.
If a Default has occurred and is continuing, the senior lender(s) may notify
the collateral trustee that the collateral trustee will no longer accept
instructions from us for the investment, withdrawal or transfer of funds or
investments in the secured accounts. The depositary bank will thereafter accept
instructions for the investment, withdrawal or transfer of funds or investments
in these secured accounts solely from the collateral trustee or other person(s)
designated by the collateral trustee. The collateral trustee will invest
project funds only in Authorized Investments. The collateral trustee will give
the depositary bank prompt notice of these circumstances.
Following the receipt by the collateral trustee of such notice from the
senior lender(s) declaring a Default, and until such time as a cessation notice
has been given by any senior lender that the Default has been cured, or an
Enforcement Action is taken by the senior lenders the collateral trustee will
exercise its rights to instruct the depositary bank in a manner that causes
available funds in the accounts to be applied in the order of priority set
forth in the pre-Default waterfall described above, except that (1) no funds
will be credited to the Distribution Account and (2) any reimbursement
obligations that remain unpaid after the expiration of 30 days following the
giving of a Priority Termination Notice as described in "Description of Our
Principal Financing Documents--Guaranty Insurance Policy and Reimbursement
Agreement" below will rank equally and ratably
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in right of payment with the senior debt obligations then due and payable.
Funds not distributed pursuant to these provisions or the pre-Default
waterfall described above will remain in the Project Revenue Account. As an
exception to the foregoing, immediately before the expiration of the 30-day
period referred to above, the collateral trustee will apply any funds on
deposit in the Project Revenue Account, less any amounts earmarked to pay
outstanding invoices for purchases of crude oil or our other operating
expenses in the ordinary course of business, to the repayment of outstanding
reimbursement obligations.
Upon receipt by the collateral trustee of a cessation notice with respect to
a Default that is continuing, the collateral trustee will immediately notify
the depositary bank, with a copy to us, directing the depositary bank once
again to accept our directions, and the collateral trustee and the depositary
bank will again accept our directions in respect of investment, withdrawal and
transfer of funds in the secured accounts.
Debt Service Reserve Account
On each semiannual Payment Date we are required to deposit cash from the
following sources into the Debt Service Reserve Account up to the aggregate
amount of principal and interest due on the senior debt on the next Payment
Date:
. in accordance with the seventh and ninth priority positions in "--
Withdrawal from Accounts Pre-Default" above;
. after the repayment of any principal amounts outstanding under the debt
service reserve insurance guarantee, from 25% of the cash available at
the tenth priority position in "--Withdrawal from Accounts Pre-Default"
above that would otherwise have been applied to repay such principal
amounts in accordance with the financing documents; and
. after the repayment of all construction and term loans, from 75% of the
cash available at the tenth priority position in "--Withdrawal from
Accounts Pre-Default" above that would otherwise have been applied to
repay such construction and term loans in accordance with the financing
documents.
The balance in the Debt Service Reserve Account at any time of determination
will be deemed to be the aggregate of:
. the amount of cash then on deposit in the Debt Service Reserve Account;
. the market value of any Authorized Investments then on deposit in the
Debt Service Reserve Account; and
. the amount available under the debt service reserve insurance guarantee.
If no Default has occurred and is continuing, we may direct the collateral
trustee to apply the funds in the Debt Service Reserve Account at any time to
pay senior debt obligations (and at any time on or after a Priority
Termination Date, oil payment reimbursement obligations) then due and payable
on the date of withdrawal or within five business days, but only to the extent
that there are insufficient funds in the Principal & Interest Accrual Account
to make the required debt service payment. Post-default withdrawals will be
made in accordance with "--Withdrawals from Accounts Post-Default" above.
Conditions Precedent
The obligation of each senior lender to make any future disbursement of a
senior loan will be subject to (1) satisfaction or waiver by it of each of the
conditions precedent set forth in such senior loan agreement and (2) specified
conditions set forth in the common security agreement, including the
following:
. no Event of Default or Potential Default as described in "--Event of
Default" below;
. the representations and warranties are true and correct in all material
respects as of the date of such borrowing;
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. no notice of abandonment has been delivered to us;
. we must not have received a notice from the collateral trustee, delivered
at the instruction of Majority Lenders, that Majority Lenders have
determined in their reasonable judgment that a material adverse change
has occurred in (1) the engineering, construction, development, operation
or performance of our Coker Project or (2) the financial condition of any
of us, Clark Refining & Marketing, Air Products, P.M.I. Comercio
Internacional, PEMEX, Foster Wheeler USA or Foster Wheeler Corporation
that is reasonably expected to have a material adverse effect on our
financial condition or the engineering, construction, development,
operation or performance of our Coker Project; provided that the
occurrence of any change in general economic conditions or market prices
for crude oil or refined products or any downgrade in the senior
unsecured long-term debt rating of Clark Refining & Marketing by Moody's
or Standard & Poor's, or both, if by not more than one rating category,
will not be deemed to constitute such a material adverse change;
. we must have received an equal and ratable capital contribution from
Blackstone and Occidental; and
. we may be required to hedge a substantial portion of our floating rate
exposure under our secured construction and term loan facility.
Restricted Payments
We may not make any partnership distribution, which we refer to as
"Restricted Payments," unless each of the following conditions has been met:
. final completion has occurred;
. immediately prior and after giving effect to such Restricted Payment, no
Event of Default or Potential Default or full or partial downtime has
occurred and is continuing;
. immediately prior and after giving effect to such Restricted Payment, the
Debt Service Reserve Account, the Principal & Interest Accrual Account,
the Tax Reserve Account, the P.M.I. Surplus Reserve Account, if required,
the Major Maintenance Account and the PMI Premium Reserve Account, if
required, will be fully funded and all project expenses and mandatory
capital expenditures that have become due and payable have been paid;
. both the projected Debt Service Coverage Ratio for the projected twelve-
month period beginning on the first day after such Restricted Payment is
made and the historical Debt Service Coverage Ratio for the historical
twelve-month period ended on the date such Restricted Payment is made are
not less than 1.6:1.0 or, if the notes then have an investment grade
rating by both Standard & Poor's and Moody's, 1.35:1.0;
. such Restricted Payment is made within 30 days immediately following a
Payment Date;
. no insolvency event with respect to Clark Refining & Marketing has
occurred and is continuing; and
. we will give the collateral trustee not less than five business days
prior notice of the proposed date of any Restricted Payment to be made,
attached with our certificate that the conditions to such Restricted
Payment have been satisfied, together with information and computations
demonstrating compliance with such conditions.
The common security agreement restricts our ability to pay fees or make
other payments to our affiliates. We may, however, make partnership
distributions to Sabine River and Neches River (1) in an aggregate amount not
to exceed $100,000 in each year in order to permit our partners to pay
directors' fees, accounting expenses and other administrative expenses or (2)
of the amounts in the Tax Reserve Account from time to time in order to permit
Sabine River and Neches River to pay their income taxes or the amounts they
are required to pay Clark Holdings under the tax sharing agreement.
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Representations and Warranties
When we entered into the common security agreement, each of us, Sabine River
and Neches River severally made customary representations and warranties to
the collateral trustee, each Applicable Agent, the secured parties and the
depositary bank, including those with respect to:
. organization, ownership and power and authority to own property and
conduct business;
. power and authority to execute, deliver, incur and perform our
obligations under and enforceability of the transaction documents;
. governmental consents and approvals for the Coker Project and the
transaction documents;
. absence of facts that could have a Material Adverse Effect and have not
been disclosed in writing to the senior lenders;
. no conflicts with any other agreement;
. compliance with laws, receipt of all governmental consents and approvals
for our Coker Project and the transaction documents, and absence of
litigation;
. title to property and validity of security interests;
. ranking of senior debt;
. no Default;
. affiliate transactions on arm's-length terms;
. year 2000 compliance;
. environmental laws;
. no force majeure event;
. separate identity from the Clark Entities;
. adequacy of services provided under project documents for our Coker
Project; and
. sole purpose of Port Arthur Finance.
Covenants
Each of us is bound by, among other things, the following covenants and
agreements:
Maintenance of Existence. We will do all things necessary to maintain:
. our due organization, valid existence and good standing; and
. the power and authority necessary to own our properties and to carry on
the business of our Coker Project.
No Modification. We will not take any action to amend or modify our
constitutive or governing documents in any respect unless:
. a copy of the modification has been delivered to the collateral trustee
reasonably in advance of the effective date thereof, along with a
certificate of a responsible officer certifying that such amendment or
waiver could not reasonably be expected to have a Material Adverse
Effect; or
. we have obtained the prior consent of Supermajority Lenders (or, in
specified circumstances, Supermajority Secured Parties).
Business. We will conduct no business or activity other than the business of
our Coker Project.
Accounting and Cost Control Systems. We will maintain, or cause to be
maintained, our own management information and cost accounting systems for our
Coker Project at all times in accordance with
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prudent industry practice and separate and apart from all management
information and cost accounting systems of any of the Clark Entities, and will
employ independent auditors of recognized national standing to audit annually
our financial statements.
Access. We will grant the collateral trustee, each bank senior lender, oil
payment insurers administrative agent and the indenture trustee or their
designees, complete access to our books and records, quality control and
performance test data, all other data relating to our Coker Project and
construction progress of our Coker Project and an opportunity to discuss
accounting matters with our independent auditors. Each of the independent
consultants, bank senior lenders, the collateral trustee, the oil payment
insurers administrative agent and the indenture trustee will also have the
right to monitor, witness and appraise the construction, testing and
operations of our Coker Project. We will offer and cause our officers,
employees, agents and contractors to offer all reasonable assistance to the
persons making any such visit.
Environmental Audits. If the collateral trustee, any bank senior lender, the
oil payment insurers administrative agent or the indenture trustee or any of
their designees reasonably believes that a release, threat of release or
violation of any environmental law may have occurred, or if an Event of
Default or Potential Default has occurred, we will grant access to and assist
any environmental consultants to conduct any requested environmental
compliance or contamination audits in their sole discretion.
Preservation of Assets.
. We will maintain our assets in good repair and will make such repairs
and replacements as are required in accordance with prudent industry
practice.
. We will not sell, assign, lease, transfer or otherwise dispose of any
project property without the prior consent of Supermajority Lenders
(or, in specified circumstances, Supermajority Secured Parties), except
for:
. dispositions of project production other than dispositions prohibited
by the terms of the "Project Production" covenant set forth below;
. dispositions of project property that has become obsolete or
redundant;
. dispositions made in the ordinary course of our business;
. dispositions of project property up to an aggregate value of $50
million in the form of a sale/lease back transaction as part of a
tax-exempt bond financing under the laws of the State of Texas to
replace senior debt, which disposition is approved by the bank
lenders administrative agent, or
. dispositions of project property the net proceeds of which are used
within 90 days of such disposition to replace such project property.
Taxes. We will file or cause to be filed all returns required to be filed by
us and we will pay and discharge, before delinquent, all taxes imposed on us
or our property (including interest and penalties).
Compliance with Law. We will comply and cause our contractors to comply with
all applicable laws, rules, regulations and orders of governmental
authorities.
Maintenance of Approvals for Agreements. We will maintain or cause to be
maintained all third-party authorizations that are necessary for:
. the execution, delivery and performance by us of each transaction
document to which we are a party;
. the incurrence or guarantee of the senior debt obligations, as the case
may be; and
. the performance of our obligations under the financing documents.
Maintenance of Approvals for Coker Project. We will maintain or cause to be
maintained all:
. third-party authorizations, including authorization, consent and
approval by government authority;
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. easements, leases, rights-of-way, auxiliary rights and other real
property rights; and
. licenses and other rights to use all technology necessary to develop,
construct, operate, maintain and finance the Coker Project.
Maintenance of Supply. We will maintain supplies of, or contracts providing
for supplies of, hydrogen, electricity, steam, natural gas and other
feedstocks and utilities, telecommunications services and other inputs
necessary to conduct our business except where a failure to maintain such
supplies or contracts could not reasonably be expected to have a Material
Adverse Effect.
Maintenance of Crude Oil Supply. We will:
. subject to events of force majeure and any other disruptions of
supplies outside our control, maintain supplies of heavy sour crude oil
necessary to conduct our business; and
. during the term of the long term crude oil supply agreement:
. comply in all respects with our obligations under the long term crude
oil supply agreement, the long term crude oil supply agreement
guarantee and the P.M.I. Comercio Internacional consent and
agreement; and
. to the extent required by the long term crude oil supply agreement,
maintain in full force and effect the oil payment guaranty insurance
policy or letters of credit.
Arm's-Length Transactions. We will not enter into any transaction or
agreement with any affiliate unless that transaction or agreement:
. is on terms that at that time are no less favorable to us than those
that could be obtained by us at that time in a comparable arm's length
transaction; and
. has been disclosed to the collateral trustee, the senior lenders and
the oil payment insurers administrative agent.
Year 2000 Compliance. We will ensure that our computer hardware, software,
systems and other operations are year 2000 compliant and will use reasonable
efforts to ensure that the computer hardware, software, systems and operations
of our material suppliers, customers, and others with which it conducts
business to be year 2000 compliant.
Construction and Completion of the Coker Project. We will, among other
things:
. cause the Coker Project to be constructed in all respects in accordance
with our construction contract with Foster Wheeler USA;
. require Clark Refining & Marketing to cause the property that is to be
leased under the facility and site lease to be upgraded and completed
in all respects, by or before October 2000, subject to extension up to
February 2001 if we satisfy specified conditions; and
. cause the hydrogen supply plant to be constructed in all respects in
accordance with the specifications set forth in the hydrogen supply
agreement by or before December 6, 2000, subject to an extension to
March 2001 if we satisfy specified conditions.
Under specified circumstances, we may be able to change the physical
facilities of our Coker Project.
Operation of the Project. We will:
. cause the Coker Project to be constructed, developed, operated,
repaired and maintained in accordance with, among other things,
prudent industry practice, the transaction documents and the major
maintenance plan;
. maintain or caused to be maintained such spare parts and inventory as
are consistent with the transaction documents and prudent industry
practice; and
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. maintain or caused to be maintained at the Coker Project site a
complete set of plans and specifications for the Coker Project.
Maintenance of Separate Identity. We will:
. maintain all aspects of our business and operations separate and
apart from the Clark Entities; and
. make all decisions with respect to our business and operations
independently from the Clark Entities.
Environmental Compliance. We will conduct our operations and maintain our
properties and assets in material compliance with all applicable environmental
laws, permits, licenses and other approvals and authorizations.
Project Production. We will:
. enter into arm's-length sales agreements for the sale or disposition
of all our production, including the product purchase agreement, on
terms and conditions consistent with prudent industry practice; and
. in the case of the product purchase agreement and the services and
supply agreement, promptly bill, and cause to be collected from,
Clark Refining & Marketing amounts due and instruct Clark Refining &
Marketing to send all payments directly to the Project Revenue
Account.
Project Documents. We will comply in all respects with, and enforce against
other parties all our rights under, the project documents. We will not agree
to any amendment, waiver, modification, termination or assignment of any of
our rights or obligations under any project document to which we are or become
a party, or provide any consent thereunder, other than in accordance with the
common security agreement.
Maintenance of Separate Identity. We will:
. maintain all aspects of our business and operations separate and
apart from the Clark Entities and hold ourselves out to the public as
an entity independent from the Clark Entities; and
. enter into all business transactions with any Clark Entity on terms
and conditions that at such time are no less favorable to it than
those that could been obtained by us at such time in a comparable
arm's-length transaction.
Except as may be permitted or required by the terms of any financing
document, we will not:
. commingle any of our funds, properties or assets with those of any
Clark Entity;
. guarantee or become obligated for debts of any Clark Entity or hold
out our credit as being available to satisfy any obligations of any
Clark Entity;
. acquire obligations or securities of any Clark Entity;
. pledge our assets for the benefit of, or make any loans or advances
to, any Clark Entity; nor
. incur, create or assume any indebtedness on behalf of, or transfer or
lease our assets or any interest therein to, any Clark Entity.
Limitation on Indebtedness. We will not create, incur, assume or suffer to
exist any indebtedness other than Permitted Indebtedness.
Preservation of Security Interests. We will preserve, maintain and perfect
the security interests granted and preserve and protect the collateral. In
addition, we will not, without the consent of Supermajority Secured Parties,
create, assume, incur, permit or suffer to exist any lien upon, or any
security interest in, any of our property, assets or contractual rights,
whether now owned or hereafter acquired, except for Permitted Liens.
Limitation on Investments and Loans. We will not make any investments or
loans or advances to any person, except for Authorized Investments and down
payments or prepayments to suppliers or service providers (other than to any
Clark Entity) and receivables in the ordinary course of business.
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Limitation on Guarantees. We will not assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable upon the obligation
of any other person except:
. by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
. guarantees provided in connection with the granting of performance bonds
to contractors and suppliers and governmental authorities made in the
ordinary course of business; and
. guarantees expressly permitted or required under the financing documents.
Hedging. We will not enter into any swap agreements, option contracts, future
contracts, options on future contracts, spot or forward contracts or other
agreements to purchase or sell or any other hedging arrangements, in each case
in respect of currencies, interest rates, commodities or otherwise other than
Permitted Hedging Instruments.
Use of Proceeds. All proceeds of the initial senior debt (other than the
secured working capital facility) will be used solely to reimburse Clark
Refining & Marketing for operating expenses incurred prior to the closing date
and to pay operating expenses. All proceeds of Additional Senior Debt incurred
to finance or refinance mandatory capital expenditures or discretionary capital
expenditures will be used solely to finance or refinance mandatory capital
expenditures or discretionary capital expenditures, as the case may be. All
proceeds of Replacement Senior Debt will be used to pay or prepay senior debt
or to replace senior debt commitments. Proceeds of the senior debt may be
invested in Authorized Investments prior to being used in accordance with this
covenant.
Independent Consultants. We, on behalf of the secured parties, have appointed
Purvin & Gertz as the initial independent engineer and the initial marketing
consultant and Sedgwick of Tennessee, Inc. as the initial insurance consultant.
Majority Secured Parties, upon 15 days prior written notice to the collateral
trustee and each Applicable Agent, will have the right to remove an independent
consultant if, in the opinion of Majority Secured Parties, that independent
consultant:
. ceases to be a consulting firm of recognized international standing;
. has become an affiliate of us, Sabine River, Neches River, the Clark
Entities, the oil payment insurers, an Applicable Agent or a secured
party;
. has developed a conflict of interest that calls into question such firm's
capacity to exercise independent judgment in the performance of our
duties in connection with the Coker Project; or
.has failed to charge commercially reasonable compensation for our duties.
If any independent consultant is removed or resigns and thereby ceases to act
as an independent consultant, the bank senior lenders administrative agent will
promptly designate a replacement independent consultant of recognized
international standing.
Subsidiaries. Port Arthur Coker Company will not at any time own any capital
stock or other ownership interest in any person other than Port Arthur Finance.
Neither Port Arthur Coker Company nor Port Arthur Finance will form any new
subsidiary. Port Arthur Coker Company and Port Arthur Finance will at all times
maintain the status of Port Arthur Finance as a wholly owned subsidiary of the
Port Arthur Coker Company.
Credit Rating Agencies. So long as any notes are outstanding, we will take
all actions as may be necessary or appropriate from time to time to cause the
notes to be rated by Moody's and Standard & Poor's. If either Moody's or
Standard & Poor's ceases to be a "nationally recognized statistical rating
organization" registered with the Commission or ceases to be in the business of
rating securities of the type and nature of the notes, we may replace it with
any other nationally recognized statistical rating organization in the business
of rating securities of the type and nature of the notes nominated by us and
approved by Majority Bank Lenders and Majority Bondholders.
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Accounts. We will cause the secured accounts to be established and maintained
at all times in accordance with the common security agreement, will make no
bank accounts other than the secured accounts and the operating account and
will make no transfer, deposit or withdrawal from any secured account, except
in either case as specifically permitted in the common security agreement. Port
Arthur Finance will not establish or maintain any bank account.
Insurance. We will maintain at all times the insurance required to be
maintained in the common security agreement.
ERISA. We will not adopt, sponsor, maintain, administer, contribute to, or
become required to contribute to any employee benefit plan as defined in
Section 3(3) of ERISA.
Further Assurances. We agree to do all things reasonably requested by the
collateral trustee, the bank senior lenders, the oil payment insurers
administrative agent or the indenture trustee to make effective, as soon as
practicable, the transactions contemplated by, and to carry out the purposes
of, the transaction documents.
Oil Payment Guaranty Insurance Policy. We will maintain in place, and make
all payments required to be made in respect of, the oil payment guaranty
insurance policy or letters of credit required under the long term crude oil
supply agreement unless and until the rating of our long-term secured debt
obligations has been at least Baa2 by Moody's and BBB by Standard & Poor's for
at least six consecutive months.
Independent Director. We will give each applicable agent not less than 45
days' prior notice of any appointment of an independent director to its board
of directors in accordance with the Certificate of Incorporation of Port Arthur
Finance and we will not make such appointment if any applicable agent objects
within such 45-day period to such proposed appointment.
Technology. We will take all actions necessary to ensure that we possess, or
have the right to use, all licenses and other rights with respect to technology
prior to Final Completion, and we will maintain in place all licenses and other
rights with respect to technology to the extent necessary for the development,
construction, operation or maintenance of our Coker Project at any time.
Amounts Received from P.M.I. Comercio Internacional. We will cause any and
all amounts repaid to us by P.M.I. Comercio Internacional, whether as the
result of defenses exercised by us or for any other reason, to the extent such
amounts relate to any shipment of Maya crude oil for which the oil payment
insurers have made payment to P.M.I. Comercio Internacional under the oil
payment guaranty insurance policy, promptly to be paid directly to the oil
payment insurers' administrative agent.
Reports
We are required to deliver the following reports to the collateral trustee,
each credit rating agency and the independent engineer: (1) prior to final
completion, monthly construction and operating and progress reports of
construction of the Coker Project and all change orders requested by Foster
Wheeler USA, (2) after substantial reliability, monthly operating reports
detailing the status of our operations, (3) annual budget and operating plans,
(4) unaudited quarterly financial statements, (5) audited annual financial
statements, (6) notice of any major maintenance, (7) quarterly and annual lists
of all permitted hedging instruments and (8) notice of certain extraordinary
events.
Insurance
We are required at all times to keep all project property of an insurable
nature and of a character usually insured, insured with insurers and reinsurers
with a rating by Best's Rating Service no less than A- and a "Financial Size
Category of Class IX" selected by us against such risks, with all risk property
and general liability coverage (including deductibles and exclusions) and in
such form and amounts as are customary for
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project facilities of similar type and scale to the Heavy Oil Processing
Facility (including insurance against sudden and accidental environmental
damage and, prior to substantial reliability, delay in start-up coverage and,
after substantial reliability, business interruption and contingent business
interruption insurance). We are required, at a minimum and without limiting the
generality of the immediately preceding sentence, to obtain and maintain at
least the coverage set forth on the schedule of required insurance set forth in
the common security agreement.
We are required to irrevocably cause:
. with limited exceptions, each of our insurance policies and, to the
extent commercially available, the related reinsurance policies to name
the collateral trustee on behalf of the secured parties and the secured
parties as additional insureds and sole loss payees as their interests
may appear; and
. each of our insurance policies other than third-party liability insurance
and workers' compensation to require all payment of proceeds directly to
the Casualty and Insurance Account or the Catastrophic Casualty Account,
as the case may be.
Events of Default
Each of the following events constitute Events of Default under the common
security agreement:
Payment Default. We default in the payment when due of principal, interest,
premium or other amounts owing in respect of any senior debt or any oil payment
reimbursement obligation, and, in each case, the default remains uncured or
unwaived for more than five business days.
Breach of Representation and Warranty. Any representation or warranty made by
any of us, Sabine River or Neches River proves to have been false or misleading
in any material respect when made.
Breach of Covenant. Any of us, Sabine River or Neches River fails to observe
or perform any obligation to be observed or performed by it under the common
security agreement and such failure continues unwaived or unremedied for 30
days.
Default Under the Financing Documents. An Event of Default has occurred and
is continuing under any financing document.
Default Under or Termination of the Project Documents. Any party to a project
document fails in any material respect to observe or perform any covenant or
other obligation to be observed or performed by it or to pay any amounts owing
by it thereunder and that failure continues uncured, unwaived or unremedied,
. for more than 30 days, in the case of failure under any project document
to which any of our affiliates is a party or in the case of a failure to
pay any amounts owing under the construction contract, the long-term
crude oil supply agreement or the hydrogen supply agreement;
. for more than 60 days, in the case of any other failure under the
construction contract, the long-term crude oil supply agreement or the
hydrogen supply agreement (which grace period will be extended to no more
than 180 days in the aggregate if Port Arthur Coker Company is diligently
pursuing a remedy for such failure) including, without limitation, by
replacing the relevant project document; and
. for more than 30 days, in the case of any other failure under any other
project document.
Insolvency. An insolvency event has occurred with respect to (1) at any time,
any of us, Sabine River or Neches River or (2) prior to substantial
reliability, Blackstone.
Cross-Acceleration. Any indebtedness in an aggregate principal amount in
excess of $5 million of any of us or Sabine River or Neches River has been
declared due and payable or required to be prepaid or redeemed, other than by
regularly scheduled required prepayment or redemption, prior to the stated
maturity
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thereof, or any event or condition has occurred that permits a holder of such
indebtedness to make such a declaration and any applicable grace period in the
financing documents under which such indebtedness was incurred has expired.
Attachment of Collateral. A person other than the collateral trustee, any
Applicable Agents, any of the secured parties or any of their authorized
representatives has attached:
. any secured account or subaccount or funds in any secured account or
subaccount; or
. any portion of our property and assets which property and assets,
individually or in the aggregate, have a book value in excess of $5
million, and such attachment remains unlifted, unstayed or undischarged
for a period of 30 days.
Security Interests Invalid. Any security interests created or purported to be
created by or pursuant to the common security agreement or any security
document are, in the reasonable opinion of counsel to the secured parties, not
valid, perfected, first priority security interests in favor of the collateral
trustee for the benefit of the secured parties to the extent specified in the
legal opinions to be delivered on the closing date.
Unsatisfied Judgments. A final judgment or final judgments in the aggregate
in excess of $5 million with respect to any of us or Sabine River or Neches
River, has been rendered by a court or other competent tribunal against any of
us or Sabine River or Neches River and remains unpaid, unstayed, undischarged,
unbonded or undismissed after the right to appeal has expired.
Unenforceability of Agreements. Any transaction document has been repudiated
or terminated by any party thereto, by operation of law or otherwise, or any
material provision of any transaction document has ceased for any other reason
to be valid, legally binding or enforceable against any party thereto other
than the secured parties if such cessation is not cured within 30 days after
notice to Port Arthur Coker Company.
Abandonment. Abandonment has occurred.
Failure to Achieve Substantial Reliability. We have failed to achieve
substantial reliability by October 2001.
Failure to Achieve Mechanical Completion. We have failed to achieve
mechanical completion by March 2001, or by October 2001 if, commencing in March
2001:
. we continue to pay the senior debt obligations as and when they become
due;
. we accrue monthly all senior debt obligations due and payable on the
immediately succeeding Payment Date and deposit such funds at the end of
each calender month into an escrow account pledged to the collateral
trustee for the benefit of the secured parties;
. we continue to pursue diligently the achievement of mechanical completion
at the earliest practicable date; and
. we have delivered to the collateral trustee a certificate setting forth
in reasonable detail (1) the actions we are taking to achieve mechanical
completion and (2) the proposed timetable for taking such actions, which
certificate will be reviewed and confirmed by the independent engineer.
Clark EPC Contract. The work to be performed by Clark Refining & Marketing in
connection with the Refinery Upgrade Project has not been substantially
completed by October 2000, subject to an extension to February 2001 if the
independent engineer certifies to the collateral trustee that this extension
will not have a material adverse effect on our ability to achieve mechanical
completion by March 2001.
Hydrogen Supply Plant. The hydrogen supply plant has not been completed by
December 2000, or by March 2001 if, commencing in December 2000:
. we continue to pay the senior debt obligations as and when due; and
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. we continue to pursue diligently the achievement of completion of the
hydrogen supply plant by Air Products or by us at the earliest
practicable date.
Failure to Deposit Funds in Accounts. We fail to cause funds to be deposited
into the secured accounts in accordance with the common security agreement and
such failure continues unwaived or unremedied for five business days.
We refer to any event or condition that with the passage of time or the
delivery of notice or both will or could be expected to become an Event of
Default as a "Potential Default."
Remedies
Declaration of Default. A Default will occur:
. upon receipt by the collateral trustee of one or more of:
. a certificate from a senior lender or a senior lender group (or, in
specified circumstances, the oil payment insurers administrative
agent) stating that an Event of Default relating to our payment
obligations has occurred and is continuing and instructing the
collateral trustee to declare a Default; or
. a certificate from Majority Lenders (or, in specified circumstances
Majority Secured Parties) stating that an Event of Default has
occurred and is continuing and instructing the collateral trustee to
declare a Default; and
. automatically upon an insolvency event.
Remedies. When an Event of Default has occurred with respect to an insolvency
event, all senior debt commitments will automatically terminate and 100% of the
outstanding principal amount of the senior debt, plus any premium, accrued
interest, fees and other amounts due under the bank loan agreements will become
immediately due and payable by us without notice of any kind.
In the case of any other Event of Default:
. the collateral trustee, at the direction of Majority Lenders (or, in
specified circumstances, Majority Secured Parties), will take control
of the secured accounts;
. Majority Lenders (or, in specified circumstances, Majority Secured
Parties) will have the right, at their sole option, to require us to
continue to operate the Heavy Oil Processing Facility or to require
us to appoint a manager or operator on terms acceptable to the
Majority Lenders (or Majority Secured Parties, as the case may be),
which manager or operator will have the same rights that we had pre-
Default to take all necessary action to operate the Heavy Oil
Processing Facility;
. each senior lender group will have the right to apply the relevant
default interest rate provided for in its bank loan agreement or
indenture, as applicable; and
. Majority Lenders (or, in specified circumstances, Majority Secured
Parties) will have the right to instruct the collateral trustee to
take Enforcement Action.
In the case of any Event of Default, Majority Lenders will have the right, at
their sole option, to notify the oil payment insurers administrative agent that
the second payment priority with respect to reimbursement obligations will
terminate, which we refer to as a "Priority Termination Notice." Separately,
either Majority Lenders or the oil payment issuers administrative agent will
notify P.M.I. Comercio Internacional that the coverage provided by the oil
payment guaranty insurance policy will be suspended on the earliest date
permitted under the policy. The second payment priority with respect to
reimbursement obligations will terminate 30 days following the effectiveness of
the suspension under the policy.
Application of Enforcement Proceeds. The collateral trustee will promptly
apply proceeds from the Enforcement Proceeds Account, established by the
collateral trustee upon receipt of a direction of Majority
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Lenders, at the direction of Majority Lenders (or, in specified circumstances,
Majority Secured Parties), in the following order of priority:
. First, to the payment of all fees, indemnities and any other amounts that
we owe to the collateral trustee, the bank senior lenders administrative
agent, the oil payment insurers administrative agent, the indenture
trustee and the depositary bank relating to services rendered in their
capacity as collateral trustee, bank senior lenders administrative agent,
oil payment insurers administrative agent, indenture trustee or
depositary bank, as the case may be;
. Second, to the payment of all fees, costs, expenses, indemnities and any
other amounts that we owe to the secured parties and the whole amount
then outstanding of senior debt obligations or reimbursement obligations
and in case such moneys will not be sufficient to pay in full the whole
amount due and unpaid, then to make equal and ratable payments, without
any preference or priority, as among the secured parties, provided that
any amounts that we owe to the oil payment insurers in respect of
reimbursement obligations relating to shipments of Maya pursuant to the
long term crude oil supply agreement for which title passed to us after
the notice from senior lenders to the oil payment insurers administrative
agent will have priority over any amounts owed to the senior lenders in
respect of senior debt obligations, except to the extent that funds on
deposit in the Debt Service Reserve Account have been applied to pay such
reimbursement obligations; and
. Third, after the payment in full of the senior debt obligations and the
reimbursement obligations, to us or our successors, or in the case of
proceeds from the transfer or disposition of all or part of the interests
in Sabine River or Neches River to the Shareholders or Sabine River, as
the case may be, or as a court of competent jurisdiction may otherwise
direct.
Mandatory Prepayments
Prepayments with Specified Proceeds
Subject to our bank loan agreements, we will apply any of the following
proceeds to the prepayment of senior loans (and, in specified circumstances,
reimbursement obligations) made by the bank senior lenders and the noteholders:
. any loss proceeds in respect of any catastrophic casualty to project
property, except to the extent that they relate to any shipment of Maya
for which (1) the oil payment insurers have made, or are obligated to
make, payment to P.M.I. Comercio Internacional under the oil payment
guaranty insurance policy or (2) the bank senior lenders have provided
cash advances or letters of credit under the secured working capital
facility, to the extent that such loss proceeds are not applied toward
repairing, replacing or restoring the relevant project property;
. any insurance proceeds in respect of any casualty to project
property, to the extent that those proceeds will not be used to
repair or replace the relevant project property; and
. any late payments (not needed to pay interest), buy down payments or
other payments received from Foster Wheeler USA pursuant to the
construction contract to the extent we do not need to direct these
funds to the payment of interest on the senior debt.
Prepayments of Bank Senior Debt
We will make prepayments of the bank senior debt but not the notes, on each
payment date after start-up in an amount equal to 75% of excess cash flow, such
amount to be determined no earlier than on each payment date.
Prepayments of Senior Debt and Oil Payment Insurance Obligations
We will apply the following to the prepayment of senior loans and
reimbursement obligations:
. any loss proceeds in respect of any catastrophic casualty to project
property, except to the extent
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that they relate to any shipment of Maya for which (1) the oil payment
insurers have made, or are obligated to make, payment to P.M.I.
Comercio Internacional under the oil payment guaranty insurance policy
or (2) the bank senior lenders have provided cash advances or letters
of credit under the secured working capital facility, to the extent
that such loss proceeds are not applied toward repairing, replacing or
restoring the relevant project property;
. any delay in start-up, business interruption or contingent business
interruption insurance proceeds that are not transferred to the Project
Revenue Account; and
. upon receipt, any condemnation compensation by governmental authority.
Application of Prepayments
Mandatory prepayments other than those that we make with the 75% of excess
cash flow will be applied equally and ratably between the senior bank loans
and the notes to reduce remaining principal installments equally and ratably
as to each remaining principal installment outstanding.
Mandatory prepayments that we make toward the bank senior debt with the 75%
of excess cash flow will be applied in direct order of maturity until the
principal due on the immediately succeeding Payment Date has been paid in full
and then to reduce the remaining principal installments of senior bank loans
in the inverse order of their maturity.
If any mandatory prepayments required to be made are applied to
reimbursement obligations outstanding at the time of prepayment, the amount or
amounts prepaid will be applied equally and ratably between senior bank loans
and such reimbursement obligations.
Insurance Proceeds
Within 60 days following the occurrence of a catastrophic casualty, we will
deliver to the collateral trustee a plan for the application of these
insurance proceeds and other funds available that are available to us to
restore, repair or replace the project property. If, within 45 days following
the later of the receipt by the collateral trustee of this plan and the
deposit of these proceeds into the Catastrophic Casualty Account, Majority
Lenders (or, in specified circumstances, Majority Secured Parties) notify us
that in their reasonable judgment it is unlikely that, after implementation of
our plan, we would be able to pay the senior debt obligations as and when they
come due or be able to produce product production of substantially the same
(or higher) quality and quantity as prior to such loss, the casualty insurance
proceeds will remain in the Catastrophic Casualty Account, and we may be
required to apply the proceeds to prepay senior debt and to direct the
collateral trustee to transfer the relevant casualty insurance proceeds from
the Catastrophic Casualty Account to the Mandatory Prepayments Account.
Prepayments arising out of these insurance proceeds will be made within two
business days following such transfer. The senior lenders will have the
option, at our expense, to consult with the independent engineer for purposes
of reviewing any plan for the application of such casualty insurance proceeds
with respect to which Majority Lenders (or Majority Secured Parties) have the
right to object.
Promptly upon the receipt of any loss proceeds relating to any shipment of
Maya, we will instruct the collateral trustee to transfer such loss proceeds,
to the extent the oil payment insurers have made, or are obligated to make,
payment to P.M.I. Comercio Internacional under the oil payment guaranty
insurance policy in respect of such shipment, from the Casualty and Insurance
Account or the Catastrophic Casualty Account, as the case may be, to an
account specified for such purpose by the oil payment insurers administrative
agent.
Optional Prepayments
We may make optional prepayments with respect to the senior bank loans and
the notes at any time upon 30 days' prior notice to the collateral trustee and
the Applicable Agent. Any optional prepayment must be accompanied by any
prepayment compensation required under the applicable credit agreements.
Optional
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prepayments will be applied to reduce the remaining principal installments of
senior loans in the order such remaining principal installments become due.
Pro Rata and Non-Pro Rata Payments
Pro Rata Payments
With respect to the senior bank loans and the notes, each payment, optional
prepayment or mandatory prepayment that we will make to a senior lender in
respect of senior debt obligations, other than an optional prepayment or
mandatory prepayment made in accordance with the following paragraph, will be
an equal and ratable payment among the senior bank loans and the notes.
Non-Pro Rata Prepayments
Subject to the terms of the senior loan agreements, we may:
. make an optional prepayment, in whole or in part, of senior loans owed to
senior lenders in one or more senior lender groups without making an
equal and ratable payment to any senior lenders in any other senior
lender group if:
. such payment is made with equity funding;
. such payment is made with the proceeds of Replacement Senior Debt
incurred by us; or
. such payment is made from funds otherwise available for Restricted
Payments;
. make an optional prepayment of senior loans owed to all senior lenders
without making any prepayment to the capital markets senior lenders,
provided that such optional prepayment is a pro rata payment among all
senior lenders (other than the capital markets senior lenders); or
. make a mandatory prepayment in whole or in part of senior debt
obligations owed to any bank senior lender if such mandatory prepayment
is made in accordance with the bank senior loan agreement, or any other
senior lender that is entitled to such mandatory prepayment as
compensation for costs incurred by it in connection with making or
maintaining its senior loans under its senior loan agreement or
indenture, as applicable, in excess of costs incurred generally by the
other senior lenders, or because it has become unlawful for it to honor
its obligation to make or maintain senior loans under its senior loan
agreement or indenture, as applicable, and it has not become unlawful
generally for the other senior lenders to honor their obligations to make
or maintain senior loans to us under their senior loan agreements, in
either case without making an equal and ratable payment to any other
senior lenders, provided that (1) such payment or prepayment is made with
equity funding, (2) such payment or prepayment is made with the proceeds
of Replacement Senior Debt incurred by us or (3) such payment or
prepayment is made from funds otherwise available for Restricted
Payments.
Additional Senior Debt
We may incur, in addition to the initial senior debt, the reimbursement
obligations and any Replacement Senior Debt and without the prior consent of
the senior lenders or the oil payment insurers, Additional Senior Debt secured
by the same common security package, subject to the following conditions:
. if we plan to use the proceeds of the Additional Senior Debt solely to
finance or refinance mandatory capital expenditures, a responsible
officer must certify to the collateral trustee and the independent
engineer that:
. no Event of Default or Potential Default has occurred and is
continuing;
. the amount and scope of such mandatory capital expenditures are
necessary to comply with a change in applicable environmental,
health, safety or other laws or regulations binding on us or are
otherwise necessary to operate the Heavy Oil Processing Facility; and
. after giving effect to the incurrence of all Additional Senior Debt,
and based on reasonable assumptions verified by the independent
engineer:
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. the minimum Debt Service Coverage Ratio for each remaining
calendar year through final maturity of the senior debt will be
not less than 1.5:1.0; and
. the average annual Debt Service Coverage Ratio from the date of
incurrence of the Additional Senior Debt through final maturity
of the senior debt will be not less than 2.0:1.0;
. if, at any time after substantial reliability, we plan to use the
proceeds of such Additional Senior Debt solely to finance or refinance
discretionary capital expenditures, a responsible officer must certify to
the collateral trustee and the independent engineer confirms that, among
other things:
. no Event of Default or Potential Default has occurred and is
continuing;
. substantial reliability has occurred;
. after giving effect to the incurrence of all additional senior debt,
and based on reasonable assumptions verified by the independent
engineer:
. the minimum Debt Service Coverage Ratio for each remaining
calendar year through final maturity of the Senior Debt as set
forth in the base case model will be not less than 2.0:1.0; and
. the average annual debt service coverage ratio from the date of
incurrence of such additional senior debt through final maturity
of the senior debt as set forth in the base case model will be
not less than 2.6:1.0;
. we must obtain a credit rating reaffirmation for the notes by
both Moody's and Standard & Poor's; and
. the aggregate principal amount of all such Additional Senior Debt
for discretionary capital expenditures does not exceed $20
million if any bank senior debt remains outstanding, or $50
million if no bank senior debt remains outstanding;
. that Additional Senior Debt ranks in right of payment, upon
liquidation and in all other respects on an equal and ratable
basis with all other senior debt without preference among senior
debt obligations by reason of date of incurrence or otherwise and
has none of the preferences with respect to reimbursement
obligations; and
. the lender of the Additional Senior Debt has executed and
delivered to the collateral trustee an agreement (with a copy of
the proposed senior loan agreement relating to the Additional
Senior Debt) setting out that it agrees:
. to become a party to the common security agreement and the
transfer restrictions agreement described under "Description of
Our Principal Financing Documents--Transfer Restrictions
Agreement" below;
. to be bound as a senior lender by all the terms and conditions of
the common security agreement and the transfer restrictions
agreement; and
. to perform all the obligations of a senior lender under the
common security agreement and the transfer restrictions
agreement.
Any incurrence of Additional Senior Debt other than in accordance with the
above terms will require the prior consent of Requisite Lenders.
Replacement Senior Debt
We may incur Replacement Senior Debt, secured by the same common security
package and entitled to the benefits of the common security agreement and the
security documents, to replace the initial senior debt, without the consent of
the senior lenders or the oil payment insurers for the purpose of paying or
prepaying all or any part of the initial senior debt or replacing all or part
of the unutilized or canceled part of the related outstanding senior debt
commitments, subject to the specified conditions including the following:
. the aggregate principal amount of such Replacement Senior Debt
does not exceed the sum of
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the amount of senior debt obligations being paid or prepaid and
the unutilized or canceled part of the senior debt commitments
being replaced;
. the Replacement Senior Debt has a Weighted Average Life no
shorter, and a final maturity date no earlier, than that of the
Senior Debt being replaced;
. the projected average debt service coverage ratio through January
15, 2009, calculated on a pro forma basis reflecting the
incurrence of the Replacement Senior Debt but not modifying any
of the other assumptions made in the base case model described in
Annex B to this offering circular is not less than 2.2:1.0; and
. we have obtained a reaffirmation of the then current credit
rating of notes by both Moody's and Standard & Poor's, provided
that no reaffirmation will be required if the Replacement Senior
Debt is Bank Senior Debt and bears interest at a rate (or in the
case of a floating rate facility a margin) that is equal to or
lower than that on the Bank Senior Debt being replaced and no
changes other than the interest rate (or margin) or
administrative, procedural, mechanical or other de minimis
changes are made.
Any incurrence of Replacement Senior Debt other than in accordance with these
conditions will require the prior consent of Requisite Lenders.
Replacement for Oil Payment Guaranty Insurance Policy
We may enter into one or more letters of credit or similar instruments
satisfying the requirements of the long term crude oil supply agreement to
replace the oil payment insurance guaranty policy in its entirety (but not in
part), without the consent of the senior lenders or the oil payment insurers,
provided that the conditions specified in the common security agreement are
satisfied.
Guarantee
Each of Port Arthur Coker Company, Sabine River and Neches River have
unconditionally and fully guaranteed jointly and severally, all obligations of
Port Arthur Finance under the common security agreement and the other financing
documents.
Governing Law
The common security agreement is governed by the laws of the State of New
York.
Secured Construction and Term Loan Agreement
We, the bank senior lenders and the bank lenders administrative agent entered
into a loan agreement, dated as of August 19, 1999, that provides for our
borrowing from the bank senior lenders $325 million to finance the
construction, development and operation of our Coker Project. The secured
construction and term loan facility is split into a Tranche A of $225 million
with a term of 7.5 years and a Tranche B of $100 million with a term of 8
years. Under specified circumstances, the aggregate amount of the construction
and term loan facility may be reallocated between the tranches. In November
1999, the bank senior lenders requested that we reallocate $5 million from
Tranche A to Tranche B. We expect this reallocation to occur in January 2000.
Tranche A loans will be amortized over time. As required under the secured
construction and term loan agreement, we drewdown the entire amount of the
Tranche B loans in October 1999. Other than the $500,000 semiannual principal
payments discussed below, all principal amount of the Tranche B loans will be
due and payable on maturity. Drawdowns of the construction and term loans must
be accompanied by equal and ratable contributions of equity or deeply
subordinated debt from Blackstone and Occidental. We will make interest and
principal payments on the Tranche A loans semiannually on each January 15 and
July 15, commencing on
January 15, 2000 (in the case of interest) and on January 15, 2002 (in the case
of principal). With respect to the Tranche B loans, we will make interest
payments quarterly on each January 15, April 15, July 15 and October 15,
commencing on January 15, 2000, and we will make principal payments in the
amount of $500,000 semiannually on each January 15 and July 15, commencing on
January 15, 2002, with the remaining principal being repaid in full on the
maturity date.
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Senior debt obligations under the construction and term loan agreement rank
equally and ratably in right of payment and liquidation with each other and
with all other senior debt obligations. Senior debt obligations under the
construction and term loan agreement in general also rank equally and ratably
in right of liquidation with our reimbursement obligations relating to the oil
payment guaranty insurance policy described under "Description of Our Principal
Financing Documents--Guaranty Insurance Policy and Reimbursement Agreement"
below, but will generally rank junior in right of payment to those
reimbursement obligations.
Secured Working Capital Facility
Under a secured working capital facility, the bank senior lenders will
provide us up to $75 million of working capital in the form of cash advances or
letters of credit. Up to an aggregate principal amount of $40 million may be
used for the purpose of providing a "Compensating Letter of Credit" (as defined
in the long term crude oil supply agreement) to P.M.I. Comercio Internacional.
We are in the process of replacing the Compensating Letter of Credit with an
insurance product. In that case, the provider of the bond or other product will
be treated as a bank senior lender under the common security agreement. The
remaining $35 million available under the secured working capital facility may
be used to meet cash needs of our Coker Project. Drawdowns under the secured
working capital facility (other than letters of credit provided in connection
with the long term crude oil supply agreement) will rank equally and ratably in
right of payment and liquidation with all other senior debt obligations. The
letters of credit provided in connection with the long term crude oil supply
agreement will rank equally and ratably, in all respects, with our
reimbursement obligations relating to the oil payment guaranty insurance
policy.
Oil Payment Guaranty Insurance Policy and Reimbursement Agreement
Winterthur issued an oil payment guaranty insurance policy for the benefit of
P.M.I. Comercio Internacional in order to guarantee our payment obligations to
P.M.I. Comercio Internacional under the long
term crude oil supply agreement for shipments of Maya. We will pay the premiums
and any interest with respect to any amounts drawn under the oil payment
guaranty insurance policy to Winterthur. Winterthur will reinsure a portion of
its exposure under the oil payment guaranty insurance policy with a syndicate
of reinsurers.
Maximum Amount. For the period from and including the coverage start date to
and including the date on which we give the full coverage start notice to the
oil payment insurers, the maximum coverage amount is $15 million, and after
that period, the maximum coverage amount is $150 million. In each case, the
coverage available to us is the maximum amount less any outstanding
reimbursement obligations that we owe to the oil payment insurers.
Coverage Period. The coverage must start no later than March 1, 2001 (subject
to extension up to October 1, 2001), provided that Majority Secured Parties may
vote to extend the outside start date up to March 1, 2002. Coverage under the
oil payment guaranty insurance policy will terminate upon the earlier of (1)
10.5 years after the closing date and (2) the date on which all senior debt
obligations have been repaid in full.
Premiums. The annual premium was paid in advance on August 19, 1999, and will
be payable annually in advance on each anniversary of such date.
Security. Under the reimbursement agreement, payments by the oil payment
insurers to P.M.I. Comercio Internacional on our behalf give rise to
reimbursement obligations in favor of the oil payment insurers that we must
repay. The oil payment insurers will be a party to, and get the benefit of, the
common security agreement, the intercreditor agreement and the transfer
restrictions agreement. In particular, the oil payment insurers share on an
equal and ratable basis in the first priority security interest in all
collateral granted to all secured parties
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under the common security agreement (but see possibility for priority access
described under "--Payment and Liquidation Priorities" below).
Payment and Liquidation Priorities. For purposes of the cash waterfall in the
common security agreement, reimbursement obligations will at all times rank
below our operating expenses but above senior debt obligations. However, if
senior lenders, following the occurrence of an Event of Default, notify the oil
payment insurers administrative agent that the oil payment insurers priority
position will terminate, any reimbursement obligations that remain unpaid after
30 days following the effectiveness of that notice will be treated like senior
debt obligations in the cash waterfall. Immediately prior to the expiration of
that 30-day period, the collateral trustee will be instructed to apply any
amounts that are then on deposit in the Project Revenue Account (less any
amount earmarked to pay outstanding invoices for oil payments or other project
expenses in the ordinary course of business) to repay any outstanding
reimbursement obligations.
For purposes of liquidation rights, oil payment insurers administrative
agents generally rank equally and ratably with all other senior debt. If,
however, an Event of Default occurs under the common security agreement, but
senior lenders do not notify the oil payment insurers administrative agent that
the oil payment insurers' priority position will terminate, then the oil
payment insurers have the right to request the senior lenders to permit
satisfaction in full of all reimbursement obligations then outstanding. If and
to the extent that outstanding reimbursement obligations are not satisfied
within the 30 calendar days immediately following notice from us to the
collateral trustee and the administrative agents of the relevant default, then
any and all reimbursement obligations arising in respect of shipments of Maya
originating after the notice from us will have priority in right of liquidation
(in addition to the payment priority described above) over all other senior
debt.
Voting Rights. Upon the expiration of the 30-day period referred to above,
the oil payment insurers will become vested with all voting rights of senior
debt holders, to the extent of reimbursement obligations then outstanding. At
all other times, the oil payment insurers will have voting rights, based upon
the maximum amount, only under specified circumstances.
Suspension Events. Upon the occurrence of any of the following events and
following five days notice to P.M.I. Comercio Internacional, the oil payment
insurers may in their sole discretion suspend the coverage provided with
respect to any shipments of Maya thereafter, provided that shipments for which
title has already passed to us will continue to be covered by the oil payment
guaranty insurance policy:
. if (1) the premium for the oil payment guaranty insurance policy is not
paid in full when due, (2) such default is not cured within 10 business
days immediately following the due date and (3) P.M.I. Comercio
Internacional has been notified, then the oil payment guaranty insurance
policy coverage may be suspended for the relevant year until the premium
is paid in full; and
. if (1) senior lenders have notified the oil payment insurers
administrative agent that the oil payment insurers' priority position
will terminate, then the coverage will be suspended for the duration of
the relevant default.
Termination Events. Upon the occurrence of any of the following events and
following five days notice thereof to P.M.I. Comercio Internacional, Winterthur
may in its sole discretion terminate (or, at its election, suspend) the
coverage provided with respect to any shipments of Maya thereafter, provided
that shipments for which title has already passed to us will continue to be
covered by the oil payment guaranty insurance policy:
. an Event of Default under the common security agreement caused by a
payment default or termination of principal project documents has
occurred and continued for at least six months;
. an insolvency event has occurred with respect to (1) at any time, any of
us, Sabine River or Neches River or (2) prior to substantial reliability,
Blackstone;
. abandonment has occurred;
. senior lenders are taking Enforcement Action under the common security
agreement in respect of any other Event of Default;
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. the coverage provided by the oil payment guaranty insurance policy has
been suspended for at least 30 consecutive days (or, if applicable, 30
consecutive days following the expiration of any cure period); or
. we have failed to give Winterthur a notice to start coverage under the
oil payment guaranty insurance policy by the dates set forth in "--
Coverage Period" above.
If Winterthur gives notice of suspension or termination of the oil payment
guaranty insurance policy to P.M.I. Comercio Internacional more than five days
but less than eight days prior to the scheduled loading of one of our Maya
shipments, P.M.I. Comercio Internacional's claim under the oil payment guaranty
insurance policy may include the liquidated damages payable with respect to
late cancellations of scheduled shipments under the long term crude oil supply
agreement in an amount equal to 15% of the price of the cancelled shipment.
We, the oil payment insurers and the oil payment insurers administrative
agent entered into a reimbursement agreement dated as of August 19, 1999.
Pursuant to the reimbursement agreement, payments made by the oil payment
insurers in respect of a claim by P.M.I. Comercio Internacional under the oil
payment guaranty insurance policy will result in our corresponding, immediately
payable reimbursement obligations that are due no later than six months
following the date of their incurrence. In addition, to the extent the oil
payment insurers have made payments with respect to particular shipments of
Maya, it will be subrogated to any and all rights we may have (1) against any
other insurer with respect to such shipments (for example, based upon marine or
casualty insurance) or (2) against the beneficiary for any payments to be
returned.
Oil payment insurance reimbursement obligations will accrue interest on a
daily basis at a rate per annum of 7-day LIBOR plus the applicable margin plus
2%.
Any failure by us to pay in full any oil payment insurers administrative
agent within the six months following the incurrence of such oil payment
insurers administrative agent will constitute an Event of Default under the
common security agreement.
Debt Service Reserve Insurance Guarantee
Winterthur issued a debt service reserve insurance guarantee on August 19,
1999, for the benefit of the secured parties in order to guarantee up to $60
million to the credit of the Debt Service Reserve Account. However, we and the
collateral trustee may mutually agree to reduce this amount permanently.
Winterthur will reissue a portion of its exposure under the debt service
reserve insurance guarantee with the same syndicate of reinsurers that will
reinsure the guaranty insurance policy.
The debt service reserve insurance guarantee is available if, and only to the
extent that, the funds then on deposit in the Principal & Interest Accrual
Account and the Debt Service Reserve Account are insufficient to make scheduled
payments on the senior debt on a payment date. The amount that may be drawn on
any Payment Date is equal to the aggregate amount of senior debt obligations
then due less (1) the balance in the Principal & Interest Accrual Account and
(2) the balance in the Debt Service Reserve Account (including, in each of
cases (1) and (2), cash and any Authorized Investments). We may not draw down
solely for the purpose of covering any shortfall in the Debt Service Reserve
Account at any time if no senior debt obligations are then due.
Coverage Period. Drawings will be permitted during the period commencing on
the date substantial reliability is achieved and ending on the tenth Payment
Date after that date, provided that the coverage will automatically terminate
early if and when the debt service reserve insurance guarantee is replaced.
Premium and Interest. We paid the annual premium for the coverage provided by
the agreement in advance on August 19, 1999, and must pay the premium annually
in advance on each anniversary such date.
Any amounts that we draw down under this arrangement will accrue interest on
a daily basis at a rate of 500 bps above 7-day LIBOR.
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Subordination. Payments of interest on drawdowns under this arrangement will
be subordinated in right of payment to (1) the prior payment in full of all
senior debt obligations and all oil payment insurance obligations related to
the guaranty insurance policy then due and (2) any deposits then required to be
made into the Principal and Interest Accrual Account, Tax Reserve Account,
Major Maintenance Account, Debt Service Reserve Account and P.M.I. Surplus
Reserve Account (but excluding any Restricted Payments). Payments of principal
in respect of drawdowns will be further subordinated. We may only make
repayments of principal in respect of drawdowns under the agreement on a
Payment Date, after applying the 75% of the cash flow available at priority
position tenth under "--Common Security Agreement--Accounts Structure--
Withdrawal from Accounts Pre-Default" to the prepayment of bank senior debt
obligations as set forth in the common security agreement. Once the bank senior
debt is repaid, we may repay principal in respect of drawdowns using 100% of
such cash flow, as set forth in the common security agreement.
Pledge. Winterthur is required to pledge any amounts extended under the debt
service reserve insurance guarantee to the secured parties.
Subordinated Lien on Collateral. Winterthur has a subordinated lien on all
collateral that we have pledged to the senior lenders. This subordinated lien
secures our obligation to reimburse Winterthur for payments made by it under
the debt service reserve insurance guaranty.
Scheduled Contributions to Debt Service Reserve Account. Pursuant to the
common security agreement, on the sixth Payment Date and each of the four
immediately succeeding Payment Dates, we must deposit at least $12 million into
the Debt Service Reserve Account, but no deposits will be required to the
extent the minimum balance of the Debt Service Reserve Account required at any
time has already been reached through payments out of excess cash flow as
described below. Upon each deposit, the guarantee amount available under this
arrangement will be automatically and permanently reduced by a corresponding
amount. These scheduled contributions to the Debt Service Reserve Account will
be subordinated in right of payment to payments of interest on drawdowns under
the arrangement.
Replacement of Debt Service Reserve Insurance Guarantee. On each Payment Date
after substantial reliability during the coverage period, so long as no
principal amount drawn under the agreement remains outstanding, we will be
required to transfer additional funds to the Debt Service Reserve Account in an
amount equal to 25% of the cash flow available at priority position tenth under
"--Common Security Agreement--Accounts--Withdrawal from Accounts Pre-Default"
(after applying 75% of such cash flow to the prepayment of bank senior debt).
At any time when the construction and term loans are repaid and all commitments
to lend under those loans have been terminated, we will be required to transfer
funds in an amount equal to 100% of such cash flow to the Debt Service Reserve
Account. Upon each such transfer, the guarantee amount available under this
arrangement will be automatically and permanently reduced by a corresponding
amount. If and when the Debt Service Reserve Account has been fully funded up
to the amount of senior debt obligations due within the succeeding six-month
period, this arrangement will automatically terminate and thereafter the
obligation to fund the Debt Service Reserve Account will rest solely with us.
Acceleration. Our obligations under this arrangement cannot be accelerated
and no Event of Default can be declared by Winterthur unless and until (1) the
secured parties have done so pursuant to the common security agreement or (2)
all outstanding senior debt obligations have been repaid in full, whichever
occurs first.
Transfer Restrictions Agreement
We, Clark Refining Holdings, Sabine River, Neches River, Blackstone, the
collateral trustee, the bank lenders administrative agent, the oil payment
insurers administrative agent and the indenture trustee entered into a transfer
restrictions agreement, dated as of August 19, 1999, that generally provides
that none of us, Clark Refining Holdings, Sabine River, Neches River nor
Blackstone will effect, or permit any Affiliate to
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effect, any transfer of such party's direct or indirect interest, if any, in
us, Clark Refining & Marketing or the Port Arthur refinery. Transfers will be
permitted in limited situations, including those set forth below.
Transfers by Blackstone. Blackstone has the right to dispose of its equity
interest in Clark Refining Holdings:
. prior to final completion of our Coker Project:
. to (1) a transferee that is rated investment grade by both Standard &
Poor's and Moody's after giving effect to the transfer or (2) any
other transferee with (a) the affirmative vote of 51% of bank lenders
and (b) the affirmative vote of 51% of the noteholders or the
reaffirmation by both Standard & Poor's and Moody's of the then-
current credit rating applicable to the notes, provided that either
Blackstone retains its equity funding commitment obligation or the
transferee assumes such obligations; or
. in part but not in whole by means of a primary or secondary public or
Rule 144A offering or private sale, so long as Blackstone (1) retains
not less than 40% of the total capital stock outstanding of Clark
Refining Holdings or (2) remains the largest single direct or
indirect shareholder of Clark Refining Holdings and maintains the
direct or indirect right to appoint no fewer than one-third of the
members of the board of directors of Clark Refining Holdings provided
in each case that Blackstone retains its obligations to fund any
unfunded equity commitment; and
. following final completion of our Coker Project, in any manner.
Transfers by Clark Refining Holdings. Following final completion, Clark
Refining Holdings may dispose of its indirect interest in the Port Arthur
refinery, Clark Refining & Marketing and Port Arthur Coker Company, in whole
but not in part, to a transferee that is engaged in petroleum refinery
operations or continuous chemical processes, provided that if the transferee is
not rated investment grade by both Standard & Poor's and Moody's after the
transfer, (1) Clark Refining Holdings has obtained the consent of Majority
Lenders and (2) Standard & Poor's and Moody's have reaffirmed the rating on the
Senior Debt at or above the then-current rating, provided further that, in any
case, if the transfer is by means other than a transfer of all the shares of
Clark Refining & Marketing or Clark USA, the transferee assumes all obligations
of Clark Refining & Marketing with respect to the Coker Project.
Other Transfers. Any other transfer will require the consent of requisite
lenders.
Intercreditor Agreement
The intercreditor agreement governs the rights and obligations, including
sharing of information, notice of non-pro rata payments, general consultation,
voting restrictions and termination of commitments, among the collateral
trustee, acting on behalf of the secured parties, the bank lenders
administrative agent, acting on behalf of the bank senior lenders, the oil
payment insurers administrative agent, acting on behalf of the oil payment
insurers, and the indenture trustee, acting on behalf of the noteholders.
Registration Rights Agreement
Pursuant to the registration rights agreement, we have agreed with the
initial purchasers, for the benefit of the holders of the notes, that we will
file and use our reasonable best efforts to cause to become effective, at our
cost, either a registration statement with respect to a registered offer to
exchange the notes for a series of debt securities which are in all material
respects substantially identical to the notes or a shelf registration covering
resales of the notes. Upon a registration statement with respect to the
exchange offer being declared effective, we will offer the exchange notes in
return for surrender of the notes. The offer will remain open for no less than
20 business days after the date notice of the exchange offer is mailed to you.
For each outstanding
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note surrendered to us under the exchange offer, you will receive exchange
notes in an equal principal amount. Interest on each exchange note will accrue
from the last date on which interest was paid on the outstanding note so
surrendered or, if no interest has been paid, since August 19, 1999.
In the event that we determine in good faith that applicable interpretations
of the staff of the Securities and Exchange Commission or other circumstances
specified in the registration rights agreement do not permit us to effect such
an exchange offer, or we so elect, we will, at our cost, use reasonable best
efforts (subject to customary representations and agreements of the
noteholders) to have a shelf registration statement covering resale of the
notes declared effective and kept effective for up to two years after the
closing date, subject to certain exceptions. We will, in the event of such a
shelf registration, provide to each noteholder copies of the prospectus, notify
noteholders when a registration statement for the notes has become effective
and take certain other actions as are appropriate to permit resale of the
notes.
In the event that such exchange offer is not consummated or such registration
statement is not declared effective within 270 days following the closing date,
the annual interest rates on the notes will increase by one half of one percent
(50 basis points) effective on the 271st day following the closing date, which
increase will remain in effect until the date on which such exchange offer is
consummated or such registration statement will have become effective.
Each noteholder (other than certain specified holders) who wishes to exchange
its outstanding notes for exchange notes in the exchange offer will be required
to represent that any exchange notes to be received by it will be acquired in
the ordinary course of business and that at the time of the commencement of the
exchange offer it will have no arrangement with any person to participate in
the distribution (within the meaning of the Securities Act) of the exchange
notes.
A noteholder that sells its notes pursuant to a shelf registration generally
would be required to be named as a selling holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sale and
will be required to agree in writing to be bound by the provisions of the
registration rights agreement which are applicable to such noteholder
(including certain indemnification obligations).
Definitions
"Applicable Agent" means, (1) in the case of the noteholders, the indenture
trustee, (2) in the case of the initial bank lender group, the bank lenders
administrative agent, (3) in the case of any other senior lender group, the
person notified to the collateral trustee as the Applicable Agent for such
senior lender group, and (4) in the case of the oil payment insurers, the oil
payment insurers administrative agent.
"Authorized Investments" means (1) investments maturing within one year after
the acquisition thereof in (a) United States government securities, (b)
deposits with banks or trust companies with a rating of at least A-1 from
Moody's and A from Standard & Poor's and at least $500 million of shareholders'
equity or (c) commercial paper by an issuer rated at least P-1 from Moody's and
A-1 from Standard & Poor's and which has at least $500 million of shareholders'
equity or (2) investments in any money market fund having a rating in the
highest investment category granted by Moody's or Standard & Poor's (including
any such fund for which the depositary bank or any affiliate thereof serves as
investment manager, administrator or custodian).
"Clark Entities" means Clark Refining Holdings, Clark USA and Clark Refining
& Marketing.
"Debt Service Coverage Ratio" means for any period, the ratio of (1) the
aggregate of cash proceeds minus project expenses for such period to (2) senior
debt obligations, other than pursuant to optional prepayments or mandatory
prepayments, paid or expected to be paid during such period, as the case may
be.
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"Enforcement Action" means, any or all of the following: (1) the application
charge or set-off of funds in the secured accounts to the payment of senior
debt obligations and the oil payment insurers administrative agents, (2) the
declaration of the principal of the senior debt immediately due and payable,
(3) the exercising of any power of sale or other rights granted by any
financing document, and (4) the taking of any other legal, equitable or other
remedy or action.
"Majority Bank Lenders" means holders of more than 50% of the aggregate
outstanding principal amount of bank senior debt (including without limitation
any insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility) and bank senior debt commitments.
"Majority Bondholders" means holders of more than 50% of the aggregate
outstanding principal amount of the notes.
"Majority Lenders" means, (1) at any time when the aggregate outstanding
principal amount of bank senior debt (including without limitation any
insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility) and bank senior debt commitments is equal to
or exceeds 15% of the aggregate outstanding principal amount of senior debt and
senior debt commitments, either (a) Majority Bank Lenders or (b) holders of
more than 25% of the aggregate outstanding principal amount of the notes, and
(2) at any time when the aggregate outstanding principal amount of bank senior
debt (including without limitation any insurance product replacing the
"Compensating Letter of Credit" under the secured working capital facility) and
bank senior debt commitments is less than 15% of the aggregate outstanding
principal amount of senior debt and senior debt commitments, the holders of
more than 25% of the aggregate outstanding principal amount of senior debt and
senior debt commitments.
"Majority Secured Parties" means either (1) holders of more than 50% of the
aggregate principal amount of bank senior debt (including without limitation
any insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility), bank senior debt commitments and the oil
payment commitment (or, under specified circumstances, the aggregate principal
amount of oil payment reimbursement obligations then outstanding), taken
together, or (2) holders of more than 25% of the aggregate outstanding
principal amount of the notes.
"Material Adverse Effect" means a material adverse effect on (1) the
business, assets, operations, properties, financial condition or prospects of
any of us or Sabine River or Neches River, (2) our ability to construct the
Coker Project and operate the Heavy Oil Processing Facility in accordance with
the transaction documents, (3) the rights and remedies of any secured party,
(4) our ability to pay any senior debt obligations when due or (5) the ability
of any of us or Sabine River or Neches River, our affiliate or any other party
to perform its material obligations under any transaction document.
"Permitted Indebtedness" means (1) indebtedness in respect of our obligations
under the financing documents, (2) permitted hedging instruments, (3) trade
accounts payable in the ordinary course of business and (4) subordinated debt.
"Permitted Liens" means (1) liens to secure senior debt obligations, (2)
judgment liens that are not currently dischargeable or that have been
discharged or stayed or appealed within 30 days after the date of such
judgment, (3) subordinated liens securing our reimbursement obligations under
the debt service reserve insurance guarantee or our obligations under the long
term crude oil supply agreement, (4) liens on cash eligible for restricted
payments under the common security agreement and (5) some other customary
permitted liens.
"Projected Tax Reserve Amount" means the total of (1) the amount of taxes
other than income or franchise taxes or operational taxes that are considered
Project Expenses projected to become due and payable on or before the next two
succeeding Payment Dates and (2) the amount of income or franchise taxes that
are
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projected to be incurred or that will become due and payable on or before the
next two Payment Dates by Sabine River and/or Neches River either directly to a
taxing authority or pursuant to the Tax Sharing Agreement in respect of their
allocable share of the taxable income of Port Arthur Coker Company.
"Requisite Bank Lenders" means holders of more than 66 2/3% of the aggregate
principal amount of bank senior debt (including without limitation any
insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility) and bank senior debt commitments.
"Requisite Lenders" means (1) at any time when the aggregate outstanding
principal amount of bank senior debt (including without limitation any
insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility) and bank senior debt commitments is equal to
or exceeds 15% of the aggregate outstanding principal amount of senior debt and
senior debt commitments, (a) Requisite Bank Lenders and (b) either Majority
Bondholders (or, under specified circumstances, Requisite Bondholders) or a
ratings reaffirmation of the notes by both Moody's and Standard & Poor's, and
(2) when the aggregate outstanding principal amount of bank senior debt
(including without limitation any insurance product replacing the "Compensating
Letter of Credit" under the secured working capital facility) and bank senior
debt commitments is less than 15% of the aggregate outstanding principal amount
of senior debt and senior debt commitments, either (a) the holders of more than
50% of the aggregate outstanding principal amount of senior debt and senior
debt commitments or (b) a ratings reaffirmation of the notes by both Moody's
and Standard and Poor's.
"Requisite Secured Parties" means (1) holders of more than 66 2/3% of the
aggregate principal amount of bank senior debt (including without limitation
any insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility), bank senior debt commitments and the oil
payment commitment (or, under specified circumstances, the aggregate principal
amount of oil payment reimbursement obligations then outstanding), taken
together, and (2) either (a) Majority Bondholders (or, in specified
circumstances, Requisite Bondholders) or (b) a credit rating reaffirmation or
the notes by both Moody's and Standard & Poor's.
"Shareholder" means each of Blackstone, Occidental and Clark Refining Holding
and each other shareholder, directly or indirectly, holding the outstanding
capital stock of Sabine River.
"Supermajority Bank Lenders" means holders of more than 75% of the aggregate
outstanding principal amount of bank senior debt and bank senior debt
commitments.
"Supermajority Lenders" means (1) at any time when the aggregate outstanding
principal amount of bank senior debt (including without limitation any
insurance product replacing the "Compensating Letter of Credit" under the
secured working capital facility) and bank senior debt commitments is equal to
or exceeds 15% of the aggregate outstanding principal amount of senior debt and
senior debt commitments, Supermajority Bank Lenders and either Supermajority
Bondholders or a ratings reaffirmation of the notes by both Moody's and
Standard & Poor's, and (2) at any time when the aggregate outstanding principal
amount of bank senior debt (including without limitation any insurance product
replacing the "Compensating Letter of Credit" under the secured working capital
facility) and bank senior debt commitments is less than 15% of the aggregate
outstanding principal amount of senior debt and senior debt commitments, (a)
holders of more than 75% of the aggregate outstanding principal amount of
senior debt and senior debt commitments or (b) a credit ratings reaffirmation
of the notes by both Moody's and Standard & Poor's.
"Supermajority Secured Parties" means (1) holders of more than 75% of the
aggregate outstanding principal amount of bank senior debt (including without
limitation any insurance product replacing the "Compensating Letter of Credit"
under the secured working capital facility), bank senior debt commitments and
the oil payment commitment (or, under specified circumstances, the aggregate
principal amount of oil payment reimbursement obligations then outstanding),
taken together, and (2) either (a) Supermajority Bondholders or (b) a credit
ratings reaffirmation of the notes by both Moody's and Standard & Poor's.
149
<PAGE>
"Weighted Average Life" means, when applied to any Indebtedness at any date,
the number of years obtained by dividing (1) the total of the products obtained
by multiplying (a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (b) the numbers of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (2) the then outstanding principal amount of such
Indebtedness.
150
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
The exchange notes will initially be represented by one or more permanent
global notes in definitive, fully registered book-entry form, without interest
coupons that will be deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee, on behalf of the acquirors of exchange notes
represented thereby for credit to the respective accounts of the acquirors, or
to such other accountants as they may direct, at DTC, or Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear System, or
Cedel Bank, societe anonyme. See "The Exchange Offer--Book Entry Transfer."
Year 2000
DTC management is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "year 2000
problems." DTC has informed its participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes
a testing phase, which is expected to be completed within appropriate time
frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to:
(1) impress upon them the importance of such services being year 2000
compliant; and
(2) determine the extent of their efforts for year 2000 remediation (and,
as appropriate, testing) of their services.
In addition, DTC is in the process of developing such contingency plans as it
deems appropriate.
151
<PAGE>
SPECIAL LEGAL ASPECTS
We have taken steps in structuring the transactions contemplated hereby that
are intended to ensure that the voluntary or involuntary application for relief
under the United States Bankruptcy Code or similar state laws by Clark Refining
& Marketing, Clark Refining Holdings or Clark USA will not result in the
consolidation of our assets and liabilities with those of such entities or any
of their affiliates (other than Blackstone, Occidental, Sabine River or Neches
River). These steps include (1) the appointment of an independent director to
the board of directors of each of the two corporate partners of Port Arthur
Coker Company and to Port Arthur Finance, (2) our creation, and the creation of
Sabine River and Neches River, pursuant to organizational documents containing
limitations (including restrictions on the nature of our and their, business
and restrictions on our, and their, ability to commence a voluntary case or
proceeding under bankruptcy law with respect to ourselves without the prior
unanimous affirmative vote of all of our, or their, directors), (3) the on-
going maintenance of Occidental's 10% common equity ownership in Sabine River
separate and independent from the ownership interest of Clark Refining
Holdings, (4) the operation of our new processing units by our own employees
and our employment of an individual responsible for our accounting and (5) our
agreement to certain covenants intended to ensure the maintenance of our
separate existence (including, among other covenants, to maintain separate
books and records, to conduct our business in our own name). However,
notwithstanding the foregoing, we cannot assure you that our activities would
not result in a court concluding that our assets and liabilities should be
consolidated with those of Clark Refining & Marketing, Clark Refining Holdings
or Clark USA in a proceeding under any bankruptcy law. If a court were to reach
such a conclusion, then delays in distributions on the notes could occur or
reductions in the amounts of such distributions could result.
We have received an opinion of our counsel to the effect that, subject to
certain facts, assumptions and qualifications, it would not be a proper
exercise by a court of its equitable discretion to disregard separate existence
and to require the consolidation of our assets and liabilities with the assets
and liabilities of Clark Refining & Marketing, Clark Refining Holdings or Clark
USA in the event of the application of any bankruptcy law to any of these
entities. Such opinion, however, points out that the risk of substantive
consolidation may be higher in a situation in which unique assets critical to
the business operations and successful reorganization of the bankrupt--so
called "core assets"--are held by a related entity and there is relatively
little judicial experience with respect to assets that may be considered "core
assets" of a debtor.
In addition, among other things, this opinion of counsel assumes, for
purposes of such opinion, that we will follow certain procedures in the conduct
of our affairs, including maintaining separate records, books of account and
bank accounts, maintaining adequate capital, refraining from commingling our
assets and refraining from holding ourselves out as having agreed to pay, or
being liable for, each other's debts and that the 10% equity interest of
Occidental in our general partner will be maintained and no portion of such
interest will be transferred, directly or indirectly to Clark Refining &
Marketing, Clark Refining Holdings or Clark USA. We and Clark Refining &
Marketing will represent to such counsel that we and Clark Refining & Marketing
will follow these and other procedures related to maintaining our separate
existence.
152
<PAGE>
U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE EXCHANGE OFFER
Exchange of Notes
The following summary describes the material U.S. federal income tax
consequences of the exchange offer. The exchange of outstanding notes for
exchange notes in the exchange offer will not constitute a taxable event to
holders. Consequently, no gain or loss will be recognized by a holder upon
receipt of an exchange note, the holding period of the exchange note will
include the holding period the outstanding note and the basis of the exchange
note will be the same as the basis of the outstanding note immediately before
the exchange.
In any event, persons considering the exchange of outstanding notes for
exchange notes should consult their own tax advisors concerning the United
States federal income tax consequences in light of their particular situations
as well as any consequences arising under the laws of any other taxing
jurisdiction.
153
<PAGE>
PLAN OF DISTRIBUTION
Until , 2000, 90 days after the date of this prospectus, all
dealers effecting transactions in the exchange notes, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
Each broker-dealer that receives exchange notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. This prospectus, as it may
be amended or supplemented, may be used by a broker-dealer in connection with
resales of exchange notes received in exchange for outstanding notes where such
outstanding notes were acquired as a result of market-making activities or
other trading activities. Port Arthur Finance has agreed that it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale for a period of 120 days from the date on
which the exchange offer is consummated, or such shorter period as will
terminate when all outstanding notes acquired by broker-dealers for their own
accounts as a result of market-making activities or other trading activities
have been exchanged for exchange notes and such exchange notes have been resold
by such broker-dealers. In addition, dealers effecting transactions in the
exchange notes may be required to deliver a prospectus.
Port Arthur Finance will not receive any proceeds from any sale of exchange
notes by broker-dealers. Exchange notes received by broker-dealers for their
own account pursuant to the exchange offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the exchange notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any exchange
notes. Any broker-dealer that resells exchange notes that were received by it
for its own account pursuant to the exchange offer and any broker or dealer
that participates in a distribution of such exchange notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 120 days from the date on which the exchange offer is
consummated, or such shorter period as will terminate when all outstanding
notes acquired by broker-dealers for their own accounts as a result of market-
making activities or other trading activities have been exchanged for exchange
notes and such exchange notes have been resold by such broker-dealers, Port
Arthur Finance will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer that requests
such documents in the letter of transmittal. Port Arthur Finance has agreed to
pay all expenses incident to the exchange offer other than commissions or
concessions of any brokers or dealers and the fees of any counsel or other
advisors or experts retained by the holders of outstanding notes, except as
expressly set forth in the registration rights agreement, and will indemnify
the holders of outstanding notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act. In the event of a
shelf registration, Port Arthur Finance has agreed to pay the expenses of one
firm of counsel designated by the holders of notes covered by the shelf
registration.
If you are an affiliate of Port Arthur Finance or are engaged in, or intend
to engage in, or have an agreement or understanding to participate in, a
distribution of the exchange notes, you cannot rely on the applicable
interpretations of the Securities and Exchange Commission and you must comply
with the registration requirements of the Securities Act of 1933 in connection
with any resale transaction.
154
<PAGE>
LEGAL MATTERS
Our counsel, Simpson Thacher & Bartlett, New York, New York, will issue an
opinion regarding the validity of the notes and other specified legal matters.
Simpson Thacher & Bartlett provides legal services to Clark Refining
Holdings, Clark USA and Clark Refining & Marketing, as well as Blackstone and
its affiliates, on a regular basis. In addition, Simpson Thacher & Bartlett
provided legal services to these parties in connection with some of the
transactions described in this prospectus. Certain partners of Simpson Thacher
& Bartlett and related persons have an indirect interest in less than 1% of the
common stock of Clark Refining Holdings.
EXPERTS
The balance sheet of Port Arthur Coker Company as of August 5, 1999 included
in this registration statement has been audited by Deloitte & Touche LLP, as
stated in their report, which is included elsewhere herein, and has been so
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
With respect to the unaudited interim financial information as of September
30, 1999, which is included in this prospectus, Deloitte & Touche LLP have
applied limited procedures in accordance with professional standards for a
review of such information. However, as stated in their report included
elsewhere herein, they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports
are not "reports" or a "part" of the registration statement prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
The consolidated financial statements of Clark Refining & Marketing as of and
for the years ended December 31, 1997 and 1998 included in Annex A to this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which are also included in Annex A herein, and have
been so included in reliance upon the report of such firm upon their authority
as experts in accounting and auditing.
With respect to the audited interim financial information of Clark Refining
and Marketing for the three and nine month periods ended September 30, 1998 and
1999 which is included in Annex A to this prospectus, Deloitte & Touche LLP
have applied limited procedures in accordance with professional standards for a
review of such information. However, as stated in their reports included in
Clark Refining & Marketing's Quarterly Reports on Form 10Q/A for the quarter
ended September 30, 1999 and included in Annex A herein, they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of
the registration statement prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
The consolidated financial statements of Clark Refining & Marketing for the
year ended December 31, 1996 included in Annex A to this prospectus have been
audited by PricewaterhouseCoopers LLP (on July 1, 1998, Coopers & Lybrand
L.L.P. merged with Price Waterhouse LLP to form PricewaterhouseCoopers LLP),
independent auditors, as stated in their reports, which are included in Annex A
herein, and have been so included and incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
Neither our independent auditors, nor any other independent accountants, have
compiled, examined or performed any procedures with respect to our or Purvin &
Gertz's estimates regarding the Coker Project contained herein, nor have they
expressed any opinion or any other form of assurance on such information or its
achievability, and assume no responsibility for, and disclaim any association
with, the aforementioned estimates.
155
<PAGE>
INDEPENDENT ENGINEER
Purvin & Gertz prepared the independent engineer's report included as Annex B
to this prospectus. We include this report in this offering circular in
reliance upon Purvin & Gertz's authority as a leading consulting and
engineering firm experienced in review of the design, development and operation
of petroleum refinery projects. You should read this report in its entirety for
information contained therein with respect to our Coker Project and the related
matters discussed therein.
INDEPENDENT MARKET CONSULTANT
Purvin & Gertz prepared the crude oil and refined products market report
included as Annex C to this prospectus. We include this report in this offering
circular in reliance upon Purvin & Gertz's authority as a consultant in
evaluation of Maya and other refinery feedstock markets and related matters.
You should read this report in its entirety for information contained therein
with respect to our Coker Project and the related matters discussed therein.
AVAILABLE INFORMATION
We have filed with the Commission a registration statement on Form S-4 under
the Securities Act with respect to the exchange notes being offered hereby.
This prospectus, which forms a part of the registration statement, does not
contain all of the information set forth in the registration statement. You
should refer to the registration statement for further information. Statements
contained in this prospectus as to the contents of any contract or other
document are not necessarily complete, and, where such contract or other
document is an exhibit to the registration statement, each such statement is
qualified by the provision in such exhibit to which reference is hereby made.
We are not currently required to file reports with the U.S. Securities and
Exchange Commission pursuant to the Exchange Act. At a future date, however, we
may be required to file reports with the Commission. Prior to any date on which
we are required to file such reports, we will provide without charge, upon
written request of a holder of a note or a prospective investor, a copy of such
information as is required by Rule 144A to enable resales of the notes to be
made pursuant to Rule 144A unless, at the time of such request, we are subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act. Any
such request will be subject to the confidentiality provisions referred to
below. Written requests for such information should be addressed to the
Corporate Secretary at our executive offices located at 1801 S. Gulfway Drive,
Office No. 36, Port Arthur, Texas 77640. Each prospective investor agrees to
keep confidential the various documents and all written information that from
time to time have been or will be disclosed to it concerning us and our Coker
Project, including without limitation, any of the financial statements and
information disclosed hereunder, and agrees not to disclose any portion of the
same to any person.
Clark Refining & Marketing, Occidental, Foster Wheeler Corporation, Air
Products and PEMEX are subject to the informational requirements of the
Exchange Act, and in accordance therewith has filed reports and other
information with the Commission. Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, NW, Room 1024, Washington,
D.C. 20549. Copies of such materials may be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, NW, Washington, D.C.
20549. The Commission maintains a Web site (http://www.sec.gov) that contains
reports and information statements and other information regarding registrants,
such as Clark Refining & Marketing, Occidental, Foster Wheeler Corporation and
Air Products, that file electronically with the Commission.
In addition, we have attached as Annex A to this prospectus additional
information regarding Clark Refining & Marketing. You are urged to read such
information in its entirety.
156
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Port Arthur Coker Company L.P. and Subsidiary
Interim Financial Statements
Independent Auditors Report ................................. F-2
Independent Accountants Report .............................. F-3
Consolidated Balance sheet as of August 5, 1999
September 30, 1999 .......................................... F-4
Notes to Consolidated Financial Statements .................. F-5
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Sabine River Holding Corp., as a general partner
of Port Arthur Coker Company L.P.:
We have audited the accompanying consolidated balance sheet of Port Arthur
Coker Company L.P. and Subsidiary (the "Company") as of August 5, 1999. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statement presents fairly, in all
material respects, the financial position of the Company at August 5, 1999 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
St. Louis, Missouri
August 5, 1999
F-2
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of
Sabine River Holding Corp., as general partner of Port Arthur Coker Company
L.P.:
We have reviewed the accompanying consolidated balance sheet of Port Arthur
Coker Company L.P. (the "Company") as of September 30, 1999. This financial
statement is the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such financial statement for it to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of August 5, 1999;
and in our report dated August 5, 1999, we expressed an unqualified opinion on
that financial statement. In our opinion, the information set forth in the
accompanying balance sheet as of August 5, 1999 is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.
Deloitte & Touche LLP
St. Louis, Missouri
December 10, 1999
F-3
<PAGE>
PORT ARTHUR COKER COMPANY L.P. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
<TABLE>
<CAPTION>
Reference August 5, September 30,
Note 1999 1999
--------- --------- -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................... 3 $ 1 $ 1
Prepaid expenses and other................... -- 1,220
----- --------
Total current assets........................ 1 1,221
PROPERTY, PLANT AND EQUIPMENT, NET............ -- 314,882
CASH RESTRICTED FOR CAPITAL ADDITIONS......... 5 -- 47,836
OTHER ASSETS.................................. -- 757
----- --------
$ 1 $364,696
===== ========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................. $ -- $ 84,647
Payables with affiliates..................... -- 607
Accrued expenses and other................... -- 4,492
----- --------
Total current liabilities................... -- 89,746
LONG-TERM DEBT................................ 6 255,000
PARTNERS' CAPITAL............................. 1 19,950
----- --------
$ 1 $364,696
===== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PORT ARTHUR COKER COMPANY L.P. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business
Port Arthur Coker Company L.P. (the "Company") was formed as a Delaware
limited partnership on May 4, 1999. The Company was formed to construct, own,
operate and finance a new 80,000 barrel per stream day delayed coker unit, a
35,000 barrel per stream day hydrocracker and a 417 long tons per day sulfur
complex and related assets at the Port Arthur, Texas refinery of an affiliate,
Clark Refining & Marketing, Inc. Port Arthur Coker Company L.P. is owned 1% by
its general partner, Sabine River Holding Corporation, and 99% by its limited
partner, Neches River Holding Corporation. Both partners were incorporated in
Delaware in May 1999. Sabine River is owned 90% by Clark Refining Holdings Inc.
("Clark Refining Holdings") and 10% by Occidental Petroleum Corporation
("Occidental"). After giving effect to anticipated equity contributions to be
made in connection with the funding of the projects, Clark Refining Holdings,
Inc. will be owned, indirectly through subsidiaries, by Blackstone Capital
Partners III Merchant Banking Fund L.P. and its affiliates ("Blackstone") with
an approximately 82% interest, and by Occidental with an approximately 17%
interest. The Company is an affiliate of Clark Refining & Marketing because
Clark Refining Holdings owns 100% of the capital stock of Clark USA, Inc.,
which in turn owns 100% of the capital stock of Clark Refining & Marketing.
As of the date hereof, Port Arthur Coker Company and its subsidiary have not
conducted any operations and is in the development stage. In order to fund the
Company's Coker Project, in August 1999 the Company, through a wholly-owned
subsidiary, Port Arthur Finance Corp. ("Port Arthur Finance"), issued $255
million in notes, entered into a $325 million secured construction and term
loan facility, obtained a $75 million secured working capital facility and
entered into equity subscription agreements totaling $135 million (see Note 6--
Long-Term Debt). Port Arthur Finance, a Delaware holding company, was formed on
May 4, 1999. Port Arthur Finance's organizational documents only allow it to
engage in activities related to issuing notes and borrowing under bank credit
facilities in connection with the initial financing of the Company, and
remitting the proceeds thereof to the Company. In issuing the notes and
borrowing under the bank credit facilities, Port Arthur Finance is acting as an
agent of the Company.
In March 1998, Clark Refining & Marketing announced that it had entered into
a long-term crude oil supply agreement with P.M.I. Comercio Internacional, S.A.
de C.V. ("PMI"), an affiliate of Petroleos Mexicanos, the Mexican state oil
company. The contract provided Clark Refining & Marketing with the foundation
necessary to continue developing a project to upgrade its Port Arthur, Texas
refinery to process primarily lower-cost, heavy sour crude oil. The project
includes the construction of additional coking and hydrocracking capability,
and the expansion of crude unit capacity to approximately 250,000 barrels per
day. The oil supply agreement with PMI and the construction work-in-progress
related to the new processing units were transferred for value to the Company
in the third quarter of 1999. In connection with the project, Clark Refining
and Marketing will lease certain existing processing units of Clark Refining &
Marketing to the Company on fair market terms and, pursuant to this lease, will
be obligated to make certain modifications, infrastructure improvements and
incur certain development costs during 1999 and 2000 at an estimated cost up to
$120 million. To secure this commitment, Clark Refining & Marketing posted a
letter of credit in the amount of $97 million at the closing. As of September
30, 1999, Clark Refining & Marketing had expended approximately $36 million
towards this commitment. In addition, the Company entered into agreements with
Clark Refining & Marketing pursuant to which Clark Refining and Marketing will
provide certain operating, maintenance and other services and will purchase the
output from the new coking and hydrocracking equipment for further processing
into finished products. The Company also entered into agreements under which
the Company will process certain hydrocarbon streams owned by Clark Refining &
Marketing.
2. Basis of Preparation
The interim financial statement of the Company has been reviewed by
independent accountants. In the opinion of the management of the Company, all
adjustments (consisting only of normal recurring adjustments)
F-5
<PAGE>
necessary for a fair presentation of the financial statement has been included
therein. The Company is in preoperation stage and has no operating revenue.
Accordingly, only balance sheet data is presented, and no ratio of earnings to
fixed charges is presented. The unaudited financial statement should be read in
conjunction with the audited financial statement and notes thereto included in
the Company's August 5, 1999 audited financial statement.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statement includes the accounts of its 100%
subsidiary Port Arthur Finance.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of financial statements. Actual
results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments, such as time deposits,
money market instruments, commercial paper and United States and foreign
government securities, purchased with an original maturity of three months or
less, to be cash equivalents. Cash and cash equivalents as of September 30,
1999 approximated fair value.
4. Accounting Changes
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. The Company is required to adopt this statement effective January
1, 2001. SFAS No. 133 will require the Company to record all derivatives on the
balance sheet at fair value. Changes in derivative fair value will either be
recognized in earnings as offsets to the changes in fair value of related
hedged assets, liabilities, and firm commitments or, for forecasted
transactions, deferred and recorded as a component of comprehensive income
until the hedged transactions occur and are recognized in earnings. The
ineffective portion of a hedging derivative's change in fair value will be
recognized in earnings immediately. The Company is currently evaluating when it
will adopt this standard and the impact of the standard on the Company. The
impact of SFAS No. 133 will depend on a variety of factors, including future
interpretive guidance, the future level of hedging activity, the types of
hedging instruments used, and the effectiveness of such instruments.
5. Cash Restricted for Capital Additions
Pursuant to the notes issued by Port Arthur Finance on behalf of the Company,
all proceeds from the notes are restricted for use in the construction of new
operating units.
6. Long-Term Debt
<TABLE>
<CAPTION>
August 5, September 30,
1999 1999
--------- -------------
(unaudited)
<S> <C> <C>
12 1/2% Senior Secured
Notes due January 15,
2009 ...................
(12 1/2% Senior Notes) . -- 255.0
----- -------
$ -- $ 255.0
===== =======
</TABLE>
F-6
<PAGE>
The 12 1/2% Senior Notes were issued by Port Arthur Finance Corp. in August
1999 on behalf of the Company at par and are secured by substantially all of
the assets of the Company. The Company is required to pay a portion of the
principal of the notes on a set schedule on each January 15 and July 15,
commencing July 15, 2002. The notes are redeemable at the Company's option at
any time at a redemption price equal to 100% of principal plus accrued and
unpaid interest plus a make-whole premium which is based on the rates of
treasury securities with average lives comparable to the average life of the
remaining scheduled payments plus 75 basis points.
The Company has entered into a $325 million secured construction and term
loan facility provided by commercial banks and institutional lenders. The
construction and term loan facility is split into a Tranche A of $225 million
with a term of 7.5 years and a Tranche B of $100 million with a term of 8
years. Under specified circumstances, the aggregate amount of the construction
and term loan facility may be reallocated between the tranches with the
Company's consent, which may not be unreasonably withheld. In addition, the
Company has obtained a $75 million secured working capital facility from
commercial banks, which banks include some of the same commercial banks that
provide the construction and term loan facility. The Company expects to replace
$40 million of the working capital facility with an insurance product.
The 12 1/2% Senior Notes indenture and the construction and term loan
facility agreement contain certain restrictive covenants including limitations
on distributions to our owners from our distribution account, limitations on
Blackstone disposing of any equity interest in Clark Refining Holdings,
limitations on Clark Refining Holdings disposing of any equity interest in
Clark Refining & Marketing, the Port Arthur Refinery or Port Arthur Coker
Company L.P. and limitation on incurring additional senior debt. The Company is
required to provide a debt service reserve arrangement, which has been provided
through an insurance product that will be replaced by a cash funded reserve
account from available cash flow from operations.
The scheduled maturities of long-term debt during the next five years are (in
millions): 1999, 2000 and 2001--$0; 2002--$4.3; 2003--$14.8; 2004 and
thereafter--$235.9.
7. Commitments and Contingencies
The Company is subject to various legal proceedings related to governmental
regulations and other actions arising out of the normal course of business,
including legal proceedings related to environmental matters. While it is not
possible at this time to establish the ultimate amount of liability with
respect to such contingent liabilities, the Company is of the opinion that the
aggregate amount of any such liabilities, for which provision has not been
made, will not have a material adverse effect on their financial position;
however, an adverse outcome of any one or more of these matters could have a
material effect on quarterly or annual operating results or cash flows when
resolved in a future period.
In July 1999, the Company entered into a contract for the engineering,
procurement and construction of the Company's Coker Project with Foster Wheeler
USA. Under this construction contract, Foster Wheeler USA will continue to
engineer, design, procure equipment for, construct, test and oversee startup of
the Coker Project and integrate the Coker Project with the Port Arthur refinery
of Clark Refining & Marketing Inc. Under the construction contract, the Company
will pay Foster Wheeler USA a fixed price of approximately $544 million of
which $157.1 million was credited to the Company for amounts Clark Refining &
Marketing had already paid Foster Wheeler USA for work performed on the Coker
Project prior to August 1999. The Company purchased this work in progress from
Clark Refining & Marketing when the financings were consummated in August 1999.
F-7
<PAGE>
ANNEX A
ADDITIONAL INFORMATION REGARDING CLARK REFINING & MARKETING
The following are (1) Items 1 and 2 (Business; Properties); Item 3 (Legal
Proceedings); Item 6 (Selected Financial Data); Item 7 (Management's Discussion
and Analysis of Financial Condition and Results of Operation); and Item 8 and
Item 14(a) 1 and 2 (Financial Statements and Supplementary Data) from
Clark Refining & Marketing's Annual Report on Form 10-K, as amended by
Amendment No. 1 thereto on Form 10-K/A for the fiscal year ended December 31,
1998 and (2) Clark Refining & Marketing's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 as amended by Amendment No. 1 thereto on Form
10-Q/A (excluding exhibits to such document).
A-1
<PAGE>
Explanatory note from Clark Refining & Marketing's Amendment No. 1 on Form 10-
K/A to its 1998 Annual Report on Form 10-K.
Explanatory Note
On July 8, 1999, Clark Refining & Marketing, Inc. ("Clark R&M" or the
"Company"), a wholly owned subsidiary of Clark USA, Inc. ("Clark USA") which is
a wholly owned subsidiary of Clark Refining Holdings Inc. ("Clark Holdings")
completed the sale of its retail operations to an affiliate of Apollo
Management, L.P. ("Apollo") for cash proceeds of $230 million. The retail
operations sold include all Company-operated retail stores, approximately 200
independently-operated Clark-branded stores and the Clark trade name.
Accordingly, the retail marketing operation's net assets (liabilities) have
been segregated from the Company's continuing operations in the consolidated
balance sheets, and its operating results are segregated and reported as
discontinued operations in the accompanying consolidated statements of
operations and cash flows.
This Form 10-K/A Amendment No. 1 amends the following items of the Form 10-K
of Clark R&M filed for the fiscal year ended December 31, 1998, as follows:
.Items 1 and 2
.Item 6
.Item 7
.Item 7A
.Item 14
.Exhibit 27
A-2
<PAGE>
Selected items from Clark Refining & Marketing's 10-K, as amended.
ITEM 1 and 2. Business; Properties
General
Clark R&M is currently one of the five largest independent refiners of
petroleum products in the United States based on rated crude oil throughput
capacity. Clark R&M is a wholly-owned subsidiary of Clark USA, which is a
wholly-owned subsidiary of Clark Holdings. Clark R&M's four refineries, one in
Texas, two in Illinois and one in Ohio, represent an aggregate of over 547,000
barrels per day of rated crude oil throughput capacity. In July 1999, the
Company sold its retail operations to Apollo for $230 million. In addition, in
June 1999, the Company announced that it was in discussions to sell 12
distribution terminals to Equilon Enterprises, L.L.C. ("Equilon"), a joint
venture between Shell and Texaco. These transactions are part of a strategy to
focus on refining operations which the Company believes will offer higher
potential return. As part of this strategy, Clark R&M announced in June 1999,
that it had signed a non-binding letter of intent to pursue the acquisition of
Equilon's 295,000 barrel per day Wood River, Illinois refinery, which is
adjacent to Clark R&M's Hartford, Illinois refinery.
Clark R&M was incorporated in Delaware in 1988 as Clark Oil & Refining
Corporation although the Clark brand name has been in existence since 1932. Its
principal executive offices are at 8182 Maryland Avenue, St. Louis, Missouri,
63105 and its telephone number is (314) 854-9696.
Blackstone Capital Partners III Merchant Banking Fund L.P. and its affiliates
("Blackstone") acquired its interest in Clark USA from Trizec Hahn Corporation
(formerly The Horsham Corporation, "TrizecHahn") in November 1997. Blackstone
owns a 78.5% voting interest (68.0% economic interest). An affiliate of
Occidental Petroleum Corporation ("Oxy"), Clark USA's other principal
shareholder, acquired its interest in Clark USA in November 1995 in exchange
for rights to future crude oil deliveries that the Company subsequently sold.
Oxy owns a 19.9% voting interest (30.7% economic interest). Much of the debt of
Clark USA and Clark R&M is publicly traded. In May 1999, all existing
shareholders of Clark USA exchanged their shares for equal shares in Clark
Holdings.
Business Strategy
Clark R&M is focused on becoming a world class refiner to capture the
manufacturing value created in refining crude oil into gasoline, diesel fuel,
jet fuel and other petroleum products. Demand for these products have grown at
consistent rates since the mid-1980's and the excess capacity resulting from
the oil crisis' of the 1970's and early 1980's have now been almost fully
absorbed.
Clark R&M has a disciplined business approach with a strategy that has been
consistently focused towards i) improving the productivity of existing assets
with minimum capital, ii) selectively adding scale through acquisition at
fractions of replacement costs, iii) optimizing capital investments through a
rigorous project review and implementation process, while iv) maintaining
significant liquidity and financial flexibility. The Company has implemented
this strategy by promoting an entrepreneurial culture where employee incentives
are aligned with performance objectives.
Improving Productivity. Clark R&M continues to implement relatively no or
low-cost initiatives designed to increase production, sales volumes and
production yields and to improve its sales mix while reducing input costs and
operating expenses. Examples of these types of initiatives include improvements
at the Port Arthur Refinery, increased yields and crude oil throughput
capability at its Illinois refineries and the creation of value within the
retail division and subsequent harvesting of that value to be deployed to
higher return uses.
Adding scale through acquisitions. Clark R&M intends to continue to
selectively add scale to its refining operations through the acquisitions of
low-cost, quality assets. Since 1994, the Company has almost quadrupled its
refining capacity by acquiring the Port Arthur refinery in 1995 and the Lima
refinery in 1998. The Company believes there may be additional acquisition
opportunities in the future due to continued consolidation in the industry.
A-3
<PAGE>
Optimizing capital investment. The Company emphasizes an entrepreneurial
approach to perceived mandatory expenditures, such as those required to comply
with reformulated and low-sulfur fuel regulations. For example, the Company may
seek to comply with such regulations through the access of alternative markets
for existing products if adequate returns on capital investment are not
assured. Discretionary capital expenditures are managed by linking capital
investment to internally generated cash flow. The Company seeks to minimize
investment risk, while maximizing project returns, and most projects in the
past three years have generated paybacks of less than four years.
Promoting entrepreneurial culture. Clark R&M emphasizes an entrepreneurial
management approach that uses employee incentives to enhance financial
performance and safety. All of the Company's employees participate in its
performance management, profit sharing or other incentive plans, and the
Company has adopted a stock incentive plan for Clark R&M's key employees.
Maintaining strong liquidity and financial flexibility. Earnings in the
Company's industry are volatile. As result, the Company has historically
maintained significant liquidity and utilized long-term financing when possible
while retaining some prepayment flexibility. As of December 31, 1998, the
Company had a cash balance of approximately $152.0 million and no long-term
debt maturities prior to 2003. Through December 31, 1998, the Company had
utilized existing cash of approximately $41.5 million to begin funding a major
upgrade of the Port Arthur refinery. These funds, along with subsequent
expenditures will be reimbursed in connection with the Port Arthur project (see
the "Port Arthur Upgrade Project").
Refining Division
Overview
The Company currently operates one refinery in Texas, one refinery in Ohio
and two refineries in Illinois with a combined crude oil throughput capacity of
approximately 547,000 barrels per day ("bpd"). The Company also owns 17 product
terminals located in its Midwest and Gulf Coast market areas, two crude oil
terminals, an LPG terminal and crude oil pipeline interests. The following
table shows the rated crude oil throughput capacities of the Company's four
refineries in barrels per day as of December 31, 1998:
<TABLE>
<S> <C>
Port Arthur, Texas................................................... 232,000
Lima, Ohio........................................................... 170,000
Blue Island, Illinois................................................ 80,000
Hartford, Illinois................................................... 65,000
-------
Total.............................................................. 547,000
=======
</TABLE>
The Company's principal refined products are gasoline, on and off-road diesel
fuel, jet fuel, residual oil and petroleum coke. Gasoline, on-road (low sulfur)
diesel fuel and jet fuel are principally used for transportation purposes. Off-
road (high sulfur) diesel fuel is principally used as a fuel for agriculture
and trains. Residual oil (slurry oil and vacuum tower bottoms) is used mainly
for heavy industrial fuel (e.g., power generation) and in the manufacturing of
roofing flux or for asphalt used in highway paving. Petroleum coke is a by-
product of the coking process and is a coal-like substance that can be burned
for power generation. The Company also produces many unfinished petrochemical
products that are sold to neighboring chemical plants at the Port Arthur and
Lima refineries. Most of the Company's products are sold in the eastern half of
the U.S.
The Company currently sells gasoline and diesel fuel on an unbranded basis to
approximately 475 distributors and chain retailers through Company-owned
terminals and third-party facilities. The Company believes these sales offer
higher profitability than spot market alternatives. Wholesale sales are also
made to the transportation, agricultural and commercial sectors, including
airlines, railroads, barge lines and other industrial end-users. Fuel sales to
all channels of trade focus on maximizing netback realizations (revenue less
all distribution and working capital investment costs).
A-4
<PAGE>
Port Arthur Refinery
The Port Arthur refinery is located in Port Arthur, Texas, approximately 90
miles east of Houston, on a 4,000-acre site. The Port Arthur refinery was
acquired from Chevron U.S.A. Inc. in February 1995. The Port Arthur refinery
has the ability to process 100% sour crude oil, including up to 20% heavy crude
oil, and has coking capabilities. Heavy sour crude oil has historically been
available at substantially lower cost when compared to light sweet crude oil
such as West Texas Intermediate ("WTI"). The Port Arthur refinery's Texas Gulf
Coast location provides access to numerous cost-effective domestic and
international crude oil sources that can be accessed by waterborne delivery or
through the West Texas Gulf pipeline. The Port Arthur refinery can produce
conventional gasoline, up to 55% summer and 75% winter reformulated gasoline
("RFG"), 100% low-sulfur diesel fuel and jet fuel. The refinery's products can
be sold in the Mid-continent and Eastern U.S. as well as in export markets.
These markets can be accessed through the Explorer, Texas Eastern and Colonial
pipelines or by ship or barge.
The Company has agreements to sell to Chevron up to 27,000 bpd of gasoline
and up to 2,100 bpd of low-sulfur diesel at market prices from the Port Arthur
refinery through February 28, 2000. This contract is cancelable upon 90 days'
notice by either party. The Company also has an agreement to exchange certain
refined products and chemicals at market prices with Chevron Chemical Company,
which exchanged amounts averaged approximately 24,700 bpd during 1996, 1997 and
1998. This contract is cancelable upon 18 months notice by either party or by
mutual agreement.
Since acquiring the Port Arthur refinery, the Company increased crude oil
throughput capability from approximately 178,000 bpd to its current 232,000 bpd
and immediately lowered operating expenses by approximately 50c per barrel. The
Port Arthur refinery has generated annual average Operating Contribution (as
defined herein) of over $95 million in its three full years of the Company's
ownership.
A-5
<PAGE>
The average daily feedstocks and production of the Port Arthur refinery for
the years ended December 31, 1996, 1997 and 1998 were as follows:
Port Arthur Refinery Feedstocks and Production
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1996 1997(a) 1998
----------- ----------- -----------
Bpd % Bpd % Bpd %
----- ----- ----- ----- ----- -----
(barrels per day in thousands)
<S> <C> <C> <C> <C> <C> <C>
Feedstocks
Light Sweet Crude Oil.................. 30.1 14.5% 23.0 11.1% 14.8 6.6%
Light Sour Crude Oil................... 100.7 48.3 95.4 46.2 87.9 39.5
Heavy Sweet Crude Oil.................. 65.4 31.4 15.6 7.6 2.3 1.0
Heavy Sour Crude Oil................... 3.6 1.7 72.6 35.1 114.3 51.4
Unfinished & Blendstocks............... 8.5 4.1 -- -- 3.3 1.5
----- ----- ----- ----- ----- -----
Total.................................. 208.3 100.0% 206.6 100.0% 222.6 100.0%
===== ===== ===== ===== ===== =====
Production
Gasoline
Unleaded............................... 56.9 27.0 54.6 25.6 78.5 35.1
Premium Unleaded....................... 33.5 15.9 30.5 14.3 20.4 9.1
----- ----- ----- ----- ----- -----
90.4 42.9 85.1 39.9 98.9 44.2
Other Products
Low-Sulfur Diesel Fuel................. 47.7 22.6 59.6 27.9 58.3 26.0
Jet Fuel............................... 30.5 14.5 22.2 10.4 23.7 10.6
Petrochemical Products................. 18.4 8.7 26.0 12.2 24.1 10.8
Others................................. 23.8 11.3 20.6 9.6 18.9 8.4
----- ----- ----- ----- ----- -----
120.4 57.1 128.4 60.1 125.0 55.8
----- ----- ----- ----- ----- -----
Total................................ 210.8 100.0% 213.5 100.0% 223.9 100.0%
===== ===== ===== ===== ===== =====
</TABLE>
- --------
(a) Feedstocks and production in 1997 reflect maintenance turnaround downtime
of approximately one month on selected units.
Lima Refinery
The Lima refinery is located in Lima, Ohio, approximately halfway between
Toledo and Dayton, on a 650-acre site. The first refinery on the site was
constructed in 1886 to take advantage of what was to become the world's
greatest oil producing area until 1910. Most of the processing units in the
Lima refinery have been rebuilt since 1970, making the Lima refinery relatively
young among Midwest refineries.
In 1996, British Petroleum ("BP") unsuccessfully attempted to sell the Lima
refinery and announced they would close the refinery in two years. Despite such
announcement, BP continued to invest at near historical levels for maintenance
operating expenses and mandatory capital expenditures at the Lima refinery
during 1997. The Company acquired the Lima refinery, related terminal
facilities and non-hydrocarbon inventory from affiliates of BP in August 1998
for $175 million plus approximately $35 million for hydrocarbon inventory and
$7 million for assumed liabilities principally related to employee benefits
(the "Lima Acquisition").
The Lima refinery is highly automated and modern with a Nelson complexity
rating of 8.7 and an estimated replacement cost of $1.2 billion. The Lima
refinery is large enough to realize economies of scale and other efficiencies.
The Midwest location of the refinery has historically provided it with a
transportation cost advantage and less gross margin volatility than refineries
in other regions since demand for refined products has exceeded supply in the
region.
A-6
<PAGE>
The Lima refinery was designed to process light, sweet crude oil, but the
refinery does have coking capability allowing it to upgrade lower-valued
products. The Lima refinery obtains 100% of its crude oil supply by pipeline
from a variety of domestic and foreign sources. The Mid-Valley, Salem-Stoy-Lima
(SSL) and Marathon pipeline systems provide final delivery capability to the
refinery. These pipelines allow ultimate connection to the Capline, Louisiana
Offshore Oil Port, Mobil, Ozark, IPL, West Texas Gulf and other pipeline
systems. The Lima refinery can produce conventional gasoline, diesel fuel, jet
fuel and certain specialty chemical products. Products can be distributed
through the Buckeye and Inland Pipeline systems and by rail, truck or an
adjacent terminal. The Buckeye system allows access to markets in
Northern/Central Ohio, Indiana, Michigan and Western Pennsylvania. The Inland
Pipeline System is a private intra-state system jointly owned by BP, Shell,
Unocal and Sun and available solely for their use.
The average daily feedstocks and production of the Lima refinery from the
acquisition date of August 10, 1998 through December 31, 1998 were as follows:
Lima Refinery Feedstocks and Production
<TABLE>
<CAPTION>
Year Ended
December 31, 1998 (a)
---------------------
Bpd %
----------- ----------
(barrels per day in
thousands)
<S> <C> <C>
Feedstocks
Light Sweet Crude Oil.............................. 53.3 105.3%
Light Sour Crude Oil............................... -- --
Other.............................................. (2.7) (5.3)
---------- ----------
Total............................................ 50.6 100.0
========== ==========
Production
Gasoline
Unleaded........................................... 24.0 46.5
Premium Unleaded................................... 5.6 10.8
---------- ----------
29.6 57.3
Other Products
Diesel Fuel........................................ 10.7 20.7
Jet Fuel........................................... 5.3 10.2
Petrochemical Products............................. -- --
Others............................................. 6.1 11.8
---------- ----------
22.1 42.7
---------- ----------
Total............................................ 51.7 100.0%
========== ==========
</TABLE>
- --------
(a) Includes feedstocks and production since the acquisition date of August 10,
1998
Illinois Refineries
The Illinois refineries are connected by product pipelines, increasing their
flexibility relative to stand-alone operations. Both refineries are situated on
major water transportation routes that provide flexibility to receive crude oil
or intermediate feedstocks by barge when economical. The Company believes that
the Midwest location of these refineries has provided relatively high refining
margins with less volatility than comparable operations located in other
regions of the U.S., principally because demand for refined products has
exceeded production in the region. This excess demand has been satisfied by
imports from other regions, providing Midwest refineries with a transportation
advantage.
A-7
<PAGE>
Blue Island Refinery
The Blue Island refinery is located on the Cal-Sag canal in Blue Island,
Illinois, approximately 17 miles south of Chicago on a 170-acre site. The Blue
Island refinery was designed to process light, sweet crude oil, but can process
up to 25% light sour crude oil. The Blue Island refinery can receive Canadian
crude oil through the Lakehead pipeline from Canada, foreign and domestic crude
oil through the Capline pipeline system originating in the Louisiana Gulf Coast
region, and domestic crude oil originating in West Texas, Oklahoma and the
Rocky Mountains through the Arco pipeline system. The Blue Island refinery has
among the highest capabilities to produce gasoline relative to the other
refineries in its market area. During most of the year, gasoline is the most
profitable refinery product. The Blue Island refinery can produce conventional
gasoline, up to 60% RFG, high sulfur diesel fuel and residual fuel. It can also
produce 30% low-sulfur diesel fuel when market prices warrant and based on the
clean fuels attainment of the Company's total refining system. Products can be
distributed through the Wolverine, West Shore, Badger, Transmontaigne and
Marathon pipeline systems or by barge.
Since 1992, the Company has increased the crude oil throughput capability at
the Blue Island refinery by approximately 10,000 bpd, introduced light sour
crude oil as a lower-cost feedstock, improved the fluid catalytic cracking
("FCC") unit operation and introduced the capability to produce RFG.
The average daily feedstocks and production of the Blue Island refinery for
the years ended December 31, 1996, 1997 and 1998 were as follows:
Blue Island Refinery Feedstocks and Production
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1996 (a) 1997 1998 (a)
---------- ---------- ----------
Bpd % Bpd % Bpd %
---- ----- ---- ----- ---- -----
(barrels per day in thousands)
<S> <C> <C> <C> <C> <C> <C>
Feedstocks
Light Sweet Crude Oil..................... 57.9 84.2% 51.7 72.3% 48.5 74.9%
Light Sour Crude Oil...................... 10.5 15.3 18.1 25.4 14.8 22.8
Unfinished & Blendstocks.................. 0.4 0.5 1.7 2.3 1.5 2.3
---- ----- ---- ----- ---- -----
Total................................... 68.8 100.0% 71.5 100.0% 64.8 100.0%
==== ===== ==== ===== ==== =====
Production
Gasoline
Unleaded.................................. 34.1 50.9 37.7 52.5 36.7 56.9
Premium Unleaded.......................... 8.0 11.6 8.4 11.7 6.5 10.1
---- ----- ---- ----- ---- -----
42.1 62.5 46.1 64.2 43.2 67.0
Other Products
Diesel Fuel............................... 15.6 22.5 14.9 20.7 13.2 20.3
Others.................................... 10.3 15.0 10.8 15.1 8.2 12.7
---- ----- ---- ----- ---- -----
25.9 37.5 25.6 35.8 21.4 33.0
---- ----- ---- ----- ---- -----
Total................................... 68.0 100.0% 71.7 100.0% 64.6 100.0%
==== ===== ==== ===== ==== =====
</TABLE>
- --------
(a) Output during 1996 and 1998 was reduced by significant planned and
unplanned downtime.
Hartford Refinery
The Hartford refinery is located on the Mississippi River in Hartford,
Illinois, approximately 17 miles northeast of St. Louis, on a 400-acre site.
The Hartford refinery includes a coker unit and, consequently, has the ability
to process a variety of crude oil including lower cost, heavy sour crude oil
into higher-value products
A-8
<PAGE>
such as gasoline and diesel fuel. The Hartford refinery has the capability to
process approximately 60% heavy sour crude oil and 25% medium sour crude oil.
This upgrading capability allows the refinery to benefit from higher margins if
heavy sour crude oil is priced at a significant discount to light sweet crude
oil. The Hartford refinery has access to foreign and domestic crude oil
supplies through the Capline/Capwood pipeline systems and access to Canadian
crude oil through the Express pipeline and the Mobil/IPL pipeline system. The
Hartford refinery can produce conventional gasoline, high sulfur diesel fuel,
residual fuel and petroleum coke. Products can be distributed through the
Marathon/Wabash and Explorer pipeline systems or by barge.
Since 1992, the Company has increased the crude oil throughput capability at
the Hartford refinery by approximately 10,000 bpd, improved overall liquid
recovery by approximately 3%, improved FCC unit yields by approximately 3%,
increased higher-valued crude unit yields by approximately 2,000 bpd and
dramatically reduced combined "recordable" and "days away from work" rates from
27 in 1990 to an average of less than one during 1998.
The average daily feedstocks and production of the Hartford refinery for the
years ended December 31, 1996, 1997 and 1998 were as follows:
Hartford Refinery Feedstocks and Production
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1996 1997(a) 1998
---------- ---------- -----------
Bpd % Bpd % Bpd %
---- ----- ---- ----- ---- -----
(barrels per day in thousands)
<S> <C> <C> <C> <C> <C> <C>
Feedstocks
Light Sweet Crude Oil.................... 10.2 15.5% 7.1 10.9% 8.2 12.9%
Light Sour Crude Oil..................... 53.5 81.4 37.3 57.9 35.1 55.0
Heavy Sour Crude Oil..................... 0.5 0.7 14.2 22.1 21.7 34.0
Unfinished & Blendstocks................. 1.5 2.4 5.9 9.1 (1.2) (1.9)
---- ----- ---- ----- ---- -----
Total.................................. 65.7 100.0% 64.5 100.0% 63.8 100.0
==== ===== ==== ===== ==== =====
Production
Gasoline
Unleaded................................. 29.7 44.9 31.5 49.0 29.6 45.7
Premium Unleaded......................... 4.7 7.1 2.5 4.0 2.8 4.3
---- ----- ---- ----- ---- -----
34.4 52.0 34.0 53.0 32.4 50.0
Other Products
High-Sulfur Diesel Fuel.................. 24.4 36.9 19.6 30.5 20.9 32.3
Others................................... 7.4 11.1 10.5 16.5 11.5 17.7
31.8 48.0 30.1 47.0 32.4 50.0
---- ----- ---- ----- ---- -----
Total.................................. 66.2 100.0% 64.1 100.0% 64.8 100.0%
==== ===== ==== ===== ==== =====
</TABLE>
- --------
(a) The 1997 results reflect maintenance turnaround downtime of approximately
one month on selected units.
Terminals and Pipelines
The Company owns 15 refined product terminals with a combined capacity of
approximately 3.9 million barrels throughout its upper Midwest market area. The
Company owns a 1.1 million barrel crude oil terminal associated with the Lima
refinery and also owns a crude oil and refined product terminal, a refined
product terminal and an LPG terminal with a combined capacity of approximately
7.1 million barrels associated with the Port Arthur refinery in Texas. The
Company also enters into refined product exchange agreements with unaffiliated
companies to broaden its geographical distribution capabilities.
A-9
<PAGE>
The Company owns and operates a common carrier pipeline system that connects
its Port Arthur refinery with three Company-owned terminals. It also owns
proprietary refined products pipelines from the Blue Island refinery to its
terminal in Hammond, Indiana, and from the Port Arthur refinery to its LPG
terminal in Fannett, Texas.
In 1998, the Company sold minority interests in the Southcap and Chicap crude
oil pipelines, and the Wolverine and West Shore product pipelines, after
determining they were not strategic. The Company's shipping rights are assured
due to the pipelines' operation as common carrier pipelines and the Company's
historical throughput on these pipelines. In February 1999, the Company
announced it was soliciting offers for the sale of certain refined product
terminals. In June 1999, the Company entered into a letter of intent to sell
12 distribution terminals to Equilon.
Crude Oil Supply
The majority of the Company's crude oil supply requirements are acquired on
the spot market from unaffiliated foreign and domestic sources. In addition to
the contract with PMI related to the Port Arthur heavy sour crude oil upgrade
project, the Company has several crude oil supply contracts that total
approximately 176,800 bpd with several third-party suppliers, including PMI,
Bay Oil and Mobil Oil Corporation. These contracts are generally cancelable
upon one to three months' notice by either party, but are intended to remain in
place for the foreseeable future. The following table shows the Company's daily
average sources of crude oil in 1998:
Sources of Crude Oil Supply
<TABLE>
<CAPTION>
1998
-----------
Bpd %
----- -----
(in
thousands)
<S> <C> <C>
United States.................................................... 53.9 13.4%
Latin America.................................................... 163.9 40.9
Canada........................................................... 47.8 11.9
West Africa...................................................... 18.4 4.6
Middle East...................................................... 78.5 19.6
North Sea........................................................ 35.6 8.9
Other............................................................ 2.8 0.7
----- -----
Total 400.9 100.0%
===== =====
</TABLE>
Clean Air Act/Reformulated Fuels
Under the Clean Air Act, the EPA promulgated regulations mandating low-sulfur
diesel fuel for all on-road consumers, and RFG for ozone non-attainment areas,
including Chicago, Milwaukee and Houston in the Company's direct market area.
The Clean Air Act requires the EPA to review national ambient air quality
standards for certain pollutants every five years. In July 1997, after such a
review, the EPA adopted more stringent national standards for ground level
ozone (smog) and particulate matter (soot). These standards, when implemented,
are likely to increase significantly the number of non-attainment areas and
thus require additional pollution controls, more extensive use of RFG, and
possibly new diesel fuel standards. Efforts are being made to influence the
legislative branch to repeal the new standards under the Congressional Review
Act. A lawsuit filed by the U.S. Chamber of Commerce, the American Trucking
Association and the National Coalition of Petroleum Retailers is challenging
the implementation of these standards. As a result, it is too early to
determine what impact this rule could have on the Company.
The Company anticipates that the EPA will announce a Proposed Rule that will
establish national fuel standards for sulfur specifications in gasoline. The
Company believes that the EPA will recommend that sulfur
A-10
<PAGE>
levels in gasoline be reduced to coincide with the introduction of 2004 motor
vehicles. This proposal would likely require the Company to make some level of
capital investments at its refineries to reduce the sulfur levels in its
gasoline. Until the announcement and evaluation of the Proposed Rule, the
Company is unable to determine the specific impact of the proposal on the
Company.
Expenditures required to comply with existing reformulated fuels regulations
are primarily discretionary, subject to market conditions and economic
justification. The reformulated fuels programs impose restrictions on
properties of fuels to be refined and marketed, including those pertaining to
gasoline volatility, oxygenated content, detergent addition and sulfur content.
The regulations regarding these fuel properties vary in markets in which the
Company operates, based on attainment of air quality standards and the time of
the year. The Company's Port Arthur, Blue Island and Hartford refineries have
the capability to produce up to approximately 60%, 60% and 25% respectively, of
their gasoline production in RFG. Each refinery's maximum RFG production may be
limited based on the clean fuels attainment of the Company's total refining
system. The Port Arthur refinery has the capability to produce 100% low-sulfur
diesel fuel.
Market Environment
The Company's feedstocks and refined products are principally commodities
and, as such, are significantly affected by a variety of factors beyond its
control, including the supply of, and demand for, crude oil, gasoline and other
refined products which, in turn, depend on, among other factors, changes in
domestic and foreign economies, weather conditions, political affairs, crude
oil production levels, the rate of industry investments, the availability of
imports, the marketing of competitive fuels and the extent of government
regulations. The Company's results are also impacted by seasonal fluctuations
with generally stronger earnings recorded during the higher transportation-
demand periods of the spring and summer and weaker earnings recorded during the
fall and winter.
The Company believes that it is well positioned to benefit from potential
long-term improvements in refining industry profitability. The Company believes
refining industry improvement may result from (i) increased demand for gasoline
and distillate fuel, (ii) domestic refinery crude oil distillation utilization
rates nearing maximum sustainable rates, (iii) reduced growth in conversion
capacity, and (iv) increased availability of lower cost heavy sour crude oil.
Conversion refers to the ability to extract more higher valued products, such
as gasoline and distillate fuel, out of the same barrel of crude oil.
The Company believes industry improvement has occurred since 1995 and
particularly in 1997 as indicated by the Company's record 1997 Operating
Contribution and improvement in certain key industry market indicators.
According to the U.S. Department of Energy, Energy Information Administration
("EIA"), U.S. demand for gasoline and distillate fuel grew from 9.4 million bpd
in 1980 to 11.9 million bpd in 1998, averaging growth of 1.5% per year during
this period. The Company believes this growth in U.S. demand for gasoline and
distillate fuel is principally due to increased economic activity in the U.S.
This growth reflects the expansion of the U.S. vehicle fleet miles driven,
increased seat-miles flown on U.S. airlines and reduced improvement in vehicle
miles per gallon due to consumer preference for light trucks and sport-utility
vehicles as indicated by statistics from the U.S. Department of Transportation.
The Company believes U.S. gasoline and distillate fuel demand will continue to
track U.S. economic activity.
Since 1980, U.S. crude oil distillation capacity decreased from 18.1 million
bpd to 15.9 million bpd in 1998, according to the Oil & Gas Journal, as 137
refineries closed between 1980 and 1998. However, during this period,
conversion capacity increased to meet the growing demand for transportation
fuels. From the early 1990s until 1996, growth in conversion capacity exceeded
demand growth. According to the Oil and Gas Journal and the American Petroleum
Institute, since the early 1990s, industry capital spending, especially
non-environmental capital spending, much of which was for increased conversion
capacity, has decreased as indicated in the table below. The Company believes
this decrease is due to reduced industry profitability caused
A-11
<PAGE>
by overcapacity. The Company believes "excess" conversion capacity may have
reached equilibrium with demand in 1996.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
(in billions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total capital expenditures........ $4.4 $6.1 $6.1 $5.4 $5.1 $4.9 $3.9 $3.9 $3.9
Environmental capital
expenditures..................... 1.3 1.8 3.3 3.2 3.1 2.2 0.8 N/A N/A
</TABLE>
According to the EIA, U.S. crude oil distillation utilization rates have
steadily increased from approximately 75% in 1980 to approximately 95% in 1998.
The Company believes U.S. crude oil distillation utilization rates may be
approaching long-term sustainable maximums due to the requirement for routine
maintenance and the likelihood of unplanned downtime.
The Company believes that, due to the crude oil processing capabilities of
its refineries, it may benefit from increased availability of heavy sour crude
oil. Crude oil pipeline expansions into the U.S. Midwest in 1996 and 1997
increased the availability of Canadian heavy sour crude oil and thereby
improved competition for crude oil sales to Midwest refiners. Additionally,
industry studies indicate improved availability of heavy and light sour crude
oil over the next several years due to increased crude oil supply from several
Western Hemisphere sources, primarily Canada and Latin America. The
availability and associated discounts for heavy sour crude oil were reduced in
1998 due to low absolute crude oil prices.
Retail Division
The Clark brand began during the 1930s with the opening of a store in
Milwaukee, Wisconsin. The brand then expanded throughout the Midwest. By the
early 1970s, there were more than 1,800 Clark retail stores with a strong
market reputation for the sale of high-octane gasoline at discount prices. In
line with the general industry trends, stores were rationalized during the
1970s and 1980s. The Company acquired the Clark brand and retail assets in
1988.
In February 1999, the Company announced that it would solicit buyers for its
marketing operation. The assets offered include all company-operated retail
stores, the Clark trade name, certain wholesale sales activities and several
distribution terminals. This action was taken to allow the Company to focus its
financial resources and management attention on the continued improvement and
expansion of its refining business, which it believes will generate higher
future returns.
On July 8, 1999, the Company completed the sale of its retail marketing
operations in a recapitalization transaction to a company controlled by Apollo
for cash proceeds of $230 million. Apollo assumed all unknown and future
environmental responsibility while the Company will retain all known
contamination. Clark Holdings will hold a six percent equity interest in the
retail marketing operation. As part of the sale agreement, the Company also
entered into a two-year, market-based supply agreement for refined products
that is based on market pricing and payment terms. The supply agreement may be
canceled with 90 days notice by the buyer.
The Company expects to recognize a gain on sale in the quarter ended
September 30, 1999. The retail marketing operation sold included all Company-
operated retail stores, approximately 200 independently-operated, Clark-branded
stores and the Clark trade name. Accordingly, the retail marketing operation's
net assets (liabilities) have been segregated from the Company's continuing
operations in the consolidated balance sheets, and its operating results were
segregated and reported as discontinued operations in the accompanying
consolidated statements of operations and cash flows.
The Company's retail presence was focused in the Great Lakes region of the
U.S. where Company-operated stores market value-oriented gasoline and
convenience products. As of December 31, 1998, the Company had 672 Company-
operated retail locations, nearly all of which operated under the Clark brand
name. The Company operates a high proportion of its locations and believes this
enables it to respond more quickly and uniformly to changing market conditions
than many of its competitors, including major oil companies
A-12
<PAGE>
whose focus has generally been operating their stores through dealer or jobber
networks. As of December 31, 1998, an additional 191 Clark-branded retail
stores were owned and operated by independent jobbers.
Over the past several years, the Company has focused on building core markets
where it believes it can maintain or develop market share of 7.5% to 15% in
order to leverage brand recognition, promotions and other marketing and
operating activities. The Company has acquired 130 stores since 1994.
Simultaneously with growing the Company's market share in core markets through
acquisitions, the Company has divested 305 stores in non-core markets.
In 1998, the Company's core market monthly gasoline sales per store averaged
113,500 gallons, which exceeded the 1997 national industry average of 86,400
gallons, while monthly sales per square foot averaged approximately $53 for
convenience products versus the industry average of approximately $26. The
Company believes that it is in the first quartile in terms of operating costs
in its regions, which provides it with an important competitive advantage.
Chicago, Central Illinois, Southern Michigan, Cleveland, Milwaukee and Toledo
are currently the Company's six highest volume core metropolitan markets, with
market shares of 4% to 12%.
The geographic distribution of Company-operated retail stores by state as of
December 31, 1998, was as follows:
Geographical Distribution of Retail Stores
<TABLE>
<CAPTION>
Company- Independently-
Operated Operated Total
-------- -------------- -----
<S> <C> <C> <C>
Illinois....................................... 229 42 271
Michigan....................................... 202 26 228
Ohio........................................... 109 51 160
Indiana........................................ 78 11 89
Wisconsin...................................... 53 15 68
Missouri....................................... 1 46 47
--- --- ---
Total........................................ 672 191 863
=== === ===
</TABLE>
The Company has continued to optimize its retail stores through productivity
achieved from improved operations, profit-enhancing capital expenditures and
the addition of incremental new concept and other income initiatives. The
following table shows a profile of Company-operated stores as of December 31,
1998:
Profile of Company-Operated Retail Stores
(Percent of total company-operated stores)
<TABLE>
<S> <C>
Owned.................................................................. 73.4%
Canopy................................................................. 95.4
Full Convenience Store (1200+ square feet)............................. 26.3
Mini-mart (400-1199 square feet)....................................... 58.0
Multi-Product Dispenser................................................ 74.6
Pay-at-the-Pump........................................................ 13.1
Automated Teller Machine............................................... 79.2
Car Wash............................................................... 1.2
Branded Fast Food...................................................... 1.5
</TABLE>
As a result of productivity initiatives and recent acquisitions, the Company
has increased core market monthly convenience product sales per store by over
60% to $34,100, increased the mix of higher margin non-cigarette convenience
products from 32% to 42% of total convenience product sales, and improved
monthly convenience product gross margin per store by 80% to $9,000 since 1992.
A-13
<PAGE>
The Company implemented a number of environmental projects at its retail
stores. These projects included the response to the September 1988 regulations
related to the design, construction, installation, repair and testing of
underground storage tanks ("UST"). These regulations provided for a ten-year
transition period through 1998. As of December 31, 1998, all current locations
met the December 1998 federal UST compliance standards.
Competition
The refining segment of the oil industry is highly competitive. Many of the
Company's principal competitors are integrated multinational oil companies that
are substantially larger and better known than the Company. Because of their
diversity, integration of operations, larger capitalization and greater
resources, these major oil companies may be better able to withstand volatile
market conditions, more effectively compete on the basis of price and more
readily obtain crude oil in times of shortages.
The principal competitive factors affecting the Company's refining operations
are crude oil and other feedstock costs, refinery efficiency, refinery product
mix and product distribution and transportation costs. Certain of the Company's
larger competitors have refineries which are larger and, as a result, could
have lower per-barrel costs or higher margins per barrel of throughput. The
Company has no crude oil reserves and is not engaged in exploration and
production activities. The Company obtains nearly all of its crude oil
requirements on the spot market from unaffiliated sources. The Company believes
that it will be able to obtain adequate crude oil and other feedstocks at
generally competitive prices for the foreseeable future. The principal
competitive factors affecting the Company's wholesale distribution system are
product price and quality, reliability and availability of supply and location
of distribution points.
Environmental Matters
Compliance Matters
Operators of refineries and gasoline stores are subject to comprehensive and
frequently changing federal, state and local environmental laws and
regulations, including those governing emissions of air pollutants, discharges
of wastewater and stormwater, and the handling and disposal of non-hazardous
and hazardous waste. Federal, state and local laws and regulations establishing
numerous requirements and providing penalties for violations thereof affect
nearly all of the operations of the Company. Included among such laws and
regulations are the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act and the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"). Also
significantly affecting the Company are the rules and regulations of the
Occupational Safety and Health Administration. Many of these laws authorize the
imposition of civil and criminal sanctions upon companies that fail to comply
with applicable statutory or regulatory requirements. As discussed below,
federal and state agencies have filed various enforcement actions alleging that
the Company has violated a number of environmental laws and regulations. The
Company nevertheless believes that, in all material respects, its existing
operations are in compliance with such laws and regulations.
The Company's operations are large and complex. The numerous environmental
regulations to which the Company is subject are complicated, sometimes
ambiguous, and often changing. In addition, the Company may not have detected
certain violations of environmental laws and regulations because the conditions
that constitute such violations may not be apparent. It is therefore possible
that certain of the Company's operations are not currently in compliance with
state or federal environmental laws and regulations. Accordingly, the Company
may be required to make additional expenditures to comply with existing
environmental requirements. Such expenditures, along with compliance with
environmental requirements, could have a material adverse effect on the
Company's financial condition, results of operations, cash flow or liquidity.
Regulations issued by the EPA in 1988 with respect to USTs required the
Company, over a period of up to ten years, to install, where not already in
place, detection devices and corrosion protection on all USTs and
A-14
<PAGE>
piping at its retail gasoline outlets. The Company completed this work on
schedule and implemented a program to continue to remediate soil and
groundwater in accordance with appropriate standards. The Company also
implemented measures, including tightness testing and monitoring, to prevent
the release of petroleum to soil or groundwater.
The Company anticipates that, in addition to expenditures necessary to comply
with existing environmental requirements, it will incur costs in the future to
comply with new requirements. The Company cannot predict what environmental
legislation or regulations will be enacted in the future or how existing or
future laws or regulations will be administered or interpreted with respect to
products or activities to which they have not previously been applied.
Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter interpretation of
existing laws which may develop in the future, could have an adverse effect on
the financial position or operations of the Company and could require
substantial additional expenditures by the Company for the installation and
operation of pollution control systems and equipment. See "--Legal
Proceedings."
Remediation Matters
In addition to environmental laws that regulate the Company's ongoing
operations, the Company's various operations also are subject to liability for
the remediation of contaminated soil and groundwater. Under CERCLA and
analogous state laws, certain persons may be liable as a result of the release
or threatened release of hazardous substances (including petroleum) into the
environment. Such persons include the current owner or operator of property
where such releases or threatened releases have occurred, any persons who owned
or operated such property during the time that hazardous substances were
released at such property, and persons who arranged for the disposal of
hazardous substances at such property. Liability under CERCLA is strict. Courts
have also determined that liability under CERCLA is, in most cases where the
government is the plaintiff, joint and several, meaning that any responsible
party could be held liable for all costs necessary for investigating and
remediating a release or threatened release of hazardous substances. As a
practical matter, liability at most CERCLA (and similar) sites is shared among
all the solvent "potentially responsible parties" ("PRPs"). The most relevant
factors in determining the probable liability of a party at a CERCLA site
usually are the cost of investigation and remediation, the relative amount of
hazardous substances contributed by the party to the site and the number of
solvent PRPs. While the Company maintains property and casualty insurance in
the normal course of its business, such insurance does not typically cover
remediation and certain other environmental expenses.
The release or discharge of petroleum and other hazardous materials can occur
at refineries, terminals and retail stores. The Company has identified a
variety of potential environmental issues at its refineries, terminals and
retail stores. In addition, each refinery has areas on-site that may contain
hazardous waste or hazardous substance contamination and which may have to be
addressed in the future at substantial cost. Many of the terminals may also
require remediation due to the age of tanks and facilities and as a result of
current or past activities at the terminal properties including several
significant spills and past on-site waste disposal practices.
Legal And Governmental Proceedings
The Company is also the subject of various environmental-related legal
proceedings. See "--Legal Proceedings."
Employees
Currently the Company employs approximately 6,700 people, approximately 18%
of who were covered by collective bargaining agreements at the Blue Island,
Hartford, Lima and Port Arthur refineries. The Port Arthur refinery contract
expires in January 2002, the Hartford refinery contract expires in February
2002 and the Blue Island and Lima refinery contracts expire in August 2002. In
addition, the Company has union contracts for certain employees at its Hammond,
Indiana, and St. Louis, Missouri, terminals. Relationships with the unions have
been good and the Company has never experienced a work stoppage as a result of
labor disagreements.
A-15
<PAGE>
ITEM 3. Legal Proceedings
As a result of its activities, the Company is the subject of a number of
legal and administrative proceedings relating to environmental matters. The
Company is required by the Commission to disclose all matters that could be
material or that involve a governmental authority and could reasonably involve
monetary sanctions of $100,000 or greater.
Hartford Federal Enforcement. In February 1999, the Company was served with a
complaint in the matter, United States v. Clark Refining & Marketing, Inc.,
alleging violations of the Clean Air Act, and regulations promulgated
thereunder, in the operation and permitting of the Hartford refinery fluid
catalytic cracking unit. No estimate can be made at this time of the Company's
potential liability, if any, as a result of this matter.
Hartford State Enforcement. In 1996, the matter People of the State of
Illinois v. Clark Refining & Marketing, Inc. PCB No. 95-163 was substantially
settled by the parties. Remaining issues are being discussed and resolution is
anticipated. No estimate of any liability with respect to this remaining
element of the complaint can be made at this time.
Blue Island Federal Enforcement. The Blue Island refinery is the subject of
federal investigations concerning potential violations of certain environmental
laws and regulations. In March 1997, the EPA initiated a multimedia
investigation at the Blue Island refinery. The investigation included an on-
site visit, requests for information and meetings. In March 1997, the Company
received a Grand Jury subpoena requesting certain documents relating to
wastewater discharges. In September 1998, the Company was served with a
complaint in the matter, United States v. Clark Refining & Marketing, Inc.,
alleging that the Company has operated the refinery in violation of certain
federal laws relating to air pollution, water pollution and solid waste
management. The Company filed an answer denying the material allegations of the
lawsuit. No estimate can be made of the Company's potential liability, if any,
as a result of these matters.
Blue Island State Enforcement. People ex rel. Ryan v. Clark Refining &
Marketing, Inc., is currently pending in the Circuit Court of Cook County,
Illinois alleging operation of the Blue Island refinery in violation of
environmental laws. The allegations originate from a fire that occurred in the
Isomax unit in March 1995, a release of hydrogen fluoride in May 1995 from a
processing unit, other releases into the air that occurred in the past three
years, and releases of wastewater and stormwater to the Cal Sag Channel. The
Company has filed an answer denying the material allegations in the lawsuit. No
estimate of any liability with respect to this matter can be made at this time.
St. Louis Terminal. In January 1994, a gasoline spill occurred at the
Company's St. Louis terminal. In May 1997, the Company received correspondence
from the State of Missouri seeking the payment of a penalty of less than
$200,000 related to this matter.
Sashabaw Road. In May 1993, the Company received correspondence from the
Michigan Department of Natural Resources ("MDNR") indicating that the MDNR
believes that the Company may be a potentially responsible party in connection
with groundwater contamination in the vicinity of one of its retail stores on
Sashabaw Road in Oakland County, Michigan. In July 1994, MDNR commenced suit
against the Company and is currently seeking $300,000 to resolve the matter.
Port Arthur and Lima Refineries. The original refineries on the sites of the
Port Arthur and Lima refineries began operating in the late 1800s and early
1900s prior to modern environmental laws and methods of operation. While the
Company believes as a result there is extensive contamination at these sites,
the Company is unable to estimate the cost of remediating such contamination.
Under the purchase agreement between the Company and Chevron related to the
Port Arthur refinery, Chevron will be obligated to perform the required
remediation of more than 97% of pre-closing contamination. The Company
estimates its obligation at approximately $8 million. Under the purchase
agreement between the Company and BP, BP indemnified the Company for all
environmental and other liabilities and obligations arising from the ownership
and operation of
A-16
<PAGE>
the Lima refinery prior to closing, subject to the terms and limitations in the
purchase agreement. As a result of these acquisitions, the Company may become
jointly and severally liable under CERCLA for the costs of investigation and
remediation at these sites. In the event that Chevron or BP is unable (as a
result of bankruptcy or otherwise) or unwilling to perform the required
remediation at these sites, the Company may be required to do so. The cost of
any such remediation could be substantial and could be beyond the Company's
financial ability. In June 1997, the Company, Chevron and the State of Texas
entered into an Agreed Order that substantially confirmed the relative
obligations of the Company and Chevron.
As of December 31, 1998, the Company had accrued a total of $28.8 million for
legal and environmental-related obligations that may result from the matters
noted above, other legal and environmental matters and obligations associated
with certain retail sites. While it is not possible at this time to estimate
the ultimate amount of liability with respect to the legal proceedings
described above, the Company is of the opinion that the aggregate amount of any
such liability will not have a material adverse effect on its financial
position. However, an adverse outcome of any one or more of these matters could
have a material effect on quarterly or annual operating results or cash flows
when resolved in a future period.
In addition to the specific matters discussed above, the Company has also
been named in various other suits and claims. While it is not possible to
estimate with certainty the ultimate legal and financial liability with respect
to these other legal proceedings, the Company believes the outcome of these
other suits and claims will not have a material adverse effect on the Company's
financial position, operating results or cash flow.
A-17
<PAGE>
ITEM 6. Selected Financial Data
The selected consolidated financial data set forth below for the Company as
of December 31, 1997 and 1998 and for each of the three years in the period
ended December 31, 1998 are derived from the audited financial statements
included elsewhere herein, which have been restated to report the Company's
retail marketing operations as discontinued operations. The selected financial
data set forth below as of December 31, 1994, 1995 and 1996 and for each of the
two years in the period ended December 31, 1995 are derived from audited
financial statements not included herein, which have been restated to report
the Company's retail marketing operations as discontinued operations. This
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and related notes included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
($ in millions)
<S> <C> <C> <C> <C> <C>
Income statement data:
Net sales and operating
revenue................ $ 2,061.8 $ 4,070.5 $ 4,656.9 $ 3,880.0 $ 3,580.5
Cost of sales........... (1,883.8) (3,787.3) (4,318.1) (3,434.6) (3,115.1)
Operating expenses...... (115.1) (251.8) (291.3) (293.9) (341.6)
General and
administrative
expenses............... (31.1) (34.4) (37.8) (43.0) (50.0)
Depreciation and
amortization(b)........ (27.3) (32.4) (35.7) (46.7) (54.4)
Inventory recovery of
(write-down) to market
value.................. 26.5 -- -- (19.2) (86.6)
Recapitalization, asset
write-offs and other
charges................ -- -- -- (40.0) --
Gain on sale of pipeline
interests.............. -- -- -- -- 69.3
--------- --------- --------- --------- ---------
Operating income (loss). $ 31.0 $ (35.4) $ (26.0) $ 2.6 $ 2.1
Interest and financing
costs, net(c).......... (37.6) (39.9) (38.7) (39.8) (51.0)
--------- --------- --------- --------- ---------
Loss from continuing
operations before taxes
and extraordinary
items.................. $ (6.6) $ (75.3) $ (64.7) $ (37.2) $ (48.9)
Income tax (provision)
benefit................ 3.4 28.6 18.6 (10.4) 12.9
--------- --------- --------- --------- ---------
Loss from continuing
operations before
extraordinary items.... $ (3.2) $ (46.7) $ (46.1) $ (47.6) $ (36.0)
Discontinued operations,
net of income taxes of
$9.2 (1997--$0.1,
1996--$4.7, 1995--
$12.9, 1994--$13.1).... $ 21.3 $ 21.2 $ 7.6 $ 0.1 $ 15.1
Extraordinary items..... -- -- -- (10.7) --
--------- --------- --------- --------- ---------
Net earnings (loss)..... $ 18.1 $ (25.5) $ (38.5) $ (58.2) $ (20.9)
========= ========= ========= ========= =========
Balance sheet data:
Cash, cash equivalents
and short-term
investments............ $ 132.5 $ 105.0 $ 332.7 $ 243.0 $ 152.0
Total assets............ 768.9 1,097.6 1,339.0 1,180.4 1,447.0
Long-term debt.......... 400.1 419.8 417.0 586.8 805.2
Stockholder's equity.... 162.9 304.1 534.9 260.9 225.0
Selected financial data:
Cash flows from
operating activities... 53.7 (85.6) 16.9 94.9 (44.7)
Cash flows from
investing activities... (21.2) (134.1) 212.0 (123.6) (229.9)
Cash flows from
financing activities... (5.4) 174.7 30.0 (61.0) 194.0
Expenditures for
turnaround............. 11.2 6.5 13.9 47.4 28.3
Expenditures for
property, plant and
equipment.............. 68.0 15.7 20.1 26.4 101.3
Refinery acquisition
expenditures........... 13.5 71.8 -- -- 175.0
Operating statistics:
Port Arthur refinery
(acquired February 27,
1995)
Production (m
bbls/day).............. -- 207.7 210.8 213.5 223.9
Gross margin (per barrel
of production)(a)...... $ -- $ 2.28 $ 2.78 $ 3.84 $ 3.48
Operating
expenses(mm)(a)........ -- 121.6 164.7 170.7 172.7
Blue Island, Hartford,
Lime and other refining
Production (m
bbls/day).............. 140.3 136.5 134.2 135.8 181.1
Gross margin (per barrel
of production)(a)...... $ 3.35 $ 2.51 $ 2.56 $ 3.79 $ 2.95
Operating
expenses(mm)(a)........ 115.1 130.2 126.6 123.2 168.9
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
(b) Amortization includes amortization of turnaround and organizational costs.
(c) Interest and financing costs, net, includes amortization of debt issuances
cost of $1.2 million, $5.2 million, $6.5 million, $7.0 million, $2.2 for
the years ended December 31, 1994, 1995, 1996, 1997 and 1998 respectively.
Interest and financial costs, net also includes interest on all
indebtedness net of capitalized interest and interest income.
A-18
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Results of Operations
The following table provides supplementary data for the Company's continuing
operations in a format that is not intended to represent an income statement
presented in accordance with generally accepted accounting principles. The
operating results of the retail marketing operations have been segregated from
the Company's continuing operations and as a result have been excluded from the
following table. In addition, certain reclassifications have been made to prior
periods to conform to current period presentation. The Company considers
certain items in each of the periods discussed to be special items. These items
are discussed separately.
1998 compared with 1997 and 1996:
Financial Results:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1996 1997 1998
------- ------- -------
(in millions)
<S> <C> <C> <C>
Operating Income:
Port Arthur refinery Crude oil throughput (m
bbls/day).......................................... 199.8 206.6 219.3
Production (m bbls/day)............................. 210.8 213.5 223.9
Gross margin (per barrel of production)............. $ 2.78 $ 3.84 $ 3.48
Golf coast 3/2/1 crack spread ($/barrel)............ 2.65 3.24 2.39
Operating expenses.................................. (164.7) (170.7) (172.7)
Net margin.......................................... 49.7 128.6 112.1
Midwest refineries and other Crude oil throughout (m
bbls/day).......................................... 132.7 128.5 181.6
Production (m bbls/day)............................. 134.2 135.8 181.1
Gross margin (per barrel of production)............. $ 2.56 $ 3.79 $ 2.95
Chicago 3/2/1 crack spread ($/barrel)............... 4.02 4.04 3.33
Operating expenses.................................. (126.6) (123.2) (168.9)
Net margin.......................................... $ (0.9) $ 64.9 $ 26.3
General and administrative expenses................. (37.8) (43.0) (50.0)
------- ------- -------
Operating Contribution.............................. $ 11.0 $ 150.5 $ 88.4
Inventory timing adjustments gain (loss)............ (1.3) (42.0) (14.6)
Inventory write-down to market...................... -- (19.2) (86.6)
Recapitalization, asset write-offs and other costs.. -- (40.0) --
Gain on sale of minority pipeline interests......... -- -- 69.3
Depreciation and amortization....................... (35.7) (46.7) (54.4)
------- ------- -------
Operating income (loss)............................. $ (26.0) $ 2.6 $ 2.1
======= ======= =======
</TABLE>
- --------
(a) Includes adjustments to inventory costs caused by timing differences
between when crude oil is actually purchased and refined products are
actually sold, and a daily "market in, market out" operations measurement
methodology for the refining division.
The Company recorded an Operating Contribution (earnings before interest,
taxes, depreciation, amortization, inventory-related items, the gain on the
sale of minority pipeline interests and recapitalization, asset write-offs and
other costs) of $88.4 million in 1998, which was less than the $150.5 million
Operating Contribution achieved in 1997, but improved over $11.0 million in
1996. Operating Contribution was reduced principally due to lower margins for
refined products in 1998 than 1997 or 1996 due to excess industry inventories.
Inventories increased as a result of a warmer than normal 1997-1998 winter
heating oil season, high refinery utilization rates and the impact on world
demand from the Asian economic slowdown. In 1997,
A-19
<PAGE>
Operating Contribution improved over 1996 due to improved refining industry
conditions and strong operations. Net income in 1997 and 1998 was materially
reduced by several significant items the Company considers special. As a
result, the Company reported net losses of $20.9 million in 1998, $58.2 million
in 1997 and $38.5 million in 1996. Net sales and operating revenues and cost of
goods sold were higher in 1996 than 1997 or 1998 principally because of higher
hydrocarbon prices in that period.
Special items totaled $31.9 million in 1998 and $111.9 million in 1997, of
which $101.2 million reduced operating income and $10.7 million was recorded as
an extraordinary item for early retirement of debt. See Note 9 "Long Term Debt"
and Note 14 "Equity Recapitalization and Change in Control" to the Consolidated
Financial Statements. These special items consisted of the following:
Inventory timing adjustments. Inventory timing adjustment losses of $14.6
million in 1998 and $42.0 million in 1997 were principally due to the
timing impact on crude oil purchases, and refined product sale commitments
of an over $5 per barrel decrease in crude oil prices in 1998 and $8 per
barrel decrease in 1997. Petroleum prices fell over the past two years as
world energy markets became oversupplied principally as a result of an
increase in OPEC production and reduced demand resulting from the Asian
economic slowdown and the warm 1997-1998 winter. Gains in 1996 resulting
from rising crude oil prices were offset by the volatility of the crude oil
market principally related to the uncertainty associated with Iraq's
pending reentry into the world markets. These gains and losses resulted
from the fact that feedstock acquisition costs are fixed on average two to
three weeks prior to the manufacture and sale of the finished products. The
Company does not currently hedge this price risk because of the cost of
entering into appropriate hedge-related derivatives and the long-term
nature of such risk.
Inventory write-downs to market. Also as a result of decreasing petroleum
prices, the Company was required to record non-cash accounting charges of
$86.6 million in 1998 and $19.2 million in 1997 to reflect the decline in
the value of petroleum inventories below carrying value.
Recapitalization, asset write-offs and other costs. Recapitalization, asset
write-offs and other costs totaled a charge of $40.0 million in 1997. In
1997 this item included a non-cash charge of $20.3 million principally to
write down the value of an idled refining capital project that was being
dismantled for more productive use. A non-cash charge of $9.0 million was
also recorded in 1997 due to a change in strategic direction principally
for certain legal, environmental and other accruals related to existing
actions. In addition, the Company incurred costs of $10.7 million in
connection with affiliates of Blackstone acquiring an indirect controlling
interest in the Company.
Gain on sale of minority pipeline interests. In 1997, the Company
determined that its minority interests in the Southcap and Chicap crude oil
pipelines, and the Wolverine and West Shore product pipelines, were not
strategic since the Company's shipping rights are assured due to the
pipelines' operation as common carrier pipelines and the Company's
historical throughput on these pipelines. In 1998, the Company sold its
interests in these pipelines for net proceeds of $76.4 million which
resulted in a before and after-tax book gain of approximately $69.3
million. These pipelines contributed earnings of approximately $5.3 million
in 1998, $8.2 million in 1997 and $9.0 million in 1996 and were recorded as
a component of refinery gross margin for the Midwest refineries.
The principal reason for the decrease in Operating Contribution in 1998 was
reduced margins on refined products as indicated by a 26% decrease in the Gulf
Coast refining margin indicator (3/2/1 crack spread) and an 18% decrease in the
Chicago refining margin indicator. Refining margins for the Hartford refinery
were further reduced by a decrease in discounts for heavy sour Canadian crude
oil as a result of low absolute crude oil prices which caused the lower-valued
oil to be unavailable.
Operating Contribution increased in 1997 due to improved yields and
throughput and wider crude oil quality differentials. Crude oil quality
differential market indicators for light sour crude oil improved from $1.24 per
barrel in 1996 to $1.71 per barrel in 1997 and $1.56 per barrel in 1998. Market
indicators for
A-20
<PAGE>
benchmark heavy sour crude oil discounts improved from $4.78 per barrel in 1996
to $5.63 per barrel in 1997 and $5.68 in 1998. The Company believes crude oil
quality differential indicators improved primarily due to increased production
of heavy and sour crude oil, increased availability of Canadian light and heavy
sour crude oil from the Express and Interprovincial pipelines, higher levels of
industry refinery maintenance turnarounds and milder winter weather in the
first quarter of 1997 and 1998. Hartford refinery results in 1997 particularly
benefited from improved access to lower-cost Canadian heavy crude oil.
Discounts for heavy sour crude oil narrowed throughout 1998 and averaged $4.90
per barrel in the fourth quarter.
Major scheduled maintenance turnarounds at the Blue Island refinery (1998),
the Port Arthur refinery (1997), and the Hartford refinery (1997 and 1996)
resulted in an opportunity cost from lost production of $17.1 million in 1998,
$19.3 million in 1997 and $7.2 million in 1996. Unscheduled downtime at the
Blue Island refinery in 1996 reduced gross margins by an estimated $3.1
million.
Port Arthur refinery throughput rates increased in both 1997 and 1998 over
the previous year. Results in 1997 were buoyed by the operational benefits
realized from a first quarter maintenance turnaround and in 1998 due to less
scheduled downtime. The Port Arthur refinery achieved record annual throughput
rates on all major units, including the crude, FCC and coker units in 1998.
Production increased in the Midwest refineries due to the acquisition in August
1998 of the Lima refinery which averaged 131,800 bpd during the nearly five
months it was owned by the Company. Record rates were achieved in 1998 at the
Hartford refinery on most major units, including the crude, FCC and coker
units.
Operating expenses increased from 1996 through 1998 at the Port Arthur
refinery principally due to higher throughput rates and incentive compensation.
Operating expenses for the Midwest refineries continued to benefit from cost
containment programs with the increase in 1998 primarily attributable to the
acquisition of the Lima refinery. General and administrative expenses increased
in 1997 principally because of higher incentive pay in 1997 due to a stronger
Operating Contribution, and in 1998 due to the addition of the Lima refinery,
increased employee placement costs and an increase in information services
costs related to year 2000 remediation and upgrades and increased consulting
services.
Other Financial Matters
Depreciation and amortization expenses increased in each of the past three
years principally because of amortization of the Port Arthur refinery
maintenance turnaround performed in the first quarter of 1997, the acquisition
of the Lima refinery in 1998 and higher capital expenditures.
Interest and finance costs, net increased in 1997 and 1998 over 1996
principally because of incremental debt added by the Company associated with
the acquisition of the Lima refinery in August 1998 and as part of the
financial restructuring of the Company and Clark USA in late 1997. This
additional debt more than offset the benefit of reduced borrowing rates and
reduced financing cost amortization resulting from the Company's and Clark
USA's financing activities in late 1997. The Company issued $110 million of 8
5/8% Senior Notes, due 2008 and expanded a $115 million floating rate term loan
to finance the Lima refinery acquisition. In late 1997, the Company redeemed
its 10 1/2% Senior Notes, due 2001 ("10 1/2% Senior Notes") and returned
capital of $215 million to Clark USA so that Clark USA could repurchase
substantially all of its Senior Secured Zero Coupon Notes, due 2000 ("Zero
Coupon Notes"). The Company issued $100 million 8 3/8% Senior Notes due 2007
("8 3/8% Senior Notes") and $175 million 8 7/8% Senior Subordinated Notes due
2007 ("8 7/8% Senior Subordinated Notes") and entered into a $125 million
floating rate term loan due 2004 ("Floating Rate Loan"). The Company also
entered into an amended and restated working capital facility. See Note 8
"Working Capital Facility" and Note 14 "Equity Recapitalization and Change in
Control" to the Consolidated Financial Statements.
A-21
<PAGE>
Sale of Retail Division
On July 8, 1999, the Company completed the sale of its retail marketing
operations in a recapitalization transaction to a company controlled by Apollo
for cash proceeds of $230 million. Apollo assumed all unknown and future
environmental responsibility while the Company will retain all known
contamination. Clark Holdings will hold a six percent equity interest in the
retail marketing operation. As part of the sale agreement, the Company also
entered into a two-year, market-based supply agreement for refined products
that is based on market pricing and payment terms. The supply agreement may be
canceled with 90 days notice by the buyer. The retail marketing operation was
sold in order to allow the Company to focus its human and financial resources
on the continued improvement and expansion of its refining business, which it
believes will generate higher future returns.
The Company expects to recognize a gain on sale in the quarter ended
September 30, 1999. The retail marketing operation sold included all Company-
operated retail stores, approximately 200 independently-operated, Clark-branded
stores and the Clark trade name. Accordingly, the retail marketing operation's
net assets (liabilities) have been segregated from the Company's continuing
operations in the consolidated balance sheets, and its operating results were
segregated and reported as discontinued operations in the accompanying
consolidated statements of operations and cash flows.
Year 2000 Readiness Disclosure
The Company is faced with the year 2000 issue as a result of its use of
computer systems that were programmed to identify calendar dates with only the
last two digits of the year. As a result, such programs are unable to
distinguish between the year 1900 and 2000, potentially resulting in
malfunctions, miscalculations or failures of such programs. In addition to its
potential effect on computer systems, the century date change may also result
in malfunctions or failures of non-IT equipment which contain embedded systems
with date sensitive functions.
The Company began significant efforts to address its exposures related to the
year 2000 issue in 1997. A project team was put in place to assess, remediate
or replace, test and implement computer systems and applications so that such
systems and related processes will continue to operate and properly process
information after December 31, 1999.
Many applications and embedded systems have already been replaced or
modified. The Company has committed the financial and human resources expected
to be required to replace or modify the remaining applications and embedded
systems. The Company has expended $2.3 million through December 31, 1998 and
estimates the total cost of program conversions or replacements to be
approximately $5 million to $8 million, and estimates substantial completion by
June 30, 1999. Such costs will be expensed as incurred and funded from
operations. The Company will also develop contingency plans for these systems
as well as the business processes and operations that they support. Such plans
will be drafted during second quarter 1999 and are expected to be completed by
June 30, 1999. The Company reviews the progress of its year 2000 program weekly
and if it is determined that any item is falling behind schedule the Company
has, or will, identify an alternative remediation or replacement approach.
In addition, the Company is communicating, and evaluating the systems of its
customers, suppliers, financial institutions and others with which it does
business to identify any year 2000 issues. Presently, the Company does not
anticipate that the year 2000 problem will have a material adverse effect on
the operations or financial performance of the Company.
The estimated completion dates and costs of compliance noted above are the
current best estimates of the Company and are believed to be reasonably
accurate. In the event unanticipated problems are encountered which cause the
compliance plan to fall behind schedule, the Company may devote additional
resources to completing the plan and additional costs may be incurred.
A-22
<PAGE>
If the Company were not able to satisfactorily complete the year 2000
program, potential consequences could include among other things, unit downtime
or damage to the Company's refineries, delays in transporting refinery
feedstocks and refined products, impairment of relationships with significant
customers or suppliers, loss of accounting data or delays in processing such
data and loss of or delays in communications both internal and external. The
occurrence of any or all of these above events could result in a material
adverse effect on the Company's operational or financial results. The
contingency plans described above are intended to mitigate these potential
events if they were to occur.
Although the Company currently believes that it will satisfactorily complete
the year 2000 program as described above, prior to January 1, 2000, there can
be no assurance that the program will be completed by such time or that the
year 2000 problem will not adversely affect the Company and its business.
Likewise, there can be no assurance that the Company's customers, suppliers,
financial institutions and others will be successful in their efforts to be
year 2000 compliant which could also adversely affect the Company.
Accounting Standard Not Yet Adopted
In June 1998, the FASB adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. This
statement becomes effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The Company is currently evaluating this new
standard, the impact it may have on the Company's accounting and reporting, and
planning for when to adopt the standard.
Outlook
Since most of the Company's products are commodities, supply and demand for
crude oil and refined products have a significant impact on the Company's
results. Demand for fuel products has grown by an average of 2% per year since
1992, primarily as a result of increased miles driven and little improvement in
the fuel efficiency of the U.S. automobile fleet. The Company believes that
capital spending in the refining sector is highly correlated to refining
industry profitability. As a result of the high capital spending levels of the
early 1990s, the industry's ability to produce refined products exceeded demand
in recent years. Since then, industry refinery capital spending has declined.
The Company expects that there will continue to be volatility in refining
margins and the Company's earnings because of the seasonal nature of refined
product demand and the commodity nature of the Company's refined products.
Industry margins in early 1999 remained below historical averages as the third
consecutive warm winter limited demand and resulted in excess refined product
inventories.
Liquidity and Capital Resources
<TABLE>
<CAPTION>
Year Ended December
31,
Financial Position: ---------------------
1996 1997 1998
------ ------ ------
(in millions)
<S> <C> <C> <C>
Cash and short-term investments.......................... $332.7 $243.0 $152.0
Working capital.......................................... 547.4 433.8 361.8
Property, plant and equipment............................ 391.0 380.4 627.4
Long-term debt........................................... 417.0 586.8 805.2
Stockholder's equity..................................... 534.9 260.9 225.0
Operating Cash Flow...................................... (24.6) 46.6 33.1
</TABLE>
Net cash provided by operating activities, excluding working capital changes
("Operating Cash Flow"), for the year ended December 31, 1998 was $33.1 million
compared to $46.6 million in 1997 and cash flow used of $24.6 million in 1996.
Operating Cash Flow decreased in 1998 compared to 1997 due to weaker
A-23
<PAGE>
refining market conditions, while 1997 was improved over 1996 because of a
stronger refining margin environment and improved refining productivity in that
period. Working capital as of December 31, 1998 was $361.8 million, a 1.99 to 1
current ratio, versus $433.8 million, a 2.51 to 1 current ratio, at December
31, 1997 and $547.4 million, a 2.58 to 1 current ratio, as of December 31,
1996. Working capital decreased in 1998 compared to 1997 principally due to
lower hydrocarbon prices and increased capital spending. Working capital also
decreased during 1997 because of lower inventory carrying values and the
capital cost of the Port Arthur and Hartford refinery maintenance turnarounds.
As part of its overall inventory management and crude acquisition strategies,
the Company routinely buys and sells, in varying degrees, crude oil in the spot
market. Such ongoing activities carry various payment terms and require the
Company to maintain adequate liquidity and working capital facilities. The
Company's short-term working capital requirements fluctuate with the pricing
and sourcing of crude oil. Historically, the Company's internally generated
cash flows have been sufficient to meet its needs. The Credit Agreement is used
for the issuance of letters of credit primarily for the purchase of crude oil
and other feedstocks and refined products.
In September 1997, the Company entered into a credit agreement that provides
for borrowings and the issuance of letters of credit. The credit agreement was
amended in August 1998 to increase the facility to the lesser of $700 million,
or the amount of a borrowing base calculated with respect to the Company's cash
and cash equivalents, eligible investments, eligible receivables and eligible
petroleum inventories. Direct borrowings under the facility are limited to $150
million. The facility is secured by liens on substantially all of the Company's
cash and cash equivalents, receivables, crude oil, refined product inventories
and other inventories and trademarks and other intellectual property. The
amount available under the borrowing base associated with such facility at
December 31, 1998 was $457 million and approximately $245 million of the
facility was utilized for letters of credit. As of December 31, 1998, there
were no direct borrowings under the credit agreement and the Company was in
compliance with all covenants.
The credit agreement contains covenants and conditions that, among other
things, limit dividends, indebtedness, liens, investments, contingent
obligations and capital expenditures. It also requires the Company to maintain
its property and insurance, to pay all taxes and comply with all laws, and to
provide periodic information and conduct periodic audits on behalf of the
lenders. The Company is also required to comply with certain financial
covenants. The financial covenants are (i) maintenance of working capital of at
least $150 million; (ii) maintenance of a tangible net worth (as defined) of at
least $280 million (subject to adjustment); and (iii) maintenance of minimum
levels of balance sheet cash (as defined) of $50 million. The covenants also
provide for a cumulative cash flow test (as defined) from March 31, 1997, which
must be greater than zero. The credit agreement also limits the amount of
future additional indebtedness that may be incurred by the Company to $75
million, subject to certain exceptions.
In August 1998, the Company acquired BP's 170,000 barrel per day Lima, Ohio
refinery, related terminal facilities, and non-hydrocarbon inventories for a
purchase price of approximately $175.0 million plus related acquisition costs
of $11.3 million. Hydrocarbon inventories were purchased for $34.9 million. The
Company assumed liabilities mainly related to employee benefits of $7.0
million. BP retained permanent responsibility for all known pre-existing
environmental liabilities and responsibility for a minimum of twelve years for
pre-existing but unknown environmental liabilities. The total cost of the
acquisition was accounted for using the purchase method of accounting with
$175.0 million allocated to the refinery long-term assets and $53.2 million
allocated to current assets for hydrocarbon and non-hydrocarbon inventories and
catalysts. From 1991 to 1997 the Company believes BP invested an aggregate of
approximately $212 million in the Lima refinery. Based on the Company's due
diligence, it expects mandatory capital expenditures for the Lima refinery to
average approximately $20 million per year for the period from 1999 to 2002 and
maintenance turnaround expenditures to cost approximately $30 million once
every five years. The Lima refinery is scheduled to have the first such major
maintenance turnaround in 1999. The Company expects cash flows from the Lima
refinery to be more than adequate to cover incremental financing and mandatory
capital and turnaround costs.
A-24
<PAGE>
In 1998, the Company sold its minority interests in West Shore Pipeline
Company, Wolverine Pipeline Company, Chicap Pipeline Company and Southcap
Pipeline Company after determining they were not strategic. The Company's
shipping rights are assured due to the pipelines' operation as common carrier
pipelines and the Company's historical throughput on such pipelines. The sale
of the interests in these pipelines generated net proceeds of $76.4 million.
These pipelines contributed earnings of approximately $5.3 million for the year
ended December 31, 1998, $8.2 million in 1997 and $9.0 million in 1996.
Cash flows used in investing activities (excluding short-term investment
activities which the Company manages similar to cash and cash equivalents) in
1998 were $240.3 million compared to $123.6 million in 1997 and cash flow
generated from investing activities of $180.9 million in 1996. Net cash flows
used in investing activities in 1998 were higher than 1997 principally due to
the Lima Acquisition, which was partially offset by proceeds from the sale of
the minority pipeline interests and certain non-core retail stores. Two major
refinery maintenance turnarounds and a large retail store acquisition increased
cash flows used in investing activities in 1997 over 1996. Cash flow was
generated in 1996 from the sale of an advance crude oil purchase receivable.
Capital expenditures for property, plant and equipment totaled $101.3 million
in 1998 (1997--$26.4 million; 1996--$20.1 million) and expenditures for
refinery maintenance turnarounds totaled $28.3 million in 1998 (1997--$47.4
million; 1996--$13.9 million). Approximately 36% of expenditures in 1998 were
non-discretionary with discretionary expenditures principally for the Port
Arthur refinery heavy oil upgrade project ($41.5 million), expansion of the
Blue Island refinery's vacuum tower ($6.7 million) and the expansion of coker
capacity at the Hartford refinery ($3.6 million). Approximately 50% of 1997 and
1996 expenditures were non-discretionary with discretionary capital
expenditures in 1997 for a project to increase the ability of the Hartford
refinery to process heavy, sour Canadian crude oil ($2.3 million) and
debottlenecking improvements to the Port Arthur refinery's FCC unit ($8.0
million).
The Company classifies its capital expenditures into two categories, non-
discretionary and discretionary. Non-discretionary capital expenditures are
required to maintain safe and reliable operations, and non-discretionary
environmental expenditures are required to comply with regulations pertaining
to ground, water and air contamination and occupational, safety and health
issues. The Company estimates that total non-discretionary capital and
turnaround expenditures will average approximately $90 million per year over
the next three years. Costs to comply with future regulations cannot be
estimated.
The Company has a philosophy to link routine capital expenditures to cash
generated from operations. The Company has a total capital and refinery
maintenance turnaround expenditure budget, excluding the Port Arthur refinery
upgrade project, of approximately $130 million for 1999. Total capital
expenditures may be under budget if cash flow is less than expected, and higher
than budget if cash flow is better than expected.
Cash flow provided by financing activities in 1998 was $194.0 million and was
principally related to the acquisition of the Lima refinery. The Company funded
the acquisition of the Lima refinery and related costs with cash on hand and
the proceeds of a private placement to institutional investors of $110 million
8 5/8% Senior Notes due 2008 and a $115 million floating rate term loan due
2004. In November 1997, the Company returned capital of $215 million to Clark
USA so that it could repurchase for $206.6 million, $259.2 million (value at
maturity) of Zero Coupon Notes tendered pursuant to a tender offer.
Subsequently in 1997, the Company received net proceeds of approximately $390
million from the issuance of the 8 3/8% Senior Notes, the 8 7/8% Senior
Subordinated Notes and a floating rate term loan. On December 24, 1997, Clark
R&M redeemed all $225 million of the 10 1/2% Senior Notes outstanding at a
price of $1,032.96 for each $1,000.00 principal amount of the notes. In early
1998, Clark USA called the remaining Zero Coupon Notes outstanding ($3.6
million) and the Company repurchased some of its 9 1/2% Senior Notes tendered
under its required change of control offer ($3.3 million).
A-25
<PAGE>
On November 3, 1997, Blackstone acquired the 13.5 million shares of Common
Stock of Clark USA previously held by TrizecHahn and certain of its
subsidiaries. As a result, Blackstone obtained an indirect controlling interest
in the Company. Clark R&M's credit facility was amended to permit the
acquisition by Blackstone of Clark USA's Common Stock.
Funds generated from operating activities together with existing cash, cash
equivalents and short-term investments, are expected to be adequate to fund
existing requirements for working capital and capital expenditure programs,
excluding the Port Arthur refinery upgrade project, for the next year. Due to
the commodity nature of its products, the Company's operating results are
subject to rapid and wide fluctuations. While the Company believes that its
maintenance of large cash, cash equivalents and short-term investment balances
and its operating philosophies will be sufficient to provide the Company with
adequate liquidity through the next year, there can be no assurance that market
conditions will not be worse than anticipated. Future working capital,
discretionary capital expenditures, environmentally mandated spending and
acquisitions may require additional debt or equity capital.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
The market risk inherent in the Company's market risk sensitive instruments
and positions is the potential loss from adverse changes in commodity prices
and interest rates. None of the Company's market risk sensitive instruments are
held for trading.
Commodity Risk
The Company's earnings, cash flow and liquidity are significantly affected by
a variety of factors beyond its control, including the supply of, and demand
for, commodities such as crude oil, gasoline and other refined products. The
demand for these refined products depends on, among other factors, changes in
domestic and foreign economies, weather conditions, domestic and foreign
political affairs, production levels, the availability of imports, the
marketing of competitive fuels and the extent of government regulation. As a
result, crude oil and refined product prices fluctuate significantly, which
directly impact the Company's net sales and operating revenues and costs of
goods sold.
The movement in petroleum prices does not necessarily have a direct long-term
relationship to net earnings. The effect of changes in crude oil prices on the
Company's operating results is determined more by the rate at which the prices
of refined products adjust to reflect such changes. The Company is required to
fix the price of its crude oil purchases approximately two to three weeks prior
to when the crude oil can be processed and sold. As a result, the Company is
exposed to crude oil price movements during such period. In addition, the
market value of the Company's petroleum inventory is currently below original
cost, which has resulted in a writedown of inventory to fair market value. The
Company's earnings will continue to be impacted by these writedowns, or
recovery of writedowns, to market value until market prices exceed LIFO cost.
Earnings Sensitivity
The following table illustrates the estimated pre-tax earnings impact based
on average historical operating rates, fixed price purchase commitments and
inventory levels resulting from potential changes in several key refining
market margin indicators and crude oil prices described below. This analysis
may differ from actual results.
. Sweet crude oil cracking margins--the spread between gasoline and diesel
fuel prices and input (e.g., a benchmark light sweet crude oil) costs
. Sweet/sour differentials--the spread between a benchmark light sour crude
oil and a benchmark light sweet crude oil
. Heavy/light differentials--the spread between a benchmark light sweet
crude oil and a benchmark heavy sour crude oil
A-26
<PAGE>
. Fixed price purchase commitments--fixed price purchase commitments for
crude oil required for the two to three weeks prior to when products are
refined and sold.
. Lower of cost or market adjustment--physical inventory subject to lower
of cost or market adjustments while carrying value is below original cost
<TABLE>
<CAPTION>
Pre-tax
Assumed Earnings
Change Barrels Impact
------------ ------------- -------------
(per barrel) (in millions) (in millions)
<S> <C> <C> <C>
Refining margins
Sweet crude oil cracking margin...... $0.10 200 $20
Sweet/sour differentials............. 0.10 90 9
Heavy/light differentials............ 0.10 30 3
Crude oil prices
Fixed price purchase commitments..... 2.00 4 8
Lower of cost or market adjustment... 2.00 17 34
</TABLE>
The Company utilizes limited risk management tools to mitigate risk
associated with fluctuations in petroleum prices on its normal operating
petroleum inventories. The Company believes this policy is appropriate since
inventories are required to operate the business and are expected to be owned
for an extended period of time. The Company believes the cost of using such
tools to manage short-term fluctuations outweigh the benefits.
The Company occasionally uses several strategies to minimize the impact on
profitability of volatility in feedstock costs and refined product prices.
These strategies generally involve the purchase and sale of exchange-traded,
energy-related futures and options with a duration of six months or less. In
addition, the Company to a lesser extent uses energy swap agreements similar to
those traded on the exchanges, such as crack spreads and crude oil options, to
better match the specific price movements in the Company's markets as opposed
to the delivery point of the exchange-traded contract. These strategies are
designed to minimize, on a short-term basis, the Company's exposure to the risk
of fluctuations in crude oil prices and refined product margins. The number of
barrels of crude oil and refined products covered by such contracts varies from
time to time. Such purchases and sales are closely managed and subject to
internally established risk standards. The results of these hedging activities
affect refining costs of sales and inventory costs. The Company does not engage
in speculative futures or derivative transactions.
A sensitivity analysis was prepared to estimate the Company's exposure to
market risk associated with derivative commodity positions. This analysis may
differ from actual results. The fair value of each derivative commodity
position was based on quoted futures prices. Market risk was estimated based on
a 10% change in prices. As of December 31, 1998, the Company's sensitivity to
market risk associated with derivative commodity instruments was immaterial.
Interest Rate Risk
The Company's principal interest rate risk is associated with its long-term
debt. The Company manages this rate risk by maintaining a high percentage of
its long-term debt with fixed rates. In addition, the Company has no material
principal payments due prior to 2003, but as of December 31, 1998 had the
flexibility to call $411.7 million of its long term debt, including all of its
floating rate bank term loan. A 1% change in the fair market value of long-term
debt would result in a $8.1 million change in fair value. The Company is
subject to interest rate risk on this floating rate bank term loan and any
direct borrowings under the Company's credit facility. As of December 31, 1998,
$240.0 million of the Company's long-term debt was based on floating interest
rates. There were no borrowings under the Company's credit facility.
A-27
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference to
Part IV Item 14(a) 1 and 2. Financial Statements and Financial Statement
Schedules.
David A. Stockman has served as a director of the Company and Clark USA
since November 3, 1997. Mr. Stockman is a Senior Managing Director of The
Blackstone Group L.P., which he joined in 1988. Mr. Stockman also serves as Co-
Chairman of the board of directors of Collins & Aikman Corporation and a member
of the boards of directors of American Axle Manufacturing Inc., Bar
Technologies Inc., The Imperial Home Decor Group Inc., Haynes International
Inc., and Republic Engineered Steels, Inc.
Except as described above, there are no arrangements or understandings
between any director or executive officer and any other person pursuant to
which such person was elected or appointed as a director or executive officer.
There are no family relationships between any director or executive officer and
any other director or executive officer.
A-28
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Clark Refining & Marketing, Inc. and Subsidiaries:
Annual Financial Statements
Reports of Independent Accountants...................................... 30
Consolidated Balance Sheets as of December 31, 1997 and 1998............ 32
Consolidated Statements of Operations for the years ended December 31,
1996, 1997 and 1998.................................................... 33
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1997 and 1998.................................................... 34
Consolidated Statements of Stockholder's Equity for the years ended
December 31, 1996, 1997 and 1998....................................... 35
Notes to Consolidated Financial Statements.............................. 36
</TABLE>
A-29
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Clark Refining & Marketing, Inc.
We have audited the accompanying consolidated balance sheets of Clark
Refining & Marketing, Inc. and Subsidiaries (the "Company") as of December 31,
1997 and 1998 and the related consolidated statement of operations,
stockholder's equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1997
and 1998, and the results of their operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
St. Louis, Missouri
February 6, 1999
(July 8, 1999 as to the discontinued
operations described in Note 3)
A-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Clark Refining & Marketing, Inc.:
We have audited the accompanying consolidated statements of operations,
stockholder's equity and cash flows for the year ended December 31, 1996 of
Clark Refining & Marketing, Inc. and Subsidiaries (a Delaware corporation and
wholly-owned subsidiary of Clark USA, Inc.) These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of the operations and the cash
flows of Clark Refining & Marketing, Inc. for the year ended December 31, 1996
in conformity with generally accepted accounting principles. We have not
audited the consolidated financial statements of Clark Refining & Marketing,
Inc. for any period subsequent to December 31, 1996.
PricewaterhouseCoopers LLP
St. Louis, Missouri
February 4, 1997, except
for Note 3 as it relates to
discontinued operations, for
which the date is July 8, 1999
A-31
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
December 31,
Reference -----------------
Note 1997 1998
--------- -------- --------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................... 2 $ 228.1 $ 147.5
Short-term investments.......................... 4 14.9 4.5
Accounts receivable............................. 4 99.2 130.7
Receivable from affiliates...................... 2.2 2.3
Inventories..................................... 2,5 228.6 267.7
Prepaid expenses and other...................... 13.7 31.6
Net assets held for sale........................ 3 134.0 143.2
-------- --------
Total current assets.......................... 720.7 727.5
Property, Plant, and Equipment, net............... 2,6 380.4 627.4
Other Assets...................................... 2,7 79.3 92.1
-------- --------
$1,180.4 $1,447.0
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable................................ 2,8 $ 206.2 $ 250.3
Payable to affiliates........................... 14.8 25.2
Accrued expenses and other...................... 9,11 45.2 64.3
Accrued taxes other than income................. 20.7 25.9
-------- --------
Total current liabilities..................... 286.9 365.7
Long-Term Debt.................................... 9,11 586.8 805.2
Other Long-Term Liabilities....................... 12 45.8 51.1
Contingencies..................................... 16 -- --
Stockholder's Equity:
Common stock ($.01 par value per share; 1,000
shares authorized and 100 shares issued and
outstanding)................................... -- --
Paid-in capital................................. 11 249.2 234.2
Retained earnings (deficit)..................... 4 11.7 (9.2)
-------- --------
Total stockholder's equity.................... 260.9 225.0
-------- --------
$1,180.4 $1,447.0
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
A-32
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
For The Year Ended December 31,
Reference ----------------------------------
Note 1996 1997 1998
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales and Operating Revenues. 2 $ 4,656.9 $ 3,880.0 $ 3,580.5
Expenses:
Cost of sales.................. (4,318.1) (3,434.6) (3,115.1)
Operating expenses............. (291.3) (293.9) (341.6)
General and administrative
expenses...................... (37.8) (43.0) (50.0)
Depreciation................... 2 (24.6) (26.2) (28.7)
Amortization................... 2,7 (11.1) (20.5) (25.7)
Inventory write-down to market. 5 -- (19.2) (86.6)
Recapitalization, asset write-
offs, and other charges....... 14 -- (40.0) --
---------- ---------- ----------
(4,682.9) (3,877.4) (3,647.7)
Gain on Sale of Pipeline
Interests....................... 3 -- -- 69.3
---------- ---------- ----------
Operating Income (loss).......... (26.0) 2.6 2.1
Interest expense and finance
income, net................... 9 (38.7) (39.8) (51.0)
---------- ---------- ----------
Loss From Continuing Operations
Before Income Taxes............. (64.7) (37.2) (48.9)
Income tax (provision) benefit. 2,13 18.6 (10.4) 12.9
---------- ---------- ----------
Loss From Continuing Operations
Before Extraordinary Item....... (46.1) (47.6) (36.0)
Discontinued operations, net of
income taxes of $9.2
(1997 $0.1, 1996 $4.7)........ 3 7.6 0.1 15.1
Extinguishment of debt......... 9 -- (10.7) --
---------- ---------- ----------
Net loss......................... $ (38.5) $ (58.2) $ (20.9)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
A-33
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
For The Year Ended
December 31,
-------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss........................................... $ (38.5) $ (58.2) $ (20.9)
Discontinued operations............................ (7.6) (0.1) (15.1)
Extraordinary item................................. -- 10.7 --
Adjustments:
Depreciation...................................... 24.6 26.2 28.7
Amortization...................................... 17.8 27.5 28.2
Share of earnings of affiliates, net of dividends. (0.1) (1.3) 0.4
Deferred income taxes............................. (22.1) 0.2 (10.9)
Gain on sale of pipeline interests................ -- -- (69.3)
Inventory write-down to market.................... -- 19.2 86.6
Recapitalization, asset write-offs, and other
charges.......................................... -- 21.0 --
Other............................................. 1.3 1.4 5.4
Cash provided by (reinvested in) working capital--
Accounts receivable, prepaid expenses and other... 12.8 79.7 (45.5)
Inventories....................................... 13.3 2.4 (125.5)
Accounts payable, accrued expenses, taxes other
than income and other............................ (5.4) (71.7) 75.0
------- ------- -------
Net cash provided by (used in) operating
activities of continuing operations............. (3.9) 57.0 (62.9)
Net cash provided by operating activities of
discontinued operations......................... 20.8 37.9 18.2
------- ------- -------
Net cash provided by (used in) operating
activities...................................... 16.9 94.9 (44.7)
------- ------- -------
Cash Flows from Investing Activities:
Purchases of short-term investments................ -- (3.0) (3.2)
Sales and maturities of short-term investments..... 31.1 3.0 13.6
Expenditures for property, plant, and equipment.... (20.1) (26.4) (101.3)
Expenditures for turnaround........................ (13.9) (47.4) (28.3)
Refinery acquisition expenditures.................. -- -- (175.0)
Proceeds from disposals of property, plant, and
equipment......................................... 3.6 0.1 --
Discontinued operations............................ (24.1) (49.9) (12.1)
Proceeds from sale of pipeline interests........... -- -- 76.4
Advance crude oil purchase receivable.............. 235.4 -- --
------- ------- -------
Net cash provided by (used in) investing
activities...................................... 212.0 (123.6) (229.9)
------- ------- -------
Cash Flows from Financing Activities:
Long-term debt payments............................ (2.8) (234.2) (6.7)
Proceeds from issuance of long-term debt........... -- 398.0 224.7
Capital contribution received (returned)........... 33.6 (215.0) (15.0)
Deferred financing costs........................... (0.8) (9.8) (9.0)
------- ------- -------
Net cash provided by (used in) financing
activities...................................... 30.0 (61.0) 194.0
------- ------- -------
Net increase (decrease) in Cash and Cash
Equivalents........................................ 258.9 (89.7) (80.6)
Cash and Cash Equivalents, beginning of period...... 58.9 317.8 228.1
------- ------- -------
Cash and Cash Equivalents, end of period............ $ 317.8 $ 228.1 $ 147.5
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
A-34
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Retained
Common Paid-in Earnings
Stock Capital (Deficit) Total
------ ------- --------- ------
<S> <C> <C> <C> <C>
Balance--January 1, 1996...................... $ -- $195.6 $108.5 $304.1
Change in unrealized short-term investment
gains and losses, net of taxes............. -- -- (0.1) (0.1)
Capital contribution received............... -- 268.6 -- 268.6
Net loss.................................... -- -- (38.5) (38.5)
----- ------ ------ ------
Balance--December 31, 1996.................... $ -- $464.2 $ 69.9 $534.1
===== ====== ====== ======
Capital contribution returned............... -- (215.0) -- (215.0)
Net loss.................................... -- -- (58.2) (58.2)
----- ------ ------ ------
Balance--December 31, 1997.................... $ -- $249.2 $ 11.7 $260.9
===== ====== ====== ======
Capital contribution returned............... -- (15.0) -- (15.0)
Net loss.................................... -- -- (20.9) (20.9)
----- ------ ------ ------
Balance--December 31, 1998.................... $ -- $234.2 $ (9.2) $225.0
===== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
A-35
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1996, 1997, and 1998
(TABULAR DOLLAR AMOUNTS IN MILLIONS OF US DOLLARS)
1. Nature of Business
Clark Refining & Marketing, Inc., a Delaware corporation ("Clark R&M" or "the
Company") is wholly owned by Clark USA, Inc., a Delaware corporation ("Clark
USA"), which is a wholly owned subsidiary of Clark Refining Holdings Inc.
("Clark Holdings"). Clark R&M's principal operations include the refining of
crude oil into gasoline, diesel fuel, jet fuel and other petroleum products and
the marketing of these products. The Company also sold petroleum products and
convenience store items in retail stores in the central United States. On July
8, 1999, the Company sold these retail operations. Accordingly, the retail
marketing operation's net assets (liabilities) have been segregated from the
Company's continuing operations in the consolidated balance sheets, and its
operating results are segregated and reported as discontinued operations in the
accompanying consolidated statements of operations and cash flows.
The Company's earnings and cash flow from operations are primarily dependent
upon processing crude oil and selling quantities of refined petroleum products
at margins sufficient to cover operating expenses. Crude oil and refined
petroleum products are commodities, and factors largely out of the Company's
control can cause prices to vary, in a wide range, over a short period of time.
This potential margin volatility can have a material effect on financial
position, current period earnings, and cash flow.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Clark Refining & Marketing, Inc. and its wholly owned subsidiaries, principally
Clark Port Arthur Pipeline, Inc., a Delaware corporation, and Clark
Investments, Inc., a Nevada corporation. The Company consolidates the assets,
liabilities, and results of operations of subsidiaries in which the Company has
a controlling interest. Investments in companies in which less than a
controlling interest is held are generally accounted for by the equity method.
All significant intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments, such as time deposits,
money market instruments, commercial paper and United States and foreign
government securities, purchased with an original maturity of three months or
less, to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
under the last-in, first-out "LIFO" method for all hydrocarbon inventories
including crude oil, refined products, and blendstocks. The
A-36
<PAGE>
cost of convenience products is determined under the retail LIFO method, and
the cost of warehouse stock and other inventories is determined under the
first-in, first-out method "FIFO".
Hedging Activity
The Company considers all futures and options contracts to be part of its
risk management strategy. Unrealized gains and losses on open contracts are
recognized as a product cost component unless the contract can be identified as
a price risk hedge of specific inventory positions or open commitments, in
which case the unrealized gain or loss is deferred and recognized as an
adjustment to the carrying amount of petroleum inventories or accounts payable
if related to open commitments. Deferred gains and losses on these contracts
are recognized as an adjustment to product cost when such inventories are sold
or consumed.
Property, Plant, and Equipment
Property, plant, and equipment additions are recorded at cost. Depreciation
of property, plant, and equipment is computed using the straight-line method
over the estimated useful lives of the assets or groups of assets. The cost of
buildings and marketing facilities on leased land and leasehold improvements
are amortized on a straight-line basis over the shorter of the estimated useful
life or the lease term. The Company capitalizes the interest cost associated
with major construction projects based on the effective interest rate on
aggregate borrowings.
Expenditures for maintenance and repairs are expensed. Major replacements and
additions are capitalized. Gains and losses on assets depreciated on an
individual basis are reflected in current operating income. Upon disposal of
assets depreciated on a group basis, unless unusual in nature or amount,
residual cost less salvage is charged against accumulated depreciation.
The Company reviews long-lived assets for impairments whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
Deferred Turnaround
A turnaround is a periodically required standard procedure for maintenance of
a refinery that involves the shutdown and inspection of major processing units
and generally occurs approximately every three to five years. Turnaround costs,
which are included in "Other assets", are amortized over the period to the next
scheduled turnaround, beginning the month following completion. The
amortization is presented in "Amortization" on the statements of net and other
comprehensive earnings.
Environmental Costs
Environmental liabilities are recorded when environmental assessments and/or
remedial efforts are probable and can be reasonably estimated. Reimbursements
for underground storage remediation are also recorded when probable and can be
reasonably estimated.
Environmental expenditures are expensed or capitalized depending upon their
future economic benefit. Costs that improve a property as compared with the
condition of the property when originally constructed or acquired and costs
that prevent future environmental contamination are capitalized. Costs that
return a property to its condition at the time of acquisition or original
construction are expensed.
Income Taxes
Clark R&M files a consolidated U.S. federal income tax return with Clark USA
but computes its provision on a separate company basis. Deferred taxes are
classified as current or noncurrent depending on the classification of the
assets and liabilities to which the temporary differences relate. Deferred
taxes arising from temporary differences that are not related to a specific
asset or liability are classified as current or noncurrent
A-37
<PAGE>
depending on the periods in which the temporary differences are expected to
reverse. The Company records a valuation allowance when necessary to reduce the
net deferred tax asset to an amount expected to be realized.
Stock Based Compensation Plan
The Company accounts for stock-based compensation issued to employees in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," ("APB Opinion No. 25") which generally requires
recognizing compensation cost based upon the intrinsic value at the date
granted of the equity instrument awarded. The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," which encourages, but does not
require, companies to recognize compensation expense for grants of stock, stock
options and other equity instruments based on the fair value of those
instruments, but alternatively allows companies to disclose such impact in
their footnotes. The Company has elected to adopt the footnote disclosure
method.
New Accounting Standards
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income", effective January 1, 1998, with no
effect on the Company's financial statements for the three years ending
December 31, 1996, 1997, and 1998. This statement establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements.
The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". This statement requires that public
business enterprises report certain information about operating segments in
complete sets of financial statements of the enterprise and in condensed
financial statements of interim periods issued to shareholders. With the
divesture of the retail operations, Clark R&M's sole business segment consists
of the refining of crude oil into petroleum products and segment reporting is
not applicable.
The Company adopted SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits" (see Note 12 "Employee Benefit Plans"). This
statement standardizes the disclosure requirements for pensions and other
postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan
assets that will facilitate financial analysis, and eliminates certain
disclosures previously required.
The Company adopted Statement of Position ("SOP") No. 98-1 "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use". The SOP
provides guidance on accounting for the costs of computer software developed or
obtained for internal use. This statement allows for capitalization of internal
labor costs for certain information system projects. The Company's previous
accounting policy was consistent with the requirements of this SOP, and
therefore, the adoption of this SOP did not represent an accounting change.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Company is required to adopt this statement effective January 1, 2001. SFAS No.
133 will require the Company to record all derivatives on the balance sheet at
fair value. Changes in derivative fair value will either be recognized in
earnings as offsets to the changes in fair value of related hedged assets,
liabilities, and firm commitments or, for forecasted transactions, deferred and
recorded as a component of other stockholders' equity until the hedged
transactions occur and are recognized in earnings. The ineffective portion of a
hedging derivative's change in fair value will be recognized in earnings
immediately. The Company is currently evaluating when it will adopt this
standard and the impact of the standard on the Company. The impact of SFAS No.
133 will depend on a variety of factors, including future interpretive
guidance, the future level of hedging activity, the types of hedging
instruments used, and the effectiveness of such instruments.
A-38
<PAGE>
3. Acquisition and Disposition
In August 1998, Clark R&M purchased BP Amoco PLC's, formerly British
Petroleum, ("BP"), 170,000 barrel per day Lima, Ohio refinery, related terminal
facilities, and non-hydrocarbon inventories for a purchase price of $175.0
million plus related acquisition costs of $11.3 million (the "Lima
Acquisition"). Hydrocarbon inventories were purchased for $34.9 million. The
Company assumed liabilities mainly related to employee benefits of $7.0
million. BP retained permanent responsibility for all known pre-existing
environmental liabilities and responsibility for a minimum of twelve years for
pre-existing but unknown environmental liabilities. The total cost of the
acquisition was accounted for using the purchase method of accounting with
$175.0 million allocated to the refinery long-term assets and $53.2 million
allocated to current assets for hydrocarbon and non-hydrocarbon inventories and
catalysts. Clark R&M funded the Lima Acquisition with existing cash and the
proceeds from the issuance of $110 million 8 5/8% Senior Notes due 2008 and
$115 million floating rate term loan due 2004 (see Note 9 "Long-Term Debt").
In 1998, the Company sold minority interests in West Shore Pipeline Company,
Wolverine Pipeline Company, Chicap Pipeline Company, and Southcap Pipeline
Company, for net proceeds of $76.4 million that resulted in a before and after-
tax gain of $69.3 million. Income from these interests for the year ended
December 31, 1998 was $5.3 million (1997--$8.2 million; 1996--$9.0 million).
On July 8, 1999, the Company completed the sale of its retail marketing
operation in a recapitalization transaction to a company controlled by Apollo
Management L.P. for cash proceeds of $230 million. An affiliate of the Company
will hold a six percent equity interest in the retail marketing operation. As
part of the sale agreement, the Company also entered into a two-year, market-
based supply agreement for refined products that will be provided to the retail
business through the Company's Midwest refining and distribution network, which
is not included in the sale. The supply agreement may be canceled with 90 days
notice by the buyer.
Assets sold included all company-operated retail stores, approximately 200
independently-operated, Clark-branded stores and the Clark trade name.
Accordingly, the retail marketing operation's net assets (liabilities) have
been segregated from the Company's continuing operations in the consolidated
balance sheets, and its operating results are segregated and reported as
discontinued operations in the accompanying consolidated statements of
operations and cash flows.
The components of Net assets held for sale included in the Company's
Consolidated Balance Sheets for December 31, 1997 and December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
December 31,
-------------
1997 1998
------ ------
<S> <C> <C>
Current Assets................................................ $ 50.9 $ 43.1
Noncurrent Assets............................................. 195.3 187.5
------ ------
Total Assets................................................ 246.2 230.6
Current Liabilities........................................... 84.8 62.7
Noncurrent Liabilities........................................ 27.4 24.7
------ ------
Total Liabilities........................................... 112.2 87.4
------ ------
Net Assets Held For Sale.................................... $134.0 $143.2
====== ======
</TABLE>
A-39
<PAGE>
The Statements of Operations for retail operations are as follows:
<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- ------
<S> <C> <C> <C>
Net sales and Operating Revenues................ $1,128.7 $1,151.3 $938.8
Expenses:
Cost of Sales................................. (954.8) (966.7) (752.7)
Operating expenses............................ (127.6) (138.4) (127.4)
General and administrative expenses........... (21.3) (22.5) (22.4)
Depreciation.................................. (12.7) (14.5) (13.7)
Inventory write-down to market................ -- -- (0.5)
Recapitalization, asset write-offs and other
charges...................................... -- (9.0) 2.2
-------- -------- ------
(1,116.4) (1,151.1) (914.5)
-------- -------- ------
Operating Income................................ 12.3 0.2 24.3
Income tax provision............................ (4.7) (0.1) (9.2)
-------- -------- ------
Net Earnings of Discontinued Operations......... $ 7.6 $ 0.1 $ 15.1
======== ======== ======
</TABLE>
The retail operations collected federal excise and state motor fuel taxes on
the sale of products and remitted to governmental agencies $374.7 million for
the year ended December 31, 1998 (1997--$411.5 million; 1996--$411.6 million).
These taxes are not included in "Net sales and operating revenue," "Cost of
sales," or "Operating expenses."
The continuing operations will sell fuel previously sold to the retail
operations to outside buyers. Refinery sales and retail cost of sales of $478.1
million for the year ended December 31, 1998 (1997--$695.6 million; 1996--
$712.9 million) that were previously eliminated from financial statements
prepared according to generally accepted accounting principles are included in
the financial statements of the continuing operations to reflect this change.
The discontinued operations in the Cash Flows from Investing Activities
consist of expenditures for property and equipment of $28.7 million for the
year ended December 31, 1998 (1997--$55.3 million; 1996--$24.9 million), net of
proceeds from the disposal of property and equipment of $16.6 million for the
year ended December 31, 1998 (1997--$5.4 million; 1996--$0.8 million).
4. Financial Instruments
Short-term Investments
Short-term investments consist of investments, including United States
government security funds, maturing more than three months from date of
purchase. The Company invests only in AA rated or better fixed income
marketable securities or the short-term rated equivalent. The Company's short-
term investments are all considered Available-for-Sale and are carried at fair
value with the resulting unrealized gain or loss (net of applicable taxes)
shown as a component of stockholders' equity. Realized gains and losses are
presented in "Interest and finance costs, net" and are computed using the
specific identification method. As of December 31, 1998, short-term investments
consisted of U.S. Debt Securities of $4.5 million (1997--$14.9 million). In
1998 and 1997, $4.5 million and $9.9 million, respectively, of the U.S. Debt
Securities were pledged as collateral for the Company's self-insured workers
compensation programs, certain retail leases, and in 1997 for futures
positions.
For the years ended December 31, 1996, 1997 and 1998, there were no material
unrealized or realized gains or losses on the short-term investments. The
amortized cost of short-term investments as of December 31, 1998 was $4.5
million, with $2.9 million maturing in one year or less, and $1.6 million
maturing after one year through two years.
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<PAGE>
Derivative Instruments
Clark R&M enters into crude oil and refined products futures and options
contracts to limit risk related to hydrocarbon price fluctuations created by a
potentially volatile market. As of December 31, 1998, Clark R&M's open
contracts represented 1.2 million barrels of crude oil and refined products,
and had terms extending into September 1999. As of December 31, 1997, Clark
R&M's open contracts represented 2.3 million barrels of crude oil and refined
products and had terms extending into July 1998. As of December 31, 1998, the
Company had net unrealized gains on open futures and options contracts of
$1.3 million (1997--net unrealized losses of $1.9 million) all of which have
been recognized and reflected as a component of operating income.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of trade receivables. Credit risk on trade
receivables is minimized as a result of the credit quality of the Company's
customer base and industry collateralization practices. The Company conducts
ongoing evaluations of its customers and requires letters of credit or other
collateral as appropriate. Trade receivable credit losses for the three years
ended December 31, 1998 were not material. As of December 31, 1998, the Company
had $11.4 million (1997--$20.6 million) due from Chevron USA Products Co.
("Chevron"). Sales to Chevron in 1998 totaled $340.1 million (1997--$455.7
million; 1996--455.8 million).
The Company does not believe that is has a significant credit risk on its
derivative instruments which are transacted through the New York Mercantile
Exchange or with counterparties meeting established collateral and credit
criteria.
5. Inventories
The carrying value of inventories consisted of the following:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
------ ------
<S> <C> <C>
Crude oil.................................................... $ 86.2 $165.3
Refined products and blendstocks............................. 147.9 186.4
LIFO inventory value excess over market...................... (19.2) (105.8)
Warehouse stock and other.................................... 13.7 21.8
------ ------
$228.6 $267.7
====== ======
</TABLE>
6. Property, Plant, and Equipment
Property, plant, and equipment consisted of the following:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
------ ------
<S> <C> <C>
Real property................................................ $ 3.6 $ 12.4
Refineries................................................... 443.7 699.3
Product terminals and pipelines.............................. 65.3 69.1
Other........................................................ 9.9 17.1
------ ------
522.5 797.9
Accumulated depreciation and amortization.................... (142.1) (170.5)
------ ------
$380.4 $627.4
====== ======
</TABLE>
As of December 31, 1998, property, plant, and equipment included $90.1
million (1997--$35.5 million) of construction in progress, of which $43.7
million related to a project at the Port Arthur refinery that includes
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<PAGE>
construction of additional coking and hydrocracking capability and expansion of
the crude unit capacity to approximately 250,000 barrels per day. This project
is scheduled to be completed by January 2001. Capital lease assets of $20.1
million (1997--$21.3 million) were included in property, plant, and equipment
as of December 31, 1998.
7. Other Assets
Other assets consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------
1997 1998
------ ------
<S> <C> <C>
Deferred financing costs...................................... $ 13.4 $ 19.5
Deferred turnaround costs..................................... 43.9 46.5
Deferred tax asset............................................ 13.4 24.2
Other......................................................... 8.6 1.9
------ ------
$ 79.3 $ 92.1
====== ======
</TABLE>
The company incurred deferred financing costs of $8.9 million associated with
the financing of the Lima Acquisition. Amortization of deferred financing costs
for the year ended December 31, 1998 was $2.2 million (1997--$7.0 million;
1996- $6.5 million) and is included in "Interest and finance costs, net".
8. Working Capital Facility
In August 1998, Clark R&M amended its September 1997, secured revolving
credit facility increasing capacity from the original $400 million to $700
million. The credit facility, which expires on December 31, 1999, provides for
borrowings and the issuance of letters of credit of up to the lesser of $700
million or the amount available under a defined borrowing base calculated with
respect to Clark R&M's cash and cash equivalents, eligible investments,
eligible receivables and eligible petroleum inventories ($457.0 million as of
December 31, 1998). Direct borrowings under the credit facility are limited to
$150 million at interest rates ranging from London Interbank Offer Rate
("LIBOR") plus 62.5 basis points to LIBOR plus 225 basis points depending on
the attainment of certain financial ratios. Clark R&M uses the facility
primarily for the issuance of letters of credit to secure purchases of crude
oil. Clark R&M is required to comply with certain financial covenants including
maintaining defined levels of working capital, cash, cash equivalents and
qualifying investments, tangible net worth, and cumulative cash flow. As of
December 31, 1998, $244.8 million (1997-- $272.1 million) of the line of credit
was utilized for letters of credit, of which $98.3 million supported
commitments for future deliveries of petroleum products. There were no direct
cash borrowings under any revolving credit facility as of December 31, 1998 and
1997.
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<PAGE>
9. Long-Term Debt
<TABLE>
<CAPTION>
December 31,
-------------
1997 1998
------ ------
<S> <C> <C>
8 5/8% Senior Notes due August 15, 2008
("8 5/8% Senior Notes")..................................... $ -- $109.7
8 3/8% Senior Notes due November 15, 2007
("8 3/8% Senior Notes")..................................... 99.3 99.3
8 7/8% Senior Subordinated Notes due November 15, 2007
("8 7/8% Senior Subordinated Notes")........................ 173.8 173.9
Floating Rate Term Loan due November 15, 2003 and 2004
("Floating Rate Loan")...................................... 125.0 240.0
9 1/2% Senior Notes due September 15, 2004
("9 1/2% Senior Notes")..................................... 175.0 171.7
Obligations under capital leases and other notes............... 16.8 13.8
------ ------
589.9 808.4
Less current portion....................................... 3.1 3.2
------ ------
$586.8 $805.2
====== ======
</TABLE>
The estimated fair value of long-term debt as of December 31, 1998 was $760.2
million (1997-- $602.2 million, 1996--$431.8 million), determined using quoted
market prices for these issues.
The 8 5/8% Senior Notes were issued by Clark R&M in August 1998, at a
discount of 0.234% and are unsecured. The 8 5/8% Senior Notes are redeemable at
the option of the Company beginning August 2003, at a redemption price of
104.312% of principal, which decreases to 100% of principal amount in 2005. Up
to 35% in aggregate principal amount of the notes originally issued are
redeemable at the option of the Company out of the net proceeds of one or more
equity offerings at any time prior to August 15, 2002, at a redemption price
equal to 108.625% of principal.
The 8 3/8% Senior Notes and 8 7/8% Senior Subordinated Notes were issued by
Clark R&M in November 1997, at a discount of 0.734% and 0.719%, respectively.
These notes are unsecured, with the 8 7/8% Senior Subordinated Notes
subordinated in right of payment to all unsubordinated indebtedness of the
Company. The 8 3/8% Senior Notes and 8 7/8% Senior Subordinated Notes are
redeemable at the option of the Company beginning November 2002, at a
redemption price of 104.187% of principal and 104.437% of principal,
respectively, which decreases to 100% of principal amount in 2004 and 2005,
respectively. Up to 35% in aggregate principal amount of the notes originally
issued are redeemable at the option of the Company out of the net proceeds of
one or more equity offerings at any time prior to November 15, 2001, at a
redemption price equal to 108.375% of principal for the 8 3/8% Senior Notes and
108.875% of principal for the 8 7/8% Senior Notes.
Clark R&M borrowed $125.0 million in November 1997, and an additional $115.0
million in August 1998, under a floating rate term loan agreement expiring in
2004. Of the principal outstanding, 25% must be repaid in 2003. The Floating
Rate Loan is a senior unsecured obligation of Clark R&M and bears interest
LIBOR plus a margin of 275 basis points. The loan may be repaid in whole or in
part at any time at the redemption price of 101.25% of principal through
November 1999 and at 100% of principal thereafter.
The 9 1/2% Senior Notes were issued by Clark R&M in September 1992 and are
unsecured. The 9 1/2% Senior Notes are currently redeemable at the Company's
option at a redemption price of 102.375% of principal, decreasing to 100% of
principal in September 1999.
The Clark R&M note indentures contain certain restrictive covenants including
limitations on the payment of dividends, limitations on the payment of amounts
to related parties, limitations on the incurrence of debt,
A-43
<PAGE>
redemption provisions related to change of control, and incurrence of liens.
Clark R&M must maintain a minimum net worth of $100 million.
The scheduled maturities of long-term debt during the next five years are (in
millions): 1999--$3.2 (included in "Accrued expenses and other"); 2000--$10.6;
2001--$0.0; 2002--$0.0; 2003--$31.3; 2004 and thereafter--$765.4.
Extinguishment of Debt
In 1997, the Company redeemed its 10 1/2% Senior Notes. As a result, the
Company recorded an extraordinary loss of $10.7 million for the redemption
premiums ($5.9 million), the write-off of deferred financing costs ($3.7
million), and other related costs ($1.1 million).
Interest and finance costs, net
Interest and finance costs, net, included in the statements of net and other
comprehensive earnings, consisted of the following:
<TABLE>
<CAPTION>
1996 1997 1998
----- ------ -----
<S> <C> <C> <C>
Interest expense....................................... $42.9 $ 44.7 $61.4
Finance costs.......................................... 6.5 11.0 2.4
Interest and finance income............................ (9.7) (14.5) (9.8)
----- ------ -----
39.7 41.2 54.0
Capitalized interest................................... (1.0) (1.4) (3.0)
----- ------ -----
Interest and finance costs, net........................ $38.7 $ 39.8 $51.0
===== ====== =====
</TABLE>
Cash paid for interest expense in 1998 was $56.6 million (1997--$44.8
million; 1996--$42.9 million). Accrued interest payable as of December 31, 1998
of $13.3 million (December 31, 1997--$8.7 million, December 31, 1996--$6.8
million) was included in "Accrued expenses and other."
10. Lease Commitments
The Company leases refinery equipment, office space, and office equipment.
The lease terms for refinery equipment and office space and equipment range
from 1 to 8 years with the option to purchase some of the equipment at the end
of the lease term at fair market value. The leases generally provide that the
Company pay taxes, insurance, and maintenance expenses related to the leased
assets. As of December 31, 1998, net future minimum lease payments under non-
cancelable operating leases were as follows (in millions): 1999--$7.0; 2000--
$13.7; 2001--$2.6; 2002--$2.5; 2003--$2.3; and $1.0 in the aggregate
thereafter. Rental expense during 1998 was $5.4 million (1997--$4.6 million;
1996--$4.4 million).
11. Related Party Transactions
Clark USA, Inc.
During 1998, the Company returned $15.0 million of capital to Clark USA for
its repayment of interest related to the 10 7/8% Senior Notes.
During 1997, the Company returned $215.0 million of capital to Clark USA for
its repurchase of the Zero Coupon Notes.
Management Services
As of December 31, 1998, the Company had a payable to The Blackstone Group
("Blackstone"), an affiliate of its principal shareholder, of $3.2 million
(December 31, 1997--$2.0 million) for annual monitoring
A-44
<PAGE>
fees and transaction fees related to the Lima Acquisition. The Company has an
agreement with an affiliate of Blackstone under which Blackstone would receive
a monitoring fee equal to $2.0 million per annum (subject to increases relating
to inflation and in respect of additional acquisitions by the Company).
Affiliates of Blackstone may in the future receive customary fees for advisory
services rendered to the Company. Such fees will be negotiated from time to
time with the independent members of the Company's board of directors on an
arm's-length basis and will be based on the services performed and the
prevailing fees then charged by third parties for comparable services.
In connection with the Blackstone Transaction in 1997 (see Note 14 "Equity
Recapitalization and Change in Control"), affiliates of Blackstone received
fees of $7.0 million, and the Company reimbursed Blackstone for $1.7 million of
out-of-pocket expenses related to the Blackstone Transaction and the issuance
of the 8 3/8% Senior Notes and 8 7/8% Senior Subordinated Notes.
12. Employee Benefit Plans
Postretirement Benefits Other Than Pensions
Clark R&M provides health insurance in excess of social security and an
employee paid deductible amount, and life insurance to most retirees once they
have reached a specified age and specified years of service.
The following table sets forth the changes in the benefit obligation for the
unfunded post retirement health and life insurance plans for 1997 and 1998:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
------ ------
<S> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year...................... $ 27.3 $ 25.2
Service costs................................................ 0.8 1.1
Interest costs............................................... 1.7 2.1
Actuarial loss (gain)........................................ (3.7) 3.3
Benefits paid................................................ (0.9) (1.5)
Lima acquisition............................................. -- 4.8
------ ------
Benefit obligation at end of year............................ 25.2 35.0
Unrecognized net gain........................................ 3.9 0.5
Unrecognized prior service benefit........................... 0.2 0.2
------ ------
Accrued postretirement benefit liability..................... $ 29.3 $ 35.7
====== ======
</TABLE>
The components of net periodic postretirement benefit costs are as follows:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- -----
<S> <C> <C> <C>
Service costs............................................... $0.9 $0.8 $ 1.1
Interest costs.............................................. 1.9 1.7 2.1
Amortization of prior service cost and (gains) or losses.... -- -- (0.2)
---- ---- -----
Net periodic postretirement benefit cost.................... $2.8 $2.5 $ 3.0
==== ==== =====
</TABLE>
In measuring the expected postretirement benefit obligation, the Company
assumed a discount rate of 7.00% (1997--7.50%) as well as a 4.00% (1997--4.00%)
rate of increase in the compensation level, and utilized a health care cost
trend ranging from 7.25% to 8.25% in 1998, grading down to an ultimate rate of
5.25% in 2003. The effect of increasing the average health care cost trend
rates by one percentage point would increase the accumulated postretirement
benefit obligation as of December 31, 1998, by $7.4 million and increase the
annual aggregate service and interest costs by $0.6 million. The effect of
decreasing the average
A-45
<PAGE>
health care cost trend rates by one percentage point would decrease the
accumulated postretirement benefit obligation as of December 31, 1998, by $6.1
million and decrease the annual aggregate service and interest costs by $0.5
million.
Employee Savings Plan
The Clark Refining & Marketing, Inc. Retirement Savings Plan and separate
Trust (the "Plan"), a defined contribution plan, covers substantially all
employees of Clark. Under terms of the Plan, Clark R&M matches the amount of
employee contributions, subject to specified limits. Company contributions to
the Plan during 1998 were $6.4 million (1997--$5.4 million; 1996--$5.3
million).
13. Income Taxes
Clark provides for deferred taxes under the asset and liability approach
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.
The income tax provision (benefit) is summarized as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Earnings (loss) before provision for income taxes
Continuing operations............................ $(64.7) $(37.2) $(48.9)
Extraordinary item............................... -- (10.7) --
------ ------ ------
$(64.7) $(47.9) $(48.9)
====== ====== ======
Income tax provision (benefit):
Continuing operations............................ $(18.6) $ 10.4 $(12.9)
Extraordinary item............................... -- -- --
------ ------ ------
$(18.6) $ 10.4 $(12.9)
====== ====== ======
Current provision (benefit)--Federal............... $ (0.2) $ 8.7 $ (1.7)
--State................................. 4.4 1.5 (0.4)
------ ------ ------
4.2 10.2 (2.1)
------ ------ ------
Deferred provision (benefit)--Federal.............. (15.9) -- (10.4)
--State................................ (6.9) 0.2 (0.4)
------ ------ ------
(22.8) 0.2 (10.8)
------ ------ ------
Income tax provision (benefit)..................... $(18.6) $ 10.4 $(12.9)
====== ====== ======
</TABLE>
A reconciliation between the income tax provision computed on pretax income
at the statutory federal rate and the actual provision for income taxes is as
follows:
<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Federal taxes computed at 35%........................$.(22.6) $ (16.8) $ (17.1)
State taxes, net of federal effect.................. (1.6) 1.1 (0.5)
Nontaxable dividend income.......................... (2.4) (1.9) (0.4)
Valuation allowance................................. 6.1 28.4 2.3
Other items, net.................................... 1.9 (0.4) 2.8
------- ------- -------
Income tax provision (benefit)...................... $ (18.6) $ 10.4 $ (12.9)
======= ======= =======
</TABLE>
A-46
<PAGE>
The following represents the approximate tax effect of each significant
temporary difference giving rise to deferred tax liabilities and assets:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
------ ------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment.............................. $ 73.2 $ 84.9
Turnaround costs........................................... 13.1 14.1
Other...................................................... 0.8 3.6
------ ------
87.1 102.6
------ ------
Deferred tax assets:
Alternative minimum tax credit............................. 12.0 18.8
Trademarks................................................. -- --
Environmental and other future costs....................... 14.7 19.5
Tax loss carryforwards..................................... 87.4 67.0
Inventory.................................................. 3.7 44.8
Other...................................................... 17.2 13.5
------ ------
135.0 163.6
------ ------
Valuation allowance.......................................... (34.5) (36.8)
------ ------
Net deferred tax asset....................................... $ 13.4 $ 24.2
====== ======
</TABLE>
As of December 31, 1998, Clark has made net cumulative payments of $18.8
million under the Federal alternative minimum tax system which are available to
reduce future regular income tax payments. As of December 31, 1998, Clark had a
Federal net operating loss carryforward of $160.2 million and Federal business
tax credit carryforwards in the amount of $3.7 million. Such operating losses
and tax credit carryforwards have carryover periods of 15 years (20 years for
losses and credits originating in 1998 and years thereafter) and are available
to reduce future tax liabilities through the year ending December 31, 2018.
The valuation allowance as of December 31, 1998 was $36.8 million (1997--
$34.5 million). In calculating the increase in the valuation allowance, Clark
assumed as future taxable income only future reversals of existing taxable
temporary differences and available tax planning strategies.
Section 172 of the Internal Revenue Code ("Code") allows a 10-year carryback
period for specified liability losses, as defined. During 1997 and 1998, Clark
filed federal and state refund claims based upon the carryback of $85.6 million
of specified liability losses. The carryback of specified liability losses has
reduced Clark's Federal net operating loss carryforward as of December 31, 1998
to $160.2 million. The refund claims, if fully recovered, would provide a
current tax benefit of $18.2 million. In addition, the refund claims, if fully
recovered, would recharacterize $15.2 million of deferred tax assets from tax
loss carryforwards to alternative minimum tax credit carryforwards. However,
Section 172 of the Code is an unsettled area of the law and the refund claims
are currently under audit examination. Of the total potential current tax
benefit, Clark has recognized $7.6 million.
During 1998, Clark USA received net federal cash refunds of $10.2 million and
during 1997 and 1996, made Federal tax payments of $5.0 million and $2.7
million, respectively. The Company provides for its portion of such
consolidated refunds and liability under its tax sharing agreement with Clark
USA. During 1998, Clark made net cash state tax payments of $1.3 million
(1997--$2.6 million; 1996--$0.6 million).
Section 382 of the Code restricts the utilization of net operating losses and
other carryover tax attributes upon the occurrence of an ownership change, as
defined. Such an ownership change occurred during 1997 as a result of the
purchase of a majority interest in the Company by an affiliate of Blackstone
(see Note 14 "Equity Recapitalization and Change in Control"). However, based
upon the existence of future taxable income from
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<PAGE>
reversals of existing taxable temporary differences and available tax planning
strategies, management believes such limitation will not restrict the Company's
ability to significantly utilize the net operating losses over the allowable
carryforward periods.
14. Equity Recapitalization and Change in Control
On November 3, 1997, Blackstone acquired the 13,500,000 shares of Common
Stock of Clark USA previously held by TrizecHahn and certain of its
subsidiaries (the "Blackstone Transaction"), as a result of which Blackstone
obtained a controlling interest in the Clark USA.
In 1997, the Company recorded a charge to operations in the amount of $40.0
million for recapitalization expenses, asset write-offs, and other charges
incurred in connection with the Company's equity recapitalization and change in
control. The total charge includes $20.3 million of asset write-offs
principally related to an investment in a project initiated to produce low-
sulfur diesel fuel at the Hartford refinery (the "DHDS Project"); $10.7 million
of transaction, advisory, and monitoring fees related to the Blackstone
Transaction; and $9.0 million resulting from a change in strategic direction
primarily for certain environmental, legal and other accruals related to
existing actions.
In 1992, the DHDS Project was delayed based on internal and third party
analysis that indicated an oversupply of low-sulfur diesel fuel capacity in the
Company's market. Based on the analysis, the Company projected relatively
narrow price differentials between low and high sulfur products. In December
1997, subsequent to the Blackstone Transaction, the Company determined that
certain equipment purchased for the DHDS Project would yield a higher value
being utilized at the Hartford and Port Arthur refineries, rather than
remaining idle until the diesel fuel differentials widened sufficiently to
justify completing the DHDS Project. As a result of this decision, the
equipment was written down to its fair market value.
15. Stock Option Plans
The Company has adopted a compensatory Long-Term Performance Plan (the
"Performance Plan"). Under the Performance Plan, designated employees,
including executive officers, of the Company and its subsidiaries and other
related entities are eligible to receive awards in the form of stock options,
stock appreciation rights, and stock grants.
An aggregate of 1,250,000 shares of Clark USA Inc., Common Stock may be
awarded under the Performance Plan, either from authorized, unissued shares
which have been reserved for such purpose or from shares purchased on the open
market, subject to adjustment in the event of a stock split, stock dividend,
recapitalization or similar change in the outstanding Common Stock of the
Company. The options normally extend for 10 years and become fully vested
within 3 years of the grant date, or with a change of control, as defined in
the Plan. Also upon change of control, participants are entitled to a cash
payment in an amount equal to the difference between the option price and
either the final offer price in a tender or exchange offer or a price
determined by the Compensation Committee. The Blackstone Transaction
constituted a change in control under the Plan, which caused all granted shares
to become fully vested, but did not invoke any cash payments. The stock options
granted may not be sold or otherwise transferred, and are not exercisable until
after a public offering of stock is completed by the Company. Stock granted
under this plan is priced at the fair market value at the date of grant.
No stock options have been granted under the Performance Plan since 1995. As
of December 31, 1998, 323,750 stock options were outstanding (1997--531,500;
1996--549,000) at an exercise price of $15 per share. No shares were exercised
in 1998 or 1997, and 207,750 and 17,500 shares were forfeited in 1998 and 1997,
respectively. As of December 31, 1998, 323,750 shares were fully vested (1997--
531,500).
A-48
<PAGE>
16. Commitments and Contingencies
Clark R&M is subject to various legal proceedings related to governmental
regulations and other actions arising out of the normal course of business,
including legal proceedings related to environmental matters. Among those
actions and proceedings are the following:
Clark R&M is the subject of a purported class action lawsuit related to an
on-site electrical malfunction at Clark R&M's Blue Island Refinery on October
7, 1994, which resulted in the release to the atmosphere of used catalyst
containing low levels of heavy metals, including antimony, nickel and vanadium.
This release resulted in the temporary evacuation of certain areas near the
refinery, including a high school, and approximately fifty people were taken to
area hospitals. Clark R&M offered to reimburse the medical expenses incurred by
persons receiving treatment. The purported class action lawsuit was filed on
behalf of various named individuals and purported plaintiff classes, including
residents of Blue Island, Illinois and Eisenhower High School students,
alleging claims based on common law nuisance, negligence, willful and wanton
negligence and the Illinois Family Expense Act as a result of this incident.
Plaintiffs seek to recover damages in an unspecified amount for alleged medical
expenses, diminished property values, pain and suffering and other damages.
Plaintiffs also seek punitive damages in an unspecified amount.
While it is not possible at this time to establish the ultimate amount of
liability with respect to the Company's contingent liabilities, Clark R&M and
the Company are of the opinion that the aggregate amount of any such
liabilities, for which provision has not been made, will not have a material
adverse effect on their financial position; however, an adverse outcome of any
one or more of these matters could have a material effect on quarterly or
annual operating results or cash flows when resolved in a future period.
In March 1998, the Company entered into a long-term crude oil supply
agreement with PMI, an affiliate of Petroleos Mexicanos, the Mexican state oil
company, which provides the Company with the foundation necessary to continue
developing a project to upgrade the Port Arthur refinery to process primarily
lower-cost, heavy sour crude oil. The project is expected to cost $600-$700
million and include the construction of additional coking and hydrocracking
capability, and the expansion of crude unit capacity to approximately 250,000
barrels per day. Although the Company, Clark USA and its shareholders are
currently evaluating alternatives for financing the project, it is expected
that the financing will be on a non-recourse basis to the Company. The oil
supply agreement with PMI and the construction work-in-progress are expected to
be transferred for value to a non-recourse entity that will likely be an
affiliate of, but not be controlled by, the Company and its subsidiaries. The
Company expects to enter into agreements with its affiliate pursuant to which
the Company would provide certain operating, maintenance and other services and
would purchase the output from the new coking and hydrocracking equipment for
further processing into finished products. The Company expects to receive
compensation under these agreements at fair market value that is expected to be
favorable to the Company.
In the event the project financing cannot be completed on a non-recourse
basis to the Company as contemplated, the restrictions in the Company's
existing debt instruments would likely prohibit the Company and its
subsidiaries from raising the financing themselves and thus completing the
project. Notwithstanding the foregoing, however, the Company has begun entering
into purchase orders, some of which contain cancellation penalties and
provisions, for material, equipment and services related to this project. As of
December 31, 1998, non-cancelable amounts of approximately $80 million had
accumulated under these purchase orders. Additional purchase orders and
commitments have been made and are expected to continue to be made during 1999.
If the project were cancelled, the Company would be required to pay a
termination fee of approximately $200,000 per month to PMI from September 1,
1998 to the cancellation date. In addition, the Company would be subject to
payment of the non-cancelable commitments and required to record a charge to
earnings for all expenditures to date. Although the financing is expected to be
completed in the first half of 1999, there can be no assurance that the
financing for the project will be successful or that the project can be
completed as contemplated.
A-49
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q/A
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 1-11392
----------------
CLARK REFINING & MARKETING, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1491230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8182 Maryland Avenue St. Louis, 63105-3721
Missouri (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code (314) 854-9696
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Number of shares of registrant's common stock, $.01 par value, outstanding as
of November 10, 1999: 100, all of which were owned by Clark USA, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-50
<PAGE>
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Form 10-Q for the quarterly
period ended September 30, 1999 as set forth in the pages attached hereto:
(list all such items, financial statements, exhibits or other portions amended)
1. Item 1 Financial Statements--Amended to insert $4.3 million omitted from the
September 30, 1999 "Discontinued operations" line in the Consolidated
Statement of Cash Flows. No other amounts or totals from the Consolidated
Statement of Cash Flows or any other financial statement or the notes
thereto changed due to this omission.
A-51
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of
Clark Refining & Marketing, Inc:
We have reviewed the accompanying consolidated balance sheet of Clark
Refining & Marketing, Inc. and Subsidiaries (the "Company") as of September 30,
1999, and the related consolidated statements of operations for the three and
nine month periods ended September 30, 1998 and 1999, and the consolidated
statements of cash flows for the nine month periods then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1998, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein); and in
our report dated February 6, 1999 (except Note 3 for which the date was July 8,
1999), we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1998 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
Deloitte & Touche LLP
St. Louis, Missouri
November 9, 1999
A-52
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share data)
<TABLE>
<CAPTION>
Reference December 31, September 30,
Note 1998 1999
--------- ------------ -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............... $ 147.5 $ 231.3
Short-term investments.................. 4.5 1.5
Accounts receivable..................... 130.7 182.1
Receivable from affiliates.............. 2.3 7.0
Inventories............................. 3 267.7 326.7
Prepaid expenses and other.............. 31.6 38.1
Net assets held for sale................ 7 143.2 --
-------- --------
Total current assets.................. 727.5 786.7
Property, Plant, And Equipment, Net....... 627.4 620.5
Other Assets.............................. 4 92.1 110.6
-------- --------
$1,447.0 $1,517.8
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable........................ $ 250.3 $ 318.5
Payable to affiliates................... 25.2 26.2
Accrued expenses and other.............. 5 64.3 65.5
Accrued taxes other than income......... 25.9 30.7
-------- --------
Total current liabilities............. 365.7 440.9
Long-term Debt............................ 805.2 802.9
Other Long-term Liabilities............... 51.1 63.0
Commitments And Contingencies............. 8 -- --
COMMON STOCKHOLDER'S EQUITY:
Common stock ($.01 par value per share;
1,000 shares authorized and 100 shares
issued and outstanding)................ -- --
Paid-in capital......................... 234.2 194.7
Retained earnings (deficit)............. (9.2) 16.3
-------- --------
Total stockholder's equity............ 225.0 211.0
-------- --------
$1,447.0 $1,517.8
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
A-53
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
For the Three
Months Ended
September 30,
Reference -------------------
Note 1998 1999
--------- -------- ---------
<S> <C> <C> <C>
Net Sales and Operating Revenues................ $1,019.1 $ 1,137.5
Expenses:
Cost of sales................................. (880.5) (1,015.8)
Operating expenses............................ (89.0) (104.5)
General and administrative expenses........... (12.6) (12.5)
Depreciation.................................. (7.3) (9.1)
Amortization.................................. (6.9) (6.5)
Inventory recovery (write-down) to market..... 3 20.5 --
-------- ---------
(975.8) (1,148.4)
-------- ---------
Gain on Sale of Pipeline Interests.............. 69.3 --
-------- ---------
Operating Income (Loss)......................... 112.6 (10.9)
Interest and finance costs, net............... 4, 5 (13.5) (14.4)
-------- ---------
Earnings (Loss) From Continuing Operations
Before Income Taxes............................ 99.1 (25.3)
Income tax benefit............................ 6 3.9 13.2
-------- ---------
Earnings (Loss) From Continuing Operations...... 103.0 (12.1)
Discontinued operations, net of income tax
benefit of $5.7
(1998--provision of $3.9).................... 7 6.3 (9.2)
Gain on disposal of discontinued operations,
net of taxes of $23.3........................ 7 -- 36.6
-------- ---------
Net Earnings.................................... $ 109.3 $ 15.3
======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
A-54
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
Reference --------------------
Note 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net Sales and Operating Revenues............... $ 2,599.9 $ 3,094.1
Expenses:
Cost of sales................................ (2,228.3) (2,796.0)
Operating expenses........................... (241.2) (297.0)
General and administrative expenses.......... (36.2) (38.1)
Depreciation................................. (20.2) (26.5)
Amortization................................. (18.7) (18.5)
Inventory recovery (write-down) to market.... 3 (10.4) 105.8
--------- ---------
(2,555.0) (3,070.3)
--------- ---------
Gain on Sale of Pipeline Interests............. 69.3 --
--------- ---------
Operating Income............................... 114.2 23.8
Interest and finance costs, net.............. 4, 5 (35.5) (46.4)
--------- ---------
Earnings (loss) From Continuing Operations
Before Income Taxes........................... 78.7 (22.6)
Income tax benefit........................... 6 3.7 15.8
--------- ---------
Earnings (loss) From Continuing Operations..... 82.4 (6.8)
Discontinued operations, net of income tax
benefit of $2.7 (1998--provision of $3.9)... 7 6.3 (4.3)
Gain on disposal of discontinued operations,
net of taxes of $23.3....................... 7 -- 36.6
--------- ---------
Net Earnings................................... $ 88.7 $ 25.5
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
A-55
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
--------------------
1998 1999
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings............................................. $ 88.7 $ 25.5
Discontinued operations.................................. (6.3) 4.3
Adjustments:
Depreciation............................................ 20.2 26.5
Amortization............................................ 20.3 23.0
Deferred income taxes................................... -- 8.2
Gain on sale of pipeline and retail interests........... (69.3) (59.9)
Inventory (recovery) write-down to market............... 10.4 (105.8)
Other, net.............................................. 6.9 20.4
Cash provided by (reinvested in) working capital -
Accounts receivable, prepaid expenses and other ........ (145.0) (54.6)
Inventories............................................. (176.2) 48.1
Accounts payable, accrued expenses, taxes other than
income and other....................................... 125.2 68.5
--------- ---------
Net cash provided by (used in) operating activities of
continuing operations................................. (125.1) 4.2
Net cash provided by (used in) operating activities of
discontinued operations............................... 10.2 (1.6)
--------- ---------
Net cash provided by (used in) operating activities.... (114.9) 2.6
--------- ---------
Cash Flows From Investing Activities:
Expenditures for property, plant and equipment........... (38.0) (49.9)
Expenditures for turnaround.............................. (13.8) (66.3)
Refinery acquisition expenditures........................ (177.7) --
Proceeds from sale of assets ............................ 76.4 214.9
Proceeds from transfer of assets to Port Arthur Coker
Company L.P., net....................................... (8.1) 26.6
Purchases of short-term investments...................... -- (3.2)
Sales and maturities of short-term investments........... -- 2.9
Discontinued operations.................................. -- (1.8)
--------- ---------
Net cash provided by (used in) investing activities.... (161.2) 123.2
--------- ---------
Cash Flows From Financing Activities:
Long-term debt payments................................. (5.9) (2.5)
Proceeds from issuance of long-term debt................ 224.7 --
Capital contribution returned .......................... (9.5) (39.5)
Deferred financing costs................................ (7.9) --
--------- ---------
Net cash provided by (used in) financing activities.... 201.4 (42.0)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents.... (74.7) 83.8
Cash and Cash Equivalents, beginning of period ......... 228.1 147.5
--------- ---------
Cash and Cash Equivalents, end of period................ $ 153.4 $ 231.3
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
A-56
<PAGE>
FORM 10-Q--PART I
ITEM 1 Financial Statements (continued)
Clark Refining & Marketing, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 30, 1999
(tabular dollar amounts in millions of U.S. dollars)
1. Basis of Preparation
The consolidated interim financial statements of Clark Refining & Marketing,
Inc. and Subsidiaries (the "Company") have been reviewed by independent
accountants. In the opinion of the management of the Company, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial statements have been included therein. The
financial statements are presented in accordance with the disclosure
requirements for Form 10-Q. These unaudited financial statements should be read
in conjunction with the audited financial statements and notes thereto included
in the Company's 1998 Annual Report on Form 10-K/A.
The Company has made certain reclassifications to the prior period to conform
to current period presentation.
2. Accounting Changes
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. The Company is required to adopt this statement effective January
1, 2001. SFAS No. 133 will require the Company to record all derivatives on the
balance sheet at fair value. Changes in derivative fair value will either be
recognized in earnings as offsets to the changes in fair value of related
hedged assets, liabilities, and firm commitments or, for forecasted
transactions, deferred and recorded as a component of comprehensive income
until the hedged transactions occur and are recognized in earnings. The
ineffective portion of a hedging derivative's change in fair value will be
recognized in earnings immediately. The Company is currently evaluating when it
will adopt this standard and the impact of the standard on the Company. The
impact of SFAS No. 133 will depend on a variety of factors, including future
interpretive guidance, the future level of hedging activity, the types of
hedging instruments used, and the effectiveness of such instruments.
3. Inventories
The carrying value of inventories consisted of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
<S> <C> <C>
Crude oil......................................... $ 165.3 $103.6
Refined and blendstocks........................... 186.4 199.0
LIFO inventory cost excess over market............ (105.8) --
Warehouse stock and other......................... 21.8 24.1
------- ------
$ 267.7 $326.7
======= ======
</TABLE>
The market value of the crude oil and refined product inventories at
September 30, 1999 was approximately $116.8 million above carrying value.
4. Other Assets
Amortization of deferred financing costs for the three-month and nine-month
periods ended September 30, 1999 was $1.5 million (1998--$0.5 million) and $4.4
million (1998--$1.5 million), respectively, and was included in "Interest and
finance costs, net."
A-57
<PAGE>
5. Interest and Finance Costs, net
Interest and finance costs, net, consisted of the following:
<TABLE>
<CAPTION>
For the For the
three months nine months
ended ended
September September
30, 30,
------------- ------------
1998 1999 1998 1999
------ ----- ----- -----
<S> <C> <C> <C> <C>
Interest expense................................ $ 16.0 $18.3 $42.9 $55.4
Financing costs................................. 0.5 1.7 1.4 4.7
Interest and finance income..................... (2.3) (3.3) (7.1) (6.2)
------ ----- ----- -----
14.2 16.7 37.2 53.9
Capitalized interest............................ (0.7) (2.3) (1.7) (7.5)
------ ----- ----- -----
$ 13.5 $14.4 $35.5 $46.4
====== ===== ===== =====
</TABLE>
Cash paid for interest expense for the three-month and nine-month periods
ended September 30, 1999 was $18.7 million (1998--$12.0 million) and $55.9
million (1998--$38.7 million), respectively. Accrued interest payable as of
September 30, 1999 of $13.0 million (December 31, 1998--$13.3 million) was
included in "Accrued expenses and other."
6. Income Taxes
The Company received net cash income tax refunds totaling $0.5 million for
the three months ended September 30, 1999 (1998--net cash income tax payments
of $0.1 million), and received net cash income tax refunds totaling $0.5
million for the nine-month period ended September 30, 1999 (1998--net cash
income tax payments $1.0 million).
The income tax benefit on the Earnings (Loss) from Continuing Operations of
$13.2 million and $15.8 million for the three and nine-month periods ended
September 30, 1999 reflects the effects of intraperiod tax allocations
resulting from the utilization of net operating losses to offset the income tax
provision resulting from the Gain on Disposal of Discontinued Operations and
the income tax benefit from Discontinued Operations, as well as the write-down
of a net deferred tax asset.
7. Disposition of Retail Division
In July 1999, the Company sold its retail marketing operation in a
recapitalization transaction to a company controlled by Apollo Management L.P.
for approximately $230 million. The retail marketing operation sold included
all Company and independently-operated Clark-branded stores and the Clark trade
name. After all transaction costs, the sale generated cash proceeds of
approximately $215 million. See Exhibit 10.0 Asset Contribution and
Recapitalization Agreement filed with the Company's Quarterly Report on Form
10-Q for the period ended March 31, 1999. In general, the buyer assumed unknown
environmental liabilities at the retail stores they acquired up to $50,000 per
site, as well as responsibility for any post closing contamination. Subject to
certain risk sharing arrangements, the Company retained responsibility for all
pre-existing, known contamination. The Company's indirect parent, Clark
Refining Holdings Inc., acquired a six percent equity interest in the retail
marketing operation. As part of the sale agreement, the Company also entered
into a two-year market-based supply agreement for refined products that will be
provided to the retail business through the Company's Midwest refining and
distribution network. This network was not included in the sale. The buyer may
cancel the supply agreement with 90 days notice. The retail marketing operation
was sold in order to allow the Company to focus its human and financial
resources on the continued improvement and expansion of its refining business,
which it believes will generate higher future returns.
The retail marketing operations were classified as a discontinued operation
and the results of operations were excluded from continuing operations in the
consolidated statements of operations beginning with the
A-58
<PAGE>
periods ended March 31, 1998 and 1999. A pre-tax gain on the sale of $59.9
million ($36.6 million, net of income taxes) was recognized in the third
quarter of 1999.
The net sales revenue from the retail marketing operation for the three-month
and nine-month periods ended September 30, 1999 was $20.2 million (1998--$238.6
million) and $485.1 million (1998--$719.7 million), respectively. "Net assets
held for sale" included in the Company's Consolidated Balance Sheet as of
December 31, 1998 consisted of the following:
<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
Current Assets.................................................. $ 43.1
Noncurrent Assets............................................... 187.5
------
Total Assets.................................................. 230.6
======
Current Liabilities............................................. 62.7
Noncurrent Liabilities.......................................... 24.7
------
Total Liabilities............................................. 87.4
------
Net Assets Held For Sale........................................ $143.2
======
</TABLE>
8. Commitments and Contingencies
The Company is subject to various legal proceedings related to governmental
regulations and other actions arising out of the normal course of business,
including legal proceedings related to environmental matters. While it is not
possible at this time to establish the ultimate amount of liability with
respect to such contingent liabilities, the Company is of the opinion that the
aggregate amount of any such liabilities, for which provision has not been
made, will not have a material adverse effect on their financial position;
however, an adverse outcome of any one or more of these matters could have a
material effect on quarterly or annual operating results or cash flows when
resolved in a future period.
In March 1998, the Company announced that it had entered into a long-term
crude oil supply agreement with P.M.I. Comercio Internacional, S.A. de C.V.
("PMI"), an affiliate of Petroleos Mexicanos, the Mexican state oil company.
The contract provided the Company with the foundation necessary to continue
developing a project to upgrade its Port Arthur, Texas refinery to process
primarily lower-cost, heavy sour crude oil. The project includes the
construction of additional coking and hydrocracking capability, and the
expansion of crude unit capacity to approximately 250,000 barrels per day.
Financing for the new major processing units in the project was arranged by
Port Arthur Coker Company L.P., a company that is an affiliate of, but not
controlled by, the Company in the third quarter of 1999. The oil supply
agreement with PMI and the construction work-in-progress related to the new
processing units were transferred for value to Port Arthur Coker Company L.P.
in the third quarter of 1999. In connection with the project, the Company will
lease certain existing processing units to Port Arthur Coker Company L.P. on
fair market terms and, pursuant to this lease, will be obligated to make
certain modifications, infrastructure improvements and incur certain
development costs during 1999 and 2000 at an estimated cost up to $120 million.
To secure this commitment, the Company posted a letter of credit in the amount
of $97.0 million at the closing, all of which was outstanding at September 30,
1999. As of September 30, 1999, the Company had expended approximately $35.8
million towards this commitment. In addition, the Company entered into
agreements with Port Arthur Coker Company L.P. pursuant to which the Company
will provide certain operating, maintenance and other services and will
purchase the output from the new coking and hydrocracking equipment for further
processing into finished products. The Company also entered into agreements
under which Port Arthur Coker Company L.P. will process certain hydrocarbon
streams owned by the Company. The Company will receive and pay compensation at
fair market value under these agreements, which in the aggregate are expected
to be favorable to the Company.
A-59
<PAGE>
ITEM 2--Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Financial Highlights
The following table reflects Clark Refining & Marketing, Inc.'s (the
"Company") financial and operating highlights for the three and nine-month
periods ended September 30, 1998 and 1999. The Company is a wholly-owned
subsidiary of Clark USA, Inc., which is wholly-owned by Clark Refining Holdings
Inc. ("Holdings"). All amounts listed are dollars in millions, except per
barrel information. Certain information was restated to reflect current period
presentation. The table provides supplementary data and is not intended to
represent an income statement presented in accordance with generally accepted
accounting principles.
Operating Income:
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
---------------- ----------------
1998 1999 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Port Arthur Refinery
Crude oil throughput (thousand bbls per
day)..................................... 223.6 189.8 226.3 205.2
Production (thousand bbls per day)........ 219.9 208.6 226.7 217.3
Gross margin ($ per barrel of production). $ 3.12 $ 2.43 $ 3.71 $ 2.14
Gulf Coast 3/2/1 crack spread ($ per
barrel).................................. 1.99 2.54 2.63 1.73
Operating expenses........................ (44.9) (44.9) (132.9) (124.0)
Net margin................................ $ 18.2 $ 1.8 $ 96.7 $ 3.0
Midwest Refineries and Other
Crude oil throughput (thousand bbls per
day)..................................... 221.6 245.2 153.4 252.4
Production (thousand bbls per day)........ 216.0 257.4 152.7 266.8
Gross margin ($ per barrel of production). $ 2.74 $ 2.24 $ 3.44 $ 1.97
Chicago 3/2/1 crack spread ($ per barrel). 3.30 3.72 3.68 2.83
Operating expenses........................ (44.0) (59.6) (108.2) (173.0)
Net margin................................ $ 10.3 $ (6.6) $ 35.1 $ (29.4)
General and administrative expenses........ (12.6) (12.5) (36.2) (38.1)
------- ------- ------- -------
Operating contribution (loss)............ $ 15.9 $ (17.3) $ 95.6 $ (64.5)
Inventory timing adjustment gain (loss)
(a)....................................... 21.1 22.0 (1.4) 27.5
Inventory recovery (write-down) to market.. 20.5 -- (10.4) 105.8
Gain on sale of assets..................... 69.3 -- 69.3 --
Depreciation and amortization.............. (14.2) (15.6) (38.9) (45.0)
------- ------- ------- -------
Operating income (loss).................. $ 112.6 $ (10.9) $ 114.2 $ 23.8
======= ======= ======= =======
</TABLE>
- --------
(a) Includes gains and losses caused by the timing differences between when
crude oil is actually purchased and refined products are actually sold, and
a daily "market in, market out" operations measurement methodology.
The Company recorded net earnings of $15.3 million in the third quarter of
1999 versus net earnings of $109.3 million in the same period a year ago. For
the first nine months of 1999, the Company recorded net earnings of $25.5
million versus net earnings of $88.7 million in the same period a year ago. Net
earnings in the third quarter of 1999 included a pre-tax gain on the sale of
the company's retail division of $59.9 million and net earnings in the third
quarter of 1998 included a pre-tax gain on the sale of certain pipeline
interests of $69.3 million. Earnings in the first nine months of 1999 also
benefited from rising petroleum prices as
A-60
<PAGE>
demonstrated by an over $12.00 per barrel increase in benchmark West Texas
Intermediate ("WTI") crude oil prices. Associated inventory gains in the first
nine months of 1999 were a result of a recovery of previous non-cash inventory
writedowns of $105.8 million (1998--loss of $10.4 million) and the cash benefit
of the price increases on the lag between crude oil purchases and product sales
of $27.5 million (1998--loss of $1.4 million).
Net sales and operating revenues increased approximately 12% and 19% in the
three and nine months ended September 30, 1999, respectively, as compared to
the same periods of 1998. These increases were principally due to additional
sales volumes resulting from the acquisition of the Lima refinery in August
1998.
Operating Contribution (earnings before interest, depreciation, amortization,
inventory-related items and taxes) from continuing operations was a loss of
$17.3 million in the third quarter of 1999 versus a contribution of $15.9
million for the same period a year ago. Operating Contribution from continuing
operations was a loss of $64.5 million in the first nine months of 1999 versus
a contribution of $95.6 million in the same period of 1998. Operating
Contribution in both the third quarter and first nine months of 1999 trailed
the prior year due to weaker market conditions and significant planned and
unplanned downtime, particularly in the third quarter of 1999.
Three of the Company's four refineries had curtailed operations during the
third quarter of 1999. During September, a planned maintenance turnaround was
performed on the Company's Lima, Ohio refinery that reduced production and
resulted in a lost gross margin opportunity of an estimated $15 million with
similar activities resulting in an estimated $5 million lost gross margin
opportunity in the first quarter of 1999. Operating Contribution was further
reduced by an estimated $18 million in the third quarter of 1999 due to
unplanned downtime. The Lima refinery ran at reduced rates in August due to an
interruption of crude oil deliveries caused by a fire in a Chevron crude oil
pipeline. In addition, a lightning-induced power outage and related downtime at
the Company's Port Arthur, Texas refinery and operating problems with the
Hartford, Illinois refinery's coker unit reduced Operating Contribution.
Industry light product margins improved in the third quarter from anemic
first half levels on improving inventory fundamentals, but this improvement was
more than offset by lower margins on by-products whose prices did not track
third quarter crude price increases and by narrower discounts for heavy and
light sour crude oil. Gulf Coast 3/2/1 crack spread refining margin indicators
in the first nine months of 1999 decreased to $1.73 per barrel (1998--$2.63 per
barrel) as the third consecutive warmer-than-normal winter heating season
resulted in high industry inventories on a historical basis. As of November 9,
1999, light product inventories had improved to below 1998 levels and
approached five-year averages. The Company believes the narrower crude oil
differentials were due principally to Latin American oil exporters
disproportionately reducing supplies of heavy crude oil sales as part of the
accord reached among OPEC and non-OPEC producers to reduce the world oil glut
that existed earlier this year. Discounts for the benchmark Maya/WTI
differentials narrowed to $4.35 per barrel (1998--$5.17) in the third quarter
and to $4.67 per barrel (1998--$5.94) for the year to date. Refining market
conditions in the first nine months of 1999 were the most unfavorable of the
last 15 years.
Crude oil throughput and related production in the Company's Midwest
refineries was higher in the third quarter and first nine months of 1999
principally because of the addition of the Lima refinery in August 1998.
However, the increase in production resulting from the Lima refinery
acquisition was partially offset by a reduction in throughput due to the poor
refining margins in the first nine months of 1999, leaks in major interstate
crude oil pipelines supplying the Midwest refineries and other planned and
unplanned downtime. Crude oil throughput and production was also reduced at the
Port Arthur refinery in the third quarter and first nine months of 1999 due to
weak market conditions.
Midwest refining operating expenses increased because of the addition of the
Lima refinery. Port Arthur operating expenses were reduced in the first nine
months of 1999 due to lower maintenance and gain sharing expenses and the
positive impact of lower natural gas prices early in 1999 on fuel costs.
A-61
<PAGE>
Other Financial Highlights
The Company has expended $5.2 million from inception of its year 2000 systems
remediation program through September 30, 1999. The Company believes that as of
October 1999 its mission critical embedded processors at refineries and mission
critical systems, including hardware and software, were ready for the year
2000. In addition, the Company's mission critical business partners had
represented that their mission critical systems were remediated. In the event
the Company incurs year 2000-related problems with its mission critical systems
or processes, contingency plans have been developed to handle such occurrences.
More information on the Company's year 2000 program is discussed in the
Company's Annual Report on Form 10-K/A for the year ended December 31, 1998.
Depreciation and amortization expenses increased in the three and nine months
ended September 30, 1999 over the comparable periods in 1998 principally
because of the acquisition of the Lima refinery. Interest and finance costs,
net for the three and nine months ended September 30, 1999 increased over the
comparable periods in 1998 principally because of increased debt associated
with the acquisition of the Lima refinery.
The income tax benefit on the Earnings (Loss) from Continuing Operations of
$13.2 million and $15.8 million for the three and nine-month periods ended
September 30, 1999 reflects the effects of intraperiod tax allocations
resulting from the utilization of net operating losses to offset the income tax
provision resulting from the gain on the sale of the retail division ($23.7
million) and the income tax benefit from Discontinued Operations, as well as
the write-down of a net deferred tax asset.
Sale of Retail Division
In July 1999, the Company sold its retail marketing operation in a
recapitalization transaction to a company controlled by Apollo Management L.P.
for approximately $230 million. The retail marketing operation sold included
all Company and independently-operated retail stores and the Clark trade name.
After all transaction costs, the sale generated cash proceeds of approximately
$215 million. See Exhibit 10.0 Asset Contribution and Recapitalization
Agreement filed with the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1999. In general, the buyer assumed unknown environmental
liabilities at the retail stores they acquired up to $50,000 per site, as well
as responsibility for any post closing contamination. Subject to certain risk
sharing arrangements, the Company retained responsibility for all pre-existing
known contamination. Holdings acquired a six percent equity interest in the
retail marketing operation. As part of the sale agreement, the Company also
entered into a two-year market-based supply agreement for refined products that
will be provided to the retail business through the Company's Midwest refining
and distribution network. This network was not included in the sale. The buyer
may cancel the supply agreement with 90 days notice. The retail marketing
operation was sold in order to allow the Company to focus its human and
financial resources on the continued improvement and expansion of its refining
business, which it believes will generate higher future returns.
The retail marketing operations were classified as a discontinued operation
and the results of operations were excluded from continuing operations in the
consolidated statements of operations beginning with the periods ended March
31, 1998 and 1999. A pre-tax gain on the sale of $59.9 million ($36.6 million,
net of income taxes) was recognized in the third quarter of 1999.
Liquidity and Capital Resources
Net cash used in operating activities, excluding working capital changes, for
the nine months ended September 30, 1999 was $57.8 million compared to cash
provided by operating activities of $70.9 million in the year-earlier period.
Working capital as of September 30, 1999 was $345.8 million, a 1.78-to-1
current ratio, versus $361.8 million as of December 31, 1998, a 1.99-to-1
current ratio. Working capital at December 31, 1998 included the retail
division net assets held for sale. The benefit to working capital from
increased petroleum prices and the sale of the retail division for a gain in
the first nine months of 1999 was offset by cash flow from operating activities
and capital expenditures.
A-62
<PAGE>
In general, the Company's short-term working capital requirements fluctuate
with the price and payment terms of crude oil and refined petroleum products.
The Company has in place a credit agreement (the "Credit Agreement") which
provides for borrowings and the issuance of letters of credit up to the lesser
of $700 million, or the amount of a borrowing base calculated with respect to
the Company's cash, short-term investments, eligible receivables and
hydrocarbon inventories. Direct borrowings under the Credit Agreement are
limited to the principal amount of $150 million. Borrowings under the Credit
Agreement are secured by a lien on substantially all of the Company's cash and
cash equivalents, receivables, crude oil and refined product inventories and
trademarks. The amount available under the borrowing base associated with such
facility at September 30, 1999 was $695 million and approximately $426 million
of the facility was utilized for letters of credit. As of September 30, 1999,
there were no direct borrowings under the Credit Agreement. The Credit
Agreement expires on December 31, 1999 and the Company expects to amend or
replace the agreement by the end of November 1999.
Cash flows generated from investing activities in the first nine months of
1999 were $123.2 million as compared to cash flows used in investing activities
of $161.2 million in the year-earlier period. The variance between the first
nine months of 1999 and 1998 was principally due to proceeds from the sale of
the Company's retail division and the transfer of assets to Port Arthur Coker
Company L.P. in 1999, while the prior year included expenditures of $177.7
million related to the acquisition the Lima refinery that were only partially
offset by the proceeds from the sale of minority pipeline interests. Scheduled
maintenance turnaround expenditures in the first nine months of 1999 exceeded
that same period in the prior year due to increased turnaround activity at the
Lima and Port Arthur refineries. Expenditures for property, plant and equipment
totaled $49.9 million in the first nine months of 1999 (1998--$38.0 million)
and included $18.6 million related to the Company's portion of a project being
undertaken in conjunction with Port Arthur Coker Company L.P. to upgrade the
Port Arthur refinery to allow it to process up to 80% heavy sour crude oil.
In March 1998, the Company announced that it had entered into a long-term
crude oil supply agreement with P.M.I. Comercio Internacional, S.A. de C.V.
("PMI"), an affiliate of Petroleos Mexicanos, the Mexican state oil company.
The contract provided the Company with the foundation necessary to continue
developing a project to upgrade its Port Arthur, Texas refinery to process
primarily lower-cost, heavy sour crude oil. The project includes the
construction of additional coking and hydrocracking capability, and the
expansion of crude unit capacity to approximately 250,000 barrels per day.
Financing for the new major processing units in the project was arranged by
Port Arthur Coker Company L.P., a company that is an affiliate of, but not
controlled by, the Company and its subsidiaries in the third quarter of 1999.
The oil supply agreement with PMI and the construction work-in-progress related
to the new processing units were transferred for value to Port Arthur Coker
Company L.P. in the third quarter of 1999. In connection with the project, the
Company will lease certain existing processing units to Port Arthur Coker
Company L.P. on fair market terms and, pursuant to this lease, will be
obligated to make certain modifications, infrastructure improvements and incur
certain development costs during 1999 and 2000 at an estimated cost up to $120
million. To secure this commitment, the Company posted a letter of credit in
the amount of $97.0 million at the closing, all of which was outstanding at
September 30, 1999. As of September 30, 1999, the Company had expended
approximately $35.8 million towards this commitment. In addition, the Company
entered into agreements with Port Arthur Coker Company L.P. pursuant to which
the Company will provide certain operating, maintenance and other services and
will purchase the output from the new coking and hydrocracking equipment for
further processing into finished products. The Company also entered into
agreements under which Port Arthur Coker Company L.P. will process certain
hydrocarbon streams owned by the Company. The Company will receive and pay
compensation at fair market value under these agreements, which in the
aggregate are expected to be favorable to the Company.
In June 1999, the Company signed a non-binding letter of intent to pursue the
acquisition of Equilon Enterprises, L.L.C.'s ("Equilon") 295,000 barrel per day
Wood River, Illinois refinery, which is adjacent to the Company's Hartford,
Illinois refinery. Separately, the Company signed a non-binding letter of
intent to sell 12 distribution terminals to Equilon.
A-63
<PAGE>
Cash flows from financing activities for first nine months of 1999 were
reduced compared to the same period in 1998 principally because of the proceeds
received in 1998 to partially finance the acquisition of the Lima refinery.
Funds generated from the Company's operating activities together with
existing cash, cash equivalents and short-term investments are expected to be
adequate to fund requirements for working capital and capital expenditure
programs for the next year. Future working capital investments, discretionary
and non-discretionary capital expenditures, and acquisitons may require
additional debt or equity financing.
PART II--OTHER INFORMATION
ITEM 1--Legal Proceedings
On July 6, 1999, Clark Refining & Marketing, Inc. was served with a civil
administrative complaint by the United States Environmental Protection Agency,
Region 5, alleging certain violations of the Emergency Planning and Community
Right-to-Know Act, and regulations promulgated thereunder, with respect to
certain record-keeping and reporting requirements relating to the Hartford
refinery. The administrative complaint seeks a civil penalty of $498,000. No
estimate can be made at this time of the Company's potential liability, if any,
as a result of this matter.
ITEM 5--Other Information
Director Change
Richard C. Lappin, 54, was appointed director of the Company, Holdings and
Clark R&M effective October 12, 1999. Mr. Lappin has served as a Senior
Managing Director of The Blackstone Group L.P. since February 1999. Prior to
joining Blackstone, Mr. Lappin served as President of Farley Industries which
included West Point-Pepperell, Inc., Acme Boot Company, Inc., Tool and
Engineering, Inc., Magnus Metals, Inc. and Fruit of the Loom, Inc. from 1989 to
1998. Mr. Lappin replaced David A. Stockman on the board of directors. Mr.
Stockman resigned as a director of the Company, Holdings and Clark R&M
effective September 9, 1999.
Sale of Retail Division
In July 1999, the Company sold its retail marketing operation in a
recapitalization transaction to a company controlled by Apollo Management L.P.
for approximately $230 million. The retail marketing operation sold included
all Company and independently-operated retail stores and the Clark trade name.
After all transaction costs, the sale generated cash proceeds of approximately
$215 million. See Exhibit 10.0 Asset Contribution and Recapitalization
Agreement filed with the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1999. In general, the buyer assumed unknown environmental
liabilities at the retail stores they acquired up to $50,000 per site, as well
as responsibility for any post closing contamination. Subject to certain risk
sharing arrangements, the Company retained responsibility for all pre-existing
known contamination. Holdings acquired a six percent equity interest in the
retail marketing operation. As part of the sale agreement, the Company also
entered into a two-year market-based supply agreement for refined products that
will be provided to the retail business through the Company's Midwest refining
and distribution network. This network was not included in the sale. The buyer
may cancel the supply agreement with 90 days notice. The retail marketing
operation was sold in order to allow the Company to focus its human and
financial resources on the continued improvement and expansion of its refining
business, which it believes will generate higher future returns.
The retail marketing operations were classified as a discontinued operation
and the results of operations were excluded from continuing operations in the
consolidated statements of operations beginning with the periods ended March
31, 1998 and 1999. A pre-tax gain on the sale of $59.9 million ($36.6 million,
net of income taxes) was recognized in the third quarter of 1999.
A-64
<PAGE>
ANNEX B
- --------------------------------------------------------------------------------
INDEPENDENT ENGINEER'S REPORT ON
PORT ARTHUR COKER COMPANY PROJECT
- --------------------------------------------------------------------------------
Prepared by:
[Logo of Purvin & Gertz, Inc.]
Dallas -- Houston -- Los Angeles
London -- Calgary
Buenos Aires -- Singapore
August 10, 1999_____________________________________________________Ken E. Noack
Anthony E. Chodorowski
Stephen N. Fekete
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
I.INTRODUCTION........................................................... B-1
PROJECT OVERVIEW...................................................... B-1
SCOPE OF REVIEW....................................................... B-2
II.PROJECT PARTICIPANTS................................................... B-4
CLARK REFINING HOLDINGS INC........................................... B-4
FOSTER WHEELER USA CORPORATION........................................ B-5
AIR PRODUCTS AND CHEMICALS INC........................................ B-5
PETROLEOS MEXICANOS/P.M.I. COMERCIO INTERNACIONAL..................... B-5
III.CONCLUSIONS........................................................... B-7
TECHNICAL............................................................. B-7
COMMERCIAL AND MARKETING.............................................. B-8
FINANCIAL PROJECTIONS................................................. B-10
STAND-ALONE CASE...................................................... B-10
IV.DISCUSSION OF FINDINGS................................................. B-12
PROCESS DESCRIPTION................................................... B-12
UPGRADE PROJECT COSTS................................................. B-14
UPGRADE PROJECT SCHEDULE.............................................. B-16
TECHNOLOGY ASSESSMENT................................................. B-17
DELAYED COKER....................................................... B-17
VGO HYDROCRACKER.................................................... B-17
SULFUR RECOVERY..................................................... B-17
REFINERY RENOVATIONS AND UPGRADES................................... B-18
OFFSITES, AND UTILITIES............................................. B-18
PROJECT CONTRACTS..................................................... B-19
CRUDE OIL SUPPLY AGREEMENT.......................................... B-19
PRICING FORECAST AND EFFECT ON PMI CONTRACT....................... B-20
APCI HYDROGEN CONTRACT.............................................. B-21
REVIEW OF INTERCOMPANY AGREEMENTS................................... B-21
COKER COMPLEX GROUND LEASE AND BLANKET EASEMENT AGREEMENT ("GROUND
LEASE").......................................................... B-22
ANCILLARY EQUIPMENT SITE LEASE AND EASEMENT AGREEMENT ("ANCILLARY
EQUIPMENT LEASE")................................................ B-22
PRODUCT PURCHASE AGREEMENT........................................ B-23
SERVICES AND SUPPLY AGREEMENT..................................... B-23
ENGINEERING, PROCUREMENT, AND CONSTRUCTION CONTRACTS................ B-24
CLARK EPC CONTRACT................................................ B-24
EPC CONTRACT...................................................... B-24
CONTRACTOR RESPONSIBILITIES...................................... B-24
PROJECT COST AND SCHEDULE........................................ B-25
CHANGES IN LAWS OR REGULATIONS................................... B-25
FORCE MAJEURE AND OWNER DELAYS................................... B-25
CHANGE ORDERS.................................................... B-25
WARRANTIES....................................................... B-26
PERFORMANCE TESTS AND COMPLETION GUARANTEE....................... B-26
INDEPENDENT ENGINEER............................................. B-27
CONSTRUCTION MONITORING.......................................... B-27
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
CAPACITY TEST........................................................ B-28
CAPACITY TEST PARAMETERS............................................. B-28
RELIABILITY TEST..................................................... B-29
ENVIRONMENTAL REVIEW................................................... B-32
ENVIRONMENTAL PERMITS AND COMPLIANCE................................. B-32
FLEXIBLE AIR PERMIT ALTERATION AND SEPARATION........................ B-32
WASTEWATER AND, SOLID AND HAZARDOUS WASTES........................... B-33
EXISTING SITE CONTAMINATION.......................................... B-33
EFFECT OF PROPOSED GASOLINE SULFUR SPECIFICATIONS.................... B-34
MTBE................................................................. B-34
COMPETITIVENESS OF REFINERY............................................ B-34
V.ECONOMIC MODEL........................................................... B-36
GENERAL................................................................ B-36
CAPITALIZATION OF THE PACC............................................. B-36
REVENUES............................................................... B-37
FEEDSTOCKS TO PACC..................................................... B-38
YIELDS FROM PACC....................................................... B-38
OPERATING COSTS AND SUSTAINING CAPITAL................................. B-38
PROCESSING/LEASE FEES................................................ B-41
AMORTIZATION......................................................... B-42
CONSTRUCTION MANAGEMENT SERVICES..................................... B-42
DEBT SERVICE COVERAGE RATIOS........................................... B-43
BASE CASE............................................................ B-44
SENSITIVITIES........................................................ B-44
BASE CASE--NO PMI CONTRACT......................................... B-44
BACKCAST CASE...................................................... B-44
BACKCAST CASE--NO PMI CONTRACT..................................... B-44
DOWNSIDE CASE...................................................... B-44
REDUCED UTILIZATION CASE........................................... B-45
REDUCED COKER YIELD AND REDUCED HYDROCRACKER
CONVERSION CASES.................................................. B-45
OPERATING COST INCREASE CASE....................................... B-45
STAND-ALONE CASE....................................................... B-45
CONFIGURATION........................................................ B-45
PRODUCTS............................................................. B-46
PRICING.............................................................. B-46
OPERATING COSTS...................................................... B-47
DSCR................................................................. B-47
APPENDIX A................................................................. B-71
</TABLE>
ii
<PAGE>
INDEPENDENT ENGINEER'S REPORT
I. INTRODUCTION
Purvin & Gertz, Inc. ("PGI") has been retained as Independent Engineer ("IE")
to review certain aspects of the Port Arthur Coker Company L.P. heavy oil
upgrade project as defined herein. The heavy oil upgrade project is to be
constructed at the Clark Refining & Marketing, Inc. ("Clark") refinery located
at Port Arthur, Texas.
This report has been prepared by PGI on behalf of financing parties and
lenders of senior debt (collectively, the "Financing Parties") to a newly
formed limited partnership, the Port Arthur Coker Company L.P. ("PACC") and its
wholly owned subsidiary, Port Arthur Finance Corp. PGI understands that this
report will be provided to certain insurance companies and included as an
appendix to preliminary and final offering circulars, bank syndicate
information memoranda and prospectuses relating to the offer and sale of senior
debt securities of the PACC and its affiliates. PGI consents to this report
being so included as an appendix to such preliminary and final offering
circulars, bank syndicate information memoranda and prospectuses, subject to
the limitations expressed therein. Certain information contained in this report
is covered under confidentiality agreements between Clark and third parties.
PGI conducted this analysis and prepared this report utilizing reasonable
care and skill in applying methods of analysis consistent with normal industry
practice. All results are based on information available at the time of review.
Changes in factors upon which the review is based could affect the results.
Forecasts are inherently uncertain because of events or combinations of events
that cannot reasonably be foreseen including the actions of government,
individuals, third parties and competitors. NO IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY.
PGI has not addressed potential year 2000 recognition problems in this
analysis and the results assume zero impact from year 2000 recognition
problems.
Some of the information on which this report is based has been provided by
the Upgrade Project participants, including Clark. PGI has utilized such
information without verification unless specifically noted. PGI accepts no
liability for errors or inaccuracies in information provided by others.
All defined terms are either defined in this document, in the Definitions to
the Intercompany Agreements (as defined herein), or in the EPC Contract (as
defined herein).
PROJECT OVERVIEW
An 80,000 barrel per stream day ("bpsd") delayed coker, a 35,000 bpsd vacuum
gas oil ("VGO") hydrocracker, a 417 long tons per day ("LTD") sulfur recovery
unit ("SRU"), revamps to the existing crude unit, vacuum unit, hydrotreaters
and certain offsites (the "Upgrade Project") will be constructed at Clark's
Port Arthur, Texas refinery (the "Refinery") in order to add additional heavy
sour crude oil, primarily Mexican Maya, processing capabilities. PACC will be
established in order to construct, own and operate the coker, hydrocracker, SRU
and certain offsites. PACC will also lease 100% of Clark's existing crude unit,
vacuum unit, and three hydrotreaters (naphtha, jet and diesel), and will have
access to all necessary Clark-owned common facilities under the Ancillary
Equipment Site Lease And Easement Agreement and the Coker Complex Ground Lease
And Blanket Easement Agreement (all described herein). (See Figure I-1 for
listing of major facilities included in the scope of the Upgrade Project).
Clark will also provide other services and utilities to PACC under the Services
and Supply Agreement (as described herein) and will purchase all products
produced by PACC under the Product Purchase Agreement (described herein). The
Ancillary Equipment Site Lease And Easement Agreement, the Coker Complex Ground
Lease And Blanket Easement Agreement, the Services and Supply Agreement and the
Product Purchase Agreement will be referred to as a group throughout this
report as "Intercompany Agreements". PACC will also be the assignee of the
crude oil supply agreement ("PMI Contract"--see description herein) which
provides for a minimum supply of Maya crude oil and contains a mechanism for
stabilizing coker gross margin. PACC will enter into a fixed price turn-key
("LSTK") engineering, procurement and construction contract (the "EPC
Contract") with Foster Wheeler USA
B-1
<PAGE>
Corporation ("Foster Wheeler") in order to construct the new units ("PACC
Project"). Clark will enter into a separate "cost-plus" reimbursable contract
with Foster Wheeler (the "Clark EPC Contract") for the renovation and upgrade
of certain existing Refinery units and offsites required for the PACC Project
("Clark Project"). Air Products and Chemicals, Inc. ("APCI") will design,
construct and operate a hydrogen plant on the Refinery site to supply PACC's
hydrogen requirements secured by a long term contract between PACC and APCI
("Hydrogen Contract"). Clark will also contract for steam and electricity to be
produced at the APCI hydrogen plant.
[Chart of Figure I-1 Major Facilities Included in Upgrade Project]
SCOPE OF REVIEW
PGI has reviewed certain technical, environmental and economic aspects of the
Upgrade Project as listed below:
. Upgrade Project design basis
. PACC Project integration with Clark Project
. PACC Project and Clark Project cost estimates and construction schedules
. Construction and procurement strategy
. Handling, storage and disposal of coke
. Principal Upgrade Project participant capabilities
. PACC Project charge, yield and operating cost projections
. Intercompany Agreements
B-2
<PAGE>
. Environmental permits and safety data
. PACC Project Base Case economic model, sensitivities and stand-alone case
. Project contracts and documentation as listed in Appendix A
. Hydrogen supply
PGI also conducted interviews with key members of the Upgrade Project
management team. PGI has also prepared a separate Crude Oil and Refined Product
Market Forecast which provides the basis for the crude oil and product prices
utilized in PACC economic projections and which confirms that sufficient Maya
crude oil will be available to fulfill the supply obligations under the PMI
Contract.
PGI conducted this analysis and prepared this report utilizing reasonable
care and skill in applying methods of analysis consistent with normal industry
practice. In the preparation of this report and the opinions expressed, PGI has
made certain assumptions with respect to conditions which may exist or events
which may occur in the future. All results and conclusions are based on
information available at the time of the review. Changes in factors upon which
the review is based could affect the results and the conclusions.
The principal assumptions and considerations made by PGI in developing the
results and conclusions presented in this report include the following:
. As IE, PGI has made no determination as to the validity and
enforceability of any contract or agreement applicable to the Upgrade
Project. However, for purposes of this report, PGI has assumed that all
such contracts and agreements will be fully enforceable in accordance
with their respective terms and that all parties will comply with the
provisions of such contracts and agreements. In addition, PGI has assumed
that the Upgrade Project has or will comply with all regulations that may
be applicable thereto.
. As IE, PGI has reviewed the design practices and cost estimating methods
employed for the Upgrade Project to determine if industry standards and
practices were followed; however, PGI has not re-performed design or cost
estimate calculations. PGI's review has been conducted utilizing
reasonable care and skill in accordance with customary industry standards
and provides a reasonable basis for the conclusions contained in this
report.
. Foster Wheeler, as the Upgrade Project contractor and Clark, as operator,
will construct, manage operation of and maintain the Upgrade Project in
accordance with good industry standards and practices.
. Clark and PACC will make all required renewals and replacements in a
timely manner, and will not operate equipment to cause it to exceed the
equipment manufacturer's recommended maximum ratings for extended periods
of time.
B-3
<PAGE>
II. PROJECT PARTICIPANTS
[Chart of Figure II-1 Project Participants]
CLARK REFINING HOLDINGS INC.
Clark Refining Holdings Inc. ("Clark Holdings") is principally owned by
Blackstone Capital Partners III Merchant Banking Fund L.P. and its affiliates
("Blackstone") and Occidental Petroleum Corporation ("Oxy"). The company's
operations include refining, marketing, and supply and transportation of
petroleum products.
Clark Holdings, through its 100% wholly owned operating subsidiary Clark
Refining & Marketing, Inc. owns and operates three Midwest oil refineries and
the Port Arthur oil refinery. The Midwest refineries are located in Lima, Ohio
(capacity 170,000 bpsd), Blue Island, Illinois (capacity 80,000 bpsd), and
Hartford, Illinois (capacity 65,000 bpsd). The Gulf Coast refinery is located
in Port Arthur, Texas (capacity 232,000 bpsd). The company is currently the
fifth largest independent refiner in the U.S. and markets gasoline, diesel fuel
and other petroleum products on a wholesale unbranded basis. On July 8, 1999,
Clark Holdings announced that it had disposed of its retail marketing assets
for cash proceeds of $230 million.
Clark Holdings is experienced in undertaking capital projects. In 1998, the
company had capital expenditures of approximately $160 million. The company has
executed two large scale refinery acquisition projects in the last four years
totaling over $440 million. In addition, the company has extensive experience
in
B-4
<PAGE>
operating coker units. The Lima, Hartford and Port Arthur refineries all have
operating coker units with a combined capacity of 70,000 bpsd.
FOSTER WHEELER USA CORPORATION
Foster Wheeler designs, engineers and constructs petroleum, chemical,
petrochemical and alternative-fuels facilities. In addition, Foster Wheeler
owns and licenses patents, trademarks and proprietary knowledge which are used
in each of its industry groups. Foster Wheeler Corporation, the parent of
Foster Wheeler, had revenues totaling $4,597 million and total assets of $3,495
million for the year ending December 31, 1998, and has approximately 11,000
employees.
Foster Wheeler has designed and built over 100 cokers, representing 80% of
the existing cokers in the world. These include many comparable projects that
are in various phases of completion such as:
.Shell--Martinez, Norco, Deer Park, Moerdijk, and Buenos Aires refineries
.PEMEX--Madero, Minatitlan, Salina Cruz, and Cadereyta refineries
.Koch--Corpus Christi refinery
.Chevron--Salt Lake City, and Pascagoula refineries
.Exxon/Mobil--Baton Rouge, and Paulsboro refineries
In addition to the construction of coker units, Foster Wheeler also has
extensive experience in building hydrocracking units. Since the 1960s, the
company has executed over 30 hydrocracker projects. During the last ten years,
the company has performed 39 engineering, procurement and construction
projects, and currently has 3 Orinoco Belt extra-heavy oil upgrade projects in
engineering stages. PGI views Foster Wheeler as the industry leader in the
design and construction of coker units, and believes the company is the well
qualified choice for the execution of the Upgrade Project.
AIR PRODUCTS AND CHEMICALS INC.
APCI is a multinational corporation which produces industrial gases,
chemicals and energy/environmental systems. The company has developed expertise
in supplying industrial gases for over 50 years. APCI operates and maintains
over 300 air separation facilities worldwide. As well as being an operating
company, APCI is an experienced designer and builder of cryogenic plants and
equipment for gas and liquid production, recovery, purification and
liquefaction. For the year ending December 31, 1998, APCI had revenues totaling
$4,919 million and total assets of $7,490 million.
APCI is very experienced in the construction and operation of hydrogen
production facilities with 32 steam methane reformers and 14 offgas
recovery/purification plants in operation around the world. Since 1992, APCI
has been allied with Kinetics Technology International ("KTI") a leading
supplier of hydrogen plants to the refinery industry. The APCI/KTI alliance has
constructed and continues to operate several onsite hydrogen plants for
refineries similar to the facility proposed for Clark. PGI believes that APCI
is well qualified to construct and operate the proposed hydrogen plant which
will be capable of supplying the Upgrade Project with its hydrogen requirements
and, in addition, electricity and steam.
PETROLEOS MEXICANOS/P.M.I. COMERCIO INTERNACIONAL
Petroleos Mexicanos ("Pemex") is the national oil company of Mexico and one
of the world's largest producers of crude oil and natural gas with 1997
revenues in excess of $30 billion. Pemex is the sole developer of Mexico's
crude oil and natural gas reserves, which in the aggregate rank in the top ten
accumulations of known hydrocarbons in the world and have an estimated current
reserve life of approximately 40 years. Pemex is also a major manufacturer and
distributor of refined petroleum products and basic petrochemical feedstocks.
The company owns and operates six domestic refineries and owns a 50% interest
in the Shell Deer Park
B-5
<PAGE>
Refining Company in Texas. As a wholly owned entity of the Mexican state, Pemex
is a major contributor to the country's federal budget. In 1997, Pemex's
federal taxes and duties represented 36.6% of the total federal budget. P.M.I.
Comercio Internacional, S.A. de C.V. ("PMI") which is 93% owned by Pemex and 7%
owned by branches of the Federal Government of Mexico, is the international
trading arm of Pemex responsible for all exports.
Pemex produces three primary types of crude oil for export: (i) Isthmus, a
light crude oil, 33.6(degrees) API density and 1.3 weight % sulfur, (ii) Maya,
heavy crude oil, 22(degrees) API density and 3.3 weight % sulfur, and
(iii) Olmeca, a very light crude oil, 39.3(degrees) API density and 0.8 weight
% sulfur. The U.S. is the dominant export market for Pemex with 80% of total
exports in 1998. Maya crude oil exports totaled 1 million barrels per day in
1998 and are expected to increase throughout the forecast period. Pemex through
PMI has been actively seeking to expand the otherwise limited market for its
increasing reserves of Maya crude oil by offering attractive long term crude
oil supply agreements. The U.S. has been the targeted market for these
agreements since Pemex realizes the highest value for its crude oil in the U.S.
market due to lower transportation costs. PMI has signed long term supply
agreements with Clark, Coastal Corp., Deer Park Refining L.P., Marathon Ashland
Petroleum and Exxon Corp., of which Clark's is one of the largest.
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III. CONCLUSIONS
In PGI's opinion, the Upgrade Project will transform the Refinery into one of
the top five refineries on the Gulf Coast in terms of competitiveness and heavy
crude oil conversion capacity. The investment in the Upgrade Project is
consistent with Clark Holdings overall strategy and will allow Clark to further
improve its market position in a very competitive environment. Based on our
review of the Upgrade Project, PGI has reached the following technical,
commercial/marketing and financial conclusions:
TECHNICAL
1. The design of the major new units to be installed at the Refinery,
specifically the delayed coker and the hydrocracker process units, are
based on licensed technology that is well established and commercially
proven. Clark has obtained and will transfer to PACC a process license
from Chevron Research and Technology Company ("Chevron"), a subsidiary
of Chevron USA, for the hydrocracking technology and will obtain the
Foster Wheeler delayed coking technology as part of the EPC Contract.
The size and configuration of the new process units should integrate
well with the Refinery.
2. The Upgrade Project capital cost estimate provided by Foster Wheeler
and Clark of $636 million for the construction of new units, offsites,
and revamps is reasonable and includes all relevant items based on
PGI's review of the estimate. The contingency and escalation allowance
included in the estimate is adequate at this stage of the Upgrade
Project. The total Upgrade Project cost including owner's costs,
additional contingency, financing costs and interest during
construction is $833 million.
3. The Upgrade Project schedule of 31 months from April 1998 to mechanical
completion at November 1, 2000 is achievable. Field construction work
in the areas of site preparation, piling, foundations, and structural
are currently underway. As of June 1999, 98% of the major equipment has
been placed on order and 70% of the final design and engineering work
has been completed, and civil construction is very advanced.
4. Clark obtained an umbrella flexible air emissions permit which was
amended as of August 31, 1998 to allow construction and operation of
the Upgrade Project. In May 1999, the PACC units were removed from
Clark's flexible permit and a new permit for such units was issued to
PACC. PACC will have all permits required to construct, own and operate
the PACC Project, including the stand-alone case, as needed. PACC also
obtained a standby permit in July 1999 to allow PACC to have its own
permit to cover the entire Refinery, including the Ancillary Equipment,
if it is needed in the event of a Clark bankruptcy or otherwise. The
wastewater treatment facility is a state of the art design and will be
able to accommodate the effluent from the Upgrade Project in compliance
with environmental regulations and requirements. Solid and hazardous
wastes are reported to be handled, stored and transported according to
the required regulations and do not present any non-compliance issues.
5. There are no apparent site conditions including known underground
obstructions or contamination that would lead to major cost overruns.
All of the major site excavation has been completed.
6. The Upgrade Project will have a useful life of at least twenty years
extending well beyond the term of the debt financing.
7. Foster Wheeler is a reputable engineering contractor experienced in
designing and constructing refining and petrochemical facilities. In
addition, PGI believes that Foster Wheeler is well qualified for the
proposed assignment and has the resources and financial strength
necessary to fulfill their obligations under the EPC Contract and Clark
EPC Contract.
8. The EPC Contract specifies a fixed price ($544 million) and a firm
mechanical completion date. The EPC Contract terms and conditions are
very specific in protecting price, efficiencies and completion
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date, and incorporate substantial penalties in the event of schedule
delays. In addition, Foster Wheeler has indicated that the EPC Contract
contains a contingency amount of $35 million. In PGI's opinion the EPC
Contract is favorable to PACC, suitable for this type of financing, and
provides adequate protection to PACC for cost overruns, completion risk,
integration risk and inefficiencies.
9. No owners of PACC or Clark will provide a completion guarantee for the
Upgrade Project. Foster Wheeler will be responsible for satisfying the
required performance and reliability tests including meeting the
contractual capacity and efficiency process guarantees. Tests have been
structured to validate the cash flow availability in order to support
the anticipated debt service capacity and if not, to cause Foster
Wheeler to buy down the debt to adjust it according to the reduced debt
capacity. The liquidated damages cap of $145 million represents up to
$70 million of delay damages and up to $75 million of buydown damages
for inefficiencies and is adequate for this type of project. PGI will
monitor the construction progress and funds disbursements for the EPC
Contract and witness and approve the performance/reliability tests.
10. The crude unit and hydrotreater modifications, and other offsites and
utilities will be undertaken by Foster Wheeler under the Clark EPC
Contract. These types of modifications are a group of relatively
routine small refinery projects normally carried out during turnarounds
or during refinery operation and are expected to cost $92 million. The
major components of Clark's responsibility, the crude unit revamp and
interconnecting piping, are planned to be complete and in operation at
least six months prior to the EPC Contract Target Mechanical Completion
Date. PGI believes that the Clark Project will not present a major risk
to the successful startup, operation and integration of the PACC
Project.
11. Clark is an experienced fuels refinery operator currently processing
Maya crude oil and operating two existing cokers at the Refinery. PGI
believes that Clark is well qualified to manage operations at the
Refinery.
12. The newly constructed units can be reasonably expected to achieve the
on-stream factors in the Base Case projections. The Base Case
projections include a reduced on-stream factor through 2000 to reflect
startup and achieving a steady operation.
13. The crude import infrastructure at Clark's facilities and at Sun Pipe
Line Company's ("Sun") Nederland terminal and connecting pipelines to
the Refinery facilities are adequate to support the volumes of imported
Maya and other crude oils contemplated for the Upgrade Project's
operation. Several pipeline and terminal alternatives also exist to
deliver crude oil to the Refinery if required.
14. A new hydrogen plant will be constructed at the Refinery by APCI in
support of both PACC and Clark's hydrogen requirements. The capacity of
the hydrogen plant will be in excess of the Upgrade Project's
requirements and an amount equivalent to approximately 69% of the total
Hydrogen Contract volume will be sold under contract to PACC on a "take
and pay, if delivered" basis. Clark will also contract for steam and
electricity to be produced at the APCI plant. PGI believes that APCI is
a reliable hydrogen producer and that the plant will be constructed in
a timely manner and that it will produce the required hydrogen and
utilities at the contract specifications. Approximately 50% of the
required hydrogen can be supplied by APCI via pipeline as a backup, if
necessary.
COMMERCIAL AND MARKETING
1. Clark has entered into the PMI Contract with PMI that will be assigned
to PACC simultaneously with the close of the PACC financing. The PMI
Contract was designed to minimize the effect of adverse refining
cycles, thereby establishing more stable cash flow for PACC. In order
to effect stable cash flows, the PMI Contract contains a formula that
is intended to be an approximation for coker gross margin and is
designed to provide for a minimum average coker gross margin for the
first eight years
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following completion of the Upgrade Project. The mechanism, which is
more fully described in the Project Contracts section, guarantees an
average minimum $15.00 per barrel Differential formula related to coker
gross margin via price adjustments on Maya crude oil. If the
Differential formula amount is calculated over the August 1987 to
December 1998 period and regressed against the historical WTI/Maya
differential, the mathematical results implies that the $15/bbl is
equivalent to the WTI/Maya differential of $5.94/bbl. This is $0.24/bbl
above the historical average WTI/Maya differential of $5.70/bbl over the
same period. PGI has reviewed the PMI Contract and believes the
mechanism serves as a suitable method of stabilizing coker gross margin
fluctuations.
2. Clark will offtake all the intermediate and final products produced by
PACC and will provide services to PACC on a routine contractual basis.
Clark will be able to incorporate the products from PACC into the
Refinery and has considerable experience in selling finished products
into the Gulf Coast market. The volume of incremental finished products
produced by the Refinery as a result of the operation of the Upgrade
Project (a 15% increase) will be minor in proportion to the entire Gulf
Coast market (about 1/2% of current market) and its growth forecast and
are not expected to impact the market. The product offtake, operation,
maintenance and other services are provided under Intercompany
Agreements between Clark and PACC (see Project Contracts for
description). In PGI's opinion, the Intercompany Agreements will
transact products and services that are priced to reflect arms-length
mechanisms and market-based prices and contain fair market terms.
3. Based on PGI's analysis of the worldwide heavy oil supply and demand
fundamentals and plans and objectives stated by Pemex and PDVSA, PGI
forecasts that heavy crude production will continue to increase through
the term of the PACC financing. The crude oil heavy/light differential
(defined as WTI Cushing minus Maya FOB Mexico) is forecast to average
$6.00 per barrel or above in constant 1999 dollars over the same
period. This is equivalent to a $15.16 per barrel coker gross margin as
defined by the Differential formula in the PMI Contract. This forecast
is consistent with the expectation that coker projects will continue to
develop in an orderly fashion in line with the expected heavy crude oil
production increases.
4. PGI believes that PEMEX/PMI have sufficient Maya crude oil reserves to
fulfill the supply obligation under the PMI Contract. The risk of
diversion of Maya crude oil away from PACC is felt to be minimal
because: (i) Mexico is significantly increasing production of Maya;
(ii) the number of other sour crude refineries able to process Maya are
very limited; (iii) the demand for heavy crude oil outside the U.S. is
small and not expected to change during the forecast period; and (iv)
the netback for heavy crude oil shipments to Europe or Asia is low
relative to U.S. Gulf Coast deliveries.
5. While the Upgrade Project is designed to process Maya crude oil as its
primary feedstock, it will have the flexibility of processing other
similar quality heavy sour crude oils and will be able to achieve
essentially equivalent economics to the Base Case projections (the
"Base Case") with minimal changes to configuration excluding any
benefits of the coker gross margin guarantee in the PMI Contract.
6. The shutdown of the Refinery is, in the opinion of PGI, an extremely
remote possibility due to its competitiveness post-completion of the
Upgrade Project.
7. The terms of each of the Product Purchase Agreement, the Services and
Supply Agreement, the Ground Lease and Blanket Easement Agreement and
the Ancillary Equipment Site Lease and Easement Agreement are as
favorable to Clark and to PACC, in all material respects, as terms that
would be obtainable at this time for a comparable transaction or series
of similar transactions in arm's length dealings with a person who is
not an affiliate. In the opinion of PGI, payments to be made by Clark
to PACC under the Product Purchase Agreement and the Services and
Supply Agreement are fair consideration for the products acquired or
services received.
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8. The consideration PACC will pay Clark for PACC's assumption of the PMI
Contract, PACC's acquisition of work in progress under the construction
contract and Clark's reduction of the permissible emissions levels
under one of its air emissions permits in order to allow PACC to obtain
its air permit is equal to the fair market value of such assets. Clark
will receive rental payments under both the Ground Lease and Blanket
Easement Agreement and the Ancillary Equipment Site Lease and Easement
Agreement equal to the fair market value rental payments of the
property leased.
FINANCIAL PROJECTIONS
1. The Base Case assumes that the PACC-owned units are operated as part of
the Refinery. Assuming a PGI price forecast, the estimated average
operating cash flow over the initial 11 year operating period for PACC
is approximately $228 million per year and the after-tax cash flows
generated by PACC will be sufficient to repay PACC debt obligations
(scheduled principal amortization and interest) with minimum and
average debt service coverage ratios ("DSCR") of 2.0 and 2.4,
respectively.
2. PGI analyzed various sensitivity cases including a backcast (1989-
1998). PGI presents the back cast from 1989-1996 (the "Backcast Case")
because the PACC debt has a term of eight years after start-up. PGI
concludes that in all cases PACC can comfortably meet its debt service
obligations. The PMI Account provides liquidity during low coker margin
periods. This can be seen in the Backcast Case with minimum and average
DSCRs of almost 1.0 and 2.0 respectively. In 2007 (DSCR of almost 1.0)
where the debt service shortfall amounts to $3.0 million, the PMI
Account is fully funded with $50 million. In the Backcast Case without
the PMI Contract in place, cash flow shortfall amounts to $5.0 million,
with a debt service reserve account of $37 million and over $100
million of cash available for debt service. The PMI Account effectively
mitigates the timing issue of a delay in receiving discounts after
prior period surpluses. When fully funded and combined with the debt
service reserve account, these reserve accounts provide approximately
1.25 years of debt service coverage.
3. The proceeds of the total financing combined with the proposed equity
should be sufficient to pay the total estimated Upgrade Project cost of
$833 million.
4. If the PACC-owned units and the modifications to the Ancillary
Equipment are designed, constructed, operated and maintained as
currently proposed, PACC should be capable of meeting or exceeding the
production projections.
5. The basis for the estimate of PACC's total costs of operating and
maintaining the PACC facilities is in accordance with standard industry
practice. The operating and maintenance costs set forth in the Base
Case projections provide sufficient funds for the operations and
maintenance of the PACC facilities consistent with the operating
scenarios presented.
STAND-ALONE CASE
To demonstrate the robustness of the economics of PACC and to ensure that
PACC can be operated independently from Clark, PGI developed a stand-alone case
that assumes the following:
. PACC continues its operations while operations at the rest of the
Refinery are discontinued, other than the units PACC owns, is leasing or
has a right to use under the Coker Complex Ground Lease.
. PACC uses the full capacity of the leased and owned facilities.
. A third-party is managing the operation of all PACC leased and owned
units for PACC.
. PACC continues to purchase crude oil under the PMI Contract.
. A third party is marketing all intermediate and finished products on
behalf of PACC.
. PACC's rights to possession under the Ancillary Equipment Site Lease and
Coker Complex Ground Lease remain in effect.
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In this regard PGI believes that:
1. From a technical standpoint, PACC could successfully continue to
operate in a stand-alone mode given the preceding assumptions.
2. The modifications necessary to achieve stand-alone operation are
relatively minor and could be achieved within three months and will
cost less than $5 million.
3. The intermediate and finished products produced from a stand-alone
operation should be readily marketable based on appropriate discounts
for quality to spot market prices to long term off-takers since PACC is
located in the most liquid refinery products market in the world.
Discounts are applied to naphtha and VGO over a three-year period to
account for the market disruption caused by introducing a large volume
of intermediate products into the market.
4. Even in this extremely unlikely scenario, PACC is able to service its
debt obligations after paying all operating expenses as evidenced by
projected minimum and average after tax DSCRs of 1.1 and 1.9,
respectively.
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IV. DISCUSSION OF FINDINGS
PROCESS DESCRIPTION
The Refinery is currently configured to process a medium sour crude oil slate
as limited by delayed coker and hydrotreating capacity. The design basis of the
Upgrade Project is a refinery crude oil throughput of 250,000 bpsd of primarily
a heavy sour crude oil slate consisting of up to 210,000 bpsd of Maya and
40,000 bpsd of light opportunity crude which is assumed to be Arab Light in the
Base Case. PACC has been established to facilitate the construction of an
80,000 bpsd delayed coker, a 35,000 bpsd VGO hydrocracker, and a 417 LTD sulfur
recovery plant. In addition, modifications will be made to existing units
throughout the Refinery to enable processing of the heavy crude oil slate. The
units to be modified, which will remain under Clark ownership, include the
crude/vacuum unit, the distillate hydrotreaters, the naphtha hydrotreater, and
the crude oil feed system. Other offsites will also be constructed in support
of the Upgrade Project. The simplified block flow diagram in Figure IV-1 below
illustrates the interaction of the PACC units and the Clark units.
[BLOCK FLOW DIAGRAM]
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The delayed coker is designed to process 80,000 bpsd of vacuum resid and is
equipped with 6 coking drums. The delayed coking unit converts vacuum residue
via thermal cracking to lighter more valuable products, namely heavy gas oil
which is fed to the hydrocracker, light gas oil which is blended to the
distillate pool after further processing, naphtha feed for the reformer,
butane/butylene, propane/propylene, and fuel gas. The delayed coker being
constructed is a modern Foster Wheeler design incorporating a low operating
drum pressure and a low recycle rate. Coke from the unit is currently planned
to be loaded by crane into rail cars for sale by PACC to Clark.
The VGO hydrocracker is a 2-stage Chevron design with a design operating
pressure of 2500 psig. The unit is designed to process 35,000 bpsd of feedstock
consisting of coker heavy gas oil, virgin VGO, and light cycle oil from the
Clark fluid catalytic cracking unit ("FCCU"). The unit is designed for 50 vol%
conversion of the heavy feedstock. Full conversion of the VGO is not required
in the hydrocracker since the existing 77,000 bpsd FCCU has enough capacity to
convert the remainder of the unconverted VGO from the hydrocracker which will
be low sulfur quality. This allows the hydrocracker to have a smaller second
stage reactor than is typical for full conversion VGO hydrocrackers, which
reduces the capital cost of the hydrocracker.
The new sulfur recovery plant is rated at a sulfur capacity of 417 LTD. In
addition to the sulfur plant, a new Shell Claus Offgas Treater ("SCOT") tailgas
unit is being constructed as well as a sour water stripper and amine
regenerator. Recovered sulfur will be purchased by Clark and shipped via rail
at a new rail siding.
Modifications to the existing Refinery units include upgrading the
crude/vacuum unit from the existing 232,000 bpsd of crude oil feed to 250,000
bpsd of crude oil feed. The modifications include changes to process exchangers
to provide more preheat to the vacuum tower, upgrading the vacuum tower heater,
and miscellaneous pumps and piping. In addition, the GFU 243 distillate
hydrotreater has been modified by the replacement of the existing reactor which
will extend the cycle length and capability of the unit. These modifications
are scheduled to be completed at least six months prior to the mechanical
completion of the coker, hydrocracker and SRU (currently estimated at November
1, 2000). In addition to the GFU 243 hydrotreater reactor replacement, the GFU
241 hydrotreater (which is not being leased) reactor will be replaced with a
new reactor, and the GFU 242 hydrotreater existing two reactors are being
replaced with the reactor from GFU 243. These modifications are to ensure
adequate cycle life upon completion of the Upgrade Project.
A new naphtha hydrotreater guard bed reactor will be installed on the coker
plot site to remove silica and di-olefins from the coker naphtha. Silica is
used to control foaming in the coke drums and has a boiling point in the
naphtha range. Silica is a permanent poison for reformer catalyst and must be
removed prior to processing in the reformer. Di-olefins are unstable compounds
which tend to polymerize over time. This polymerization results in the
formation of a high boiling point material which will have a negative effect on
reformer yields as a result of excessive coking. The existing guard bed reactor
located on the 1344 reformer site currently used to remove silica will be
converted to hydrotreating service and placed in series with the existing
naphtha hydrotreater, thereby increasing the effective reactor volume of the
naphtha hydrotreater.
Other offsite modifications will be made consisting of inter-connecting
piping, addition of a flare, modifications to the fire water system, addition
of electrical distribution systems, a new cooling tower, and site improvement.
Clark plans to receive a minimum of 125,000 bpsd of crude oil at the Refinery
docks. A study was performed by Lanier & Associates, a marine engineering and
consulting firm, which concluded that Clark's dock facilities are adequate to
support the required capacity. The remainder of the crude oil will be delivered
to the Sun terminal at Nederland which is located approximately 15 miles from
the Refinery from where the crude oil is sent by Clark's pipeline to Clark's
Lucas terminal. The crude oil is shipped from the Lucas terminal to the
Refinery via a company-owned pipeline. The Sun terminal, which has five ship
docks, three barge docks and approximately ten million barrels of storage
capacity, can receive all 250,000 bpsd of crude oil if necessary and the
pipeline can transport this quantity to the Refinery. Clark and Chevron/Gulf,
the owner of the Refinery
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prior to Clark, have had a long term relationship with the Sun terminal and PGI
sees no reason that the availability of the Sun terminal would change. Clark
utilizes the Sun terminal under a year to year evergreen contract. PGI believes
that the crude import facilities are adequate to accommodate the volumes of
crude oil contemplated for the Upgrade Project's operation.
If, for some unforeseen reason, the Sun terminal would not be available or
would have reduced capacity, the Refinery would have other alternatives. A
Unocal terminal, also located at Nederland, is connected to an idle Chevron
pipeline which could easily be connected to the Lucas terminal. This terminal
has 6.2 million barrels of storage and two ship docks. The Refinery also has
access to the Louisiana Offshore Oil Port through a Texaco pipeline which could
be used to transport approximately 100,000 bpd.
UPGRADE PROJECT COSTS
A definitive Upgrade Project construction cost estimate including both the
EPC Contract and the Clark EPC Contract has been prepared by Foster Wheeler and
Clark. PGI's review of this cost consisted of an evaluation of each major cost
category, in comparison with similar cost categories for other United States
Gulf Coast projects.
The total construction cost for the Upgrade Project is $636 million,
excluding working capital, financing expenses, capitalized interest, and
owner's costs. This includes the PACC EPC Contract of $544 million and $92
million for the Clark EPC Contract. The cost of the major new PACC units and a
portion of the offsites are incorporated in the EPC Contract, while the Clark
portion of the revamps and offsites will be incorporated in the Clark EPC
Contract. An itemization of the construction cost is shown below.
TABLE IV-1
UPGRADE PROJECT CONSTRUCTION COST ESTIMATE
(Million $)
<TABLE>
<CAPTION>
EPC Clark EPC
Contract Contract Total
-------- --------- -----
<S> <C> <C> <C>
New Units (coker, hydrocracker, SRU)............. 442 0 442
Existing unit revamps............................ 0 44 44
Offsites......................................... 27 48 75
Contingency, Escalation, and Profit.............. 55 -- 55
Spare Parts, Other............................... 20 -- 20
--- --- ---
544 92 636
</TABLE>
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Other Upgrade Project costs borne by both Clark and PACC include items such
as Upgrade Project management team expenses and salaries, insurance, startup
costs, training, legal and other miscellaneous costs that are not covered by
the EPC Contract. The $52 million allowance for other PACC costs, not including
contingency, appears to adequately cover the expected categories. An additional
contingency of $28 million has been included with this estimate. The breakdown
of the other PACC Project cost estimate is shown below.
TABLE IV-2
UPGRADE PROJECT OTHER COST ESTIMATE
(Million $)
<TABLE>
<CAPTION>
PACC CLARK TOTAL
---- ------- -----
<S> <C> <C> <C>
Project Management Team................ -- 26(/1/) 26
Startup Costs, Taxes................... 20 -- 20
Legal and Consulting................... 11 2 13
Financing Expenses..................... 21 -- 21
Contingency............................ 28 -- 28
--- ------- ---
80 28 108
</TABLE>
(1) Includes construction management fees of $7 million to be repaid to Clark
by PACC over 3 years following startup.
The total Upgrade Project cost estimate is $833 million ($636 million in
construction cost, $108 million of other Upgrade Project costs and $89 million
of capitalized interest expense). Based on its analysis of the construction and
other Upgrade Project cost, PGI believes that the budget will be adequate based
on comparison to similar construction in the United States Gulf Coast region in
recent years and based on the fact that 98% of major equipment has been
procured, design is 70% complete and site excavation and foundation work is
well advanced. The Upgrade Project contingency and escalation allowance is
sufficient, excluding excessive discretionary changes or force majeure events.
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UPGRADE PROJECT SCHEDULE
Upgrade Project mechanical completion is based on a 31-month schedule from
the start date of April 1, 1998, which PGI feels is achievable.
[Chart of Figure IV-2 Project Schedule]
The key Upgrade Project milestones defined in the EPC Contract are as
follows:
<TABLE>
<CAPTION>
Milestone Date
------------------- ------------------------
<S> <C>
Target Mechanical
Completion November 1, 2000
Guaranteed
Mechanical January 1, 2001
Completion (start of delay damages)
Mechanical
Completion Default March 1, 2001
Substantial
Reliability
Default September 1, 2001
Guaranteed Final
Completion December 1, 2001
</TABLE>
The 60-day Reliability Test is planned to be carried out as soon as possible
after PACC Project startup and stable operation. Achievement of Substantial
Reliability in the Reliability Test must occur before September 1, 2001.
Guaranteed Final Completion or debt buydown must occur prior to December 1,
2001.
The delay damages and performance damages applicable are discussed in EPC
Contract section of this report.
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TECHNOLOGY ASSESSMENT
The selected technology for the processes that form the Upgrade Project are
typical of the preferred processes currently used in the industry and are well
integrated into the existing Refinery. In all, PGI believes that the Upgrade
Project will be able to perform as planned based on the technology selected.
Each major unit or category of the Upgrade Project is discussed below.
DELAYED COKER
The processing design selected by Clark to upgrade heavy sour Maya crude oil
consists of a delayed coker and VGO hydrocracker integrated with Clark's
existing processing units. This design is widely accepted in the industry as
the preferred method of upgrading heavy sour crude oils like Maya. PGI believes
that Clark has chosen well proven technology to upgrade Maya crude oil that
will result in the planned yields and economics.
Delayed coking technology has been utilized for well over 50 years and is one
of the most widely used processes to upgrade low value heavy residue into
higher value light products. The process is based on the principle of severe
thermal cracking which essentially breaks high molecular weight molecules into
lower molecular weight molecules via high temperatures. The portion of the
residue that does not crack is left as coke which is a coal-like solid material
and, in the case of coke derived from Maya crude oil, is typically burned as a
fuel. The delayed coking process incorporates specially designed high velocity
heaters which minimize coke formation in the heaters. The heater effluent flows
into the coke drums where the coking reaction takes place and hydrocarbon
vapors are vented to a fractionator. The delayed coking process is considered a
semi- batch process because once a coke drum is full it is taken off-line and
the heater effluent is switched to another coke drum. The heads of the drum are
then opened and the coke is drilled out of the drum using a high pressure water
jet. The hydrocarbon vapors leaving the coke drum during normal operation are
fractionated yielding a fuel product, a propane/propylene product, a
butane/butylene product, a naphtha product which is sent to the catalytic
reformer, a light gas oil product which is blended to the diesel pool after
hydrotreating, and a heavy gas oil product which is sent to the hydrocracker.
The delayed coker being constructed is a modern Foster Wheeler design
incorporating a low operating drum pressure and a low recycle rate. A lower
operating pressure results in more favorable product yields and a lower recycle
rate which reduces unit operating costs.
The delayed coking technology will be provided under a license with process
guarantees from Foster Wheeler in the EPC Contract. Foster Wheeler is a very
experienced licensor of delayed coking technology having designed over 100
coker units, representing an 80% market share, with the largest being 120,000
bpsd. Although the 80,000 bpsd coker is fairly large in size, Foster Wheeler
has designed five units with a capacity of 75,000 bpsd or greater. Two of these
have been in operation for several years and three others are under
construction. The key equipment items of a delayed coker are the coke drums and
coke drum size is limited by the ability to cool the coke during the decoking
cycle. Recent unit designs, including the PACC coker, have required larger coke
drums to achieve design rates. The coke drums being utilized for the PACC coker
are similar in size to two recent Foster Wheeler projects and have a proven and
successful operating history.
VGO HYDROCRACKER
Hydrocracking VGO is also a well proven technology of upgrading VGO to
lighter, more valuable products. The hydrocracker employs fixed bed catalysts
with high pressure hydrogen to crack heavy feedstock into lighter, more
valuable products. In addition, the sulfur concentration of the products is
reduced to very low levels as compared to the feed.
The hydrocracking process design is licensed from Chevron who also provides a
process guarantee. Chevron has conducted pilot plant testing on the proposed
PACC feedstocks and has verified the projected yields and process conditions.
The pilot plant testing provides credibility to the hydrocracker yields assumed
in the Base Case and PGI believes that the projected yields can be achieved.
SULFUR RECOVERY
The new 417 LTD SRU will operate in parallel with existing units and is
designed to recover 99.8% or greater of the hydrogen sulfide in the feed gas.
Amine acid gas and sour water stripper acid gas are routed to a Claus SRU using
technology licensed from Amoco Corporation. The tailgas from the Claus sulfur
plant is
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processed using the SCOT process, licensed by Shell Oil Company, to produce an
acid gas stream that is recycled back to the Claus plant to achieve the desired
recovery. The effluent gas from the SCOT Tailgas Cleanup Unit is thermally
incinerated in a Tailgas Thermal Oxidation Unit to convert all of the remaining
sulfur compounds into sulfur dioxide (S0\\2\\) before dispersion of the gas to
the atmosphere. The effluent gas from the SRU and SCOT is expected to comply
with the regulatory requirements for sulfur plants operated in Texas
refineries.
The SRU is being designed by a joint team of Ortloff Engineers, Ltd. (process
and technology) and Pro-Quip (engineering and construction) under the
supervision and responsibility of Foster Wheeler. Ortloff and Pro-Quip have
often worked together over the past ten years to design and construct a variety
of sulfur recovery systems. PGI believes that the technology selected for the
SRU and the Ortloff/Pro-Quip team will deliver a well-designed unit with
adequate sulfur removal capacity to support both the Clark Project and PACC
Project operation at full capacity.
The Sour Water Stripper and Amine Treating Unit are generic open art units
that were designed by Jacobs Engineering Group ("Jacobs") and will be
constructed by Matrix Engineering under Foster Wheeler's supervision and
responsibility. These units are commonly found in all refineries and do not
involve any unique technology. PGI has reviewed the design basis for these
units and believes that the units will be adequate for the purpose intended.
REFINERY RENOVATIONS AND UPGRADES
The majority of renovation and upgrade capital will be spent on upgrading the
existing crude unit to process primarily Maya crude oil and to increase
capacity by about 10% from 232,000 bpsd to 250,000 bpsd. The revisions involve
addition of heat exchangers, re-configuration of piping, replacing pumps,
replacing vacuum tower packing, and adding tubes to the vacuum tower heater.
These activities are of the type that are typically carried out by refineries
during turnarounds. The process design has been carried out by Jacobs and
Foster Wheeler under Clark's supervision. The majority of the crude unit work
is to be conducted during a turnaround scheduled for March 2000. PGI believes
that the crude unit design is adequate to support the processing of the
proposed volume of Maya crude oil required to support the PACC and Clark
operations and that these revisions will be completed before Project start-up.
The GFU-241, GFU-242 and GFU-243 distillate/kerosene hydrotreaters are being
upgraded to increase capability for handling the higher sulfur distillate
products produced from the more sour crude slate. The modifications involve
increasing the size of reactors and catalyst volume through replacement of
reactors. These types of small debottlenecking projects are routinely carried
out in refineries. A portion of this work (GFU-243) has already been completed.
PGI believes that the hydrotreater revamps will be adequate to support the PACC
and Clark's operations and that these are estimated to be completed three to
six months prior to PACC Project start-up.
OFFSITES, AND UTILITIES
The major activities to be carried out in this category are
. Interconnecting process and utility piping pumping between the new units
and the Refinery
. Upgrade of crude pumping station
. Conversion of Tanks 108 and 109 to coker feed storage
. Coke handling outside battery limits of PACC
. Addition of piping and pumps to feed new sour water stripper
. Provision of a new cooling tower to provide cooling water to both Clark
and PACC
. Construction of a new dedicated flare for the new units
. Construction of a new 13.8 kV substation to supply power to the new
units. Additional power to the Refinery will be supplied from the APCI
hydrogen plant and Entergy
. Install truck and rail loading facilities for sulfur
. Construction of a new control building for the new units
. Expansion of the firewater loop to the new units
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The offsites and utilities items are a collection of typical refinery
projects. The majority of the capital is for the interconnecting piping and
electrical substation. PGI has reviewed the design basis for these items and
believes that the planned offsites and utilities will be adequate for both the
Clark Project and PACC Project. PGI further believes that the offsite and
utilities items do not pose a major technological or construction delay risk to
Clark or PACC.
PROJECT CONTRACTS
CRUDE OIL SUPPLY AGREEMENT
In March 1998, Clark signed the PMI Contract with PMI. The PMI Contract is
designed to provide a stable and secure supply of Maya crude oil to PACC for
over eight years commencing upon completion of the Upgrade Project. The PMI
Contract incorporates the use of a formula that acts as a proxy for calculating
the difference between light products and heavy oil or resid prices. The PMI
Contract provides stabilization for this differential for up to 210,000 bpsd of
Maya crude oil. The Base Case assumes a Contract Quantity of 160,908 bpsd.
Pricing--The base price of Maya crude oil is the formula price used by PMI to
price the majority of PMI Maya crude oil sales. The formula price of Maya crude
oil is stated as follows and is a 5-day average of the formula components:
Maya Price = 0.40* (WTS + FO No. 6, 3%S) + 0.10*(LLS + Brent DTD) - DF
where WTS = the average Platt's prices for West Texas Sour crude oil,
$/B
LLS = the average Platt's prices for Light Louisiana Sweet crude
oil, $/B
Brent DTD = the average Platt's prices for Brent Crude Oil, $/B
FO No. 6, 3% S = the average Platt's prices for fuel oil having 3%,
sulfur content $/B
DF = discount factor subject to adjustment by PMI, $3.50/B at time
of signing
For WTS, LLS and Brent, the price is the average of the high and low spot
prices as quoted by Platt's Crude Oil Marketwire. For FO No. 6 Fuel Oil, the
price is the average of the high and low spot prices as quoted by Platt's
Oilgram U.S. Marketscan, U.S. Gulf Section, Waterborne Column.
The PMI Contract provides for an alternative mechanism for calculating the
price of Maya crude oil under certain conditions where there is a lack of
adequate buyers of Maya and the formula price is not able to be confirmed in
the market. The alternative pricing methodology calculates the price of Maya
based on a marker crude oil, gasoline, diesel, and No. 6 fuel oil through the
use of a multiple regression formula where the coefficients of the regression
formula are based on historical pricing. If the formula price of Maya deviates
sufficiently from the predicted price of Maya using the multiple regression
technique, then the multiple regression formula will be used to determine the
price of Maya. The marker crude oil used in the regression formula can be any
actively traded crude with similar properties to Maya (although it does not
need to be a heavy sour crude) with transparent pricing, significant USGC
market depth, and widely available published pricing.
Differential--The Differential is incorporated into the PMI Contract to
provide PACC with a stabilized average coker gross margin. This is effected
through the application of a discount to the market price of the Maya crude oil
when the Differential falls below a negotiated floor of $15 ("Guaranteed
Differential") or through the application of a premium when the Differential
exceeds $15. The Differential formula is defined as follows:
Differential = (0.5*RUL) + (No. 2 Oil) - (1.5*No. 6 Oil)
where RUL = average of Platt's prices for conventional, non-RFG 87
octane gasoline, $/B
No. 2 Oil = average of Platt's prices for 0.2% sulfur No. 2 fuel oil,
$/B
No. 6 Oil = average of Platt's prices for 3% sulfur No. 6 fuel oil, $/B
Prices are calculated on a monthly average based on the low spot prices
in the U.S. Gulf Section, Pipeline column of Platt's Oilgram Price
Report for RUL and No. 2 oil and the Waterborne column for No. 6 oil.
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On a monthly basis the difference between the Differential and the Guaranteed
Differential is calculated. If the Differential is greater than the Guaranteed
Differential, then a monthly surplus exists. If the Differential is less than
the Guaranteed Differential, a monthly shortfall exists. At the end of a given
quarter, the monthly shortfalls and surpluses are netted. If a net shortfall
exists, then PACC will receive a discount on crude oil in the succeeding
quarter equal to 36.6% (the typical percentage of coker feedstock derived from
one barrel of Maya processed through the crude unit) of the net shortfall times
the Contract Quantity times the number of days in the quarter (assumed to be 90
days) up to a maximum $30 million in any given quarter. Any excess of this
amount will be carried to the next quarter with interest applied. Conversely,
if a net surplus exists, then Clark will pay a premium on the crude oil
received in the succeeding quarter equal to 36.6% of the net surplus times the
Contract Quantity times the number of days in the quarter limited to a maximum
of $20 million in any given quarter, subject to PACC having an aggregate
shortfall position at the end of the prior quarter. As above, any excess of the
$20 million cost will be carried to the next quarter with interest applied. The
total premium paid by PACC will not be greater than the aggregate of discounts
received in prior quarters plus interest. Interest is applied quarterly at a
rate of LIBOR + 1% on the aggregate of discounts received in prior quarters.
Duration--The PMI Contract has an eight year Differential period. The
Differential period commences upon the earlier of (1) Upgrade Project
completion, which is defined in the PMI Contract as having achieved mechanical
completion, commissioning and processing at a rate of at least 80% of Refinery
and coker design capacities for at least thirty consecutive days and (2) July
1, 2001, which date may be extended for reasons of force majeure. If the
Upgrade Project has not reached these completion criteria by January 1, 2001,
monthly extensions can be purchased. Either PMI or PACC have the right to
terminate the PMI Contract after eight years subject to a minimum one-year
phase out period.
Force Majeure--The force majeure clause in the PMI Contract includes as part
of the definitions "interruption, decline or shortage of Seller's supply of
Maya available for export from Mexico (including, without limitation, shortage
due to increased domestic demand)". This clause is standard for PMI oil supply
agreements and would presumably allow PMI to invoke force majeure if Mexican
refinery demand for Maya increased more rapidly than production. In PGI's
knowledge, this aspect of the force majeure clause has not been exercised with
other buyers of Maya crude oil. Based on its crude oil supply/demand forecast,
PGI does not expect this clause to be invoked during the term of the PMI
Contract. Relatively constant projected domestic demand for Maya is expected,
while large increases in Maya production are planned.
According to the PMI Contract, any reduction in PACC's Maya supply volume
would be in proportion to total reductions in Maya supply to other large
quantity Maya customers, or if too few, then to industry. PACC would not be
disadvantaged compared to other contract buyers of Maya crude oil.
Pricing Forecast and Effect on PMI Contract
The PMI Contract was reviewed by PGI utilizing PGI's oil and refined products
price forecast. The Differential formula was applied with pricing discounts and
premiums applied as appropriate.
Figure IV-3 illustrates the PGI forecast of the calculated Differential
formula compared to the Guaranteed Differential. The Differential formula is
designed to be managed quarterly; however, PGI's forecast is made on an annual
basis only and therefore the Differential formula was applied annually as well.
As can be seen in the figure, a net shortfall situation exists in 2001 and
2002, the first two full years of operation, where PACC receives a discount.
After 2002 and onward, the Differential formula moves to a net surplus
position. A premium is applied in 2003 through 2006 equal to the aggregate
discount received by PACC in 2001 and 2002 plus interest at a rate of LIBOR +
1%. From 2007 forward, PACC is forecast to pay the market price for Maya crude
oil since the remainder of the Differential formula period results in a net
surplus position.
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[Chart of Figure IV-3 PMI Contract Guaranteed Differential]
These results are not surprising and confirm that the basic intent of the PMI
Contract is only to minimize adverse cycle risk to secure adequate cash flow
for debt service obligations. It is not structured as a permanent subsidy for
oil purchases. Figure IV-3 confirms that the parties to the PMI Contract have
chosen an appropriate level for the margin protection which should not put
unfair pressure on PMI over an extended period of time.
APCI HYDROGEN CONTRACT
APCI and PACC will enter into a twenty-year take and pay, if delivered
contract under which PACC will purchase up to 80 million standard cubic feet
per day ("MMSCFD") of hydrogen from APCI, of which 55 MMSCFD will be on a
dedicated take and pay basis. APCI will build a new steam methane reformer and
two PSA purification units on Refinery property leased from Clark. APCI will
also produce steam and electricity for sale to Clark.
Commencement date of the contract is required to fall between October 6, 2000
and December 6, 2000 (the "Start-up Date"). PGI believes that the Start-up Date
is achievable. If the hydrogen supply plant fails to be ready to operate due to
APCI acts or omissions on or before December 6, 2000 or prior to December 6 if
the PACC Project requires hydrogen due to completion of the PACC Project, APCI
will pay liquidated damages of $19,250 per day for each day of delay up to
$1,155,000. If PACC is unable to take the hydrogen on or before December 6,
2000 then PACC will pay liquidated damages of $38,500 per day for each day of
delay up to $1,155,000. APCI will guarantee that the hydrogen supply will
achieve an on-stream factor of at least 98% and will pay liquidated damages up
to $1,800,000 if the on-stream factor falls below 98%. If APCI achieves an
average on-stream factor greater than 98%, the APCI will be eligible for a
bonus of up to $900,000. Penalties or bonus payments due to on-stream
reliability will be determined after two complete years of operation.
The hydrogen price is set from an initial base natural gas price and then
adjusted monthly for natural gas price, a labor cost index and the producer
price index. The pricing mechanism is market based and is typical for U.S. Gulf
Coast hydrogen contracts. The price is consistent with the hydrogen price
utilized in the Base Case. PGI believes that the Hydrogen Contract provides
hydrogen and utilities at a competitive price and adequate volume to PACC.
REVIEW OF INTERCOMPANY AGREEMENTS
There are four Intercompany Agreements between Clark and PACC. These are:
. Coker Complex Ground Lease And Blanket Easement Agreement--Land lease for
site of PACC units and access to common facilities by PACC.
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. Ancillary Equipment Site Lease And Easement Agreement- Lease of Clark
owned units.
. Product Purchase Agreement--Clark purchase of products produced by PACC
. Services and Supply Agreement--Supply of all required services and
utilities by Clark to PACC and fees paid by Clark to PACC for processing
Clark crude oil through all PACC owned and leased units
The intent of the Intercompany Agreements is to transact access, supplies,
services and product purchases to reflect arms-length market mechanisms and
fair market pricing terms.
Coker Complex Ground Lease and Blanket Easement Agreement
("Ground Lease")
The Ground Lease provides for the leasing to PACC of land and any
improvements located on such property encompassing the sites for the coker,
hydrocracker and SRU. Clark also grants easements to PACC for access across the
Refinery including ingress, egress, piping, wiring and other purposes as
necessary. An additional easement is provided for use of the Refinery dock for
unloading crude oil and feedstocks and for loading of products.
Under the Ground Lease, Clark also grants PACC a license to use various other
facilities at the Refinery required for operation of PACC.
The payment for the Ground Lease is structured as an up-front payment of
$25,000 for the initial 30 year term of the lease. Any lease extensions will be
based on a fair market rental value as agreed between Clark and PACC or by a
value determined according to the defined appraisal procedure contained in the
Ground Lease definitions. The Ground Lease can be extended past the initial 30
year term in 5 year increments. At the end of the Ground Lease, any
improvements may be dismantled and removed by PACC or, if not removed, shall
become the property of Clark.
Ancillary Equipment Site Lease and Easement Agreement
("Ancillary Equipment Lease")
The Ancillary Equipment Lease is an agreement between Clark and PACC covering
PACC's lease of the site where the Ancillary Equipment is located, access to
the Clark owned process units. In PGI's opinion, this agreement is critical for
PACC to operate in a stand-alone, as well as, the normal mode of operation. The
process units and offsites included in the Ancillary Equipment Lease are:
. Crude/vacuum unit, AVU-146
.Hydrotreaters, GFU-242, GFU-243, CRU-1344
The Ancillary Equipment Lease also grants easements to the PACC for required
access to the leased facilities.
Clark is upgrading the crude and vacuum units to increase processing capacity
from 232,000 up to 250,000 bpsd. Clark is obligated to substantially complete,
at its sole cost, upgrades on or before October 1, 2000. After start-up of the
PACC-owned units, PACC will pay to Clark quarterly lease payments of
approximately $8 million adjusted for inflation through the lease term. An
operating fee determined in accordance with the fixed and variable costs for
Clark processing PACC's crude oil through the Ancillary Equipment is due
monthly. The quarterly lease fee is based on a capital recovery charge for both
existing asset values and the cost of the upgrade. PGI has reviewed the cost of
the lease and operating fees and believe they reflect arm's length basis
pricing and fair market terms.
The initial term of the Ancillary Equipment Lease is for a 30 year period.
The agreement allows for five 5-year extensions. The rent for any extension
period will be based on a fair market rental value as agreed between Clark and
PACC or by a value determined according to the defined appraisal procedure
contained in the agreement definitions.
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Product Purchase Agreement
The Product Purchase Agreement ("PPA") provides for the sale to Clark of all
the finished and unfinished products produced by PACC. The agreement is a take
and pay, if delivered contract and as such obligates Clark to accept and take
delivery of all the products that are produced by PACC and delivered to Clark.
In the event that Clark cannot take delivery, PACC has the right to sell the
products to a third party.
Products are sold based on market based pricing using industry market indices
such as Platt's and Oil Price Information Service ("OPIS"). Intermediate or
unfinished products are discounted for quality considerations and both finished
and intermediate products have appropriate charges for marketing and
terminaling costs when these products are sold to third parties. PGI reviewed
the pricing methodology applied in determining the product values and considers
it to be industry typical and to reflect arm's length basis pricing and fair
market terms. PGI also verified that the product pricing contained in the PPA
is consistent with the pricing used in the Base Case projections. All products
have required target specifications, delivery points, quantity, measurement,
and quality references.
The contract term is for a 30 year period and therefore extends well beyond
the term of the financing. The agreement addresses the required product mix to
be produced and states that any changes made must maximize the overall Refinery
profitability and cannot maximize Clark's profits at the expense of PACC.
The PPA is structured to work in conjunction with the Services and Supply
Agreement. If any dispute arises regarding the PPA, PACC and Clark are required
to meet and resolve the conflict. In the event an agreement is not reached
either party may initiate an arbitration proceeding.
Services and Supply Agreement
The Services and Supply Agreement ("SSA") incorporates all the services and
supplies that Clark provides to PACC including the following: (i) management
and supervision of the PACC construction; (ii) supervision, management and
maintenance of the required Ancillary Equipment (crude/vacuum and
hydrotreaters) needed by PACC to generate on a continuous basis the required
product mix as defined in the PPA; and (iii) provision of services, supplies
and certain feedstocks to PACC.
The SSA has a 30 year term and gives PACC the right to terminate the
agreement for an event of default that is not remedied by Clark. The agreement
provides for Clark arranging for PACC the delivery of Maya and light sour crude
oils and other Refinery feedstocks including hydrogen, provides dock, pipeline,
and storage services, enables Clark and PACC to arrange for processing of their
crude oils and products in the respective PACC and Clark facilities, supplies
operations, management, technical, and maintenance personnel, supplies all
required utilities, chemicals and catalysts,and fuel, and arranges for all the
support services needed to operate PACC in regulatory compliance as well as
safely and reliably.
The SSA also contains provisions addressing the processing rights by Clark
for the use of its required capacity in either PACC-owned units or the
Ancillary Equipment. The agreement also grants PACC approval rights with
respect to annual budgets and operating plans submitted by Clark. These
provisions protect PACC's ability to generate revenues and its profitability.
Each of the services mentioned above are tied to specific schedules that
describe the specific service to be provided and address quantity, measurement,
applicable pricing, and billing. Both PACC and Clark are obliged to make the
required payments that cover the reimbursable costs incurred by the party
providing the service and/or supply. PGI reviewed the pricing methodology
applied in determining the specific services and/or supply to be provided and
consider it to reflect arms-length basis pricing and fair market terms. PGI
also verified that the revenues and expenses as a result of these services and
supplies are reflected in and consistent with the Base Case.
The SSA is structured to work in conjunction with the PPA. If any dispute
arises regarding the SSA, PACC and Clark are required to meet and resolve the
conflict. In the event an agreement is not reached either party may initiate an
arbitration proceeding.
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ENGINEERING, PROCUREMENT, AND CONSTRUCTION CONTRACTS
There are two separate contracts with Foster Wheeler: (i) the Clark EPC
Contract between Clark and Foster Wheeler; and (ii) the EPC Contract between
PACC and Foster Wheeler. Following is a summary discussing each one.
Clark EPC Contract
The renovation and upgrade of the crude unit, vacuum tower and other
Ancillary Equipment required to be performed by Clark pursuant to the Ancillary
Equipment Lease represents primarily routine turnaround work and will be done
by Foster Wheeler under the Clark EPC Contract. Under this contract, Foster
Wheeler is paid on a "cost-plus" reimbursable basis rather than a fixed-cost
basis. The cost estimate for this work is $92 million. Completion of this work
is expected to occur no later than October 2000. This contract contains
retainage, warranty and process guarantee provisions from Foster Wheeler that
are customary for reimbursable-cost basis refinery upgrade contracts. This
contract will be assigned to PACC as security for Clark's construction
obligation under the Ancillary Equipment Lease.
EPC Contract
The EPC Contract is a lump sum fixed price basis contract for the
engineering, design, procurement, construction, installation, testing and
documentation of a new 80,000 bpsd delayed coking unit, a 35,000 bpsd
hydrocracker, a 417 LTD sulfur recovery unit and various offsites for a fixed
price contract amount of $544 million.
The EPC Contract in most aspects follows a typical industry standard format
that is routinely used for a lump sum fixed price basis agreement. In addition
it incorporates substantial terms and conditions pertaining to completion and
acceptance (covering performance and reliability) that is more demanding of
Foster Wheeler. The engineering, procurement, and construction of the PACC
process units (delayed coker, hydrocracker, amine and sour water stripper, and
sulfur plant) are on a fixed price basis. The EPC Contract specifically defines
the scope, deliverables, responsibilities, obligations, price, and schedule.
PGI believes that the EPC Contract will provide the PACC with a well designed
facility and a reliable operation. The EPC Contract contains the mechanism
required to control the cost and completion dates, and is structured to reduce
the risks associated with overruns, schedule delays and integration with the
process units outside of PACC that are needed for the continuous operation. It
also incorporates the auditing requirements which will be carried out by the IE
who will independently monitor construction and certify completion and
performance.
Following are some specific comments pertaining to some of the more critical
contract terms and conditions.
Contractor Responsibilities
In general terms, the EPC Contract protects PACC's rights, and obligates
Foster Wheeler to meet all its obligations and responsibilities in the
engineering, procurement, construction, commissioning, and startup of the
Upgrade Project. Clark management has provided specifications ("Turnkey
Specifications") which Foster Wheeler is contractually obligated to meet in the
performance of their responsibilities. The EPC Contract language is very
specific and careful in making Foster Wheeler, and solely Foster Wheeler,
responsible for all obligations under the EPC Contract including completing
construction within a fixed price and project schedule, including all work
performed by subcontractors.
Foster Wheeler non-performance is penalized by rebates and setoffs. These in
turn are related to delay and performance liquidated damages caused by delays
in mechanical completion or under performance when PACC cannot achieve process
design guarantees and reliability criteria defined in a Performance Test. Delay
damages amounting up to $70 million and performance damages amounting up to $75
million are specified in the contract. The Performance Test includes both a
Capacity Test and a Reliability Test. Performance Test liquidated damages are
applicable if and when PACC is not able to operate at design capacity or
produce the
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specified salable products, or achieve the guaranteed plant efficiency. In
addition, the Reliability Test requires Foster Wheeler to demonstrate that PACC
can achieve minimum daily net margin targets. In the event the daily net
margins are not achieved, Foster Wheeler is obligated to make Reliability Test
buydown payments. While the EPC Contract does contain a clause allowing the
payment of a bonus in the event of early completion, it is only paid upon final
acceptance of the Upgrade Project. The contract also subjects Foster Wheeler to
a penalty equal to the full amount of the contract, i.e. $544 million in the
event of default.
Scheduled payments will be based on achieving determined engineering,
materials procurement, and construction progress. PGI will be required to
review the Upgrade Project's progress in relation to expenditures. In addition
to delay and performance liquidated damages, the contract requires a 10% letter
of credit that serves as a retainage in which PACC is the beneficiary and has,
as owner, the right to withhold funds in the event of Foster Wheeler not
completing all items as required in the Turnkey Specifications.
Project Cost and Schedule
The EPC Contract has terms that address fixed price and firm completion
dates. The terms and conditions typically found in EPC fixed price contracts or
LSTK arrangements that allow either cost or schedule increases, are included in
the EPC Contract. Specifically, changes in laws or regulations, force majeure
situations, and change orders are part of the EPC Contract and are drafted in
detail. Sufficient site work has been completed at the Refinery to eliminate
unknown underground structures risk, which is sometimes an additional cause for
change orders, and make this the responsibility of Foster Wheeler.
PGI believes that the cost estimate as well as the construction schedule are
both very realistic and achievable, that the risk allocation is fair and should
not result in cost increases or disputes.
Changes in Laws or Regulations
In PGI's opinion, changes in laws or regulations should be of little impact
since Clark has obtained revised permits needed for PACC construction. Further
details on the construction permits are contained in the Environmental Section
of this report.
Force Majeure and Owner Delays
The force majeure clause is considered typical of those found in EPC
contracts, and should not be a cause for construction project overruns or
schedule delays. The intent of the EPC Contract is that Foster Wheeler be a
qualified contractor (as addressed in the Contractor's Expertise clause) who is
experienced in doing similar projects and is familiar with the location where
construction is to take place. Language in the force majeure section restricts
extraordinary weather related delays by specifying a 30 year history and limits
labor problems to industry wide and/or nationwide incidents. PGI believes that
Foster Wheeler has taken into account its experience in refinery projects and
knowledge of the Port Arthur region, and built in sufficient time for
uncontrollable events that may occur during the course of the construction
which may have an impact on construction cost and schedule.
The EPC Contract also addresses owner caused delays which can be the basis
for contractor claims. Clark management and Foster Wheeler have organized an
experienced team, which in our opinion is critical to having a successful
Upgrade Project. Clark management is committing sufficient personnel as needed
to undertake the Upgrade Project management and support Foster Wheeler efforts.
Based on our meetings with Clark management and Foster Wheeler, we believe that
sufficient capable and experienced human resources and planning are (and will
be made) available, as needed, to achieve successful completion of the Upgrade
Project.
Change Orders
Change orders can be a major cause for cost overruns and schedule delays.
Change orders can be avoided if specifications are very clear and do not have
any undefined scope or responsibilities. As currently drafted,
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PACC has the right to approve or disapprove change orders at its option. In
PGI's opinion, the EPC Contract includes satisfactory terms to provide a
comprehensive and complete technical specification to the contractor and to
provide sufficient supervision and controls to minimize the potential for
change orders. PGI must approve any individual change order in excess of
$500,000 and change orders, in the aggregate, in excess of $5 million.
Based on the advanced design (over 70% complete as of June 1999), 98%
completed procurement, civil construction being almost finalized and the
remaining construction time of 16 months, the risk of excessive and expensive
change orders is considered minimal.
Warranties
The objective of the EPC Contract is to deliver a facility that performs
according to design. A facility that is completed on time and within budget but
does not perform according to design would be of little value. Sufficient
safeguards in the form of warranties and performance guarantees are needed
beyond mechanical completion, commissioning, and startup to assure a safe,
reliable, and profitable operation. The EPC Contract contains language on
mechanical warranties and performance guarantees that cover all defects and
deficiencies caused by errors and omissions in engineering and design or
otherwise. The warranties vary from one to three years and cover civil and
mechanical events. The mechanical warranties vary from one to two years
depending on mechanical completion dates and are considered typical for EPC
contracts. The guarantees cover plant capacity, efficiency, reliability, and
the integration of the PACC Project with the rest of the Refinery. In PGI's
opinion, these warranties and guarantees are adequate.
Performance Tests and Completion Guarantee
The EPC Contract addresses both delay penalties and performance penalties.
Delay penalties cover delays in mechanical completion while performance
penalties cover performance at below design conditions.
Delay damages are triggered if Foster Wheeler does not achieve mechanical
completion or Guaranteed Reliability by the Guaranteed Mechanical Completion
Date (as defined in the EPC Contract) by January 1, 2001 and if certain other
milestones are not met after the PACC Project is mechanically complete. The cap
of $70 million for delay damages is sufficient to cover non-capitalized debt
service payments through December 31, 2001.
The EPC Contract incorporates performance tests that confirm PACC's
capability to process the required amount of feedstocks, produce the design
product yields and specifications, and consume the energy (fuel and
electricity), and utilities, as specified in the operating assumptions of the
Base Case economic model. Foster Wheeler guarantees completion and has to pass
a sixty-day extended period test that will reflect the various unit capacities
to achieve operation at process design conditions. Each unit must operate
smoothly in a safe and efficient mode and in environmental compliance for
extended periods that demonstrate its reliability over the long term. Tables
IV-3 through IV-7, Performance Test Standards, show how the performance is
validated. If the Performance Test fails to achieve the Guaranteed Reliability
(as defined in the EPC Contract), Foster Wheeler is subject to loan buydown
payments, for up to $75 million. This buydown amount is considered by PGI to be
adequate to cover the majority of foreseeable risks.
In addition, Foster Wheeler is exposed to 100% of the EPC Contract amount
until PACC achieves Substantial Reliability which is defined as 95% of the
Guaranteed Reliability as defined in the EPC Contract.
PGI believes that the definition, configuration and duration of the agreed
performance and reliability test are suitable to demonstrate that PACC will be
able to achieve the operating rates and efficiencies assumed in the Base Case
and that these tests and other rights that PACC has under the EPC Contract
represent an appropriate completion risk mitigation.
B-26
<PAGE>
Independent Engineer
The EPC Contract includes provisions which address the role of an IE. The IE
participates in reviewing the procedures and practices followed in the
engineering, procurement, and construction phases of the Upgrade Project.
Although the IE does not perform or participate in any process simulations,
equipment specifications, mechanical drawings, piping and instrument diagrams,
civil and structural design, fabrication, and construction activities, the IE
provides an opinion on whether the engineering and construction is following
standard industry practices, required implementation policies exist, an
experienced and qualified management team is in place, sufficient checks and
balances exist, and that any specific requirements are in place. The IE is also
responsible for certifying that the required steps are being taken by the
management team to assure that the Upgrade Project is being designed and built
in accordance with the required standards and within the allotted budget and
schedule. In the event that any problems are detected, the IE is responsible
for bringing these to the attention of the Financing Parties as well as PACC
management.
Construction Monitoring
While it is PACC's responsibility to review and certify that each EPC
Contract invoice is valid and is due, the IE will monitor the construction
progress (by reviewing periodic progress reports and making routine visits to
the construction site) and will certify to the disbursement agent that
construction funds can be released.
The IE will check that the necessary procedures are in place to assure that
PACC will not approve any payments without carrying out the necessary approval
process. The EPC Contract provides the IE with the right to spot check any
payments and ascertain whether the payments being made correlate with the
construction progress being reported (and observed based on field inspection).
The IE will also certify PACC's acceptance of mechanical completion after
carrying out the required due diligence review.
TABLE IV-3
PERFORMANCE TEST STANDARDS
Purpose: The Performance Test measures the ability of PACC facilities to
generate cash flow, adequate to service its Senior Debt outstanding,
using the assumptions for average market prices of products and
feedstocks, and average unit prices for utilities contained in the
Base Case for years 2001 through 2011. The Performance Test is
intended to demonstrate that the PACC facilities can operate in
conjunction with the Clark facilities at the forecasted throughput,
yield and operating efficiency without any effects of changes in the
market prices of, or price relationships between, feedstocks and
refined products.
GENERAL TEST PARAMETERS
1. The Performance Test will consist of a Capacity Test and a Reliability
Test to be conducted following Mechanical Completion and Commissioning.
All General Test Parameters will apply to both the Capacity Test and
Reliability Test.
2. The candidate crude oils charged to crude unit AVU-146 will be from the
list in Table IV-4 and actual crude oils as agreed to between PACC,
Foster Wheeler USA Corporation, and the Independent Engineer during all
test runs. The volume mix of crudes shall be approximately 80% from the
heavy category and 20% from the light sour category.
3. All products produced and sold to Clark during the Performance Test
shall meet the specifications set forth in the Process Technical
Specifications set forth in Schedule 1.7 in the Turnkey Specifications.
To the extent the products actually produced deviate from the product
specification, the price shall be
B-27
<PAGE>
adjusted to reflect the values for the processing or sale of such
products by PACC or Clark R&M as approved by the IE.
4. During the Performance Test, the Guaranteed Emission and Effluent Limits
shown in Table IV-5 shall not be exceeded on a ratable basis.
5. During the test period, only one component of spared equipment will be
utilized at any time where redundant components (pumps, compressors,
etc.) are installed. This does not preclude switching among components
of spared equipment during the test period.
6. For purposes of measuring the consumption of each feedstock and utility,
and production of products for calculation of Daily Net Margin, Clark
and PACC will use the measurement systems and equipment that are
utilized for accounting purposes. Meters shall be installed for
measurement of the main feeds, products and utilities between Clark and
PACC. Calibration of such meters will be carried out prior to the
commencement of the Performance Test.
7. Details of the yield accounting approach including measurement
tolerances, analytical procedures, scheduling and reporting during the
Performance Test will be developed between PACC and Foster Wheeler
personnel and the IE before the commencement of the test.
8. PACC and Foster Wheeler may from time to time request modifications to
any of the procedures of the Performance Test. Such modifications will
become effective upon the consent of the IE, which consent shall not be
unreasonably withheld or delayed.
CAPACITY TEST
9. During a continuous 72-hour period, which can be during the Reliability
Test or at another time, the PACC units will be operated at or within
the conditions identified in the process unit performance guarantees
included as attachments to Schedule 5.3 of the EPC Contract. The
capacity test will demonstrate that PACC can achieve design capacity and
efficiency. The summary table below shows some of the major capacity
test parameters.
CAPACITY TEST PARAMETERS
<TABLE>
<CAPTION>
<S> <C> <C>
DELAYED COKER
Charge Rate 80,000 B/D minimum
Total Liquid Product (C5+) yield 58.9 wt% minimum
Coke Drum Cycle 18 Hours maximum
HYDROCRACKER
Charge Rate 35,000 B/D minimum
Total Liquid Product (C5+) yield 111.2 LV% minimum
Hydrogen Makeup 2,152 SCF/BBL Feed maximum
(Chemical)
SULFUR RECOVERY UNIT
Recovered Sulfur 417 LT/Day minimum
Sulfur Recovery Efficiency 99.80% minimum
Incinerator Effluent 250 ppm vol SO2(/1/) maximum
</TABLE>
--------
(1) Dry and 0% excess air basis
9.1 Crude unit AVU-146 will be operated by Clark at a nominal 250,000 bpsd
during the Capacity Test to provide adequate vacuum bottoms feedstock
for the delayed coking unit (DCU 843).
9.2 The delayed coker feedstock will be vacuum resid. The hydrocracker
feedstock will be mixed coker gas oil, light cycle oil, and vacuum gas
oil.
B-28
<PAGE>
RELIABILITY TEST
10. Crude Unit AVU-146 will be operated for 60 consecutive days at a crude
oil charge rate of not less than an average of 245,000 B/D to provide
feedstocks for the Project units. The coker will be operated during the
same period at an average charge rate of not less than 76,340 B/D of
vacuum resid feedstocks. There will be no limitation on the amount of
feedstock processed in Crude Unit AVU-146 and vacuum resid feedstock
sent to the coker subject to physical limitations of the Crude Unit
AVU-146 and safety considerations. The hydrocracker will be operated
during the same period at an average charge rate of not less than
33,250 B/D of mixed coker gas oil, light cycle oil and VGO feedstocks.
11. The Guaranteed Reliability of the Project will be determined by the
achievement of 100% of the Daily Net Margin of $904,500 as described
below. The Project can achieve Substantial Completion by achieving at
least a Daily Net Margin of $859,200 and by Foster Wheeler paying
Reliability Test Buydown Payments according to the schedule in Table
IV-6.
The "Daily Net Margin" generated during a Performance Test is
calculated as follows: (i) the sum of Product Values (as defined
below) for each product produced during the Performance Test minus
the sum of the Feedstock Values (as defined below) minus Variable
Costs (as defined below) divided by (ii) the number of days in such
Performance Test. The Daily Net Margin calculation shown in Table
IV-3 in Schedule 5.3 of the EPC Contract is based on an 80/20
Maya/Arab Light crude slate; any alternate Light Sour crude oil will
affect product yields and utility consumption. It is not anticipated
that changes in the Light Sour crude selection will have a material
impact on the Daily Net Margin. However, any change in crude
selection and the corresponding Daily Net Margin calculation will be
subject to review and agreement by PACC, Foster Wheeler, and the IE.
As used in Daily Net Margin, the following terms have the following
meanings:
"Product Value" means, for any product produced in a Performance Test,
(i) the volume or other measure of such product produced during such
Performance Test multiplied by (ii) the Dollar Value (as defined
below) of such product.
"Feedstock Value" means, for any feedstock consumed in a Performance
Test, (i) the volume or other measure of such feedstock consumed
during such Performance Test multiplied by (ii) the Dollar Value of
such feedstock.
"Dollar Value" of any product or feedstock means the value therefore as
set forth in the Base Case and as listed in Table IV-7 or, if there
is no value set forth in Table IV-7 for such product or feedstock,
as the case may be, a value determined by PACC, with the written
approval of the IE, on a basis consistent with the methodology used
to determine the prices of similar products or feedstocks, as the
case may be, set forth in the Base Case, adjusted to reflect any
differences in quality and transportation costs.
"Variable Costs" means the total of utilities consumed (or produced)
multiplied by the unit price of each utility as specified by the
Services and Supply Agreement assuming base fuel and electricity
costs of $2.307/MMBTU and $.032/KWH, respectively. The consumption
basis for each utility is outlined in the Heavy Oil Project
Guarantee Basis in Schedule 5.3 of the EPC Contract.
B-29
<PAGE>
TABLE IV-4
APPROVED CRUDE OILS
<TABLE>
<CAPTION>
LIGHT SOUR HEAVY
---------- -----
<S> <C>
Arab Light Maya
Basrah Light(*)
Kirkuk(*)
Kuwait(*)
Olmeca(*)
Oriente(*)
Poseidon(*)
Mars(*)
Urals(*)
Vasconia(*)
</TABLE>
(*) These crudes are candidates for use subject to selection of the most likely
crude to be run by PACC and Clark and a process design check to be
performed by Foster Wheeler after such crude is selected by PACC and Clark.
TABLE IV-5
MAXIMUM ALLOWABLE AIR EMISSIONS
<TABLE>
<CAPTION>
TOTAL EMISSIONS T/YR
-------------------------------------
Unit VOC NOX CO S02 PM H2S
---- ----- ------ ------ ------ ----- ----
<S> <C> <C> <C> <C> <C> <C>
HCU 942............................. 32.56 51.16 39.01 8.63 8.95 0.00
DCU 843............................. 34.52 189.22 90.39 30.83 22.35 0.00
SRU 545............................. 5.37 10.51 29.35 387.21 0.66 0.18
Auxillary C.T., Flare, Etc.......... 17.20 0.26 9.21 0.04 0.00 0.00
----- ------ ------ ------ ----- ----
TOTALS.............................. 89.65 251.15 167.96 426.71 31.96 0.18
</TABLE>
Note: The maximum allowable air emissions are subject to revisions based on
final design specifications and operating performance of the PACC-owned
units.
TABLE IV-6
RELIABILITY TEST BUYDOWN PAYMENTS
<TABLE>
<CAPTION>
LIQUIDATED DAMAGES SCHEDULE
---------------------------------------------------------------
Net Daily Margin Buydown
(M$/Day) (MM$)
---------------- -------
<S> <C>
904.50 0.00
899.50 8.28
894.50 16.56
889.50 24.84
884.50 33.11
879.50 41.39
874.50 49.67
869.50 57.95
864.50 66.23
859.50 74.51
859.20 75.00
</TABLE>
Buydown (MM$) = 1.6557 MM$ / 1.0 M$ (Net Daily Margin Impairment).
Note: The Net Daily Margin guarantee basis will be updated to reflect the final
utility volume design data. The Buydown amount of 1.6557 MM$ / 1.0 M$
(Net Daily Margin Impairment) will not change with this update.
B-30
<PAGE>
TABLE IV-7
PRICING--PURVIN & GERTZ 2001-2011 AVERAGE
<TABLE>
<CAPTION>
Pricing--
Purvin & Gertz 2001-
2011 Average
--------------------
<S> <C>
Fuel $2.31 /MMBTU
Reg UL 87 $23.13 $/bbl
Prem UL 93 $25.04 $/bbl
Penhex Sales $18.74 $/bbl
Propylene $22.51 $/bbl
Propane $14.98 $/bbl
N-Butane Sales $16.27 $/bbl
Isobutane $18.29 $/bbl
Butylene $18.58 $/bbl
BB Mix $18.58 $/bbl
Naphtha Purchase $21.63 $/bbl
Kero $23.13 $/bbl
Jet 54 $23.13 $/bbl
LS Dies $22.66 $/bbl
HS Dies $22.00 $/bbl
LS VGO $20.86 $/bbl
HS VGO $19.39 $/bbl
#6 Fuel $11.72 $/bbl
Coke $0.00 $/FOEB
Hydrogen $1.31 /MSCF
Power 3.2 cents/kwH
CW m/u 10 c/gal
Sulfur $41.00 $/LT
Coker Naphtha $19.07 $/bbl
Coker LGO $19.90 $/bbl
Hydrocracker Light
Naphtha $18.11 $/bbl
Hydrocracker Heavy
Naphtha $23.29 $/bbl
Hydrocracker Jet $22.71 $/bbl
Coker VTB $4.05 $/bbl
Vacuum Gas Oil $18.55 $/bbl
FCC Light Cycle
Oil $19.48 $/bbl
650# Steam $3.80 $/mlb
125# Steam $3.59 $/mlb
</TABLE>
B-31
<PAGE>
ENVIRONMENTAL REVIEW
ENVIRONMENTAL PERMITS AND COMPLIANCE
The Refinery is located in Jefferson County, Texas and falls under the
Environmental Protection Agency ("EPA") Region VI, and under Region X of the
Texas Natural Resources Conservation Commission ("TNRCC"). Jefferson County is
classified by the EPA as an ozone non-attainment area. The county was a serious
ozone non-attainment area and was reclassified to a moderate ozone non-
attainment area on June 3, 1996.
The past relationship (under both Gulf and Chevron ownership) as well as the
current relationship between Clark and the federal and state environmental
regulators, is satisfactory. As evidenced by correspondence between Clark and
the agency, good lines of communication are open between Clark and the
regulators and this relationship has facilitated frank and cooperative
discussion on items pertaining to permits and compliance.
The EPA carried out a multimedia (air, water, solid/hazardous waste)
inspection in April 1997 which indicated that Clark was essentially in
compliance. Only two deficiencies were identified; Clark has since corrected
these items to EPA's satisfaction. The most recent TNRCC inspection conducted
in 1998 reported the refinery to be essentially in compliance.
FLEXIBLE AIR PERMIT ALTERATION AND SEPARATION
Clark holds five conventional TNRCC permits and one umbrella or bubble type
flexible air permit. Clark is currently covering most of the Refinery
operations under the flexible air emissions permit (Permit Nos. 6825A and PSD-
TX-49). This air permit is in lieu of the traditional single source permits and
incorporates all of the existing air emissions sources under one umbrella
permit. The flexible air permit establishes 10 individual maximum allowable
emission rates (VOC, NOx, SO2, CO, PM, H2S, HF, NH3, Benzene, and MTBE) and
defined individual limitations (which includes control of fugitive emissions,
opacity, operation of SRUs, visible emissions from heaters and boilers, and
continuous emission monitoring systems, amongst others). The flexible permit
requires Clark to make certain investments beginning in 1994 and ending in
2004, that will ultimately reduce the total air emissions by installing best
available control technology ("BACT") on all grandfathered equipment. In
return, Clark was granted a permit that does not specify emission limits on
each source but instead provides an overall plant limit for each of the ten
pollutants mentioned above. The starting time was determined by
Chevron's/Clark's promise to pursue a flexible permit in 1994. The permit was
approved in 1996. PGI reviewed Clark's 1998 emissions summary which reported
all individual emission caps to be below the maximum allowable limits. Clark is
required to make this demonstration to the TNRCC every quarter, until
continuous emission monitoring equipment is installed that will allow this
demonstration on a real time basis. In view of the reported emissions
documentation and conversations with Clark and the TNRCC, it is apparent that
emissions are routinely within permissible limits.
Clark's 10 year flexible permit capital investment requirements (1994-2004)
includes the addition of low NOx burners, a vapor recovery system at the docks,
fugitive emissions control and monitoring, continuous emissions monitoring
equipment, and process revisions needed to lower the SOx emissions in the FCCU
flue gas. FCCU emissions reductions will be accomplished by lowering the sulfur
content in the FCCU feedstock to 0.3wt%. Clark is targeting to have all items
completed by 2002. The estimated total investment plan is approximately $33
million to achieve all the items.
PGI reviewed documentation provided by Clark that evidences the permits under
the TNRCC jurisdiction that changed ownership in April 1995 after Clark
acquired the Refinery from Chevron USA, Inc. and Chevron Pipe Line Co. In
December 1996, the existing permits were captured under a single permit
referred to as the original Flexible Permit.
The Flexible Permit was amended on August 31, 1998 to allow Clark to
undertake the Project. On March 9, 1999 a request was made by Clark to the
Office of Air Quality of the TNRCC for permit alteration and separation of
Flexible Permit 6825 A. On March 18, 1999, an additional request was made to
TNRCC to
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<PAGE>
once again alter the Flexible Permit and in addition amend Permit 2303 A. These
requests will have the net result of separating PACC from the Flexible Permit
and incorporate the emissions from PACC to Permit 2303 A. This existing permit
covers emissions from four crude oil storage tanks (of which two will be used
as coker feed storage tanks) which are located in the general vicinity of the
PACC site. Permit 2303A will have emissions capped by individual source rather
than the flexible concept. The TNRCC notified Clark on April 29, 1999 that the
amendment to Permit 2303A and the alteration to Permit 6825A had been approved.
Subsequently, on May 12, 1999 Clark requested TNRCC to change the ownership of
Permit 2303 A from Clark to PACC. On May 28, 1999 the TNRCC approved the change
of ownership. This permit gives PACC the right to construct and operate the
Coker Complex. Both permits remain under TNRCC account ID No. JE-0042-B. The
TNRCC considers this reasonable since Port Arthur is functionally one emissions
site.
The revised original Flexible Permit approved by TNRCC requires that
construction of the Upgrade Project begin no later than February 2000. This
condition has already been satisfied since construction has already begun. The
revised Flexible Permit would require a permit modification to continue to
operate the existing coker units once the new coker becomes operational.
In addition to the existing permits, on July 9, 1999, the TNRCC issued to
PACC standby permits (Permit Nos. 6825Z and PSD-TX-49Z) that would replace the
existing Clark Flexible Permit and become effective upon notice by PACC to the
TNRCC. These permits are subject to the same special conditions contained in
the existing Clark permits and would allow PACC to operate the Clark Ancillary
Equipment required to support the Coker Complex operation.
WASTEWATER AND, SOLID AND HAZARDOUS WASTES
The current operation treats all Refinery process wastewater prior to its
discharge into the Neches river via the Refinery joint outfall canal. Chevron,
prior to selling the Refinery to Clark, installed a new wastewater treatment
plant that treats all Refinery wastewater and the wastewater produced at the
Chevron petrochemical plants. The treatment plant is considered a state of the
art facility and incorporates various stages of treatment prior to the
wastewater being discharged. Current wastewater discharge parameters are
routinely below the TNRCC and EPA limits. Clark provided documentation which
shows the Refinery to be in compliance at percentage rates better than the
industry average.
Solid and hazardous wastes are handled, stored, and transported according to
the required RCRA regulations and do evidence any material non-compliance
issues. PGI reviewed a RCRA compliance inspection report done in conjunction
with the multimedia inspection which shows Clark to be essentially in
compliance.
EXISTING SITE CONTAMINATION
The Refinery site was determined to be contaminated prior to Clark's purchase
from Chevron. Black & Veatch, an engineering and environmental consultant, was
retained (November 1994) by Clark to ascertain the pre-existing contamination
of the entire refinery complex. As a condition of the fuels refinery sale by
Chevron to Clark, Chevron retained the environmental liability for the pre-
existing site contamination with exception to those areas classified as
excluded areas which include the areas immediately under and within 100 feet of
the prime fuels operating units (crude unit, FCC, reformer, alky, etc.) The
ground areas that will be leased by PACC have potential soil and underground
water contamination; however, this contamination remains a Clark liability. The
area in which the existing Clark fuels refinery is located represents
approximately 3% of the total Refinery facilities area. The areas occupied by
the tank farm and Chevron's petrochemical plants are also potentially
contaminated and remain under Chevron's responsibility.
Environmental impact studies performed by Clark's environmental consultants,
Black & Veatch, reportedly indicate minimum risk to the surrounding surface and
underground water bodies that are considered as potable drinking water sources.
The underlying geology at the site shows Beaumont clay at an average depth of
30 feet which has a low permeability and tends to impede the downward flow of
groundwater. In PGI's experience it is common for remediation not to be
immediately mandated in circumstances where no potable
B-33
<PAGE>
water sources are endangered. A previous report (November 1994) by Black &
Veatch also indicates that ground water remediation will not be performed for
individual areas of the Refinery, but for the Refinery as a whole.
For those areas outside of Clark's boundaries, Chevron agreed with the
environmental authorities on a site remediation plan, and today, site
remediation in areas under Chevron's responsibility is in progress. The intent
is that the remediation work will continue until the site has reached the
negotiated conditions.
The area that will contain the major PACC units, namely the coker and the
hydrocracker, has potential soil and underground water contamination. Chevron
has agreed to pay Clark an agreed settlement amount, based on forecast cleanup
costs (of any remediation of soil located above the groundwater table), of
approximately $1.4 million in order for Clark to assume this potential
liability. Black & Veatch calculated a cleanup cost estimate of $1 million for
capital costs and $0.8 million for operating costs (based on insitu
stabilization of the soil). Black & Veatch indicated that the settlement amount
would be sufficient for the level of remediation (if remediation were
mandated). As Clark retains all environmental liabilities under the Coker
Complex Ground Lease and Ancillary Equipment Lease for existing site
contamination, PACC is protected against any environmental exposure with
respect to existing conditions.
EFFECT OF PROPOSED GASOLINE SULFUR SPECIFICATIONS
Future gasoline specifications beyond the Complex model have been issued by
the EPA and are referred to as Tier 2. There is currently a debate between the
automobile manufacturers and the refining industry concerning proposed levels
of sulfur in gasoline. The automobile manufacturers association argue that
further improvements to the catalytic converter requires a lower sulfur
gasoline fuel as sulfur is a temporary catalyst poison. The proposed
specifications are an annual average sulfur concentration of 30 parts per
million ("ppm") with a per gallon maximum of 80 ppm. To achieve these
specifications, refiners will be required to make capital expenditures to
construct additional processing units to treat gasoline type streams. New
specifications will likely be decided in 1999 with new requirements going into
effect in 2004.
As the low sulfur specifications are currently in the proposal stage and no
new regulations have been passed at this time, most refiners including Clark do
not have definitive plans to construct the additional equipment necessary to
meet the proposed specifications. With the new PACC hydrocracker and the
existing VGO Hydrotreater (GFU244), Clark will likely only require additional
hydrotreating on the FCCU gasoline and light straight run streams. This capital
expenditure is expected to be no more than $50 million through the use of idle
equipment currently located at the Refinery. Based on Clark's past commitment
to meet the regulations at the Refinery, it is reasonable to expect that Clark
will spend the capital necessary to meet the new proposed specifications.
MTBE
Recent concerns regarding groundwater contamination by MTBE in California
have prompted a panel of the Environmental Protection Agency to recommend that
Congress enact a ban on MTBE usage. In addition, the governor of California has
signed an executive order regarding the phasing out of MTBE usage over the next
few years. In the past the refinery has produced reformulated gasoline (RFG)
using MTBE produced through a tolling agreement with Huntsman Chemical.
Although the refinery will continue to have the capability to produce RFG
containing MTBE, PACC does not plan to produce MTBE. If a ban on MTBE usage
were to spread throughout the U.S., including Clark's market area, the Refinery
would be prohibited from utilizing MTBE in its gasoline blends. Such an
occurrence would generally affect all refiners more or less equally. PGI
believes that a ban on MTBE usage would not have a material effect on PACC's
operations and cash flow or the competitiveness of the Refinery.
B-34
<PAGE>
COMPETITIVENESS OF REFINERY
Purvin & Gertz utilizes a proprietary methodology to predict the relative net
margin of a refinery of a given configuration compared to other refineries with
different configurations. The index, termed processing power index or PPI, is
based on the conversion capability of the refinery, the hydrogen uptake per
barrel of crude oil processed, and relative size. The PPI is based on seven
different standard index USGC refineries with varying degrees of complexity and
types of crude oil processed. The refinery configurations include both cracking
and coking modes of operations processing sweet and sour crude slates in
various combinations. Calculation of the PPI assumes that the refinery operator
is prudent in all matters regarding operating costs, maintenance practices,
safety and environmental compliance. Based on our analysis, the Refinery will
move into the top five refineries on the US Gulf Coast based on PPI. In
comparison, the Refinery ranks number seventeen per the PPI in the pre-
expansion mode. The graph below illustrates where the refinery is today and
post-project.
[Chart of Figure IV-4 Relative Margin Indicator for 29 USGC Refineries]
B-35
<PAGE>
V. ECONOMIC MODEL
GENERAL
Clark management developed and provided to PGI an economic model to simulate
economics for PACC. PGI examined the model and confirmed the assumptions and
calculations by performing an independent review. PGI considers the economic
model to be an accurate representation of the projected revenues, expenses, and
net cash flows generated by PACC.
The objective of the economic model is to analyze the expected revenue, net
income, and DSCR's. PGI verified the feedstocks consumption, products yields,
operating costs, processing fees, utility/environmental fees, marketing fees,
maintenance turnaround charges, and capital (initial and sustaining)
expenditures based on documents provided by Clark. Our evaluation did not
include verification of financing assumptions, depreciation, reserve fund
requirements, or taxes (corporate, sales, state, municipal, etc.) that were
assumed by Clark and are incorporated into the economic model. Depreciation is
calculated on a 30 year straight line method for book basis and 10 year double
declining balance method for tax purposes. Cash income taxes are assumed to be
at a rate of 35%.
The economic model calculates, on a semi-annual basis, the expected PACC
revenues, project expenses and DSCR beginning November 1, 2000 and ending in
2015. For the purposes of this report the results from the economic model are
reported on a yearly basis. The model incorporates the PGI price forecast
adjusted from a basis of 2% inflation reduced to 1%. A 1% inflation basis
increases conservatism in estimating the debt service coverage ratios. The
basis for the PGI price forecast is discussed in detail in the separate "Crude
Oil and Refined Product Market Forecast".
PACC consists of the delayed coker, hydrocracker, sulfur plant and certain
offsites. PACC is integrated with the existing operations at the Refinery and
its economics are based on the sale of intermediate and finished product
streams at market rates to Clark. In addition to finished and intermediate
product sales, PACC incurs lease and operating fees related to the leasing and
operating costs incurred by the upgrading of PACC intermediate products in PACC
owned and leased units and receives processing fees from Clark for the
processing of Clark intermediate products in the PACC owned and leased units.
Finished product and intermediates pricing are based on widely accepted
market publications such as Platt's with quality discounts or premiums applied
where applicable. All pricing is established at the Refinery gate by applying
appropriate transportation costs and fees to the US Gulf Coast basis.
CAPITALIZATION OF PACC
PACC's capital costs, operating cash deficiencies during construction and
financing expenses (including interest during construction) are to be funded
through a $135 million equity contribution and the issuance of bank term debt
($325 million) and capital markets debt ($255 million). The bank term debt has
a final maturity of 7.5 and 8 years with a prepayment mechanism allowing for
75% of the excess cash flow to prepay outstanding bank term debt. The remaining
25% of free cash flow is available to fund the debt service reserve account and
thereafter for dividends subject to certain restrictions. The capital markets
debt will consist of $255 million with a term of 9.3 years and an average life
of approximately 7.0 years. Semi-annual interest payments are capitalized
through the construction period to March 1, 2001 with cash interest payments
beginning in July 2001 and scheduled principal amortization beginning in
January 2002.
A $75 million working capital facility will be established to provide letters
of credit for non-Maya crude oil purchases and to provide "compensating
collateral" under the PMI Contract. A $150 million Guaranty Insurance Policy
will be issued by Winterthur International Insurance Company Limited, an "AA-"
rated insurance company, in lieu of a traditional working capital facility for
letters of credit for all PACC Maya crude oil purchases. Premiums are paid
annually in advance beginning at financial close.
B-36
<PAGE>
In lieu of an initial debt service reserve account being funded by PACC
(equal to six months of interest and principal amortization payments), a Debt
Service Reserve Insurance Guarantee ("DSRIG") is to be provided by Winterthur.
Premiums on the DSRIG will be paid annually in advance beginning at financial
close. The DSRIG is reduced over time and replaced with a debt service reserve
account that will be funded initially with the residual excess cash flow
generated by PACC after prepayment of bank debt. New PACC equity of $135
million (19% of total sources of funds) is to be contributed by Blackstone
Capital Partners III L.P. (90%) and Occidental Petroleum (10%).
A PMI surplus reserve account ("PMI Account") will be established to retain
funds in an amount equal to the net quarterly surpluses that will have accrued
pursuant to the Differential formula up to a maximum amount of $75 million,
which will be automatically reduced to $50 million upon repayment in full of
all bank term debt. This reserve will be adequate to provide liquidity to PACC
in case of reduced cash flows because of a delay in discounting Maya until all
prior surpluses have been fully used. The combination of a fully-funded PMI
Account and the debt service reserve account will provide PACC with liquidity
up to 1.25 years of debt service.
At financial close, PACC, with PGI's certification, will reimburse Clark for
all PACC related capital outlays incurred since Upgrade Project inception (a
projected total of approximately $139 million though July 31, 1999). PACC will
also pay Clark $2.2 million for transfer of value items including the PMI
Contract and other items.
REVENUES
PACC generates revenues from processing approximately 200,000 bpsd of crude
oil (80% Maya and 20% light sour), selling products to Clark (mainly LPG,
diesel, intermediates, coke, and sulfur) and receiving fees from Clark for
processing Clark feedstocks (approximately 50,000 bpsd of crude oil). The
salable products are based on the material balance yields used as the basis in
the economic model which incorporates yields guaranteed by Foster Wheeler as
part of the Performance Test. The prices received for the products sold are
based on the PGI market price forecast. As indicated in prior sections of this
report, the prices are adjusted from market prices for quality and freight for
price realization at the refinery gate.
Since feedstocks and products purchased and sold by PACC are handled by
Clark, a per barrel fee component is charged to PACC. The rates used in the
financial model and listed in the table below are representative of typical
handling fees charged by third-party entities.
TABLE V-1
HANDLING FEES
<TABLE>
<S> <C>
Finished Product.................. $0.021/bbl
LPG's & Intermediates*............ $0.042/bbl
Crude............................. $0.030/bbl
Coke.............................. $0.010/bbl
</TABLE>
--------
* Fee will only be charged if
intermediate is sold to a 3rd party
Sales to a 3rd party will occur during a
turnaround or during abnormal operation
B-37
<PAGE>
FEEDSTOCKS TO PACC
Feedstocks purchased by PACC consist of Maya crude oil purchased under the
PMI Contract from PMI and a light sour crude oil purchased on the spot market.
To allow processing of the Maya crude oil at the Refinery, a volume of light
sour crude oil (the model assumes Arab Light) equal to approximately 20% by
volume of the total crude oil processed is required. The crude oil will be fed
to the crude/vacuum unit that is being leased by PACC and PACC will pay a lease
fee to Clark for utilizing 100% of the crude unit. In addition to crude oil
purchased by PACC, Clark has the right to process additional crude oil
purchased by them through crude/vacuum units. In such case, a processing fee
will be paid by Clark to PACC for such processing. Products from the
crude/vacuum unit will be split according to the respective percentages of PACC
and Clark crude oil processed (approximately 80% PACC and 20% Clark). In
addition to the crude oil liquid feedstocks, PACC will purchase hydrogen needed
for the hydrocracker from APCI at a price of 1.8648 times fuel value plus a
fixed fee.
Residue from the vacuum unit will be fed to the new delayed coker. As
mentioned, the proportion of residue fed to the coker is equal to the
percentage of PACC crude processed through the crude/vacuum units. Light
products from the delayed coker will be sold back to Clark at market reference
prices.
Coker heavy gas oil will be fed to the hydrocracker along with light cycle
oil from Clark and VGO from the crude/vacuum unit. Products from the
hydrocracker are sold to Clark at market reference prices.
The sulfur plant will process acid gas only from PACC units and have the
capability to process minor amounts of acid gas from the Clark units, if
necessary.
YIELDS FROM PACC
Product yields and quality estimates from PACC have been made by Clark and
Foster Wheeler. The yields are based on information provided by each of the
process licensors. Coker yields are based on Foster Wheeler's extensive
experience with designing and constructing delayed cokers worldwide. The
hydrocracker yields are based on pilot plant testing performed by Chevron on
feedstock similar to that used in PACC. The assumed product yields and
qualities are reasonable and consistent with expectations for such refinery
units. The Base Case projections are those yields which have been guaranteed by
Foster Wheeler as part of the performance test in the EPC contract. These
yields represent 97% of design yields for the coker and 95% of design yields
for the hydrocracker.
Beginning on December 15, 2000, revenues for PACC are initiated with a 80%
onstream operation assumed for a 45 day period. Following the 45 day start-up
period, the remainder of 2001 is assumed to operate at 95% of normal operating
rates. Normal operation is assumed to begin in 2002.
OPERATING COSTS AND SUSTAINING CAPITAL
Clark has prepared detailed estimates of the variable and fixed operating
costs for the PACC units (coker, hydrocracker, sulfur plant). These estimates
are the basis of the Services and Supply Agreement. Variable costs are those
items that vary with throughput which include fuel, electricity, steam, other
utilities, and chemicals consumed in daily operations. PACC's variable cost
estimate has been developed from detailed utilities estimates prepared by
Foster Wheeler and associated sub-contractors. The current estimate for
variable costs, which are predominantly expenditures for fuel and electricity,
is approximately $0.38/BBL or about $28 million per year. Variable costs are
priced as follows:
. Fuel (total consumed)--Calculated based on the fuel gas price forecast.
. Steam (included in the fuel expense line item)--Based on the incremental
cost of steam from APCI with prices indexed to the fuel gas price
forecast.
. Electricity--Based on the incremental cost of electricity from APCI and
other third party providers with price indexed to the fuel gas price
forecast.
. Other--Includes water, nitrogen, and other miscellaneous services.
B-38
<PAGE>
Fixed costs are expenditures that are unaffected by varying throughput and
include items like administration, process labor, maintenance, taxes,
insurance, and overheads. Clark also includes catalyst and chemicals in fixed
costs to coincide with their accounting conventions. Catalyst and chemicals are
assumed to be purchased as needed and are amortized over the useful life.
Initial supplies of catalyst and chemicals are included as start up costs.
Labor expenses include both operations and maintenance and are estimated to be
$10 million per year. In 2001, expenses include an additional $1.5 million for
new unit troubleshooting. Expenses are inflated at 2% per year. Details of
direct and indirect labor are as follows:
TABLE V-2
LABOR EXPENSES
<TABLE>
<CAPTION>
Million $ Per Year
------------------------
PACC Clark R&M Total
Employees Employees Employees Base OT Benefits Total
--------- --------- --------- ---- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Coker................... 27 15 42 $2.1 $0.3 $1.0 $3.4
Hydrocracker............ 9 -- 9 0.5 0.1 0.2 0.8
Acct/Admin.............. 1 2 3 0.1 -- 0.1 0.2
Sulfur Unit............. 6 -- 6 0.3 -- 0.1 0.4
SWS/Amine Unit.......... 4 -- 4 0.2 -- 0.1 0.3
--- --- --- ---- ---- ---- ----
Subtotal.............. 47 17 64 $3.2 $0.4 $1.5 $5.1
Maintenance............. 36 36 $1.8 $0.3 $0.8 $2.9
Unit/Maintenance
Supervision
Operations.............. -- 12 12 $0.8 $-- $0.3 $1.1
Maintenance............. -- 4 4 0.3 -- 0.1 0.4
--- --- --- ---- ---- ---- ----
Subtotal.............. -- 16 16 $1.1 $-- $0.4 $1.5
Clerical................ -- 6 6 $0.2 $-- $0.1 $0.3
--- --- --- ---- ---- ---- ----
Totals................ 47 75 122 $6.3 $0.7 $2.8 $9.8
</TABLE>
Repairs and maintenance includes both materials and contract labor. The
repairs and maintenance costs of the new coker, hydrocracker, and sulfur plant
are based on industry averages for similar units and are estimated to be
approximately $5 million after the first year of operation inflated at 2%
thereafter. In year 2001, an additional expense of $2.5 million is assumed for
troubleshooting. Total repairs and maintenance as an average percentage of unit
replacement cost over 15 years including maintenance labor, materials, contract
labor, turnaround and mandatory capital are 4.5% for the PACC units and off-
sites. Major turnarounds of the coker, hydrocracker, and crude unit are assumed
to occur in years 2004, 2008 and every four years thereafter. Crude unit heater
de-coke and hydrocracker catalyst change are assumed to occur during interim
outages in years 2002, 2006, and 2010.
B-39
<PAGE>
Environmental costs are based on historical Refinery environmental costs of
$0.2 million per year associated with operating the existing cokers plus $0.6
million per year for waste services, inflated at 2% per year. An incremental
insurance premium of $2 million per year for business interruption and process
units is included based on Marsh & McLennan estimates. The base tax rate
included is 3% of the assessed property value less assigned abatement and
environmental exemptions for pollution control equipment.
General and administrative (G&A) expenses are estimated at $700,000 per year.
This includes $200,000 for accounting and optimization activities to be
conducted by Clark, and $500,000 for corporate activities such as tax services,
information services, legal fees, insurance administration, bondholder
relations and SEC filing requirements. These expenses are adjusted for
inflation at 2% annually. The support services/other category includes support
services as detailed below:
TABLE V-3
SUPPORT SERVICES/OTHER
<TABLE>
<CAPTION>
Million $ Per Year
-------------------
Total
Employees Base Benefits Total
--------- ---- -------- -----
<S> <C> <C> <C> <C>
Site Management................................... 1 $0.1 $ -- $0.1
Technical......................................... 4 0.3 0.1 0.4
Laboratory........................................ 8 0.4 0.2 0.6
Accounting........................................ 3 0.1 0.1 0.2
EH&S.............................................. 3 0.2 0.1 0.3
--- ---- ---- ----
19 $1.1 $0.5 $1.6
EMS............................................... $0.1 $ -- $0.1
Security.......................................... 0.3 -- 0.3
General........................................... 0.6 -- 0.6
G&A--Corporate Offices............................ 0.7 -- 0.7
Misc. Supplies.................................... 0.1 -- 0.1
Other............................................. 1.4 -- 1.4
---- ---- ----
$3.2 $ -- $3.2
----
Total Other Expenses.............................. $4.8
</TABLE>
B-40
<PAGE>
A sustaining capital component averaging approximately $5 million per year
has also been included for capital replacements and other required
expenditures. The sustaining capital outlays are projected to be lower than
average in the early years when the equipment is new and higher than average in
the later years. The operating and maintenance cost and sustaining capital
projections set forth in the economic projections are reasonable and sufficient
for the operation and maintenance of PACC. Total operating costs are summarized
in the table below:
TABLE V-4
OPERATING COSTS
<TABLE>
<CAPTION>
Variable ($/bbl) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fuel.................... 0.23 0.22 0.22 0.23 0.23 0.23 0.23 0.24 0.24 0.26
Electricity............. 0.15 0.17 0.16 0.18 0.16 0.17 0.17 0.19 0.17 0.19
Total Variable expenses. 0.37 0.39 0.38 0.41 0.39 0.40 0.40 0.42 0.40 0.45
<CAPTION>
Fixed (million $/year)
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating labor......... 11.26 9.96 10.16 10.36 10.57 10.78 11.00 11.22 11.44 11.67
Cat / Chemicals......... 4.44 4.26 4.26 4.49 4.68 4.87 5.07 5.27 5.48 5.70
Repairs & Maintenance... 7.27 4.86 4.96 5.06 5.16 5.26 5.37 5.47 5.58 5.70
Environmental........... 0.77 0.78 0.80 0.82 0.83 0.85 0.87 0.88 0.90 0.92
Taxes and Insurance..... 5.91 9.75 9.89 10.10 11.15 12.37 13.97 14.54 14.95 16.80
Support Services/Other.. 4.69 4.78 4.88 4.98 5.07 5.18 5.28 5.39 5.49 5.60
Total Fixed expenses
(million $/year)....... 34.34 34.40 34.94 35.81 37.46 39.30 41.54 42.77 43.85 46.39
</TABLE>
PROCESSING/LEASE FEES
Under the Ancillary Equipment Lease, PACC pays a lease fee to Clark for use
of 100% of the crude/vacuum unit, and distillate, kerosene, and naphtha
hydrotreaters. In addition, under the Ancillary Equipment Lease, PACC pays
operating fees to Clark for all units, which include fees for turnaround and
sustaining capital accrual, fuel and fixed operating cost. Other costs include
utilities and environmental services which include items such as nitrogen,
demineralized water and other services. These other costs are in line with
market rates and are relatively minor in proportion to other expenses. These
fees encompass both a fixed and variable cost component as well as a capital
recovery component. The capital recovery component in the lease fee assumes a
25% after tax rate of return for the coker and hydrocracker, 15% after tax rate
of return for other new capital investment, and 3% after tax rate of return for
use of existing assets. Under the Services and Supply Agreement, processing
fees are paid to PACC by Clark to process Clark's portion of the vacuum residue
in the delayed coker. In addition, Clark pays PACC a processing fee to process
LCO, coker HGO, and crude still VGO through the hydrocracker. Clark also pays
for use of a portion of the crude/vacuum unit and hydrotreaters.
B-41
<PAGE>
The table below summarizes the processing, operating and lease fees for the
Upgrade Project.
TABLE V-5
PROCESSING/LEASE FEES (million $ per year)
<TABLE>
<CAPTION>
PACC Processing Fee Revenue 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
- --------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coker................... 25.6 26.3 26.8 27.2 27.9 28.4 28.9 29.3 30.0 30.6
Hydrocracker and Sulfur
Plant.................. 28.5 29.3 29.9 30.4 31.1 31.6 32.3 32.7 33.5 34.1
Crude Unit.............. 10.8 11.3 11.6 11.5 12.0 12.1 12.3 12.3 12.8 12.9
Hydrotreaters........... 4.7 5.0 5.1 5.0 5.2 5.3 5.4 5.4 5.6 5.7
Total Processing Fee
Revenue................ 69.7 72.0 73.4 74.1 76.1 77.4 78.9 79.7 81.9 83.3
<CAPTION>
PACC Lease Fee Expenses
- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Crude Unit.............. (25.5) (26.0) (26.6) (27.2) (27.6) (28.2) (28.7) (29.4) (29.9) (30.5)
Distillate Hydrotreater. (2.3) (2.3) (2.4) (2.4) (2.5) (2.5) (2.6) (2.6) (2.7) (2.7)
Jet Hydrotreater........ (2.0) (2.0) (2.1) (2.1) (2.1) (2.2) (2.2) (2.3) (2.3) (2.4)
Naphtha Hydrotreater.... (1.8) (1.8) (1.8) (1.9) (1.9) (2.0) (2.0) (2.0) (2.1) (2.1)
Total Lease Fee Expense. (31.6) (32.2) (32.8) (33.6) (34.2) (34.8) (35.5) (36.4) (37.0) (37.7)
<CAPTION>
PACC Operating Fee Expenses
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Crude Unit.............. (35.1) (36.6) (38.0) (37.3) (39.2) (39.1) (40.2) (39.4) (41.4) (41.7)
Distillate Hydrotreater. (9.3) (9.9) (10.0) (9.9) (10.3) (10.5) (10.6) (10.5) (11.0) (11.2)
Jet Hydrotreater........ (6.0) (6.4) (6.5) (6.4) (6.7) (6.8) (6.9) (6.8) (7.1) (7.2)
Naphtha Hydrotreater.... (5.5) (5.8) (5.9) (5.8) (6.1) (6.2) (6.3) (6.2) (6.5) (6.6)
Total Operating Fee
Expense................ (55.8) (58.7) (60.5) (59.4) (62.3) (62.6) (64.0) (62.9) (66.0) (66.7)
Total Lease & Operating
Fee Expense............ (87.4) (90.9) (93.3) (93.0) (96.5) (97.4) (99.5) (99.3) (103.0) (104.4)
</TABLE>
PGI has reviewed these fees and believes that they are structured on an arms
length basis and could be achieved under contract with a third party and
represent fair market terms.
AMORTIZATION
Turnaround expenses for the various units are amortized over the life of the
turnaround. The expenses are based on industry averages for units of similar
size. Turnaround expenses for the crude unit and hydrotreater are paid by Clark
and included as part of the operating fees incurred by PACC. Cash turnaround
costs will be accumulated annually through a restricted cash account
specifically for turnaround expenditures. The turnaround amortization period
for all major PACC units is 4 years. Financing fees are amortized based on the
final maturity of the various issues and amortization of royalty payments are
based on the depreciable life of the asset.
CONSTRUCTION MANAGEMENT SERVICES
Construction management services will be provided by Clark prior to Final
Completion under the SSA at a fixed cost of $7 million. These costs will be
paid by PACC over a 3 year period following startup of the PACC Project
(approximately $2.7 million per year including interest).
B-42
<PAGE>
DEBT SERVICE COVERAGE RATIOS
DSCRs are calculated by taking after tax cash flows (defined as EBITDA less
sustaining capital expenditures less amortized turnaround expenses less cash
taxes) as a ratio to scheduled principal amortization and cash interest
payments. In addition to the Base Case, a variety of other cases were examined
to test the robustness of PACC economics and the availability of cash flow to
service the outstanding debt. These cases and results are described in the
table below:
TABLE V-6
DESCRIPTION AND RESULTS OF CASES
<TABLE>
<CAPTION>
Average Minimum
Case Description DSCR DSCR
-------------------------------- ---------------------------- ------- -------
<S> <C> <C> <C>
Base Case....................... Base financial model with 2.4 2.0
PGI pricing forecast
Base Case w/o PMI Contract...... 2.4 1.9
Base financial model with
PGI pricing forecast but
assumed that the PMI
Contract was not in place
Backcast Case................... Used 1989-1998 historical 2.0 0.9*
pricing
Backcast Case w/o PMI Contract.. 2.0 0.9*
Used 1989-1998 historical
pricing but assumed that the
PMI Contract was not in
place
Downside Case................... Assumed 1996 pricing during 1.9 1.1
the first three years of
full operations followed by
PGI forecast
Reduced Utilization Case........ On-stream utilization 2.2 1.9
reduced by 5% to 95% of Base
Case utilization
Reduced Coker Yield Case........ Decreased coker design 2.3 1.9
yields by 5%
Reduced Hydrocracker
Conversion Case................. Decreased hydrocracker VGO 2.4 2.0
conversion by 10%
Operating Cost 2.2 1.9
Increase Case................... Increased fixed and variable
cost
by 20%
</TABLE>
- --------
* In 2007, the Backcast Case cash flow available for debt service shortfall
amounts to approximately $3.0 million. The shortfall is primarily a result
of prior year surpluses which have not been fully used so that discounts
are not allowed under the PMI Contract. This scenario is mitigated by the
PMI Account. Consequently, in this year, PACC will have a fully funded PMI
Account of $50 million, debt service reserve account of $37 million and
over $100 million of additional cash available for debt service. In the
Backcast Cast without PMI Contract, cash flow available for debt service
shortfall amounts to approximately $5.0 million, with a debt service
reserve account of $37 million and over $100 million of additional cash
available for debt service.
B-43
<PAGE>
The results demonstrate that PACC is able to service its debt obligations
under a variety of scenarios. Detailed tables supporting these cases are shown
in Tables V-9 to V-26.
Each case is discussed in more detail below.
BASE CASE
The Base Case has been defined in preceding paragraphs. PGI believes that the
Base Case projections are achievable and that they are a reasonable
representation of the expected performance of PACC. The Base Case provides a
minimum after tax DSCR of 2.0 and an average after tax DSCR of 2.4.
SENSITIVITIES
Due to the uncertainties necessarily inherent in relying on assumptions and
projections, it should be anticipated that certain circumstances and events may
differ from those assumed and described herein and that such circumstances may
affect the results of our Base Case. In order to demonstrate the impact of
certain events on the Base Case economics, a number of sensitivity cases were
tested. It should be noted that other cases than those described below might be
considered. The sensitivities recommended are not presented in any particular
order with regard to the likelihood of any case actually occurring. In
addition, no assurance can be given that all relevant sensitivities are
addressed, that the level of each sensitivity is the appropriate level for
testing, or that only one (rather than a combination of more than one) of such
variations or sensitivities could impact PACC in the future.
Base Case--No PMI Contract
This sensitivity involves the loss of the PMI Contract. In the Base Case,
PACC receives a discount on Maya purchases during the first two years of
operation followed by a surplus situation whereby PACC pays a premium on Maya
purchases until the aggregate of the shortfalls is offset. Without the PMI
Contract in effect, the average DSCR is 2.4 compared to the Base Case of 2.4,
with the minimum DSCR being 1.9. The results reflect the fact that the basic
intent of the PMI Contract is not to provide a subsidy for oil purchases.
Backcast Case
A Backcast Case was generated using 1989-1998 historic pricing to correspond
to the volume projections for 2001 to 2010. The intent of the Backcast Case is
to illustrate historic cyclicality of the petroleum market. On-stream
utilization and yields were kept the same as the Base Case. The PMI Contract is
assumed to be in place for the Backcast Case. The average DSCR is determined to
be 2.0 with a minimum DSCR of almost 1.0 in 2007 (a 1995 pricing environment).
In 2007, the cash flow shortfall amounts to only $3.0 million and is a result
of the absence of discounts due to prior year surpluses under the PMI Contract.
As discussed, to mitigate this risk, the PMI Account is fully funded ($50
million) to cover this shortfall in addition to the $37 million balance in the
debt service reserve account.
Backcast Case--No PMI Contract
An additional Backcast Case was generated which assumes the PMI Contract is
not in place. This case results in an average DSCR of 2.0 with a minimum DSCR
of almost 1.0. Again, the results do not materially change from the Backcast
Case with the PMI Contract for the same reasons explained above. The shortfall
of available cash flow for debt service in 2007 amounts to $5.0 million. This
shortfall would be covered by the debt service reserve account.
Downside Case
A downside case was also developed that incorporates 1996 prices during the
period 2000-2003 with PGI's forecast used thereafter. This scenario tests the
impact of an extended period of weak coker economics.
B-44
<PAGE>
In the past ten years of history, it was found that the worst year for coker
performance in conjunction with the coker gross margin stabilization under the
PMI Contract occurred in 1996; hence, the use of 1996 pricing during the first
three full years of operation followed by the Base Case assumptions. PGI
believes that a three year period of depressed coker economics is highly
unlikely and would likely self-correct as a result of a decline in addition of
new coker projects. The average after-tax DSCR was determined to be 1.9 with a
minimum DSCR of 1.1. During the first three years the DSCR were 1.5, 1.1 and
1.2.
Reduced Utilization Case
The effect of a change in utilization or on-stream factor was tested by
reducing the overall on-stream factor to 95% of the Base Case which effectively
is 90% of design rates in bpsd. A reduction in utilization could occur as a
result of under-design of key pieces of equipment or mechanical reliability
issues. This change in utilization impacts PACC's operating cash flow by only
$14.1 million in 2003 (or about 6%) with a reduction in average DSCR from 2.4
to 2.2.
Reduced Coker Yield and Reduced Hydrocracker Conversion Cases
There is the possibility of achieving less than the expected product yields
from the delayed coker and the hydrocracker units. Although PACC utilizes well-
proven technology, there is always risk associated with the start-up of newly
constructed units. A key performance indicator of delayed coker operation is
the percentage of feedstock that is converted to lighter more valuable liquid
products. Along the same line, a key performance indicator of hydrocrackers is
the conversion of VGO feedstock. Conversion not only impacts the amount of
light, more valuable fuels products that are produced, but also adversely
affects the VGO balance resulting in the sale of excess VGO. Cases were
evaluated to analyze a reduction of 5% of the delayed coker liquid volume yield
and a 10% reduction in hydrocracker conversion resulting in average DSCRs of
2.3 and 2.4, respectively.
Operating Cost Increase Case
Variable and fixed operating costs were both increased by 20% to simulate
lower efficiencies and higher than expected labor or maintenance costs. A 20%
increase in operating costs results in an average and minimum DSCR of 2.2 and
1.9.
An additional sensitivity was performed which assumes that PACC operates
without the rest of the Clark facility in operation. This case is discussed in
the next section.
STAND-ALONE CASE
To demonstrate the robustness of the economics of the PACC, PGI developed an
alternative case scenario under which PACC continues its operations while the
rest of the Refinery not leased or used by PACC in the Base Case discontinues
its operations. PACC would continue to have access to all leased and owned
units. It is assumed a third-party would replace Clark as operator. In a stand-
alone operation, PACC will need to arrange for crude purchases and logistics as
well as product sales and logistics. These functions are assumed to be
contracted to third parties for fees similar in magnitude to those assumed in
the Base Case.
CONFIGURATION
The stand-alone operation scenario assumes that the PMI Contract remains in
effect and that the crude unit continues to process 250,000 bpsd of crude oil.
The delayed coker, hydrocracker, sulfur plant, the crude/vacuum unit and the
sat gas plant, as well as the distillate hydrotreaters (GFU 242 and GFU 243),
will be required to process crude oil. In addition, boilers, tankage, transfer
piping, control houses, laboratory, and miscellaneous equipment and buildings
are all assumed to be available to PACC. The crude and distillate hydrotreating
units are assumed to be available to PACC for the lease fees stated in the
Processing/Lease Fees section previously described.
B-45
<PAGE>
Relatively minor modifications to piping would be needed to implement the
stand-alone case. In addition, modifications will be required at the PACC
sulfur plant to handle the additional sulfur load which entails the use of
oxygen enrichment. Additional variable costs are included in the cash flow
model to account for this oxygen usage. The cost to modify the Refinery and
PACC to support a stand-alone operation is not expected to exceed $5 million,
nor take longer than 3 months to implement.
PRODUCTS
In the stand-alone operation, the catalytic reformer, FCCU, and the
alkylation unit will not be operated. As a result, the only specification
products produced will be low sulfur diesel fuel and kerosene. All other
product streams from the operating units are intermediate products,
specifically light naphtha or penhex, reformer feed, and low and high sulfur
VGO and which are sold to the spot market.
PRICING
Stand-alone product pricing is adjusted to reflect discounts or premiums due
to quality, transportation fees, and market discounts. The quality and
transportation discounts are applied throughout the pricing period, however,
market discounts are applied only for the first 3 years.
Naphtha pricing depends primarily on whether the naphtha is light or heavy,
whether it has been stabilized, and its naphthene and aromatic ("N+A") content.
Heavy naphtha and higher N+A naphtha command a higher price versus light
naphtha and low N+A product. Premiums and discounts have been applied as
appropriate to naphtha produced in the crude, hydrocracker, and coker units.
Light naphtha, for example, is valued to the olefins cracker market and/or
gasoline blending and is priced at USGC natural gasoline less the required
discount.
The effect of introducing 40,000 bpsd of poor quality unstabilized
Hydrocracker and Coker naphtha into the reformer naphtha market will result in
discounts in addition to the quality discount as supply will outweigh demand.
In 1998, the imports of reformer naphtha into the U.S. Gulf Coast were about
60,000 bpsd which represents the incremental supply to meet the demand for
reformer feed. Introducing the incremental supply of naphtha into the market
will impact the price of naphtha for several years until an equilibrium
supply/demand balance is achieved. To account for the market impact of the
introduction of additional reformer type naphtha on the market, a 5 c/gallon
discount was applied for the first three years of stand-alone operation.
Furthermore, typical transportation charges have been applied. Price discounts
for the various naphthas produced are shown in Table V-7.
Low sulfur VGO was priced using PGI's long term forecast, with no additional
discounts, applied as shown in Table V-7. A 2 c/gallon discount was applied to
the PGI forecast of HS VGO to compensate for the poor quality and an additional
3 c/gallon was applied to cover the market impact of introducing 50,000 bpsd
into the market. The market discount was assumed only for the first three years
of stand-alone operation and is based on historical trends related to quality
and volume discounts. As with naphtha, all the VGO pricing is adjusted for a
transportation fee.
B-46
<PAGE>
In addition to naphtha and VGO, coke and sulfur pricing have been adjusted
for quality and transportation as shown in Table V-7.
TABLE V-7
STAND-ALONE CASE--PRODUCT PRICING
<TABLE>
<S> <C>
Crude Stabilized Naphtha USGC Natural Gasoline - 2 c/gal processing fee - 1.5 c/gal transportation
Hydrocracker Stabilized
Naphtha USGC Natural Gasoline - 2 c/gal processing fee - 1.5 c/gal transportation
Hydro. Crude / Coker
Naphtha USGC Naphtha - 2.5 c/gal quality - 5 c/gal ( 3 years) market - 1c/gal trans.
Hydrocracker Heavy
Naphtha USGC Naphtha + 2 c/gal - 1 c/gal transportation
LS VGO USGC VGO - 1c/gal transportation
HS VGO USGC HS VGO - 2 c/gal quality - 3 c/gal ( 3 years) market - 1 c/gal trans.
Coke (FOEB) USGC Fuel Grade Coke - quality adjustment - transportation
Sulfur ($/ton) USGC Market - transportation
</TABLE>
OPERATING COSTS
Fixed and variable operating costs were held consistent with the Base Case.
These costs, which are market-based and replicate what a third-party could
provide, include all fuel and power, labor, maintenance, turnaround,
environmental, and associated costs required to operate PACC. All lease and
operating fees paid by PACC were also held consistent with the Base Case. All
processing fees formerly received from Clark were assumed to be zero.
DSCR
Both a forecast and backcast case were developed for the stand-alone case.
These cases use the same pricing basis as discussed previously in the Base Case
and Backcast Case but with the adjustment for the naphtha and vacuum gas oil
prices. The CSA is assumed to be in effect. Interest expense and principal
amortization were held consistent with the Base Case financial model. The DSCR
for these cases are as follows:
TABLE V-8
STAND-ALONE CASE
<TABLE>
<CAPTION>
DSCR
---------------
Average Minimum
------- -------
<S> <C> <C>
Forecast.................... 1.9 1.1
Backcast.................... 1.7 0.7
</TABLE>
In the forecast case, the minimum DSCR of 1.1 occurs in 2004 which includes a
turnaround. Even though the backcast has a minimum DSCR of 0.7 in one year, the
PMI Account was fully funded at $50 million and would be able to cover the
shortfall of $17.4 million. In the backcast case, the 0.7 coverage coincided
with a period of poor coker margins in 1995 and a net aggregate surplus under
the PMI Contract, thereby not allowing for Maya discounts. This demonstrates
the benefit of establishing the PMI Account. The supporting tables for the
stand-alone case are shown in Tables V-27 and V-28.
PGI is of the opinion that the stand-alone scenario will be an extremely
remote possibility since the Refinery will be one of the most competitive
refineries in the USGC after startup of the Upgrade Project. Even in a
bankruptcy proceeding against Clark, it would be more beneficial to continue to
operate the Refinery, since Clark would continue to receive the lease and
operating fees.
B-47
<PAGE>
- --------------------------------------------------------------------------------
CRUDE OIL AND REFINED PRODUCT
MARKET FORECAST
- --------------------------------------------------------------------------------
Prepared For:
PORT ARTHUR COKER COMPANY L.P.
[LOGO OF PURVIN & GERTZ, INC. APPEARS HERE]
Dallas - Houston - Los Angeles
London - Calgary - Buenos Aires - Singapore
July 13, 1999 T.J. Manning
K.E. Noack
<PAGE>
- ------------------
TABLE OF CONTENTS
- ------------------
<TABLE>
<S> <C>
I. INTRODUCTION................................................................................... 1
II. SUMMARY AND CONCLUSIONS........................................................................ 3
LIGHT/HEAVY DIFFERENTIAL................................................................... 4
HEAVY CRUDE OIL AVAILABILITY............................................................... 5
PRODUCT DEMAND............................................................................. 7
REFINERY MARGINS........................................................................... 7
III. WORLD PETROLEUM SUPPLY/DEMAND BALANCE.......................................................... 9
WORLD PETROLEUM DEMAND..................................................................... 9
OECD DEMAND........................................................................... 10
NON OECD PETROLEUM DEMAND............................................................. 10
OPEC AND THE PETROLEUM SUPPLY/DEMAND BALANCE............................................... 11
RECENT TRENDS IN THE WORLD PETROLEUM SUPPLY/DEMAND BALANCE............................ 11
WORLD PETROLEUM SUPPLY/DEMAND BALANCE METHODOLOGY.......................................... 12
WORLD PETROLEUM SUPPLY/DEMAND BALANCE FORECAST............................................. 12
IV. U.S. ENERGY AND PETROLEUM DEMAND............................................................... 19
UNITED STATES PETROLEUM DEMAND............................................................. 19
U.S. MOTOR FUEL DEMAND FORECASTS........................................................... 21
METHODOLOGY........................................................................... 21
REGIONAL TRAVEL....................................................................... 22
VEHICLE EFFICIENCIES.................................................................. 23
NON-HIGHWAY FUEL USE ADJUSTMENTS...................................................... 24
ALTERNATIVE FUELS..................................................................... 24
U.S. GASOLINE DEMAND.................................................................. 25
DIESEL/NO. 2 FUEL OIL................................................................. 27
U.S. AVIATION FUELS................................................................... 28
U.S. RESIDUAL FUEL OIL................................................................ 29
U.S. ASPHALT.......................................................................... 30
U.S. COKE............................................................................. 31
U.S. OTHER PRODUCTS................................................................... 31
V. HEAVY CRUDE OIL AVAILABILITY................................................................... 33
HEAVY CRUDE OIL PRODUCTION................................................................. 33
SUPPLY OF HEAVY CRUDE OIL TO THE PROJECT................................................... 34
MEXICAN CRUDE OIL PRODUCTION.......................................................... 34
MAYA CRUDE OIL................................................................... 36
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ALTERNATE SOURCES OF HEAVY CRUDE OIL SUPPLY................................................ 36
VENEZUELA............................................................................. 36
HEAVY CRUDE BALANCES....................................................................... 39
VI. DIVERSION RISKS................................................................................ 47
PRODUCTION CHANGES......................................................................... 47
MARKETING OPPORTUNITIES.................................................................... 47
U.S. CRUDE OIL IMPORTS................................................................ 48
MAJOR CUSTOMERS....................................................................... 49
STRUCTURAL IMPEDIMENTS..................................................................... 49
PHYSICAL LIMITATIONS.................................................................. 49
OWNERSHIP LIMITATIONS................................................................. 50
GEOGRAPHICAL CONSTRAINTS.............................................................. 50
MAJOR FACTORS LIMITING MARKET PENETRATION BY PEMEX......................................... 50
REFINERY COMPLEXITY REQUIREMENT....................................................... 50
HIGH LEVEL OF SOUR CRUDE OIL CAPACITY UTILIZATION OF EXISTING REFINERIES.............. 51
STRATEGIC AFFILIATIONS OF COMPETING PRODUCERS......................................... 51
VENEZUELAN EXTRA HEAVY OIL PROJECTS................................................... 51
ALTERNATIVE CRUDE SUPPLY.............................................................. 51
VII. CRUDE OIL PRICING AND LIGHT/HEAVY DIFFERENTIAL................................................. 61
CRUDE OIL PRICING.......................................................................... 61
LIGHT/HEAVY DIFFERENTIAL................................................................... 62
FACTORS THAT AFFECT THE LIGHT/HEAVY DIFFERENTIAL...................................... 62
RECENT TRENDS IN THE CONVERSION CAPACITY SUPPLY/DEMAND BALANCE........................ 62
RECENT TRENDS IN THE LIGHT/HEAVY DIFFERENTIAL......................................... 64
VOLATILITY OF THE LIGHT/HEAVY DIFFERENTIAL............................................ 64
LIGHT/HEAVY DIFFERENTIAL FORECAST..................................................... 66
USGC REFINERY MARGINS...................................................................... 67
DRIVERS OF REFINERY PROFITABILITY..................................................... 67
CAPACITY UTILIZATION............................................................. 69
COMMODITY DRIVEN CYCLES.......................................................... 70
MARGIN FORECAST FOR LLS CRACKER.................................................. 71
REFINERY MARGINS................................................................. 71
USGC PRODUCT PRICES........................................................................ 71
GASOLINE.............................................................................. 72
CONVENTIONAL GRADES.............................................................. 72
REFORMULATED GASOLINE............................................................ 73
DISTILLATE FUELS...................................................................... 74
STANDARD DISTILLATE.............................................................. 74
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
LOW SULFUR DIESEL............................................ 74
RESIDUAL FUEL OIL................................................. 75
TABLES................................................................. iii
FIGURES................................................................ iv
TABLES
III-1 INTERNATIONAL PETROLEUM DEMAND............................................. 15
III-2 INTERNATIONAL PETROLEUM SUPPLY............................................. 16
III-3 INTERNATIONAL PETROLEUM SUPPLY/DEMAND BALANCE.............................. 17
III-4 MAXIMUM SUSTAINABLE CAPACITY............................................... 18
IV-1 UNITED STATES ENERGY BALANCE............................................... 20
IV-2 UNITED STATES REFINED PRODUCT BALANCE...................................... 26
V-1 WORLD CRUDE OIL PRODUCTION BY REGION AND TYPE.............................. 42
V-2 MEXICAN CRUDE OIL BALANCES................................................. 44
V-3 VENEZUELAN CRUDE OIL BALANCES.............................................. 45
V-4 TOTAL U.S. HEAVY SOUR CRUDE OIL SUPPLY/DEMAND.............................. 46
VI-1 SOUR CRUDE OIL IMPORTS..................................................... 53
VI-2 SOUR CRUDE IMPORTS BY SOURCE............................................... 54
VI-3 1997 SOUR CRUDE CAPACITY UTILIZATION....................................... 55
VI-4 1996 SOUR CRUDE CAPACITY UTILIZATION....................................... 57
VI-5 MEXICO SOUR CRUDE IMPORTERS................................................ 59
VII-1 INTERNATIONAL CRUDE OIL PRICES (CURRENT $/B)............................... 76
VII-2 INTERNATIONAL CRUDE OIL PRICES (FORECAST 1999 $/B)......................... 77
VII-3 U.S. GULF COAST LIGHT SWEET CRUDE MARGINS (CURRENT $/B).................... 78
VII-4 U.S. GULF COAST LIGHT SWEET CRUDE MARGINS (FORECAST 1999 $/B).............. 79
VII-5 U.S. GULF COAST SOUR CRUDE MARGINS (CURRENT $/B)........................... 80
VII-6 U.S. GULF COAST SOUR CRUDE MARGINS (FORECAST 1999 $/B)..................... 81
VII-7 U.S. PRODUCT PRICES (CURRENT $/B).......................................... 82
VII-8 U.S. PRODUCT PRICES (FORECAST 1999 $/B).................................... 83
</TABLE>
iii
<PAGE>
FIGURES
<TABLE>
<S> <C>
II-1 WTI CUSHING CRUDE OIL PRICE.............................................. 3
II-2 OPEC CRUDE PRODUCTION.................................................... 4
II-3 WTI CUSHING MINUS MAYA FOB MEXICO........................................ 5
II-4 RELATIVE MARGIN INDICATOR FOR 29 USGC REFINERIES (PPI)................... 7
III-1 NON-OECD AND FSU DEMAND GROWTH........................................... 10
III-2 WORLD CRUDE PRODUCTION................................................... 12
III-3 OPEC CRUDE PRODUCTION.................................................... 13
III-4 OPEC CRUDE PRODUCTION AND QUOTA.......................................... 14
V-1 MEXICO CRUDE PRODUCTION.................................................. 35
V-2 MEXICO CRUDE EXPORTS..................................................... 35
V-3 VENEZUELA CRUDE PRODUCTION............................................... 38
V-4 VENEZUELA CRUDE EXPORTS.................................................. 39
VII-1 WORLD CONVERSION CAPACITY CHANGES........................................ 63
VII-2 U.S. CONVERSION CAPACITY CHANGES......................................... 64
VII-3 WTI CUSHING MINUS MAYA FOB............................................... 65
VII-4 WTI CUSHING MINUS MAYA FOB MEXICO (6 MONTH MOVING AVERAGE)............... 65
VII-5 WTI CUSHING MINUS MAYA FOB MEXICO........................................ 66
VII-6 RELATIVE MARGIN INDICATOR FOR 29 USGC REFINERIES (PPI)................... 68
VII-7 USGC LLS CRACKING MARGINS AFTER VARIABLE COSTS........................... 68
VII-8 USGC LLS CRACKING VARIABLE COST MARGIN................................... 68
</TABLE>
iv
<PAGE>
- -----------------
I. INTRODUCTION
- -----------------
Purvin & Gertz, Inc. has been retained as Market Consultant to provide a
long term crude oil and refined product forecast to be utilized in evaluating
the Clark Refining and Marketing, Inc. ("Clark") heavy oil upgrade project
("Upgrade Project") to be constructed at Clark's Port Arthur, Texas refinery.
The new process units (coker, hydrocracker, sulfur recovery) and certain
offsites are to be constructed by Port Arthur Coker Company L.P. ("PACC") while
other modifications to existing units and certain offsites construction will be
carried out by Clark. The Upgrade Project is designed to process primarily
Mexican Maya crude oil. This study provides an outlook for crude oil and
refined products supply, demand and pricing. In addition, a discussion of heavy
crude oil availability is provided, along with an analysis of the risk of
diversion of Maya crude away from the Upgrade Project.
This report has been prepared for the sole benefit of the client. No
distribution shall be made to third parties without the written consent of
Purvin & Gertz. Any third party in possession of part of all of the report may
not rely on its conclusions without the written consent of Purvin & Gertz.
Purvin & Gertz understands that this report may be provided to various banking
institutions, Initial Purchasers, Ratings Agencies and insurance companies in
the course of securing financing. Purvin & Gertz also understands that this
report may be included as an Appendix to an Offering Memorandum relating to the
offer and sale of debt securities. Purvin & Gertz consents to this report being
provided to such entities and included in such documents, subject to all
limitations expressed therein and provided that such third parties acknowledge
and accept the statement of care and limitations of rights and remedies in
Purvin & Gertz' Standard Terms and Conditions.
Purvin & Gertz conducted this analysis and prepared this report utilizing
reasonable care and skill in applying methods of analysis consistent with normal
industry practice. Purvin & Gertz has not addressed potential year 2000
recognition problems in this analysis and the results assume zero impact from
year 2000 recognition problems. All results are based on information available
at the time of review. Changes in factors upon which the review is based could
affect the results. Forecasts are inherently uncertain because of events or
combinations of events which cannot reasonably be foreseen including the actions
of government, individuals, third parties and competitors. NO IMPLIED WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY.
Some of the information on which this report is based has been provided by
others. Purvin & Gertz has utilized such information without verification
unless specifically noted otherwise. Purvin & Gertz accepts no liability for
errors or inaccuracies in information provided by others.
C-1
<PAGE>
- ----------------------------
II. SUMMARY AND CONCLUSIONS
- ----------------------------
The overall level of crude oil prices is set by the cost of production and
supply/demand pressures. If the price is too high, the supply will increase
because of the economic attractiveness of developing new reserves or producing
existing reserves at higher rates. At the same time, demand is decreased by use
of alternative fuels such as coal, natural gas, or nuclear energy, and/or by
conservation efforts. The resulting imbalance of supply versus demand forces
prices back down. In the same manner, if the price is too low, demand is
stimulated, alternative energy supply development is constrained, and adding new
reserves becomes less economical. Ultimately, the low prices cause demand to
approach capacity limits on production, and the resulting competition for supply
drives prices back up.
Since the crude oil price crash in 1986, the price of crude has fluctuated
around $20.00 per barrel. (Figure II-1). Prices increased in 1990/91 due to the
Gulf War, slowly declined through 1994, increased again in 1995/96 as strong
demand in Asia outstripped crude production increases. One of the key factors
was delays in bringing on new crude production in the North Sea.
[GRAPH APPEARS HERE]
The price of crude oil was beginning to slip in 1997 (Figure II-1) even
before the full impact of the Asian Financial Crisis was felt as a result of
growth in non-OPEC supplies and over production by OPEC with the return of Iraq.
Crude prices continued to weaken throughout 1998 and averaged $11.28 per barrel
in December. Prices are increasing in 1999 on the strength of the agreement by
OPEC and a few non-OPEC producers to reduce crude production. The price of WTI
averaged about $18.00 per barrel in June.
C-2
<PAGE>
We estimate that OPEC production would have to be constrained to around 80%
of capacity (Figure II-2) to bring the market back into balance. The propensity
for OPEC members to overproduce is high, so downward pressure will be there
until demand grows requiring OPEC to produce at 85 to 90% of capacity. As shown,
it will be around 2005 before OPEC production will be back up to 90% of
capacity.
[GRAPH APPEARS HERE]
The absolute level of crude prices has a very direct impact on the
feasibility of the upstream business but crude price differentials have a larger
impact on the economics of refinery conversion projects. The heavy/light
differential in this report is expressed as the differential between WTI at
Cushing and Maya fob Mexico.
LIGHT/HEAVY DIFFERENTIAL
. The light/heavy differential is the result of a complex balance of a
number of factors, such as:
- Absolute and relative demand for light and heavy products.
- Supply of heavy crude oil.
- Conversion capacity supply/demand balance.
. In the time period of August 1987 to December 1998, the WTI/Maya
differential averaged $5.70/bbl based on Platt's Oilgram Price Report
weekly quotes.
. For the time period from January 1988 to March 1999, the six-month
period moving average of the light/heavy differential ranged from a
high of $8.90 to a low of $3.76, with an average of $5.83.
C-3
<PAGE>
. Low oil prices and reduced supplies of heavy oil relative to
conversion capacity have caused the differential to narrow in late
1998/early 1999. Despite these adverse conditions, the light/heavy
differential averaged about $5.00 per barrel over the past six months.
. The light/heavy differential is expected to widen from 2000 to 2005,
and then remain relatively stable for the remainder of the forecast
period. The differential will widen due to a number of factors, such
as:
- A rise in the price of crude oil. All other things being equal,
when the price of crude oil rises the light/heavy differential
will tend to widen.
- Resurgence of strong product demand in Asia, filling conversion
capacity.
- Increase in the rate of development of heavy oil reserves in
Mexico, Venezuela, and Canada will rapidly increase overall heavy
feedstock availability and overwhelm conversion capacity.
. The light/heavy differential over the 2000 to 2020 time period is
forecast to average $6.51 per barrel in real terms and $8.18 per
barrel in nominal terms (Figure II-1). While there can be considerable
volatility in the light/heavy differential, the market fundamentals
suggest a widening light/heavy differential which will be beneficial
to the Upgrade Project.
[GRAPH APPEARS HERE]
HEAVY CRUDE OIL AVAILABILITY
. Adequate supplies of heavy crude oil are expected to be available to
the Upgrade Project throughout the forecast period, given that heavy
crude production is concentrated in the Western Hemisphere and
production is expected to increase substantially over the life of the
Upgrade Project.
C-4
<PAGE>
. The Upgrade Project has been designed to process Maya produced by
PEMEX. Maya is expected to be abundant given PEMEX's reserves,
production levels and plans to expand production.
. If the Maya crude is diverted from the Upgrade Project, there are
alternative supplies. Although most of the other heavy crude supplies
are generally heavier than Maya (22(degrees)API), they are still heavy
crudes that could be used effectively in the new coker.
- Contracts for Venezuela heavy crude could probably be obtained
since Venezuela plans to significantly increase their supply of
heavy crude after 2000.
- Contracts for Neutral Zone crude (18(degrees)API) could probably
be obtained since the producers (Saudi Arabia and Kuwait) are
having difficulty placing its growing supplies.
. The risk of diversion of the Maya crude contracted to be used in the
Upgrade Project, is minimal for the following reasons:
- A program to significantly expand production of Maya is currently
underway and the extra supply will be difficult to place in the
market due to the limited capacity of complex refineries required
to process it.
- The netback for heavy crude shipments to Europe or Asia is low
related to U.S. Gulf Coast deliveries.
- Heavy crude is run in complex high conversion refineries and the
highest concentration of this type of refinery is found in the
U.S. Gulf Coast.
- The demand for heavy crude outside the U.S. is small and relates
primarily to asphalt manufacture; this is not expected to change
during the forecast period.
- About 75% of the refinery capacity in PADDs I-III is designed for
light sweet and light sour crude. The light sweet refineries can
not run heavy, high sulfur crude like Maya due to metallurgy and
product specifications. The light sour refineries already run as
heavy a slate as is practical.
- A heavy crude producer with an equity position in a refinery will
choose to run its own crude rather than purchasing from others
such as Mexico. PDVSA has equity ownership of over 900,000 B/D of
refining capacity in the U.S. (about 30% of the total heavy oil
refinery capacity in PADDs I-III) and is following an aggressive
strategy to secure markets for its heavy crude in competition
with Mexico.
- Although Mexico could decide to participate in heavy oil export
cutbacks, the cutbacks are not likely to be large and would be
prorated over all of its customers. Recently, announced cutbacks
have been in the 100,000 to 125,000 B/D range or about 10% of
exports. The Upgrade Project would not be materially affected by
cuts of this magnitude.
C-5
<PAGE>
PRODUCT DEMAND
. Product demand growth varies from year to year but generally averages
less than 2% annually. Gasoline growth is the key to overall product
growth since the product accounts for 40 to 50% of the total. Jet fuel is
the fastest growing product but total demand is relatively small.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
U.S. PETROLEUM PRODUCT DEMAND
(Million Barrels per Day)
- ----------------------------------------------------------------------------------------------------
Annual % Change
1995 1996 1997 1998 1999 2000 2005 2010 2015 1995-2015
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Motor Gasoline 7.79 7.89 8.02 8.20 8.39 8.51 8.89 9.42 9.68 0.98
Kerosene/Jet Fuel 1.55 1.64 1.66 1.65 1.70 1.74 1.94 2.13 2.31 1.99
Distillate 3.21 3.37 3.44 3.44 3.55 3.65 4.03 4.43 4.83 2.02
Residual Fuel Oil 0.85 0.85 0.80 0.82 0.81 0.81 0.78 0.76 0.75 -0.49
Other Products 4.33 4.56 4.71 4.57 4.58 4.63 5.01 5.27 5.49 1.09
Total Demand 17.72 18.30 18.62 18.68 19.03 19.35 20.64 22.01 23.06 1.25
Growth, % 0.03 3.27 1.72 0.31 1.89 1.65 1.30 1.29 0.94
- ----------------------------------------------------------------------------------------------------
</TABLE>
REFINERY MARGINS
. Refinery margins for heavy sour crude processors are expected to be
significantly higher than for light sweet crude refineries. The Upgrade
Project will move Clark's Port Arthur refinery into the top tier of Gulf
Coast refineries (Figure II-4).
[GRAPH APPEARS HERE]
C-6
<PAGE>
- --------------------------------------------------------
III. WORLD PETROLEUM SUPPLY/DEMAND BALANCE
- --------------------------------------------------------
The outlook for the world petroleum supply/demand balance is a key
input into the forecast of crude oil prices and differentials. A discussion of
the historical trends and expected future supply/demand balances is provided in
this section.
WORLD PETROLEUM DEMAND
The following table summarizes our outlook for world petroleum demand
by key regions of the world.
- --------------------------------------------------------------------------------
WORLD PETROLEUM DEMAND
(Million Barrels per Day)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROJECTED
----------------------------------------------
1990 1995 1996 1997 1998 1999 2000 2005 2010 2015 2020
----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OECD Demand
United States 16.99 17.72 18.30 18.62 18.86 19.24 19.57 21.12 22.43 23.51 24.33
U.S. Territories 0.25 0.25 0.22 0.19 0.20 0.22 0.23 0.24 0.25 0.27 0.28
Canada 1.71 1.81 1.87 1.94 2.00 2.01 2.03 2.12 2.19 2.26 2.31
Mexico 1.76 1.82 1.90 1.94 2.05 2.07 2.10 2.23 2.36 2.49 2.58
OECD Europe 13.17 14.60 14.87 15.01 15.22 15.45 15.72 16.41 17.04 17.67 18.32
Japan 5.29 5.71 5.76 5.71 5.51 5.53 5.66 6.21 6.67 7.12 7.52
Republic of Korea 1.04 2.01 2.13 2.29 1.93 1.96 2.01 2.45 2.75 2.95 3.13
Australia/New Zealand 0.83 0.96 0.94 0.95 0.95 0.98 1.00 1.08 1.15 1.22 1.28
----- ----- ---- ----- ----- ----- ----- ----- ----- ----- -----
Total OECD 41.04 44.88 45.99 46.66 46.72 47.45 48.32 51.86 54.85 57.46 59.75
OECD Growth, % 0.92 1.14 2.48 1.44 0.14 1.57 1.83 1.14 1.06 0.89 0.71
Non-OECD Demand
FSU (Former Soviet Union) 8.40 4.75 4.60 4.61 4.33 4.37 4.43 5.05 6.08 7.31 8.39
Eastern Europe 1.05 0.70 0.74 0.78 0.80 0.82 0.84 0.95 1.10 1.28 1.43
China 2.32 3.33 3.67 4.09 4.16 4.28 4.50 5.86 6.89 7.97 8.87
Africa 1.94 2.20 2.24 2.32 2.32 2.35 2.40 2.61 2.79 2.97 3.10
Latin America 3.41 4.12 4.27 4.43 4.58 4.71 4.83 5.33 5.79 6.25 6.62
Other Asia 4.40 5.96 6.42 6.63 6.62 6.72 7.05 8.67 10.07 11.48 12.65
Middle East 3.23 4.04 4.17 4.23 4.27 4.33 4.45 5.00 5.48 5.96 6.35
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Non-OECD 24.75 25.10 26.10 27.08 27.08 27.58 28.50 33.46 38.20 43.23 47.42
Non-OECD Growth, % 0.32 3.64 4.02 3.73 0.02 1.82 3.33 2.88 2.62 2.52 1.50
Total World Demand 65.79 69.98 72.10 73.73 73.80 75.03 76.82 85.32 93.05 100.69 107.17
World Growth, % 0.70 2.02 3.03 2.27 0.09 1.66 2.38 1.82 1.69 1.58 1.06
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-7
<PAGE>
OECD DEMAND
OECD regional petroleum demand growth averaged 1.9% from 1990 to 1997. OECD
figures now formally include Mexico, Republic of Korea, the Czech Republic and
Poland. World petroleum demand growth in 1996, helped by a cold winter, averaged
about 3% or 2 million B/D. Demand grew 2.3% in 1997, gaining 1.6 million B/D.
With a mild winter, OECD growth in 1997 was just above 1.4%, whereas, in 1998,
growth dropped to nearly zero due primarily to the financial turmoil in Asia.
U.S. demand is expected to grow at about 1.5% through 2005, but it is expected
to taper off to about 1% through the remainder of the forecast period. Western
Europe growth is expected to be slightly less robust than the U.S. but will
still average above 1% throughout the forecast period.
Without the important influence of Asian growth, world demand growth was
nil in 1998. We expect OECD petroleum demand growth to be moderate through the
forecast period, rising about 1.3% through 2005 and slowing to the 1% range.
This projection assumes rising prices, slowing population growth and softening
economic growth through 2000.
NON OECD PETROLEUM DEMAND
On the other hand, non-OECD petroleum demand growth (ex FSU) approached 5%
per year over the 1990 to 1997 period. Petroleum demand in the FSU collapsed
during the early 1990s, pulling down the total non-OECD trend (Figure III-1).
However, demand now appears to be stabilizing in that area although weakness due
to the current financial problems will continue in the near term. This has
resulted in total world growth rates rising in recent years.
As a result of the Asian financial crisis, Asian demand declined in 1998
whereas Asian growth from 1990 to 1997 contributed 5.8 million B/D to the total
world growth of 7.9 million B/D or 73% of the world increase. Asia's growth
averaged 5.1% per year.
- --------------------------------------------------------------------------------
FIGURE III-1
NON-OECD AND FSU DEMAND GROWTH
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
C-8
<PAGE>
OPEC AND THE PETROLEUM SUPPLY/DEMAND BALANCE
The following table summarizes our outlook for the world petroleum
supply/demand balances and the impact that OPEC is expected to have on the
balance.
<TABLE>
<CAPTION>
WORLD PETROLEUM SUPPLY/DEMAND BALANCE
(Million Barrels per Day)
- ------------------------------------------------------------------------------------------------------
Projected
------------------------------------------
1990 1995 1996 1997 1998 1999 2000 2005 2010 2015 2020
----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Petroleum Demand
OECD 41.04 44.88 45.99 46.66 46.72 47.45 48.32 51.86 54.85 57.46 59.75
Non-OECD 24.75 25.10 26.10 27.08 27.08 27.58 28.50 33.46 38.20 43.23 47.42
----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ------
Total World Demand 65.79 69.98 72.10 73.73 73.80 75.03 76.82 85.32 93.05 100.69 107.17
Demand Growth, % 0.70 2.02 3.03 2.27 0.09 1.66 2.38 1.82 1.69 1.58 1.06
Petroleum Supply
OPEC Crude 22.40 25.18 26.13 26.94 27.83 26.50 26.38 33.02 36.94 42.60 46.88
OPEC NGL 1.28 1.51 1.50 1.59 1.70 1.70 1.80 1.95 2.21 2.58 2.99
OPEC Condensates 0.70 0.80 0.89 1.04 1.09 1.10 1.25 1.35 1.56 1.81 2.09
Non-OPEC Crude 37.46 36.43 37.30 38.00 38.18 39.22 39.96 40.77 42.86 43.25 43.90
Non-OPEC NGL 3.29 3.81 3.92 3.99 4.05 4.22 4.54 5.06 5.85 6.50 6.93
Non-OPEC Condensates 0.24 0.47 0.54 0.59 0.61 0.63 0.75 1.06 1.32 1.53 1.76
Process Gain/Other(1) 1.85 2.04 2.13 2.15 2.18 2.25 2.29 2.42 2.59 2.71 1.65
----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ------
Total World Supply 67.22 70.24 72.40 74.29 75.64 75.63 76.96 85.62 93.34 100.98 107.38
Inventory, Build/(Draw) 1.43 0.27 0.31 0.56 1.83 0.59 0.14 0.30 0.30 0.28 0.21
Notes: (1) Sum of process gain and other hydrocarbon supplies including non-petroleum synthetics
and oxygenates.
- ------------------------------------------------------------------------------------------------------
</TABLE>
RECENT TRENDS IN THE WORLD PETROLEUM SUPPLY/DEMAND BALANCE
OPEC crude oil production bottomed in 1985 at only 16 million B/D as
demand growth remained flat and non-OPEC supplies continued to grow with high
crude oil prices. This trend intensified competitive pressures to the breaking
point and world petroleum prices collapsed in early 1986. The collapse resulted
in a reversal of both demand and non-OPEC supply trends. The lower prices
enhanced demand internationally and non-OPEC crude oil production, especially in
the U.S., decreased as a result of the change. Thus, demand for OPEC crude
benefited from both sides of the balance.
By 1990, OPEC output had increased to 23.2 million B/D, a 48% increase
relative to the low point in 1985. The growth over that period benefited
significantly from the shock effect of the price change and it was enhanced by
strong economic growth in most regions of the world.
In 1998/99, demand for OPEC crude declined significantly as a result of
Asia financial crisis and continued growth in non-OPEC crude. In response to
decreased world demand for OPEC crude oil, OPEC members entered into a
production limitation agreement in 1998 intended to reduce production in an
attempt to maintain stable prices through the end of the decade.
C-9
<PAGE>
WORLD PETROLEUM SUPPLY/DEMAND BALANCE METHODOLOGY
Given the projected outlook for petroleum demand, a world petroleum balance
can be derived by balancing the projected availability of crude oil and other
petroleum supplies from non-OPEC suppliers against anticipated OPEC crude oil
production. This methodology assumes that non-OPEC suppliers will produce to
their maximum capability in the longer term. The detailed supply balances and
projections are shown in Tables III-1 through III-3.
WORLD PETROLEUM SUPPLY/DEMAND BALANCE FORECAST
While economic growth will continue and petroleum demand will be robust,
OPEC crude oil requirements are expected to decline in the near term due to the
rapid increases in non-OPEC output and other supplies through the end of this
decade. The Asian downturn will have a particularly negative effect on demand
over the next several years. As a result, short term upward price pressure
should be non-existent.
In the longer term, increasing demand and a slower rise in non-OPEC output
will allow OPEC countries to once again regain market share (Figure III-2). We
expect that future OPEC capacity will be sufficient to accommodate our forecast
of increased crude oil demands at the forecast price levels. We anticipate that
most of this increased OPEC production will come from the large reserve-base
countries in the Middle East and Venezuela. Our forecast also is predicated on
non-OPEC supplies increasing to the levels shown in our balances (Table III-2)
with OPEC supplies expanding at a rate such that OPEC is able to operate between
90% and 95% of its production capacity.
- --------------------------------------------------------------------------------
FIGURE III-2
WORLD CRUDE PRODUCTION
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Figure III-3 shows our forecast for OPEC crude oil production, expected
maximum productive capacity, and the implied utilization rate of this capacity.
The lower line represents capacity utilization of 80%. When the utilization rate
is high, upward price pressure is likely to result. On the other hand, if
production requirements fall to below 80%, as occurred during the
C-10
<PAGE>
early 1980s and again in 1998, then crude prices tend to be volatile and weaken
significantly. Currently, production requirements are below 80% and are expected
to remain at these levels through this decade, improving only beyond that point.
- --------------------------------------------------------------------------------
FIGURE III-3
OPEC CRUDE PRODUCTION
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Our present assumptions regarding individual OPEC country production
capacities over the forecast period are shown in Table III-4. Capacity expansion
plans are constantly changing depending on pricing trends, budgetary
considerations and financing availability. Saudi Arabia's plans over the last
few years have been moderated strongly due to budgetary considerations and our
outlook reflects a conservative growth pattern for total capacity. Saudi Arabia
is concentrating on capacity of highest value crudes. We believe Saudi Arabia
will try to maintain extra capacity relative to total OPEC requirements as a
buffer to potential political events. Due to the increase in demand and easing
non-OPEC production increases in the outer years, it may eventually become more
difficult for Saudi Arabia to achieve the desired buffer level, tightening the
market and increasing OPEC utilization. We have reflected this in our forecast.
C-11
<PAGE>
Purvin & Gertz uses these production capacities, along with anticipated
OPEC production quotas, as a guideline to determine the projected production of
each country. Historically, output from many OPEC countries (with the exception
of Saudi Arabia, Kuwait and the UAE) has exceeded the quota levels (Figure III-
4). OPEC crude production is being constrained in the short term by agreements
to cut production, rather than new quotas. In March 1999, OPEC (excluding Iraq)
agreed to cut production to 22.965 million B/D. OPEC appears to be producing
very close to these targets.
- --------------------------------------------------------------------------------
FIGURE III-4
OPEC CRUDE PRODUCTION AND QUOTA
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
C-12
<PAGE>
TABLE III-1
INTERNATIONAL PETROLEUM DEMAND
(Million Barrels Per Day)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Projected
--------------------------------------------------------------------
Est.
OECD DEMAND 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020
- ----------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States 16.99 17.72 18.30 18.62 18.86 19.24 19.57 19.88 20.18 20.49 20.80 21.12 22.43 23.51 24.33
U.S. Territories 0.25 0.25 0.22 0.19 0.20 0.22 0.23 0.23 0.23 0.24 0.24 0.24 0.25 0.27 0.28
Canada 1.71 1.81 1.87 1.94 2.00 2.01 2.03 2.05 2.07 2.09 2.10 2.12 2.19 2.26 2.31
Mexico 1.76 1.82 1.90 1.94 2.05 2.07 2.10 2.13 2.15 2.18 2.20 2.23 2.36 2.49 2.58
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Sub-Total North America 20.71 21.60 22.29 22.69 23.10 23.55 23.93 24.29 24.63 24.99 25.35 25.71 27.24 28.52 29.50
OECD Europe (1) 13.17 14.60 14.87 15.01 15.22 15.45 15.72 15.94 16.09 16.23 16.36 16.41 17.04 17.67 18.32
Japan 5.29 5.71 5.76 5.71 5.51 5.53 5.66 5.83 5.95 6.01 6.11 6.21 6.67 7.12 7.52
Republic of Korea 1.04 2.01 2.13 2.29 1.93 1.96 2.01 2.09 2.18 2.31 2.38 2.45 2.75 2.95 3.13
Australia/New Zealand 0.83 0.96 0.94 0.95 0.95 0.98 1.00 1.02 1.03 1.05 1.06 1.08 1.15 1.22 1.28
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Sub-Total Pacific 7.16 8.68 8.83 8.95 8.40 8.46 8.67 8.94 9.17 9.37 9.56 9.74 10.57 11.28 11.93
Total OECD 41.04 44.88 45.99 46.66 46.72 47.45 48.32 49.17 49.89 50.58 51.27 51.86 54.85 57.46 59.75
Demand Growth, % 0.92 1.14 2.48 1.44 0.14 1.57 1.83 1.76 1.45 1.40 1.36 1.14 1.06 0.89 0.71
NON-OECD DEMAND
- ---------------
FSU 8.40 4.75 4.60 4.61 4.33 4.37 4.43 4.51 4.61 4.73 4.88 5.05 6.08 7.31 8.39
East Europe 1.05 0.70 0.74 0.78 0.80 0.82 0.84 0.85 0.87 0.90 0.92 0.95 1.10 1.28 1.43
China 2.32 3.33 3.67 4.09 4.16 4.28 4.50 4.77 5.04 5.36 5.63 5.86 6.89 7.97 8.87
Other Asia 4.40 5.96 6.42 6.63 6.62 6.72 7.05 7.45 7.78 8.09 8.39 8.67 10.07 11.48 12.65
Latin America 3.41 4.12 4.27 4.43 4.58 4.71 4.83 4.94 5.04 5.15 5.24 5.33 5.79 6.25 6.62
Middle East 3.23 4.04 4.17 4.23 4.27 4.33 4.45 4.56 4.67 4.79 4.90 5.00 5.48 5.96 6.35
Africa 1.94 2.20 2.24 2.32 2.32 2.35 2.40 2.44 2.49 2.53 2.57 2.61 2.79 2.97 3.10
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Non-OECD 24.75 25.10 26.10 27.08 27.08 27.58 28.50 29.53 30.50 31.54 32.53 33.46 38.20 43.23 47.42
Demand Growth, % Non-OECD 0.32 3.64 4.02 3.73 0.02 1.82 3.33 3.61 3.31 3.41 3.12 2.88 2.62 2.52 1.50
TOTAL WORLD DEMAND 65.79 69.98 72.10 73.73 73.80 75.03 76.82 78.70 80.39 82.13 83.80 85.32 93.05 100.69 107.17
Demand Growth, % 0.70 2.02 3.03 2.27 0.09 1.66 2.38 2.45 2.15 2.16 2.04 1.82 1.69 1.58 1.06
</TABLE>
Notes: (1) Countries include Hungary, Poland and Czech Republic.
C-13
<PAGE>
TABLE III-2
INTERNATIONAL PETROLEUM SUPPLY
(Million Barrels Per Day)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECTED
---------------------------------------------------------------------
Est.
CRUDE OIL PRODUCTION 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020
- -------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mideast OPEC
Saudi Arabia 6.26 7.98 8.06 7.97 8.09 7.60 7.42 8.00 8.70 8.84 9.17 9.50 10.43 11.90 12.62
Iran 3.19 3.60 3.60 3.60 3.59 3.35 3.31 3.40 3.50 3.57 3.65 3.71 3.92 4.40 4.90
Iraq 2.11 0.74 0.74 1.38 2.18 2.60 2.75 2.80 2.89 2.99 3.13 3.28 4.13 5.70 6.39
Kuwait 1.02 1.81 1.81 1.81 1.81 1.66 1.64 1.75 1.88 1.98 2.11 2.23 2.44 2.90 3.24
UAE 1.80 2.14 2.18 2.16 2.27 2.11 2.09 2.16 2.23 2.29 2.36 2.41 2.56 2.68 2.94
Qatar 0.41 0.45 0.51 0.55 0.66 0.61 0.61 0.63 0.65 0.67 0.69 0.71 0.75 0.79 0.96
Neutral Zone 0.31 0.39 0.48 0.53 0.55 0.57 0.58 0.60 0.61 0.63 0.64 0.66 0.66 0.66 0.66
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Subtotal-Mideast Opec 15.10 17.10 17.38 18.01 19.14 18.50 18.40 19.33 20.45 20.96 21.76 22.50 24.89 29.04 31.70
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Other OPEC
Venezuela 2.09 2.76 3.15 3.25 3.12 2.84 2.88 3.15 3.39 4.00 4.27 4.48 5.50 6.50 7.18
Nigeria 1.73 1.84 2.07 2.10 2.05 1.82 1.80 1.89 1.99 2.06 2.15 2.21 2.39 2.57 2.76
Indonesia 1.30 1.33 1.33 1.33 1.34 1.30 1.29 1.32 1.35 1.37 1.40 1.42 1.55 1.63 1.78
Libya 1.40 1.40 1.39 1.40 1.38 1.28 1.27 1.31 1.36 1.39 1.43 1.46 1.56 1.68 1.78
Algeria 0.79 0.75 0.81 0.85 0.82 0.76 0.75 0.80 0.84 0.88 0.92 0.95 1.06 1.18 1.68
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Subtotal-Other Opec 7.30 8.08 8.75 8.92 8.69 8.00 7.98 8.47 8.93 9.70 10.17 10.51 12.05 13.56 15.18
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total OPEC Crude 22.40 25.18 26.13 26.94 27.83 26.50 26.38 27.80 29.38 30.66 31.93 33.02 36.94 42.60 46.88
Non-OPEC
United States 7.35 6.56 6.46 6.41 6.36 6.43 6.51 6.59 6.58 6.58 6.50 6.40 5.99 5.43 4.99
North Sea 3.66 5.58 6.00 5.96 5.94 6.64 7.00 6.70 6.58 6.40 6.25 6.14 6.65 5.85 5.25
Mexico 2.55 2.71 2.86 3.03 3.06 2.96 3.00 3.17 3.20 3.23 3.26 3.29 3.44 3.62 3.80
Oman 0.67 0.86 0.89 0.90 0.88 0.91 0.91 0.91 0.91 0.92 0.92 0.92 0.93 0.94 0.95
FSU 11.09 6.85 6.75 6.89 6.92 6.97 6.94 6.93 6.93 7.00 7.07 7.15 8.20 9.46 10.69
Eastern Europe 0.33 0.26 0.25 0.25 0.24 0.23 0.23 0.22 0.22 0.22 0.21 0.21 0.19 0.18 0.18
China 2.77 2.99 3.14 3.25 3.21 3.26 3.30 3.35 3.39 3.43 3.47 3.51 3.67 3.77 3.88
Others 9.04 10.63 10.95 11.30 11.56 11.82 12.07 12.22 12.46 12.69 12.93 13.15 13.78 13.98 14.15
* North Sea includes UK
onshore ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Non-OPEC Crude 37.46 36.43 37.30 38.00 38.18 39.22 39.96 40.10 40.28 40.46 40.59 40.77 42.86 43.25 43.90
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Crude Supply 59.86 61.61 63.43 64.93 66.01 65.72 66.34 67.90 69.66 71.12 72.52 73.79 79.80 85.85 90.78
OTHER PETROLEUM SUPPLY
- ----------------------
OPEC NGL 1.28 1.51 1.50 1.59 1.70 1.70 1.80 1.82 1.84 1.86 1.88 1.95 2.21 2.58 2.99
OPEC Condenstate 0.70 0.80 0.89 1.04 1.09 1.10 1.25 1.28 1.33 1.37 1.41 1.35 1.56 1.81 2.09
Non-OPEC NGL 3.29 3.81 3.92 3.99 4.05 4.22 4.54 4.61 4.72 4.83 4.94 5.06 5.85 6.50 6.93
Non-OPEC Condensate 0.24 0.47 0.54 0.59 0.61 0.63 0.75 0.81 0.86 0.93 1.00 1.06 1.32 1.53 1.76
Process Gain 1.51 1.35 1.41 1.41 1.42 1.47 1.51 1.51 1.52 1.52 1.53 1.54 1.61 1.63 1.65
Other(1) 0.34 0.70 0.72 0.74 0.76 0.78 0.78 0.80 0.82 0.84 0.86 0.88 0.98 1.08 1.18
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Other Supply 7.36 8.63 8.97 9.36 9.63 9.91 10.62 10.84 11.09 11.35 11.62 11.83 13.54 15.12 16.60
TOTAL PETROLEUM SUPPLY 67.22 70.24 72.40 74.29 75.64 75.63 76.96 78.74 80.75 82.47 84.14 85.62 93.34 100.98 107.38
</TABLE>
Notes: (1) Other hydrocarbon supplies including non-petroleum synthetics and
oxygenates.
C-14
<PAGE>
TABLE III-3
INTERNATIONAL PETROLEUM SUPPLY/DEMAND BALANCE
(Million Barrels Per Day Unless Noted)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Projected
Est. ---------------------------------------------------------
PETROLEUM DEMAND 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020
- ---------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
North America 20.71 21.60 22.29 22.69 23.10 23.55 23.93 24.29 24.63 24.99 25.35 25.71 27.24 28.52 29.50
OECD Europe 13.17 14.60 14.87 15.01 15.22 15.45 15.72 15.94 16.09 16.23 16.36 16.41 17.04 17.67 18.32
Pacific 7.16 8.68 8.83 8.95 8.40 8.46 8.67 8.94 9.17 9.37 9.56 9.74 10.57 11.28 11.93
----- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ------ ------
Total OECD 41.04 44.88 45.99 46.66 46.72 47.45 48.32 49.17 49.89 50.58 51.27 51.86 54.85 57.46 59.75
Non-OECD 24.75 25.10 26.10 27.08 27.08 27.58 28.50 29.53 30.50 31.54 32.53 33.46 38.20 43.23 47.42
----- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ------ ------
Total World Demand 65.79 69.98 72.10 73.73 73.80 75.03 76.82 78.70 80.39 82.13 83.80 85.32 93.05 100.69 107.17
PETROLEUM SUPPLY
OPEC Crude 22.40 25.18 26.13 26.94 27.83 26.50 26.38 27.80 29.38 30.66 31.93 33.02 36.94 42.60 46.88
OPEC NGL 1.28 1.51 1.50 1.59 1.70 1.70 1.80 1.82 1.84 1.86 1.88 1.95 2.21 2.58 2.99
OPEC Condensates 0.70 0.80 0.89 1.04 1.09 1.10 1.25 1.28 1.33 1.37 1.41 1.35 1.56 1.81 2.09
Non-OPEC Crude 37.46 36.43 37.30 38.00 38.18 39.22 39.96 40.10 40.28 40.46 40.59 40.77 42.86 43.25 43.90
Non-OPEC NGL 3.29 3.81 3.92 3.99 4.05 4.22 4.54 4.61 4.72 4.83 4.94 5.06 5.85 6.50 6.93
Non-OPEC Condensates 0.24 0.47 0.54 0.59 0.61 0.63 0.75 0.81 0.86 0.93 1.00 1.06 1.32 1.53 1.76
Process Gain 1.51 1.35 1.41 1.41 1.42 1.47 1.51 1.51 1.52 1.52 1.53 1.54 1.61 1.63 1.65
Other (1) 0.34 0.70 0.72 0.74 0.76 0.78 0.78 0.80 0.82 0.84 0.86 0.88 0.98 1.08 1.18
----- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ------ ------
Total World Supply 67.22 70.24 72.40 74.29 75.64 75.63 76.96 78.74 80.75 82.47 84.14 85.62 93.34 100.98 107.38
Inventory,Build/(Draw) 1.43 0.27 0.31 0.56 1.83 0.59 0.14 0.04 0.36 0.35 0.34 0.30 0.30 0.28 0.21
----- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ------ ------
Statistical Imbalance (1.23) (0.31) (0.22) (0.14) (0.04) -0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Inventory, Billion Barrels
(Ending Stocks)
OECD Industry 2.72 2.55 2.55 2.65 2.80 2.91 2.96 3.02 3.11 3.20 3.26 3.31 3.55 3.79 3.98
OECD Government 0.85 1.18 1.19 1.20 1.23 1.23 1.23 1.23 1.26 1.28 1.30 1.32 1.42 1.51 1.59
Other (2) 1.82 2.01 2.03 2.07 2.55 2.65 2.65 2.61 2.62 2.63 2.68 2.72 2.92 3.11 3.27
----- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ------ ------
Total Inventory 5.39 5.74 5.77 5.92 6.58 6.79 6.84 6.86 6.99 7.11 7.24 7.35 7.90 8.41 8.85
Days of Supply (3)
(Free World)
OECD Industry 50 42 40 41 43 44 44 44 45 45 45 45 45 45 45
OECD Government 16 19 19 19 19 19 18 18 18 18 18 18 18 18 18
Other 34 33 32 32 39 40 39 38 38 37 37 37 37 37 37
----- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ------ ------
Total Days of Supply 100 94 91 92 102 103 102 100 100 100 100 100 100 100 100
</TABLE>
Notes: (1) Other hydrocarbon supplies including none-petroleum synthetics and
oxygenates. Excludes former CPE.
(2) Inventories outside reporting areas and floating stocks. Excludes
former CPE.
(3) Year ending stocks divided by average year demand for year totals.
C-15
<PAGE>
TABLE III-4
MAXIMUM SUSTAINABLE CAPACITY*
(Million Barrels Per Day)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mideast OPEC
- ------------
Saudi Arabia 8.50 9.25 9.30 9.80 10.00 10.00 10.00 10.20 10.40 10.60 10.80 11.00 11.50 13.00 13.50
Iran 3.50 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80 4.00 4.50 5.00
Iraq 3.50 0.74 0.74 1.38 2.18 2.60 2.75 3.00 3.20 3.30 3.40 3.50 4.50 6.00 6.50
Kuwait 1.70 2.00 2.00 2.00 2.20 2.20 2.20 2.24 2.28 2.32 2.36 2.40 2.50 3.00 3.30
UAE 2.00 2.30 2.30 2.30 2.45 2.45 2.45 2.46 2.47 2.48 2.49 2.50 2.60 2.70 3.00
Qatar 0.45 0.40 0.51 0.65 0.70 0.70 0.70 0.71 0.72 0.73 0.74 0.75 0.75 0.80 1.00
Neutral Zone 0.40 0.40 0.40 0.55 0.60 0.60 0.70 0.72 0.74 0.76 0.78 0.80 0.80 0.80 1.00
----------------------------------------------------------------------------------------------------------
Subtotal Mideast OPEC 20.05 18.89 19.05 20.48 21.93 22.35 22.60 23.13 23.61 23.99 24.37 24.75 26.65 30.80 33.30
Other OPEC
Venezuela 2.50 3.00 3.25 3.50 3.85 4.15 4.50 4.60 4.70 4.80 4.90 5.00 6.00 7.00 7.20
Nigeria 2.00 2.00 2.00 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.45 2.60 2.80
Indonesia 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.60 1.70 1.80
Libya 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.60 1.70 1.80
Algeria 0.81 0.81 0.83 0.85 0.90 0.95 1.00 1.00 1.00 1.00 1.00 1.00 1.10 1.20 1.80
----------------------------------------------------------------------------------------------------------
Subtotal Other OPEC 8.26 8.76 9.03 9.60 10.00 10.35 10.75 10.85 10.95 11.05 11.15 11.25 12.75 14.20 15.40
TOTAL OPEC CRUDE 28.31 27.65 28.08 30.08 31.93 32.70 33.35 33.98 34.56 35.04 35.52 36.00 39.40 45.00 48.70
OPEC Utilization 79% 91% 93% 90% 87% 81% 79% 82% 85% 87% 90% 92% 94% 95% 96%
</TABLE>
*Estimated by Purvin & Gertz, Inc.
C-16
<PAGE>
- --------------------------------------------
IV. U.S. ENERGY AND PETROLEUM DEMAND
- --------------------------------------------
This section analyzes regional U.S. refined product supply/demand
balance trends and resulting refining operating patterns. In the U.S., petroleum
is the dominant fuel (38%), but its market share is being slowly eroded.
However, since the U.S. economy is so highly developed, shifts from one energy
source to another occur very slowly (Table IV-1). Gas and solid fuels each have
about 25% of the energy market. Gas is regaining market share lost during the
1980s as it was precluded from being used in new large boilers, so coal and
nuclear energy captured a larger share of the market. Hydropower's share is only
about 2%, and little potential growth remains. Petroleum's share of the market
will continue to erode, primarily since growth in vehicle fuel use is being
constrained by higher overall fleet efficiencies. Gas is forecast to show the
strongest growth as more gas becomes available. Residual fuel oil and thermal
distillate use have already been reduced to practical minimums, so gas for
heating can only increase with new demand growth. Nuclear power is limited by
regulations and financial problems, but it accounts for 8.5% of the total.
UNITED STATES PETROLEUM DEMAND
Demand in 1990 showed a decline for the first time since 1983. This
resulted primarily from the effects of the recession, which was significantly
worsened by the effects of the Mideast crisis. The trend continued through 1991
as the economy had not staged a significant recovery during that period.
However, since 1991 refined product growth has averaged over 1% annually. Growth
from 1995 to 1998, in fact, averaged almost 1.8% for a gain of near 1 million
B/D. Initial 1998 data indicate a small 0.3% gain. However, adjustments will
bring this figure closer to 0.8%. The reasonably strong growth, despite several
years of mild weather, reflects the continuing strong economy. Gasoline demand
has been particularly strong recently due to low prices and stagnant efficiency
gains.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
U.S. PETROLEUM PRODUCT DEMAND
(Million Barrels per Day)
- ------------------------------------------------------------------------------------------------------------
Annual % Change
1995 1996 1997 1998 1999 2000 2005 2010 2015 1998-2015
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Motor Gasoline 7.79 7.89 8.02 8.20 8.39 8.51 8.89 9.42 9.68 0.98
Kerosene/Jet Fuel 1.55 1.64 1.66 1.65 1.70 1.74 1.94 2.13 2.31 1.99
Distillate 3.21 3.37 3.44 3.44 3.55 3.65 4.03 4.43 4.83 2.02
Residual Fuel Oil 0.85 0.85 0.80 0.82 0.81 0.81 0.78 0.76 0.75 -0.49
Other Products 4.33 4.56 4.71 4.57 4.58 4.63 5.01 5.27 5.49 1.09
Total Demand 17.72 18.30 18.62 18.68 19.03 19.35 20.64 22.01 23.06 1.25
Growth, % 0.03 3.27 1.72 0.31 1.89 1.65 1.30 1.29 0.94
- ------------------------------------------------------------------------------------------------------------
</TABLE>
C-17
<PAGE>
TABLE IV-1
UNITED STATES ENERGY BALANCE
(Thousand Tonnes Oil Equivalent)
<TABLE>
<CAPTION>
ECONOMIC/ENERGY INDICATORS
- ------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GDP (Bil 96$) 7,100.48 7,341.90 7,628.23 7,925.74 8,155.58 8,383.94 9,966.69 11,666.30 13,589.77
GDP Growth (%) 2.30 3.40 3.90 3.90 2.90 2.80 3.00 3.50 3.10
Population (MM) 263.17 265.56 267.97 270.40 272.85 275.33 288.06 301.37 315.30
Population Growth (%) 0.95 0.91 0.91 0.91 0.91 0.91 0.91 0.91 0.91
Energy Growth (%) 1.46 2.23 0.64 (0.04) 1.16 1.10 1.06 1.10 0.86
TOE/$GNP 294 291 282 271 266 262 235 212 190
Per Capita 8,012 8,113 8,091 8,015 8,035 8,051 8,210 8,271 8,554
Energy% / GNP% 0.63 0.65 0.17 (0.01) 0.40 0.39 0.35 0.32 0.28
ENERGY DEMAND BY TYPE
- ------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Petroleum 804,411 832,380 844,379 847,712 864,237 878,437 937,992 1,001,896 1,049,190
Natural Gas 508,673 504,153 503,795 491,676 517,778 527,915 580,487 626,110 688,522
Solid Fuels 475,344 494,013 506,225 513,316 495,192 494,518 525,837 543,758 556,725
Nuclear 186,022 186,389 173,647 185,169 185,207 185,109 186,121 184,176 179,704
Hydropower/Other 114,023 118,022 120,662 109,974 110,348 110,649 113,192 114,177 113,814
Total Energy 2,088,473 2,134,956 2,148,708 2,147,847 2,172,762 2,196,629 2,343,629 2,470,117 2,577,954
ENERGY DEMAND BY SECTOR
- ------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Industry 352,333 366,744 368,040 359,441 363,823 368,036 393,815 416,282 435,721
Transport 545,214 558,563 564,356 566,320 577,360 586,846 626,633 669,324 700,919
Res./Com./Other 435,744 455,771 454,834 447,602 452,118 456,402 483,301 505,545 523,607
Electricity 755,183 753,878 761,478 774,484 779,460 785,345 839,881 878,966 917,707
Total Energy 2,088,473 2,134,956 2,148,708 2,147,847 2,172,762 2,196,629 2,343,629 2,470,117 2,577,954
</TABLE>
C-18
<PAGE>
Annual growth of well over 1% is expected to continue through most of the
forecast under normal weather conditions. Growth in overall distillates is
expected to average near 2% over the next decade, before slowing to about 1.5%
through the 2010 to 2015 period. Distillate growth reflects strong gains in on-
road application. Gasoline demand growth is now expected to average 1% through
the forecast. Travel should increase in the short term as retail prices remain
low relative to the peaks in 1997. However, new technology is now expected to
influence efficiencies beyond 2005. Beyond the short term, travel will continue
to increase by near 2%. Demand per capital gains for gasoline are now expected
to decrease over the forecasted period, largely as a result of efficiency
improvements and continuing increases in per capita miles traveled. Our forecast
now anticipates new car efficiency to improve over the forecast as a result of
technology changes.
Kerosene/jet fuel demand growth should show some of the strongest rates for
all products averaging nearly 2% for most of the forecast. Residual fuel oil
demand continues to fall averaging 0.5% decline for the forecast period. Demands
for all other products, including other refined products and natural gas
liquids, are expected to increase at a rate of 1% through out the forecast, with
natural gas liquids showing the largest gains. Residual fuel demand is expected
to continue to decline over the forecast.
U.S. MOTOR FUEL DEMAND FORECASTS
METHODOLOGY
There are three primary driving forces behind motor fuel forecasts --the
extent of travel, the fuel efficiency of the fleet, and the types of fuels used
in vehicles. An additional level of complexity to gasoline forecasts has been
added over the last few years with the introduction of oxygenated and
reformulated gasolines. These fuels have different efficiencies than standard
fuels and each region of the country has seen varying levels of price impact due
to varying volumetric requirements for the new fuels. Assumptions regarding
alternative motor fuels also affect the outlook for gasoline demand within the
time frame of this forecast, and trends also vary by region of the country.
Therefore, gasoline demand forecasts must account for the changing qualities and
regional differences.
The first step in calculating vehicle fuel demand is a projection of annual
vehicle miles traveled (AVMT) by PADD. Historical AVMT were broken down into
commercial (buses and multi-axle trucks) and private (automobiles, two-axle
trucks and motorcycles) categories. AVMT in each category were correlated to
population, fuel price, and per capita income. These correlations were used to
project miles traveled by PADD based on expected changes in the three variables.
Vehicle mileage was considered on a PADD and vehicle category basis.
Historical mileage for automobiles and two-axle trucks was calculated using
aggregated AVMT and fuel data. Correlations of future mileage of those two
vehicle classes were prepared based on projected changes in new vehicle fleet
mileage, scrappage and replacement rates, as well as
C-19
<PAGE>
factors accounting for the difference between mileage measured by EPA methods
and experienced by on-road vehicles.
Projected AVMT in the private and commercial sectors was desegregated into
the five vehicle types. The projected AVMT by vehicle type, combined with
projected mileage by vehicle type, resulted in the total fuel requirement.
Motor vehicle fuels have been grouped into three categories --gasolines
(conventional and reformulated), distillate fuels, and alternative fuels
(methanol, electricity, LPG, and CNG). Cars and two-axle trucks are projected to
use mostly gasoline though there is a small proportion of diesel and alternative
fuel use. Motorcycles use only gasoline. Buses and multi-axle trucks use
significant amounts of both gasoline and diesel fuel. Fleet vehicles in that
class may use alternative fuels. The projected proportions of each type of fuel
by vehicle class were combined with the total fuel requirements to determine
fuel use by type.
From the forecast of key transportation variables, gasoline consumption in
the U.S. is projected to increase at a moderate pace in the longer term. The
annual growth rate is expected to average about 1.0% over the next ten years,
slowing to less than 1% by the end of the forecast period due to moderating
price increases, lower population growth, economic effects and efficiency gains.
Underlying demand changes over recent years have been altered significantly
by the rapid increase in popularity of low MPG utility vehicles and trucks,
which expand the demand for gasoline as miles traveled increases. Also, the lack
of government initiatives increasing the required MPG for new vehicles has
resulted in stagnation of average vehicle efficiency in recent years. However,
vehicle technologies now emerging are expected to result in higher efficiency in
the future, as discussed below.
REGIONAL TRAVEL
Conforming to Federal Highway Administration (FHA) definitions, vehicles
are grouped into passenger cars, light-duty or double-axle trucks, motorcycles,
medium and heavy duty or nondouble-axle trucks, and buses. The breakdown of
miles traveled into these vehicle groups is necessary to distinguish the
different fuel requirements by each group. Using state averages of travel by
each type of vehicle, miles traveled are grouped by PADD. The forecast of
regional vehicle mileage uses motor fuel prices, population, per capita income,
and characteristics of the vehicle stocks to statistically measure past
variations in travel corresponding to changes in each of the variables. Each of
the regions possess different demographic and economic trends that influence
travel patterns for the forecast period.
Population growth obviously has a very strong influence on the number of
miles traveled on U.S. roads and highways. The table below reviews the estimated
historical data and our projections for population growth. The forecasts are
prepared on a state-by-state basis and are generally consistent with U.S.
government forecasts. Population growth is expected to decrease moderately in
the outer years.
C-20
<PAGE>
Per capita income (PCI) is also a significant factor affecting the level of
travel. Over the last five years PCI has been growing strongly as the economy
improved from the recessionary trends of the early 1990s. This has contributed
to a significant increase in miles traveled. PCI has been a rather erratic
variable, but we expect it to average about 1.2-1.3% over the forecast period.
Recent levels have been as high as 2%.
The average fuel price in each PADD is forecast consistent with our outlook
for crude and product prices. The forecast also takes into account changes in
prices in specific regions related to changing gasoline specifications under the
expected environmental restrictions. With the price collapse of 1998 and
relatively mild recovery of prices, we expect a very strong impact on miles
traveled in the near term.
Key indicators lead to positive growth for miles traveled throughout the
forecast. We expect average growth of about 2.7% until the end of the decade.
With prices stabilizing and population and PCI growth subsiding, longer term
growth in vehicle miles is expected to subside to the 1.7% range in the outer
years. Demographics and economic factors come to bear on the regional forecasts
as do the differing prices of fuels in each region, particularly as influenced
by the regional diversity in requirements for the new fuels of the future,
whether gasoline or alternate fuels.
VEHICLE EFFICIENCIES
Having now projected the extent of vehicle travel, it is necessary to
analyze how efficiently each vehicle group uses the motor fuel. Historical and
projected vehicle fuel efficiencies as miles per gallon (MPG) were developed on
a PADD-by-PADD basis.
The fleet average is based upon the replacement rates of new cars for the
old vehicles. For autos and double-axle trucks, the rate of new vehicle sales,
plus the scrappage rate of old vehicles, were combined to calculate the
replacement rate. Replacement rates are the ratio of new registrations to total
vehicles from forecasts of new car registrations and the resultant auto stock.
For double-axle trucks, the replacement rate is estimated using the auto
replacement rate. This is justified because both vehicles have similar
characteristics and data on double-axle trucks was insufficient to compute a
similar measure. For motorcycles, nondouble-axle trucks and buses, it was
assumed that the new vehicle characteristics are the same as old vehicle
characteristics.
Average fleet efficiency has not improved significantly in recent years
with the American consumers demanding larger engines and more power. In
addition, the move toward SUVs and light trucks has been dramatic. While these
trends are generally expected to continue for the foreseeable future, emerging
vehicle technologies are expected to provide an upward boost to auto efficiency
in future years, even without new government mandates. The most important of
these is the gasoline direct injection (GDI) engine. These engines use lean-burn
technology and precise fuel control to provide efficiency gains of 15-20% in
typical vehicles. Several manufacturers are now poised to commercialize GDI
technology. However, the lean-burn mode results in much higher nitrogen oxides
(NOX) emissions than conventional engines. Current emissions control catalyst
systems cannot reduce NOX sufficiently due to the
C-21
<PAGE>
high sulfur level in today's gasoline. Thus, GDI is unlikely to penetrate the
fleet until gasoline sulfur is reduced significantly. The recently proposed
reduction to 30 ppm (average) by 2004 should enable GDI technology to begin to
enter the fleet. As the engines gain consumer acceptance, penetration should
increase rapidly. As a result of GDI and other technological advancements,
average light-duty vehicle fleet efficiency is projected to increase by about
20% from 2005 to the end of the forecast period.
Our forecast of new car efficiency changes results in an EPA based average
fuel efficiency in the year 2010 at about 30.4 MPG's and 34 in 2015 versus about
28.7 currently. New truck efficiencies are expected to gain modestly as well.
When translated to the fleet calculation, they yield about a 21.6 fleet MPG
average in 2015 versus about 19.3 currently.
NON-HIGHWAY FUEL USE ADJUSTMENTS
To accurately project gasoline and diesel fuel consumption, the data must
be adjusted to account for the reporting differences between Federal Highway
Administration (FHA) data and Department of Energy (DOE) numbers. The FHA
collects consumption numbers on the basis of the federal tax revenues collected.
This is different from the data collected by the DOE, which include all gasoline
supplied for both highway and non-highway use. Diesel and special fuels consumed
for highway use are collected by the FHA. Adjustments have been made to reflect
non-highway use. Also, comparing FHA and DOE growth rates on a total U.S. basis
does not show dramatic differences except where significant secondary inventory
shifts might be effecting the primary demand data. When comparing rates by PADD,
however, the differences can be large, reflecting transfers between regions. We
have developed a correction method that incorporates this and allows FHA data
history and forecasts to be converted into a DOE basis by PADD.
ALTERNATIVE FUELS
Much discussion and concern recently has focused on the possible effects of
alternative fuels on gasoline demand. Obviously, significant penetration of non-
gasoline vehicles into society would have very important implications for
refiners. Reduced gasoline demand would change the outlook for capacity
requirements. If rapid changes occurred, there could be a negative effect on
industry profitability.
Our analysis still indicates that alternative fuels are not likely to have
a significant effect on gasoline demand until late in the next decade, and the
extent of impact then is by no means a clear issue at this point. The primary
alternative fuels presently at issue include methanol, CNG, LPG, and
electricity. LPG (primarily propane) contributed about 41,000 B/D to the
transportation sector in 1997, and this is projected to grow to about 55,000 B/D
by early in the next decade. Though CNG is currently in use, its application is
likely to be restricted to fleet vehicles for some time. Fleet vehicles,
however, represent only a small portion of the overall fleet, and the effect on
gasoline demand, therefore, would likely be small, unless full conversions were
made. A major portion of CNG use is also displacing diesel fuel rather than
gasoline. Methanol usage is also expected to be inconsequential, taking into
account such factors as toxicity, logistics and economics.
C-22
<PAGE>
The West Coast has been a leader in mandating alternative fuels. In 1990,
the California Air Resources Board (CARB) mandated zero emissions or electric
vehicles (ZEV's) to comprise two percent of new vehicle sales by the 1998 model
year increasing to ten percent by 2003. Technological progress has not met the
CARB expectations and only a few hundred ZEV's have been licensed for highway
use in California.
CARB has delayed and modified the ZEV mandate. Due to a failure for auto
manufacturers to produce a viable electric vehicle, mandates for 1998 through
2002 were suspended. Furthermore, the program has been modified to allow for
production of equivalent zero emissions vehicles (EZEV's) which have emissions
profiles similar to the generating stations used to power electric hybrid
electric vehicles (HEV's). The fuels which would power EZEV's or HEV's are not
limited but they could include petroleum-based fuels manufactured in the
California refining system. Future sales of ZEV's and other alternative fuel
variants will depend on the ability of auto manufacturers to devise products
incorporating those emissions characteristics while preserving performance and
value parameters demanded by the auto-buying public.
U.S. GASOLINE DEMAND
Gasoline consumption declined from a high of about 7.4 million B/D in 1978
to only 6.5 million B/D in 1982, but this decline was reversed as gains in
vehicle miles traveled began to outweigh the mandated fuel efficiency
improvements, and as the fuel standards were relaxed. Because of relatively
stable energy prices, the percentage of disposable income required to pay fuel
bills began to shrink as incomes grew. Consequently, consumers had more money to
spend on lifestyle improvement and they chose to purchase larger, higher-
performance automobiles rather than smaller cars. In combination with increased
driving, this caused gasoline consumption to grow through the early 1980s. The
drop in prices in 1986 resulted in a particularly strong increase. However,
beginning in 1989, efficiency improvements outpaced increased driving. The
significant impact of briefly increased prices and the economic downturn in 1990
and 1991 is particularly evident in the driving trends over that period.
Large gains in prices due to the Gulf War caused US motor gasoline demand
growth to drop sharply in the early 1990's. As prices equilibrated from the
highs of the war, demand recovered 2.5% in 1995. In 1996 strong overall
petroleum demand tightened the market causing prices to rise. Counterbalancing
some of the increases in prices were consumer spending increases and as well as
a choice for larger more inefficient sports utility vehicles versus smaller
passenger cars. The price collapse in 1998 elevated demand growth to above 2%.
We continue to see the near term growth around 2% as prices slowly recover. By
2015 motor gasoline demand growth is projected to drop to less than 0.5% which
will result in higher efficiency in the outer years. This forecast evolves on
new vehicle technology.
C-23
<PAGE>
TABLE IV-2
UNITED STATES REFINED PRODUCT BALANCE
(Thousand Barrels per Day)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Product Flow 1995 1996 1997 1998 1999 2000 2005 2010 2015
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gasoline Production 7,588 7,647 7,870 8,041 8,180 8,330 8,691 8,204 9,454
Gasoline Imports 265 336 309 299 323 322 343 366 380
Gasoline Exports 104 104 137 125 117 128 135 143 148
Gasoline Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Gasoline Supply Adjustments 40 12 (26) (15) 7 (10) (11) (11) (3)
Gasoline Consumption 7,789 7,891 8,017 8,200 8,393 8,514 8,888 9,416 9,683
Kero/Jet Fuel Production 1,468 1,577 1,620 1,598 1,626 1,662 1,850 2,028 2,193
Kero/Jet Fuel Imports 107 112 92 81 102 106 121 135 148
Kero/Jet Fuel Exports 28 50 35 26 24 24 26 27 28
Kero/Jet Fuel Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Kero/Jet Fuel Supply Adjustments 21 1 (13) (2) (2) (2) (6) (6) (6)
Kero/Jet Fuel Consumption 1,568 1,640 1,663 1,651 1,701 1,742 1,940 2,130 2,308
Distillate Production 3,155 3,316 3,392 3,421 3,439 3,557 3,921 4,303 4,670
Distillate Imports 193 230 228 195 216 222 242 263 283
Distillate Exports 183 190 152 124 122 133 120 113 102
Distillate Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Distillate Supply Adjustments 41 10 (32) (49) 17 4 (17) (20) (18)
Distillate Consumption 3,207 3,365 3,435 3,442 3,549 3,650 4,026 4,433 4,833
Residual Fuel Production 788 726 708 762 722 724 696 697 691
Residual Fuel Imports 187 248 194 203 195 196 187 177 171
Residual Fuel Exports 136 102 120 138 114 113 103 112 112
Residual Fuel Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Residual Fuel Supply Adjustments 13 (24) 15 (10) 8 3 1 1 0
Residual Fuel Consumption 852 848 797 817 811 810 781 762 751
Asphalt Production 467 459 485 492 511 526 593 653 706
Asphalt Imports 36 27 32 28 29 29 32 34 35
Asphalt Exports 6 7 8 7 7 8 9 9 10
Asphalt Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Asphalt Supply Adjustments (11) 5 (4) 2 (1) (2) (3) (3) (3)
Asphalt Consumption 486 484 505 515 531 545 613 674 728
Other Production 1,986 1,996 2,128 2,142 2,196 2,226 2,350 2,487 2,521
Other Imports 356 421 448 477 471 466 455 459 473
Other Exports 365 394 412 346 361 367 384 404 415
Other Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Other Supply Adjustments 567 596 587 514 458 464 564 599 652
Other Consumption 2,545 2,620 2,754 2,786 2,761 2,786 2,982 3,138 3,229
Total Production 15,453 15,720 16,202 16,456 16,673 17,025 18,102 19,373 20,235
Total Imports 1,144 1,375 1,303 1,284 1,337 1,342 1,378 1,434 1,491
Total Exports 821 847 864 766 745 773 776 808 815
Total Int'l Marine Bunkers 0 0 0 0 0 0 0 0 0
Total Supply Adjustments 671 600 526 440 486 456 528 559 623
Total Consumption 16,447 16,848 17,171 17,412 17,748 18,047 19,230 20,555 21,532
</TABLE>
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<PAGE>
DIESEL/NO. 2 FUEL OIL
Consumption dropped in 1990 and again in 1991 due to the warm weather,
particularly along the Eastern Seaboard and due to the economic downturn, which
was exacerbated by the crisis in the Middle East. Demand turned up in 1992 and
1993 due to the economic recovery and rose sharply in 1994 (Table IV-2) due to
the severe winter. The unusual weather in 1994 resulted in only modest gains in
1995 for the winter fuels, but the extended cold waves in early 1996 led to a
recovery. Demand growth in 1996 averaged close to 5% with strong gains in diesel
as well as heating oil. In 1997, the winter was significantly milder, resulting
in an increase of only 2%. In 1998 the mild weather caused by El Nino effects
resulted in demand rising only 0.2%.
Distillate fuel oil market growth in the future will come mostly from
increases in transportation consumption. Diesel penetration of the personal
automobile fleet will be negligible. However, continued economic growth will
increase the need for trucking and, therefore, diesel fuel. Bunker use of
distillate has been growing steadily, but should see more moderate increases in
the future. The continued growth in distillate demand will be primarily due to
the rise in transportation demand.
Whereas distillate used for transportation has been growing rapidly, market
shares of distillate in most other sectors have declined. The loss of market for
distillate fuel oil has been particularly noticeable in the residential sector,
Consumption of natural gas and electricity has pushed out demand for distillate.
A strong winter in 1996 revitalized the sector but was quickly gone with the El
Nino effect in 1998. Demand declined 8% to 390 MB/D in 1998. Longer term, we
still expect modest declines in this sector. Consumption of distillate in the
industrial sector (combining industrial, oil company and electric utility)
dropped to about 224,000 B/D in 1997, (the last year for which full sector
information is available). This compares to a high of 460,000 B/D in 1979. The
drop has been due to fuel substitution. Consumption in these sectors has
stabilized somewhat since the economy is again growing, but we do not see
foresee major gains in these sectors through the forecast. The use of distillate
fuel oil in the commercial sector also declined through the early 1990s. It has
continued to fall to 210,000 in 1997. Consumption in the other sectors (farm,
military, off-highway, and miscellaneous) has also leveled off in recent years,
and only modest growth is anticipated.
In October 1993, refiners began to produce diesel fuel with a much lower
sulfur content from in the on-highway market. These fuels are required to
contain 0.05% sulfur or less. Only about 55% of the distillate pool is required
to meet these more stringent specifications, as it is applicable to on-highway
product. Even so, many refiners are able to produce 100% of lower sulfur
material. Low sulfur diesel is penetrating other sectors, such as farming and
off-highway diesel use, as a result of logistic constraints as well as strong
marketing. In fact, total U.S. low sulfur diesel demand now represents about 66%
of distillate use while the on-highway portion is only 56% of total consumption.
Low sulfur diesel market share is forecast to grow due to the increasing
demand for diesel fuels in the transportation sector, rising to about 70% of
distillate over the next 10 years. This growth in transportation demands
combined with the growth in other sectors will result in
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<PAGE>
low sulfur demand growing from 2.3 million B/D in 1998 to over 2.4 million B/D
by the end of the decade. Low sulfur diesel growth should exceed 2% annually
over the next decade, but is expected to taper closer to 2% by the end of the
forecast period. High sulfur distillate demand in contrast remains stagnant,
rising from 1.17 million B/D in 1998 to 1.21 million B/D by 2000, and to only
1.35 million B/D by 2015.
Low sulfur diesel demand has grown more rapidly than expected since its
introduction. This is attributed, at least partially, to use of non-taxable
fuels in this market. This problem now has been alleviated by fuel dyeing for
monitoring purposes.
Most of the distillate fuel oil consumed in this country is produced
domestically, but imports have been averaging about 200,000 B/D under normal
conditions. This material is primarily imported from the Caribbean to the East
Coast, but Canada and Africa are also major supply sources. Due to the somewhat
more robust growth of distillate demand relative to gasoline, refinery
production of distillate relative to gasoline will continue to increase in the
future. Imports are also expected to remain generally proportional to demand
increases. The introduction of low sulfur diesel fuel has made it difficult for
some exporters to meet these requirements. Nevertheless, Canada and Virgin
Island imports should remain proportional to demand. In addition, European
specifications are being modified to reduce sulfur levels.
U.S. AVIATION FUELS
Growth in demand for aviation fuels has been one of the strongest among the
refined products, led by commercial kerosene-type jet fuel. Aviation gasoline
usage has held steady over recent years and averages only 20,000 B/D. Military
consumption of naphtha-based jet fuels had been steadily declining due to the
downsizing of the military. The military began the phase-out of JP-4 in 1992 and
JP-4 was totally phased out by the end of 1995. This switch substantially
increased the demand for kerosene-based fuels over the phase-out period but the
underlying growth patterns have now become transparent.
Kerosene-type jet fuel demand grew from about 800,000 B/D in the early
1980s to a peak of 1.34 million B/D in 1990, representing an average growth in
excess of 5%. A decline was noted in 1991 due to the Middle East crisis and the
downturn in the economy, but a strong growth was been evident during the
military switch. Demand in 1997 reached a record high of 1.6 million B/D. The
1998 figures currently indicate a decline, which is inconsistent with other
usage indicators. This is attributed to gross underestimates of imports by the
EIA and this is expected to be corrected. Other forecasts take fairs into
account. We expect strong growth to continue throughout the forecast with
increasing airline travel. We are looking for average growth rates in the 2.0-
2.5% range over the next 10 years, declining to about 1.5% by 2015.
The U.S. still produces a major portion of its jet fuel requirements, but
there is some trade. Except during the 1989-1990 Gulf Crisis, net imports have
averaged about 50,000 B/D, with exports ranging from 25,000-40,000 B/D. Most of
the imports come into PADD I, through increases in PADD V are adjusted PADD III
accounts for the bulk of the exports.
C-26
<PAGE>
U.S. RESIDUAL FUEL OIL
Beginning in the late 1960s, the demand for residual fuel oil began to
escalate rapidly as many of the utility companies burned residual fuel oil in
much greater quantities because of its availability and low cost. In the 1970s,
natural gas was in short supply and residual fuel use was high. The demand for
residual fuel in the utility industry peaked in 1977-1978 at about 1.6 million
B/D, but declined to only 400,000 B/D in 1985. Residual fuel oil demand has
continued to decline and a particularly strong drop occurred in 1995, as gas
availability forced reductions in fuel consumption in Florida and other areas.
The 1995 decline in residual fuel use was 16.6%. Actual sector data is available
through 1997. The data shows utility usage as the major contribution to the
decline. With lower prices relative to natural gas utility demand strengthened
in 1997 and 1998 relative to past years. This trend is expected to reverse again
in the forecast.
Another major use of residual fuel oil is in the transportation sector for
vessel bunkering. Consumption in the transportation sector grew rapidly from
260,000 B/D in 1973 to nearly 600,000 B/D in 1980. Much of this growth in bunker
fuel demand was due to U.S. price controls, which caused U.S. bunkers to be much
cheaper than world market prices. Consequently, whenever possible, foreign ships
bunkered in U.S. ports. When crude oil price controls were lifted, U.S. bunker
fuel demand declined to 400,000 B/D. Since that time, bunker use has fallen to
the 315,000 B/D range and appears stabilized at this level. Increased petroleum
imports into the U.S. should cause bunker use to increase gradually over the
forecast period.
The use of residual fuel oil in the industrial sector was 855,000 B/D in
1973, but since then, consumption declined near 120,000 B/D. This level is the
lowest since 1991 when demand was 126,000 B/D. This decline can be attributed to
fuel switching.
The decline in utility demand is expected to continue in the years ahead,
however, at a much slower rate. Commercial demand accounts for only a small
portion of total demand and this demand should also fall over the forecast. The
declines in utility demand and the small amount of industrial demand results in
the transportation sector's outlook becoming the dominant determinate on demand
for residual fuel oil. Our forecast anticipates that bunker demand will continue
to rise slowly with the growing amount of international trade. Longer term, this
growth, combined with the rise in industrial demand, will result in residual
fuel oil demand declining slightly on an annual basis during the next decade.
Of the total demand, about 25% is currently being imported. The Caribbean
is the major supply source, but significant, though decreasing, volumes of low
sulfur residual fuel oil are imported from Algeria and Brazil. We expect imports
as a percentage of demand to decline slowly throughout our forecast.
Gulf Coast refiners use the export market to balance their operations. PADD
III has two options: it can either move material to other PADDs or export it.
Since the East Coast primarily uses low sulfur material, excess PADD III high
sulfur material must be exported. Presently, most of these exports are into the
Western Hemisphere blending market and to
C-27
<PAGE>
Caribbean markets such as utilities. This is a sensitive balance and even slight
excesses of supply relative to regional demand can result in the need to export
beyond the Western Hemisphere. This results in depressed prices in the Gulf
Coast, as was seen throughout the Mideast crisis when refiners were forced to
run the higher sulfur heavier crudes, and early in 1997 when conversion unit
problems increased supply. In 1998, export demand increased due to hydropower
deficiencies and the market strengthened. Low production resulting from lighter
crude slates and increased conversion has kept the market strong in 1999.
PADD V satisfies its imbalance from the production of residual fuel oil by
exporting its surplus. This surplus has, however, significantly decreased over
the years and exports have dropped even further as new coking units come
onstream. Total U.S. exports dropped to $100,000 B/D in 1996 from peaks of well
over 200,000 B/D during the Iraqi war when U.S. refiners were running heavier
crudes, and residual fuels had to be exported out of the Western Hemisphere.
they increased to 137,000 B/D in 1998 due to the high export demand. However, we
expect them to drop back to the 100,000 B/D range in the forecast. PADD II is
essentially in balance, but some low sulfur residual fuel oil is moved up from
the Gulf Coast, while small periodic surpluses of high sulfur residual fuel oil
moved down to PADD III. PADD I is the major deficit market in the U.S.
Therefore, it balances its market demand by either importing or transferring
material from PADD III. Generally, PADD III serves the southeastern portion of
PADD I, whereas the foreign product is largely moved to the Northeast market.
U.S. ASPHALT
Asphalt demand in the U.S. is mainly driven by paving requirements for road
construction, resurfacing, restoration, and maintenance. In fact, paving
activities consume nearly 90% of the asphalt demand in most years. Roofing
requirements consume the rest of the demand. The Asphalt Institute conducts an
annual survey of asphalt producers in North America which provides information
on the split between paving and non-paving demand.
Asphalt demand peaked in 1990 at about 485,000 B/D, but dropped off to
about 450,000 B/D in 1991/92 as a result of the recession. Demand varies from
year to year, and exceeded 500,000 B/D for the first time in 1997 (Table IV-2).
Asphalt demand is affected by the economy, since roofing asphalt demand is a
function of home building and the replacement market. Paving asphalt demand is
dependent on government funding for road building and repair so it varies with
government policy. Since the outlook for the basic drivers (the economy and
transportation) is positive, asphalt demand is expected to increase over the
forecast period, with normal year to year fluctuations.
The U.S. is basically self-sufficient in asphalt but about 30,000 B/D are
annually imported, primarily from Venezuela. PDVSA is a large producer and
marketer of asphalt in the U.S. and brings in some supplies from Venezuela. No
significant increase in imports is expected.
C-28
<PAGE>
U.S. COKE
Coke consumption has increased along with the increase in production of
marketable coke. In addition to the marketable coke, another 220,000 B/D is
produced and consumed in the refineries. A portion of the coke is low sulfur and
can be used for anodes for the manufacture of aluminum, but most is high sulfur
and is used as fuel or exported. Coke can be used directly for burning in cement
plants and blended with coal for boiler fuel.
PADD II is the largest consumer of coke followed by PADD III. PADD II
consumption, accounts for about 45% of the total usage. There are a number of
coal fueled utility plants in PADD II. The big increase in consumption in PADD
III in 1992 was related to the start-up of a co-generation plant that uses coke
as fuel, but consumption has dropped back off. As more cokers are brought
onstream, coke will be marketed to the extent possible in the U.S., with the
balance exported.
U.S. OTHER PRODUCTS
Production of other products is now about 2.2 million B/D and growing.
Most of these products are consumed in the U.S., but a significant portion of
the coke production is exported, as discussed earlier coke shown in the table
below represents total coke produced. Other product demand has grown very
strongly over the years. In 1997, growth averaged near 3%, rising to 4.7 million
B/D. This includes NGL's and all other non-major fuels products. In 1998, demand
fell to 1996 levels of 4.6 million B/D reflecting mild weather, but is expected
to rise by about 1% per year over the forecast.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
UNITED STATES OTHER PRODUCT PRODUCTION
(Thousand Barrels per Day)
- --------------------------------------------------------------------------------
Product 1995 1996 1997 1998 1999 2000 2005 2010 2015
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Refinery LPG 629 633 664 640 659 667 697 737 756
White Spirits 51 50 52 68 69 70 75 79 82
Naphtha 172 191 229 244 248 252 270 286 299
Lubes & Waxes 196 196 207 208 212 216 233 249 263
Petroleum Coke 630 664 690 695 717 727 762 804 775
Miscellaneous 308 262 285 287 292 295 314 331 346
Total 1,986 1,996 2,128 2,142 2,196 2,226 2,350 2,487 2,521
</TABLE>
C-29
<PAGE>
- -------------------------------------
V. HEAVY CRUDE OIL AVAILABILITY
- -------------------------------------
There should be adequate supplies of heavy crude available to the
Upgrade Project because heavy crude production is concentrated in the Western
Hemisphere and production is expected to increase substantially over the life of
the Upgrade Project. In recent years, heavy crude production has been increasing
rapidly, particularly in Venezuela, Mexico and Canada, whereas exports to
Western Europe and Asian have not increased significantly. The increased
Canadian production has been utilized in refineries in the U.S. Midwest (PADD
II) and Mountain Region (PADD IV). Most of the increase from Mexico and
Venezuela has been placed in refineries on the U.S. Gulf Coast (PADD III), where
the Upgrade Project will be located. Availability of larger quantities of heavy
crude has led to the addition of deep conversion equipment (such as cokers) to
minimize the yield of residual fuel oil in the refining process. Expected future
increases in heavy crude production in Mexico and Venezuela are causing the
heavy oil producers to seek out joint ventures or crude supply arrangements,
such as the Upgrade Project, to process these crudes. Several others have been
announced and more will likely be forthcoming.
HEAVY CRUDE OIL PRODUCTION
Heavy crude production is concentrated in the Western Hemisphere. In
1998, Latin America produced 3.9 million B/D of heavy crude out of a total
worldwide production of 8.9 million B/D. The U.S. (866,000 B/D) and Canada
(825,000 B/D) contributed 1.7 million B/D, raising the Western Hemisphere total
to 5.6 million B/D which represents over 60% of the world's 1998 heavy crude
production. About 2.0 million B/D of heavy crude was produced in the Middle
East, with the balance scattered throughout the rest of world. Heavy crude
production by region is shown in Table V-1 and summarized below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
HEAVY CRUDE PRODUCTION
(Thousand Barrels per Day)
- --------------------------------------------------------------------------------
Projected
--------------------------------------------
1996 1997 1998 1999 2000 2005 2010 2015 2020
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States 915 887 866 857 848 780 696 611 575
Canada 682 800 825 799 781 1,201 1,244 1,292 1,292
Latin America 3,631 3,899 3,879 3,809 3,837 5,002 5,781 6,473 6,899
Mexico 1,371 1,567 1,607 1,650 1,693 1,910 2,127 2,300 2,417
Venezuela 1,985 2,037 1,948 1,817 1,787 2,711 3,251 3,753 4,045
Other 275 295 325 342 356 382 404 420 436
Africa 331 312 301 291 281 272 254 231 209
Middle East 1,888 1,955 2,034 2,000 2,003 2,251 2,409 2,694 2,751
China 691 701 709 718 727 773 807 830 851
Western Europe 221 288 302 365 513 557 553 551 550
Eastern Europe 28 26 24 23 22 19 16 15 14
Total 8,387 8,869 8,940 8,861 9,012 10,855 11,761 12,698 13,140
</TABLE>
C-30
<PAGE>
Since most of the heavy crude is produced in the Western Hemisphere
(Mexico, Venezuela, and Canada), most is exported to the United States. Exports
by destination for 1998 are shown in the following table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
HEAVY CRUDE EXPORTS: 1998
(Thousand Barrels per Day)
- --------------------------------------------------------------------------------
PADD I PADD II PADD III PADD IV PADD V EUROPE ASIA TOTAL
------ ------- -------- ------- ------ ------ ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Venezuela 164 38 696 -- 18 170 -- 1,086
Mexico 22 26 732 -- 22 163 5 970
Canada 27 591 4 150 4 -- -- 776
Middle East 38 6 286 -- -- 166 222 718
------ ------- -------- ------- ------ ------ ---- -----
Total 251 661 1,718 150 44 499 227 3,550
</TABLE>
SUPPLY OF HEAVY CRUDE OIL TO THE UPGRADE PROJECT
The Upgrade Project is being designed to run predominantly Maya crude
which is heavy (22(degree)API) sour crude. Mexico also produces a medium
(32(degree)API) sour crude (Isthmus) and a very light (39(degree)API) sour crude
(Olmeca).
MEXICAN CRUDE OIL PRODUCTION
Total crude oil and condensate production has increased rapidly since
the first wells in the Chiapas-Tabasco (Reforma) were brought onstream. A high
level of drilling activity in 1978 resulted in production from the prolific
fields in the Bay of Campeche. Total crude oil reserves that were estimated to
be 25.6 billion barrels at the end of 1978 have been officially estimated at
48.8 billion barrels as of January 1, 1998.
Crude production in Mexico increased rapidly from the mid 1970s through
the early 1980s. From 1982 through 1996, production averaged about 2.7 million
B/D and did not reach the 3 million B/D mark until 1997 (Figure V-1 and Table V-
2). Even though total production did not increase significantly over the 1982/98
period, there was a significant shift in quality. Prior to 1982, most of the
production was light sour (Isthmus), but heavy sour (Maya) grew rapidly starting
in 1979, and exceeded 1.0 million B/D in 1982 for the first time. Maya
production has increased slowly since then and was 1.61 million B/D in 1998.
C-31
<PAGE>
- --------------------------------------------------------------------------------
FIGURE V-1
MEXICO CRUDE PRODUCTION
(Million Barrels per Day)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
For the short term, Mexico has agreed to reduce exports to assist the OPEC
producers in reducing excess supplies of crude oil. However, in the longer term,
exports of Maya will increase (Figure V-2).
- --------------------------------------------------------------------------------
FIGURE V-2
MEXICO CRUDE EXPORTS
(Million Barrels per Day)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
In 1988, Mexico began segregating a very light sour crude (Olmeca) and
production of Olmeca peaked at 578,000 B/D in 1996, declining slightly to
554,000 B/D in 1998. At the same time, production of medium sour crude (Isthmus,
32(degree)API) declined from about 1.7 million B/D in 1982 to below 900,000 B/D
in 1991. Production of Isthmus has remained in the 800,000 to 900,000 B/D range
since 1991. Production of Olmeca and Isthmus is forecast to decline slowly over
the next 20 years.
C-32
<PAGE>
Maya Crude Oil
Most of Mexico's heavy Maya (22(degree)API and 3.4%S) comes from the
Cantarell field. Within the Cantarell field there are four major fields with
total remaining reserves of 14 billion barrels of crude.
<TABLE>
<CAPTION>
----------------------------------------------------
CANTARELL CRUDE OIL RESERVES
(Million Barrels)
----------------------------------------------------
Original Remaining
-------- ---------
<S> <C> <C>
Akal 32,086.4 13,111.2
Chac 285.3 33.4
Kutz 637.1 363.1
Nohoch 2,011.1 464.0
Takin 35.0 14.2
-------- --------
Total 35,055.3 13,985.9
----------------------------------------------------
</TABLE>
PEMEX is initiating a massive nitrogen injection project on the
Cantarell field to boost crude production. Estimated expenditures exceed $1
billion. It is being brought on in stages, with the first train of the plant
(300 MM cfd) scheduled for April 2000 and the remaining three trains to be
onstream by January 2001. At completion, production of Maya is expected to
increase to over 2.0 million B/D.
Mexico exports most of its Maya to the U.S., with the balance shipped
to Europe and Asia. While PEMEX prefers to sell its Maya on a term basis, some
Maya could be redistributed between markets. This may take 6 months to 1 year to
accomplish this since PEMEX generally sells its crude on term contracts. Longer
term, PEMEX is likely to have uncommitted volumes of Maya as production is
likely to grow faster than PEMEX can find commitments for its crude.
ALTERNATE SOURCES OF HEAVY CRUDE OIL SUPPLY
If for some reason heavy crude from Mexico is not available to the
Upgrade Project, other heavy crudes are likely to be available. Venezuela plans
to increase production of heavy crude and will be looking for outlets for this
production. Venezuela would be a logical place for the Upgrade Project to look
for heavy crude supplies since it would be a short haul crude. Venezuela crudes
are heavier and contain more sulfur than Maya but they can be processed by the
Upgrade Project.
VENEZUELA
Venezuela's reserves are predominantly composed of heavy grade crudes.
In 1998, PDVSA had about 75 billion barrels of proved oil reserves, which
includes both developed and undeveloped reserves. Developed reserves totaled 17
billion barrels in 1998 of which heavy and extra heavy (less than 10(degree)API)
crudes comprised approximately 6.5 billion barrels.
C-33
<PAGE>
Venezuela has a broad range of crude oil produced from numerous
fields. Such production is categorized by Venezuela into three types:
Light: 30(degrees)API
Medium: 22-30(degrees)API
Heavy: *22(degrees)API
Production of the light grade crude oil has been increasing rapidly in
recent years due to the market preference for lighter crudes at rates
disproportionate to reserves.
The medium grade crude classification by PDVSA includes crude
predominantly in the 22-25(degrees)API range, and includes the major
24(degrees)API export grades. These Venezuelan crudes have somewhat better
distillation yields, lower sulfur content and lower viscosity when compared to
most other exported heavy crude oils. The low gravity is exaggerated by the
naphthenic quality of the crude, although the metals content is typical of
Western Hemisphere heavy crudes.
The heavier than 22(degrees)API crudes include Bachaquero light types
of approximately 17(degrees)API, the Bachaquero heavy types of approximately
13(degrees)API, the Merey crude oil (16(degrees)API and the even heavier types
such as the Boscan 11(degrees)API crude.
In order to more rapidly develop its heavy oil reserves in the Orinoco
belt, Venezuela is developing a number of heavy oil projects. These projects
vary in size from 100,000 to 200,000 B/D, and employ different technologies to
produce syncrudes ranging from light sweet (31(degrees)API) to fairly heavy sour
syncrude (15(degrees)API). These projects currently include the following:
. Conoco has entered in a joint venture with PDVSA (Petrozuata) to
upgrade 120,000 B/D of Zuata heavy crude oil (10(degrees)API,
2.7%S) to 104,000 B/D of 20(degrees) to 23(degrees)API high
sulfur (2.3%S) syncrude.
. Mobil/Veba entered in a joint venture with PDVSA (Cerro Negro),
approved in October 1997, to upgrade 120,000 B/D of Cerro Negro
heavy crude oil (8(degrees)API) which will be upgraded further at
Mobil's Chatmette, LA refinery and in Veba's European refinery
system.
. Total/Statoil (Sincor) entered in a joint venture with PDVSA to
upgrade 192,000 B/D of heavy crude oil (9(degrees)API, 3.4%S) to
light sweet syncrude.
. Arco/Phillips/Texaco have entered in a $2.2 billion joint venture
Association Agreement with PDVSA (Petrolera Ameriven). In
connection with this project, about 200,000 B/D of Hamaca heavy
crude oil (9(degrees)API) will be upgraded to 180,000 B/D of
25(degrees)API syncrude. This project is currently on hold
pending developments in the energy and capital markets. Arco
recently sold its interest in the project to Phillips and the new
partners plan to start construction by mid 2000.
* Less than
C-34
<PAGE>
Venezuela's actual and estimated crude oil production exports and domestic
use is shown in Table V-3. Venezuela's crude oil production declined from the
early 1970s through the late 1980s to 1.56 million B/D. However, since 1986/87,
this trend has reversed and production has doubled to about 3.25 million B/D in
1997 (Figure V-3). Production was down slightly in 1998 and will decrease again
in 1999 as a result of Venezuela's agreement with OPEC to cut production. Prior
to the recent decline in demand, which prompted the cutbacks by OPEC, Venezuela
had announced plans to increase production to 5.5 million B/D by 2008. However,
given the OPEC cutbacks, decline in demand and other developments, reaching this
targeted production rate will likely be delayed.
- --------------------------------------------------------------------------------
FIGURE V-3
VENEZUELA CRUDE PRODUCTION
(Million Barrels per Day)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
In 1998, PDVSA processed for domestic use mostly medium crude (412,000 B/D)
and light crude (426,000 B/D) in its refineries. Only about 228,000 B/D of heavy
crude was processed. As a result, the majority of heavy crude produced is
exported for processing outside of Venezuela. Exports in 1998 amounted to
approximately 813,000 B/D, 798,000 B/D, and 445,000 B/D of heavy, medium and
light crude oil, respectively (Figure V-4). Since heavy crude production is
expected to increase in line with, or slightly faster than the other grades, we
believe that heavy crude exports will increase. Medium Venezuelan crude also
includes heavy crude ranging from 21(degree)API to 30(degree)API with most of
the production being of heavier grades.
C-35
<PAGE>
- --------------------------------------------------------------------------------
FIGURE V-4
VENEZUELA CRUDE EXPORTS
(Million Barrels per Day)
- --------------------------------------------------------------------------------
[CHART]
[PLOT POINTS TO COME]
Since 1989, Venezuela's crude production has gradually shifted to a higher
percentage of heavy sour crude. Heavy crude accounted for about 22% in 1990,
about 33% in 1997 and is forecast to be about 35% by 2020 (Table V-3).
HEAVY CRUDE BALANCES
Heavy crude production, indigenous consumption, and exports by destination
were analyzed for the historical period of 1990 to 1998 and forecasts were
prepared for 1999 to 2020. The major export markets for heavy crude are shown
in the following table:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
MAJOR EXPORT MARKETS FOR HEAVY CRUDE
(Thousand Barrels per Day)
- ----------------------------------------------------------------------------------------------------------------
Projected
-------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015 2020
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States 2,335 2,494 2,818 2,885 2,912 3,153 4,367 4,923 5,393 5,500
Canada 104 75 79 79 95 96 103 110 118 125
Latin America 55 61 86 87 89 90 97 104 111 120
Middle East 108 98 80 80 79 79 78 76 75 75
Japan 351 338 343 357 371 386 457 529 550 600
Asia 13 15 33 35 35 35 35 35 35 35
Western Europe 579 540 541 527 518 506 447 383 315 300
Total 3,543 3,620 3,981 4,050 4,099 4,345 5,584 6,160 6,597 6,755
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
C-36
<PAGE>
Worldwide heavy crude production declined from a peak of 7.3 million
B/D in 1981 to 6.0 million B/D in 1985, but reached a new high of 8.94 million
B/D in 1998 (Table V-1). The output of heavy crude in the Middle East during
that time period was highly influenced by the level of production in Saudi
Arabia and the mix of crude oil grades. The decrease in Middle East heavy crude
production in the 1980s was due to a number of factors, including overall market
demand, the OPEC quota system, and Saudi Arabia's election to have its
production efforts focused on light and medium crudes. Also, as Venezuela
strived to maximize light production within its OPEC quota, its heavy crude
output declined through 1989 (Table V-3). OPEC producers capable of producing
multiple grades of crude oil have an incentive to maximize revenues in periods
of constrained production by maximizing production of more profitable light and
medium crudes while making production cuts in the heavy crude oils. Saudi Arabia
and Venezuela increased their share of total production in 1990-91 in connection
with the Gulf War.
During the early 1980s, the higher value of Middle Eastern crudes in
other markets prevented heavy crudes from penetrating the U.S. market. About 65%
of the U.S. heavy crude refining capacity was designed for the low-metals Middle
Eastern crudes and, hence was under-utilized in the early 1980s due to the price
disparity.
Netback pricing arrangements eliminated the disparity and Middle
Eastern imports began flowing into U.S. markets in the late 1980s. Imports of
heavy crude from the Middle East averaged only 24,000 B/D in 1986, but rose
rapidly and peaked at 500,000 B/D in 1991/92. Imports dropped back off during
the 1993/97 period. Middle East imports have increased the past two years, with
330,000 B/D of heavy sour crude imported into the U.S. in 1998.
Heavy crude imports from sources other than the Middle East increased
throughout the 1980s and early 1990s. Imports of Maya increased to the 800,000
B/D range, while Venezuelan shipments increased from approximately 300,000 B/D
in 1985 to 900,000 B/D in 1998. Venezuelan exports to the U.S. were stimulated
in part by Venezuelan equity ownership of U.S. heavy crude refining assets.
Canadian exports, mostly to the Midwest, averaged about 400,000 B/D during the
1990-95 period, but surged to over 724,000 B/D in 1998 when more pipeline
capacity became available.
Europe and Japan are the only other major importers of heavy crude.
Consumption in Japan has remained relatively constant for the last several
years. Japan imports 350,000-375,000 B/D, mostly from the Middle East. Imports
of heavy crude into Europe are declining. From a peak of 875,000 B/D in 1992,
imports declined to approximately 527,000 B/D in 1998. Most of Europe's imports
come from Latin America and the Middle East, but Egypt exports about 50,000 B/D
to southern Europe.
Over the next several years production of heavy crude will not
increase as rapidly as in the recent past. The OPEC cutbacks will cause less
heavy crude to be produced in Venezuela and in the Middle East. Canada's plans
to increase heavy oil production have also been slowed by the recent crude price
drop.
C-37
<PAGE>
However, the crude price is already recovering so the impact of the price
drop will be short lived. As is illustrated in the following table, we expect
heavy crude production to further increase during the 2000 to 2020 period with
the major production increases occurring in the following areas.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
MAJOR HEAVY CRUDE OIL PRODUCTION INCREASES
(Thousand Barrels per Day)
- -----------------------------------------------------------------------------------------------------
Production Production Increases
------------------------------------------------------- ---------------------------
Projected
---------------------------------- 1998- 2000- 2010- 2015-
1985 1990 1998 2000 2005 2010 2015 2020 2000 2010 2015 2020
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California OCS 81 82 131 123 86 60 43 40 (8) (63) (18) (2)
Canadian 297 449 825 781 1,201 1,244 1,292 1,292 (44) 462 48 0
Mexico 1,126 1,223 1,607 1,693 1,910 2,127 2,300 2,417 87 433 173 117
Venezuela 1,088 1,202 1,948 1,787 2,711 3,251 3,753 4,045 (160) 1,463 502 292
Middle East 966 1,662 2,034 2,003 2,251 2,409 2,694 2,751 (31) 407 285 57
Total 3,559 4,618 6,544 6,388 8,159 9,091 10,081 10,546 (156) 2,703 991 464
</TABLE>
C-38
<PAGE>
TABLE V-1
WORLD CRUDE OIL PRODUCTION BY REGION AND TYPE
(Thousand Barrels per Day)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Projected
-----------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015 2020
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States
Condensate 357 383 396 420 437 456 416 371 329 293
Light Sweet 2,584 2,536 2,487 2,455 2,426 2,408 2,290 2,088 1,897 1,739
Light Sour 2,730 2,722 2,756 2,675 2,767 2,848 2,963 2,882 2,635 2,323
Heavy Sour 939 915 887 866 857 848 780 696 611 575
Total 6,610 6,557 6,525 6,415 6,485 6,560 6,449 6,037 5,473 4,930
Canada
Condensate 163 175 177 189 200 206 238 256 268 276
Light Sweet 896 876 851 910 933 966 1,316 1,374 1,349 1,379
Light Sour 284 274 285 280 275 272 245 219 196 176
Heavy Sour 615 682 800 825 799 781 1,201 1,244 1,292 1,292
Total 1,958 2,007 2,114 2,204 2,207 2,225 3,000 3,093 3,105 3,123
Latin America
Condensate 36 38 41 43 44 46 53 59 63 66
Light Sweet 990 1,210 1,355 1,519 1,658 1,788 2,000 2,180 2,323 2,462
Light Sour 3,910 4,101 4,091 4,032 3,904 3,815 4,492 5,147 5,626 6,056
Heavy Sour 3,218 3,631 3,899 3,879 3,809 3,837 5,002 5,781 6,473 6,899
Total 8,153 8,981 9,386 9,473 9,416 9,485 11,548 13,167 14,484 15,482
Middle East
Condensate 15 19 23 27 31 34 36 37 38 39
Light Sweet 485 533 571 817 813 808 820 833 843 852
Light Sour 16,464 16,643 17,170 18,049 17,887 17,882 20,526 22,647 26,337 27,066
Heavy Sour 1,821 1,888 1,955 2,034 2,000 2,003 2,251 2,409 2,694 2,751
Total 18,786 19,083 19,719 20,926 20,730 20,727 23,633 25,927 29,912 30,707
Africa
Condensate 92 93 94 103 96 95 109 118 128 131
Light Sweet 5,244 5,449 5,568 5,787 5,656 5,669 6,510 7,136 7,762 8,071
Light Sour 604 600 588 587 588 590 568 532 487 445
Heavy Sour 352 331 312 301 291 281 272 254 231 209
Total 6,292 6,474 6,563 6,778 6,631 6,634 7,458 8,040 8,608 8,855
Asia
Condensate 51 57 64 65 66 67 64 62 61 60
Light Sweet 3,516 3,544 3,574 3,600 3,602 3,587 3,588 3,634 3,690 3,655
Light Sour 80 80 87 88 88 88 86 84 82 81
Heavy Sour 0 0 0 0 0 0 0 0 0 0
Total 3,647 3,681 3,726 3,753 3,755 3,741 3,738 3,780 3,833 3,796
China
Condensate 0 0 0 0 0 0 0 0 0 0
Light Sweet 2,330 2,450 2,487 2,515 2,545 2,576 2,740 2,862 2,944 3,018
Light Sour 0 0 0 0 0 0 0 0 0 0
Heavy Sour 657 691 701 709 718 727 773 807 830 851
Total 2,987 3,141 3,188 3,225 3,263 3,303 3,513 3,670 3,774 3,870
</TABLE>
C-39
<PAGE>
TABLE V-1 (Continued)
WORLD CRUDE OIL PRODUCTION BY REGION AND TYPE
(Thousand Barrels per Day)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Projected
-------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015 2020
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western Europe
Condensate 99 111 111 109 125 130 93 89 83 78
Light Sweet 5,311 5,646 5,544 5,473 6,023 6,291 5,510 6,053 5,298 4,461
Light Sour 379 373 364 368 400 405 308 280 241 213
Heavy Sour 151 221 288 302 365 513 557 553 551 550
Total 5,940 6,351 6,307 6,251 6,914 7,339 6,467 6,974 6,174 5,301
Eastern Europe
Condensate 31 30 26 25 24 23 20 17 16 15
Light Sweet 164 162 160 159 158 156 145 137 131 126
Light Sour 34 33 31 30 29 28 25 23 21 20
Heavy Sour 29 28 26 24 23 22 19 16 15 14
Total 257 253 243 238 234 229 208 194 184 175
FSU
Condensate 318 317 336 334 338 340 354 389 447 580
Light Sweet 175 174 173 173 221 233 290 970 1,460 3,645
Light Sour 6,673 6,576 6,720 6,684 6,682 6,677 6,845 7,235 7,999 9,174
Heavy Sour 0 0 0 0 0 0 0 0 0 0
Total 7,166 7,067 7,228 7,191 7,241 7,249 7,488 8,594 9,906 13,398
Total World
Condensate 1,162 1,224 1,267 1,312 1,359 1,396 1,382 1,398 1,432 1,537
Light Sweet 21,694 22,581 22,771 23,409 24,035 24,480 25,209 27,268 27,697 29,407
Light Sour 31,157 31,403 32,093 32,792 32,620 32,604 36,057 39,048 43,626 45,553
Heavy Sour 7,782 8,387 8,869 8,941 8,861 9,012 10,855 11,761 12,698 13,141
Total 61,795 63,595 65,000 66,453 66,875 67,492 73,503 79,476 85,453 89,637
</TABLE>
C-40
<PAGE>
TABLE V-2
MEXICAN CRUDE OIL, BALANCES
(Thousands of Barrels Per Day)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Production Exports Domestic Use
------------------------------ -------------------------------- ---------------------------------
Maya Isthmus Olmeca Total Maya Isthmus Olmeca Total Maya Isthmus Olmeca Total Runs Draw
------ ------- ------ ----- ---- ------- ------ ----- ---- ------- ------ ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1976 0 801 0 801 0 94 0 94 0 707 0 707
1977 0 981 0 981 0 202 0 202 0 779 0 779
1978 0 1,213 0 1,213 0 365 0 365 0 848 0 848 828 (20)
1979 12 1,459 0 1,471 12 521 0 533 0 938 0 938 890 (48)
1980 611 1,325 0 1,936 370 458 0 828 241 867 0 1,108 1,054 (54)
1981 887 1,426 0 2,313 611 487 0 1,098 276 939 0 1,215 1,174 (41)
1982 1,041 1,706 0 2,747 812 679 0 1,491 229 1,027 0 1,256 1,161 (95)
1983 1,117 1,548 0 2,665 859 678 0 1,537 258 870 0 1,128 1,222 (6)
1984 1,178 1,506 0 2,684 904 540 0 1,444 274 966 0 1,240 1,224 (16)
1985 1,126 1,505 0 2,630 832 606 0 1,438 294 898 0 1,192 1,246 54
1986 1,025 1,402 0 2,428 838 452 0 1,290 187 950 0 1,137 1,214 76
1987 1,178 1,363 0 2,541 819 526 0 1,345 359 837 0 1,196 1,256 60
1988 1,163 1,272 72 2,507 768 467 72 1,307 395 805 0 1,200 1,245 45
1989 1,188 1,178 148 2,513 786 344 148 1,278 402 834 0 1,236 1,288 52
1990 1,223 1,167 158 2,548 827 293 158 1,277 396 874 0 1,271 1,307 36
1991 1,328 917 431 2,676 875 328 162 1,365 453 589 269 1,311 1,345 34
1992 1,346 892 430 2,668 935 291 160 1,386 411 601 270 1,282 1,335 53
1993 1,320 791 562 2,673 861 264 220 1,345 459 527 342 1,328 1,370 42
1994 1,270 890 525 2,685 806 179 329 1,314 464 711 196 1,371 1,413 42
1995 1,220 864 533 2,617 721 158 432 1,311 499 706 101 1,306 1,349 43
1996 1,371 910 578 2,859 866 192 495 1,553 505 718 83 1,306 1,353 47
1997 1,567 881 574 3,022 1,020 216 485 1,721 547 665 89 1,301 1,243 (58)
1998 1,607 900 554 3,060 1,084 197 473 1,754 523 703 81 1,306 1,287 (19)
Projected
1999 1,650 898 550 3,098 1,111 230 463 1,803 539 669 88 1,295 1,295 0
2000 1,693 894 547 3,134 1,138 226 452 1,816 555 669 95 1,319 1,319 0
2001 1,737 888 544 3,168 1,165 219 442 1,826 572 669 102 1,343 1,343 0
2002 1,780 879 540 3,200 1,192 209 432 1,832 588 671 109 1,367 1,367 0
2003 1,823 869 537 3,229 1,219 197 421 1,837 604 672 116 1,392 1,392 0
2004 1,867 859 533 3,259 1,246 186 411 1,842 621 673 123 1,416 1,416 0
2005 1,910 849 530 3,289 1,273 175 400 1,848 637 674 130 1,441 1,441 0
2006 1,953 840 527 3,320 1,300 164 390 1,854 653 676 137 1,466 1,466 0
2007 1,997 831 523 3,351 1,327 154 380 1,861 670 677 144 1,491 1,491 0
2008 2,040 823 520 3,383 1,354 144 369 1,868 686 679 151 1,516 1,516 0
2009 2,083 814 517 3,414 1,381 134 359 1,874 702 680 158 1,540 1,540 0
2010 2,127 804 513 3,444 1,408 122 349 1,878 718 682 165 1,565 1,565 0
2015 2,300 818 500 3,618 1,500 128 300 1,928 800 691 200 1,691 1,691 0
2020 2,417 860 526 3,803 1,617 44 326 1,986 800 816 200 1,816 1,816 0
</TABLE>
C-41
<PAGE>
TABLE V-3
VENEZUELAN CRUDE OIL BALANCES
(Thousands Barrels Per Day)
<TABLE>
<CAPTION>
Production Exports Domestic Use (Includes inventory changes)
------------------------------------- ------------------------------------------- -----------------------------------------
Recon-
Hvy Med Light Cond. Total Hvy Med Light /(1)/ stituted Total Hvy Med Light Cond. Total Runs
----- ----- ----- ----- ----- ----- ----- ---------- -------- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1976 617 875 782 20 2,294 379 406 424 171 1,380 238 469 378 0 1,085 987
1977 678 762 779 19 2,238 451 363 346 170 1,330 227 399 452 0 1,078 970
1978 667 759 720 20 2,166 421 347 269 179 1,216 246 412 471 0 1,129 839
1979 790 830 715 21 2,356 598 413 274 159 1,444 192 417 462 0 1,071 962
1980 803 693 630 21 2,147 635 292 226 130 1,283 168 401 425 0 994 892
1981 830 639 600 19 2,088 659 312 212 84 1,267 171 327 407 0 905 840
1982 735 562 562 17 1,876 575 227 186 74 1,062 160 335 393 0 888 843
1983 745 451 534 33 1,763 588 188 123 86 985 157 263 444 0 864 842
1984 795 322 351 109 1,690 723 101 117 67 824 82 393 333 0 808 839
1985 608 480 351 119 1,558 526 87 137 74 824 82 393 333 0 808 867
1986 472 653 378 142 1,645 489 156 254 50 949 (17) 497 266 0 746 857
1987 410 589 370 165 1,534 470 212 298 48 1,028 (60) 377 237 0 554 807
1988 393 708 426 188 1,715 457 195 311 47 1,010 (64) 513 303 0 752 938
1989 313 827 448 160 1,748 332 185 417 52 986 (19) 642 191 0 814 907
1990 455 880 700 51 2,085 491 348 355 48 1,242 (37) 532 396 0 891 917
1991 622 999 680 37 2,338 592 432 299 59 1,382 30 567 418 0 1,015 1,014
1992 621 989 687 37 2,334 649 476 257 47 1,429 (28) 513 467 0 952 941
1993 728 871 692 35 2,326 663 558 270 49 1,540 65 313 457 0 835 950
1994 922 1,047 559 40 2,568 712 651 274 57 1,693 211 396 325 0 932 935
1995 915 1,096 710 39 2,760 696 691 405 26 1,818 219 405 344 0 968 1,004
1996 1,048 1,242 816 48 3,154 826 835 474 50 2,185 222 407 390 0 1,019 1,019
1997 1,082 1,269 848 51 3,250 857 860 479 50 2,246 225 409 420 0 1,054 1,054
1998 1,041 1,209 817 55 3,122 813 798 445 50 2,106 228 412 426 0 1,066 1,066
Projected
1999 977 1,124 774 50 2,925 747 710 402 50 1,909 230 414 423 0 1,067 1,067
2000 967 1,101 765 57 2,890 734 685 402 50 1,871 233 416 420 0 1,069 1,069
2001 1,056 1,189 847 57 3,149 820 771 486 50 2,127 236 418 418 0 1,072 1,072
2002 1,137 1,267 926 55 3,385 898 847 565 50 2,360 239 421 416 0 1,075 1,075
2003 1,346 1,485 1,118 51 4,000 1,104 1,062 756 50 2,972 242 423 413 0 1,078 1,078
2004 1,438 1,570 1,208 50 4,266 1,194 1,145 847 50 3,235 244 425 411 0 1,081 1,081
2005 1,514 1,635 1,284 50 4,483 1,267 1,207 922 50 3,446 247 427 412 0 1,086 1,086
2006 1,586 1,694 1,355 51 4,687 1,336 1,264 1,000 50 3,650 250 430 407 0 1,086 1,086
2007 1,656 1,751 1,426 53 4,887 1,404 1,319 1,075 50 3,848 253 432 404 0 1,089 1,089
2008 1,726 1,805 1,498 55 5,084 1,471 1,371 1,151 50 4,042 255 434 402 0 1,092 1,092
2009 1,797 1,858 1,573 54 5,282 1,539 1,422 1,228 50 4,238 258 436 400 0 1,094 1,094
2010 1,874 1,917 1,658 50 5,500 1,613 1,478 1,311 50 4,453 261 439 397 0 1,097 1,097
2015 2,235 2,160 2,049 56 6,500 1,960 1,710 1,720 50 5,440 275 450 385 0 1,110 1,110
2020 2,490 2,269 2,301 117 7,177 2,190 1,769 2,095 50 6,104 300 500 323 0 1,123 1,123
</TABLE>
Notes: (1) Includes Condensate
C-42
<PAGE>
TABLE V-4
TOTAL UNITED STATES HEAVY SOUR CRUDE OIL SUPPLY/DEMAND
(Thousand Barrels Per Day)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Runs 13,972 14,195 14,662 14,837 15,003 15,253 16,370 17,393 18,205
Heavy Sour Runs 3,136 3,293 3,628 3,708 3,762 3,994 5,141 5,614 6,000
% Heavy Sour Runs 22 23 25 25 25 26 31 32 33
Production 939 915 887 866 857 848 780 696 611
Imports
Africa 30 35 34 30 30 30 30 30 30
Asia 0 0 0 0 0 0 0 0 0
Canada 509 554 705 724 694 670 960 1,026 1,096
China 0 0 0 0 0 0 0 0 0
Eastern Europe 0 0 0 0 0 0 0 0 0
FSU 0 0 0 0 0 0 0 0 0
Japan 0 0 0 0 0 0 0 0 0
Latin America 1,526 1,649 1,804 1,740 1,845 2,122 3,105 3,655 4,114
Middle East 138 147 181 330 316 303 235 168 100
United States 131 109 75 40 5 5 4 4 3
Western Europe 1 0 18 20 22 24 32 41 50
Subtotal Imports 2,335 2,494 2,818 2,885 2,912 3,153 4,367 4,923 5,393
Exports
Africa 0 0 0 0 0 0 0 0 0
Asia 0 0 0 0 0 0 0 0 0
Canada 0 0 0 0 0 0 0 0 0
China 0 0 0 0 0 0 0 0 0
Eastern Europe 0 0 0 0 0 0 0 0 0
FSU 0 0 0 0 0 0 0 0 0
Japan 0 0 0 0 0 0 0 0 0
Latin America 0 0 0 0 0 0 0 0 0
Middle East 0 0 0 0 0 0 0 0 0
United States 131 109 75 40 5 5 4 4 3
Western Europe 0 0 0 0 0 0 0 0 0
Subtotal Exports 131 109 75 40 5 5 4 4 3
Total Supply 3,143 3,300 3,630 3,710 3,764 3,996 5,143 5,616 6,001
</TABLE>
C-43
<PAGE>
- -------------------------
VI. DIVERSION RISKS
- -------------------------
There is always some risk that crude from a particular source will be
disrupted or diverted from a particular market for any number of reasons:
. Weather or other "force majeure."
. Infrastructure constraints.
. Political interference.
. Production changes.
. Marketing opportunities.
The risks can be minimized by designing in flexibility to use crude
from alternative sources. Usually, weather related disruptions are short lived.
Similarly, infrastructure constraints like pipeline bottlenecks, etc., can be
relieved fairly quickly. Political interference like the Iraqi, Libyan, or
Iranian embargoes, last longer and can sometimes be permanent. Decline in
production or better marketing opportunities can also be more permanent and
structural impediments are generally long lasting.
PRODUCTION CHANGES
Declines in production can often be anticipated but, if not, the
gradual nature of full decline provides time to make alternative arrangements.
The Upgrade Project is being designed to run Maya crude. Generally, it is risky
to design a facility capable of running only one specific crude particularly if
the design crude has a unique set of characteristics. The field could decline,
the producer could refuse or be unable to deliver, etc. However, in this case,
the risks are reduced since Mexico has a very active program underway to
significantly expand Maya production. In addition, Venezuela is also expanding
its heavy crude production as well. However, a facility designed to handle Maya
crude (22(degrees)API) can easily substitute other heavy crudes like Neutral
Zone crudes or many Venezuelan crudes since they are generally lighter and have
less metals and sulfur.
MARKETING OPPORTUNITIES
Producers continuously analyze market opportunities to seek out the
highest possible netbacks consistent with maximizing production and hence
revenue. Even so, most crude today is sold under contract so that efficient
transportation arrangements can be made and crude will flow regularly from
producer to consumer. In this environment, crudes tend to flow to the highest
value market and the flow patterns are fairly stable. Stability is often
disrupted by sudden increases (decreases) in supply in a producing region. For
example, the rapid increase in crude supplies in the Atlantic Basin (North Sea,
West Africa, Latin America) is causing flow pattern changes.
C-44
<PAGE>
In recent years, Mexico, Venezuela and Canada have increased
production of heavy crude and have placed as much as possible in the U.S.
(particularly in the U.S. Gulf Coast). These crudes have reduced requirements
for crude from the Middle East. Mexico and Venezuela have a strong incentive to
place the crude in the U.S. because other markets are much farther away so the
shipping cost would reduce the netbacks to the producers. Furthermore, the
refining industry in most other regions is not configured to handle heavy sour
crude. In 1997, PEMEX exported 843,000 B/D of Maya to the U.S. which accounts
for 84% of its heavy exports.
Northwest Europe, for example, has a large surplus of light sweet
crude coming out of the North Sea. Refineries in this region have no incentive
to invest to run heavy crude when more than adequate supplies of light sweet
crude are available. In addition, the requirement for low sulfur products and
the availability of natural gas from the North Sea and Russia reduces the need
for residual fuel oil, particularly high sulfur resid. Heavy sour crudes yield a
much larger percentage of high sulfur resid than light sweet crude.
Refineries in the Mediterranean region were designed to handle some
heavy sour crude from the Middle East. However, a similar requirement for low
sulfur fuels is reducing the demand for crudes which yield high sulfur resid.
Declines in resid consumption is being expedited by the significant increases in
availability of natural gas from Africa, Russia and the North Sea.
Asia is choosing lighter crudes from Africa and the Middle East for
similar reasons. Product specifications are requiring lower sulfur products and
refiners are better able to meet these requirements by selecting lighter crudes
and minimizing investments. Japan is the major market for heavy crude as their
refineries were configured to handle heavy crudes from the Middle East. Even so,
Japan is resisting pressure from Middle East producers to use more heavy crude.
The small quantities of heavy crude from Mexico and Venezuela that are
exported to Europe and Asia are primarily for asphalt manufacture. These crudes
make good asphalt and are highly sought for these properties. However, the
quantities are limited and growth in demand will be moderate. Most of Mexico's
shipments to Europe go to Spain under a state to state arrangement between PEMEX
and Repsol of Spain with smaller quantities going to Portugal. Most of
Venezuela's heavy crude shipments to Europe go to Germany where PDVSA has
ownership in a refinery.
U.S. CRUDE OIL IMPORTS
Table VI-1 summarizes total PADD I, II, and III heavy sour crude oil
imports for 1994 through 1998. The tables demonstrates that the Gulf Coast (PADD
III) is the largest U.S. sour crude oil and heavy sour crude oil import market.
The table also illustrates that PEMEX's market share for crude oil and heavy
sour crude oil in particular is substantial, particularly in the Gulf Coast
region. In the Midwest region (PADD II), where Canadian crude oil has a
significant transportation advantage over Mexican crude oil, PEMEX's market
share is small.
C-45
<PAGE>
PEMEX was the second largest supplier of heavy crude oil to the United
States with a 29% share of imports into the combined U.S. East Coast (PADD I),
U.S. Midwest (PADD II) and U.S. Gulf Coast (PADD III) regional markets in 1998.
Venezuela was first with a 33% share. The PADD (Petroleum Administration for
Defense District) designation is the terminology used to define the various
crude oil refining and marketing regions of the United States. The U.S. Rocky
Mountain (PADD IV) region and the U.S. West Coast (PADD V) region are not
considered competitive markets for Mexican crude oil due to logistical and
competitive advantages possessed by Californian and Alaskan production.
Sour crude imports for 1996 through 1998 by source are shown in Table
VI-2. Crude runs by refinery for 1996 and 1997 are shown in Tables VI-3 and VI-
4, respectively.
MAJOR CUSTOMERS
PEMEX's high U.S. market share is a result of increasing availability
of heavy sour crude and its proximity to the market, as well as an effective
marketing strategy. PEMEX is entering into agreements with refineries capable of
efficiently processing heavy sour crude oil. The first joint venture coker
project was with Shell at Deer Park. In late 1996, a 60,000 B/D coker came
onstream. An announcement has been made that the coker will be expanded and Maya
crude runs will be increased at Deer Park. PEMEX has also entered into a 100,000
B/D crude supply agreement with Coastal for Aruba. About 220,000 B/D of Maya
crude runs are expected to be run when the new coker is completed in 2000. The
Upgrade Project at the Clark Port Arthur refinery calls for about 200,000 B/D of
Maya to be run at this facility. Recently agreements have been reached with
Exxon to increase Maya runs to 65,000 B/D when the coker is expanded at Baytown
and with Marathon to run 90,000 B/D when its new coker is completed. Long term
contracts for Maya for 2002 now total 675,000 B/D.
Table VI-5 lists the primary customers for PEMEX in the U.S. ranked by
total barrels of heavy crude oil imported into PADDs I, II, and III over the
1994-98 period. As the table illustrates, customers of PEMEX together
represented around 800,000 B/D of the heavy crude oil imports into the U.S. in
1998 and this will increase in the future.
STRUCTURAL IMPEDIMENTS
Structural constraints which would reduce the risks of diversion can
either be physical (i.e. the refinery design does not allow heavy sour crude to
be run), ownership (for example, Venezuelan crude will be selected over Maya if
unable to run in refineries owned by PDVSA) or geographical (such as Canadian
heavy can more easily capture markets in the Northern Tier markets whereas Maya
can compete more effectively on the U.S. Gulf Coast.
C-46
<PAGE>
PHYSICAL LIMITATIONS
As shown in Table VI-3, about 3.9 million B/D or 43% of the refinery
capacity in PADDs I-III is designed for light sweet. This excludes this capacity
from consideration. Another 2.9 million B/D or 32% of the refinery capacity is
designed for light sour. Light sour refiners can run some heavy sour but they
probably have already heavied up their slate to the extent possible. Therefore,
about 75% of the refinery capacity can be excluded as a potential market for
Maya or other heavy crude.
OWNERSHIP LIMITATIONS
PDVSA's equity ownership of more than 900,000 B/D of refining
capacity, its substantial import market share among existing third party
refineries capable of processing Venezuelan type crude oil, and the discounts
that would be needed to increase market share in existing complex refineries or
through additions of new capacity effectively limit the possibility of a major
shift by PEMEX away from supplying their contracted customers. Should PEMEX
attempt such a shift, the resulting competition for the sale of heavy crude oil
could result in a downward spiral of retaliatory price discounting, leading to
even greater reductions in crude oil prices and total revenues.
GEOGRAPHICAL CONSTRAINTS
Further market penetration by PEMEX is constrained by logistical
advantages of Canadian crude oil in the Midwest region, the various
producer/refiner joint venture relationships in the U.S. East and Gulf Coast
regions and the somewhat limited sour crude oil processing capacity in the
United States.
MAJOR FACTORS LIMITING MARKET PENETRATION BY PEMEX
REFINERY COMPLEXITY REQUIREMENT
The heavy sour crude oil that dominates PEMEX's production requires
refineries with relatively high Nelson complexity factors to most efficiently
produce higher value refined petroleum products. The Nelson complexity factor is
determined by multiplying all reported unit capacities by their complexity
factor and dividing by crude oil distillation capacity. A basic topping
refinery, which essentially separates crude oil into its boiling point
fractions, has a complexity factor of 1.0. A refinery with asphalt capacity,
which typically includes a vacuum distillation unit, has a complexity factor of
1.1 to 3.0. A hydroskimming refinery, which is usually a topping refinery with a
catalytic reformer to upgrade the naphtha, has a typical complexity of 4 to 6. A
cracking refinery which includes either a Fluid Catalytic Cracker (FCCU) or a
Hydrocracker to upgrade gas oil into gasoline and distillates typically has a
complexity factor range of 5 to 10. A coking refinery has a complexity factor of
7 to 12 and includes a delayed coker, which allows full conversion of the crude
oil barrel. Mexico's crude
C-47
<PAGE>
oil is typically processed in coking refineries to realize the full value of the
crude oil barrel. Refiners without coking capacity cannot typically process
PEMEX's heavy sour crude oil economically, except in specialty asphalt
operations.
HIGH LEVEL OF SOUR CRUDE OIL CAPACITY UTILIZATION OF EXISTING
REFINERIES
Due to the high utilization rate of existing heavy oil capacity, PEMEX
would find it difficult to divert its heavy crude to other users. Approximately
93% of the 6.9 million barrels per day of sour crude oil capacity in PADDs I,
II, and III was utilized in 1997 (Tables VI-3 and VI-4). Of the underutilized
refineries in PADD III in 1997 capable of processing sour crude oil, several of
these refineries have long to medium term crude oil supply contracts, including
Phillips at Sweeny, Exxon at Baytown, and Clark at Port Arthur. Of the roughly
6.9 million barrels per day of sour crude oil refining capacity in PADDs I, II,
and III, PEMEX supplies refineries having a capacity of 4.8 million barrels per
day, or 77% of the total capacity. Most is under contract. Typically the
contract term is for one year but they are "evergreen" which means they roll-
over unless either party terminates the arrangement.
STRATEGIC AFFILIATIONS OF COMPETING PRODUCERS
Other competing producers are tying up refining capacity that might
otherwise be available to process Mexican crude oil. The impact of known
producer/refiner affiliations can be seen in the concentration of supply. For
example, the total of Middle East crude oil processed by former Saudi Aramco
partners Mobil, Chevron, Exxon and affiliate Texaco/Star Enterprise is 973 MBPD,
or 68% of Middle Eastern imports of crude oil into the United States. These will
further limit PEMEX expansion potential.
VENEZUELAN EXTRA HEAVY OIL PROJECTS
PDVSA is currently involved in four and negotiating two additional
extra heavy oil production and upgrading projects in Venezuela's Orinoco Oil
Belt, which will further limit the market for PEMEX's traditional production and
imports into the United States to the extent they include PDVSA partner
refineries which would otherwise be outlets for traditional PEMEX heavy sour
crude oil production. The affected refineries include the Mobil Chalmette
refinery, the Conoco Lake Charles refinery, and potentially, the Coastal Corpus
Christi and the Exxon refineries.
ALTERNATIVE CRUDE SUPPLY
If for some reason, PEMEX decided to divert the Maya crude away from
the Clark Port Arthur refinery, there are alternative supplies of heavy sour
crude that Clark and PACC could likely obtain.
C-48
<PAGE>
Venezuela will be rapidly expanding its heavy crude production as
world crude demand grows as Asia recovers. OPEC quota levels will be raised so
Venezuela will not have to constrain output. In addition, the heavy oil
production (Orinoco) discussed earlier will get back on track and will add to
the heavy crude supply.
Mexico is expanding its heavy crude production from 1.6 million B/D to
2.3 million B/D by 2015. New customers will need to be found. In addition, an
examination of the refineries that purchase Mexican Maya crude indicates that a
significant portion is being run in refineries which do not have adequate
bottoms upgrading to completely upgrade the bottoms so it is run in a cracking
mode rather than in a coking mode. This means that PEMEX could realize a higher
value for the Maya if it were sold to a coking operation, like the Upgrade
Project.
Saudi Arabia is having difficulty in marketing the expanded production
from the Neutral Zone. They are pressuring Japan to take more but the Japanese
are resisting. Contracts for this crude would not be difficult to obtain.
C-49
<PAGE>
TABLE VI-1
SOUR CRUDE OIL IMPORTS
(Thousand Barrels per Day)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TOTAL SOUR CRUDE HEAVY SOUR CRUDE
---------------------------------------------- ----------------------------------------------
PADD I PADD II PADD III Total % PADD I PADD II PADD III Total %
------ ------- -------- ----- -------- ------ ------- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 PEMEX 27 61 1,190 1,278 23% 22 26 732 780 29%
Canada 59 711 5 775 14% 27 591 4 623 23%
Venezuela 205 125 1,007 1,337 24% 164 38 696 898 33%
Middle East 163 237 1,480 1,880 34% 38 6 286 330 12%
Other 71 18 118 206 4% 55 3 41 100 4%
Total 524 1,152 3,799 5,476 100% 307 664 1,760 2,731 100%
1997 PEMEX 23 106 1,215 1,344 25% 21 53 772 846 32%
Canada 38 671 0 709 13% 24 588 0 612 23%
Venezuela 177 158 997 1,333 25% 156 18 696 870 33%
Middle East 153 170 1,240 1,563 30% 50 4 135 189 7%
Other 86 36 213 335 6% 41 0 48 89 3%
Total 477 1,141 3,666 5,284 100% 292 663 1,651 2,606 100%
1996 PEMEX 16 115 1,078 1,210 26% 16 31 668 715 31%
Canada 38 509 4 551 12% 24 450 2 475 21%
Venezuela 192 153 938 1,283 28% 168 93 692 953 42%
Middle East 171 117 1,109 1,396 30% 39 0 35 74 3%
Other 63 35 125 223 5% 35 0 28 63 3%
Total 480 929 3,253 4,663 100% 282 574 1,425 2,280 100%
1995 PEMEX 30 28 860 918 22% 21 11 539 571 30%
Canada 41 524 1 566 14% 27 398 0 425 22%
Venezuela 157 157 656 969 24% 141 24 457 622 32%
Middle East 238 101 1,083 1,422 35% 72 0 160 232 12%
Other 29 3 196 228 6% 27 1 38 66 3%
Total 495 812 2,795 4,102 100% 288 434 1,194 1,916 100%
1994 PEMEX 55 55 730 840 21% 26 54 517 597 33%
Canada 61 510 1 571 14% 0 278 1 279 15%
Venezuela 142 138 538 818 20% 123 6 398 527 29%
Middle East 239 132 1,276 1,647 41% 89 1 256 347 19%
Other 26 35 119 180 4% 10 8 33 52 3%
Total 523 870 2,664 4,056 100% 248 347 1,205 1,801 100%
</TABLE>
C-50
<PAGE>
TABLE VI-2
SOUR CRUDE IMPORTS BY SOURCE
(Barrels per Day)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1996 PADD I PADD II PADD III TOTAL PADD I-III
- ---- --------------------------- ---------------------------- ------------------------------ -------------------------------
Light Heavy Total Light Heavy Total Light Heavy Total Light Heavy
Sour Sour PADD I Sour Sour PADD II Sour Sour PADD II Sour Sour TOTAL
------- ------- -------- ------- ------- ---------- --------- --------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mexico 0 16,071 16,071 83,679 31,496 115,175 410,659 667,765 1,078,424 494,338 715,332 1,209,671
Venezuela 23,690 168,493 192,183 60,356 92,573 152,929 245,310 692,343 937,653 329,356 953,409 1,282,765
Canada 14,019 23,870 37,889 59,675 449,520 509,195 2,115 1,784 3,899 75,809 475,174 550,983
Mid East 132,041 38,700 170,741 116,633 0 116,633 1,073,616 34,921 1,108,537 1,322,290 73,621 1,395,911
Other 28,178 34,693 62,871 35,449 0 97,022 97,022 27,910 124,932 160,649 62,603 223,252
TOTAL 197,928 281,827 479,755 355,792 573,588 990,954 1,828,723 1,424,723 3,253,445 2,382,443 2,280,138 4,662,581
1997
- ----
Mexico 1,920 21,159 23,079 53,400 52,737 106,137 443,050 772,200 1,215,250 498,370 846,096 1,344,466
Venezuela 21,310 155,770 177,080 140,670 17,690 158,360 301,020 696,270 997,290 463,000 869,730 1,332,730
Canada 14,272 24,116 38,388 82,470 588,171 670,641 0 0 0 96,742 612,287 709,029
Mid East 102,592 49,959 152,551 165,430 4,482 169,912 1,105,488 134,940 1,240,428 1,373,510 189,381 1,562,891
Other 44,460 41,170 85,630 36,440 0 36,440 165,580 47,710 213,290 246,480 88,880 335,360
TOTAL 184,554 292,174 476,728 478,410 663,080 1,141,490 2,015,138 1,651,120 3,666,258 2,678,102 2,606,374 5,284,476
1998
- ----
Mexico 4,556 22,038 26,594 35,482 25,589 61,071 457,942 732,074 1,190,016 497,980 779,701 1,277,681
Venezuela 41,036 164,104 205,140 86,847 38,252 125,099 310,726 696,022 1,006,748 438,609 898,378 1,336,987
Canada 31,715 27,464 59,179 119,941 591,071 711,012 1,058 4,189 5,247 152,714 622,724 775,438
Mid East 124,307 38,422 162,729 231,523 5,805 237,328 1,193,682 286,151 1,479,833 1,549,512 330,378 1,879,890
Other 15,556 54,967 70,523 14,370 3,225 17,595 76,164 41,370 117,534 106,090 99,562 205,652
TOTAL 217,170 306,995 524,165 488,163 663,942 1,152,105 2,039,572 1,759,806 3,799,378 2,744,905 2,730,743 5,475,648
</TABLE>
Note: Heavy indicates less than 30(degrees) API; Sour is greater than 0.7%
sulfur
C-51
<PAGE>
TABLE VI-3
1997 SOUR CRUDE CAPACITY UTILIZATION
(Thousand Barrels per Day
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Design Light Sour Heavy Sour
---------------------- ------------------------------ -------------------------------
Crude Light Light Heavy
Company Location Capacity Sweet Sour Sour Total Domestic Canada Offshore Total Domestic Canada Offshore Total
- ------- -------- -------- ----- ----- ----- ----- -------- ------ -------- ----- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Yorktown 57 - 25 32 57 - - 4 4 - - 29 29
Chevron Perth Amboy 80 - - 80 80 - - - - - - 34 34
Citgo Savannah 28 - - 28 28 - - - - - - 15 15
Citgo Thorofare 80 - - 80 80 - - - - - - 50 50
Coastal Westville 140 140 - - 140 - - 1 1 - - 1 1
Motiva (Star) Delaware City 140 - 30 110 140 - - 25 25 - - 134 134
Sun Philadelphia 307 207 50 50 307 - - - - - - - -
Tosco Linden 240 240 - - 240 - - 2 2 - - 0 0
United Refining Co. Warren 67 20 22 25 67 - 14 - 14 - 24 - 24
Valero (Mobil) Paulsboro 149 - 139 10 149 - - 138 138 - - 4 4
Witco Chemical Bradford 10 10 - - 10 - - - - - - - -
Young Refining Douglasville 6 - - 6 6 - - - - - - - -
TOTAL PADD I 1,303 617 266 421 1,303 0 14.272 170 185 0 24.116 268 292
<CAPTION>
Design Light Sour Crude Heavy Sour Crude
---------------------- ------------------------------ -------------------------
Crude Light Light Heavy
Company Location Capacity Sweet Sour Sour Total Domestic Canada Offshore Total Domestic Canada Offshore Total
- ------- -------- -------- ----- ----- ----- ----- -------- ------ -------- ----- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Whiting 410 140 140 130 410 101 1 16 118 12 124 1 138
BP Amoco Toledo 147 147 - - 147 - - - - - 12 - 12
Citgo Lemont 145 - 70 75 145 - - 86 86 - 56 - 56
Clark Oil Blue Island 75 50 25 - 75 - - 7 7 - 0 - 0
Clark Oil Hartford 65 - 40 25 65 16 10 27 53 - 7 - 7
Conoco Ponca City 160 105 55 - 160 55 - - 55 - - - -
Equilon (Shell) Wood River 271 100 136 35 271 181 4 32 216 - 36 3 40
Equilon (Texaco) El Dorado 100 20 60 20 100 60 1 8 69 - - 15 15
Exxon/Mobil Joliet 204 - 70 134 204 16 40 - 56 - 116 - 116
Farmland Coffeyville 110 85 25 - 110 5 - 19 24 - - 1 1
Koch Rosemount 286 - - 286 286 - 19 - 19 - 202 40 242
Laketon Laketon 4 - - 4 4 - - - - - - - -
Marathon Ashland Detroit 70 40 10 20 70 6 1 - 7 - 16 8 24
Marathon Ashland Robinson 185 185 - - 185 - 1 50 51 - 9 - 9
Marathon Ashland Catlettsburg 219 - 214 5 219 72 4 126 202 - 1 1 2
Marathon Ashland Canton 70 45 20 5 70 - 0 17 17 - - 1 1
Marathon Ashland St. Paul Park 70 60 - 10 70 - 1 2 3 - - - -
Murphy Superior 36 29 - 7 36 - 2 - 2 - 8 - 8
NCRA McPherson 74 49 25 - 74 18 - 5 23 - - - -
Sinclair Tulsa 50 40 10 - 50 10 - - 10 - - 4 4
Ultramar Diamond
Shamrock Ardmore 68 23 45 - 68 40 - 40 - - - -
Ultramar Diamond
Shamrock Almak 51 41 10 - 51 10 - - 10 - - - -
TOTAL PADD II 2,870 1,159 956 756 2,870 589 82 396 1,067 12 588 75 675
<CAPTION>
--------------------------------------------------------------------------
Total Sour
Total Sour Crude Utilization
- -------------------------------------------------------------------------------------- -------------------------
Hvy
Company Location Domestic Canada Offshore Total Lt Sour Sour Total
- ------- -------- ----------- -------- ---------- ------ ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Yorktown - - 34 34 17% 93% 59%
Chevron Perth Amboy - - 34 34 - 43% 43%
Citgo Savannah - - 15 15 - 54% 54%
Citgo Thorofare - - 50 50 - 62% 62%
Coastal Westville - - 2 2 - - -
Motiva (Star) Delaware Cit - - 159 159 83% 122% 114%
Sun Philadelphia - - - - - - -
Tosco Linden - - 2 2 - - -
United Refining Co. Warren - 38 - 38 66% 96% 82%
Valero (Mobil) Paulsboro - - 142 142 99% 45% 96%
Witco Chemical Bradford - - - - - - -
Young Refining Douglasville - - - - - - -
TOTAL PADD I 0 38 438 477 69% 69% 69%
BP Amoco Whiting 113 125 18 256 85% 106% 95%
BP Amoco Toledo - 12 - 12 - - -
Citgo Lemont - 56 86 142 122% 75% 98%
Clark Oil Blue Island - 0 7 8 29% - 30%
Clark Oil Hartford 16 17 27 60 131% 30% 92%
Conoco Ponca City 55 - - 55 100% - 100%
Equilon (Shell) Wood River 181 40 35 256 159% 113% 149%
Equilon (Texaco) El Dorado 60 1 23 84 115% 76% 105%
Exxon/Mobil Joliet 16 156 - 172 80% 87% 84%
Farmland Coffeyville 5 - 20 25 96% - 102%
Koch Rosemount - 221 40 261 - 85% 91%
Laketon Laketon - - - - - - -
Marathon Ashland Detroit 6 16 8 31 69% 118% 102%
Marathon Ashland Robinson - 10 50 61 - - -
Marathon Ashland Catlettsburg 72 4 127 203 94% 32% 93%
Marathon Ashland Canton - 0 18 18 86% 16% 72%
Marathon Ashland St. Paul Par - 1 2 3 - - 28%
Murphy Superior - 10 - 10 - 120% 146%
NCRA McPherson 18 - 5 23 90% - 90%
Sinclair Tulsa 10 - 4 14 100% - 141%
Ultramar Diamond Shamrock Ardmore 40 - - 40 89% - 89%
Ultramar Diamond Shamrock Almak 10 - - 10 100% - 100%
TOTAL PADD II 601 671 471 1,743 112% 89% 102%
</TABLE>
C-52
<PAGE>
TABLE VI-3(CONTINUED)
1997 SOUR CRUDE CAPACITY UTILIZATION
(Thousand Barrels per Day)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Design Light Sour Crude
------------------------------------ ---------------------------------
Crude Light Light Heavy
Company Location Capacity Sweet Sour Sour Total Domestic Canada Offshore Total
- ------------------ --------------- -------- ------- ------- ------- ------- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Berry Petroleum Stevens 7 - - 7 7 - - - -
BP Amoco Texas City 437 200 87 150 437 47 - 59 107
Chevron Pascagoula 295 - 145 150 295 6 - 135 141
Chevron El Paso 90 - 90 - 90 86 - - 86
Citgo Lake Charles 304 90 14 200 304 - - 15 15
Citgo Corpus Christi 133 - 33 100 133 - - 36 36
Clark Oil Port Arthur 212 50 137 25 212 1 - 138 139
Coastal Mobile 19 - - 19 19 - - - -
Coastal Corpus Christi 100 5 35 60 100 - - 25 25
Conoco Lake Charles 226 60 - 166 226 - - 59 59
Cross Oil Smackover 6 - - 6 6 - - - -
Crown Tyler 60 48 12 - 60 - - - -
Crown Houston 100 80 20 - 100 10 - 14 24
Ergon Refining Vicksburg 25 - - 25 25 - - - -
Exxon Mobil Baton Rouge 450 200 180 70 450 28 - 146 174
Exxon Mobil Chalmette 170 90 - 80 170 - - 3 3
Exxon Mobil Baytown 427 50 227 150 427 14 - 228 242
Exxon Mobil Beaumont 320 30 200 90 320 19 - 134 153
Hunt Tuscaloosa 43 - - 43 43 - - - -
Koch Corpus Christi 280 90 190 - 280 - - 57 57
Lion El Dorado 53 - 45 8 53 9 - 38 47
Lyondell Houston 239 - - 239 239 - 2 2
Marathon Ashland Garyville 225 - 170 55 225 49 - 153 201
Motiva (Shell) Norco 219 219 - - 219 - - 12 12
Motiva (Star) Convent 230 - 220 10 230 - - 223 223
Motiva (Star) Port Arthur 235 - 135 100 235 - - 149 149
Murphy Meraux 95 - 95 - 95 - - 99 99
Navajo Artesia/Lovington 60 - 60 - 60 59 - - 59
Neste Trifinery Corpus Christi 30 - - 30 30 - - - -
Phillips Sweeny 200 75 125 - 200 - - 78 78
Phillips Borger 120 10 110 - 120 114 - - 114
Shell Deer Park 256 15 30 211 256 - - 24 24
Southland Oil Lumberton 6 - - 6 6 - - - -
Southland Oil Sandersville 11 - - 11 11 - - - -
Total (Fina) Port Arthur 179 50 129 - 179 41 - 65 107
Total (Fina) Big Spring 58 - 58 - 58 54 - - 54
Ultramar Diamond Shamrock Three Rivers 80 80 - - 80 - - 2 2
Ultramar Diamond Shamrock Sunray/McKee 135 95 40 - 135 41 - - 41
Valero Corpus Christi 30 30 - - 30 - - 10 10
Valero (Basis) Houston 68 30 38 - 68 5 - 13 18
Valero (Basis) Texas City 125 15 105 5 125 31 - 98 129
TOTAL PADD III 6,356 1,612 2,729 2,016 6,356 615 - 2,015 2,630
TOTAL Padds I-III 10,530 3,388 3,950 3,192 10,530 1,204 97 2,581 3,882
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Total Sour
Heavy Sour Crude Total Sour Crude Crude Utilization
-------------------------------- ------------------------ ---------------------
Heavy
Company Location Domestic Canada Offshore Total Domestic Canada Offshore Total Lt Sour Sour Total
- -------------------------- ----------------- -------- ------ -------- ----- -------- ------ -------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Berry Petroleum Stevens 6 - 6 6 - - 6 -- 84% 84%
BP Amoco Texas City - - 96 96 47 - 155 203 123% 64% 86%
Chevron Pascagoula - - 161 161 6 - 296 302 97% 107% 102%
Chevron El Paso - - - - 86 - - 86 95% -- 95%
Citgo Lake Charles - - 180 180 - - 196 196 110% 90% 91%
Citgo Corpus Christi - - 86 86 - - 122 122 111% 86% 92%
Clark Oil Port Arthur - - 28 28 1 - 166 168 102% 112% 103%
Coastal Mobile - - 13 13 - - 13 13 -- 68% 68%
Coastal Corpus Christi - - 62 62 - - 87 87 72% 104% 92%
Conoco Lake Charles - - 105 105 - - 164 164 -- 63% 99%
Cross Oil Smackover 6 - - 6 6 - - 6 -- 97% 97%
Crown Tyler - - - - - - - - -- -- --
Crown Houston - - - - 10 - 14 24 119% -- 119%
Ergon Refining Vicksburg - - 22 22 - - 22 22 -- 90% 90%
Exxon Mobil Baton Rouge 42 - 31 73 70 - 177 247 97% 104% 99%
Exxon Mobil Chalmette - - 65 65 - - 68 68 -- 82% 85%
Exxon Mobil Baytown 103 - 88 191 117 - 316 433 107% 127% 115%
Exxon Mobil Beaumont - - 89 89 19 - 223 243 77% 99% 84%
Hunt Tuscaloosa 21 - 17 38 21 - 17 38 -- 89% 89%
Koch Corpus Christi - - 23 23 - - 79 79 30% -- 42%
Lion El Dorado 4 - - 4 13 - 38 51 106% 50% 98%
Lyondell Houston - - 213 213 - - 215 215 -- 89% 90%
Marathon Ashland Garyville - - 22 22 49 - 175 224 118% 40% 99%
Motiva (Shell) Norco - - 2 2 - - 14 14 -- -- --
Motiva (Star) Convent - - 5 5 - - 229 229 102% 52% 99%
Motiva (Star) Port Arthur - - 85 85 - - 234 234 110% 85% 99%
Murphy Meraux - - - - - - 99 99 104% -- 104%
Navajo Artesia/Lovington - - - - 59 - - 59 98% -- 98%
Neste Trifinery Corpus Christi - - 24 24 - - 24 24 -- 79% 79%
Phillips Sweeny - - - - - - 78 78 62% -- 62%
Phillips Borger - - - - 114 - - 114 104% -- 104%
Shell Deer Park - - 224 224 - - 248 248 79% 106% 103%
Southland Oil Lumberton 2 - - 2 2 - - 2 -- 33% 33%
Southland Oil Sandersville 4 - - 4 4 - - 4 -- 34% 34%
Total (Fina) Port Arthur - - - - 41 - 65 107 83% -- 83%
Total (Fina) Big Spring - - - - 54 - - 54 93% -- 93%
Ultramar Diamond Shamrock Three Rivers - - - - - - 2 2 -- -- --
Ultramar Diamond Shamrock Sunray/McKee - - - - 41 - - 41 102% -- 102%
Valero Corpus Christi - - 6 6 - - 15 15 -- -- --
Valero (Basis) Houston - - - - 5 - 13 18 48% -- 48%
Valero (Basis) Texas City - - 3 3 31 - 101 132 122% 53% 119%
TOTAL PADD III 188 - 1,651 1,839 803 - 3,666 4,469 96% 91% 94%
TOTAL Padds I-III 200 612 1,994 2,806 1,404 709 4,575 6,688 98% 88% 94%
</TABLE>
C-53
<PAGE>
TABLE VI-4
1996 SOUR CRUDE CAPACITY UTILIZATION
(Thousand Barrels per Day)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Design Light Sour Heavy Sour
----------------------- ------------------------------ ------------------------------
Crude Light Light Heavy
Company Location Capacity Sweet Sour Sour Total Domestic Canada Offshore Total Domestic Canada Offshore Total
- ------- -------- -------- ----- ----- ----- ----- -------- ------ -------- ----- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Yorktown 57 - 25 32 57 - - 12 12 - - 30 30
Chevron Perth Amboy 80 - - 80 80 - - - - - - 32 32
Citgo Savannah 28 - - 28 28 - - - - - - 15 15
Citgo Thorofare 80 - - 80 80 - - - - - - 39 39
Motiva (Star) Delaware City 140 - 30 110 140 - - 11 11 - - 121 121
Sun Philadelphia
- Girard Pt 307 207 50 50 307 - - 22 22 - - 17 17
Sun Marcus Hook 175 175 - - 175 - - 1 1 - - - -
Tosco Linden 240 240 - - 240 - - 1 1 - - - -
United Refining Co. Warren 67 20 22 25 67 - 14 - 14 - 24 - 24
Valero (Mobil) Paulsboro 149 - 139 10 149 - - 136 136 - - 3 3
Young Refining Douglasville 6 - - 6 6 - - - - - - - -
TOTAL PADD I 1,328 642 266 421 1,328 - 14 184 198 - 24 258 282
<CAPTION>
Design Light Sour Crude Heavy Sour Crude
----------------------- ------------------------------ ------------------------------
Crude Light Light Heavy
Company Location Capacity Sweet Sour Sour Total Domestic Canada Offshore Total Domestic Canada Offshore Total
- ------- -------- -------- ----- ----- ----- ----- -------- ------ -------- ----- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Whiting 410 140 140 130 410 116 1 14 131 12 109 11 132
BP Amoco Toledo 147 147 - - 147 - - 0 0 - 9 - 9
Citgo Lemont 145 - 70 75 145 - 2 55 57 - 26 61 86
Clark Oil Blue Island 75 55 20 - 75 - 9 11 19 - - - -
Clark Oil Hartford 65 - 40 25 65 12 1 41 54 - - - -
Conoco Ponca City 155 100 55 - 155 55 - - 55 - - - -
Equilon (Shell) Wood River 271 100 136 35 271 163 - 27 191 - - 13 13
Equilon (Texaco) El Dorado 100 20 60 20 100 80 - 1 81 - - 11 11
Exxon Mobil Joliet 204 - 70 134 204 27 28 - 56 - 105 - 105
Farmland Coffeyville 110 110 - - 110 5 - 5 10 - - - -
Koch Rosemount 286 - - 286 286 - 17 - 17 - 177 19 196
Laketon Laketon 4 - - 4 4 - - - - - - - -
Marathon Ashland Detroit 70 40 10 20 70 10 1 1 11 - 9 6 15
Marathon Ashland Robinson 166 166 - - 166 - - 3 3 - 7 - 7
Marathon Ashland Catlettsburg 219 - 214 5 219 79 - 125 203 - - - -
Marathon Ashland Canton 66 41 20 5 66 - 1 15 16 - - - -
Marathon Ashland St. Paul Park 69 59 - 10 69 - - - - - - - -
Murphy Superior 36 29 - 7 36 - 0 - 0 - 7 - 7
NCRA McPherson 74 49 25 - 74 23 - - 23 - - - -
Sinclair Tulsa 50 40 10 - 50 10 - - 10 - - 3 3
Ultramar Diamond
Shamrock Ardmore 68 23 45 - 68 40 - 40 - - - -
Ultramar Diamond
Shamrock Alma 46 36 10 - 46 10 - - 10 - - - -
TOTAL PADD II 2,836 1,154 926 756 2,836 630 59.675 296 986 12 449.5 124 585
<CAPTION>
Total Sour Crude
Total Sour Crude Utilization
------------------------------ ---------------------
Hvy
Company Location Domestic Canada Offshore Total Lt Sour Sour Total
- ------- -------- -------- ------ -------- ----- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Yorktown - - 43 43 49% 96% 75%
Chevron Perth Amboy - - 32 32 -- 40% 40%
Citgo Savannah - - 15 15 -- 54% 54%
Citgo Thorofare - - 39 39 -- 49% 49%
Motiva (Star) Delaware City - - 132 132 35% 110% 94%
Sun Philadelphia
- Girard Pt - - 40 40 45% 34% 40%
Sun Marcus Hook - - 1 1 -- -- --
Tosco Linden - - 1 1 -- -- --
United Refining Co. Warren - 38 - 38 65% 95% 81%
Valero (Mobil) Paulsboro - - 139 139 98% 30% 93%
Young Refining Douglasville - - - - -- -- --
TOTAL PADD I - 38 442 480 74% 67% 70%
<CAPTION>
Total Sour Crude
Total Sour Crude Utilization
------------------------------ --------------------
Hvy
Company Location Domestic Canada Offshore Total Lt Sour Sour Total
- ------- -------- -------- ------ -------- ----- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP Amoco Whiting 128 110 25 263 93% 102% 97%
BP Amoco Toledo - 9 0 10 -- -- --
Citgo Lemont - 28 116 143 81% 115% 99%
Clark Oil Blue Island - 9 11 19 96% -- 96%
Clark Oil Hartford 12 1 41 54 135% -- 83%
Conoco Ponca City 55 - - 55 100% -- 100%
Equilon (Shell) Wood River 163 - 40 203 140% 36% 119%
Equilon (Texaco) El Dorado 80 - 12 92 135% 57% 115%
Exxon Mobil Joliet 27 134 - 161 80% 79% 79%
Farmland Coffeyville 5 - 5 10 -- -- --
Koch Rosemount - 194 19 212 -- 68% 74%
Laketon Laketon - - - - -- -- --
Marathon Ashland Detroit 10 9 7 26 111% 75% 87%
Marathon Ashland Robinson - 7 3 10 -- -- --
Marathon Ashland Catlettsburg 79 - 125 203 95% -- 93%
Marathon Ashland Canton - 1 15 16 81% -- 65%
Marathon Ashland St. Paul Park - - - - -- -- --
Murphy Superior - 7 - 7 -- 96% 97%
NCRA McPherson 23 - - 23 93% -- 93%
Sinclair Tulsa 10 - 3 13 100% -- 129%
Ultramar Diamond
Shamrock Ardmore 40 - - 40 89% -- 89%
Ultramar Diamond
Shamrock Alma 10 - - 10 100% -- 100%
TOTAL PADD II 642 509 420 1,571 107% 77% 55%
</TABLE>
C-54
<PAGE>
TABLE VI-4 (Continued)
1996 SOUR CRUDE CAPACITY UTILIZATION
(Thousand Barrels per Day)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Design Light Sour Crude Heavy Sour Crude
---------------------------- ----------------------------- -----------------------------
Crude Light Light Heavy
Company Location Capacity Sweet Sour Sour Total Domestic Canada Offshore Total Domestic Canada Offshore Total
- ------- -------- -------- ----- ----- ------ ----- -------- ------ -------- ----- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Berry Petroleum Stevens 7 - - 7 7 - - - - 6 - - 6
BP Amoco Texas City 433 200 83 150 433 47 - 54 101 - 1 85 86
Chevron Pascagoula 295 - 145 150 295 0 - 168 168 - - 134 134
Chevron El Paso 90 - 90 - 90 82 - - 82 - - - -
Citgo Lake Charles 304 90 14 200 304 - - 15 15 - - 171 171
Citgo Corpus Christi 133 - 33 100 133 - - 33 33 - - 103 103
Clark Oil Port Arthur 212 50 137 25 212 47 - 56 102 2 - 1 4
Coastal Mobile 15 - - 15 15 - - - - - - 14 14
Coastal Corpus Christi 100 5 40 55 100 14 - 11 25 - - 55 55
Conoco Lake Charles 226 60 - 166 226 - - 8 8 - - 119 119
Cross Oil Smackover 6 - - 6 6 - - - - 6 - - 6
Crown Houston 100 90 10 - 100 10 - 4 14 - - - -
Ergon Refining Vicksburg 25 - - 25 25 - - - - 1 - 18 19
Exxon Mobil Baton Rouge 432 200 162 70 432 28 - 83 111 42 - 34 76
Exxon Mobil Chalmette 176 96 - 80 176 - - 3 3 - - 78 78
Exxon Mobil Baytown 411 50 211 150 411 20 - 216 236 103 - 28 131
Exxon Mobil Beaumont 320 30 200 90 320 15 - 166 181 - 1 77 78
Hunt Tuscaloosa 43 - - 43 43 - - 1 1 20 - 18 37
Koch Corpus Christi 280 90 190 - 280 - - 35 35 - - - -
Lion El Dorado 53 - 45 8 53 12 - 31 43 4 - - 4
Lyondell Houston 258 - - 258 258 - 27 27 - - 144 144
Marathon Ashland Garyville 225 - 170 55 225 - - 187 187 - - 29 29
Marathon Ashland Texas City 70 70 - - 70 - - - - - - 2 2
Motiva (Star) Convent 230 - 220 10 230 - - 207 207 - - 3 3
Motiva (Star) Port Arthur 235 - 135 100 235 - - 155 155 - - 80 80
Murphy Meraux 95 5 90 - 95 - 2 77 79 - - - -
Navajo Artesia/Lovington 60 - 60 - 60 59 - - 59 - - - -
Neste Trifinery Corpus Christi 30 - - 30 30 - - - - - - 22 22
Phillips Sweeny 200 75 125 - 200 13 - 114 126 - - - -
Phillips Borger 120 10 110 - 120 102 - - 102 - - - -
Shell Deer Park 256 15 30 211 256 15 - 30 45 - - 190 190
Shell Chemical Co. Saraland 76 76 - - 76 - - 4 4 - - - -
Southland Oil Lumberton 6 - - 6 6 - - - - 2 - - 2
Southland Oil Sandersville 11 - - 11 11 - - - - 4 - - 4
Total (Fina) Port Arthur 179 50 129 - 179 58 - 55 113 - - - -
Total (Fina) Big Spring 58 - 58 - 58 45 - - 45 - - - -
Ultramar Diamond
Shamrock Three Rivers 80 80 - - 80 - - - - - - 1 1
Ultramar Diamond
Shamrock Sunray 135 95 40 - 135 41 - - 41 - - - -
Valero (Basis) Houston 68 30 38 - 68 36 - 21 57 - - 3 3
Valero (Basis) Texas City 125 40 80 5 125 19 - 66 84 - - 15 15
TOTAL III 6,176 1,507 2,644 2,025 6,176 662 2.110 1,826 2,489 190 1.775 1,423 1,615
TOTAL Padds I-III 10,340 3,304 3,835 3,202 10,340 1,292 76 2,306 3,674 202 475 1,805 2,482
<CAPTION>
- --------------------------------------------------------------------------------------------------
Total Sour
Total Sour Crude Crude Utililization
---------------------------------------------------------
Heavy
Company Location Domestic Canada Offshore Total Lt Sour Sour Total
- ------- -------- -------- ------ -------- ----- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Berry Petroleum Stevens 6 - - 6 -- 89% 89%
BP Amoco Texas City 47 1 139 187 122% 57% 80%
Chevron Pascagoula 0 - 302 302 116% 90% 103%
Chevron El Paso 82 - - 82 91% -- 91%
Citgo Lake Charles - - 186 186 105% 86% 87%
Citgo Corpus Christi - - 136 136 102% 103% 103%
Clark Oil Port Arthur 49 - 57 106 75% 15% 65%
Coastal Mobile - - 14 14 -- 93% 93%
Coastal Corpus Christi 14 - 66 80 63% 99% 84%
Conoco Lake Charles - - 127 127 -- 72% 77%
Cross Oil Smackover 6 - - 6 -- 99% 99%
Crown Houston 10 - 4 14 138% -- 138%
Ergon Refining Vicksburg 1 - 18 19 -- 75% 75%
Exxon Mobil Baton Rouge 70 - 117 187 68% 109% 81%
Exxon Mobil Chalmette - - 81 81 -- 98% 101%
Exxon Mobil Baytown 123 - 245 367 112% 87% 102%
Exxon Mobil Beaumont 15 1 243 258 90% 86% 89%
Hunt Tuscaloosa 20 - 19 38 -- 86% 89%
Koch Corpus Christi - - 35 35 19% -- 19%
Lion El Dorado 16 - 31 47 97% 50% 89%
Lyondell Houston - - 171 171 -- 56% 66%
Marathon Ashland Garyville - - 216 216 110% 53% 96%
Marathon Ashland Texas City - - 2 2 -- -- --
Motiva (Star) Convent - - 210 210 94% 29% 91%
Motiva (Star) Port Arthur - - 234 234 114% 80% 100%
Murphy Meraux - 2 77 79 88% -- 88%
Navajo Artesia/Lovington 59 - - 59 98% -- 98%
Neste Trifinery Corpus Christi - - 22 22 -- 74% 74%
Phillips Sweeny 13 - 114 126 101% -- 101%
Phillips Borger 102 - - 102 93% -- 93%
Shell Deer Park 15 - 220 235 150% 90% 97%
Shell Chemical Co. Saraland - - 4 4 -- -- --
Southland Oil Lumberton 2 - - 2 -- 40% 40%
Southland Oil Sandersville 4 - - 4 -- 36% 36%
Total (Fina) Port Arthur 58 - 55 113 88% -- 88%
Total (Fina) Big Spring 45 - - 45 77% -- 77%
Ultramar Diamond
Shamrock Three Rivers - - 1 1 -- -- --
Ultramar Diamond
Shamrock Sunray 41 - - 41 102% -- 102%
Valero (Basis) Houston 36 - 24 60 153% -- 160%
Valero (Basis) Texas City 19 - 81 100 105% 306% 117%
TOTAL III 852 4 3,249 4,104 94% 80% 66%
TOTAL Padds I-III 1,494 551 4,111 6,155 96% 78% 60%
</TABLE>
C-55
<PAGE>
TABLE VI-5
MEXICAN HEAVY SOUR CRUDE IMPORTERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Thousands Barrels per Day
---------------------------------------------
1998% 1998 1997 1996 1995 1994
----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Deer Park Refg. 20.1 157 169 164 105 10
Exxon Mobil 16.6 130 122 109 97 66
Conoco 12.1 94 88 77 63 82
Chevron 11.5 90 120 123 116 130
BP Amoco 9.8 77 72 66 47 67
CITGO 6.4 50 54 36 16 53
Koch Industries 5.4 42 44 17 23 36
Chalmette Refining 3.5 27 46 37 23 25
Clark 3.4 27 24 1 14 29
Coastal 3.1 24 26 14 17 14
Equilon 1.8 14 3 10 - 10
Marathon Ashland 1.3 10 18 16 21 29
Hunt 1.2 10 8 9 8 6
Other 3.7 29 52 36 23 41
----- ---- ---- ---- ---- ----
Total 100.0 780 846 715 571 597
</TABLE>
C-56
<PAGE>
- --------------------------------------------------------------------------------
VII. CRUDE OIL PRICING AND LIGHT/HEAVY DIFFERENTIAL
- --------------------------------------------------------------------------------
CRUDE OIL PRICING
The overall level of crude oil prices is set by the cost of production and
the balance between the demand for refined products and the supply of crude oil.
If the overall level of prices is high, the supply of crude will tend to
increase because of the economic attractiveness of developing new reserves or
producing existing reserves at higher rates. At the same time, high prices tend
to cause product demand to decrease as relatively less expensive alternative
fuels such as coal, natural gas and nuclear energy are substituted for crude
oil. The resulting imbalance of supply and demand tends to drive prices down.
Similarly, if the price is low, demand is generally stimulated, alternative
energy supply development is constrained, and adding new reserves becomes less
economical. Ultimately, the low prices cause demand to approach production
capacity limits and the resulting competition for supply drives prices back up.
The world supply of crude oils is assumed to be consumed in the most
economic manner subject to political and structural constraints. The pattern of
world crude oil movement establishes the price equalization point for each crude
oil and the crude oils it will compete against in that market. The differential
values of crude oils are determined by the prices of products in the market,
yields of the crude oils in the refineries in which they are used, and
processing costs.
Purvin & Gertz uses the price of Brent crude oil (light, sweet), FOB Sullom
Voe as the basis for forecasting the prices of major crude oils. Brent serves
both North American and European markets and competes directly with the Middle
Eastern and African crude oils that serve all major markets. The market prices
of other crude oils are based on the price of Brent and are developed through an
analysis of trading patterns and quality adjustments. Both historical and
forecast prices for the various crude oils considered in current and constant
dollars, are shown in Tables VII-1 and VII-2, respectively.
In an interactive process, product prices for each forecast year are
calculated based on expected returns on conversion capacity (which are tied to
excesses and shortages of capacity), which is an element of the base crude
forecast. Crude prices are then determined as a function of the expected
relative yield of a stream of crude oil processed using the type of refinery
configuration that has been determined to be the price-setting mechanism in a
given market, such as vacuum gas oil cracking in the U.S. Gulf Coast. Using the
product price forecast and the relative yields to Brent (or another marker
crude), the relative prices of the various crudes can be calculated. The price
level of light products relative to heavy products will directionally impact the
relative value of light and heavy crudes and the light/heavy differential. Heavy
crudes, when run in a cracking mode, will produce more residual fuel oil than
light crudes. If the differential for light products versus heavy products is
wide, the heavy
C-57
<PAGE>
crude value will be lowered relative to a light crude and the differential will
be wide. The reverse is also true, producing narrow differentials.
LIGHT/HEAVY DIFFERENTIAL
For the purposes of this study and the Upgrade Project, the light/heavy
differential has been defined as the difference between the respective spot
prices of WTI at Cushing for the light crude and Maya FOB Mexico for the heavy
crude.
FACTORS THAT AFFECT THE LIGHT/HEAVY DIFFERENTIAL
The light/heavy differential is the result of a complex balance of a number
of factors, such as:
1. Demand for light products: The overall demand for light products, such
as gasoline and distillates, determines the total amount of crude oil
to be processed, as well as the amount of heavy feedstock available to
be converted into light products or burned as fuel.
2. Demand for heavy products relative to demand for light products: As
the relative proportion of light products in the overall demand mix
increases, more of the heavy portion of each crude barrel must undergo
conversion into lighter products in order to satisfy light product
demand. The reverse situation can occur as well.
3. Supply of heavy crude: As the quality of the crude oil produced
becomes heavier, relatively more conversion capacity is required to
process it and meet the requirements of the market, assuming light
product demand remains stable.
4. Conversion Capacity heavy feedstock to be upgraded and the
corresponding need for conversion capacity. The amount of conversion
capacity existing and being built determines the extent to which
refiners can upgrade available heavy feedstock into light products.
The balance between the demand for upgraded heavy feedstock and
available conversion capacity affects the light/heavy differential.
RECENT TRENDS IN THE CONVERSION CAPACITY SUPPLY/DEMAND BALANCE
In the late 1980s, the balance between conversion capacity and heavy
feedstock was tight, with little or no excess capacity. As a result, returns on
investment to refiners were sufficient to motivate new investments in capacity.
By the early 1990s, the rate of addition of conversion capacity considerably
exceeded the needed level. Many producers added this capacity with the intention
of processing heavy crude into low sulfur diesel and reformulated gasoline. Many
refiners found the most economic way of accomplishing this was to combine
various refinery modifications made in response to regulatory changes with
expansions of conversion capacity. Since conversion capacity is generally the
most profitable increment of
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<PAGE>
refining, many refiners believed that increasing it was the most effective way
to maximize returns on product quality improvement investments. However, because
so many refiners recognized the potential benefit of increasing conversion
capacity, an overbuilding of such capacity resulted. The overabundance of
conversion capacity drove up demand for heavy feedstock and resulted in a
narrowing of the light/heavy differential through 1995.
A recovery in the light/heavy differential occurred in 1996 and 1997. While
this recovery was due in part to temporary refinery operating problems at
several major refinery units, which decreased the availability of conversion
capacity, this recovery was primarily driven by the rising output of heavy
crudes in the Western Hemisphere. This increasing production of heavy crude
resulted in severe price competition and residual fuel oil oversupply. The
spreads reached a peak late in 1997 and early 1998 due to these factors.
In April 1998, the trends began to reverse and the light/heavy differential
began to narrow. This reversal was brought about by the confluence of a number
of factors. These included the effects of the Asian crisis, which reduced demand
for refined products and opened up conversion capacity worldwide. In addition,
low oil prices and high natural gas prices in the U.S. caused demand for
residual fuel to increase rather dramatically. At the same time, export demand
for residual fuel increased sharply due to El Nino related hydropower shortages
in Mexico.
- --------------------------------------------------------------------------------
FIGURE VII-1
WORLD CONVERSION CAPACITY CHANGES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Although the rate of increase in conversion capacity fell sharply after
1994, several major projects are currently underway. In addition, several
conversion projects are linked to supplies of heavy crude from Venezuela and
Mexico and are expected to absorb increases in heavy crude production. Figures
VII-1 and VII-2 illustrate the addition of conversion capacity both worldwide
and in the U.S. Net additions in recent years have been at a rate of 2% in the
U.S. and nearly 4% worldwide.
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<PAGE>
- --------------------------------------------------------------------------------
FIGURE VII-2
U.S. CONVERSION CAPACITY CHANGES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
RECENT TRENDS IN THE LIGHT/HEAVY DIFFERENTIAL
The recent heavy crude production cuts by Venezuela and Canada are causing
the light/heavy differential to narrow currently. At the same time, new
conversion capacity is being brought on and is absorbing any excess heavy
feedstock, thereby strengthening heavy feedstock prices and further narrowing
the differential. In addition, high natural gas prices coupled with low residual
fuel oil prices are encouraging the burning of resid, thereby squeezing the
heavy feedstock balance and narrowing the light/heavy differential even further.
Even so, the differential averaged about $5.00 over the past six months.
Domestic supply constraints in 1998 increased the price of WTI above the
level which would otherwise be expected given the global supply-demand balance.
These constraints are in the process of being reversed, and this is expected to
reduce the price of WTI. Because these supply constraints did not have a
significant impact on the Gulf Coast price of Maya, the light/heavy differential
is expected to contract as WTI prices decline relative to Maya.
Over the short term, the absolute price of WTI is likely to remain in the
$15 to $20 per barrel range. Low demand for petroleum caused by the continuation
of the Asian financial crisis will cause Venezuela and other OPEC producers to
constrain production in the short term. Short term production will be further
constrained under the terms of the recent OPEC agreement. Mexico has agreed to
constrain exports as well. These factors will tend to keep the light/heavy
differential around $5.00 in the short term (i.e. through 2000).
VOLATILITY OF THE LIGHT/HEAVY DIFFERENTIAL
The changing balances between the key factors discussed above historically
have caused a considerable amount of volatility in the light/heavy differential
(Figure VII-3).
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<PAGE>
- --------------------------------------------------------------------------------
FIGURE VII-3
WTI CUSHING minus MAYA FOB
(Dollars per Barrel)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Month to month variations can be expected to continue in the future since
both end-product and crude oil prices fluctuate daily due to both short-term
speculative activity and fundamental changes in the key drivers over a longer
period of time. Some of this volatility is smoothed out when six month moving
average data is used (Figure VII-4). For the time period from January 1988 to
March 1999, the six month period moving average of the light/heavy differential
ranged from a high of $8.90 to a low of $3.76 with an average of $5.83.
- --------------------------------------------------------------------------------
FIGURE VII-4
WTI CUSHING minus MAYA FOB MEXICO (6 MONTH MOVING AVERAGE)
(Dollars per Barrel)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
As a result of the Gulf War, the differential increased sharply in the 1st
quarter of 1990. This increase occurred as crude prices escalated rapidly as
both production and conversion capacity in Iraq and Kuwait were lost. Other
crude producers increased output of heavy crude to compensate. Refineries also
increased runs to compensate for the perceived product shortage. The result was
that residual fuel oil production increased as more heavy crude was run in lower
conversion operations which were not capable of fully upgrading the heavy
feedstock. As the balance was restored the light/heavy differential came off
these highs.
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<PAGE>
LIGHT/HEAVY DIFFERENTIAL FORECAST
We believe that after 2000, the light/heavy differential will widen (Figure
VII-5) as the key drivers are projected to result in a wider differential:
- --------------------------------------------------------------------------------
FIGURE VII-5
WTI CUSHING minus MAYA FOB MEXICO
(Dollars per Barrel)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
1. Demand for light products will increase rapidly (particularly in Asia)
as the world economy improves, necessitating more crude processing.
2. Crude prices will increase (Tables VII-1 and VII-2) as demand for
crude runs increases due to supply/demand balance tightening.
3. Crude production will increase (particularly heavy crude) as demand
for crude increases and higher prices encourage the development of
existing and new fields.
4. Venezuela, Mexico and Canada will expedite heavy oil production once
OPEC production restrictions are lifted. Typically, producers respond
to production limitations by curtailing production of heavy crude
disproportionately to production of light crude, primarily because
producing heavy crude is less profitable on a per-barrel basis.
Assuming producers respond to the most recent OPEC cutbacks in this
manner, heavy oil production may decrease in the short term, but will
increase sharply once the production and export restrictions are
lifted. Thus, there will be an abundant supply of heavy crude oil for
the duration of the Upgrade Project.
5. The combination of increased light product demand and increased heavy
crude production will increase demand for conversion hardware faster
than new conversion capacity can be added, due largely to delays in
building projects. Therefore, refiners will be forced to process heavy
crude oil in refineries that are incapable of fully upgrading heavy
feedstock. As a result, excess residual fuel oil will be produced
until sufficient conversion capacity is added to reduce the overhang
of heavy feedstock from the market. The market should reach
equilibrium in approximately 2005, with the light/heavy differential
stabilizing at nearly $6 per barrel in real terms from this point
forward, with short term fluctuations around this level.
C-62
<PAGE>
USGC REFINERY MARGINS
Refinery margins were very low for most of the 1980s because of excess
capacity resulting from the prior decline in product demand in the early 1980s.
By the later 1980s, capacity had been largely rationalized, demand was once
again growing and margins strengthened considerably. The industry did not enjoy
a very long respite, as a wave of refining investment resulted in a return of
over capacity.
In the following section, the marginal refinery for the USGC is developed
and margins as a function of complexity and crude type are projected. These
margins and grade differentials between products are used to forecast a
consistent set of product prices. Forecasts for the benchmark margins along with
the forecast of USGC product prices are given in Tables VII-3 through VII-8.
DRIVERS OF REFINERY PROFITABILITY
Refinery profitability is driven primarily by supply/demand pressures.
Capacity utilization, both in overall refinery capacity as well as conversion
capacity, is the most direct measure of supply/demand pressures. Of course, in
the short term, excessive capacity utilization can create excess supply and put
downward pressures on margins. However, if an industry needs to operate at near
capacity to meet demand, margins generally are good.
Rather than using domestic capacity to produce the needed demand, imports
from foreign sources can also meet these requirements. Availability of imports
depends on the worldwide balance and the amount of spare capacity in areas such
as Europe and the Caribbean, which can ship products to the U.S.
Over the longer term, capital expenditures measure the amount of new
capacity coming onstream, which can influence capacity utilization. On the other
hand, required capital expenditures in a low margin environment can force
shutdowns of facilities, further tightening the supply/demand balance.
Conversely, if margins are strong, capital expenditures can lead to overbuilding
of capacity.
Commodity markets are a wild card in the drivers of refinery profitability.
At the minimum, these commodity markets greatly enhance the sensitivity of
margin to small supply/demand imbalances and create drastic short term cyclic
behavior. On a broader basis, commodity markets greatly increase the number of
participants in the market and the increased competition tends to drive down
margins, even when the supply/demand balance is only marginally long. Each of
these drivers will be discussed subsequently.
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<PAGE>
- --------------------------------------------------------------------------------
FIGURE VII-6
RELATIVE MARGIN INDICATOR FOR 29 USGC REFINERIES (PPI)
(Dollars per Barrel vs LLS Cracking Refinery)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
FIGURE VII-7
USGC LLS CRACKING MARGINS AFTER VARIABLE COSTS
(Forecast in 1999 Dollars per Barrel)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
FIGURE VII-8
USGC LLS CRACKING VARIABLE COST MARGIN
(Dollars per Barrel)
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
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<PAGE>
Capacity Utilization
Capacity utilization is an important driver of margins because it is a
measure of supply/demand pressure. High utilization rates make it difficult to
respond quickly to unexpected market imbalances and cause prices to be bid up to
attract supplies. Capacity utilization is also important in determining the
marginal refinery economics serving a region; the higher the utilization rate,
the less efficient the marginal supplier.
The marginal USGC refinery has continually become more efficient.
Production of residual fuel oil by USGC refineries have now fallen to nearly 4%
of crude runs. Operating costs have steadily been reduced. Our analysis shows
that virtually all USGC refineries have some form of bottoms upgrading, ranging
from direct cat cracking of "clean" resids to hydroprocessing and coking. In the
late 1980s, the marginal refinery had no bottoms upgrading and long term margins
needed to support full cost economics of the cracking refinery. The processing
power index (PPI) is our way of measuring refinery complexity. Unlike other
measures of complexity, it is designed to measure margin generating capability,
rather than replacement cost. We have found that refinery margins depend
strongly on the processing power of the refinery, that is, its ability to use
the lowest cost raw material and make the highest value possible products. The
PPI is based on the scale of the operation, conversion intensity and hydrogen
intensity. We maintain models of seven different refinery configurations on the
Gulf Coast of varying degrees of complexity and type of crude processed. By
rating each of these model refineries according to scale, conversion intensity
and hydrogen intensity, we have been able to develop weighting factors on how
each of these contributes to margin.
As shown in Figure VII-6 all but one USGC refinery (excluding small
specialty operations) are significantly better than the LLS cracking refinery (a
cracking refinery with no vacuum bottoms upgrading processing Light Louisiana
Sweet crude oil). This represents a significant portion of the U.S. supply and,
thus, most members of the group must survive in order to meet demand
requirements. This group is shown to have margins about $0.50/bbl. better than
the LLS cracking refinery.
The relative position of the Clark Port Arthur refinery is shown in Figure
VII-6 before and after the coker Upgrade Project. It can be seen that the coker
Upgrade Project will move Clark's refinery at Port Arthur from below the middle
of the group to near the top.
Annual average margins after variable costs for the LLS cracking refinery
are shown in Figure VII-7 During the late 1980s, this refinery had a margin
above variable cost of well over the fixed cost level of about $1.20 per barrel.
Thus, margins were sufficient to support the full cost operation of this type of
facility, including sufficient funds to meet needed capital expenditures.
Following the building boom in conversion capacity in the early 1990s, the
margin for this operation fell below the fixed cost level. However, the margin
on average was sufficient to justify incremental processing. We estimate that a
margin above variable cost of about $0.50 a barrel is needed to justify
incremental processing. This level is sufficient to cover timing risks and other
market uncertainties so that the refiner has an incentive to process the
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<PAGE>
marginal barrel. Going forward, we believe that this marginal LLS refining
operation will continue to be the marginal source of product on the U.S. Gulf
Coast.
In order to understand the basis for our forecast, it is necessary to look
beyond the annual averages. Commodity pricing of crude oil and products
generates high frequency cycles which must be analyzed to project the evolution
of margins.
Commodity Driven Cycles
The impact of commodity markets on margins is difficult to analyze and is
the subject of controversy. The financial community, which benefits from large
numbers of paper transactions, portrays the commodity markets as merely a mirror
reflecting the industry. On the other hand, many industry participants believe
that the markets are not merely a reflection, but are creating the image. The
demand for paper instruments has an impact on the supply/demand balance just as
a demand for physical barrels, although in the long term, the physical balance
must prevail. Commodity markets greatly increase the number of participants
since no physical position or assets are required, only a credit line.
For refining, the problem is further exacerbated by the fact that most of
the activity is on crude oil rather than on products. The concentration of
activity in crude oil results from its fundability and a smaller risk compared
to refined products. Likewise, producers have a much greater need for hedging
instruments to lock in production profits and loan repayments than do consumers
of refined products. Thus, a large demand for crude oil hedging instruments is
met by speculators, commodity funds, etc. The result is that the crude oil
market can often go in a different direction from product markets depending on
the supply/demand for hedging instruments as opposed to the supply/demand for
physical crude oil.
Commodity markets have made it impossible to have market leadership to
provide discipline in downward cycles to prevent margins from plunging to levels
that shut in marginal production. The international nature of the market further
aggravates the problem by causing imbalances in any part of the world to quickly
spread to all markets. The result is that prices are extremely sensitive to
small changes in the supply/demand balance.
The sensitivity of margins is shown in Figure VII-8. The volatility and
cyclic behavior is apparent in this chart of monthly averages. Daily averages
would show even greater volatility. Cycles in refining are likely to continue to
have very high frequency because of the overall slow growth in demand. That is,
imbalances can quickly be met and, if necessary, modest capital expenditures can
add capacity commensurate with the rate of growth in demand. By contrast, the
chemical industry which is growing at a 4% or 5% rate, shows longer term cyclic
behaviors and capacity shortages may take several years to work off. Thus,
chemicals can enjoy very strong earnings during their upward cycles for several
years.
The average margin only tells part of the story. The peak level margins
form one set of data points while the bottom level another. In addition, a
number of points are intermediate.
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<PAGE>
Margin Forecast for LLS Cracker
The margin chart (Figure VII-8) can be idealized somewhat as corresponding
to three basic zones of operation. In the "boom" zone, capacity is running full
out, margins are sufficient to attract imports, and the profit for running
incremental crude oil covers fully allocated costs. This level of profitability
would produce very satisfactory returns for the refining industry if it could be
sustained. The "bust" cycle occurs when considerable excess product is available
on the market. In this part of the cycle, runs must be cut to bring
supply/demand back into balance. At this level, a marginal loss occurs on
incremental runs.
The marginal part of the cycle has the highest frequency of occurrence and
is the basis of our theory of incremental supply. At this level of margin, it is
profitable to run incremental crude oil at a marginal profit of about 50(cent)
per barrel. At this level, the risk of holding inventory can be compensated and
an incentive occurs to produce marginal product.
As the supply/demand balance tightens for the reasons discussed previously,
we believe that the frequency of the cycles will change, although their basic
character will not. We anticipate more and longer boom cycles and fewer of the
bust cycles. As capacity tightens, turnarounds, unexpected cold weather, etc.
will have a bigger impact and a greater chance of forcing up margins. From
November 1997 until December 1998 the monthly averages have been above the
"bust" category and there have been a number of data points in the "boom"
category. However, margins weakened in first half of 1999. In the near term,
some downward pressure may result from the full startup of the Trans-American
refinery. After that, we forecast an average trend line at approximately full
cost break-even economics.
Refinery Margins
In Table VII-3 through VII-6, historical and forecast margins and
incremental returns are presented for several USGC refinery configurations in
current and constant 1999 dollars. Capital intensive heavy crude operations show
the greatest return. These margins are based on producing fuel products only.
Many refineries also produce lubes, chemicals, and specialty products. These
operations can have a significant impact on profitability in addition to the
basic fuel operations.
USGC PRODUCT PRICES
The USGC product price forecast is shown in Tables VII-7 and VII-8 in
current and constant 1999 dollars, respectively. The prices are spot pipeline
lows for light products and waterborne lows for residual fuel oil. These prices
are developed through an iterative procedure from the forecast margins discussed
above and the product price relationships discussed below.
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<PAGE>
GASOLINE
The relationship among the gasoline grades and the pricing of oxygenated
and reformulated gasolines through the forecast are important to the economics
of capacity additions and modifications necessary for the industry to be able to
supply these changing fuels. The subsections below describe the basis,
methodology and results for forecasting the prices of the various gasoline
grades.
Conventional Grades
Conventional gasolines are expected to remain a large part of the pool
throughout the forecast. However, the relationships among the conventional
grades have changed as reformulated fuels were introduced into the pool, since
the value of octane has been modified by the addition of substantial quantities
of MTBE and other oxygenates.
The pricing of different grades of conventional gasoline is a function of
the value of octane. The value of octane is determined by the cost of
manufacture. Our calculations are based on incremental reforming costs.
Reforming operations are the major source of incremental octane in the U.S.
refining industry. Higher octane gasolines are more costly to produce due to
higher severity in the reformer. Higher severity results in lower yields of
gasoline, higher proportions of less valuable by-products and additional
operating costs. The relationship is non-linear and must be determined through
calculations of costs at various levels of severity. The results of this
analysis are summarized in the following table along with the actual market
differentials experienced.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
CONVENTIONAL GASOLINE OCTANE COSTS AND MARKET DIFFERENTIALS
(Forecast in 1999 Dollars per Barrel)
---------------------------------------------------------------------------------------------
1987 1990 1991 1992 1993 1994 1995 1996 1997 2000 2005 2010 2015
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Low Octane
Cost 0.20 0.33 0.29 0.23 0.18 0.18 0.20 0.20 0.19 0.13 0.19 0.20 0.19
Market 0.21 0.39 0.31 0.27 0.24 0.25 0.24 0.23 0.24 0.17 0.23 0.23 0.23
High Octane
Cost 0.29 0.47 0.42 0.33 0.26 0.28 0.28 0.28 0.27 0.19 0.27 0.27 0.27
Market 0.35 0.49 0.31 0.34 0.28 0.37 0.33 0.28 0.27 0.25 0.30 0.30 0.20
----------------------------------------------------------------------------------------------
</TABLE>
In the table above, low octane represents the cost per octane barrel when
producing regular gasoline, while high octane represents the costs when
producing premium gasoline. Cost is based on variable costs of operation and by-
product yields on the USGC. The low octane market value is that implied from
USGC spot market differentials between 70 (R+M)/2 natural gasoline and unleaded
regular. The high octane market value is based on the differential between
unleaded regular and premium gasoline. Historically, there was often a small
market premium above cost. We expect octane values to continue to reflect a
small market add-on versus our estimated cost of manufacture. The premium
should, however, remain modest as all octane costs have been reduced with the
introduction of reformulated fuels.
C-68
<PAGE>
With the introduction of mandated reformulated gasoline, the basis of all
octane values has shifted due to the net effects of addition of MTBE and
modified processing. Addition of MTBE to even a portion of the gasoline pool
results in reduced severity of operations to meet total octane requirements.
This applies to the conventional grade gasoline that is still manufactured and
sold in non-reformulated areas as well as to the reformulated grades.
Reformulated Gasoline
The cost of making reformulated gasoline will vary considerably from
refinery to refinery, but in order to index the spot market spreads, the
reformulated cost differential above conventional gasoline was calculated for
our base sour crude cracking refinery. A summary of the results is shown in the
table below.
------------------------------------------------------------------
REFORMULATED/CONVENTIONAL GASOLINE COST DIFFERENTIALS
(Forecast in Constant 1999 (Cents/Gallon)
----------------------------------------------------------------
Phase I (1998) Phase II (2000)
-------------- ---------------
Variable Operating Costs 3.60 5.07
Fixed Operating Costs 2.98 3.72
Oxygenate/Yield Credit (2.25) (6.17)
Capital Recovery (1.81) 1.49
------- -------
Total 2.53 4.12
------------------------------------------------------------------
Our process simulations indicated that it is not very difficult to produce
Phase I reformulated gasoline while at the same time making low sulfur diesel.
Refinery operations needed to be modified only moderately, and the major
investment required and higher operating costs are associated with the
requirement to add oxygenates to regular gasoline. Most refineries have added
MTBE plants based on refinery isobutylenes and adequate supplies of other MTBE
are available for purchase.
The price premiums for Phase I gasoline over conventional gasoline are
calculated to be in the 2.0-2.5(cent) per gallon range under conditions of
normal MTBE prices. In 1995, MTBE prices were inflated early in the year by high
methanol costs, resulting in reformulated fuel premiums peaking in the 6-7(cent)
gallon range. This resulted in an average annual premium on reformulated
gasoline in the 3.5(cent) range for that year. On the other hand, the average
spread in 1997 and 1998 was about 2.5(cent) per gallon and similar levels are
projected until Phase II product is introduced.
Phase II reformulated fuels are expected to show premiums of about 4(cent)
per gallon versus conventional gasoline. Some additional refinery investment
will be required to meet sulfur, olefins, aromatics, and distillation
restrictions. Many refiners have already added processing which will enable them
to produce Phase I complex model and Phase II reformulated fuels. However, we
believe pricing should reflect some capital recovery for the additional industry
requirements.
C-69
<PAGE>
DISTILLATE FUELS
Standard Distillate
In this discussion we will refer to typical specification, heating
oil/diesel fuel as "standard distillate," while the 0.05% sulfur diesel fuel
introduced in 1993 will be referred to as "low sulfur" diesel. Distillate fuel
oil prices are projected based on a relationship versus unleaded regular
standard gasoline. Distillate price differentials are somewhat more difficult to
calculate on a strict refining economics basis due to the seasonal nature of
price trends. Typically, the summer differentials will rise to a level that more
than supports the maximized conversion of this material to gasoline through
revised cutpoints for FCCU charge. At maximum utilization of cracking capacity,
the differential often rises above balanced levels. Our forecasts are based on a
summertime (second and third quarter) distillate discount averaging in the
5(cent) per gallon range, though peaks well over this level are typical.
Wintertime balances can be erratic and the typical premium on distillate
during the winter season is both a function of the distillate balance, the
weather conditions and the relative strength or weakness of the gasoline
balance. Under typical conditions, we estimate the wintertime premium (first and
last quarters of the year) to be near zero. Often the strongest distillate
period is just prior to the winter as inventories are being added to meet peak
winter requirements. The combination of the expected averages yields a long term
forecast for a 2.5(cent) discount for standard distillates relative to
conventional gasoline on a yearly average basis. From 1992-1996 the average
differentials were narrower than the expected longer term trend. This has
resulted primarily from overcapacity to convert distillates and a weak gasoline
market due to oversupply. In 1997, the spread widened out to over 4.5(cent) as a
result of a mild winter and strong gasoline demand, late in the summer season
(July to September). Product demand growth will absorb the extra capacity and
distillate discounts should return to more normal levels in 1998 and in the
future.
Low Sulfur Diesel
Low sulfur diesel fuel was introduced in the fourth quarter of 1993 to meet
the new EPA requirements for on-highway fuel. This material must have a sulfur
content less than or equal to 0.05%. Pricing of this new fuel can be volatile on
a seasonal basis. Its pricing will be a function of operating costs and regional
supply/demand balances. Based on the production data available, U.S. refineries
are capable of producing more than enough low sulfur diesel to meet the market's
requirements. The premium for this fuel has, therefore, has remained relatively
low, reflecting only variable costs with no fixed cost or capital recovery.
Based on simulations of refinery operations in each PADD, it appears that
more than enough low sulfur diesel can be produced than is required by
regulation. Therefore, the opportunity to earn a return on capital is not
expected. The price differential should remain close to variable cost and this
expectation has been confirmed over the years since introduction. Our cost
calculations indicate that the low cost supply source should not be able to
recover much more than 1.5(cent) per gallon for low sulfur diesel relative to
the baseline
C-70
<PAGE>
standard fuel. We are assuming that in the long term, supply capabilities will
exceed demand, and this variable cost differential is used as the long term
equilibrium price differential.
RESIDUAL FUEL OIL
We do not envision shortages of low sulfur crude oils in the international
market, and expect that low sulfur fuel oil will continue to be made from low
sulfur crude bottoms and indirect desulfurization/blending. We do not expect the
demand for low sulfur residual fuel oil to be high enough to require
desulfurizing sour vacuum bottoms to produce low sulfur fuel oil in most
markets. Consequently, the differential will be set by the alternative of
additional processing to produce light products rather than fuel oil. This
processing requires significant desulfurization investment and higher operating
costs for sour residuals versus low sulfur residuals. Thus, the differential
between high and low sulfur fuel oil closely follows trends in conversion
returns. When conversion capacity is slack and returns are low, refiners will
maximize income by preferentially processing the lower cost high sulfur
feedstocks, reducing the sweet-sour differential. When capacity is tight,
however, processing low sulfur material can effectively increase capacity due to
its high yields, and so the differential between high and low sulfur residual
widens. The forecast differential is based on continuation of the observed
relationship with the conversion return.
C-71
<PAGE>
TABLE VII-1
INTERNATIONAL CRUDE OIL PRICES
(Current Dollars per Barrel)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sweet Crude Oil Prices, $/Bbl.
Brent, FOB 17.01 20.64 19.07 12.71 14.46 15.80 19.24 21.40 23.89
Brent, USGC 18.38 22.10 20.61 14.11 15.71 17.04 20.64 22.93 25.57
Brent, NWE 17.54 21.24 19.68 13.22 14.98 16.36 19.87 22.09 24.65
LLS, St. James 18.58 22.31 20.69 14.17 15.90 17.24 20.86 23.18 25.84
WTI Spot, USGC 18.61 22.30 20.55 14.38 16.36 17.53 20.82 23.43 26.46
WTI Spot, Cushing 18.41 22.13 20.59 14.39 16.33 17.47 20.90 23.54 26.55
WTI Spot, Midland 18.28 22.07 20.31 14.12 16.11 17.28 20.54 23.14 26.15
WTI Posted (40 API) 16.75 20.44 18.62 11.95 13.96 15.47 19.11 21.96 24.86
Sour Crude Oil Prices, $/Bbl.
Isthmus, FOB 16.72 20.58 18.26 12.10 14.03 15.36 18.23 20.28 22.62
Isthmus, USGC 17.40 21.15 18.90 12.58 14.47 15.82 18.70 20.79 23.18
Maya, FOB 14.32 17.26 14.85 8.62 11.50 12.67 13.75 15.31 17.13
Maya, USGC 14.96 17.82 15.48 9.10 11.94 13.14 14.25 15.86 17.73
Heavy/Light Differential
WTI Spot, Cushing minus
Maya, FOB 4.09 4.87 5.75 5.76 4.83 4.79 7.15 8.22 9.42
</TABLE>
C-72
<PAGE>
TABLE VII-2
INTERNATIONAL CRUDE OIL PRICES
(Forecast in 1999 Dollars per Barrel)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sweet Crude Oil Prices, $/Bbl.
Brent, FOB 17.01 20.64 19.07 12.71 14.46 15.56 17.17 17.29 17.49
Brent, USGC 18.38 22.10 20.61 14.11 15.71 16.79 18.42 18.53 18.71
Brent, NWE 17.54 21.24 19.68 13.22 14.98 16.12 17.73 17.86 18.05
LLS, St. James 18.58 22.31 20.69 14.17 15.90 16.99 18.62 18.73 18.92
WTI Spot, USGC 18.61 22.30 20.55 14.38 16.36 17.27 18.58 18.94 19.37
WTI Spot, Cushing 18.41 22.13 20.59 14.39 16.33 17.21 18.65 19.02 19.43
WTI Spot, Midland 18.28 22.07 20.31 14.12 16.11 17.02 18.33 18.70 19.14
WTI Posted (40 API) 16.75 20.44 18.62 11.95 13.96 15.24 17.05 17.75 18.20
Sour Crude Oil Prices, $/Bbl.
Isthmus, FOB 16.72 20.58 18.26 12.10 14.03 15.13 16.27 16.39 16.56
Isthmus, USGC 17.40 21.15 18.90 12.58 14.47 15.58 16.69 16.80 16.97
Maya, FOB 14.32 17.26 14.85 9.62 11.50 12.49 12.27 12.38 12.54
Maya, USGC 14.96 17.82 15.48 9.10 11.94 12.95 12.72 12.82 12.98
Heavy/Light Differential
WTI Spot, Cushing minus Maya,
FOB 4.90 4.87 5.75 5.76 4.83 4.72 6.38 6.64 6.89
</TABLE>
C-73
<PAGE>
TABLE VII-3
U.S. GULF COAST LIGHT SWEET CRUDE MARGINS
(Current Dollars per Barrel)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Light Sweet Crude Cost 18.67 22.31 20.69 14.17 15.90 17.24 20.86 23.18 25.84
Light Sweet Hydroskimming Refinery
Product Sales Realization 18.32 22.24 20.73 14.84 15.89 17.51 21.11 23.44 26.13
Variable Costs 0.30 0.40 0.40 0.36 0.36 0.38 0.40 0.44 0.51
Fixed Costs 0.61 0.60 0.62 0.64 0.67 0.66 0.73 0.80 0.89
Net Refining Margin (1.27) (1.07) (0.98) (0.34) (1.04) (0.77) (0.88) (0.98) (1.10)
Interest on Working Capital 0.12 0.14 0.13 0.09 0.09 0.10 0.12 0.13 0.15
Return, % of Replacement Cost (17.93) (15.56) (14.15) (5.45) (14.32) (10.87) (11.16) (11.32) (11.50)
Light Sweet Cracking Refinery
Product Sales Realization 19.93 23.76 22.60 16.16 17.31 18.94 23.05 25.60 28.54
Variable Costs 0.46 0.54 0.55 0.52 0.52 0.54 0.57 0.64 0.72
Fixed Costs 1.25 1.24 1.28 1.32 1.37 1.35 1.49 1.64 1.82
Net Refining Margin (0.46) (0.33) 0.09 0.15 (0.48) (0.20) 0.13 0.14 0.16
Interest on Working Capital 0.13 0.15 0.14 0.10 0.10 0.11 0.13 0.14 0.16
Return, % of Replacement Cost (3.82) (3.06) (0.35) 0.34 (3.66) (1.90) 0.00 0.00 0.00
Light Sweet Coking Refinery
Product Sales Realization 20.48 24.46 23.30 16.63 17.80 19.49 23.90 26.54 29.57
Variable Costs 0.51 0.59 0.60 0.57 0.57 0.59 0.63 0.69 0.78
Fixed Costs 1.48 1.47 1.52 1.57 1.62 1.61 1.77 1.96 2.16
Net Refining Margin (0.18) 0.09 0.49 0.33 (0.30) 0.05 0.64 0.71 0.79
Interest on Working Capital 0.14 0.15 0.15 0.10 0.10 0.11 0.13 0.15 0.16
Return, % of Replacement Cost (1.74) (0.34) 1.86 1.23 (2.16) (0.32) 2.43 2.44 2.45
Light Sweet Incremental Capital
Recovery Factors (%)
Hydroskimming/Cracking 10.45 9.57 13.60 6.22 7.11 7.17 11.28 11.45 11.63
Cracking/Coking 10.49 15.74 14.92 6.55 6.74 9.01 16.72 16.80 16.88
</TABLE>
C-74
<PAGE>
TABLE VII-4
U.S. GULF COAST LIGHT SWEET CRUDE MARGINS
(Forecast in 1999 Dollars per Barrel)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Light Sweet Crude Cost 18.67 22.31 20.69 14.17 15.90 18.99 18.62 18.73 18.92
Light Sweet Hydroskimming Refinery
Product Sales Realization 18.32 22.24 20.73 14.84 15.89 17.25 18.84 18.94 19.13
Variable Costs 0.30 0.40 0.40 0.36 0.36 0.38 0.35 0.36 0.37
Fixed Costs 0.61 0.60 0.62 0.64 0.67 0.65 0.65 0.65 0.65
Net Refining Margin (1.27) (1.07) (0.98) (0.34) (1.04) (0.76) (0.78) (0.79) (0.81)
Interest on Working Capital 0.12 0.14 0.13 0.09 0.09 0.10 0.11 0.11 0.11
Return, % of Replacement Cost (17.83) (15.56) (14.15) (5.45) (14.32) (10.87) (11.16) (11.32) (11.50)
Light Sweet Cracking Refinery
Product Sales Realization 19.93 23.76 22.60 15.16 17.31 18.86 20.57 20.69 20.89
Variable Costs 0.48 0.54 0.55 0.52 0.52 0.53 0.51 0.51 0.53
Fixed Costs 1.25 1.24 1.28 1.32 1.37 1.33 1.33 1.33 1.33
Net Refining Margin (0.46) (0.33) 0.09 0.15 (0.48) (0.19) 0.12 0.12 0.12
Interest on Working Capital 0.13 0.15 0.14 0.10 0.10 0.11 0.12 0.12 0.12
Return, % of Replacement Cost (3.52) (3.06) (0.35) 0.34 (3.65) (1.90) 0.00 0.00 0.00
Light Sweet Caking Refinery
Product Sales Realization 20.48 24.46 23.30 16.63 17.80 19.20 21.33 21.45 21.55
Variable Costs 0.51 0.59 0.60 0.57 0.57 0.58 0.56 0.56 0.57
Fixed Costs 1.48 1.47 1.52 1.57 1.52 1.58 1.58 1.58 1.58
Net Refining Margin (0.18) 0.09 0.48 0.33 (0.30) 0.05 0.57 0.57 0.58
Interest on Working Capital 0.14 0.15 0.15 0.10 0.10 0.11 0.12 0.12 0.12
Return, % of Replacement Cost (1.74) (0.34) 1.86 1.23 (2.16) (0.32) 2.43 2.44 2.45
Light Sweet Incremental Capital Recovery Factors (%)
Hydroskimming/Cracking 10.45 9.57 13.60 6.22 7.11 7.17 11.26 11.45 11.63
Cracking/Caking 10.49 15.74 14.92 5.55 6.74 9.01 16.72 16.80 16.88
</TABLE>
C-75
<PAGE>
TABLE VII-5
U.S. GULF COAST SOUR CRUDE MARGINS
(Current Dollars per Barrel)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Light Sour Crude Cost 17.40 21.15 18.90 12.58 14.47 15.82 18.70 20.79 23.18
Light Sour Hydroskimming Refinery
Product Sales Realization 17.12 20.27 18.95 13.24 14.80 16.05 18.60 20.66 23.06
Variable Costs 0.36 0.47 0.48 0.43 0.43 0.45 0.47 0.52 0.60
Fixed costs 0.82 0.81 0.84 0.87 0.90 0.89 0.98 1.08 1.20
Net Refining Margin (1.46) (2.16) (1.26) (0.64) (1.01) (1.11) (1.56) (1.73) (1.91)
Interest on Working Capital 0.12 0.14 0.13 0.09 0.09 0.10 0.11 0.13 0.14
Return, % of Replacement Cost (15.17) (21.96) (13.11) (6.80) (10.29) (11.15) (13.88) (13.97) (13.98)
Light Sour Cracking Refinary
Product Sales Realization 18.62 21.95 20.87 14.76 16.13 17.53 20.79 23.10 25.76
Variable Costs 0.52 0.78 0.79 0.72 0.73 0.76 0.80 0.88 1.01
Fixed costs 1.49 1.48 1.53 1.58 1.64 1.62 1.78 1.97 2.18
Net Refining Margin (0.89) (1.46) (0.34) (0.13) (0.70) (0.67) (0.49) (0.55) (0.60)
Interest on Working Capital 0.13 0.15 0.14 0.10 0.10 0.11 0.12 0.14 0.15
Return, % of Replacement Cost (5.44) (8.52) (2.52) (1.16) (4.14) (3.95) (2.84) (2.85) (2.85)
Light Sour Coking Refinery
Product Sales Realization 19.53 23.44 22.32 15.94 17.07 18.67 22.89 25.41 28.32
Variable Costs 0.71 0.88 0.89 0.82 0.83 0.86 0.91 1.00 1.15
Fixed costs 1.92 1.90 1.97 2.03 2.10 2.08 2.29 2.53 2.80
Net Refining Margin (0.40) (0.50) 0.56 0.51 (0.34) (0.09) 0.98 1.09 1.20
Interest on Working Capital 0.14 0.15 0.15 0.10 0.10 0.11 0.13 0.15 0.16
Return, % of Replacement Cost (2.20) (2.66) 1.67 1.62 (1.76) (0.79) 3.02 3.02 3.01
Maya Coking Refinery
Product Sales Realization 19.33 22.85 22.02 15.73 16.84 18.32 22.37 24.84 27.68
Variable Costs 1.19 1.52 1.54 1.40 1.40 1.47 1.54 1.71 1.95
Fixed costs 2.42 2.40 2.48 2.55 2.65 2.62 2.89 3.19 3.52
Net Refining Margin 0.76 1.11 2.53 2.68 0.84 1.09 3.69 4.08 4.47
Interest on Working Capital 0.13 0.14 0.14 0.09 0.10 0.11 0.12 0.13 0.15
Return, % of Replacement Cost 2.04 3.12 7.50 8.19 2.35 3.07 9.99 9.99 9.92
Light Sour Incremental Capital Recovery
Factors(%)
Hydroskimming/Cracking 6.75 8.25 10.75 5.94 3.56 5.05 10.98 11.08 11.08
Cracking/Coking 8.85 17.29 15.98 11.13 6.38 10.00 23.00 23.00 23.00
Maya Coking/Coking 17.77 24.57 29.63 32.50 17.60 17.37 35.85 35.87 35.55
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-76
<PAGE>
TABLE VII-5
U.S. GULF COAST SOUR CRUDE MARGINS
(Forecast in 1999 Dollars per Barrel)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Light Sour Crude Cost 17.40 21.15 18.90 12.58 14.47 15.58 16.69 16.80 16.97
Light Sour Hydroskimming Refinery
Product Sales Realization 17.12 20.27 18.95 13.24 14.80 15.81 18.59 16.70 16.88
Variable Costs 0.36 0.47 0.48 0.43 0.43 0.44 0.42 0.42 0.44
Fixed Costs 0.82 0.81 0.84 0.87 0.90 0.88 0.88 0.88 0.88
Net Refining Margin (1.46) (2.16) (1.26) (0.64) (1.01) (1.09) (1.39) (1.40) (1.40)
Interest on Working Capital 0.12 0.14 0.13 0.09 0.09 0.10 0.10 0.10 0.10
Return, % of Replacement Cost (15.17) (21.96) (13.11) (6.80) (10.29) (11.15) (13.88) (13.97) (13.98)
Light Sour Cracking Refinery
Product Sales Realization 18.62 21.95 20.87 14.76 16.13 17.27 18.55 18.67 18.65
Variable Costs 0.62 0.78 0.79 0.72 0.73 0.75 0.71 0.71 0.74
Fixed Costs 1.49 1.48 1.53 1.58 1.64 1.59 1.59 1.59 1.59
Net Refining Margin (0.89) (1.46) (0.34) (0.13) (0.70) (0.66) (0.44) (0.44) (0.44)
Interest on Working Capital 0.13 0.15 0.14 0.10 0.10 0.11 0.11 0.11 0.11
Return, % of Replacement Cost (5.44) (8.52) (2.52) (1.16) (4.14) (3.96) (2.84) (2.85) (2.85)
Light Sour Coking Refinery
Product Sales Realization 19.63 23.44 22.32 15.94 17.07 18.39 20.42 20.54 20.73
Variable Costs 0.71 0.88 0.89 0.82 0.83 0.85 0.81 0.81 0.84
Fixed Costs 1.92 1.90 1.97 2.03 2.10 2.05 2.05 2.05 2.05
Net Refining Margin (0.40) (0.50) 0.56 0.51 (0.34) (0.09) 0.88 0.88 0.88
Interest on Working Capital 0.14 0.15 0.15 0.10 0.10 0.11 0.12 0.12 0.12
Return, % of Replacement Cost (2.20) (2.66) 1.67 1.62 (1.76) (0.79) 3.02 3.02 3.01
Maya Coking Refinery
Product Sales Realization 19.33 22.35 22.02 15.73 16.84 18.05 19.96 20.07 20.26
Variable Costs 1.19 1.52 1.54 1.40 1.40 1.45 1.37 1.38 1.43
Fixed Costs 2.42 2.40 2.48 2.55 2.65 2.58 2.58 2.58 2.58
Net Refining Margin 0.76 1.11 2.53 2.68 0.84 1.07 3.29 3.29 3.27
Interest on Working Capital 0.13 0.14 0.14 0.09 0.10 0.10 0.11 0.11 0.11
Return, % of Replacement Cost 2.04 3.12 7.60 8.19 2.35 3.07 9.99 9.99 9.92
Light Sour Incremental Capital Recovery Factors (%)
Hydroskimming/Cracking 6.75 8.26 10.75 5.94 3.56 5.05 10.98 11.08 11.08
Cracking/Coking 8.85 17.29 15.98 11.13 6.38 10.00 23.00 23.00 23.00
Maya Coking/Coking 17.77 24.57 29.63 32.60 17.60 17.37 35.85 35.87 35.56
</TABLE>
C-77
<PAGE>
TABLE VII-7
U.S. PRODUCT PRICES
(Current Dollars per Barrel)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gulf Coast Product Prices, (cents/Gal.)
Propane 31.89 41.98 37.20 25.87 28.35 31.08 37.66 42.46 48.25
Isobutane 40.43 50.56 46.37 31.70 35.37 37.58 48.42 51.19 56.84
Normal Butane 38.19 46.94 43.68 30.76 33.95 35.66 41.36 45.57 50.59
Natural Gasoline 40.55 49.50 47.75 33.78 36.78 39.61 47.44 52.59 58.87
Premium Unleaded Gasoline 55.44 83.37 62.20 45.34 48.06 51.45 63.47 70.44 78.32
Mid-grade Unleaded Gasoline 52.17 60.61 59.66 42.73 45.47 48.88 60.04 66.63 74.17
Regular Unleaded Gasoline 50.72 59.37 58.34 41.17 44.08 47.84 58.62 65.05 72.46
Jet/Kerosene 49.31 60.52 56.75 40.20 43.15 47.84 58.62 65.05 72.46
Diesel/No. 2 Fuel Oil 47.07 58.20 53.60 37.55 40.60 45.30 55.82 61.96 69.04
0.05% S Diesel 48.51 58.66 54.68 39.30 42.20 46.54 57.49 63.82 71.13
1% Sulfur Residual Fuel Oil ($/Bbl.) 14.56 17.35 16.01 11.96 12.53 13.76 15.23 16.94 18.93
3% Sulfur Residual Fuel Oil ($/Bbl.) 13.62 15.41 14.26 9.49 11.62 12.29 12.36 13.78 15.44
Reformulated Gasoline (cents/Gal.)
Phase I 1996-1999, Phase II 2000-2015 58.90 65.66 64.68 47.10 49.53 54.39 56.73 74.48 93.68
Premium Unleaded Gasoline 55.72 62.88 62.16 44.95 47.37 52.23 63.30 70.67 79.52
Mid-grade Unleaded Gasoline 54.31 61.64 60.82 43.69 46.17 51.24 61.89 69.09 77.81
Regular Unleaded Gasoline
</TABLE>
C-78
<PAGE>
TABLE VII-8
U.S. PRODUCT PRICES
(Forecast in 1999 Dollars per Barrel)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2005 2010 2015
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gulf Coast Product Prices, (cents/Gal.)
Propane 31.89 41.98 37.20 25.87 28.35 30.62 33.60 34.31 35.32
Isobutane 40.43 50.56 46.37 31.70 35.37 37.03 41.42 41.37 41.61
Normal Butane 38.19 46.94 43.68 30.76 33.95 35.14 36.90 36.83 37.04
Natural Gasoline 40.55 49.50 47.75 33.78 35.78 39.03 42.33 42.50 43.10
Premium Unleaded Gasoline 55.44 63.37 62.20 45.34 48.05 50.69 56.63 56.93 57.33
Mid-grade Unleaded Gasoline 52.17 60.61 59.66 42.73 45.47 48.16 53.57 53.85 54.29
Regular Unleaded Gasoline 50.72 59.37 58.34 41.17 44.08 47.13 52.31 52.58 53.04
Jet/Kerosene 49.31 60.52 55.75 40.20 43.15 47.13 52.31 52.58 53.04
Diesel/No. 2 Fuel Oil 47.07 58.20 53.80 37.55 40.60 44.63 49.81 50.08 50.54
0.05% S Diesel 48.51 59.66 54.68 39.30 42.20 45.85 51.30 51.58 52.07
1% Sulfur Residual Fuel Oil ($/Bbl.) 14.56 17.36 18.01 11.96 12.63 13.56 13.59 13.69 13.86
3% Sulfur Residual Fuel Oil ($/Bbl.) 13.62 15.41 14.26 9.49 11.62 12.11 11.03 11.13 11.30
Reformulated Gasoline (cents/Gal.)
Phase I 1996-1999, Phase II 2000-2015
Premium Unleaded Gasoline 58.90 65.66 64.68 47.10 49.53 53.59 59.54 60.20 61.25
Mid-grade Unleaded Gasoline 55.72 62.88 62.16 44.95 47.37 51.45 56.48 57.11 58.21
Regular Unleaded Gasoline 54.31 51.64 60.82 43.69 46.17 50.49 55.22 55.84 56.95
</TABLE>
C-79
<PAGE>
$255,000,000
Port Arthur Finance Corp.
Offer to Exchange All Outstanding 12.50% Senior Secured Notes due 2009 for
12.50% Senior Secured Notes due 2009, which have been registered under the
Securities Act of 1933.
Unconditionally Guaranteed Jointly and Severally by Port Arthur Coker Company
L.P., Sabine River Holding Corp. and Neches River Holding Corp.
Until , 2000, (90 days after the date of this prospectus), all dealers
effecting transactions in the exchange notes, whether or not participating in
this distribution, may be required to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments of subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") authorizes the registrants to indemnify their officers and
directors under certain circumstances and subject to certain conditions and
limitations as stated therein, against all expenses and liabilities incurred by
or imposed upon them as a result of actions, suits and proceedings, civil or
criminal, brought against them as such officers and directors if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the registrants and, with respect to any criminal action
or proceeding, had no reasonable cause to believe their conduct was unlawful.
Reference is hereby made to Article 11 of the Certificate of Incorporation of
Port Arthur Finance and Article 10 of the Amended and Restated Certificates of
Incorporation of Sabine River and Neches River, copies of which are filed as
Exhibits 3.01(a), 3.01(b) and 3.01(c), respectively, each of which provides for
indemnification of officers and directors to the fullest extent permitted by
Delaware Law. Reference is hereby made to Section 7.1 of the By Laws of Port
Arthur Finance and Section 7.1 of the Amended and Restated By Laws of each of
Sabine River and Neches River, copies of which are filed as Exhibits 3.02(a),
3.02(b) and 3.02(c), respectively, each of which provides for indemnification
of directors or officers in derivative and non derivative actions in the
circumstances provided in such Section 7.1. Section 7.2 of the By Laws of Port
Arthur Finance and Section 7.2 of the Amended and Restated By Laws of each of
Sabine River and Neches River authorize each such company to purchase and
maintain insurance on behalf of any director, officer, employee or agent of
such company against any liability asserted against or incurred by them in such
capacity or arising out of their status as such, whether or not such company
would have the power to indemnify such person against such liability.
Sabine River Holdings Corp. maintains a directors' and officers' insurance
policy which insures the officers and directors of Sabine River and its
subsidiaries from any claim arising out of an alleged wrongful act by such
persons in their respective capacities as officers and directors.
Section 102(b)(7) of the Delaware Law permits corporations to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of a fiduciary duty of care as a
director. Reference is made to Article 10 of Port Arthur Finance's Certificate
of Incorporation and Article 9 of the Amended and Restated Certificates of
Incorporation of each of Sabine River and Neches River each of which limit a
director's liability in accordance with such Section.
Reference is made to Section 7 of the Purchase Agreement, copy of which is
filed as Exhibit 1.01 for information concerning indemnification arrangements
among the registrants and the initial purchasers of the outstanding notes.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.01 --Purchase Agreement, dated as of August 10, 1999 among Credit Suisse
First Boston Corporation, Goldman, Sachs & Co., Deutsche Bank
Securities Inc., Clark Refining Holdings Inc., Port Arthur Finance
Corp. ("PAFC"), Port Arthur Coker Company L.P. ("PACC"), Sabine
River Holding Corp. ("Sabine") and Neches River Holding Corp.
("Neches").
3.01(a) --Certificate of Incorporation of PAFC
3.01(b) --Amended and Restated Certificate of Incorporation of Sabine and the
Certificate of Amendment thereto dated August 11, 1999
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
3.01(c) --Amended and Restated Certificate of Incorporation of Neches and the
Certificate of Amendment thereto dated August 11, 1999
3.02(a) --By Laws of PAFC
3.02(b) --Amended and Restated By Laws of Sabine
3.02(c) --Amended and Restated By Laws of Neches
3.03 --Amended and Restated Partnership Agreement of Port Arthur Coker
Company L.P., dated as of August 2, 1999, among Sabine and Neches
4.01 --Indenture, dated as of August 19, 1999, among PAFC, PACC, Sabine,
Neches, HSBC Bank USA, the capital markets trustee and Bankers
Trust Company, as Collateral Trustee;
4.02 --Form of 12.50% Senior Secured Notes due 2009 (the "Exchange Note")
(included as part of Exhibit 4.01 hereto)
4.03 --Registration Rights Agreement, dated as of August 19, 1999, among
Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Deutsche Bank Securities Inc., Clark Refining Holdings Inc., PAFC,
PACC, Sabine and Neches
4.04 --Common Security Agreement, dated as of August 19, 1999, among PAFC,
PACC, Sabine, Neches, Bankers Trust Company, as Collateral Trustee
and Depositary Bank, Deutsche Bank AG, New York Branch ("Deutsche
Bank"), as Administrative Agent, Winterthur International Insurance
Company Limited, an English company ("Winterthur"), as Oil Payment
Insurers Administrative Agent and HSBC Bank USA, as Capital Markets
Trustee
4.05 --Transfer Restrictions Agreement, dated as of August 19, 1999, among
PAFC, PACC, Clark Refining Holdings Inc., Sabine, Neches,
Blackstone Capital Partners III Merchant Banking Fund L.P. ("BCP
III"), Blackstone Offshore Capital Partners III L.P. ("BOCP III"),
Blackstone Family Investment Partnership III ("BCIP III"),
Winterthur, as the Oil payment Insurers Administrative agent,
Bankers Trust Company, as Collateral Trustee, Deutsche Bank, as
Administrative Agent and HSBC Bank USA, as Capital Markets Trustee
4.06 --Intercreditor Agreement, dated as of August 19, 1999, among Bankers
Trust Company, as Collateral Trustee, Deutshe Bank, as
Administrative Agent, Winterthur, as Oil Payment Insurers
Administrative Agent and Debt Service Reserve Insurer and HSBC Bank,
as Capital Markets Trustee
5.01 --Opinion of Simpson Thacher & Bartlett as to the legality of the
securities being registered
10.01 --Capital Contribution Agreement, dated as of August 19, 1999, among
BCP III, BOCP III, BCIP, Clark Refining Holdings Inc.. PACC,
Sabine, Neches and Bankers Trust Company as Collateral Trustee
10.02 --Capital Contribution Agreement, dated as of August 19, 1999, by and
among Occidental Petroleum Corporation, Clark Refining Holdings,
Inc., PACC, Sabine, Neches and Bankers Trust Company as Collateral
Trustee
10.03 --Bank Senior Loan Agreement, dated as of August 19, 1999, among
PAFC, PACC, Sabine, Neches, Deutsche Bank, as Administrative Agent
and the Bank Senior Lenders named therein
10.04 --Secured Working Capital Facility, dated as of August 19, 1999,
among PAFC, PACC, Sabine, Neches, Deutsche Bank, as Administrative
Agent and the Bank Senior Lenders named therein
10.05 --Reimbursement Agreement, dated as of August 19, 1999, among PAFC,
PACC, Sabine, Neches and Winterthur, as Primary Insurer and Oil
Payment Insurers Administrative Agent
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.06 --Engineering, Procurement and Construction Contract, dated as of July
12, 1999, between PACC and Foster Wheeler USA Corporation
10.07 --EPC Contract Parent Guarantee, dated as of July 13, 1999, between
PACC and Foster Wheeler Corporation
10.8 --Services and Supply Agreement, dated as of August 19, 1999, between
PACC and Clark R&M
10.9 --Product Purchase Agreement, dated as of August 19, 1999, between
PACC and Clark R&M
10.10 --Hydrogen Supply Agreement, dated as of August 1, 1999, between PACC
and Air Products and Chemicals, Inc.
10.11 --Coker Complex Ground Lease, dated as of August 19, 1999, between
PACC and Clark R&M
10.12 --Ancillary Equipment Site Lease, dated as of August 19, 1999, between
PACC and Clark R&M
10.13 --Assignment and Assumption Agreement, dated as of August 19, 1999,
between PACC and Clark R&M
10.14 --Maya Crude Oil Sale Agreement, dated as of March 10, 1998, between
Clark R&M and P.M.I. Comercio Internacional, S.A. de C.V., as
amended by the First Amendment and Supplement to the Maya Crude Oil
Sales Agreement, dated as of August 19, 1999 (included as Exhibit
10.15 hereto), and as assigned by Clark R&M to PACC pursuant to the
Assignment and Assumption Agreement, dated as of August 19, 1999
(included as Exhibit 10.13 hereto.
10.15 --First Amendment and Supplement to the Maya Crude Oil Sales
Agreement, dated as of August 19, 1999
10.16 --Guarantee Agreement, dated as of March 10, 1998, between Clark R&M
and Petroleos Mexicanos, the Mexican national oil company, as
assigned by Clark R&M to PACC as of August 19, 1999 pursuant to the
Assignment and Assumption Agreement, dated as of August 19, 1999
(included as Exhibit 10.13)
15 --Letter Regarding Unaudited Interim Financial Information
21 --Subsidiaries of the Registrants
23.01 --Consent of Simpson Thacher & Bartlett (contained in Exhibit 5.01)
23.02 --Consent of Deloitte & Touche LLP
23.03 --Consent of Purvin & Gertz, Inc.
23.04 --Consent of PricewaterhouseCoopers LLP
25 --Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of HSBC Bank USA, as trustee
99.01 --Form of Letter of Transmittal
99.02 --Form of Notice of Guaranteed Delivery
</TABLE>
II-3
<PAGE>
(b) Financial Statement Schedules
Item 22. Undertakings
(a) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(b) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(c) Insofar as indemnification for liabilities arising under Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the applicable registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i)to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii)to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
that a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant issuer has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of St.
Louis, state of Missouri, on December 9, 1999.
PORT ARTHUR FINANCE CORP.
By: /s/ Maura J. Clark
Name: Maura J. Clark
Title: Executive Vice President
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being an
officer or director, or both, of Port Arthur Finance Corp. (the "Issuer"), in
his or her capacity as set forth below, hereby constitutes and appoints Maura
J. Clark and Richard A. Keffer and each of them, his or her true and lawful
attorney and agent, to do any and all acts and all things and to execute any
and all instruments which said attorney and agent may deem necessary or
desirable to enable the Issuer to comply with the Securities Act of 1933, as
amended (the "Act"), and any rules, regulations and requirements of the
Securities and Exchange Commission thereunder, in connection with the
registration under the Act of the exchange notes (the "Securities"), including,
without limitation, the power and authority to sign the name of each of the
undersigned in the capacities indicated below to the registration statement on
Form S-4 to be filed with the Securities and Exchange Commission with respect
to such Securities, to any and all amendments or supplements to such
Registration Statement, whether such amendments or supplements are filed before
or after the effective date of such Registration Statement, to any related
Registration Statement filed pursuant to Rule 462 under the Act, and to any and
all instruments or documents filed as part of or in connection with such
Registration Statement or any and all amendments thereto, whether such
amendments are filed before or after the effective date of such Registration
Statement; and each of the undersigned hereby ratifies and confirms all that
such attorney and agent shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed on December 9, 1999 by or behalf of the
following persons in the capacities indicated with the registrant issuer.
Signatures Title
/s/ William C. Rusnack Director, President
- ------------------------------------- and CEO
William C. Rusnack (Principal Executive
Officer)
/s/ Maura J. Clark Executive Vice
- ------------------------------------- President and Chief
Maura J. Clark Financial Officer
(Principal Financial
Officer)
/s/ Bradley R. Aldrich Executive Vice
- ------------------------------------- President
Bradley D. Aldrich
/s/ Dennis R. Eichholz Vice President,
- ------------------------------------- Controller and
Dennis R. Eichholz Treasurer
(Principal Accounting
Officer)
/s/ Robert L. Friedman Director
- -------------------------------------
Robert L. Friedman
II-5
<PAGE>
Signatures Title
/s/ David I. Foley Director
- -------------------------------------
David I. Foley
/s/ Stephen I. Chazen Director
- -------------------------------------
Stephen I. Chazen
/s/ William E. Haynes Director
- -------------------------------------
William E. Haynes
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant guarantor has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of St.
Louis, state of Missouri, on December 9, 1999.
PORT ARTHUR COKER COMPANY L.P.
By: Sabine River Holding Corp.,
as General Partner
/s/ Maura J. Clark
By: _________________________________
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director of Sabine River Holding Corp., the corporate general partner of Port
Arthur Coker Company L.P. (the "Guarantor"), in his or her capacity as set
forth below, hereby constitutes and appoints Maura J. Clark and Richard A.
Keffer and each of them, his or her true and lawful attorney and agent, to do
any and all acts and all things and to execute any and all instruments which
said attorney and agent may deem necessary or desirable to enable the Guarantor
to comply with the Securities Act of 1933, as amended (the "Act"), and any
rules, regulations and requirements of the Securities and Exchange Commission
thereunder, in connection with the registration under the Act of the exchange
notes (the "Securities"), including, without limitation, the power and
authority to sign the name of each of the undersigned in the capacities
indicated below to the registration statement on Form S-4 to be filed with the
Securities and Exchange Commission with respect to such Securities, to any and
all amendments or supplements to such Registration Statement, whether such
amendments or supplements are filed before or after the effective date of such
Registration Statement, to any related Registration Statement filed pursuant to
Rule 462 under the Act, and to any and all instruments or documents filed as
part of or in connection with such Registration Statement or any and all
amendments thereto, whether such amendments are filed before or after the
effective date of such Registration Statement; and each of the undersigned
hereby ratifies and confirms all that such attorney and agent shall do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed on December 9, 1999 by or behalf of the
following persons in the capacities indicated with the registrant guarantor.
Signatures Title
/s/ William C. Rusnack Director
- -------------------------------------
William C. Rusnack
/s/ Robert L. Friedman Director
- -------------------------------------
Rober L. Friedman
/s/ David I. Foley Director
- -------------------------------------
David I. Foley
/s/ Stephen I. Chazen Director
- -------------------------------------
Stephen I. Chazen
/s/ William E. Haynes Director
- -------------------------------------
William E. Haynes
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant guarantor has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of St.
Louis, state of Missouri, on December 9, 1999.
SABINE RIVER HOLDING CORP.
/s/ Maura J. Clark
By: _________________________________
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being an
officer or director, or both, of Sabine River Holding Corp. (the "Guarantor"),
in his or her capacity as set forth below, hereby constitutes and appoints
Maura J. Clark and Richard A. Keffer and each of them, his or her true and
lawful attorney and agent, to do any and all acts and all things and to execute
any and all instruments which said attorney and agent may deem necessary or
desirable to enable the Guarantor to comply with the Securities Act of 1933, as
amended (the "Act"), and any rules, regulations and requirements of the
Securities and Exchange Commission thereunder, in connection with the
registration under the Act of the exchange notes (the "Securities"), including,
without limitation, the power and authority to sign the name of each of the
undersigned in the capacities indicated below to the registration statement on
Form S-4 to be filed with the Securities and Exchange Commission with respect
to such Securities, to any and all amendments or supplements to such
Registration Statement, whether such amendments or supplements are filed before
or after the effective date of such Registration Statement, to any related
Registration Statement filed pursuant to Rule 462 under the Act, and to any and
all instruments or documents filed as part of or in connection with such
Registration Statement or any and all amendments thereto, whether such
amendments are filed before or after the effective date of such Registration
Statement; and each of the undersigned hereby ratifies and confirms all that
such attorney and agent shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed on , 1999 by or behalf of the
following persons in the capacities indicated with the registrant guarantor.
Signatures Title
William C. Rusnack Director, President
- ------------------------------------- and CEO
William C. Rusnack (Prinicipal
Executive Officer)
/s/ Maura J. Clark Executive Vice
- ------------------------------------- President and Chief
Maura J. Clark Financial Officer
(Principal Financial
Officer)
/s/ Bradley D. Aldrich Executive Vice
- ------------------------------------- President
Bradley D. Aldrich
/s/ Dennis R. Eichholz Vice President,
- ------------------------------------- Controller and
Dennis R. Eichholz Treasurer
(Principal Accounting
Officer)
/s/ Robert L. Friedman Director
- -------------------------------------
Robert L. Friedman
II-8
<PAGE>
Signatures Title
David I. Foley Director
- -------------------------------------
David I. Foley
/s/ Stephen I. Chazen Director
- -------------------------------------
Stephen I. Chazen
/s/ William E. Haynes Director
- -------------------------------------
William E. Haynes
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant guarantor has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of St.
Louis, state of Missouri, on December 9, 1999.
NECHES RIVER HOLDING CORP.
/s/ Maura J. Clark
By: _________________________________
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being an
officer or director, or both, of Neches River Holding Corp. (the "Guarantor"),
in his or her capacity as set forth below, hereby constitutes and appoints
Maura J. Clark and Richard A. Keffer and each of them, his or her true and
lawful attorney and agent, to do any and all acts and all things and to execute
any and all instruments which said attorney and agent may deem necessary or
desirable to enable the Guarantor to comply with the Securities Act of 1933, as
amended (the "Act"), and any rules, regulations and requirements of the
Securities and Exchange Commission thereunder, in connection with the
registration under the Act of the exchange notes (the "Securities"), including,
without limitation, the power and authority to sign the name of each of the
undersigned in the capacities indicated below to the registration statement on
Form S-4 to be filed with the Securities and Exchange Commission with respect
to such Securities, to any and all amendments or supplements to such
Registration Statement, whether such amendments or supplements are filed before
or after the effective date of such Registration Statement, to any related
Registration Statement filed pursuant to Rule 462 under the Act, and to any and
all instruments or documents filed as part of or in connection with such
Registration Statement or any and all amendments thereto, whether such
amendments are filed before or after the effective date of such Registration
Statement; and each of the undersigned hereby ratifies and confirms all that
such attorney and agent shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed on December 9, 1999 by or behalf of the
following persons in the capacities indicated with the registrant guarantor.
Signatures Title
/s/ William C. Rusnack Director, President
- ------------------------------------- and CEO
William C. Rusnack (Principal Executive
Officer)
/s/ Maura J. Clark Executive Vice
- ------------------------------------- President and Chief
Maura J. Clark Financial Officer
(Principal Financial
Officer)
/s/ Bradley D. Aldrich Executive Vice
- ------------------------------------- President
Bradley D. Aldrich
/s/ Dennis R. Eichholz Vice President,
- ------------------------------------- Controller and
Dennis R. Eichholz Treasurer
(Principal Accounting
Officer)
/s/ Robert L. Friedman Director
- -------------------------------------
Rober L. Friedman
II-10
<PAGE>
Signatures Title
/s/ David I. Foley Director
- -------------------------------------
David I. Foley
/s/ Stephen I. Chazen Director
- -------------------------------------
Stephen I. Chazen
/s/ William E. Haynes Director
- -------------------------------------
William E. Haynes
II-11
<PAGE>
Exhibit 1.01
EXECUTION COPY
PORT ARTHUR FINANCE CORP.
$255,000,000
12.50% Senior Secured Notes due 2009
Unconditionally Guaranteed Jointly and Severally by
PORT ARTHUR COKER COMPANY L.P.
SABINE RIVER HOLDING CORP.
NECHES RIVER HOLDING CORP.
PURCHASE AGREEMENT
------------------
August 10, 1999
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Deutsche Bank Securities Inc.
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
1. Introductory. Port Arthur Finance Corp., a Delaware corporation (the
"Issuer"), proposes, subject to the terms and conditions stated herein, to issue
and sell to Credit Suisse First Boston Corporation ("CSFBC"), Goldman, Sachs &
Co. and Deutsche Bank Securities Inc. (together, the "Initial Purchasers") an
aggregate of $255,000,000 principal amount of its 12.50% Senior Secured Notes
due 2009 (the "Notes"), unconditionally and irrevocably guaranteed (the
"Guarantee, and together with the Notes, the "Offered Securities") jointly and
severally by Port Arthur Coker Company L.P., a Delaware limited partnership (the
"Partnership"), Sabine River Holding Corp., a Delaware corporation and general
partner of the Partnership (the "General Partner") and Neches River Holding
Corp., a Delaware corporation and limited partner of the Partnership (the
"Limited Partner" and, together with the General Partner, the "Partners"). The
Offered Securities will be issued under an indenture (the "Indenture"), to be
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dated as of the Closing Date (as defined below), among the Issuer, the
Partnership, the Partners and HSBC Bank USA, as Indenture Trustee. Capitalized
terms not otherwise defined herein shall have the respective meanings ascribed
thereto in Annex A to the Common Security Agreement, to be dated as of the
Closing Date, among the Issuer, the Partnership, the Partners, Winterthur
International Insurance Company Limited, as Administrative Agent for the Oil
Payment Insurers, Bankers Trust Company, as Collateral Trustee for the Secured
Parties, Bankers Trust Company, as Administrative Agent for the Bank Senior
Lenders, the Indenture Trustee and HSBC Bank USA, as Depositary Bank (the
"Common Security Agreement"), whether expressly set forth therein or by
reference to another document. The United States Securities Act of 1933, as
amended, is referred herein to as the "Securities Act."
The Initial Purchasers and the direct and indirect transferees of the
Offered Securities will be entitled to the benefits of the registration rights
agreement, in the form attached hereto as Exhibit M, dated as of the Closing
Date (the "Registration Rights Agreement"). Pursuant to the Registration Rights
Agreement, the Issuer, the Partnership and the Partners have agreed (i) to file
a registration statement with the Securities and Exchange Commission registering
the Exchange Securities (as defined in the Registration Rights Agreement) under
the Securities Act or (ii) to file a shelf registration statement pursuant to
Rule 415 of the Securities Act with the Securities and Exchange Commission. In
addition, under certain circumstances set forth in the Registration Rights
Agreement, the Issuer, the Partnership and the Partners have agreed to issue and
deliver to the Initial Purchasers the Private Exchange Securities (as defined
in the Registration Rights Agreement). The Offered Securities, Exchange
Securities and Private Exchange Securities are referred to collectively as the
"Securities".
It is understood that all payments of principal, interest and premium, if
any, on the Notes will be unconditionally guaranteed jointly and severally by
the Partnership and the Partners (the "Guarantors"). In addition, it is also
understood that, as an inducement for the Initial Purchasers to enter into this
Agreement, and in consideration of the benefits expected to be received from the
Initial Purchasers' purchase of the Offered Securities, (i) the Issuer, the
Partnership, the Partners and Clark Refining Holdings are making certain
representations, warranties and covenants under this Agreement and (ii) Clark
Refining & Marketing is making certain representations and warranties as to the
information set forth in the Offering Document under the headings "Management's
Discussion and Analysis - Operations to Date," "Our Coker Project -
Environmental Matters - Existing Conditions," "Principal Project Participants -
Clark Refining & Marketing," all Clark Refining & Marketing Information
incorporated or to be incorporated by reference into the Offering Document,
"Annex A- Additional Information Regarding Clark Refining & Marketing" and
"Existing Port Arthur Refinery and the Refinery Upgrade Project" in each case,
insofar as such information relates to Clark Refining & Marketing (collectively,
the "Clark Refining & Marketing Information") under a Letter Agreement dated the
date hereof.
Each of the Issuer, the Partnership, each Partner and Clark Refining
Holdings Inc. hereby agrees with the Initial Purchasers as follows:
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2. Representations and Warranties of the Issuer, the Partnership, the
Partners and Clark Refining Holdings. Each of the Issuer, the Partnership, the
Partners and Clark Refining Holdings, jointly and severally represents and
warrants to, and agrees with, the Initial Purchasers that (except that Clark
Refining Holdings makes no representation or warranty with respect to any
information incorporated by reference pursuant to subparagraph (p) below):
a. A preliminary offering circular, dated July 16, 1999, and an
offering circular, dated August 10, 1999, relating to the Offered
Securities to be offered by the Initial Purchasers have been prepared by
the Issuer and the Partnership. Such preliminary offering circular and
offering circular, as supplemented as of the date of this Agreement,
including all documents incorporated therein by reference, or annexed or
attached thereto, together with any other document approved in writing
after the date hereof by the Issuer or the Partnership for use in
connection with the contemplated resale of the Offered Securities, are
hereinafter collectively referred to as the "Offering Document." On the
date of this Agreement, the Offering Document is true and correct in all
material respects and does not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The preceding sentence does not apply to statements
in, or omissions from, the Offering Document based upon (i) written
information furnished by the Initial Purchasers specifically for use
therein, it being understood and agreed that the only such information is
that described as such in Section 7(b), (ii) Clark Refining & Marketing
Information (as defined in Section 1 above) or (iii) any information
incorporated by reference pursuant to information furnished by and relating
to Foster Wheeler USA, Foster Wheeler Corporation, P.M.I. Comercio
International, S.A. de C.V., Air Products and Chemicals, Inc. and
Occidental Petroleum Corporation specifically for use therein ("Selected
Information"). To the best of the knowledge of each of the Issuer, the
Partnership, the Partners and Clark Refining Holdings, the Selected
Information is true and correct in all material respects and does not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements there, in light of
the circumstances under which they were made.
b. The Offered Securities have been duly authorized and, when
delivered and paid for pursuant to this Agreement and the Indenture on the
Closing Date, will have been duly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Issuer
and the Guarantors, as the case may be, entitled to the benefits provided
in the Indenture and, indirectly, the security provided in the Security
Documents, and enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws of general applicability related to or affecting creditors'
rights and by general equity principles.
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c. The Exchange Securities and the Private Exchange Securities have
been duly authorized by the Issuer and the Guarantors, as the case may be,
and the Issuer and the Guarantors have all requisite corporate power and
authority to execute, issue and deliver the Exchange Securities and the
Private Exchange Securities, if any, and to incur and perform its
obligations provided for therein. When issued in accordance with the terms
of the Registration Rights Agreement and the Indenture, the Exchange
Securities and the Private Exchange Securities, if any, as of the
consummation of the Exchange Offer or the Private Exchange Offer, as the
case may be, will have been duly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Issuer
and the Guarantors, as the case may be, entitled to the benefits provided
in the Indenture and, indirectly, the security provided in the Security
Documents, and enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws of general applicability related to or affecting creditors'
rights and by general equity principles.
d. The Indenture, the Registration Rights Agreement and each
Security Document which will be in effect at or prior to the Closing Date
have been duly authorized by each of the Issuer, the Partnership and the
Partners party thereto, and, when executed and delivered by the Issuer, the
Partnership and the Partners, as the case may be, will constitute its valid
and binding obligation, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization and other laws of general applicability related to or
affecting creditors' rights and by general equity principles and, in the
case of the Registration Rights Agreement only, consideration of public
policy.
e. The Offered Securities, the Exchange Securities, the Indenture
and the Registration Rights Agreement will conform in all material respects
to the description thereof contained in the Offering Document.
f. This Agreement has been duly authorized, executed and delivered
by it and constitutes its valid and binding obligation.
g. All financial statements of the Partnership included in the
Offering Document present fairly the financial position of the Partnership
as of the dates shown and their results of operations and cash flows for
the periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis.
h. No securities of the Issuer, the Partnership or the Partners of
the same class (within the meaning of Rule 144A(d)(3) under the Securities
Act) as any of the Securities are listed on any national securities
exchange registered under Section 6 of the
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United States Securities Exchange Act of 1934 ("Exchange Act") or quoted in
a U.S. automated inter-dealer quotation system.
i. Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section 4 of this Agreement, the offer
and sale of the Offered Securities by the Issuer to the Initial Purchasers
will be exempt from the registration requirement of the Securities Act by
reason of Section 4(2) thereof and Regulation S thereunder; and prior to
the effectiveness of the Exchange Offer or the Shelf Registration Statement
it is not necessary to qualify an indenture in respect of the Offered
Securities under the United States Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
j. The issue and sale of the Offered Securities, the issuance and
delivery of the Exchange Securities and the Private Exchange Securities, if
any, the compliance by it with all of the provisions of this Agreement, the
Indenture and the Registration Rights Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it or any of its
subsidiaries is a party or to which any of its property or assets is
subject, nor will such action result in any violation of the provisions of
its constituent documents or any statute or any order, rule or regulation
of any Governmental Authority. No consent, approval, authorization, order,
registration, clearance or qualification of or with any Governmental
Authority is required for the issue and sale of the Securities, the
issuance and delivery of Exchange Securities and Private Exchange
Securities, if any, by the Issuer or the consummation of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement, except (A) the registration under the 1933 Act of the
Securities, the Exchange Securities and the Private Exchange Securities, if
any, in connection with the transactions contemplated by the Registration
Rights Agreement and (B) such governmental authorizations as may be
required under United States state securities or Blue Sky laws or any laws
of jurisdictions outside the United States in connection with the purchase
and distribution of the Securities by or for the account of the Initial
Purchasers.
k. None of the Issuer, the Partnership, the Partners nor any of
their respective affiliates, nor any person acting on their behalf, (i)
has, within the six-month period prior to the date hereof, offered or sold
in the United States or to any U.S. person (as such terms are defined in
Regulation S) the Securities or any security of the same class or series as
any of the Securities or (ii) has offered or will offer to sell the Offered
Securities (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act or (B) with respect to any such securities sold in
reliance on Regulation S, by means of any directed selling efforts within
the meaning of Rule 902(b) of Regulation S. The Issuer, the
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Partnership, the Partners, their respective affiliates and any Person
acting on their behalf have complied and will comply with the offering
restrictions requirement of Rule 902 of Regulation S. None of the Issuer,
the Partnership nor the Partners has entered nor will enter into any
contractual arrangement with respect to the distribution of the Securities
or any securities of the same class or series as the Securities, except for
this Agreement and the Registration Rights Agreement. Each of the Issuer,
the Partnership and the Partners will take reasonable precautions designed
to ensure that any offer or sale, direct or indirect, in the United States
or to any U.S. person of any Securities, or any substantially similar
security issued by any of the Issuers, the Partnership or the Partners,
within six months subsequent to the date on which the distribution of the
Offered Securities has been completed (as notified by CSFBC), is made,
except (i) in accordance with the Registration Rights Agreement or (ii)
under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Securities Act.
l. Deloitte & Touche LLP and Price Waterhouse Coopers LLP, which
have certified certain financial statements of one or more of the Issuer,
the Partnership, the Partners and Clark Refining & Marketing, whose reports
appear in the Offering Document and which have delivered the initial
letters referred to in Section 6(a), are independent public accountants
within the meaning of the Securities Act.
m. Prior to the date hereof, none of the Issuer, the Partnership,
the General Partner, nor the Limited Partner has taken any action which is
designed to or which has constituted or which might have been expected to
cause or result in stabilization or manipulation of the price of any
security of any of the Issuer, the Partnership, the General Partner, or the
Limited Partner in connection with the sale, resale or exchange of the
Securities;
n. Purvin & Gertz, the Independent Engineer, has developed a base
case financial model which is set forth in the report of the Independent
Engineer included in the Offering Document as part of Appendix B (the "IE's
Report") and based on certain assumptions and hypothetical events set forth
in such report (the "Projections"). The Projections are based in part upon
information supplied by the Partnership to the Independent Engineer, which
information the Partnership believes is complete and correct in all
material respects as of the date hereof, and which the Partnership believes
provides a reasonable basis, in light of the assumptions included in the
IE's Report, for the preparation of the Projections. The assumptions
provided by the Partnership and included in the IE's Report for the
purposes of making the Projections were and are (A) made in good faith (B)
believed by the Partnership to be appropriate and reasonable and (C)
consistent in all material respects with the Transaction Documents. The
assumptions provided by the Partnership are disclosed in the IE's Report
included in the Offering
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Document to the extent material for purposes of consideration of the
Projections taken as a whole. The Partnership believes that the Projections
are reasonable in light of the assumptions made therein and are consistent
in all material respects with the Transaction Documents.
o. None of the Issuer, the Partnership, the General Partner nor the
Limited Partner is an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of 1940; and
none of the Issuer, the Partnership, the General Partner nor the Limited
Partner is or, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in the
Offering Document, will be an "investment company" as defined in the
Investment Company Act.
p. Each of the representations and warranties made by the Issuer,
the Partnership and the Partners in Article III of the Common Security
Agreement (other than subparagraphs (j), (l) and (x)(iv) thereof) are
hereby incorporated by reference in their entirety as if they were set out
in this Agreement in full and are hereby made by each of the Issuer, the
Partnership and the Partners, provided that in the event of any conflict
between a representation and warranty incorporated by reference pursuant to
this clause (p), on the one hand, and any representation and warranty made
in clauses (a) through (o) of this Agreement, on the other hand, the
representations and warranties made in this Agreement shall control.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements contained in this Agreement, and
subject to the terms and conditions set forth herein, the Issuer agrees to sell
to the Initial Purchasers, and the Initial Purchasers agree, severally but not
jointly, to purchase from the Issuer the Notes at a purchase price of 98.25% of
the principal amount thereof plus accrued interest from August 19, 1999 to the
Closing Date in accordance with the respective principal amounts of the Offered
Securities set forth opposite the names of the Initial Purchasers in Schedule A
hereto.
The Issuer will deliver against payment of the purchase price the Offered
Securities to be initially offered and sold by the Initial Purchasers in
reliance on Regulation S in the form of one or more temporary global securities
in definitive, fully registered form without interest coupons (the "Temporary
Regulation S Global Securities"). The Temporary Regulation S Global Securities
shall be registered in the name of the Depository Trust Company (the "U.S.
Depository") or its nominee and deposited with the Indenture Trustee, at its
Corporate Trust Office, as custodian for the U.S. Depository, duly executed by
the Issuer and authenticated by the Indenture Trustee for credit to the
respective accounts of beneficial owners of such global securities at Morgan
Guaranty Trust Company of New York, Brussels office, as operator of Euroclear,
or Citibank, N.A. as operator and Cedelbank. On or after the termination of the
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relevant Distribution Compliance Period, interests in the Temporary Regulation S
Global Security will be exchangeable for corresponding interests in an
unrestricted global Security, in definitive, fully registered form without
interest coupons. As used herein, the term "Distribution Compliance Period,"
with respect to global Securities offered and sold in reliance on Regulation S,
means the period of 40 consecutive days beginning on and including the later of
(i) the day on which the Securities of such series are first offered to persons
other than distributors (as defined in Regulation S) in reliance on Regulation S
(according to a notice to the Issuer and the Indenture Trustee provided by the
Initial Purchaser(s), if any, of the offering of such Securities) and (ii) the
date of the closing of such offering. Until the termination of the Distribution
Compliance Period, interests in the Temporary Regulation S Global Securities may
only be held by the U.S. Depository participants for Euroclear and Cedelbank.
The Issuer will deliver against payment of the purchase price the
Offered Securities to be purchased by each Initial Purchaser in reliance on Rule
144A under the Securities Act in the form of one or more global securities in
definitive, fully-registered form without interest coupons (the "Restricted
Global Security"). The Restricted Global Securities shall be registered in the
name of the U.S. Depository or its nominee and deposited with the Indenture
Trustee, at its Corporate Trust Office, as custodian for such U.S. Depository,
duly executed on behalf of the Issuer and authenticated by the Indenture Trustee
as hereinafter provided.
Payment for the Offered Securities shall be made by the Initial
Purchasers in Federal (same day) funds by official check or checks or wire
transfer to the Bond Proceeds Account drawn to the order of the Collateral
Trustee at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New
York 10004 at 12:00 P.M. (New York time), on August 19, 1999 or at such other
time and date not later than seven full business days thereafter as CSFBC and
the Issuer may determine, such time being referred to herein as the "Closing
Date," against delivery to the U.S. Depository or its designated custodian of
(i) the Regulation S Global Securities representing all of the offered
Regulation S securities for the respective accounts of the U.S. Depository
participants for Euroclear and Cedelbank and (ii) the Restricted Global
Securities representing all of the 144A securities. The Regulation S Global
Securities and the Restricted Global Securities will be made available for
checking at the above office of Sullivan & Cromwell at least 24 hours prior to
the Closing Date.
4. Representations by the Initial Purchasers; Resale by Initial
Purchasers.
a. Each Initial Purchaser severally represents and warrants that it
is an "accredited investor" within the meaning of Regulation D of the
Securities Act.
b. Each Initial Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act of 1933 (the
"Securities Act") and may not be offered or sold within the United States
except in accordance with Regulation S or
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pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. Each Initial Purchaser
severally represents and agrees that it has offered and sold, and will
offer and sell, the Offered Securities within the United States (i) as part
of its distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering and the Closing Date, only in
accordance with Rule 903 or Rule 144A under the Securities Act.
Accordingly, each Initial Purchaser severally agrees that, neither it nor
its affiliates, nor any Persons acting on its or their behalf, have engaged
or will engage in any directed selling efforts with respect to the Offered
Securities, and such Initial Purchaser, its affiliates and all Persons
acting on its or their behalf, have complied with and will comply with the
offering restrictions requirement of Regulation S. Each Initial Purchaser
severally agrees that, at or prior to confirmation of any sale of the
Offered Securities, other than a sale pursuant to Rule 144A, such Initial
Purchaser will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases the Offered
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (i) AS PART
OF THEIR DISTRIBUTION AT ANY TIME OR (ii) OTHERWISE UNTIL 40
DAYS AFTER THE LATER OF THE DATE OF THE COMMENCEMENT OF THE
OFFERING AND THE CLOSING DATE, EXCEPT IN EITHER CASE IN
ACCORDANCE WITH REGULATION S (OR RULE 144A IF AVAILABLE)
UNDER THE SECURITIES ACT. TERMS USED ABOVE HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S."
Terms used in this subsection (b) have the meanings given to them in
Regulation S.
c. Each Initial Purchaser severally agrees that neither it nor any
of its Affiliates has entered or will enter into any contractual
arrangement with respect to the distribution of the Offered Securities,
except for any such arrangements with the other Initial Purchasers or
affiliates of the other Initial Purchasers or with the prior written
consent of the Issuer.
d. Each Initial Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act, including, but
not limited to, (i) any advertisement, article, notice or other
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communication published in any newspaper, magazine or similar media or
broadcast over television or radio or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. Each Initial Purchaser severally agrees, with respect to
resales made in reliance on Rule 144A of any of the Offered Securities, to
deliver either with the confirmation of such resale or otherwise prior to
settlement of such resale a notice to the effect that the resale of such
Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
e. Each Initial Purchaser severally represents and agrees that (i)
it has not offered or sold, and prior to the date six months after the date
of issue of the Offered Securities will not offer or sell, any Offered
Securities to any persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offering of Securities Regulation 1995, (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of
the Offered Securities to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.
5 Covenants of the Issuer, the Partnership and the Partners. Each of the
Issuer, the Partnership and the Partners, jointly and severally, agrees with the
Initial Purchasers:
a. To prepare the Offering Document in a form approved by the
Initial Purchasers; to advise the Initial Purchasers promptly of any
proposal to amend or supplement the Offering Document; and not to effect
such amendment or supplement without CSFBC's prior written consent, which
consent shall not be unreasonably withheld. If, at any time prior to the
completion of the resale of the Offered Securities by the Initial
Purchasers, any event occurs as a result of which the Offering Document as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, the Issuer, the Partnership or the Partners will
promptly notify the Initial Purchasers of such event and will promptly
prepare, at its own expense, an amendment or supplement which will correct
such statement or omission. Neither CSFBC's consent to, nor the Initial
Purchasers' delivery to offerees or investors of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.
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b. To furnish to the Initial Purchasers copies of any preliminary offering
circular, the Offering Document and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as CSFBC
reasonably requests. At any time when the Issuer is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and not exempt
from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it will
promptly furnish or cause to be furnished to the Initial Purchasers and, upon
request of holders and prospective purchasers of the Offered Securities, to such
holders and purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Offered Securities pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto) in
order to permit compliance with Rule 144A in connection with resales by such
holders of the Offered Securities. The Issuer or the Partnership will pay the
expenses of printing and distributing all such documents.
c. To arrange for the qualification of the Offered Securities for sale, if
requested by the Initial Purchasers, under the laws of such jurisdictions in the
United States as CSFBC designates, and to maintain such qualifications in effect
so long as required for the resale of the Offered Securities by the Initial
Purchasers, provided that none of the Issuer, the Partnership nor the Partners
will be required to qualify as a foreign corporation or to subject itself to
file a general consent to service of process in any such state.
d. To use all of the proceeds received by the Issuer from the sale of the
Offered Securities in the manner specified in the Offering Document under the
caption "Use of Proceeds." The proceeds of the Offered Securities, which will
be "on-lent" directly or indirectly by the Issuer to the Partnership, will not
be used by the Partnership in violation of any applicable law or regulation,
including Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
e. During the period of two years after the Closing Date to furnish to the
Initial Purchasers copies of all materials furnished by it to holders of the
Securities and any stock exchange on which any of the Securities are listed.
f. During the period of two years after the Closing Date, upon the Initial
Purchasers' request, to furnish to each of the Initial Purchasers and any holder
of Securities a copy of the restrictions on transfer, if any, applicable to the
Securities.
g. During the period of two years after the Closing Date, not to permit
any of its respective affiliates (as defined in Rule 144 under the Securities
Act) to, resell any of the Securities that have been reacquired by any of them.
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h. During the period of two years after the Closing Date, not to become an
open-end investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act, or to become, a closed-end investment company required
to be registered, but not registered, under the Investment Company Act.
i. To pay all expenses (including VAT, if applicable) incidental to the
performance if its obligations under this Agreement and the Indenture,
including without limitation: (i) the fees and expenses of the Indenture
Trustee and its professional advisers; (ii) all expenses in connection with the
execution, issue, authentication, packaging and initial delivery of the
Securities, the preparation and printing of this Agreement, the Indenture, the
Securities, the Offering Document and amendments and supplements thereto, and
any other document relating to the issuance, offer, sale, exchange or delivery
of the Securities; (iii) the fees and expenses of the Independent Consultant;
(iv) any expenses (including reasonable fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities for sale
under the laws of such jurisdictions in the United States as CSFBC reasonably
designates and the printing of memoranda relating thereto; (v) any fees charged
by investment rating agencies for the rating of the Securities; (vi) the
reasonable fees and disbursements of New York and Texas counsel to the Initial
Purchasers; and (vii) any expenses incurred in distributing the Offering
Document (including any amendments and supplements thereto). In addition, it
agrees to pay, or reimburse the Initial Purchasers (to the extent incurred by
them) for, all travel expenses of the Initial Purchasers, the Issuer's, the
Partnership's and the Partners' respective officers and employees and for any
expenses of the Initial Purchasers, the Issuer, the Partnership and the Partners
in connection with attending or hosting meetings with prospective purchasers of
the Securities from the Initial Purchasers.
j. Except as otherwise disclosed in the Offering Document and contemplated
by the Common Security Agreement with respect to the other Senior Loan
Agreements (including the incurrence of other Senior Debt), for a period of 90
days after the date of the initial offering of the Offered Securities by the
Initial Purchasers, it will not offer, sell, contract to sell, pledge, guarantee
or otherwise dispose of, directly or indirectly, any other U.S. dollar-
denominated debt securities. Furthermore, it will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any securities
where such offer, sale, pledge, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act or the safe harbor of
Regulation S thereunder to cease to be applicable to the offer and sale of the
Offered Securities.
12
<PAGE>
6. Conditions of the Obligation of the Initial Purchasers. The obligation
of the Initial Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of all the representations and warranties on the part of
the Issuer, the Partnership and the Partners herein, to the accuracy of all of
the statements of officers of the Issuer, the Partnership and the Partners
(collectively, the "Relevant Parties") made in the certificates set forth below,
to the performance by the Relevant Parties of their respective obligations under
this Agreement and to the following additional conditions precedent:
a. The Initial Purchasers shall have received letters, dated the date
of this Agreement, of each of Deloitte & Touche LLP and Price Waterhouse
Coopers LLP, substantially in the form set forth in Exhibit A, concerning
the financial information of the Issuer, the Partnership, the Partners and
Clark Refining & Marketing set forth in the Offering Document.
b. Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) a change in U.S. or international financial,
political or economic conditions as would, in the judgment of CSFBC, be
likely to adversely prejudice materially the success of the proposed issue,
sale or distribution of the Offered Securities or (ii) (A) any change, or
any development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of the
Issuer, the Partnership, the Partners or, on a consolidated basis, Clark
Refining & Marketing, which, in the judgment of CSFBC, is material and
adverse and makes it impractical or inadvisable to proceed with the
completion of the offering or sale of and payment for the Offered
Securities; (B) any downgrading in the rating of any debt securities of the
Issuer, the Partners or Clark Refining & Marketing by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act), or any new public announcement that
any such organization has under surveillance or review its rating of any
debt securities of the Issuer, the Partners or Clark Refining & Marketing
(other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such rating);
(C) any suspension or limitation of trading in securities generally on the
New York Stock Exchange, Inc.; (D) any general commercial banking
moratorium declared by U.S. Federal or New York authorities; or (E) any
outbreak or escalation of major hostilities in which the United States or
is involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the judgment of
CSFBC, the effect of any such outbreak, escalation, declaration, calamity
or emergency makes it impractical or inadvisable to proceed with completion
of the offering or sale of and payment for the Offered Securities.
c. The Initial Purchasers shall have received opinions, dated the
Closing Date, of general counsel for the Clark Entities, in the forms
attached hereto as Exhibit B, with such changes as Sullivan & Cromwell
shall reasonably request.
13
<PAGE>
d. The Initial Purchasers shall have received from Simpson Thacher &
Bartlett, New York and Delaware counsel to the Issuer, the Partnership, the
Partners, the Clark Entities and Blackstone, (i) opinions, dated the
Closing Date, in the forms attached hereto as Exhibit C, with such changes
that Sullivan & Cromwell shall reasonably request and (ii) a
nonconsolidation opinion, dated the Closing Date, satisfactory in form and
content to the Initial Purchasers.
e. The Initial Purchasers shall have received from Sullivan &
Cromwell, counsel to the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the validity of the Offered
Securities, the Offering Document, the exemption from registration for the
offer and sale of the Offered Securities by the Issuer to the Initial
Purchasers and the resales by the Initial Purchasers as contemplated hereby
and other related matters as CSFBC may require, and the Issuer, the
Partnership and the Partners shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
f. The Initial Purchasers shall have received the opinions of Mexican
counsel to PMI and PEMEX, in the form attached hereto as Exhibit D.
g. The Initial Purchasers shall have received the opinions of Curtis,
Mallet-Prevost, Colt & Mosle LLP, U.S. counsel to PMI and Pemex, in the
form attached hereto as Exhibit E.
h. The Initial Purchasers shall have received the opinion of counsel
to the EPC Contractor and the EPC Guarantor, in the form attached hereto as
Exhibit F.
i. The Initial Purchasers shall have received the opinions of Mayer
Brown & Platt, Texas real estate counsel to the Issuer, the Partnership and
the Partners in the form attached hereto as Exhibit G, with such changes as
Sullivan & Cromwell shall reasonably request.
j. The Initial Purchasers shall have received the opinion of Vinson &
Elkins L.L.P., Texas environmental counsel to the Issuer, the Partnership
and the Partners in the form attached hereto as Exhibit H.
k. The Initial Purchasers shall have received the opinion of counsel
to Occidental Petroleum, in the form attached hereto as Exhibit I.
l. The Initial Purchasers shall have received the opinion of Barlow
Lyde & Gilbert, English counsel to the Oil Payment Insurers Administrative
Agent, in the form attached hereto as Exhibit J.
14
<PAGE>
m. The Initial Purchasers shall have received the opinion of counsel
to the Hydrogen Supplier, in the form attached hereto as Exhibit K.
n. The Initial Purchasers shall have received the opinion of W.S.
Walker & Company, Cayman Islands counsel to Blackstone, in the form
attached hereto as Exhibit L.
o. The Initial Purchasers shall have received the opinion of
Benckenstein & Oxford, special Texas counsel to the Issuer, the
Partnership, the Limited Partner and the General Partner, in the form
attached hereto as Exhibit M.
p. The Initial Purchasers shall have received a certificate, dated
the Closing Date, in a form acceptable to CSFBC, of the President or any
Vice President and a principal financial or accounting officer of each of
the Issuer, the Partnership, the General Partner and the Limited Partner,
in which such persons, to the best of their knowledge after reasonable
investigation, shall state that the applicable representations and
warranties in this Agreement of the Issuer and the General Partner,
respectively, are true and correct, that the Issuer and the General
Partner, respectively, have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under this Agreement at
or prior to the Closing Date, and that, subsequent to the date of the most
recent financial statements included in the Offering Document, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Issuer , the
Partnership, the General Partner and the Limited Partner, respectively,
except as set forth in, or contemplated by, the Offering Document or as
described in such certificate.
q. The Initial Purchasers shall have received a certificate, dated
the Closing Date, in a form acceptable to CSFBC, of the President or any
Vice President and a principal financial or accounting officer of Clark
Refining & Marketing in which such persons, to the best of their knowledge
and reasonable investigation, shall state that the representations and
warranties of Clark Refining & Marketing set forth in the Letter Agreement
are true and correct and that subsequent to the date of the most recent
financial statements included in the Offering Document, there has been no
material adverse change, nor any development or event involving a material
adverse change, in the condition (financial or other), business, properties
or results of operations of Clark Refining & Marketing that has a Material
Adverse Effect, except as set forth in, or contemplated by, the Offering
Document or as described in such certificate.
r. The Initial Purchasers shall have received letters, dated the
Closing Date, of each of Deloitte & Touche LLP and Price Waterhouse Coopers
LLP, which meet the requirements of paragraph (a) above, except that (i)
the specified date referred to in such
15
<PAGE>
subsection will be a date not more than three days prior to the Closing
Date for purposes of this paragraph (r) and (ii) with respect to the letter
from Deloitte & Touche, such letter shall provide comfort regarding Clark
Refining & Marketing's quarterly report on form 10-Q for the quarter ended
June 30, 1999, to be filed shortly after the date of this Agreement and
prior to the Closing Date.
s. The Initial Purchasers shall have received a letter of Purvin &
Gertz, dated the Closing Date, addressed to the Initial Purchasers and in a
form satisfactory to CSFBC, confirming that it is an independent consultant
with respect to the Project and reaffirming, as of the Closing Date, the
accuracy and completeness in all material respects of all statements made
in its reports included in the Final Offering Document.
t. Each of Moody's and S&P shall have delivered to the Partnership
and the Initial Purchasers a final rating letter setting forth a rating
with respect to the Offered Securities of at least "Ba3" and "BB,"
respectively.
u. On or prior to the Closing Date, each of the Issuer, the
Partnership and the Partners shall have furnished to the Initial Purchasers
evidence reasonably satisfactory to the Initial Purchasers of the
acceptance of the appointment of an agent for service of process referenced
in Section 14.
v. Each of the conditions precedent set forth in Section 9.01 of the
Common Security Agreement shall have been fully satisfied.
The Partnership will furnish the Initial Purchasers with such conformed copies
of such other opinions, certificates, letters and documents as the Initial
Purchasers may reasonably request. CSFBC may in its sole discretion waive
compliance with any conditions to its obligations under this Agreement, whether
in respect of the Closing Date or otherwise.
7. Indemnification and Contribution.
a. Each of the Partnership, the Issuer, the Partners and Clark
Refining Holdings, jointly and severally, will indemnify and hold harmless
the Initial Purchasers against any losses, claims, damages, liabilities
(collectively, "Losses") to which any Initial Purchaser may become subject,
under the Securities Act or otherwise, insofar as such Losses (or actions
in respect thereof) arise out of or are based upon any breach of any of the
representations and warranties of the Issuer, the Partnership, the Partners
or Clark Refining Holdings contained in this Agreement (except that Clark
Refining Holdings shall have no such indemnification obligation in respect
of any representations and warranties incorporated by reference pursuant to
subparagraph (p) of Section 2 hereof) or any untrue statement or alleged
untrue statement of a material fact contained in the Offering Document
(including, for the purposes of clarity, the Selected Information),
16
<PAGE>
or arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and will reimburse such Initial Purchaser for any legal or
other expenses reasonably incurred by such Initial Purchaser in connection
with investigating or defending any such Loss as such expenses are
incurred, provided, however, that neither the Issuer, the Partnership, the
Partners nor Clark Refining Holdings will be liable in any such case to the
extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with (i)
Clark Refining & Marketing Information or (ii) written information
furnished by any Initial Purchaser through CSFBC specifically for use
therein, it being understood and agreed that the only such information
consists of the information described as such in paragraph (b) below
provided further, however, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any
preliminary offering circular the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Initial Purchaser that
sold the Securities concerned to the person asserting any such Losses to
the extent that such sale was an initial resale by such Initial Purchaser
and any such Loss of such Initial Purchaser results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the
final Offering Document (exclusive of any material included therein but not
attached thereto) if the Issuer had previously furnished copies thereof to
such Initial Purchaser.
b. Each Initial Purchaser, severally and not jointly, will indemnify
and hold harmless the Issuer, the Partnership, the Partners and Clark
Refining Holdings against any Losses to which any of them may become
subject, under the Securities Act or otherwise, insofar as such Losses (or
actions in respect thereof) arise out of or are based upon any breach of
any of the representations and warranties of such Initial Purchaser
contained herein or any untrue statement or alleged untrue statement of any
material fact contained in the Offering Document, or any amendment or
supplement thereto, or any related preliminary offering circular, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Issuer, the Partnership, the Partners or Clark
Refining Holdings by such Initial Purchaser through CSFBC specifically for
use therein, and will reimburse any legal or other expenses reasonably
incurred by the Issuer, the Partnership, the Partners or Clark Refining
Holdings in connection with investigating or defending any such Loss as
such expenses are incurred, it being understood and agreed that the only
such information furnished by the Initial Purchasers consists of the
17
<PAGE>
following information in the Offering Document: the third paragraph,
the third sentence of the seventh paragraph and the tenth paragraph under
the caption "Plan of Distribution."
c. Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under paragraph (a) or (b) above, notify in writing the indemnifying party
of the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability that it may have to any
indemnified party otherwise than under paragraph (a) or (b) above. In case
any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party) and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and does
not include a statement as to or an admission of fault, culpability or
failure to act by or on behalf of any indemnified party.
d. If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a)
or (b) above, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the Losses
referred to in paragraph (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer, the
Partnership, the Partners and Clark Refining Holdings on the one hand and
the Initial Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Issuer, the Partnership, the Partners and
Clark Refining Holdings on the one hand and the Initial Purchasers on the
other in connection with the statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
benefits received by the Issuer, the Partnership, the Partners and Clark
Refining Holdings on the one hand and the Initial Purchasers on the other,
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before
18
<PAGE>
deducting expenses) received by the Issuer bear to the total discounts and
commissions received by the Initial Purchasers from the Issuer under this
Agreement. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Issuer, the Partnership, the Partners and
Clark Refining Holdings on the one hand, or the Initial Purchasers on the
other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the Losses referred
to in the first sentence of this paragraph (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any action or claim which is
the subject of this paragraph (d). Notwithstanding the provisions of this
paragraph (d), no Initial Purchaser shall be required to contribute any
amount in excess of the amount by which the total price at which the
Offered Securities purchased by it were resold exceeds the amount of any
damages that such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations in this paragraph
(d) to contribute are several in proportion to their respective purchase
obligations and not joint.
e. The obligations of the Issuer, the Partnership, the Partners and
Clark Refining Holdings under this Section shall be in addition to any
liability that they may otherwise have and shall extend, upon the same
terms and conditions, to each Person, if any, who controls any Initial
Purchaser within the meaning of the Securities Act or the Exchange Act; and
the several obligations of the Initial Purchasers under this Section shall
be in addition to any liability that the Initial Purchasers may otherwise
have and shall extend, upon the same terms and conditions, to each officer
and director of the Issuer, the Partnership, the Partners and Clark
Refining Holdings and to each Person, if any, who controls the Issuer, the
Partnership, the Partners or Clark Refining Holdings within the meaning of
the Securities Act or the Exchange Act.
8. Default of Initial Purchasers. If any Initial Purchaser defaults in its
several obligation to purchase Offered Securities under this Agreement and the
aggregate principal amount of the Offered Securities that such defaulting
Initial Purchaser agreed but failed to purchase does not exceed 10% of the total
principal amount of the Offered Securities, the non-defaulting Initial Purchaser
may make arrangements for the purchase of such Offered Securities by other
Persons, including by any non-defaulting Initial Purchaser, but if no such
arrangements are made by the Closing Date, the non-defaulting Initial Purchasers
shall be obligated to purchase the Offered Securities that such defaulting
Initial Purchaser agreed but failed to purchase. If any Initial Purchaser so
defaults and the aggregate principal amount of the Offered Securities with
respect to which such default occurs exceeds 10% of the total principal amount
of the Offered
19
<PAGE>
Securities and arrangements for the purchase of such Offered Securities by the
non-defaulting Initial Purchasers are not made within 36 hours after such
default, then the Issuer, the Partnership and the Partners shall be entitled to
a further period of 36 hours within which to procure another person satisfactory
to the non-defaulting Initial Purchasers to purchase the Offered Securities
under the terms contained herein. In the event that within seventy-two hours
after such default, arrangements for the purchase of such Offered Securities by
other persons are not made, this Agreement will terminate without liability on
the part of any non-defaulting Initial Purchaser or the Issuer or the
Partnership, except as provided in Section 7. As used in this Agreement, the
term "Initial Purchaser" includes any person substituted for an Initial
Purchaser under this Section. Nothing in this Section 8 will relieve a
defaulting Initial Purchaser from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer, the Partnership, the Partners, Clark Refining Holdings and the Initial
Purchasers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Initial Purchaser, the Issuer, the
Partnership, the Partners or Clark Refining Holdings or any of their respective
representatives, officers or directors or any controlling Person, and will
survive delivery of and payment for the Offered Securities. If for any reason
the purchase of the Offered Securities by the Initial Purchasers is not
consummated, the Partnership shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 5 and the respective obligations of
the Issuer, the Partnership, the Partners, Clark Refining Holdings and the
Initial Purchasers pursuant to Section 7 shall remain in effect. If the
purchase of the Offered Securities by the Initial Purchasers is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (C),
(D) or (E) of Section 6(b)(ii), the Partnership will reimburse each Initial
Purchaser not in default in its obligation to purchase the Offered Securities
for all its out-of-pocket expenses (including reasonable fees and disbursements
of counsel) incurred by them in connection with the offering of the Offered
Securities.
10. Notices. All communications hereunder will be in writing and (i) if
sent to the Initial Purchasers will be mailed, delivered or telegraphed and
confirmed to CSFBC at Eleven Madison Avenue, New York, N.Y. 10010-3629,
Attention: Investment Banking Department -- Transactions Advisory Group, (ii) if
sent to the Partnership, will be mailed, delivered or telegraphed and confirmed
to it at 1801 S. Gulfway Drive, Office No. 36, Port Arthur, Texas 77640 (iii) if
sent to the Issuer, will be mailed, delivered or telegraphed and confirmed to it
at 1801 S. Gulfway Drive, Office No. 36, Port Arthur, Texas 77640, (iv) if sent
to the General Partner will be mailed, delivered or telegraphed and confirmed to
it at 1801 S. Gulfway Drive, Office No. 36, Port Arthur, Texas 77640, (v) if
sent to the Limited Partner, will be mailed, delivered or telegraphed and
confirmed to it at 1801 S. Gulfway Drive, Office No. 36, Port
20
<PAGE>
Arthur, Texas 77640, and (vi) if sent to Clark Refining Holdings will be mailed,
delivered or telegraphed and confirmed to it at 8182 Maryland Avenue, St. Louis,
Missouri 63105.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
Persons referred to in Section 7, but only to the extent set forth in Section 7,
and no other Person will have any right or obligation hereunder, except that
holders of Offered Securities shall be entitled to enforce the agreements for
their benefit contained in the second and third sentences of Section 5(b)
against the Issuer, the Partnership and the Partners as if such holders were
parties thereto.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Jurisdiction. Each of the Issuer, the Partnership, the Partners and
Clark Refining Holdings hereby submit to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or related to this Agreement or the
transactions contemplated hereby and thereby. Each of the Issuer, the
Partnership, the Partners and Clark Refining Holdings irrevocably waives any
claim, defense or objection that it is not subject to personal jurisdiction in a
Federal or state court in the Borough of Manhattan in The City of New York or
that venue for such suit is not properly laid in such court. Each of the Issuer,
the Partnership, the Partners and Clark Refining Holdings will irrevocably
appoint CT Corporation System as its authorized agent in the Borough of
Manhattan in The City of New York upon which process may be served in any such
suit or proceeding, and agrees that service of process upon such agent, and
written notice of said service to such entity, by the person seeing the same to
the address provided in Section 10, shall be deemed in every respect effective
service of process upon the Issuer, the Partnership, the Partners and Clark
Refining Holdings, respectively, in any such suit or proceeding. Each of the
Issuer, the Partnership, the Partners and Clark Refining Holdings further agree
to take any and all action as may be necessary to maintain such designation and
appointment of such agent in full force and effect for a period of seven years
from the date of this Agreement.
21
<PAGE>
If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement among the
Issuer, the Partnership, the Partners, Clark Refining Holdings and the Initial
Purchasers in accordance with its terms.
Very truly yours,
PORT ARTHUR FINANCE CORP.,
as Issuer
By /s/ Maura J. Clark
---------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as Guarantor
By /s/ Maura J. Clark
---------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.,
as General Partner and Guarantor
By /s/ Maura J. Clark
---------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
22
<PAGE>
NECHES RIVER HOLDING CORP.,
As Limited Partner and Guarantor
By /s/ Maura J. Clark
---------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Clark Refining Holdings, Inc.
By /s/ Maura J. Clark
---------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
:
The foregoing Purchase Agreement
is hereby confirmed and accepted as
of the date first above written.
Credit Suisse First Boston Corporation
By /s/ Steven Greenwald
--------------------------
Name: Steven Greenwald
Title: Managing Director
Goldman, Sachs & Co.
By /s/ Goldman, Sachs & Co.
--------------------------
Deutsche Bank Securities Inc.
By /s/ Paul McKeon
--------------------------
Name: Paul McKeon
Title: Managing Director
By /s/ Paul Brown
--------------------------
Name: Paul Brown
Title: Vice President
23
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount of
12.50% Senior Secured
Notes due 2009
----------------------------
<S> <C>
Credit Suisse First $178,500,000
Boston Corporation
Goldman, Sachs & Co. $ 63,750,000
Deutsche Bank Securities Inc. $ 12,750,000
Total $255,000,000
</TABLE>
25
<PAGE>
Exhibit A-1
[LETTERHEAD OF DELOITTE TOUCHE APPEARS HERE]
August 10, 1999
The Board of Directors of
Port Arthur Finance Corp.
Sabine River Holding Corp. and
Neches River Holding Corp.
1801 S. Gulfway Drive
Office No. 36
Port Arthur, Texas 77640
The Board of Directors of
Clark Refining & Marketing, Inc. and
Clark Refining Holdings, Inc.
8182 Maryland Avenue
St.Louis, Missouri 63105
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Deutsche Banc Alex Brown
c/o Credit Suisse First Boston
Eleven Madison Avenue
New York, NY 10010-3629
Dear Sirs:
We have audited the balance sheets of Port Arthur Finance Corp. (the "Issuer")
and of Port Arthur Coker Company L.P., Sabine River Holding Corp., and Neches
River Holding Corp. (the "Guarantors") as of August 5, 1999. The balance sheet
of Port Arthur Coker Company L.P., the sole shareholder of the Issuer, is
included in the Offering Circular of the Issuer, dated August 10, 1999, relating
to the $225,000,000, 12.5% Senior Notes Due 2009 (the "Notes"). Our report with
respect thereto is also included in that Offering Circular. The Offering
Circular, dated August 10, 1999, is herein referred to as the Offering Circular.
We have also audited the consolidated balance sheets of Clark Refining &
Marketing, Inc. and Subsidiaries ("Clark") as of December 31, 1998 and 1997, and
the related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the two years in the period ended December 31, 1998, all
included in Clark's annual report on Form 10-KA for the year ended
[LOGO APPEARS HERE]
<PAGE>
December 31, 1998, and incorporated by reference in the Offering Circular; our
report with respect thereto is also incorporated by reference in the Offering
Circular.
This letter is being furnished in reliance upon your representation to us that:
a. You are knowledgeable with respect to the due diligence review process that
would be performed if this placement of securities were being registered
pursuant to the Securities Act of 1933 (the "Act").
b. In connection with the offering of the Notes, the review process you have
performed is substantially consistent with the due diligence review process
that you would have performed if this placement of securities were being
registered pursuant to the Act.
In connection with the Offering Circular:
1. We are independent certified public accountants with respect to the Issuer,
the Guarantors and Clark under Rule 101 of the AICPA's Code of Professional
Conduct, and its interpretations and rulings.
2. We have not audited any financial statements of the Issuer or the
Guarantors as of any date or for any period subsequent to August 5, 1999;
although we conducted audits as of August 5, 1999, the purpose (and
therefore scope) of the audits was to enable us to express our opinion on
the balance sheets as of August 5, 1999. Therefore, we are unable to and do
not express any opinion on the financial position, results of operations
or cash flows of the Issuer or the Guarantors as of any date or for any
period subsequent to August 5, 1999.
3. We have not audited any financial statements of Clark as of any date or for
any period subsequent to December 31, 1998; although we conducted an audit
for the year ended December 31, 1998, the purpose (and therefore the scope)
of the audit was to enable us to express our opinion on the consolidated
financial statements of Clark as of December 31, 1998, and for the year
then ended, but not on the consolidated financial statements for any
interim period within that year. Therefore, we are unable to and do not
express any opinion on the unaudited condensed consolidated balance sheet
as of March 31, 1999, and the unaudited condensed consolidated statements
of income, stockholders' equity, and cash flows for the three-month periods
ended March 31, 1999 and 1998, included in Clark's quarterly report on Form
10-Q for the quarter ended March 31, 1999, incorporated by reference in the
Offering Circular, or on the financial position, results of operations, or
cash flows as of any date or for any period subsequent to December 31,
1998.
4. For purposes of this letter we have read the 1999 minutes of meetings of
the Board of Directors of the Issuer, the Guarantors and Clark as set forth
in the minute books at August 5, 1999, officials of the Issuer, the
Guarantors and Clark having advised us that the minutes of all such
meetings through that date were set forth therein; we have carried out
other procedures to August 5, 1999, as follows (our work did not extend to
the period from August 5, 1999 to August 10, 1999, inclusive):
-2-
<PAGE>
a. With respect to Clark for the three-month periods ended March 31, 1991 and
1998, we have:
(i) Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial Information,
on the unaudited condensed consolidated balance sheet as of March
31,1999, and unaudited condensed consolidated statements of income,
stockholders' equity, and cash flows for the three-month periods ended
March 31, 1999 and 1998, included in Clark's quarterly report on Form
10-Q for the quarter ended March 31, 1999, incorporated by reference
in the Offering Circular.
(ii) Inquired of certain officials of Clark who have responsibility for
financial and accounting matters whether the unaudited condensed
consolidated financial statements referred to in 4a(i) comply as to
form in all material respects with generally accepted accounting
principals.
b. With respect to Clark for the three and six month periods ended June 30,
1999, we have:
(i) Read the unaudited capsule financial information as of and for
the three and six month periods ended June 30, 1999 as set forth
in the Recent Developments section of the Offering Circular.
(ii) Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial
Information, on the unaudited condensed consolidated balance
sheet as of June 30, 1999, and unaudited condensed consolidated
statements of income, stockholders' equity, and cash flows for
the three and six month periods ended June 30, 1999 and 1998,
such financial statements are incomplete as they omit certain
disclosures.
(iii) Inquired of certain officials of Clark who have responsibility
for financial and accounting matters whether the unaudited
condensed consolidated financial statements referred to in a(i)
comply as to form in all material respects with generally
accepted accounting principals.
The foregoing procedures do not constitute an audit conducted in accordance with
generally accepted auditing standards. Also, they would not necessarily reveal
matters of significance with respect to the comments in the following paragraph.
Accordingly, we make no representations regarding the sufficiency of the
foregoing procedures for your purposes.
-3-
<PAGE>
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
a. Any material modifications should be made to the Clark unaudited
condensed consolidated financial statements described in 4a(i),
incorporated in the Offering Circular by reference, for them to be in
conformity with generally accepted accounting principles.
b. Any material modifications should be made to the Clark unaudited
condensed financial statements described in 4b(ii), not included in
the Offering Circular, for them to be in conformity with generally
accepted accounting principles.
6. Officials of Clark have advised us that no financial statements of Clark as
of any date or for any period subsequent to June 30, 1999, are available;
accordingly, the procedures carried out by us with respect to changes in
financial statement items for Clark after June 30, 1999, have, of
necessity, been even more limited than those with respect to the periods
referred to in 4. We have inquired of certain officials of Clark who have
responsibility for financial and accounting matters whether (a) at August
5, 1999, there was any change in the capital stock, increase in long term
debt or any change in stockholders' equity of Clark as compared with
amounts shown on the June 30, 1999, unaudited condensed consolidated
balance sheet, or (b) for the period from July 1, 1999, to August 5, 1999,
there were any decreases, as compared with the corresponding period in the
preceding year, in consolidated net sales and operating revenues, in
earnings (loss) from continuing operations before discontinued operations
and extraordinary items or of net earnings (loss) of Clark. On the basis of
these inquiries and our reading of the minutes as described in 4, nothing
came to our attention that caused us to believe that there was any such
change, increase, or decrease, except in all instances for changes,
increases, or decreases that the Offering Circular discloses have occurred
or may occur.
7. For purposes of this letter, we have also read the items identified by you
on the attached copy of selected pages from the Offering Circular, Clark's
December 31, 1998 10-KA filing, and Clark's March 31, 1999 10-Q filing and
have performed the following procedures, which were applied as indicated
with respect to the symbols explained below. It should be understood that
(1) we make no representations regarding Clark's determination and
presentation of the non-GAAP measures of financial performance (EBITDA,
EBITDA as adjusted), and (2) the non-GAAP measures presented may not be
comparable to similarly titled measures reported by other companies.
a. Compared the amount with (or recomputed from) Clark's audited
consolidated financial statements (after rounding and/or
reclassification, where applicable) and notes thereto, as of or for
the period indicated, incorporated by reference in the Offering
Circular and found them to be in agreement.
b. Compared the amount with (or recomputed from) Clark's unaudited
consolidated financial statements (after rounding and/or
reclassification, where applicable), as of or
-4-
<PAGE>
for the period indicated, incorporated by reference in the Offering
Circular and found them to be in agreement.
c. Compared the amount with (or recomputed from) a schedule or report
prepared by Clark and found them to be in agreement. We further
checked such schedules or reports prepared by Clark and found that
they were in agreement with, or properly derived from the general
accounting records of Clark that are subject to Clark's internal
controls.
d. Compared the amount with (or computed from) audited balance sheet
(after rounding, where applicable) and notes thereto of Port Arthur
Coker Company, L.P., as of or for the period indicated, included in
the Offering Circular and found them to be in agreement.
8. Our audits of the financial statements for the periods referred to in the
introductory paragraph of this letter comprised audit tests and procedures
deemed necessary for the purpose of expressing an opinion on the
financial statements taken as a whole. For none of the periods referred to
therein, or any other period, did we perform audit tests for the purpose
of expressing an opinion on individual balances of accounts or summaries of
selected transactions such as those enumerated above and, accordingly, we
express no opinion thereon.
9. It should be understood that we make no representations regarding questions
of legal interpretation or regarding the sufficiency for your purposes of
the procedures enumerated in the preceding paragraph; also, such procedures
would not necessarily reveal any material misstatement of the amounts or
percentages listed above. Further, we have addressed ourselves solely to
the foregoing data as set forth in the Offering Circular and make no
representation regarding the adequacy of disclosure or regarding whether
any material facts have been omitted.
10. This letter is solely for the information of the addressees and to assist
the underwriters in conducting and documenting their investigation of the
affairs of the company in connection with the offering of the securities
covered by the Offering Circular, and it is not to be used, circulated,
quoted, or otherwise referred to within or without the underwriting group
for any purpose, including but not limited to the registration, purchase,
or sale of securities, nor is it to be filed with or referred to in whole
or in part in the Offering Circular or any other document, except that
reference may be made to it in the underwriting agreement or in any list of
closing documents pertaining to the offering of the securities covered by
the Offering Circular.
Yours truly,
Deloitte & Touche LLP
-5-
<PAGE>
Exhibit A-2
[LETTERHEAD OF PRICEWATERHOUSECOOPERS APPEARS HERE]
August 10, 1999
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
and
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Deutsche Banc. Alex Brown
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
As Initial Purchasers for Port Arthur Finance Corp. $255,000,000 Senior Secured
Notes due 2009.
Dear Sirs and Madams:
We have audited the consolidated statements of operations, stockholder's equity
and cash flows of Clark Refining & Marketing, Inc. and Subsidiaries (the
"Company") for the year ended December 31, 1996, as incorporated by reference in
the Offering Circular of Port Arthur Finance Corp. $255,000,000 Senior Secured
Notes due 2009 (the "Securities"). Our report with respect thereto is
incorporated by reference in the Offering Circular. This Offering Circular,
dated August 10, 1999, is herein referred to as the "Offering Circular".
<PAGE>
Clark Refining & Marketing, Inc. - 2 August 10, 1999
This letter is being furnished in reliance upon your representation to us that:
a. You are knowledgeable with respect to the due diligence review process that
would be performed if this placement of securities were being registered
pursuant to the Securities Act of 1933 (the "Act").
b. In connection with the offering of Securities of Port Arthur Finance Corp.,
the review process you have performed is substantially consistent with the
due diligence review process that you would have performed if this
placement of the Securities were being registered pursuant to the Act.
In connection with the Offering Circular:
1. We are independent certified public accountants with respect to the Company
under Rule 101 of the AICPA's Code of Professional Conduct, and its
interpretations and rulings.
2. We have not audited any financial statements of the Company as of any date
or for any period subsequent to December 31, 1996; although we have
conducted an audit for the year ended December 31, 1996, the purpose (and
therefore the scope) of the audit was to enable us to express our opinion
on the consolidated financial statements as of December 31, 1996 and for
the year then ended, but not on the financial statements for any interim
period within that year. Therefore, we are unable to and do not express any
opinion on the financial position, results of operations or cash flows as
of any date or any period subsequent to December 31, 1996. We are not the
Company's independent accountants for any period subsequent to December 31,
1996.
3. For purposes of this letter, we have also read the items identified by you
on the attached copy of pages from the Offering Circular and copy of pages
from the Company's Annual Report on Form 10-K, as amended by Amendment No.
1 thereto on Form 10-K/A for the fiscal year ended December 31, 1998 as
incorporated by reference in the Offering Circular and have performed the
following procedures, which were applied as indicated with respect to the
letters explained below:
<PAGE>
Clark Refining & Marketing Inc. - 3 August 10, 1999
A. We compared the amounts to the corresponding amounts included in the
Company's audited consolidated financial statements for the respective
accounting period and found them to be in agreement after giving
effect to aggregation or rounding. However, we make no comment with
respect to reasons given to any causal relationships. The audited
consolidated financial statements have been reclassified to reflect
the Company's retail operations as discontinued.
B. We compared the amounts to the consolidated financial statements
prepared by the Company which were adjusted for the effects of
reclassifying of the Company's retail operations as discontinued. We
compared these consolidated financial statements to the audited
consolidated financial statements and found them to be in agreement
except to the extent that they reflect the reclassification the
Company's retail operations as discontinued. After compensating for
the effects of such reclassification, we found the consolidated
financial statements prepared by the Company to be in agreement with
the audited consolidated financial statements.
C. We compared the amount to the corresponding amount included in or
derived from the Company's accounting records (or recomputed the
amount, if applicable based on such accounting records) and found it
to be in agreement after giving effect to rounding. With respect to
the refining and retail sales, operating income, operating expenses,
costs of sales, net margins, and divisional general and administrative
expenses, we make no comment regarding the appropriateness of the
classification of expense categories, the allocation by location or
the allocation between refining, retail, or pipelines. With respect to
the classification of certain operating expenses or items as unusual,
we make no comment regarding the completeness or appropriateness of
the Company's determination of what constitutes unusual expenses or
items. With respect to the Company's definition of operating cash
flow, we make no comment regarding the appropriateness of the
definition used by the Company. We also make no comment with respect
to reasons given to any causal relationships.
4. Our audit of the financial statements for the period referred to in the
introductory paragraph of this letter comprised audit tests and procedures
deemed necessary for the purpose of expressing an opinion on such financial
statements taken as a whole. For none of the periods referred to therein,
or any other period, did we perform audit tests for the
<PAGE>
Clark Refining & Marketing, Inc. - 4 August 10, 1999
purpose of expressing an opinion on individual balances of accounts or
summaries of selected transactions such as those items marked on the
attached copies of pages of the Offering Circular or items incorporated by
reference and, accordingly, we express no opinion thereon.
5. It should be understood that we make no representations regarding questions
of legal interpretation or regarding the sufficiency for your purposes of
the procedures enumerated in paragraph 3. Also, such procedures would not
necessarily reveal any material misstatement of the amounts or percentages
listed above. Further, we have addressed ourselves solely to the foregoing
data as set forth in the Offering Circular and 1998 10-K/A and make no
representations regarding the adequacy of disclosure or regarding whether
any material facts have been omitted.
6. This letter is solely for the information of the addressees and to assist
the initial purchasers in conducting and documenting their investigation of
the affairs of the Company in connection with the offering of the
securities covered by the Offering Circular, and it is not to be used,
circulated, quoted, or otherwise referred to for any other purpose,
including, but not limited to the purchase or sale of securities, nor is it
to be filed with or referred to in whole or in part in the Offering
Circular or any other document, except that reference may be made to it in
the underwriting agreement or in any list of closing documents pertaining
to the offering of the securities covered by the Offering Circular.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
jpt/ymf
<PAGE>
[Exhibits B through M not filed with this registration statement]
<PAGE>
EXHIBIT N
REGISTRATION RIGHTS AGREEMENT*
- ----------------
* This agreement filed as Exhibit 4.03 to the registration statement of which
this exhibit is a part.
<PAGE>
Exhibit 3.01(a)
EXECUTION COPY
CERTIFICATE OF INCORPORATION
OF
PORT ARTHUR FINANCE CORP.
The undersigned, for the purpose of forming a corporation pursuant to
the provisions of the General Corporation Law of the State of Delaware, does
hereby certify that:
1. Name. The name of the corporation is Port Arthur Finance Corp.
----
(the "Corporation").
2. Address; Registered Agent. The address of the Corporation's
-------------------------
registered office in the State of Delaware is located at 1209 Orange Street, in
the City of Wilmington, County of New Castle. The name of its registered agent
at such address is The Corporation Trust Company.
3. Purpose. The purpose of the Corporation is to engage exclusively
-------
in the following activities:
(a) to issue and sell notes and otherwise borrow funds (collectively,
the "Project Debt"), as agent on behalf of Port Arthur Coker Company L.P.
------------
(the "Partnership"; together with the Corporation, Sabine River Holding
-----------
Corp. and Neches River Holding Corp., the "Project Companies"), in order to
-----------------
finance the Project (as defined in Article 13 below);
(b) to lend all the proceeds of the Project Debt to the Partnership;
(c) to execute any and all Financing Documents (as such term is
defined in Article 13 below) to which the Corporation is to be a party; and
(d) to engage in any lawful act or activity, and to exercise such
powers permitted to corporations organized under the laws of the State of
Delaware, that are incidental to and necessary, convenient or advisable for
the accomplishment of the above-mentioned purposes.
4. Capitalization. The total number of shares of capital stock which
--------------
the Corporation shall have authority to issue is one thousand (1,000) shares of
Common Stock with a par value of $0.01 per share.
<PAGE>
2
5. Incorporator. The name and mailing address of the sole
------------
incorporator of the Corporation is: Jennifer L. Hobbs, Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York, 10017.
6. Board of Directors. (a) The Corporation shall have no more than
------------------
three (3) directors. Elections of directors need not be by written ballot except
and to the extent provided in the By-Laws of the Corporation.
(b) At all times at least one of the directors of the Corporation
shall be an Independent Director. "Independent Director" shall mean a director
of the Corporation who (i) shall at no time be, or have been in the five (5)
years preceding appointment, (A) a direct or indirect, legal or beneficial owner
of any equity interest in any Affiliate (as defined in Article 7 below) of the
Corporation, (B) a creditor, supplier, employee, officer, director, manager or
contractor of any Affiliate of the Corporation, (C) a person who controls
(whether directly or indirectly) any Affiliate of the Corporation or any
creditor, supplier, employee, officer, director, manager or contractor of any
Affiliate of the Corporation or (D) any member of the immediate family of the
foregoing and (ii) shall not have a potential for a direct or indirect benefit
from any activity with, or control over, any Affiliate of the Corporation.
(c) A majority of the then authorized number of directors, which must
include the Independent Director, shall be necessary to constitute a quorum for
the transaction of business. Except as otherwise provided by law or herein, the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors.
7. Maintenance of Separate Identity. (a) The Corporation shall
--------------------------------
maintain all aspects of it business and operations entirely separate and apart
from those of Clark Refining & Marketing, Inc., a Delaware corporation ("Clark")
-----
and its Affiliates (as defined in clause (b) below). Clark and each of its
successors and assigns and its and their respective Affiliates, other than
Blackstone Capital Partners III Merchant Banking Fund L.P., Blackstone Offshore
Capital Partners III L.P. and Blackstone Family Investment Partnership III L.P.
and each of the direct and indirect owners thereof and Occidental Petroleum
Corporation and the Project Companies, are collectively referred to herein as
the "Clark Entities". The Corporation shall at all times hold itself out to the
--------------
public (including to any creditors of any Clark Entity) under the Corporation's
own name and as a separate and distinct corporate entity from any of its
Affiliates. All customary formalities regarding the corporate existence of the
Corporation, including holding regular meetings of the Board of Directors and
its stockholders and maintenance of current minute books, shall be observed. The
Corporation shall correct any misunderstandings concerning its separate
identity. Regular meetings of the Board of Directors shall be held at least
quarterly. A quorum of the Board of Directors shall be present in person, and
not by means of conference telephone or similar communications equipment, at no
less than one meeting each year. The Corporation's principal executive offices
shall be maintained in the State of Texas conspicuously separate and apart from
those of each Clark Entity. If such office is leased from any Clark Entity, such
lease shall be on terms no more or less favorable than could be obtained
elsewhere and such office shall be conspicuously identified as the Corporation's
office so it can be easily located by outsiders.
<PAGE>
3
(b) For purposes of this Certificate of Incorporation, an "Affiliate"
of any entity means (i) with respect to Clark or the Corporation, any and all
Clark Entities and (ii) with respect to any entity, including Clark and the
Corporation, any entity other than the entity itself: (x) which owns
beneficially, directly or indirectly, 10% or more of the outstanding shares of
the common stock of the entity, or which controls the entity; (y) of which 10%
or more of the outstanding voting securities are owned beneficially, directly or
indirectly, by the entity or any entity described in clause (x) above; or (z)
which controls or is controlled by the entity or any entity described in clause
(x) above; provided, however, that for the purposes of this definition, no
-------- -------
Project Company shall be considered and Affiliate of the Corporation. For
purposes of this definition of Affiliate, the terms "control" and "controlled
by" shall have the meaning ascribed to them in Rule 405 under the Securities Act
of 1933, as amended.
(c) The Corporation shall have sufficient officers and personnel and
maintain adequate capital to run its business and operations. At all time at
least one senior officer of the Corporation (who may also be a member of the
Board of Directors of the Corporation) shall not be, or have been in the five
(5) years preceding appointment, (i) a direct or indirect, legal or beneficial
owner of any equity interest in any Affiliate of the Corporation, (ii) a
creditor, supplier, employee, officer, director, manager or contractor of any
Affiliate of the Corporation, (iii) a person who controls (whether directly or
indirectly) any Affiliate of the Corporation or any creditor, supplier,
employee, officer, director, manager or contractor of any Affiliate of the
Corporation or (iv) any member of the immediate family of the foregoing.
(d) The Corporation shall prepare and maintain its own separate, full
and complete financial statements, accounts, accounting records and other
corporate books and documents, and shall not commingle any of its money or other
assets with the money or assets of any Clark Entity or any other entity. The
Corporation shall indicate in such statements, records and documents the
separateness of the Corporation's assets and liabilities from the assets and
liabilities of any Affiliate thereof. The Corporation shall prepare unaudited
quarterly and audited annual financial statements, and the Corporation's
financial statements shall comply with generally accepted accounting principles.
The Corporation shall maintain its own bank accounts, payroll and separate books
of account. The Corporation shall retain independent certified accountants as
its auditors, although such accountants may also serve as auditors of any
Affiliate of the Corporation.
(e) The Corporation shall act solely in its own corporate name and
through its own authorized officers and agents and conduct all business
correspondence of the Corporation and other communications in the Corporation's
own name, on its own stationary, invoices, checks and through a separately-
listed telephone number(s). No Clark Entity shall be appointed agent for the
Corporation (provided that an officer or director of a Clark Entity may serve as
an officer or director of the Corporation other than the Independent Director
and the officer referred to in paragraph (c) of this Article). The Corporation's
investment guidelines and criteria shall be established by a majority of the
Board of Directors of the Corporation which must include the Independent
Director. All investments by the Corporation shall be made in the name of the
Corporation (or, if required by the Financing Documents, in the name of the
collateral trustee acting on behalf of the Financing Parties) and made directly
by the Corporation or by brokers engaged and paid by the Corporation (or, if
required by the Financing Documents, by the
<PAGE>
4
collateral agent acting on behalf of the Financing Parties). Assets of the
Corporation shall be separately identified and segregated. All of the
Corporation's assets shall at all times be held by or on behalf of the
Corporation and, if held on behalf of the Corporation by another entity, shall
at all times be kept identifiable (in accordance with customary usages) as
assets owned by the Corporation. In no event shall any of the Corporation's
assets be held on its behalf or otherwise by any Clark Entity.
(f) Decisions with respect to the Corporation's business and daily
operations shall be independently made by the Corporation and will not be
dictated by any Clark Entity. All business transactions entered into by the
Corporation with any Clark Entity that are permitted shall be on terms and
conditions that are not more or less favorable to the Corporation than terms and
conditions available at the time to the Corporation for comparable transactions
with unaffiliated persons, or, if no such comparable transaction exists, on term
and conditions that are otherwise fair and reasonable. Any such business
transaction, and any declaration of dividends by the Company and any transaction
with or investment in the Partnership, must be approved by a majority of the
Board of Directors of the Corporation, which must include the Independent
Director. The Corporation shall not (i) guarantee or assume any liabilities or
obligations of any Clark Entity, (ii) permit any Clark Entity to assume or
guarantee any liabilities of the Corporation (provided that the Financing
Parties (as defined in Article 13 below) may be included among the beneficiaries
of certain customary indemnification obligations of Clark under the Project
Documents and/or the Financing Documents). The Corporation shall not (i) acquire
the obligations or securities of, or make loans or advances to, any Clark
Entity, (ii) guarantee, assume or become obligated for the debts of any other
entity, or (iii) hold out its credit as being able to satisfy the obligations of
any other entity.
(g) The Corporation will directly manage and pay its own liabilities
out of its own funds, including paying its own payroll and operating expenses.
In the event the employees of the Corporation participate in pension, insurance
and other benefit plans of any Affiliate thereof, the Corporation shall on a
current basis reimburse such Affiliate for the Corporation's pro rata share of
the costs thereof.
8. Corporate Limitations. Notwithstanding any other provision of
---------------------
this Certificate of Incorporation and any provision of law that otherwise so
empowers the Corporation, the Corporation shall not do any of the following:
(a) engage in any business or activity other than as set forth in
Article 3 hereof;
(b) dissolve or liquidate, in whole or in part;
(c) consolidate or merge with or into any other entity or convey or
transfer its properties and assets substantially as an entirety to any
entity; or
(d) while the Corporation is solvent, without the affirmative vote of
three-fifths of the members of the Board of Directors of the Corporation,
which must include the Independent Director, institute proceedings to be
adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a
<PAGE>
5
petition seeking or consent or acquiesce to the filing of a petition
seeking reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, or appoint, petition for or consent
to the appointment of a custodian, receiver, assignee, trustee,
sequestrator (or other similar official) of the Corporation or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as
they become due, or declare or effect a moratorium on its debt, or take any
corporate action in furtherance of any such action.
9. By-Laws. In furtherance and not in limitation of the powers
-------
conferred by statute, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-Laws of the Corporation (the "By-
Laws"); provided, however, that any action in respect of the By-Laws of the
-------- -------
Corporation that bears upon whether the separate corporate identity of the
Corporation and each Clark Entity will be respected and the assets of the
Corporation not consolidated with those of any Clark Entity under applicable
federal or state bankruptcy or insolvency law must receive the prior consent of
the Independent Director.
10. Liability of Directors. Except as otherwise provided by the
----------------------
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended, the liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent permissible under
Delaware law. Any repeal or modification of this Article 10 by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
11. Indemnification. The Corporation shall, to the fullest extent
---------------
permitted by the provisions of the General Corporation Law of Delaware, as now
or hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. Any repeal or modification of this Article 11 shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
12. Amendment of Certificate of Incorporation. The Corporation
-----------------------------------------
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation, provided, however, that, until the date which is the
-------- -------
earlier of (i) ninety one (91) days after all of the Corporation's obligations
under the Financing Documents have been indefeasibly paid and (ii) such earlier
date as permitted by the Financing Documents, the Corporation shall not amend,
alter, change or repeal any provision of Article 3, Article 6, Article 7,
Article 8, Article 9 or this Article 12 without the affirmative vote or prior
written consent of all holders of the Common Stock of the Corporation and the
unanimous vote or prior written consent of the Board of Directors, which must
include the Independent Director.
13. Additional Definitions. The following terms use herein shall have
----------------------
the following meanings:
"Financing Documents" means any and all documents to be executed in
-------------------
connection with the Project which evidence or secure the financing of the
construction of
<PAGE>
6
new delayed coking unit, hydrocracker, sulfur complex and related assets by
the Partnership at the Clark refinery in Port Arthur, Texas or the on-going
working capital requirements of the Partnership including, without
limitation (i) a common security agreement, (ii) one or more loan
agreements, (iii) a transfer restrictions agreement, (iv) an intercreditor
agreement, (v) a guaranty insurance policy and reimbursement agreement,
(vi) a debt service reserve account insurance guarantee, (vii) a note
purchase agreement, (viii) an indenture, (ix) notes, (x) one or more
mortgages, (xi) one or more pledge agreements, (xii) a registration rights
agreement and (xiii) any other documents delivered under or in connection
with any of the foregoing.
"Financing Parties" means any financing parties that may at any time
-----------------
be party to the Financing Documents and any trustee or agent action on
their behalf.
"Project" means the financing, construction, ownership and operation
-------
by the Partnership of a new delayed coking unit, hydrocracker, sulfur
complex and related assets to be located at the Port Arthur, Texas refinery
of Clark and the leasing from Clark, and operation of, the crude unit, the
vacuum tower, two distillate hydrotreaters and one naphtha hydrotreater
owned by Clark and located at its Port Arthur, Texas refinery.
"Project Documents" means, collectively, the following to be entered
-----------------
into by the Partnership: (i) a contract for engineering, procurement and
construction services with Foster Wheeler USA for the design and
construction of the new coking unit, hydrocracker, sulfur complex and
related assets; (ii) a long-term oil supply agreement with P.M.I. Comercio
Internacional for the supply of heavy sour crude oil for the Project; (iii)
a services and supply agreement with Clark for the provision of other
necessary supplies and services for the Project; (iv) a product purchase
agreement with Clark for the purchase of all the intermediate and refined
products produced by the equipment owned and leased by the Partnership; (v)
a ground lease and easement agreement with Clark for the lease of the sites
for the new coking unit, hydrocracker, sulfur complex and related assets
and the granting by Clark to the Partnership of various easements over, and
licenses to use other facilities at, Clark's Port Arthur refinery in
connection with the Project; (vi) a site and equipment lease and easement
agreement with Clark for the lease of the crude unit, vacuum tower and
three hydrotreaters at Clark's Port Arthur refinery and the site(s) on
which such equipment is located and the granting by Clark to the
Partnership of additional easements at the Port Arthur refinery; (vii) a
hydrogen supply agreement with Air Products and Chemicals, Inc. for the
construction of a hydrogen supply plant at Clark's Port Arthur refinery and
the supply of hydrogen to the Partnership; (viii) a purchase agreement with
Clark for work in progress related to the new coking unit, hydrocracker,
sulfur complex and related assets; (ix) contracts for the supply of
additional crude oil requirements for the Project; and (x) any other
contracts with third parties that are incidental to and necessary,
convenient or advisable in connection with the Project
<PAGE>
7
IN WITNESS WHEREOF, the undersigned, being the sole incorporator for
the purpose of forming a corporation under the laws of the State of Delaware,
does hereby make, acknowledge and file this Certificate of Incorporation this
30/th/ day of July 1999.
/s/ Jennifer L. Hobbs
---------------------------
Jennifer L. Hobbs
Sole Incorporator
<PAGE>
Exhibit 3.01(b)
EXECUTION COPY
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SABINE RIVER HOLDING CORP.
July 30, 1999
Sabine River Holding Corp., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that:
-----------
FIRST: The name of the Corporation is Sabine River Holding Corp.;
SECOND: The Certificate of Incorporation of the Corporation was filed with
the Delaware Secretary of State on the 3rd day of May, 1999;
THIRD: The Corporation has not received any payment for any of its stock;
FOURTH: The Board of Directors of the Corporation (the "Board of
--------
Directors") has duly adopted this amendment and restatement of the
---------
Certificate of Incorporation in accordance with the provisions of Sections
241 and 245 of the Delaware General Corporation Law; and
FIFTH: The Certificate of Incorporation of the Corporation is hereby
restated and amended in its entirety to read as follows:
1. Name. The name of the corporation is Sabine River Holding Corp.
----
(the "Corporation").
-----------
2. Address; Registered Agent. The address of the Corporation's
-------------------------
registered office in the State of Delaware is located at 1209 Orange Street, in
the City of Wilmington, County of New Castle. The name of its registered agent
at such address is The Corporation Trust Company.
3. Purpose. The purpose of the Corporation is to engage exclusively
-------
in the following activities:
(a) to engage in the ownership of a one percent (1%) partnership
interest in Port Arthur Coker Company L.P. (the "Partnership");
-----------
(b) to engage in the ownership of one hundred percent (100%) of
the issued and outstanding equity securities of Neches River Holding Corp.
(the "Limited Partner");
---------------
(c) to act as the sole general partner and managing member of the
Partnership;
<PAGE>
2
(d) to issue one or more guarantees of the debt of Port Arthur
Finance Corp. (the "Financing Company"; together with the Corporation, the
-----------------
Partnership and the Limited Partner, the "Project Companies") to be
------------------
incurred in connection with the Project (as defined in Article 12 below)
(the "Guarantees") and to enter into any and all documents in furtherance
----------
of its obligations thereunder;
(e) to execute, on behalf of the Partnership, any and all
documents required in connection with loans to be made by the Financing
Company to the Partnership in connection with the Project;
(f) to execute, on behalf of the Partnership, any and all
documents required in connection with the Partnership's ownership of one
hundred percent (100%) of the issued and outstanding equity securities of
the Financing Company;
(g) to execute, on behalf of the Partnership, any and all
Project Documents or Financing Documents (as such terms are defined in
Article 12 below) to which the Partnership is to be a party;
(h) to pledge its ownership interest in the Partnership to the
Financing Parties (as defined in Article 12 below) to secure the financing
of the Project;
(i) to execute on behalf of the Partnership, and enter into on
its own behalf, one or more equity contribution agreements in connection
with the equity funding of the Project by Blackstone Capital Partners III
Merchant Banking Fund L.P., Blackstone Offshore Capital Partners III L.P.
and Blackstone Family Investment Partnership III L.P. (together with each
of the direct and indirect owners thereof, "Blackstone") and Occidental
----------
Petroleum Corporation ("Occidental") and to issue to Occidental one or more
----------
warrants for the Corporation's common stock in connection therewith;
(j) to engage in any lawful act or activity, and to exercise
such powers permitted to corporations organized under the laws of the State
of Delaware, that are incidental to and necessary, convenient or advisable
for the accomplishment of the above-mentioned purposes.
4. Capitalization. The total number of shares of capital stock
--------------
which the Corporation shall have authority to issue is twelve million
(12,000,000) shares of Common Stock with a par value of $0.01 per share.
5. Board of Directors. (a) The Corporation shall have no more
------------------
than five (5) directors. Elections of directors need not be by written ballot
except and to the extent provided in the By-Laws of the Corporation.
(b) At all times at least one of the directors of the
Corporation shall be an Independent Director. "Independent Director" shall mean
a director of the Corporation who shall (i) at no time be, or have been in the
five (5) years preceding appointment, (A) a direct or
<PAGE>
3
indirect, legal or beneficial owner of any equity interest in any Affiliate (as
defined in Article 6 below) of the Corporation, (B) a creditor, supplier,
employee, officer, director, manager or contractor of any Affiliate of the
Corporation, (C) a person who controls (whether directly or indirectly) any
Affiliate of the Corporation or any creditor, supplier, employee, officer,
director, manager or contractor of any Affiliate of the Corporation or (D) any
member of the immediate family of the foregoing and (ii) shall not have a
potential for a direct or indirect benefit from any activity with, or control
over, any Affiliate of the Corporation.
(c) A majority of the then authorized number of directors, which must
include the Independent Director, shall be necessary to constitute a quorum for
the transaction of business. Except as otherwise provided by law or herein, the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors.
(d) The Independent Director shall have the right to engage legal
counsel on his or her behalf, at the expense of the Corporation, in connection
with his or her duties as the Independent Director. The Corporation is
authorized to pay the reasonable fees of such legal counsel and to make payment
of an advance fee to retain such legal counsel.
6. Maintenance of Separate Identity. (a) The Corporation shall
--------------------------------
maintain all aspects of it business and operations entirely separate and apart
from those of Clark Refining & Marketing, Inc., a Delaware corporation ("Clark")
-----
and its Affiliates (as defined in clause (b) below). Clark and each of its
successors and assigns and its and their respective Affiliates, other than
Blackstone, Occidental and the Project Companies, are collectively referred to
herein as the "Clark Entities". The Corporation shall at all times hold itself
--------------
out to the public (including to any creditors of any Clark Entity) under the
Corporation's own name and as a separate and distinct corporate entity from any
of its Affiliates. All customary formalities regarding the corporate existence
of the Corporation, including holding regular meetings of the Board of Directors
and its stockholders and maintenance of current minute books, shall be observed.
The Corporation shall correct any misunderstandings concerning its separate
identity. Regular meetings of the Board of Directors shall be held at least
quarterly. A quorum of the Board of Directors shall be present in person, and
not by means of conference telephone or similar communications equipment, at no
less than one meeting each year. The Corporation's principal executive offices
shall be maintained in the State of Texas conspicuously separate and apart from
those of each Clark Entity. If such office is leased from any Clark Entity, such
lease shall be on terms no more or less favorable than could be obtained
elsewhere and such office shall be conspicuously identified as the Corporation's
office so it can be easily located by outsiders.
(b) For purposes of this Certificate of Incorporation, an "Affiliate"
of any entity means (i) with respect to Clark or the Corporation, any and all
Clark Entities and (ii) with respect to any entity, including Clark and the
Corporation, any entity other than the entity itself: (x) which owns
beneficially, directly or indirectly, 10% or more of the outstanding shares of
the common stock of the entity, or which controls the entity; (y) of which 10%
or more of the outstanding voting securities are owned beneficially, directly or
indirectly, by the entity or any entity described in clause (x) above; or (z)
which controls or is controlled by the entity or any entity described in clause
(x) above; provided, however, that for the purposes of this definition,
-------- -------
<PAGE>
4
no Project Company shall be considered an Affiliate of the Corporation. For
purposes of this definition of Affiliate, the terms "control" and "controlled
by" shall have the meaning ascribed to them in Rule 405 under the Securities Act
of 1933, as amended.
(c) The Corporation shall have sufficient officers and personnel and
maintain adequate capital to run its business and operations. At all times at
least one senior officer of the Corporation (who may also be a member of the
Board of Directors of the Corporation) shall not be, or have been in the five
(5) years preceding appointment, (i) a direct or indirect, legal or beneficial
owner of any equity interest in any Affiliate of the Corporation, (ii) a
creditor, supplier, employee, officer, director, manager or contractor of any
Affiliate of the Corporation, (iii) a person who controls (whether directly or
indirectly) any Affiliate of the Corporation or any creditor, supplier,
employee, officer, director, manager or contractor of any Affiliate of the
Corporation or (iv) any member of the immediate family of the foregoing.
(d) The Corporation shall prepare and maintain its own separate, full
and complete financial statements, accounts, accounting records and other
corporate books and documents, and shall not commingle any of its money or other
assets with the money or assets of any Clark Entity or any other entity. The
Corporation shall indicate in such statements, records and documents the
separateness of the Corporation's assets and liabilities from the assets and
liabilities of any Affiliate thereof. The Corporation shall prepare unaudited
quarterly and audited annual financial statements, and the Corporation's
financial statements shall comply with generally accepted accounting principles.
The Corporation shall maintain its own bank accounts, payroll and separate books
of account. The Corporation shall retain independent certified accountants as
its auditors, although such accountants may also serve as auditors of any
Affiliate of the Corporation.
(e) The Corporation shall act solely in its own corporate name and
through its own authorized officers and agents and conduct all business
correspondence of the Corporation and other communications in the Corporation's
own name, on its own stationary, invoices, checks and through a
separately-listed telephone number(s). No Clark Entity shall be appointed agent
for the Corporation (provided that an officer or director of a Clark Entity may
serve as an officer or director of the Corporation other than the Independent
Director and the officer referred to in paragraph (c) of this Article). The
Corporation's investment guidelines and criteria shall be established by a
majority of the Board of Directors of the Corporation which must include the
Independent Director. All investments by the Corporation shall be made in the
name of the Corporation (or, if required by the Financing Documents, in the name
of the collateral trustee acting on behalf of the Financing Parties) and made
directly by the Corporation or by brokers engaged and paid by the Corporation
(or, if required by the Financing Documents, by the collateral agent acting on
behalf of the Financing Parties). Assets of the Corporation shall be separately
identified and segregated. All of the Corporation's assets shall at all times be
held by or on behalf of the Corporation and, if held on behalf of the
Corporation by another entity, shall at all times be kept identifiable (in
accordance with customary usages) as assets owned by the Corporation. In no
event shall any of the Corporation's assets be held on its behalf or otherwise
by any Clark Entity.
<PAGE>
5
(f) Decisions with respect to the Corporation's business and daily
operations shall be independently made by the Corporation and will not be
dictated by any Clark Entity. All business transactions entered into by the
Corporation with any Clark Entity that are permitted shall be on terms and
conditions that are not more or less favorable to the Corporation than terms and
conditions available at the time to the Corporation for comparable transactions
with unaffiliated persons, or, if no such comparable transaction exists, on term
and conditions that are otherwise fair and reasonable. Any such business
transaction, and any declaration of dividends by the Company and any transaction
with or investment in the Partnership, must be approved by a majority of the
Board of Directors of the Corporation, which must include the Independent
Director. The Corporation shall not (i) guarantee or assume any liabilities or
obligations of any Clark Entity, or (ii) permit any Clark Entity to assume or
guarantee any liabilities of the Corporation (provided that the Financing
Parties may be included among the beneficiaries of certain customary
indemnification obligations of Clark under the Project Documents and/or the
Finance Documents). The Corporation shall not (i) acquire the obligations or
securities of, or make loans or advances to, any Clark Entity, (ii) guarantee,
assume or become obligated for the debts of any other entity, other than the
Financing Company, or (iii) hold out its credit as being able to satisfy the
obligations of any other entity, other than the Financing Company.
(g) The Corporation will directly manage and pay its own liabilities
out of its own funds, including paying its own payroll and operating expenses.
In the event the employees of the Corporation participate in pension, insurance
and other benefit plans of any Affiliate thereof, the Corporation shall on a
current basis reimburse such Affiliate for the Corporation's pro rata share of
the costs thereof.
7. Corporate Limitations. Notwithstanding any other provision of
---------------------
this Certificate of Incorporation and any provision of law that otherwise so
empowers the Corporation, the Corporation shall not do any of the following:
(a) engage in any business or activity other than as set forth in
Article 3 hereof;
(b) dissolve or liquidate, in whole or in part;
(c) consolidate or merge with or into any other entity or convey
or transfer its properties and assets substantially as an entirety to any
entity; or
(d) while the Corporation is solvent, without the affirmative vote of
three-fifths of the members of the Board of Directors of the Corporation,
which must include the Independent Director, institute proceedings to be
adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition seeking
or consent or acquiesce to the filing of a petition seeking reorganization
or relief under any applicable federal or state law relating to bankruptcy
or insolvency, or appoint, petition for or consent to the appointment of a
custodian, receiver, assignee, trustee, sequestrator (or other similar
official) of the Corporation or a substantial part of its property, or make
any assignment for the benefit of creditors, or admit in writing its
<PAGE>
6
inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt, or take any corporate action in
furtherance of any such action.
8. By-Laws. In furtherance and not in limitation of the powers
-------
conferred by statute, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-Laws of the Corporation (the
"By-Laws"); provided, however, that any action in respect of the By-Laws of the
------- -------- -------
Corporation that bears upon whether the separate corporate identity of the
Corporation and each Clark Entity will be respected and the assets of the
Corporation not consolidated with those of any Clark Entity under applicable
federal or state bankruptcy or insolvency law must receive the prior consent of
the Independent Director.
9. Liability of Directors. Except as otherwise provided by the
----------------------
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended, the liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent permissible under
Delaware law. Any repeal or modification of this Article 9 by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
10. Indemnification. The Corporation shall, to the fullest extent
---------------
permitted by the provisions of the General Corporation Law of Delaware, as now
or hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. Any repeal or modification of this Article 10 shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
11. Amendment of Certificate of Incorporation. The Corporation
-----------------------------------------
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation; provided, however, that, until the date which is the
-------- -------
earlier of (i) ninety one (91) days after all of the Corporation's obligations
under the Guarantees have been indefeasibly paid and (ii) such earlier date as
permitted by the Financing Documents, the Corporation shall not amend, alter,
change or repeal any provision of Article 3, Article 5, Article 6, Article 7,
Article 8, Article 12 or this Article 11 without the affirmative vote or prior
written consent of all holders of the Common Stock of the Corporation and the
unanimous vote or prior written consent of the Board of Directors, which must
include the Independent Director.
12. Additional Definitions. The following terms use herein shall have
----------------------
the following meanings:
"Financing Documents" means any and all documents to be executed in
-------------------
connection with the Project which evidence or secure the financing of the
construction of new delayed coking unit, hydrocracker, sulfur complex and
related assets by the Partnership at the Clark refinery in Port Arthur,
Texas or the on-going working capital requirements of the Partnership
including, without limitation (i) a common security agreement, (ii) one or
more loan agreements, (iii) a transfer restrictions agreement, (iv) an
<PAGE>
7
intercreditor agreement, (v) a guaranty insurance policy and reimbursement
agreement, (vi) a debt service reserve account insurance guarantee, (vii) a
note purchase agreement, (viii) an indenture, (ix) notes, (x) one or more
mortgages, (xi) one or more pledge agreements, (xii) a registration rights
agreement and (xiii) any other documents delivered under or in connection
with any of the foregoing.
"Financing Parties" means any financing parties that may at any time
-----------------
be party to the Financing Documents and any trustee or agent action on
their behalf.
"Project" means the financing, construction, ownership and operation
-------
by the Partnership of a new delayed coking unit, hydrocracker, sulfur
complex and related assets to be located at the Port Arthur, Texas refinery
of Clark and the leasing from Clark, and operation of, the crude unit, the
vacuum tower, two distillate hydrotreaters and one naphtha hydrotreater
owned by Clark and located at its Port Arthur, Texas refinery.
"Project Documents" means, collectively, the following to be entered
-----------------
into by the Partnership: (i) a contract for engineering, procurement and
construction services with Foster Wheeler USA for the design and
construction of the new coking unit, hydrocracker, sulfur complex and
related assets; (ii) a long-term oil supply agreement with P.M.I. Comercio
Internacional for the supply of heavy sour crude oil for the Project; (iii)
a services and supply agreement with Clark for the provision of other
necessary supplies and services for the Project; (iv) a product purchase
agreement with Clark for the purchase of all the intermediate and refined
products produced by the equipment owned and leased by the Partnership; (v)
a ground lease and easement agreement with Clark for the lease of the sites
for the new coking unit, hydrocracker, sulfur complex and related assets
and the granting by Clark to the Partnership of various easements over, and
licenses to use other facilities at, Clark's Port Arthur refinery in
connection with the Project; (vi) a site and equipment lease and easement
agreement with Clark for the lease of the crude unit, vacuum tower and
three hydrotreaters at Clark's Port Arthur refinery and the site(s) on
which such equipment is located and the granting by Clark to the
Partnership of additional easements at the Port Arthur refinery; (vii) a
hydrogen supply agreement with Air Products and Chemicals, Inc. for the
construction of a hydrogen supply plant at Clark's Port Arthur refinery and
the supply of hydrogen to the Partnership; (viii) a purchase agreement with
Clark for work in progress related to the new coking unit, hydrocracker,
sulfur complex and related assets; (ix) contracts for the supply of
additional crude oil requirements for the Project; and (x) any other
contracts with third parties that are incidental to and necessary,
convenient or advisable in connection with the Project.
[The remainder of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, Sabine River Holding Corp. has caused this Amended
and Restated Certificate of Incorporation to be signed by Maura J. Clark, its
Executive Vice President and Chief Financial Officer on the date first written
above.
SABINE RIVER HOLDING CORP.
/s/ Maura J. Clark
---------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
9
CERTIFICATE OF AMENDMENT
to the
CERTIFICATE OF INCORPORATION
OF
SABINE RIVER HOLDING CORP.
August 11, 1999
Sabine River Holding Corp., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that:
-----------
FIRST: The name of the Corporation is Sabine River Holding Corp.;
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Delaware Secretary of State on the 3rd day of May 1999 and an Amended
and Restated Certificate of Incorporation of the Corporation was filed with the
Delaware Secretary of State on the 2nd day of August 1999;
THIRD: That paragraph (e) of Article 6 of the Certificate of
Incorporation of the Corporation is hereby amended (the "Amendment") in its
---------
entirety to read as follows:
"(e) The Corporation shall act solely in its own corporate name and
through its own authorized officers and agents and conduct all business
correspondence of the Corporation and other communications in the
Corporation's own name, on its own stationary, invoices, checks and through
a separately-listed telephone number(s). No Clark Entity shall be appointed
agent for the Corporation, except the appointment of Clark Refining
Holdings Inc. as agent for the Corporation in connection with the filing of
consolidated tax returns (provided that an officer or director of a Clark
Entity may serve as an officer or director of the Corporation other than
the Independent Director and the officer referred to in paragraph (c) of
this Article). The Corporation's investment guidelines and criteria shall
be established by a majority of the Board of Directors of the Corporation
which must include the Independent Director. All investments by the
Corporation shall be made in the name of the Corporation (or, if required
by the Financing Documents, in the name of the collateral trustee acting on
behalf of the Financing Parties) and made directly by the Corporation or by
brokers engaged and paid by the Corporation (or, if required by the
Financing Documents, by the collateral agent acting on behalf of the
Financing Parties). Assets of the Corporation shall be separately
identified and segregated. All of the Corporation's assets shall at all
times be held by or on behalf of the Corporation and, if held on behalf of
the Corporation by another entity, shall at all times be kept identifiable
(in accordance with customary usages) as assets owned by the Corporation.
In no event shall any of the Corporation's assets be held on its behalf or
otherwise by any Clark Entity.";
<PAGE>
10
FOURTH: That the Board of Directors duly adopted the Amendment by
unanimous written consent on August 3, 1999 and declared it is advisable and in
the best interests of the Corporation that the Amendment be submitted for
approval to the holders of the outstanding stock of the Corporation;
FIFTH: That the Amendment was duly adopted by all the holders of
outstanding stock of the Corporation by unanimous written consent on August 9,
1999; and
SIXTH: That the Amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, Sabine River Holding Corp. has caused this Amended
and Restated Certificate of Incorporation to be signed by Richard A. Keffer, its
Secretary on the date first written above.
SABINE RIVER HOLDING CORP.
/s/ Richard A. Keffer
---------------------------
Name: Richard A. Keffer
Title: Secretary
<PAGE>
Exhibit 3.01(c)
EXECUTION COPY
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NECHES RIVER HOLDING CORP.
July 30, 1999
Neches River Holding Corp., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that:
-----------
FIRST: The name of the Corporation is Neches River Holding Corp.;
SECOND: The Certificate of Incorporation of the Corporation was filed with
the Delaware Secretary of State on the 3rd day of May, 1999;
THIRD: The Corporation has not received any payment for any of its stock;
FOURTH: The Board of Directors of the Corporation (the "Board of
--------
Directors") has duly adopted this amendment and restatement of the
---------
Certificate of Incorporation in accordance with the provisions of Sections
241 and 245 of the Delaware General Corporation Law; and
FIFTH: The Certificate of Incorporation of the Corporation is hereby
restated and amended in its entirety to read as follows:
1. Name. The name of the corporation is Neches River Holding Corp.
(the "Corporation").
-----------
2. Address; Registered Agent. The address of the Corporation's
-------------------------
registered office in the State of Delaware is located at 1209 Orange Street, in
the City of Wilmington, County of New Castle. The name of its registered agent
at such address is The Corporation Trust Company.
3. Purpose. The purpose of the Corporation is to engage exclusively
-------
in the following activities:
(a) to engage in the ownership of a ninety nine percent (99%)
partnership interest in Port Arthur Coker Company L.P. (the "Partnership");
-----------
(b) to act as a limited partner of the Partnership;
<PAGE>
2
(c) to issue one or more guarantees of the debt of Port Arthur
Finance Corp. (the "Financing Company"; together with the Corporation, the
-----------------
Partnership and Sabine River Holding Corp., the "Project Companies") to be
-----------------
incurred in connection with the Project (as defined in Article 12 below)
(the "Guarantees") and to enter into any and all documents in furtherance
----------
of its obligations thereunder;
(d) to pledge its ownership interest in the Partnership to the
Financing Parties (as defined in Article 12 below) to secure the financing
of the Project;
(e) to enter into one or more equity contribution agreements in
connection with the equity funding of the Project by Blackstone Capital
Partners III Merchant Banking Fund L.P., Blackstone Offshore Capital
Partners III L.P. and Blackstone Family Investment Partnership III L.P.
(together with each of the direct and indirect owners thereof,
"Blackstone") and Occidental Petroleum Corporation ("Occidental"); and
---------- ----------
(f) to engage in any lawful act or activity, and to exercise such
powers permitted to corporations organized under the laws of the State of
Delaware, that are incidental to and necessary, convenient or advisable for
the accomplishment of the above-mentioned purposes.
4. Capitalization. The total number of shares of capital stock
--------------
which the Corporation shall have authority to issue is one thousand (1,000)
shares of Common Stock with a par value of $0.01 per share.
5. Board of Directors. (a) The Corporation shall have no more than
------------------
five (5) directors. Elections of directors need not be by written ballot except
and to the extent provided in the By-Laws of the Corporation.
(b) At all times at least one of the directors of the Corporation
shall be an Independent Director. "Independent Director" shall mean a director
of the Corporation who (i) shall at no time be, or have been in the five (5)
years preceding appointment, (A) a direct or indirect, legal or beneficial owner
of any equity interest in any Affiliate (as defined in Article 6 below) of the
Corporation, (B) a creditor, supplier, employee, officer, director, manager or
contractor of any Affiliate of the Corporation, (C) a person who controls
(whether directly or indirectly) any Affiliate of the Corporation or any
creditor, supplier, employee, officer, director, manager or contractor of any
Affiliate of the Corporation or (D) any member of the immediate family of the
foregoing and (ii) shall not have a potential for a direct or indirect benefit
from any activity with, or control over, any Affiliate of the Corporation.
(c) A majority of the then authorized number of directors, which
must include the Independent Director, shall be necessary to constitute a quorum
for the transaction of business. Except as otherwise provided by law or herein,
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the Board of Directors.
6. Maintenance of Separate Identity. (a) The Corporation shall
--------------------------------
maintain all aspects of it business and operations entirely separate and apart
from those of Clark Refining &
<PAGE>
3
Marketing, Inc., a Delaware corporation ("Clark") and its Affiliates (as defined
-----
in clause (b) below). Clark and each of its successors and assigns and its and
their respective Affiliates, other than Blackstone, Occidental and the Project
Companies, are collectively referred to herein as the "Clark Entities". The
--------------
Corporation shall at all times hold itself out to the public (including to any
creditors of any Clark Entity) under the Corporation's own name and as a
separate and distinct corporate entity from any of its Affiliates. All customary
formalities regarding the corporate existence of the Corporation, including
holding regular meetings of the Board of Directors and its stockholders and
maintenance of current minute books, shall be observed. The Corporation shall
correct any misunderstandings concerning its separate identity. Regular meetings
of the Board of Directors shall be held at least quarterly. A quorum of the
Board of Directors shall be present in person, and not by means of conference
telephone or similar communications equipment, at no less than one meeting each
year. The Corporation's principal executive offices shall be maintained in the
State of Texas, Delaware or New York conspicuously separate and apart from those
of each Clark Entity. If such office is leased from any Clark Entity, such lease
shall be on terms no more or less favorable than could be obtained elsewhere and
such office shall be conspicuously identified as the Corporation's office so it
can be easily located by outsiders.
(b) For purposes of this Certificate of Incorporation, an "Affiliate"
of any entity means (i) with respect to Clark or the Corporation, any and all
Clark Entities and (ii) with respect to any entity, including Clark and the
Corporation, any entity other than the entity itself: (x) which owns
beneficially, directly or indirectly, 10% or more of the outstanding shares of
the common stock of the entity, or which controls the entity; (y) of which 10%
or more of the outstanding voting securities are owned beneficially, directly or
indirectly, by the entity or any entity described in clause (x) above; or (z)
which controls or is controlled by the entity or any entity described in clause
(x) above; provided, however, that for the purposes of this definition, no
-------- -------
Project Company shall be considered and Affiliate of the Corporation. For
purposes of this definition of Affiliate, the terms "control" and "controlled
by" shall have the meaning ascribed to them in Rule 405 under the Securities Act
of 1933, as amended.
(c) The Corporation shall have sufficient officers and personnel and
maintain adequate capital to run its business and operations. At all time at
least one senior officer of the Corporation (who may also be a member of the
Board of Directors of the Corporation) shall not be, or have been in the five
(5) years preceding appointment, (i) a direct or indirect, legal or beneficial
owner of any equity interest in any Affiliate of the Corporation, (ii) a
creditor, supplier, employee, officer, director, manager or contractor of any
Affiliate of the Corporation, (iii) a person who controls (whether directly or
indirectly) any Affiliate of the Corporation or any creditor, supplier,
employee, officer, director, manager or contractor of any Affiliate of the
Corporation or (iv) any member of the immediate family of the foregoing.
(d) The Corporation shall prepare and maintain its own separate, full
and complete financial statements, accounts, accounting records and other
corporate books and documents, and shall not commingle any of its money or other
assets with the money or assets of any Clark Entity or any other entity. The
Corporation shall indicate in such statements, records and documents the
separateness of the Corporation's assets and liabilities from the assets and
liabilities of any Affiliate thereof. The Corporation shall prepare unaudited
quarterly and audited
<PAGE>
4
annual financial statements, and the Corporation's financial statements shall
comply with generally accepted accounting principles. The Corporation shall
maintain its own bank accounts, payroll and separate books of account. The
Corporation shall retain independent certified accountants as its auditors,
although such accountants may also serve as auditors of any Affiliate of the
Corporation.
(e) The Corporation shall act solely in its own corporate name and
through its own authorized officers and agents and conduct all business
correspondence of the Corporation and other communications in the Corporation's
own name, on its own stationary, invoices, checks and through a
separately-listed telephone number(s). No Clark Entity shall be appointed agent
for the Corporation (provided that an officer or director of a Clark Entity may
serve as an officer or director of the Corporation other than the Independent
Director and the officer referred to in paragraph (c) of this Article). The
Corporation's investment guidelines and criteria shall be established by a
majority of the Board of Directors of the Corporation which must include the
Independent Director. All investments by the Corporation shall be made in the
name of the Corporation (or, if required by the Financing Documents, in the name
of the collateral trustee acting on behalf of the Financing Parties) and made
directly by the Corporation or by brokers engaged and paid by the Corporation
(or, if required by the Financing Documents, in by the collateral trustee acting
on behalf of the Financing Parties). Assets of the Corporation shall be
separately identified and segregated. All of the Corporation's assets shall at
all times be held by or on behalf of the Corporation and, if held on behalf of
the Corporation by another entity, shall at all times be kept identifiable (in
accordance with customary usages) as assets owned by the Corporation. In no
event shall any of the Corporation's assets be held on its behalf or otherwise
by any Clark Entity.
(f) Decisions with respect to the Corporation's business and daily
operations shall be independently made by the Corporation and will not be
dictated by any Clark Entity. All business transactions entered into by the
Corporation with any Clark Entity that are permitted shall be on terms and
conditions that are not more or less favorable to the Corporation than terms and
conditions available at the time to the Corporation for comparable transactions
with unaffiliated persons, or, if no such comparable transaction exists, on term
and conditions that are otherwise fair and reasonable. Any such business
transaction, and any declaration of dividends by the Company and any transaction
with or investment in the Partnership, must be approved by a majority of the
Board of Directors of the Corporation, which must include the Independent
Director. The Corporation shall not (i) guarantee or assume any liabilities or
obligations of any Clark Entity, (ii) permit any Clark Entity to assume or
guarantee any liabilities of the Corporation (provided that the Financing
Parties (as defined in Article 12 below) may be included among the beneficiaries
of certain customary indemnification obligations of Clark under the Project
Documents and/or the Financing Documents). The Corporation shall not (i) acquire
the obligations or securities of, or make loans or advances to, any Clark
Entity, (ii) guarantee, assume or become obligated for the debts of any other
entity, other than the Financing Company, or (iii) hold out its credit as being
able to satisfy the obligations of any other entity, other than the Financing
Company.
(g) The Corporation will directly manage and pay its own liabilities
out of its own funds, including paying its own payroll and operating expenses.
In the event the employees
<PAGE>
5
of the Corporation participate in pension, insurance and other benefit plans of
any Affiliate thereof, the Corporation shall on a current basis reimburse such
Affiliate for the Corporation's pro rata share of the costs thereof.
7. Corporate Limitations. Notwithstanding any other provision of
---------------------
this Certificate of Incorporation and any provision of law that otherwise so
empowers the Corporation, the Corporation shall not do any of the following:
(a) engage in any business or activity other than as set forth
in Article 3 hereof;
(b) dissolve or liquidate, in whole or in part;
(c) consolidate or merge with or into any other entity or convey or
transfer its properties and assets substantially as an entirety to any
entity; or
(d) while the Corporation is solvent, without the affirmative vote of
three-fifths of the members of the Board of Directors of the Corporation,
which must include the Independent Director, institute proceedings to be
adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition seeking
or consent or acquiesce to the filing of a petition seeking reorganization
or relief under any applicable federal or state law relating to bankruptcy
or insolvency, or appoint, petition for or consent to the appointment of a
custodian, receiver, assignee, trustee, sequestrator (or other similar
official) of the Corporation or a substantial part of its property, or make
any assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt, or take any corporate action in
furtherance of any such action.
8. By-Laws. In furtherance and not in limitation of the powers
-------
conferred by statute, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-Laws of the Corporation (the "By-
Laws"); provided, however, that any action in respect of the By-Laws of the
-------- -------
Corporation that bears upon whether the separate corporate identity of the
Corporation and each Clark Entity will be respected and the assets of the
Corporation not consolidated with those of any Clark Entity under applicable
federal or state bankruptcy or insolvency law must receive the prior consent of
the Independent Director.
9. Liability of Directors. Except as otherwise provided by the
----------------------
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended, the liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent permissible under
Delaware law. Any repeal or modification of this Article 9 by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
10. Indemnification. The Corporation shall, to the fullest extent
---------------
permitted by the provisions of the General Corporation Law of Delaware, as now
or hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. Any repeal or modification of this
<PAGE>
6
Article 10 shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification.
11. Amendment of Certificate of Incorporation. The Corporation
-----------------------------------------
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation, provided, however, that, until the date which is the
-------- -------
earlier of (i) ninety one (91) days after all of the Corporation's obligations
under the Guarantees have been indefeasibly paid and (ii) such earlier date as
permitted by the Financing Documents, the Corporation shall not amend, alter,
change or repeal any provision of Article 3, Article 5, Article 6, Article 7,
Article 8, Article 12 or this Article 11 without the affirmative vote or prior
written consent of all holders of the Common Stock of the Corporation and the
unanimous vote or prior written consent of the Board of Directors, which must
include the Independent Director.
12. Additional Definitions. The following terms use herein shall have
----------------------
the following meanings:
"Financing Documents" means any and all documents to be executed
-------------------
in connection with the Project which evidence or secure the financing of
the construction of new delayed coking unit, hydrocracker, sulfur complex
and related assets by the Partnership at the Clark refinery in Port Arthur,
Texas or the on-going working capital requirements of the Partnership
including, without limitation (i) a common security agreement, (ii) one or
more loan agreements, (iii) a transfer restrictions agreement, (iv) an
intercreditor agreement, (v) a guaranty insurance policy and reimbursement
agreement, (vi) a debt service reserve account insurance guarantee, (vii) a
note purchase agreement, (viii) an indenture, (ix) notes, (x) one or more
mortgages, (xi) one or more pledge agreements, (xii) a registration rights
agreement and (xiii) any other documents delivered under or in connection
with any of the foregoing.
"Financing Parties" means any financing parties that may at any
-----------------
time be party to the Financing Documents and any trustee or agent action on
their behalf.
"Project" means the financing, construction, ownership and
-------
operation by the Partnership of a new delayed coking unit, hydrocracker,
sulfur complex and related assets to be located at the Port Arthur, Texas
refinery of Clark and the leasing from Clark, and operation of, the crude
unit, the vacuum tower, two distillate hydrotreaters and one naphtha
hydrotreater owned by Clark and located at its Port Arthur, Texas refinery.
"Project Documents" means, collectively, the following to be
-----------------
entered into by the Partnership: (i) a contract for engineering,
procurement and construction services with Foster Wheeler USA for the
design and construction of the new coking unit, hydrocracker, sulfur
complex and related assets; (ii) a long-term oil supply agreement with
P.M.I. Comercio Internacional for the supply of heavy sour crude oil for
the Project; (iii) a services and supply agreement with Clark for the
provision of other necessary supplies and services for the Project; (iv) a
product purchase agreement with Clark for the
<PAGE>
7
purchase of all the intermediate and refined products produced by the
equipment owned and leased by the Partnership; (v) a ground lease and
easement agreement with Clark for the lease of the sites for the new coking
unit, hydrocracker, sulfur complex and related assets and the granting by
Clark to the Partnership of various easements over, and licenses to use
other facilities at, Clark's Port Arthur refinery in connection with the
Project; (vi) a site and equipment lease and easement agreement with Clark
for the lease of the crude unit, vacuum tower and three hydrotreaters at
Clark's Port Arthur refinery and the site(s) on which such equipment is
located and the granting by Clark to the Partnership of additional
easements at the Port Arthur refinery; (vii) a hydrogen supply agreement
with Air Products and Chemicals, Inc. for the construction of a hydrogen
supply plant at Clark's Port Arthur refinery and the supply of hydrogen to
the Partnership; (viii) a purchase agreement with Clark for work in
progress related to the new coking unit, hydrocracker, sulfur complex and
related assets; (ix) contracts for the supply of additional crude oil
requirements for the Project; and (x) any other contracts with third
parties that are incidental to and necessary, convenient or advisable in
connection with the Project.
[The remainder of this page is intentionally left blank.]
<PAGE>
8
IN WITNESS WHEREOF, Neches River Holding Corp. has caused this Amended
and Restated Certificate of Incorporation to be signed by Maura J. Clark, its
Executive Vice President and Chief Financial Officer on the date first written
above.
NECHES RIVER HOLDING CORP.
/s/ Maura J. Clark
---------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
CERTIFICATE OF AMENDMENT
to the
CERTIFICATE OF INCORPORATION
OF
NECHES RIVER HOLDING CORP.
August 11, 1999
Neches River Holding Corp., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that:
-----------
FIRST: The name of the Corporation is Neches River Holding Corp.;
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Delaware Secretary of State on the 3rd day of May 1999 and an Amended
and Restated Certificate of Incorporation of the Corporation was filed with the
Delaware Secretary of State on the 2/nd/ day of August 1999;
THIRD: That paragraph (e) of Article 6 of the Certificate of
Incorporation of the Corporation is hereby amended (the "Amendment") in its
---------
entirety to read as follows:
"(e) The Corporation shall act solely in its own corporate name and
through its own authorized officers and agents and conduct all business
correspondence of the Corporation and other communications in the
Corporation's own name, on its own stationary, invoices, checks and through
a separately-listed telephone number(s). No Clark Entity shall be appointed
agent for the Corporation, except the appointment of Clark Refining
Holdings Inc. as agent for the Corporation in connection with the filing of
consolidated tax returns (provided that an officer or director of a Clark
Entity may serve as an officer or director of the Corporation other than
the Independent Director and the officer referred to in paragraph (c) of
this Article). The Corporation's investment guidelines and criteria shall
be established by a majority of the Board of Directors of the Corporation
which must include the Independent Director. All investments by the
Corporation shall be made in the name of the Corporation (or, if required
by the Financing Documents, in the name of the collateral trustee acting on
behalf of the Financing Parties) and made directly by the Corporation or by
brokers engaged and paid by the Corporation (or, if required by the
Financing Documents, by the collateral agent acting on behalf of the
Financing Parties). Assets of the Corporation shall be separately
identified and segregated. All of the Corporation's assets shall at all
times be held by or on behalf of the Corporation and, if held on behalf of
the Corporation by another entity, shall at all times be kept identifiable
(in accordance with customary usages) as assets owned by the Corporation.
In no event shall any of the Corporation's assets be held on its behalf or
otherwise by any Clark Entity.";
<PAGE>
10
FOURTH: That the Board of Directors duly adopted the Amendment by
unanimous written consent on August 3, 1999 and declared it is advisable and in
the best interests of the Corporation that the Amendment be submitted for
approval to the holders of the outstanding stock of the Corporation;
FIFTH: That the Amendment was duly adopted by all the holders of
outstanding stock of the Corporation by unanimous written consent on August 9,
1999; and
SIXTH: That the Amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, Neches River Holding Corp. has caused this Amended
and Restated Certificate of Incorporation to be signed by Richard A. Keffer, its
Secretary on the date first written above.
NECHES RIVER HOLDING CORP.
/s/ Richard A. Keffer
---------------------------
Name: Richard A. Keffer
Title: Secretary
<PAGE>
Exhibit 3.02(a)
================================================================================
BY-LAWS
of
PORT ARTHUR FINANCE CORP.
(Adopted July 30, 1999)
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Meeting of Shareholders.......................................................... 1
SECTION 1.1. Place of Meetings.................................................. 1
SECTION 1.2. Meetings........................................................... 1
SECTION 1.3. Notice of Meetings................................................. 1
SECTION 1.4. Quorum............................................................. 2
SECTION 1.5. Voting............................................................. 2
SECTION 1.6. Organization and Order of Business................................. 2
SECTION 1.7. Inspectors......................................................... 3
SECTION 1.8. Action Without Meeting............................................. 3
ARTICLE II
Board of Directors............................................................... 3
SECTION 2.1. Number, Election, Term and Qualifications.......................... 3
SECTION 2.2. Powers............................................................. 4
SECTION 2.3. Resignations....................................................... 4
SECTION 2.4. Vacancies.......................................................... 4
SECTION 2.5. Actions by Directors............................................... 4
SECTION 2.6. Committees of the Board............................................ 4
SECTION 2.7. Meetings of the Board of Directors................................. 5
SECTION 2.8. Organization....................................................... 6
SECTION 2.9. Directors' Compensation............................................ 6
ARTICLE III
Notices.......................................................................... 6
SECTION 3.1. Notice to Shareholders............................................. 6
SECTION 3.2. Waivers of Notice.................................................. 6
ARTICLE IV
Officers......................................................................... 7
SECTION 4.1. Officers........................................................... 7
SECTION 4.2. Other Officers and Agents.......................................... 7
SECTION 4.3. Compensation....................................................... 7
SECTION 4.4. Removal; Resignation............................................... 7
SECTION 4.5. Chairman........................................................... 7
SECTION 4.6. President.......................................................... 7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.7. Vice President..................................................... 8
SECTION 4.8. Independent Officer................................................ 8
SECTION 4.9. Secretary.......................................................... 8
SECTION 4.10. Assistant Secretary................................................ 8
SECTION 4.11. Treasurer and Assistant Treasurer.................................. 9
SECTION 4.12. Delegation of Duties............................................... 9
SECTION 4.13. Limitations on Officers............................................ 9
ARTICLE V
Ownership; Certificates of Shares................................................ 10
SECTION 5.1. Certificates....................................................... 10
SECTION 5.2. Lost Certificates.................................................. 10
SECTION 5.3. Share Record; Issuance and Transferability of Shares............... 10
SECTION 5.4. Fixing Record Date................................................. 11
SECTION 5.5. Transfer Agent; Dividend Disbursing Agent and Registrar............ 12
ARTICLE VI
General Provisions............................................................... 12
SECTION 6.1. Dividends.......................................................... 12
SECTION 6.2. Checks............................................................. 12
SECTION 6.3. Depositories....................................................... 12
SECTION 6.4. Books of Account and Records....................................... 12
SECTION 6.5. Information for Inspection......................................... 13
SECTION 6.6. Fiscal Year........................................................ 13
SECTION 6.7. Share Ledger....................................................... 13
SECTION 6.8. Seal............................................................... 13
ARTICLE VII
Indemnification.................................................................. 13
SECTION 7.1. Indemnification of Directors and Officers ......................... 13
SECTION 7.2. Nonexclusivity of Indemnification and Advancement of Expenses...... 14
SECTION 7.3. Insurance.......................................................... 14
ARTICLE VIII
Amendments....................................................................... 14
SECTION 8.1. Board of Directors................................................. 14
SECTION 8.2. Shareholders....................................................... 14
</TABLE>
ii
<PAGE>
BY-LAWS
of
PORT ARTHUR FINANCE CORP.
(adopted July 30, 1999)
Capitalized terms used herein and not defined herein shall have the following
meanings:
"Corporation" means Port Arthur Finance Corp.
-----------
"Shares" means the shares of common stock of the Corporation.
------
"Shareholders" means, at any time, all holders of record of outstanding
------------
Shares at such time.
ARTICLE I
Meeting of Shareholders
-----------------------
SECTION 1.1. Place of Meetings. Meetings of Shareholders shall be
-----------------
held at such place within the United States as shall be designated from time to
time by the Board of Directors and stated in the notice of meeting or in a duly
executed waiver of notice thereof.
SECTION 1.2. Meetings. (a) Annual meetings of Shareholders shall be
--------
held at such place, date and hour as shall be fixed by the Board of Directors
and stated in the notice of meeting, at which the directors shall be elected and
any other proper business of the Corporation may be conducted. Any business of
the Corporation may be transacted at the annual meeting without being specially
designated in the notice, except such business as is specifically required by
law to be stated in the notice.
(b) Special meetings of the Shareholders may be called at any time by
the chief executive officer of the Corporation or by a majority of the directors
and shall be called by an officer of the Corporation upon the written request of
one or more Shareholders holding in the aggregate not less than 25% of the
outstanding Shares entitled to vote at such meeting. If there shall be no
directors, the officers of the Corporation shall promptly call a special meeting
of the Shareholders entitled to vote for the election of successor directors.
Notice of any special meeting shall state the purpose or purposes of the
meeting.
SECTION 1.3. Notice of Meetings. Not less than 10 nor more than 60
------------------
days before the date of every Shareholders' meeting, the secretary shall give to
each Shareholder entitled to vote at such meeting, and to each Shareholder not
entitled to vote who is entitled by law to notice, written notice stating the
time and place of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called.
<PAGE>
2
In the case of a special meeting of Shareholders convened at the
request of Shareholders, the notice herein provided for shall be given by the
secretary, in the manner herein provided, within 10 days after receipt of such
request of Shareholders. Any such special meeting shall be held not less than 20
nor more than 60 days after receipt of said request of Shareholders.
SECTION 1.4. Quorum. At any meeting of Shareholders, the presence in
------
person or by proxy of Shareholders entitled to cast a majority of the votes
authorized to be cast by Shares then outstanding and entitled to vote shall
constitute a quorum; but this section shall not affect any requirement of law or
under the Certificate of Incorporation for the vote necessary for the adoption
of any measure. If, however, such quorum shall not be present in person or by
proxy at any meeting of the Shareholders, the Shareholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present in person or by proxy. At such adjourned meeting at
which a quorum shall be present, in person or by proxy, any business may be
transacted which could have been transacted at the meeting as originally
noticed.
SECTION 1.5. Voting. Except as otherwise required by the Certificate
------
of Incorporation or by law, whenever any action is to be taken by the
Shareholders at a meeting, it shall be authorized by the affirmative vote of the
holders of Shares representing a majority of the total number of votes cast by
Shares then outstanding and entitled to vote. At all elections of directors,
voting by Shareholders shall be conducted under the noncumulative method and the
election of directors shall be by a plurality of the votes cast by Shares then
outstanding and entitled to vote.
Unless any statute or the Certificate of Incorporation provide
otherwise, each outstanding Share shall be entitled to one vote on each matter
submitted to a vote at a meeting of Shareholders. A Shareholder may vote only
the Shares owned by him as shown on the record of Shareholders of the
Corporation as of the record date determined pursuant to these By-laws or
pursuant to applicable law. All persons who were holders of record of Shares at
such time, and no others, shall be entitled to vote at such meeting and any
adjournment thereof. A Shareholder may vote the Shares owned of record by him
either in person or by proxy executed in writing by the Shareholder or by his
duly authorized attorney-in-fact and filed with the secretary prior to the
meeting. No proxy shall be valid after eleven months from the date of its
execution. At all meetings of Shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be decided by
the chairman of the meeting.
SECTION 1.6. Organization and Order of Business. At each meeting of
----------------------------------
the Shareholders, the chairman of the Board of Directors, or in his absence or
inability to act, the president, or in the absence or inability to act of the
chairman of the Board of Directors and the president, a vice president, shall
act as chairman of the meeting. The secretary, or in his absence or inability to
act, any person appointed by the chairman of the meeting, shall act as secretary
of the meeting and keep the minutes thereof. The order of business at all
meetings of the Shareholders shall be as determined by the chairman of the
meeting.
<PAGE>
3
SECTION 1.7. Inspectors. The Board of Directors may, and shall if
----------
required by law, in advance of any meeting of Shareholders, appoint one or more
inspectors to act at such meeting or any adjournment thereof. If the inspectors
shall not be so appointed or if any of them shall fail to appear or act, the
chairman of the meeting may, and on the request of any Shareholder entitled to
vote thereat shall, appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of Shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all Shareholders.
On request of the chairman of the meeting or any Shareholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge, request
or matter determined by them and shall execute a certificate of any fact found
by them. No director or candidate for the office of director shall act as
inspector of an election of directors. Inspectors need not be Shareholders.
SECTION 1.8. Action Without Meeting. Except as otherwise provided by
----------------------
statute or the Certificate of Incorporation, any action required or permitted to
be taken at any meeting of Shareholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth such
action, is signed by Shareholders representing such proportion of the total
number of votes authorized to be cast by Shares then outstanding and entitled to
vote on such action as would be required to approve such action at a meeting at
which all holders of Shares then outstanding and entitled to vote thereon were
present and voting on such action, and any other Shareholders entitled to notice
of a meeting of Shareholders but not to vote thereat have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of Shareholders' meetings.
ARTICLE II
Board of Directors
------------------
SECTION 2.1. Number, Election, Term and Qualifications. The Board of
-----------------------------------------
Directors of the Corporation shall consist of not less than one nor more than
five directors and, subject to the terms and conditions of the Certificate of
Incorporation, at least one such director shall at all time be an Independent
Director (as such term is defined in the Certificate of Incorporation). The
first Board of Directors shall consist of three directors appointed by the Sole
Incorporator, subject to the terms and conditions contained in the Certificate
of Incorporation. Thereafter, within the limits specified above and subject to
the terms and conditions of the Certificate of Incorporation, the number of
directors shall be determined by the Board of Directors. The directors, other
than the first board of directors, shall be elected at the annual meeting of the
Shareholders, except as provided in Section 2.4, and each director elected shall
hold office until his successor is elected and qualified. Unless otherwise
restricted by law or the
<PAGE>
4
Certificate of Incorporation, any director or the entire Board of Directors may
be removed, with or without cause, by a majority of Shareholders entitled to
vote at an election of directors.
SECTION 2.2. Powers. The business and affairs of the Corporation
------
shall be managed in accordance with the Certificate of Incorporation by the
Board of Directors, which may exercise all of the powers of the Corporation
except such as are by law or by the Certificate of Incorporation or by these By-
laws conferred upon or reserved to the Shareholders.
SECTION 2.3. Resignations. Any director or member of a committee may
------------
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time of
the receipt by the chairman of the Board of Directors, the president or the
secretary. The acceptance of a resignation shall not be necessary to make it
effective.
SECTION 2.4. Vacancies. Vacancies (including vacancies created by
---------
increases in number) may be filled only by a majority of the remaining
directors, or if only one director shall remain, by the remaining director
(although less than a quorum). If at any time there shall be no directors in
office, successor directors shall be elected by the Shareholders in accordance
with Article I. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the next annual meeting of Shareholders or
until his successor is elected and qualified.
SECTION 2.5. Actions by Directors. Subject to the provisions of the
--------------------
Certificate of Incorporation, the directors may act with or without a meeting in
accordance with the following. Unless specifically provided otherwise in these
By-laws, any action of the directors may be taken (i) at a meeting, by vote of a
majority of the directors or (ii) without a meeting, by unanimous written
consent of the directors, whose written consents shall be filed with the records
of meetings of the directors. Any action or actions permitted to be taken by the
directors in connection with the business of the Corporation may be taken
pursuant to authority granted by a meeting of the directors conducted by a
telephone conference call, and the transaction of business represented thereby
shall be of the same authority and validity as if transacted at a meeting of the
directors held in person or by written consent. The minutes of any Board of
Directors' meeting held by telephone shall be prepared in the same manner as a
meeting of the Board of Directors held in person.
SECTION 2.6. Committees of the Board. The Board of Directors may
-----------------------
appoint from among its members an executive committee, an audit committee and
other committees composed of three or more directors, one of which must be the
Independent Director. The Board of Directors may delegate to any committees any
of the powers of the Board of Directors.
Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Directors. Not less than three, of
the members of any committee shall be present in person or by telephone at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of
such committee. The Board of Directors may designate a chairman of
<PAGE>
5
any committee and such chairman or any three members of any committee may fix
the time and place of its meetings unless the Board of Directors shall otherwise
provide. In the absence or disqualification of any member of any such committee,
the members thereof present at any meeting and not disqualified from voting,
whether or not they constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of such absent or disqualified
members.
The committees shall keep minutes of their proceedings and shall
report the same to the Board of Directors at the meeting next succeeding, and
any action by the committees shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or alteration.
The Board of Directors shall have the power at any time to change the
membership of any committee, to fill all vacancies, to designate alternate
members to replace any absent or disqualified member or to dissolve any such
committee.
SECTION 2.7. Meetings of the Board of Directors. Meetings of the
----------------------------------
Board of Directors, regular or special, may be held at any place as the Board of
Directors may from time to time determine or as shall be specified in the notice
of such meeting.
As soon as practicable after each annual meeting of Shareholders, a
regular meeting of the directors shall be held for the purpose of organizing,
electing officers and transacting other business. The meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors as provided in
Article III, except that no notice shall be necessary if such meeting is held
immediately after the adjournment, and at the site, of the annual meeting of
Shareholders.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board of
Directors.
Special meetings of the Board of Directors may be called at any time
by three or more directors or by the chairman of the Board of Directors or the
president. Special meetings may be held at such place or places as may be
designated from time to time by the Board of Directors; in the absence of such
designation, such meetings shall be held at such places as may be designated in
the notice of meeting.
Notice of the place and time of every special meeting of the Board of
Directors shall be delivered by the secretary to each director by (a) United
States mail, postage prepaid, (b) express mail or overnight delivery or courier
service, (c) telecopy or other facsimile transmission, (d) personal delivery or
(e) telephone, to the address, telecopy or telephone number of such director
appearing on the books of the Corporation or theretofore given by such director
to the Corporation for the purpose of notice. Such notice shall be deemed given
(i) if given by telecopier, when transmitted to the number specified for such
purpose and the appropriate answerback or confirmation is received (or, if such
time is not during a Business Day, at the
<PAGE>
6
beginning of the next Business Day), (ii) if given by mail, when deposited in
the United States mail, postage prepaid, directed to such Shareholder at his
address as it appears on the record of the Corporation or (iii) if given by any
other means, when delivered to such director.
SECTION 2.8. Organization. The chairman of the Board of Directors
------------
shall be selected by a majority of the directors and shall preside at each
meeting of the Board of Directors. In the absence or inability of the chairman
to preside at a meeting, the president, or, in his absence or inability to act,
another director chosen by a majority of the directors present, shall act as
chairman of the meeting and preside thereat. The secretary (or, in his absence
or inability to act any person appointed by the chairman of the meeting) shall
act as secretary of the meeting and keep the minutes thereof.
SECTION 2.9. Directors' Compensation. Directors may receive
-----------------------
compensation for services to the Corporation in their capacities as directors or
otherwise in such manner and in such amounts as may be fixed from time to time
by the Board of Directors.
ARTICLE III
Notices
-------
SECTION 3.1. Notice to Shareholders. Any notice of any meeting or
----------------------
other notice, communication or report to any Shareholder shall be delivered to
such Shareholder by (a) United States mail, postage prepaid, (b) express mail or
overnight delivery or courier service, (c) telecopy or other facsimile
transmission or (d) personal delivery to the address or telecopy number of such
Shareholder appearing on the books of the Corporation or theretofore given by
such Shareholder to the Corporation for the purpose of notice. Such notice shall
be deemed given (i) if given by telecopier, when transmitted to the number
specified for such purpose and the appropriate answerback or confirmation is
received (or, if such time is not during a Business Day, at the beginning of the
next Business Day), (ii) if given by mail, when deposited in the United States
mail, postage prepaid, directed to such Shareholder at his address as it appears
on the records of the Corporation or (iii) if given by any other means, when
delivered to such Shareholder.
SECTION 3.2. Waivers of Notice. Whenever any notice of the time,
-----------------
place or purpose of any meeting of Shareholders, directors or committee is
required to be given under law or under the provisions of the Certificate of
Incorporation or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice and filed with the records of the
meeting, whether before or after the holding hereof, or actual attendance at the
meeting of Shareholders in person or by proxy, or at the meeting of directors or
a committee in person, shall be deemed equivalent to the giving of such notice
to such persons. When a meeting of Shareholders is adjourned to another time and
place, unless the Board of Directors after the adjournment shall fix a new
record date for an adjourned meeting or the adjournment is for more than thirty
days, notice of such adjourned meeting need not be given if the time and place
to
<PAGE>
7
which the meeting shall be adjourned were announced at the meeting at which the
adjournment is taken.
ARTICLE IV
Officers
--------
SECTION 4.1. Officers. The officers of the Corporation shall be
--------
chosen by the Board of Directors in accordance with the Certificate of
Incorporation and shall be a president, a secretary and a treasurer. The Board
of Directors may also choose a chairman (or one or more co-chairmen) of the
Board of Directors, and one or more vice presidents, assistant secretaries or
assistant treasurers. Two or more offices, except those of chairman and/or
president and secretary, or chairman and/or president and assistant secretary,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity, if such instrument is required
by law, the Certificate of Incorporation or these By-laws to be executed,
acknowledged or verified by two or more officers.
SECTION 4.2. Other Officers and Agents. The Board of Directors may
-------------------------
appoint such other officers and agents as it shall deem necessary, who shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
SECTION 4.3. Compensation. The compensation of the officers of the
------------
Corporation shall be fixed by the Board of Directors.
SECTION 4.4. Removal; Resignation. The officers of the Corporation
--------------------
shall serve until their successors are chosen and qualify. Any officer or agent
may be removed by the Board of Directors whenever, in its judgment, the best
interests of the Corporation will be served thereby. Any officer may resign at
any time. Such resignation shall be made in writing, and shall take effect at
the time specified herein, and if such time is not specified, at the time of its
receipt by the chairman, the president or the secretary. The acceptance of a
resignation shall not be necessary to make it effective. If the office of any
officer becomes vacant for any reason, the vacancy shall be filled by the Board
of Directors.
SECTION 4.5. Chairman. The chairman shall, if present, preside at all
--------
meetings of the Board of Directors and Shareholders and exercise and perform
such other powers and duties as may be from time to time assigned to him by the
Board of Directors or prescribed by these By-laws and as may be set forth
herein.
SECTION 4.6. President. The president shall be the chief executive
---------
officer of the Corporation. The president shall have general and active control
of the business, finances and affairs of the Corporation, subject to the control
of the Board of Directors. Except as may otherwise be provided by the Board of
Directors from time to time, the president shall have the general power to
execute bonds, deeds, contracts, conveyances and other instruments in the name
of the Corporation, to appoint all employees and agents of the Corporation whose
appointment is
<PAGE>
8
not otherwise provided for and to fix the compensation thereof subject to the
provisions of these By-laws and subject to the approval of the Board of
Directors; to remove or suspend any employee or agent who shall not have been
appointed by the Board of Directors; to suspend for cause, pending final action
by the body which shall have appointed him, any officer other than an elected
officer, or any employee or agent who shall have been appointed by the Board of
Directors; to delegate to a responsible agent any of the foregoing; and to take
any other such action as the President deems necessary, subject to the oversight
of the Board of Directors.
SECTION 4.7. Vice President. The vice president, or if there shall be
--------------
more than one, the vice presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
SECTION 4.8. Independent Officer. The duties of the senior officer of
-------------------
the Corporation appointed as the "Independent Officer" in accordance with the
second sentence of paragraph (c) of Article 6 of the Certificate of
Incorporation shall include (i) reviewing the monthly financial results and
operating activities of the Corporation and Port Arthur Coker Company L.P. (the
"Partnership") based upon monthly reports delivered to such senior officer by
the Corporation and consulting with the Board of Directors in the event that
such review reveals a material adverse deviation of such financial results or
operations from budgeted results or the then-current operating plan approved by
the Board of Directors and (ii) consulting with the Board of Directors regarding
any activity or transaction that comes to such Independent Officer's attention
and bears upon the maintenance of the separate legal identity of the Corporation
in accordance with its Certificate of Incorporation and the maintenance of the
separate legal identity of the Partnership in accordance with the Limited
Partnership Agreement thereof. Except as provided in the preceding sentence or
as determined by the Corporation with the assent of the Independent Officer,
such Independent Officer shall have no other duties or obligations to the
Corporation or the Partnership in his capacity as such Independent Officer.
SECTION 4.9. Secretary. The secretary shall attend all meetings of
---------
the Board of Directors and all meetings of the Shareholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose and perform like duties for the standing
committees when required. The secretary shall give, or cause to be given, notice
of all meetings of the Shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or president, under whose supervision the secretary shall be. The
secretary shall keep in safe custody the seal of the Corporation and, when
authorized by the Board of Directors, affix the same to any instrument requiring
it and, when so affixed, it shall be attested by the secretary's signature or by
the signature of an assistant secretary.
SECTION 4.10. Assistant Secretary. The assistant secretary, or if
-------------------
there be more than one, the assistant secretaries in the order determined by the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary
<PAGE>
9
and shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
SECTION 4.11. Treasurer and Assistant Treasurer. The treasurer shall
---------------------------------
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors.
The treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.
If required by the Board of Directors, he shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory, to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
SECTION 4.12. Delegation of Duties. In the case of the absence of any
--------------------
officer of the Corporation or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may confer for the time being the
powers or duties, or any of them, of such officer upon any director.
SECTION 4.13. Limitations on Officers. Notwithstanding anything to the
-----------------------
contrary in the By-laws, no officer of the Corporation is authorized to give any
consent of, or approval by, the Corporation until such consent or approval has
been approved by a majority of the directors and, if required, by the
Shareholders, in accordance with the Certificate of Incorporation.
<PAGE>
10
ARTICLE V
Ownership; Certificates of Shares
---------------------------------
SECTION 5.1. Certificates. Each Shareholder shall be entitled to,
------------
upon request to the secretary, a certificate or certificates which shall
represent and certify the number and kind and class of Shares owned by him in
the Corporation. In all other cases certificates will not be issued. Each
certificate shall be signed by the chairman of the Board of Directors or the
president or a vice president and countersigned by the secretary or an assistant
secretary or the treasurer or an assistant treasurer and may be sealed with the
seal specified in Section 6.9 (the "Seal").
The signatures may be either manual or facsimile signatures and the
Seal may be either facsimile or any other form of Seal. In the case any officer
who has signed any certificate ceases to be an officer of the Corporation before
the certificate is issued, the certificate may nevertheless be issued by the
Corporation with the same effect as if the officer had not ceased to be such
officer as of the date of its issue. Each Share certificate shall include on its
face the name of the Corporation, the name of the Shareholder and the class of
Shares and number of Shares represented by the certificate.
SECTION 5.2. Lost Certificates. The Board of Directors may direct a
-----------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been stolen,
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be stolen, lost or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and to give a bond, with sufficient surety, to the Corporation to indemnify it
against any loss or claim which may arise by reason of the issuance of a new
certificate.
SECTION 5.3. Share Record; Issuance and Transferability of Shares.
----------------------------------------------------
(a) Records shall be kept by or on behalf of and under the direction of the
directors or the officers of the Corporation, which shall contain the names and
addresses of the Shareholders, the number of Shares held by them respectively,
the numbers of certificates representing the Shares and the amount of any
installment or remaining commitment payable thereon, if any, and in which there
shall be recorded all transfers of Shares. Certificates shall be issued, listed
and transferred in accordance with these By-laws. The Corporation, the directors
and the officers, employees and agents of the Corporation shall be entitled to
deem the Persons in whose names certificates are registered on the records of
the Corporation to be the absolute owners of the Shares represented thereby for
all purposes of the Corporation; but nothing herein shall be deemed to preclude
the directors or officers, employees or agents of the Corporation from inquiring
as to the actual ownership of Shares. Until a transfer is duly effected on the
records of the Corporation, the directors shall not be affected by any notice of
such transfer, either actual or constructive.
<PAGE>
11
(b) Shares shall be transferable on the records of the Corporation
only by the record holder thereof or by his agent thereunto duly authorized in
writing upon delivery to the directors or a transfer agent of the certificate or
certificates therefor, properly endorsed or accompanied by duly executed
instruments of transfer and accompanied by all necessary documentary stamps
together with such evidence of the genuineness each such endorsement, execution
or authorization and of other matters as may reasonably be required by the Board
of Directors or such transfer agent. Upon such delivery, the transfer shall be
recorded in the records of the Corporation and a new certificate for the Shares
so transferred shall be issued to the transferee and, in case of a transfer of
only a part of the Shares represented by any certificate, a new certificate for
the balance shall be issued to the transferor. Until a transfer is duly effected
on the records of the Corporation, the directors shall not be affected by any
notice of such transfer, either actual or constructive. Any Person becoming
entitled to any Shares in consequence of the death of a Shareholder or otherwise
by operation of law shall be recorded as the holder of such Shares and shall
receive a new certificate therefor but only upon delivery to the Board of
Directors or a transfer agent of instruments and other evidence required by the
Board of Directors or the transfer agent to demonstrate such entitlement, the
existing certificate for such Shares and such releases from applicable
governmental authorities as may be required by the Board of Directors or
transfer agent. Nothing in these By-laws shall impose upon the Board of
Directors or a transfer agent a duty or limit their rights to inquire into
adverse claims.
SECTION 5.4. Fixing Record Date. In order that the Corporation may
------------------
determine the Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date: (a) in the case of determination of Shareholders entitled to
vote at any meeting of Shareholders or adjournment thereof, shall, unless
otherwise required by law, not be more than 60 nor less than 10 days before the
date of such meeting; (b) in the case of determination of Shareholders entitled
to express consent to corporate action in writing without a meeting, shall not
be more than 10 days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (c) in the case of any other
action, shall not be more than 60 days prior to such other action. If no record
date is fixed: (i) the record date for determining Shareholders entitled to
notice of or to vote at a meeting of Shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (ii) the record date for determining Shareholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action of the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (iii) the record
date for determining Shareholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating
<PAGE>
12
thereto. A determination of Shareholders of record entitled to notice of or to
vote at a meeting of Shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5.5. Transfer Agent; Dividend Disbursing Agent and Registrar.
-------------------------------------------------------
The Board of Directors shall have power to employ one or more transfer agents,
dividend disbursing agents and registrars and to authorize them on behalf of the
Corporation to keep records, to hold and to disburse any dividends or
distributions, and to have and perform, in respect of all original issues and
transfers of Shares, dividends and distributions and reports and communications
to Shareholders, the powers and duties usually had and performed by transfer
agents, dividend disbursing agents and registrars of a Delaware corporation.
ARTICLE VI
General Provisions
------------------
SECTION 6.1. Dividends. Dividends, if any, upon the capital stock of
---------
the Corporation, subject to the provisions of the Corporation's Certificate of
Incorporation, may be declared by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash, in property, or
in its own shares, subject to the provisions of law and of the Corporation's
Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sums as the Board of
Directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
SECTION 6.2. Checks. All checks, drafts and orders for the payment of
------
money, notes and other evidences of indebtedness, issued in the name of the
Corporation shall be signed by the president or the treasurer or by such officer
or officers as the Board of Directors may from time to time designate.
SECTION 6.3. Depositories. The funds of the Corporation shall be
------------
deposited with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
SECTION 6.4. Books of Account and Records. The Corporation shall
----------------------------
maintain at its office in the City of Port Arthur, Texas, correct and complete
books and records of account of all the business and transactions of the
Corporation. Upon request of any Shareholder, there shall be made available in
accordance with the provisions of Delaware law, a record containing the number
of Shares of stock issued during a special period not to exceed 12 months and
the consideration received by the Corporation for each such Share.
<PAGE>
13
SECTION 6.5. Information for Inspection. Any Shareholder of the
--------------------------
Corporation or his agent may inspect and copy during usual business hours the
By-laws, minutes of the proceedings of its Shareholders' meetings, annual
statements of its affairs and voting trust agreements on file at its principal
office.
SECTION 6.6. Fiscal Year. The fiscal year of the Corporation shall be
-----------
the calendar year.
SECTION 6.7. Share Ledger. The Corporation shall maintain at its
------------
office in the City of Port Arthur, Texas, an original Share ledger containing
the names and addresses of all Shareholders, the number of Shares held by each
Shareholder, the number of certificates representing such Shares and the amount
of any installment or remaining commitment payable thereon, if any. Such Share
ledger may be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
SECTION 6.8. Seal. The Corporation shall have a seal containing the
----
words: "Port Arthur Finance Corp." and "Incorporated in the State of Delaware
1999".
ARTICLE VII
Indemnification
---------------
SECTION 7.1. Indemnification of Directors and Officers. Any person
-----------------------------------------
made, or threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he, his testator or intestate, is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee trust
or other enterprise, or is or was a director, officer, employee or agent of any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified, to the fullest
extent permitted by law, by the Corporation against expenses (including
attorney's fees and expenses), judgments, fines and amounts paid in any
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Expenses incurred by any
such person in defending any such action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding (i) if authorized by a majority of the directors of the Corporation
in office who are not interested in such action, suit or
<PAGE>
14
proceeding or (ii) in the case of an officer or director, upon receipt of the
undertaking specified in Section 145(e) of the General Corporation Law of the
State of Delaware.
SECTION 7.2. Nonexclusivity of Indemnification and Advancement of
----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided by or granted
- --------
pursuant to this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, contract, vote of Shareholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent of the type referred to in Section 7.1 and shall inure to the benefit
of the heirs, executors and administrators of such person.
SECTION 7.3. Insurance. The officers of the Corporation, without
---------
authorization by the Board of Directors, may in their discretion purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the type referred to in Section 7.1 against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation shall have the power to
indemnify him against such liability.
ARTICLE VIII
Amendments
----------
SECTION 8.1. Board of Directors. The Board of Directors shall have
------------------
the power, in accordance with the Certificate of Incorporation, at any regular
meeting or at any special meeting if notice thereof be included in the notice of
such special meeting, to alter, modify or repeal any By-laws of the Corporation
and to make new By-laws.
SECTION 8.2. Shareholders. The Shareholders shall not have the power
------------
to alter, modify or repeal any By-laws of the Corporation.
<PAGE>
Exhibit 3.02(b)
================================================================================
AMENDED AND RESTATED BY-LAWS
of
SABINE RIVER HOLDING CORP.
Adopted on July 30, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Meeting of Shareholders............................................ 1
SECTION 1.1. Place of Meetings.................................... 1
SECTION 1.2. Meetings............................................. 1
SECTION 1.3. Notice of Meetings................................... 1
SECTION 1.4. Quorum............................................... 2
SECTION 1.5. Voting............................................... 2
SECTION 1.6. Organization and Order of Business................... 2
SECTION 1.7. Inspectors........................................... 3
SECTION 1.8. Action Without Meeting............................... 3
ARTICLE II
Board of Directors................................................. 3
SECTION 2.1. Number, Election, Term and Qualifications............ 3
SECTION 2.2. Powers............................................... 4
SECTION 2.3. Resignations......................................... 4
SECTION 2.4. Vacancies............................................ 4
SECTION 2.5. Actions by Directors................................. 4
SECTION 2.6. Committees of the Board.............................. 4
SECTION 2.7. Meetings of the Board of Directors................... 5
SECTION 2.8. Organization......................................... 6
SECTION 2.9. Directors' Compensation.............................. 6
ARTICLE III
Notices............................................................ 6
SECTION 3.1. Notice to Shareholders............................... 6
SECTION 3.2. Waivers of Notice.................................... 6
ARTICLE IV
Officers........................................................... 7
SECTION 4.1. Officers............................................. 7
SECTION 4.2. Other Officers and Agents............................ 7
SECTION 4.3. Compensation......................................... 7
SECTION 4.4. Removal; Resignation................................. 7
SECTION 4.5. Chairman............................................. 7
SECTION 4.6. President............................................ 7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 4.7. Vice President.................................................. 8
SECTION 4.8. Independent Officer............................................. 8
SECTION 4.9. Secretary....................................................... 8
SECTION 4.10. Assistant Secretary............................................ 8
SECTION 4.11. Treasurer and Assistant Treasurer.............................. 9
SECTION 4.12. Delegation of Duties........................................... 9
SECTION 4.13. Limitations on Officers........................................ 9
ARTICLE V
Ownership; Certificates of Shares............................................. 10
SECTION 5.1. Certificates.................................................... 10
SECTION 5.2. Lost Certificates............................................... 10
SECTION 5.3. Share Record; Issuance and Transferability of Shares............ 10
SECTION 5.4. Fixing Record Date.............................................. 11
SECTION 5.5. Transfer Agent; Dividend Disbursing Agent and Registrar......... 12
ARTICLE VI
General Provisions............................................................ 12
SECTION 6.1. Dividends....................................................... 12
SECTION 6.2. Checks.......................................................... 12
SECTION 6.3. Depositories.................................................... 12
SECTION 6.4. Books of Account and Records.................................... 12
SECTION 6.5. Information for Inspection...................................... 13
SECTION 6.6. Fiscal Year..................................................... 13
SECTION 6.7. Share Ledger.................................................... 13
SECTION 6.8. Seal............................................................ 13
ARTICLE VII
Indemnification............................................................... 13
SECTION 7.1. Indemnification of Directors and Officers....................... 13
SECTION 7.2. Nonexclusivity of Indemnification and Advancement of Expenses... 14
SECTION 7.3. Insurance....................................................... 14
ARTICLE VIII
Amendments.................................................................... 14
SECTION 8.1. Board of Directors.............................................. 14
SECTION 8.2. Shareholders.................................................... 14
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED BY-LAWS
of
SABINE RIVER HOLDING CORP.
(adopted July 30, 1999)
Capitalized terms used herein and not defined herein shall have the following
meanings:
"Corporation" means Sabine River Holding Corp.
-----------
"Shares" means the shares of common stock of the Corporation.
------
"Shareholders" means, at any time, all holders of record of outstanding
------------
Shares at such time.
ARTICLE I
Meeting of Shareholders
-----------------------
SECTION 1.1. Place of Meetings. Meetings of Shareholders shall be held
-----------------
at such place within the United States as shall be designated from time to time
by the Board of Directors and stated in the notice of meeting or in a duly
executed waiver of notice thereof.
SECTION 1.2. Meetings. (a) Annual meetings of Shareholders shall be
--------
held at such place, date and hour as shall be fixed by the Board of Directors
and stated in the notice of meeting, at which the directors shall be elected and
any other proper business of the Corporation may be conducted. Any business of
the Corporation may be transacted at the annual meeting without being specially
designated in the notice, except such business as is specifically required by
law to be stated in the notice.
(b) Special meetings of the Shareholders may be called at any time by
the chief executive officer of the Corporation or by a majority of the directors
and shall be called by an officer of the Corporation upon the written request of
one or more Shareholders holding in the aggregate not less than 25% of the
outstanding Shares entitled to vote at such meeting. If there shall be no
directors, the officers of the Corporation shall promptly call a special meeting
of the Shareholders entitled to vote for the election of successor directors.
Notice of any special meeting shall state the purpose or purposes of the
meeting.
SECTION 1.3. Notice of Meetings. Not less than 10 nor more than 60
------------------
days before the date of every Shareholders' meeting, the secretary shall give to
each Shareholder entitled to vote at such meeting, and to each Shareholder not
entitled to vote who is entitled by law to notice, written notice stating the
time and place of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called.
<PAGE>
2
In the case of a special meeting of Shareholders convened at the
request of Shareholders, the notice herein provided for shall be given by the
secretary, in the manner herein provided, within 10 days after receipt of such
request of Shareholders. Any such special meeting shall be held not less than 20
nor more than 60 days after receipt of said request of Shareholders.
SECTION 1.4. Quorum. At any meeting of Shareholders, the presence in
------
person or by proxy of Shareholders entitled to cast a majority of the votes
authorized to be cast by Shares then outstanding and entitled to vote shall
constitute a quorum; but this section shall not affect any requirement of law or
under the Certificate of Incorporation for the vote necessary for the adoption
of any measure. If, however, such quorum shall not be present in person or by
proxy at any meeting of the Shareholders, the Shareholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present in person or by proxy. At such adjourned meeting at
which a quorum shall be present, in person or by proxy, any business may be
transacted which could have been transacted at the meeting as originally
noticed.
SECTION 1.5. Voting. Except as otherwise required by the Certificate
------
of Incorporation or by law, whenever any action is to be taken by the
Shareholders at a meeting, it shall be authorized by the affirmative vote of the
holders of Shares representing a majority of the total number of votes cast by
Shares then outstanding and entitled to vote. At all elections of directors,
voting by Shareholders shall be conducted under the noncumulative method and the
election of directors shall be by a plurality of the votes cast by Shares then
outstanding and entitled to vote.
Unless any statute or the Certificate of Incorporation provide
otherwise, each outstanding Share shall be entitled to one vote on each matter
submitted to a vote at a meeting of Shareholders. A Shareholder may vote only
the Shares owned by him as shown on the record of Shareholders of the
Corporation as of the record date determined pursuant to these By-laws or
pursuant to applicable law. All persons who were holders of record of Shares at
such time, and no others, shall be entitled to vote at such meeting and any
adjournment thereof. A Shareholder may vote the Shares owned of record by him
either in person or by proxy executed in writing by the Shareholder or by his
duly authorized attorney-in-fact and filed with the secretary prior to the
meeting. No proxy shall be valid after eleven months from the date of its
execution. At all meetings of Shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be decided by
the chairman of the meeting.
SECTION 1.6. Organization and Order of Business. At each meeting of
----------------------------------
the Shareholders, the chairman of the Board of Directors, or in his absence or
inability to act, the president, or in the absence or inability to act of the
chairman of the Board of Directors and the president, a vice president, shall
act as chairman of the meeting. The secretary, or in his absence or inability to
act, any person appointed by the chairman of the meeting, shall act as secretary
of the meeting and keep the minutes thereof. The order of business at all
meetings of the Shareholders shall be as determined by the chairman of the
meeting.
<PAGE>
3
SECTION 1.7. Inspectors. The Board of Directors may, and shall if
----------
required by law, in advance of any meeting of Shareholders, appoint one or more
inspectors to act at such meeting or any adjournment thereof. If the inspectors
shall not be so appointed or if any of them shall fail to appear or act, the
chairman of the meeting may, and on the request of any Shareholder entitled to
vote thereat shall, appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of Shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all Shareholders.
On request of the chairman of the meeting or any Shareholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge, request
or matter determined by them and shall execute a certificate of any fact found
by them. No director or candidate for the office of director shall act as
inspector of an election of directors. Inspectors need not be Shareholders.
SECTION 1.8. Action Without Meeting. Except as otherwise provided by
----------------------
statute or the Certificate of Incorporation, any action required or permitted to
be taken at any meeting of Shareholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth such
action, is signed by Shareholders representing such proportion of the total
number of votes authorized to be cast by Shares then outstanding and entitled to
vote on such action as would be required to approve such action at a meeting at
which all holders of Shares then outstanding and entitled to vote thereon were
present and voting on such action, and any other Shareholders entitled to notice
of a meeting of Shareholders but not to vote thereat have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of Shareholders' meetings.
ARTICLE II
Board of Directors
------------------
SECTION 2.1. Number, Election, Term and Qualifications. The Board of
-----------------------------------------
Directors of the Corporation shall consist of not less than one nor more than
five directors and, subject to the terms and conditions of the Certificate of
Incorporation, at least one such director shall at all time be an Independent
Director (as such term is defined in the Certificate of Incorporation). The
first Board of Directors shall consist of three directors appointed by the Sole
Incorporator, subject to the terms and conditions contained in the Certificate
of Incorporation. Thereafter, within the limits specified above and subject to
the terms and conditions of the Certificate of Incorporation, the number of
directors shall be determined by the Board of Directors. The directors, other
than the first board of directors, shall be elected at the annual meeting of the
Shareholders, except as provided in Section 2.4, and each director elected shall
hold office until his successor is elected and qualified. Unless otherwise
restricted by law or the
<PAGE>
4
Certificate of Incorporation, any director or the entire Board of Directors may
be removed, with or without cause, by a majority of Shareholders entitled to
vote at an election of directors.
SECTION 2.2. Powers. The business and affairs of the Corporation shall
------
be managed in accordance with the Certificate of Incorporation by the Board of
Directors, which may exercise all of the powers of the Corporation except such
as are by law or by the Certificate of Incorporation or by these By-laws
conferred upon or reserved to the Shareholders.
SECTION 2.3. Resignations. Any director or member of a committee may
------------
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time of
the receipt by the chairman of the Board of Directors, the president or the
secretary. The acceptance of a resignation shall not be necessary to make it
effective.
SECTION 2.4. Vacancies. Vacancies (including vacancies created by
---------
increases in number) may be filled only by a majority of the remaining
directors, or if only one director shall remain, by the remaining director
(although less than a quorum). If at any time there shall be no directors in
office, successor directors shall be elected by the Shareholders in accordance
with Article I. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the next annual meeting of Shareholders or
until his successor is elected and qualified.
SECTION 2.5. Actions by Directors. Subject to the provisions of the
--------------------
Certificate of Incorporation, the directors may act with or without a meeting in
accordance with the following. Unless specifically provided otherwise in these
By-laws, any action of the directors may be taken (i) at a meeting, by vote of a
majority of the directors or (ii) without a meeting, by unanimous written
consent of the directors, whose written consents shall be filed with the records
of meetings of the directors. Any action or actions permitted to be taken by the
directors in connection with the business of the Corporation may be taken
pursuant to authority granted by a meeting of the directors conducted by a
telephone conference call, and the transaction of business represented thereby
shall be of the same authority and validity as if transacted at a meeting of the
directors held in person or by written consent. The minutes of any Board of
Directors' meeting held by telephone shall be prepared in the same manner as a
meeting of the Board of Directors held in person.
SECTION 2.6. Committees of the Board. The Board of Directors may
-----------------------
appoint from among its members an executive committee, an audit committee and
other committees composed of three or more directors, one of which must be the
Independent Director. The Board of Directors may delegate to any committees any
of the powers of the Board of Directors.
Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Directors. Not less than three, of
the members of any committee shall be present in person or by telephone at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of
such committee. The Board of Directors may designate a chairman of
<PAGE>
5
any committee and such chairman or any three members of any committee may fix
the time and place of its meetings unless the Board of Directors shall otherwise
provide. In the absence or disqualification of any member of any such committee,
the members thereof present at any meeting and not disqualified from voting,
whether or not they constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of such absent or disqualified
members.
The committees shall keep minutes of their proceedings and shall
report the same to the Board of Directors at the meeting next succeeding, and
any action by the committees shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or alteration.
The Board of Directors shall have the power at any time to change the
membership of any committee, to fill all vacancies, to designate alternate
members to replace any absent or disqualified member or to dissolve any such
committee.
SECTION 2.7. Meetings of the Board of Directors. Meetings of the Board
----------------------------------
of Directors, regular or special, may be held at any place as the Board of
Directors may from time to time determine or as shall be specified in the notice
of such meeting.
As soon as practicable after each annual meeting of Shareholders, a
regular meeting of the directors shall be held for the purpose of organizing,
electing officers and transacting other business. The meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors as provided in
Article III, except that no notice shall be necessary if such meeting is held
immediately after the adjournment, and at the site, of the annual meeting of
Shareholders.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board of
Directors.
Special meetings of the Board of Directors may be called at any time
by three or more directors or by the chairman of the Board of Directors or the
president. Special meetings may be held at such place or places as may be
designated from time to time by the Board of Directors; in the absence of such
designation, such meetings shall be held at such places as may be designated in
the notice of meeting.
Notice of the place and time of every special meeting of the Board of
Directors shall be delivered by the secretary to each director by (a) United
States mail, postage prepaid, (b) express mail or overnight delivery or courier
service, (c) telecopy or other facsimile transmission, (d) personal delivery or
(e) telephone, to the address, telecopy or telephone number of such director
appearing on the books of the Corporation or theretofore given by such director
to the Corporation for the purpose of notice. Such notice shall be deemed given
(i) if given by telecopier, when transmitted to the number specified for such
purpose and the appropriate answerback or confirmation is received (or, if such
time is not during a Business Day, at the
<PAGE>
6
beginning of the next Business Day), (ii) if given by mail, when deposited in
the United States mail, postage prepaid, directed to such Shareholder at his
address as it appears on the record of the Corporation or (iii) if given by any
other means, when delivered to such director.
SECTION 2.8. Organization. The chairman of the Board of Directors
------------
shall be selected by a majority of the directors and shall preside at each
meeting of the Board of Directors. In the absence or inability of the chairman
to preside at a meeting, the president, or, in his absence or inability to act,
another director chosen by a majority of the directors present, shall act as
chairman of the meeting and preside thereat. The secretary (or, in his absence
or inability to act any person appointed by the chairman of the meeting) shall
act as secretary of the meeting and keep the minutes thereof.
SECTION 2.9. Directors' Compensation. Directors may receive
-----------------------
compensation for services to the Corporation in their capacities as directors or
otherwise in such manner and in such amounts as may be fixed from time to time
by the Board of Directors.
ARTICLE III
Notices
-------
SECTION 3.1. Notice to Shareholders. Any notice of any meeting or
----------------------
other notice, communication or report to any Shareholder shall be delivered to
such Shareholder by (a) United States mail, postage prepaid, (b) express mail or
overnight delivery or courier service, (c) telecopy or other facsimile
transmission or (d) personal delivery to the address or telecopy number of such
Shareholder appearing on the books of the Corporation or theretofore given by
such Shareholder to the Corporation for the purpose of notice. Such notice shall
be deemed given (i) if given by telecopier, when transmitted to the number
specified for such purpose and the appropriate answerback or confirmation is
received (or, if such time is not during a Business Day, at the beginning of the
next Business Day), (ii) if given by mail, when deposited in the United States
mail, postage prepaid, directed to such Shareholder at his address as it appears
on the records of the Corporation or (iii) if given by any other means, when
delivered to such Shareholder.
SECTION 3.2. Waivers of Notice. Whenever any notice of the time, place
-----------------
or purpose of any meeting of Shareholders, directors or committee is required to
be given under law or under the provisions of the Certificate of Incorporation
or these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding hereof, or actual attendance at the meeting of
Shareholders in person or by proxy, or at the meeting of directors or a
committee in person, shall be deemed equivalent to the giving of such notice to
such persons. When a meeting of Shareholders is adjourned to another time and
place, unless the Board of Directors after the adjournment shall fix a new
record date for an adjourned meeting or the adjournment is for more than thirty
days, notice of such adjourned meeting need not be given if the time and place
to
<PAGE>
7
which the meeting shall be adjourned were announced at the meeting at which the
adjournment is taken.
ARTICLE IV
Officers
--------
SECTION 4.1. Officers. The officers of the Corporation shall be chosen
--------
by the Board of Directors in accordance with the Certificate of Incorporation
and shall be a president, a secretary and a treasurer. The Board of Directors
may also choose a chairman (or one or more co-chairmen) of the Board of
Directors, and one or more vice presidents, assistant secretaries or assistant
treasurers. Two or more offices, except those of chairman and/or president and
secretary, or chairman and/or president and assistant secretary, may be held by
the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law, the
Certificate of Incorporation or these By-laws to be executed, acknowledged or
verified by two or more officers.
SECTION 4.2. Other Officers and Agents. The Board of Directors may
-------------------------
appoint such other officers and agents as it shall deem necessary, who shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
SECTION 4.3. Compensation. The compensation of the officers of the
------------
Corporation shall be fixed by the Board of Directors.
SECTION 4.4. Removal; Resignation. The officers of the Corporation
--------------------
shall serve until their successors are chosen and qualify. Any officer or agent
may be removed by the Board of Directors whenever, in its judgment, the best
interests of the Corporation will be served thereby. Any officer may resign at
any time. Such resignation shall be made in writing, and shall take effect at
the time specified herein, and if such time is not specified, at the time of its
receipt by the chairman, the president or the secretary. The acceptance of a
resignation shall not be necessary to make it effective. If the office of any
officer becomes vacant for any reason, the vacancy shall be filled by the Board
of Directors.
SECTION 4.5. Chairman. The chairman shall, if present, preside at all
--------
meetings of the Board of Directors and Shareholders and exercise and perform
such other powers and duties as may be from time to time assigned to him by the
Board of Directors or prescribed by these By-laws and as may be set forth
herein.
SECTION 4.6. President. The president shall be the chief executive
---------
officer of the Corporation. The president shall have general and active control
of the business, finances and affairs of the Corporation, subject to the control
of the Board of Directors. Except as may otherwise be provided by the Board of
Directors from time to time, the president shall have the general power to
execute bonds, deeds, contracts, conveyances and other instruments in the name
of the Corporation, to appoint all employees and agents of the Corporation whose
appointment is
<PAGE>
8
not otherwise provided for and to fix the compensation thereof subject to the
provisions of these By-laws and subject to the approval of the Board of
Directors; to remove or suspend any employee or agent who shall not have been
appointed by the Board of Directors; to suspend for cause, pending final action
by the body which shall have appointed him, any officer other than an elected
officer, or any employee or agent who shall have been appointed by the Board of
Directors; to delegate to a responsible agent any of the foregoing; and to take
any other such action as the President deems necessary, subject to the oversight
of the Board of Directors.
SECTION 4.7. Vice President. The vice president, or if there shall be
--------------
more than one, the vice presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
SECTION 4.8. Independent Officer. The duties of the senior officer of
-------------------
the Corporation appointed as the "Independent Officer" in accordance with the
second sentence of paragraph (c) of Article 6 of the Certificate of
Incorporation shall include (i) reviewing the monthly financial results and
operating activities of the Corporation and Port Arthur Coker Company L.P. (the
"Partnership") based upon monthly reports delivered to such senior officer by
the Corporation and consulting with the Board of Directors in the event that
such review reveals a material adverse deviation of such financial results or
operations from budgeted results or the then-current operating plan approved by
the Board of Directors and (ii) consulting with the Board of Directors regarding
any activity or transaction that comes to such Independent Officer's attention
and bears upon the maintenance of the separate legal identity of the Corporation
in accordance with its Certificate of Incorporation and the maintenance of the
separate legal identity of the Partnership in accordance with the Limited
Partnership Agreement thereof. Except as provided in the preceding sentence or
as determined by the Corporation with the assent of the Independent Officer,
such Independent Officer shall have no other duties or obligations to the
Corporation or the Partnership in his capacity as such Independent Officer.
SECTION 4.9. Secretary. The secretary shall attend all meetings of
---------
the Board of Directors and all meetings of the Shareholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose and perform like duties for the standing
committees when required. The secretary shall give, or cause to be given, notice
of all meetings of the Shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or president, under whose supervision the secretary shall be. The
secretary shall keep in safe custody the seal of the Corporation and, when
authorized by the Board of Directors, affix the same to any instrument requiring
it and, when so affixed, it shall be attested by the secretary's signature or by
the signature of an assistant secretary.
SECTION 4.10. Assistant Secretary. The assistant secretary, or if
-------------------
there be more than one, the assistant secretaries in the order determined by the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary
<PAGE>
9
and shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
SECTION 4.11. Treasurer and Assistant Treasurer. The treasurer shall
---------------------------------
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors.
The treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.
If required by the Board of Directors, he shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory, to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
SECTION 4.12. Delegation of Duties. In the case of the absence of any
--------------------
officer of the Corporation or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may confer for the time being the
powers or duties, or any of them, of such officer upon any director.
SECTION 4.13. Limitations on Officers. Notwithstanding anything to the
-----------------------
contrary in the By-laws, no officer of the Corporation is authorized to give any
consent of, or approval by, the Corporation until such consent or approval has
been approved by a majority of the directors and, if required, by the
Shareholders, in accordance with the Certificate of Incorporation.
<PAGE>
10
ARTICLE V
Ownership; Certificates of Shares
---------------------------------
SECTION 5.1. Certificates. Each Shareholder shall be entitled to, upon
------------
request to the secretary, a certificate or certificates which shall represent
and certify the number and kind and class of Shares owned by him in the
Corporation. In all other cases certificates will not be issued. Each
certificate shall be signed by the chairman of the Board of Directors or the
president or a vice president and countersigned by the secretary or an assistant
secretary or the treasurer or an assistant treasurer and may be sealed with the
seal specified in Section 6.9 (the "Seal").
The signatures may be either manual or facsimile signatures and the
Seal may be either facsimile or any other form of Seal. In the case any officer
who has signed any certificate ceases to be an officer of the Corporation before
the certificate is issued, the certificate may nevertheless be issued by the
Corporation with the same effect as if the officer had not ceased to be such
officer as of the date of its issue. Each Share certificate shall include on its
face the name of the Corporation, the name of the Shareholder and the class of
Shares and number of Shares represented by the certificate.
SECTION 5.2. Lost Certificates. The Board of Directors may direct a
-----------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been stolen,
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be stolen, lost or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and to give a bond, with sufficient surety, to the Corporation to indemnify it
against any loss or claim which may arise by reason of the issuance of a new
certificate.
SECTION 5.3. Share Record; Issuance and Transferability of Shares. (a)
----------------------------------------------------
Records shall be kept by or on behalf of and under the direction of the
directors or the officers of the Corporation, which shall contain the names and
addresses of the Shareholders, the number of Shares held by them respectively,
the numbers of certificates representing the Shares and the amount of any
installment or remaining commitment payable thereon, if any, and in which there
shall be recorded all transfers of Shares. Certificates shall be issued, listed
and transferred in accordance with these By-laws. The Corporation, the directors
and the officers, employees and agents of the Corporation shall be entitled to
deem the Persons in whose names certificates are registered on the records of
the Corporation to be the absolute owners of the Shares represented thereby for
all purposes of the Corporation; but nothing herein shall be deemed to preclude
the directors or officers, employees or agents of the Corporation from inquiring
as to the actual ownership of Shares. Until a transfer is duly effected on the
records of the Corporation, the directors shall not be affected by any notice of
such transfer, either actual or constructive.
<PAGE>
11
(b) Shares shall be transferable on the records of the Corporation
only by the record holder thereof or by his agent thereunto duly authorized in
writing upon delivery to the directors or a transfer agent of the certificate or
certificates therefor, properly endorsed or accompanied by duly executed
instruments of transfer and accompanied by all necessary documentary stamps
together with such evidence of the genuineness each such endorsement, execution
or authorization and of other matters as may reasonably be required by the Board
of Directors or such transfer agent. Upon such delivery, the transfer shall be
recorded in the records of the Corporation and a new certificate for the Shares
so transferred shall be issued to the transferee and, in case of a transfer of
only a part of the Shares represented by any certificate, a new certificate for
the balance shall be issued to the transferor. Until a transfer is duly effected
on the records of the Corporation, the directors shall not be affected by any
notice of such transfer, either actual or constructive. Any Person becoming
entitled to any Shares in consequence of the death of a Shareholder or otherwise
by operation of law shall be recorded as the holder of such Shares and shall
receive a new certificate therefor but only upon delivery to the Board of
Directors or a transfer agent of instruments and other evidence required by the
Board of Directors or the transfer agent to demonstrate such entitlement, the
existing certificate for such Shares and such releases from applicable
governmental authorities as may be required by the Board of Directors or
transfer agent. Nothing in these By-laws shall impose upon the Board of
Directors or a transfer agent a duty or limit their rights to inquire into
adverse claims.
SECTION 5.4. Fixing Record Date. In order that the Corporation may
------------------
determine the Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date: (a) in the case of determination of Shareholders entitled to
vote at any meeting of Shareholders or adjournment thereof, shall, unless
otherwise required by law, not be more than 60 nor less than 10 days before the
date of such meeting; (b) in the case of determination of Shareholders entitled
to express consent to corporate action in writing without a meeting, shall not
be more than 10 days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (c) in the case of any other
action, shall not be more than 60 days prior to such other action. If no record
date is fixed: (i) the record date for determining Shareholders entitled to
notice of or to vote at a meeting of Shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (ii) the record date for determining Shareholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action of the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (iii) the record
date for determining Shareholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating
<PAGE>
12
thereto. A determination of Shareholders of record entitled to notice of or to
vote at a meeting of Shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
- -------- -------
adjourned meeting.
SECTION 5.5. Transfer Agent; Dividend Disbursing Agent and Registrar.
-------------------------------------------------------
The Board of Directors shall have power to employ one or more transfer agents,
dividend disbursing agents and registrars and to authorize them on behalf of the
Corporation to keep records, to hold and to disburse any dividends or
distributions, and to have and perform, in respect of all original issues and
transfers of Shares, dividends and distributions and reports and communications
to Shareholders, the powers and duties usually had and performed by transfer
agents, dividend disbursing agents and registrars of a Delaware corporation.
ARTICLE VI
General Provisions
------------------
SECTION 6.1. Dividends. Dividends, if any, upon the capital stock of
---------
the Corporation, subject to the provisions of the Corporation's Certificate of
Incorporation, may be declared by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash, in property, or
in its own shares, subject to the provisions of law and of the Corporation's
Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sums as the Board of
Directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
SECTION 6.2. Checks. All checks, drafts and orders for the payment of
------
money, notes and other evidences of indebtedness, issued in the name of the
Corporation shall be signed by the president or the treasurer or by such officer
or officers as the Board of Directors may from time to time designate.
SECTION 6.3. Depositories. The funds of the Corporation shall be
------------
deposited with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
SECTION 6.4. Books of Account and Records. The Corporation shall
----------------------------
maintain at its office in the City of Port Arthur, Texas, correct and complete
books and records of account of all the business and transactions of the
Corporation. Upon request of any Shareholder, there shall be made available in
accordance with the provisions of Delaware law, a record containing the number
of Shares of stock issued during a special period not to exceed 12 months and
the consideration received by the Corporation for each such Share.
<PAGE>
13
SECTION 6.5. Information for Inspection. Any Shareholder of the
--------------------------
Corporation or his agent may inspect and copy during usual business hours the
By-laws, minutes of the proceedings of its Shareholders' meetings, annual
statements of its affairs and voting trust agreements on file at its principal
office.
SECTION 6.6. Fiscal Year. The fiscal year of the Corporation shall be
-----------
the calendar year.
SECTION 6.7. Share Ledger. The Corporation shall maintain at its
------------
office in the City of Port Arthur, Texas, an original Share ledger containing
the names and addresses of all Shareholders, the number of Shares held by each
Shareholder, the number of certificates representing such Shares and the amount
of any installment or remaining commitment payable thereon, if any. Such Share
ledger may be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
SECTION 6.8. Seal. The Corporation shall have a seal containing the
----
words: "Sabine River Holding Corp." and "Incorporated in the State of Delaware
1999".
ARTICLE VII
Indemnification
---------------
SECTION 7.1. Indemnification of Directors and Officers. Any person
-----------------------------------------
made, or threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he, his testator or intestate, is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee trust
or other enterprise, or is or was a director, officer, employee or agent of any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified, to the fullest
extent permitted by law, by the Corporation against expenses (including
attorney's fees and expenses), judgments, fines and amounts paid in any
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Expenses incurred by any
such person in defending any such action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding (i) if authorized by a majority of the directors of the Corporation
in office who are not interested in such action, suit or
<PAGE>
14
proceeding or (ii) in the case of an officer or director, upon receipt of the
undertaking specified in Section 145(e) of the General Corporation Law of the
State of Delaware.
SECTION 7.2. Nonexclusivity of Indemnification and Advancement of
----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided by or granted
- --------
pursuant to this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, contract, vote of Shareholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent of the type referred to in Section 7.1 and shall inure to the benefit
of the heirs, executors and administrators of such person.
SECTION 7.3. Insurance. The officers of the Corporation, without
---------
authorization by the Board of Directors, may in their discretion purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the type referred to in Section 7.1 against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation shall have the power to
indemnify him against such liability.
ARTICLE VIII
Amendments
----------
SECTION 8.1. Board of Directors. The Board of Directors shall have the
------------------
power, in accordance with the Certificate of Incorporation, at any regular
meeting or at any special meeting if notice thereof be included in the notice of
such special meeting, to alter, modify or repeal any By-laws of the Corporation
and to make new By-laws.
SECTION 8.2. Shareholders. The Shareholders shall not have the power
------------
to alter, modify or repeal any By-laws of the Corporation.
<PAGE>
Exhibit 3.02(c)
================================================================================
AMENDED AND RESTATED BY-LAWS
of
NECHES RIVER HOLDING CORP.
Adopted on July 30, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Meeting of Shareholders.......................................................... 1
SECTION 1.1. Place of Meetings................................................... 1
SECTION 1.2. Meetings............................................................ 1
SECTION 1.3. Notice of Meetings.................................................. 1
SECTION 1.4. Quorum.............................................................. 2
SECTION 1.5. Voting.............................................................. 2
SECTION 1.6. Organization and Order of Business.................................. 2
SECTION 1.7. Inspectors.......................................................... 3
SECTION 1.8. Action Without Meeting.............................................. 3
ARTICLE II
Board of Directors............................................................... 3
SECTION 2.1. Number, Election, Term and Qualifications........................... 3
SECTION 2.2. Powers.............................................................. 4
SECTION 2.3. Resignations........................................................ 4
SECTION 2.4. Vacancies........................................................... 4
SECTION 2.5. Actions by Directors................................................ 4
SECTION 2.6. Committees of the Board............................................. 4
SECTION 2.7. Meetings of the Board of Directors.................................. 5
SECTION 2.8. Organization........................................................ 6
SECTION 2.9. Directors' Compensation............................................. 6
ARTICLE III
Notices.......................................................................... 6
SECTION 3.1. Notice to Shareholders.............................................. 6
SECTION 3.2. Waivers of Notice................................................... 6
ARTICLE IV
Officers......................................................................... 7
SECTION 4.1. Officers............................................................ 7
SECTION 4.2. Other Officers and Agents........................................... 7
SECTION 4.3. Compensation........................................................ 7
SECTION 4.4. Removal; Resignation................................................ 7
SECTION 4.5. Chairman............................................................ 7
SECTION 4.6. President........................................................... 7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.7. Vice President..................................................... 8
SECTION 4.8. Independent Officer................................................ 8
SECTION 4.9. Secretary.......................................................... 8
SECTION 4.10. Assistant Secretary................................................ 8
SECTION 4.11. Treasurer and Assistant Treasurer.................................. 9
SECTION 4.12. Delegation of Duties............................................... 9
SECTION 4.13. Limitations on Officers............................................ 9
ARTICLE V
Ownership; Certificates of Shares................................................ 10
SECTION 5.1. Certificates....................................................... 10
SECTION 5.2. Lost Certificates.................................................. 10
SECTION 5.3. Share Record; Issuance and Transferability of Shares............... 10
SECTION 5.4. Fixing Record Date................................................. 11
SECTION 5.5. Transfer Agent; Dividend Disbursing Agent and Registrar............ 12
ARTICLE VI
General Provisions............................................................... 12
SECTION 6.1. Dividends.......................................................... 12
SECTION 6.2. Checks............................................................. 12
SECTION 6.3. Depositories....................................................... 12
SECTION 6.4. Books of Account and Records....................................... 12
SECTION 6.5. Information for Inspection......................................... 13
SECTION 6.6. Fiscal Year........................................................ 13
SECTION 6.7. Share Ledger....................................................... 13
SECTION 6.8. Seal............................................................... 13
ARTICLE VII
Indemnification.................................................................. 13
SECTION 7.1. Indemnification of Directors and Officers.......................... 13
SECTION 7.2. Nonexclusivity of Indemnification and Advancement of Expenses...... 14
SECTION 7.3. Insurance.......................................................... 14
ARTICLE VIII
Amendments....................................................................... 14
SECTION 8.1. Board of Directors................................................. 14
SECTION 8.2. Shareholders....................................................... 14
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED BY-LAWS
of
NECHES RIVER HOLDING CORP.
(adopted July 30, 1999)
Capitalized terms used herein and not defined herein shall have the following
meanings:
"Corporation" means Neches River Holding Corp.
-----------
"Shares" means the shares of common stock of the Corporation.
------
"Shareholders" means, at any time, all holders of record of outstanding
------------
Shares at such time.
ARTICLE I
Meeting of Shareholders
-----------------------
SECTION 1.1. Place of Meetings. Meetings of Shareholders shall be
-----------------
held at such place within the United States as shall be designated from time to
time by the Board of Directors and stated in the notice of meeting or in a duly
executed waiver of notice thereof.
SECTION 1.2. Meetings. (a) Annual meetings of Shareholders shall be
--------
held at such place, date and hour as shall be fixed by the Board of Directors
and stated in the notice of meeting, at which the directors shall be elected and
any other proper business of the Corporation may be conducted. Any business of
the Corporation may be transacted at the annual meeting without being specially
designated in the notice, except such business as is specifically required by
law to be stated in the notice.
(b) Special meetings of the Shareholders may be called at any time by
the chief executive officer of the Corporation or by a majority of the directors
and shall be called by an officer of the Corporation upon the written request of
one or more Shareholders holding in the aggregate not less than 25% of the
outstanding Shares entitled to vote at such meeting. If there shall be no
directors, the officers of the Corporation shall promptly call a special meeting
of the Shareholders entitled to vote for the election of successor directors.
Notice of any special meeting shall state the purpose or purposes of the
meeting.
SECTION 1.3. Notice of Meetings. Not less than 10 nor more than 60
------------------
days before the date of every Shareholders' meeting, the secretary shall give to
each Shareholder entitled to vote at such meeting, and to each Shareholder not
entitled to vote who is entitled by law to notice, written notice stating the
time and place of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called.
<PAGE>
2
In the case of a special meeting of Shareholders convened at the
request of Shareholders, the notice herein provided for shall be given by the
secretary, in the manner herein provided, within 10 days after receipt of such
request of Shareholders. Any such special meeting shall be held not less than 20
nor more than 60 days after receipt of said request of Shareholders.
SECTION 1.4. Quorum. At any meeting of Shareholders, the presence in
------
person or by proxy of Shareholders entitled to cast a majority of the votes
authorized to be cast by Shares then outstanding and entitled to vote shall
constitute a quorum; but this section shall not affect any requirement of law or
under the Certificate of Incorporation for the vote necessary for the adoption
of any measure. If, however, such quorum shall not be present in person or by
proxy at any meeting of the Shareholders, the Shareholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present in person or by proxy. At such adjourned meeting at
which a quorum shall be present, in person or by proxy, any business may be
transacted which could have been transacted at the meeting as originally
noticed.
SECTION 1.5. Voting. Except as otherwise required by the Certificate
------
of Incorporation or by law, whenever any action is to be taken by the
Shareholders at a meeting, it shall be authorized by the affirmative vote of the
holders of Shares representing a majority of the total number of votes cast by
Shares then outstanding and entitled to vote. At all elections of directors,
voting by Shareholders shall be conducted under the noncumulative method and the
election of directors shall be by a plurality of the votes cast by Shares then
outstanding and entitled to vote.
Unless any statute or the Certificate of Incorporation provide
otherwise, each outstanding Share shall be entitled to one vote on each matter
submitted to a vote at a meeting of Shareholders. A Shareholder may vote only
the Shares owned by him as shown on the record of Shareholders of the
Corporation as of the record date determined pursuant to these By-laws or
pursuant to applicable law. All persons who were holders of record of Shares at
such time, and no others, shall be entitled to vote at such meeting and any
adjournment thereof. A Shareholder may vote the Shares owned of record by him
either in person or by proxy executed in writing by the Shareholder or by his
duly authorized attorney-in-fact and filed with the secretary prior to the
meeting. No proxy shall be valid after eleven months from the date of its
execution. At all meetings of Shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be decided by
the chairman of the meeting.
SECTION 1.6. Organization and Order of Business. At each meeting of
----------------------------------
the Shareholders, the chairman of the Board of Directors, or in his absence or
inability to act, the president, or in the absence or inability to act of the
chairman of the Board of Directors and the president, a vice president, shall
act as chairman of the meeting. The secretary, or in his absence or inability to
act, any person appointed by the chairman of the meeting, shall act as secretary
of the meeting and keep the minutes thereof. The order of business at all
meetings of the Shareholders shall be as determined by the chairman of the
meeting.
<PAGE>
3
SECTION 1.7. Inspectors. The Board of Directors may, and shall if
----------
required by law, in advance of any meeting of Shareholders, appoint one or more
inspectors to act at such meeting or any adjournment thereof. If the inspectors
shall not be so appointed or if any of them shall fail to appear or act, the
chairman of the meeting may, and on the request of any Shareholder entitled to
vote thereat shall, appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of Shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all Shareholders.
On request of the chairman of the meeting or any Shareholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge, request
or matter determined by them and shall execute a certificate of any fact found
by them. No director or candidate for the office of director shall act as
inspector of an election of directors. Inspectors need not be Shareholders.
SECTION 1.8. Action Without Meeting. Except as otherwise provided by
----------------------
statute or the Certificate of Incorporation, any action required or permitted to
be taken at any meeting of Shareholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth such
action, is signed by Shareholders representing such proportion of the total
number of votes authorized to be cast by Shares then outstanding and entitled to
vote on such action as would be required to approve such action at a meeting at
which all holders of Shares then outstanding and entitled to vote thereon were
present and voting on such action, and any other Shareholders entitled to notice
of a meeting of Shareholders but not to vote thereat have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of Shareholders' meetings.
ARTICLE II
Board of Directors
------------------
SECTION 2.1. Number, Election, Term and Qualifications. The Board of
-----------------------------------------
Directors of the Corporation shall consist of not less than one nor more than
five directors and, subject to the terms and conditions of the Certificate of
Incorporation, at least one such director shall at all time be an Independent
Director (as such term is defined in the Certificate of Incorporation). The
first Board of Directors shall consist of three directors appointed by the Sole
Incorporator, subject to the terms and conditions contained in the Certificate
of Incorporation. Thereafter, within the limits specified above and subject to
the terms and conditions of the Certificate of Incorporation, the number of
directors shall be determined by the Board of Directors. The directors, other
than the first board of directors, shall be elected at the annual meeting of the
Shareholders, except as provided in Section 2.4, and each director elected shall
hold office until his successor is elected and qualified. Unless otherwise
restricted by law or the
<PAGE>
4
Certificate of Incorporation, any director or the entire Board of Directors may
be removed, with or without cause, by a majority of Shareholders entitled to
vote at an election of directors.
SECTION 2.2. Powers. The business and affairs of the Corporation
------
shall be managed in accordance with the Certificate of Incorporation by the
Board of Directors, which may exercise all of the powers of the Corporation
except such as are by law or by the Certificate of Incorporation or by these By-
laws conferred upon or reserved to the Shareholders.
SECTION 2.3. Resignations. Any director or member of a committee may
------------
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time of
the receipt by the chairman of the Board of Directors, the president or the
secretary. The acceptance of a resignation shall not be necessary to make it
effective.
SECTION 2.4. Vacancies. Vacancies (including vacancies created by
---------
increases in number) may be filled only by a majority of the remaining
directors, or if only one director shall remain, by the remaining director
(although less than a quorum). If at any time there shall be no directors in
office, successor directors shall be elected by the Shareholders in accordance
with Article I. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the next annual meeting of Shareholders or
until his successor is elected and qualified.
SECTION 2.5. Actions by Directors. Subject to the provisions of the
--------------------
Certificate of Incorporation, the directors may act with or without a meeting in
accordance with the following. Unless specifically provided otherwise in these
By-laws, any action of the directors may be taken (i) at a meeting, by vote of a
majority of the directors or (ii) without a meeting, by unanimous written
consent of the directors, whose written consents shall be filed with the records
of meetings of the directors. Any action or actions permitted to be taken by the
directors in connection with the business of the Corporation may be taken
pursuant to authority granted by a meeting of the directors conducted by a
telephone conference call, and the transaction of business represented thereby
shall be of the same authority and validity as if transacted at a meeting of the
directors held in person or by written consent. The minutes of any Board of
Directors' meeting held by telephone shall be prepared in the same manner as a
meeting of the Board of Directors held in person.
SECTION 2.6. Committees of the Board. The Board of Directors may
-----------------------
appoint from among its members an executive committee, an audit committee and
other committees composed of three or more directors, one of which must be the
Independent Director. The Board of Directors may delegate to any committees any
of the powers of the Board of Directors.
Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Directors. Not less than three, of
the members of any committee shall be present in person or by telephone at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of
such committee. The Board of Directors may designate a chairman of
<PAGE>
5
any committee and such chairman or any three members of any committee may fix
the time and place of its meetings unless the Board of Directors shall otherwise
provide. In the absence or disqualification of any member of any such committee,
the members thereof present at any meeting and not disqualified from voting,
whether or not they constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of such absent or disqualified
members.
The committees shall keep minutes of their proceedings and shall
report the same to the Board of Directors at the meeting next succeeding, and
any action by the committees shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or alteration.
The Board of Directors shall have the power at any time to change the
membership of any committee, to fill all vacancies, to designate alternate
members to replace any absent or disqualified member or to dissolve any such
committee.
SECTION 2.7. Meetings of the Board of Directors. Meetings of the
----------------------------------
Board of Directors, regular or special, may be held at any place as the Board of
Directors may from time to time determine or as shall be specified in the notice
of such meeting.
As soon as practicable after each annual meeting of Shareholders, a
regular meeting of the directors shall be held for the purpose of organizing,
electing officers and transacting other business. The meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors as provided in
Article III, except that no notice shall be necessary if such meeting is held
immediately after the adjournment, and at the site, of the annual meeting of
Shareholders.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board of
Directors.
Special meetings of the Board of Directors may be called at any time
by three or more directors or by the chairman of the Board of Directors or the
president. Special meetings may be held at such place or places as may be
designated from time to time by the Board of Directors; in the absence of such
designation, such meetings shall be held at such places as may be designated in
the notice of meeting.
Notice of the place and time of every special meeting of the Board of
Directors shall be delivered by the secretary to each director by (a) United
States mail, postage prepaid, (b) express mail or overnight delivery or courier
service, (c) telecopy or other facsimile transmission, (d) personal delivery or
(e) telephone, to the address, telecopy or telephone number of such director
appearing on the books of the Corporation or theretofore given by such director
to the Corporation for the purpose of notice. Such notice shall be deemed given
(i) if given by telecopier, when transmitted to the number specified for such
purpose and the appropriate answerback or confirmation is received (or, if such
time is not during a Business Day, at the
<PAGE>
6
beginning of the next Business Day), (ii) if given by mail, when deposited in
the United States mail, postage prepaid, directed to such Shareholder at his
address as it appears on the record of the Corporation or (iii) if given by any
other means, when delivered to such director.
SECTION 2.8. Organization. The chairman of the Board of Directors
------------
shall be selected by a majority of the directors and shall preside at each
meeting of the Board of Directors. In the absence or inability of the chairman
to preside at a meeting, the president, or, in his absence or inability to act,
another director chosen by a majority of the directors present, shall act as
chairman of the meeting and preside thereat. The secretary (or, in his absence
or inability to act any person appointed by the chairman of the meeting) shall
act as secretary of the meeting and keep the minutes thereof.
SECTION 2.9. Directors' Compensation. Directors may receive
-----------------------
compensation for services to the Corporation in their capacities as directors or
otherwise in such manner and in such amounts as may be fixed from time to time
by the Board of Directors.
ARTICLE III
Notices
-------
SECTION 3.1. Notice to Shareholders. Any notice of any meeting or
----------------------
other notice, communication or report to any Shareholder shall be delivered to
such Shareholder by (a) United States mail, postage prepaid, (b) express mail or
overnight delivery or courier service, (c) telecopy or other facsimile
transmission or (d) personal delivery to the address or telecopy number of such
Shareholder appearing on the books of the Corporation or theretofore given by
such Shareholder to the Corporation for the purpose of notice. Such notice shall
be deemed given (i) if given by telecopier, when transmitted to the number
specified for such purpose and the appropriate answerback or confirmation is
received (or, if such time is not during a Business Day, at the beginning of the
next Business Day), (ii) if given by mail, when deposited in the United States
mail, postage prepaid, directed to such Shareholder at his address as it appears
on the records of the Corporation or (iii) if given by any other means, when
delivered to such Shareholder.
SECTION 3.2. Waivers of Notice. Whenever any notice of the time,
-----------------
place or purpose of any meeting of Shareholders, directors or committee is
required to be given under law or under the provisions of the Certificate of
Incorporation or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice and filed with the records of the
meeting, whether before or after the holding hereof, or actual attendance at the
meeting of Shareholders in person or by proxy, or at the meeting of directors or
a committee in person, shall be deemed equivalent to the giving of such notice
to such persons. When a meeting of Shareholders is adjourned to another time and
place, unless the Board of Directors after the adjournment shall fix a new
record date for an adjourned meeting or the adjournment is for more than thirty
days, notice of such adjourned meeting need not be given if the time and place
to
<PAGE>
7
which the meeting shall be adjourned were announced at the meeting at which the
adjournment is taken.
ARTICLE IV
Officers
--------
SECTION 4.1. Officers. The officers of the Corporation shall be
--------
chosen by the Board of Directors in accordance with the Certificate of
Incorporation and shall be a president, a secretary and a treasurer. The Board
of Directors may also choose a chairman (or one or more co-chairmen) of the
Board of Directors, and one or more vice presidents, assistant secretaries or
assistant treasurers. Two or more offices, except those of chairman and/or
president and secretary, or chairman and/or president and assistant secretary,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity, if such instrument is required
by law, the Certificate of Incorporation or these By-laws to be executed,
acknowledged or verified by two or more officers.
SECTION 4.2. Other Officers and Agents. The Board of Directors may
-------------------------
appoint such other officers and agents as it shall deem necessary, who shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
SECTION 4.3. Compensation. The compensation of the officers of the
------------
Corporation shall be fixed by the Board of Directors.
SECTION 4.4. Removal; Resignation. The officers of the Corporation
--------------------
shall serve until their successors are chosen and qualify. Any officer or agent
may be removed by the Board of Directors whenever, in its judgment, the best
interests of the Corporation will be served thereby. Any officer may resign at
any time. Such resignation shall be made in writing, and shall take effect at
the time specified herein, and if such time is not specified, at the time of its
receipt by the chairman, the president or the secretary. The acceptance of a
resignation shall not be necessary to make it effective. If the office of any
officer becomes vacant for any reason, the vacancy shall be filled by the Board
of Directors.
SECTION 4.5. Chairman. The chairman shall, if present, preside at all
--------
meetings of the Board of Directors and Shareholders and exercise and perform
such other powers and duties as may be from time to time assigned to him by the
Board of Directors or prescribed by these By-laws and as may be set forth
herein.
SECTION 4.6. President. The president shall be the chief executive
---------
officer of the Corporation. The president shall have general and active control
of the business, finances and affairs of the Corporation, subject to the control
of the Board of Directors. Except as may otherwise be provided by the Board of
Directors from time to time, the president shall have the general power to
execute bonds, deeds, contracts, conveyances and other instruments in the name
of the Corporation, to appoint all employees and agents of the Corporation whose
appointment is
<PAGE>
8
not otherwise provided for and to fix the compensation thereof subject to the
provisions of these By-laws and subject to the approval of the Board of
Directors; to remove or suspend any employee or agent who shall not have been
appointed by the Board of Directors; to suspend for cause, pending final action
by the body which shall have appointed him, any officer other than an elected
officer, or any employee or agent who shall have been appointed by the Board of
Directors; to delegate to a responsible agent any of the foregoing; and to take
any other such action as the President deems necessary, subject to the oversight
of the Board of Directors.
SECTION 4.7. Vice President. The vice president, or if there shall be
--------------
more than one, the vice presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
SECTION 4.8. Independent Officer. The duties of the senior officer of
-------------------
the Corporation appointed as the "Independent Officer" in accordance with the
second sentence of paragraph (c) of Article 6 of the Certificate of
Incorporation shall include (i) reviewing the monthly financial results and
operating activities of the Corporation and Port Arthur Coker Company L.P. (the
"Partnership") based upon monthly reports delivered to such senior officer by
the Corporation and consulting with the Board of Directors in the event that
such review reveals a material adverse deviation of such financial results or
operations from budgeted results or the then-current operating plan approved by
the Board of Directors and (ii) consulting with the Board of Directors regarding
any activity or transaction that comes to such Independent Officer's attention
and bears upon the maintenance of the separate legal identity of the Corporation
in accordance with its Certificate of Incorporation and the maintenance of the
separate legal identity of the Partnership in accordance with the Limited
Partnership Agreement thereof. Except as provided in the preceding sentence or
as determined by the Corporation with the assent of the Independent Officer,
such Independent Officer shall have no other duties or obligations to the
Corporation or the Partnership in his capacity as such Independent Officer.
SECTION 4.9. Secretary. The secretary shall attend all meetings of
---------
the Board of Directors and all meetings of the Shareholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose and perform like duties for the standing
committees when required. The secretary shall give, or cause to be given, notice
of all meetings of the Shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or president, under whose supervision the secretary shall be. The
secretary shall keep in safe custody the seal of the Corporation and, when
authorized by the Board of Directors, affix the same to any instrument requiring
it and, when so affixed, it shall be attested by the secretary's signature or by
the signature of an assistant secretary.
SECTION 4.10. Assistant Secretary. The assistant secretary, or if
-------------------
there be more than one, the assistant secretaries in the order determined by the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary
<PAGE>
9
and shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
SECTION 4.11. Treasurer and Assistant Treasurer. The treasurer shall
---------------------------------
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors.
The treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.
If required by the Board of Directors, he shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory, to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
SECTION 4.12. Delegation of Duties. In the case of the absence of any
--------------------
officer of the Corporation or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may confer for the time being the
powers or duties, or any of them, of such officer upon any director.
SECTION 4.13. Limitations on Officers. Notwithstanding anything to the
-----------------------
contrary in the By-laws, no officer of the Corporation is authorized to give any
consent of, or approval by, the Corporation until such consent or approval has
been approved by a majority of the directors and, if required, by the
Shareholders, in accordance with the Certificate of Incorporation.
<PAGE>
10
ARTICLE V
Ownership; Certificates of Shares
---------------------------------
SECTION 5.1. Certificates. Each Shareholder shall be entitled to,
------------
upon request to the secretary, a certificate or certificates which shall
represent and certify the number and kind and class of Shares owned by him in
the Corporation. In all other cases certificates will not be issued. Each
certificate shall be signed by the chairman of the Board of Directors or the
president or a vice president and countersigned by the secretary or an assistant
secretary or the treasurer or an assistant treasurer and may be sealed with the
seal specified in Section 6.9 (the "Seal").
The signatures may be either manual or facsimile signatures and the
Seal may be either facsimile or any other form of Seal. In the case any officer
who has signed any certificate ceases to be an officer of the Corporation before
the certificate is issued, the certificate may nevertheless be issued by the
Corporation with the same effect as if the officer had not ceased to be such
officer as of the date of its issue. Each Share certificate shall include on its
face the name of the Corporation, the name of the Shareholder and the class of
Shares and number of Shares represented by the certificate.
SECTION 5.2. Lost Certificates. The Board of Directors may direct a
-----------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been stolen,
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be stolen, lost or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and to give a bond, with sufficient surety, to the Corporation to indemnify it
against any loss or claim which may arise by reason of the issuance of a new
certificate.
SECTION 5.3. Share Record; Issuance and Transferability of Shares.
----------------------------------------------------
(a) Records shall be kept by or on behalf of and under the direction of the
directors or the officers of the Corporation, which shall contain the names and
addresses of the Shareholders, the number of Shares held by them respectively,
the numbers of certificates representing the Shares and the amount of any
installment or remaining commitment payable thereon, if any, and in which there
shall be recorded all transfers of Shares. Certificates shall be issued, listed
and transferred in accordance with these By-laws. The Corporation, the directors
and the officers, employees and agents of the Corporation shall be entitled to
deem the Persons in whose names certificates are registered on the records of
the Corporation to be the absolute owners of the Shares represented thereby for
all purposes of the Corporation; but nothing herein shall be deemed to preclude
the directors or officers, employees or agents of the Corporation from inquiring
as to the actual ownership of Shares. Until a transfer is duly effected on the
records of the Corporation, the directors shall not be affected by any notice of
such transfer, either actual or constructive.
<PAGE>
11
(b) Shares shall be transferable on the records of the Corporation
only by the record holder thereof or by his agent thereunto duly authorized in
writing upon delivery to the directors or a transfer agent of the certificate or
certificates therefor, properly endorsed or accompanied by duly executed
instruments of transfer and accompanied by all necessary documentary stamps
together with such evidence of the genuineness each such endorsement, execution
or authorization and of other matters as may reasonably be required by the Board
of Directors or such transfer agent. Upon such delivery, the transfer shall be
recorded in the records of the Corporation and a new certificate for the Shares
so transferred shall be issued to the transferee and, in case of a transfer of
only a part of the Shares represented by any certificate, a new certificate for
the balance shall be issued to the transferor. Until a transfer is duly effected
on the records of the Corporation, the directors shall not be affected by any
notice of such transfer, either actual or constructive. Any Person becoming
entitled to any Shares in consequence of the death of a Shareholder or otherwise
by operation of law shall be recorded as the holder of such Shares and shall
receive a new certificate therefor but only upon delivery to the Board of
Directors or a transfer agent of instruments and other evidence required by the
Board of Directors or the transfer agent to demonstrate such entitlement, the
existing certificate for such Shares and such releases from applicable
governmental authorities as may be required by the Board of Directors or
transfer agent. Nothing in these By-laws shall impose upon the Board of
Directors or a transfer agent a duty or limit their rights to inquire into
adverse claims.
SECTION 5.4. Fixing Record Date. In order that the Corporation may
------------------
determine the Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date: (a) in the case of determination of Shareholders entitled to
vote at any meeting of Shareholders or adjournment thereof, shall, unless
otherwise required by law, not be more than 60 nor less than 10 days before the
date of such meeting; (b) in the case of determination of Shareholders entitled
to express consent to corporate action in writing without a meeting, shall not
be more than 10 days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (c) in the case of any other
action, shall not be more than 60 days prior to such other action. If no record
date is fixed: (i) the record date for determining Shareholders entitled to
notice of or to vote at a meeting of Shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (ii) the record date for determining Shareholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action of the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (iii) the record
date for determining Shareholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating
<PAGE>
12
thereto. A determination of Shareholders of record entitled to notice of or to
vote at a meeting of Shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
- -------- -------
adjourned meeting.
SECTION 5.5. Transfer Agent; Dividend Disbursing Agent and Registrar.
--------------------------------------------------------
The Board of Directors shall have power to employ one or more transfer agents,
dividend disbursing agents and registrars and to authorize them on behalf of the
Corporation to keep records, to hold and to disburse any dividends or
distributions, and to have and perform, in respect of all original issues and
transfers of Shares, dividends and distributions and reports and communications
to Shareholders, the powers and duties usually had and performed by transfer
agents, dividend disbursing agents and registrars of a Delaware corporation.
ARTICLE VI
General Provisions
------------------
SECTION 6.1. Dividends. Dividends, if any, upon the capital stock of
---------
the Corporation, subject to the provisions of the Corporation's Certificate of
Incorporation, may be declared by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash, in property, or
in its own shares, subject to the provisions of law and of the Corporation's
Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sums as the Board of
Directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
SECTION 6.2. Checks. All checks, drafts and orders for the payment of
------
money, notes and other evidences of indebtedness, issued in the name of the
Corporation shall be signed by the president or the treasurer or by such officer
or officers as the Board of Directors may from time to time designate.
SECTION 6.3. Depositories. The funds of the Corporation shall be
------------
deposited with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
SECTION 6.4. Books of Account and Records. The Corporation shall
----------------------------
maintain a correct and complete books and records of account of all the business
and transactions of the Corporation. Upon request of any Shareholder, there
shall be made available in accordance with the provisions of Delaware law, a
record containing the number of Shares of stock issued during a special period
not to exceed 12 months and the consideration received by the Corporation for
each such Share.
<PAGE>
13
SECTION 6.5. Information for Inspection. Any Shareholder of the
--------------------------
Corporation or his agent may inspect and copy during usual business hours the
By-laws, minutes of the proceedings of its Shareholders' meetings, annual
statements of its affairs and voting trust agreements on file at its principal
office.
SECTION 6.6. Fiscal Year. The fiscal year of the Corporation shall be
-----------
the calendar year.
SECTION 6.7. Share Ledger. The Corporation shall maintain an original
------------
Share ledger containing the names and addresses of all Shareholders, the number
of Shares held by each Shareholder, the number of certificates representing such
Shares and the amount of any installment or remaining commitment payable
thereon, if any. Such Share ledger may be in written form or any other form
capable of being converted into written form within a reasonable time for visual
inspection.
SECTION 6.8. Seal. The Corporation shall have a seal containing the
----
words: "Neches River Holding Corp." and "Incorporated in the State of Delaware
1999".
ARTICLE VII
Indemnification
---------------
SECTION 7.1. Indemnification of Directors and Officers. Any person
-----------------------------------------
made, or threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he, his testator or intestate, is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee trust
or other enterprise, or is or was a director, officer, employee or agent of any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified, to the fullest
extent permitted by law, by the Corporation against expenses (including
attorney's fees and expenses), judgments, fines and amounts paid in any
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Expenses incurred by any
such person in defending any such action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding (i) if authorized by a majority of the directors of the Corporation
in office who are not interested in such action, suit or
<PAGE>
14
proceeding or (ii) in the case of an officer or director, upon receipt of the
undertaking specified in Section 145(e) of the General Corporation Law of the
State of Delaware.
SECTION 7.2. Nonexclusivity of Indemnification and Advancement of
----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided by or granted
- --------
pursuant to this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, contract, vote of Shareholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent of the type referred to in Section 7.1 and shall inure to the benefit
of the heirs, executors and administrators of such person.
SECTION 7.3. Insurance. The officers of the Corporation, without
---------
authorization by the Board of Directors, may in their discretion purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the type referred to in Section 7.1 against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation shall have the power to
indemnify him against such liability.
ARTICLE VIII
Amendments
----------
SECTION 8.1. Board of Directors. The Board of Directors shall have
------------------
the power, in accordance with the Certificate of Incorporation, at any regular
meeting or at any special meeting if notice thereof be included in the notice of
such special meeting, to alter, modify or repeal any By-laws of the Corporation
and to make new By-laws.
SECTION 8.2. Shareholders. The Shareholders shall not have the power
------------
to alter, modify or repeal any By-laws of the Corporation.
<PAGE>
Exhibit 3.03
================================================================================
PORT ARTHUR COKER COMPANY L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
Dated as of August 2, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions......................................................... 1
SECTION 1.1 Definitions............................................ 1
SECTION 1.2 Terms Generally........................................ 6
ARTICLE II
General Provisions.................................................. 7
SECTION 2.1 Formation.............................................. 7
SECTION 2.2 Partners............................................... 7
SECTION 2.3 Name................................................... 7
SECTION 2.4 Term................................................... 7
SECTION 2.5 Purpose; Powers........................................ 7
SECTION 2.6 Place of Business...................................... 8
ARTICLE III
Management and Operation of the Partnership......................... 8
SECTION 3.1 Management............................................. 8
SECTION 3.2 Certain Duties and Obligations of the Partners......... 9
SECTION 3.3 Restrictions on Authority of the General Partner....... 10
SECTION 3.4 Separate Identity...................................... 10
SECTION 3.5 Limitations on the Partnership......................... 11
ARTICLE IV
Activities of Partner's Affiliates.................................. 12
ARTICLE V
Capital Contributions;
Distributions....................................................... 12
SECTION 5.1 Capital Contributions.................................. 12
SECTION 5.2 Distributions.......................................... 13
SECTION 5.3 Reimbursement of Expenses.............................. 13
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations....... 13
SECTION 6.1 General Accounting Matters............................. 13
SECTION 6.2 Certain Tax Matters.................................... 14
SECTION 6.3 Capital Accounts....................................... 14
SECTION 6.4 Allocations............................................ 15
ARTICLE VII
Dissolution......................................................... 16
SECTION 7.1 Dissolution............................................ 16
</TABLE>
i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 7.2 Winding-up............................................. 16
SECTION 7.3 Final Distribution..................................... 16
ARTICLE VIII
Transfer of Partner's Interests; Rights of First Refusal
SECTION 8.1 Restrictions on Transfer of Partnership Interests...... 17
SECTION 8.2 Other Transfer Provisions.............................. 17
SECTION 8.3 Partnership Interests as Securities; Evidence of
Partnership Interest.................................. 18
ARTICLE IX
Miscellaneous....................................................... 19
SECTION 9.1 Equitable Relief....................................... 19
SECTION 9.2 Officers............................................... 19
SECTION 9.3 Governing Law.......................................... 19
SECTION 9.4 Successors and Assigns................................. 19
SECTION 9.5 Access; Confidentiality................................ 19
SECTION 9.6 Notices................................................ 20
SECTION 9.7 Counterparts........................................... 20
SECTION 9.8 Entire Agreement....................................... 20
SECTION 9.9 Amendments............................................. 20
SECTION 9.10 Section Titles......................................... 20
SECTION 9.11 Representations and Warranties......................... 20
</TABLE>
Schedule A Name, Address and Sharing Percentage of Partners
ii-
<PAGE>
PORT ARTHUR COKER COMPANY L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT, dated as of August
2, 1999, by and among SABINE RIVER HOLDING CORP., a Delaware corporation, as the
general partner (the "General Partner") and NECHES RIVER HOLDING CORP., a
---------------
Delaware limited partnership, as the limited partner (the "Limited Partner";
---------------
together with the General Partner, the "Partners").
--------
Preliminary Statement
---------------------
A. The General Partner and the Limited Partner are parties to that
certain Limited Partnership Agreement of Port Arthur Coker Company L.P. (the
"Partnership") dated as of May 4, 1999 the ("Original Partnership Agreement").
----------- ------------------------------
The Partnership has previously filed a certificate of limited partnership for
the Partnership with the Department of State of Delaware.
B. The Partners desire to amend and restate the Original Partnership
Agreement and to set forth the terms and conditions upon which the Partnership
will continue.
Agreement
---------
Accordingly, in consideration of the mutual promises and agreements
herein made and intending to be legally bound hereby, the parties hereto agree
to amend and restate the Original Partnership Agreement in its entirety as
follows:
ARTICLE I
Definitions
-----------
SECTION 1.1 Definitions. Unless the context otherwise requires, the
-----------
following terms shall have the following meanings for purposes of this
Agreement:
"Act" means the Delaware Revised Uniform Limited Partnership Act, 6
---
Del. C. (S)(S) 17-101, et seq., as it may be amended from time to time, and
------- -------
any successor to such statute.
"Adjusted Capital Account Deficit" shall mean, with respect to any
--------------------------------
Partner, the deficit balance, if any in such Partner's Capital Account as
of the end of the relevant Fiscal Year, after giving effect to the
following adjustments: (i) crediting to such Capital Account any amounts
that such Partner is obligated to restore or is deemed to be obligated to
restore pursuant to Regulations sections 1.704-1(b)(2)(ii)(b)(3), 1.704-
1(b)(2)(ii)(c), 1.704-2(g), and 1.704-2(i)(5), and (ii) debiting to such
Capital Account the items described in Regulations section 1.704-
1(b)(2)(ii)(d)(4), (5), and (6).
<PAGE>
2
"Affiliate" means (i) with respect to Clark and the Partnership, any
---------
and all Clark Entities and (ii) with respect to any entity, including Clark
and the Partnership, any entity other than the entity itself: (x) which
owns beneficially, directly or indirectly, 10% or more of the outstanding
shares of the common stock of the entity, or which controls the entity; (y)
of which 10% or more of the outstanding voting securities are owned
beneficially, directly or indirectly, by the entity or any entity described
in clause (x) above; or (z) which controls or is controlled by the entity
or any entity described in clause (x) above; provided, however, that for
-------- -------
the purposes of this definition, no Project Company shall be considered an
Affiliate of the Partnership, except when such term is used in Articles IV
and XI hereof. For purposes of this definition of Affiliate, the terms
"control" and "controlled by" shall have the meaning ascribed to them in
Rule 405 under the Securities Act of 1933, as amended.
"Agreement" means this Limited Partnership Agreement, as it may be
---------
amended, supplemented, modified or restated from time to time.
"Capital Account" has the meaning set forth in Section 6.3.
---------------
"Capital Contribution" shall mean the amount of money and/or the
--------------------
agreed upon fair market value of property contributed to the Partnership by
a Partner or its predecessor in interest on the date of contribution.
Capital Contributions shall include a Partner's payments made to third
party creditors of the Partnership with respect to Partnership obligations
to the extent such Partner is required by this Agreement to make such
additional Capital Contributions, unless and until reimbursed by the
Partnership.
"Capital Proceeds" means (A) the cash or other consideration received
----------------
by the Partnership (including interest on installment sales when received)
as a result of (i) any sale, exchange, abandonment, foreclosure, insurance
award, condemnation, easement sale or other similar transaction relating to
any property of the Partnership, (ii) any financing or refinancing relating
to any property of the Partnership, (iii) Capital Contributions to the
Partnership upon admission of new partners, (iv) any other transaction
which, in accordance with generally accepted accounting principles, would
be treated as a capital event, in each case less (B) any such cash which is
applied to (i) the payment of transaction costs and expenses, (ii) the
repayment of debt of the Partnership which is required under the terms of
any indebtedness of the Partnership or has been authorized by the General
Partner, (iii) the repair, restoration or other improvement of Partnership
Assets which is required under any contractual obligation of the
Partnership or has been authorized by the General Partner, and (iv) the
establishment of reserves by the General Partner. "Capital Proceeds" shall
also mean any of the foregoing which are received by a partnership or other
vehicle in which the Partnership is a partner or investor or in which the
Partnership otherwise has an interest, to the extent received by the
Partnership as dividends or distributions.
"Carrying Value" shall mean, with respect to any Partnership Asset,
--------------
the asset's adjusted basis for federal income tax purposes, except that the
Carrying values of all Partnership Assets shall be adjusted to equal their
respective fair market values, in accordance with the rules set forth in
Regulations Section 1.704-1(b)(2)(iv)(f), except as
<PAGE>
3
otherwise provided herein, as of: (a) the date of the acquisition of any
additional Interest by any new or existing Partner in exchange for more
than a de minimis Capital Contribution, other than pursuant to the initial
closing of the sale of Interests; (b) the date of the distribution of more
than a de minimis amount of Partnership Assets to a Partner; (c) the date
an Interest is relinquished to the Partnership or (d) the date of the
termination of the Partnership under Section 708(b)(i)(B) of the Code;
provided, however, that adjustments pursuant to clauses (a), (b) and (c)
above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners. The Carrying Value of any Partnership Asset
distributed to any Partner shall be adjusted immediately prior to such
distribution to equal its fair market value and depreciation shall be
calculated by reference to Carrying Value, instead of tax basis once
Carrying Value differs from tax basis. The carrying value of any asset
contributed (or deemed contributed under Regulations Section 1.704-
1(b)(1)(iv)) by a Partner to the Partnership will be the fair market value
of the asset at the date of its contribution thereto.
"Certificate" has the meaning set forth in Section 2.1.
-----------
"Clark" means Clark Refining & Marketing, Inc., a Delaware
-----
corporation.
"Clark Entity" means Clark and each of its successors and assigns and
------------
its and their respective Affiliates, other than Blackstone Capital Partners
III Merchant Banking Fund L.P., Blackstone Offshore Capital Partners III
L.P. and Blackstone Family Investment Partnership III L.P. and the direct
and indirect owners thereof and Occidental Petroleum Corporation and the
Project Companies.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any successor statute. Any reference herein to a particular
provision of the Code shall mean, where appropriate, the corresponding
provision in any successor statute.
"Financing Company" means Port Arthur Finance Corp., a Delaware
-----------------
corporation.
"Financing Documents" means any and all documents to be executed in
-------------------
connection with the Project which evidence or secure the financing of the
construction of new delayed coking unit, hydrocracker, sulfur complex and
related assets by the Partnership at the Clark refinery in Port Arthur,
Texas or the on-going working capital requirements of the Partnership
including, without limitation (i) a common security agreement, (ii) one or
more loan agreements, (iii) a transfer restrictions agreement, (iv) an
intercreditor agreement, (v) a guaranty insurance policy and reimbursement
agreement, (vi) a debt service reserve account insurance guarantee, (vii) a
note purchase agreement, (viii) an indenture, (ix) notes, (x) one or more
mortgages, (xi) one or more pledge agreements, (xii) a registration rights
agreement and (xiii) any other documents delivered under or in connection
with any of the foregoing.
"Financing Parties" means any financing parties that may at any time
-----------------
be party to the Financing Documents and any trustee or agent action on
their behalf.
<PAGE>
4
"Financing Trigger Date" means the date which is the earlier of (i)
----------------------
ninety one (91) days after all obligations under the Financing Documents
have been indefeasibly paid and (ii) such earlier date as designated by the
Financing Documents.
"Fiscal Period" means each fiscal quarter or such other period as may
-------------
be established by the General Partner.
"Fiscal Year" means the calendar year ending on December 31 of each
-----------
year.
"General Partner" means Sabine River Holding Corp., a Delaware
---------------
corporation, and any other person admitted to the Partnership as an
additional or substitute general partner of the Partnership in accordance
with the terms of this Agreement.
"Independent Director" shall mean a director of the General Partner
--------------------
who shall at no time be, or have been in the five (5) years preceding
appointment, (a) a direct or indirect, legal or beneficial owner of any
Affiliate of the Partnership, (b) a creditor, supplier, employee, officer,
director, manager or contractor of any Affiliate of the Partnership, (c) a
person who controls (whether directly or indirectly) any Affiliate of the
Partnership or any creditor, supplier, employee, officer, director, manager
or contractor of any Affiliate of the Partnership or (d) any member of the
immediate family of the foregoing.
"Interests" means a Partner's share of the profits and losses of the
---------
Partnership and a Partner's right to receive distributions of Partnership
Assets.
"Limited Partners" means Neches River Holding Corp. and any other
----------------
person admitted to the Partnership as an additional or substitute limited
partner of the Partnership in accordance with the terms of this Agreement.
"Liquidator" has the meaning set forth in Section 7.2.
----------
"Minimum Gain" shall have the meaning set forth in Regulations section
------------
1.704-2(d)(1) and shall mean the amount determined by (i) computing for
each nonrecourse liability of the Partnership any gain the Partnership
would realize if it disposed of the property subject to that liability for
no consideration other than full satisfaction of the liability and (ii)
aggregating the separately computed gains. If, pursuant to Regulations
sections 1.704-1(b)(2)(iv)(d) or 1.704-1(b)(2)(iv)(f), Partnership Assets
are properly reflected on the books of the Partnership at a book value that
differs from the adjusted tax basis of such property, the calculation of
Minimum Gain pursuant to the preceding sentence shall be made by reference
to such book value. For purposes hereof, a liability of the Partnership is
a nonrecourse liability to the extent that no Partner or related person
bears the economic risk of loss for that liability within the meaning of
Regulations section 1.752-1.
"Net Income (Loss)" for any Fiscal Period means the taxable income or
-----------------
loss of the Partnership for such period as determined in accordance with
the accounting method used by the Partnership for federal income tax
purposes with the following adjustments: (i) all
<PAGE>
5
items of income, gain, loss or deduction allocated pursuant to paragraphs
6.4(b)-(d) shall not be taken into account in computing such taxable income
or loss; (ii) any income of the Partnership that is exempt from federal
income taxation and not otherwise taken into account in computing Net
Income (Loss) shall be added to such taxable income or loss; (iii) if the
Carrying Value of any asset differs from its adjusted tax basis for federal
income tax purposes, any depreciation, amortization or gain resulting from
a disposition of such asset shall be calculated with reference to such
Carrying Value; (iv) upon an adjustment to the Carrying Value of any asset,
pursuant to the definition of Carrying Value, the amount of the adjustment
shall be included as gain or loss in computing such taxable income or loss;
and (v) except for items in (i) above, any expenditures of the Partnership
not deductible in computing taxable income or loss, not properly
capitalizable and not otherwise taken into account in computing Net Income
(Loss) pursuant to this definition shall be treated as deductible items.
"Non-Capital Proceeds" means (x) any cash or other consideration
--------------------
received by the Partnership other than Capital Proceeds less (y) any such
cash that is applied to the establishment of reserves established by the
General Partner.
"Nonrecourse Deductions" shall have the meaning ascribed to such term
----------------------
in Regulations section 1.704-2(b)(1).
"Organizational Expenses" means all reasonable third-party costs and
-----------------------
expenses pertaining to the organization of the Partnership and the
registration, qualification or exemption of the Partnership under any
applicable federal, state or foreign laws, including fees of counsel to the
Partnership and the Partners.
"Partner" means any person who is a partner of the Partnership,
-------
whether a General Partner, a Limited Partner, or both.
"Partner Nonrecourse Debt" shall have the meaning ascribed to such
------------------------
term in Regulations section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning
-------------------------------------
ascribed to such term in Regulations section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" shall mean any item of company loss,
------------------------------
deduction, or expenditure under section 705(a)(2)(B) of the Code that is
attributable to a Partner Nonrecourse Debt, as determined pursuant to
Regulations section 1.704-2(i)(2).
"Partnership" means Port Arthur Coker Company L.P., a Delaware limited
-----------
partnership.
"Partnership Assets" means all right, title and interest of the
------------------
Partnership in and to all or any portion of the assets of the Partnership
and any property (real or personal) or estate acquired in exchange therefor
or in connection therewith.
<PAGE>
6
"Proceeds" shall mean the collective reference to Capital Proceeds and
--------
Non-Capital Proceeds.
"Project" means the financing, construction, ownership and operation
-------
by the Partnership of a new delayed coking unit, hydrocracker, sulfur
complex and related assets to be located at the Port Arthur, Texas refinery
of Clark and the leasing from Clark, and operation of, the crude unit, the
vacuum tower, two distillate hydrotreaters and one naphtha hydrotreater
owned by Clark and located at its Port Arthur, Texas refinery.
"Project Companies" means, collectively, the Partnership, the
-----------------
Financing Company, Sabine River Holding Corp. and Neches River Holding
Corp.
"Project Documents" means, collectively, the following to be entered
-----------------
into by the Partnership: (i) a contract for engineering, procurement and
construction services with Foster Wheeler USA for the design and
construction of the new coking unit, hydrocracker, sulfur complex and
related assets; (ii) a long-term oil supply agreement with P.M.I. Comercio
Internacional for the supply of heavy sour crude oil for the Project; (iii)
a services and supply agreement with Clark for the provision of other
necessary supplies and services for the Project; (iv) a product purchase
agreement with Clark for the purchase of all the intermediate and refined
products produced by the equipment owned and leased by the Partnership; (v)
a ground lease and easement agreement with Clark for the lease of the sites
for the new coking unit, hydrocracker, sulfur complex and related assets
and the granting by Clark to the Partnership of various easements over, and
licenses to use other facilities at, Clark's Port Arthur refinery in
connection with the Project; (vi) a site and equipment lease and easement
agreement with Clark for the lease of the crude unit, vacuum tower and
three hydrotreaters at Clark's Port Arthur refinery and the site(s) on
which such equipment is located and the granting by Clark to the
Partnership of additional easements at the Port Arthur refinery; (vii) a
hydrogen supply agreement with Air Products and Chemicals, Inc. for the
construction of a hydrogen supply plant at Clark's Port Arthur refinery and
the supply of hydrogen to the Partnership; (viii) a purchase agreement with
Clark for work in progress related to the new coking unit, hydrocracker,
sulfur complex and related assets; (ix) contracts for the supply of
additional crude oil requirements for the Project; and (x) any other
contracts with third parties that are incidental to and necessary,
convenient or advisable in connection with the Project.
"Regulations" means the regulations promulgated under the Code.
-----------
"Sharing Percentage" means the percentage interest of a Partner as set
------------------
forth on Schedule A hereto, as amended from time to time in accordance
herewith.
"Tax Matters Partner" shall have the meaning ascribed to such term in
-------------------
Section 6.2.
"Transfer" shall have the meaning ascribed to such term in
--------
Section 8.1.
"Transferee" shall have the meaning ascribed to such term in
----------
Section 8.1.
<PAGE>
7
SECTION 1.2 Terms Generally. The definitions in Section 1.1 shall
---------------
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The term "person" includes individuals,
partnerships, joint ventures, corporations, trusts, governments (or agencies or
political subdivisions thereof) and other associations and entities. Unless the
context requires otherwise, the words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The term
"hereunder" shall mean this entire Agreement as a whole unless reference to a
specific section of this Agreement is made.
ARTICLE II
General Provisions
------------------
SECTION 2.1 Formation. The Partnership is hereby formed under the
---------
provisions of the Act. The General Partner is hereby designated as an authorized
person, within the meaning of the Act, to execute, deliver and file the
certificate of limited partnership of the Partnership and any amendments and/or
restatements thereof (collectively, the "Certificate") and any other
-----------
certificates necessary for the Partnership to qualify to do business in a
jurisdiction in which the Partnership may wish to conduct business.
SECTION 2.2 Partners. Schedule A hereto contains the name, address
--------
and Sharing Percentage of each Partner as of the date of this Agreement.
Schedule A shall be revised by the General Partner from time to time to reflect
the admission or withdrawal of a Partner or the transfer or assignment of
interests in the Partnership in accordance with the terms of this Agreement and
other modifications to or changes in the information set forth therein.
SECTION 2.3 Name. The Partnership shall conduct its activities under
----
the name of Port Arthur Coker Company L.P. The General Partner shall have the
power at any time to change the name of the Partnership; provided, that the name
--------
shall always contain the words "Limited Partnership" or the letters "L.P."
Prompt notice of any such change shall be given to each Partner.
SECTION 2.4 Term. The term of the Partnership shall commence on the
----
date of filing the certificate of limited partnership of the Partnership in
accordance with the Act and shall continue until December 31, 2049, unless
sooner dissolved, wound up and terminated in accordance with Article VII.
SECTION 2.5 Purpose; Powers. (a) The sole purpose of the Partnership
---------------
shall be to engage in the Project and to do all things necessary or incidental
thereto.
(b) In furtherance of its purposes, the Partnership shall have all
powers necessary, statutory or otherwise suitable or convenient for the
accomplishment of its purposes, including the following:
(i) the power to engage in the ownership of one hundred
percent (100%) of the issued and outstanding equity securities of the
Financing Company and to
<PAGE>
8
pledge such ownership interest to the Financing Parties to secure the
financing of the Project;
(ii) the power to enter into, and perform its obligations
under, any and all documents required in connection with the loans to be
made by the Financing Company to the Partnership in connection with the
Project;
(iii) the power to enter into, and perform its obligations
under, any and all Project Documents or Financing Documents to which the
Partnership is to be a party including, without limitation, (x) issuing one
or more guarantees of the debt of the Financing Company which is to be
incurred in connection with the Project and (y) granting security interests
in substantially all of its assets to the Financing Parties as collateral
security for such debt;
(iv) the power to enter into, and perform its obligations
under, one or more equity contribution agreements in connection with the
equity funding of the Project by Blackstone Capital Partners III Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners III L.P. and
Blackstone Family Investment Partnership III L.P. and Occidental Petroleum
Corporation.
SECTION 2.6 Place of Business. The Partnership shall maintain a
-----------------
registered office at The Corporation Trust Company, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, or such other office within the
State of Delaware as directed by the General Partner. The Partnership shall
maintain an office and principal place of business at 1801 South Gulfway Drive,
Port Arthur, Texas 77641 or at such other place as may from time to time be
determined by the General Partner as its principal place of business. The name
and address of the Partnership's registered agent as of the date of this
Agreement is The Corporation Trust Company, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
ARTICLE III
Management and Operation of the Partnership
-------------------------------------------
SECTION 3.1 Management. (a) Except as otherwise provided herein, the
----------
management, control and operation of the Partnership and the formulation and
execution of business and investment policy shall be vested exclusively in the
General Partner, and the General Partner shall exercise all powers necessary and
convenient for the purposes of the Partnership, including those enumerated in
Section 2.5, on behalf and in the name of the Partnership.
(b) Except as otherwise provided herein, no Limited Partner shall
have the right to, and no Limited Partner shall, take part in the management or
affairs of the Partnership, nor in any event shall any Limited Partner have the
power to act or bind the Partnership in any way unless delegated such power by
the General Partner. The exercise by any Limited Partner of any right or power
conferred herein shall not be construed to constitute participation by such
<PAGE>
9
Limited Partner in the control of the business of the Partnership so as to make
such Limited Partner liable as a general partner for the debts and obligations
of the Partnership for purposes of the Act.
(c) A Partner shall not be obligated to abstain from voting on any
matter (or vote in any particular manner) because of any interest (or conflict
of interest) of such Partner (or any Affiliate thereof) in such matter.
(d) Each Partner agrees that, except as otherwise expressly provided
herein and to the fullest extent permitted by applicable law, the approval of
any proposed action of or relating to the Partnership, by the General Partner as
provided herein shall bind each Partner and shall have the same legal effect as
the approval of each Partner of such action.
SECTION 3.2 Certain Duties and Obligations of the Partners. (a)
----------------------------------------------
Subject to the terms of this Agreement, the General Partner shall take all
action which may be reasonably necessary or appropriate (i) for the formation
and continuation of the Partnership as a limited partnership under the laws of
the State of Delaware and (ii) for the development, maintenance, preservation
and operation of the business of the Partnership in accordance with the
provisions of this Agreement and applicable laws and regulations. The General
Partner shall take all action which is necessary to form or qualify the
Partnership to conduct the business in which the Partnership is engaged under
the laws of any jurisdiction in which the Partnership is doing business and to
continue in effect such formation or qualification.
(b) No Partner shall take any action so as to cause the Partnership
to be classified for Federal income tax purposes as an association taxable as a
corporation and not as a partnership.
(c) The General Partner shall not take, or cause to be taken, any
action that would result in any Limited Partner having any personal liability
for the obligations of the Partnership. The General Partner shall be under a
duty as described herein to conduct the affairs of the Partnership in the best
interests of the Partnership and of the Partners including the safekeeping and
use of all Partnership funds and assets and the use thereof for the exclusive
benefit of the Partnership.
(d) The General Partner shall not be liable, responsible or
accountable in damages or otherwise to the Partnership or to any other Partner
for: (a) any act performed within the scope of the authority conferred on the
General Partner by this Agreement, except for the gross negligence or willful
misconduct of the General Partner in carrying out the obligations of such
Partner hereunder; (b) the General Partner's failure or refusal to perform any
act, except those expressly required by or pursuant to the terms of this
Agreement; (c) the General Partner's performance of, or failure to perform, any
act on the reasonable reliance on advice of legal counsel to the Partnership; or
(d) the negligence, dishonesty or bad faith of any agent, consultant or broker
of the Partnership selected, engaged or retained in good faith. In any
threatened, pending or completed action, suit or proceeding, the General Partner
shall be fully protected and indemnified and held harmless by the Partnership
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, proceedings, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable attorneys' fees,
costs of
<PAGE>
10
investigation, fines, judgments and amounts paid in settlement, actually
incurred by the General Partner in connection with such action, suit or
proceeding) by virtue of its status as the General Partner or with respect to
any action or omission taken or suffered in good faith, other than liabilities
and losses resulting from the gross negligence or willful misconduct of the
General Partner; provided, however, that the General Partner shall not be so
indemnified for any acts determined to be in contravention of this Agreement or
in breach of its fiduciary duties. The indemnification provided by this
paragraph shall be recoverable only out of the assets of the Partnership, and no
Partner shall have any personal liability on account thereof.
SECTION 3.3 Restrictions on Authority of the General Partner. The
------------------------------------------------
General Partner shall not have the authority to:
(a) do any act in contravention of this Agreement;
(b) do any act which would make it impossible to carry on the
ordinary business of the Partnership, except in connection with the
dissolution, winding up and termination of the Partnership as provided by
Article VII;
(c) possess Partnership property, or assign their respective rights
in specific Partnership property, for other than a Partnership purpose;
(d) admit a person as a Partner except as provided in this Agreement;
or
(e) knowingly perform any act that would subject any Limited Partner
to liability as a general partner in any jurisdiction.
SECTION 3.4 Separate Identity. Notwithstanding anything to the
-----------------
contrary herein:
(a) The Partnership shall maintain all aspects of its business and
operations separate and apart from those of any Clark Entity. The Partnership
shall at all times hold itself out to the public (including to any creditors of
any Clark Entity) under the Partnership's own name and as a separate and
distinct legal entity from any of its Affiliates. The Partnership shall do all
things necessary to observe customary partnership formalities and preserve its
legal existence as a partnership under the Act and shall correct any
misunderstandings concerning its separate identity. The Partnership shall
maintain its executive offices in the State of Texas conspicuously separate and
apart from those of any Clark Entity. If such office is leased from any Clark
Entity, such lease shall be on terms no more or less favorable than could be
obtained elsewhere and such office shall be conspicuously identified as the
Partnership's office so it can be easily located by outsiders.
(b) The Partnership shall have sufficient officers and personnel and
maintain adequate capital to run its business and operations.
(c) The Partnership shall prepare and maintain its own separate, full
and complete financial statements, accounts, accounting records and other
corporate books and documents, and shall not commingle any of its money or other
assets with the money or assets of any Clark Entity or any other entity. The
Partnership shall indicate in such statements, records
<PAGE>
11
and documents the separateness of the Partnership's assets and liabilities from
the assets and liabilities of any Affiliate thereof. The Partnership shall
prepare unaudited quarterly and audited annual financial statements, and the
Partnership's financial statements shall comply with generally accepted
accounting principles. The Partnership shall maintain its own bank accounts,
payroll and separate books of account. The Partnership shall retain independent
certified accountants as its auditors, although such accountants may also serve
as auditors of any Affiliate of the Partnership.
(d) The Partnership shall act solely in its own corporate name and
through its General Partner and the Partnership's own authorized officers and
agents and conduct all business correspondence of the Partnership and other
communications in the Partnership's own name, on its own stationary, invoices
and checks and through a separately-listed telephone number(s). No Clark Entity
shall be appointed agent for the Partnership. The Partnership's investment
guidelines and criteria shall be established by a majority of the Board of
Directors of the General Partner, which must include the Independent Director.
All investments by the Partnership shall be made in the name of the Partnership
(or, if required by the Financing Documents, in the name of the collateral
trustee acting on behalf of the Financing Parties) and made directly by the
Partnership or by brokers engaged and paid by the Partnership (or, if required
by the Financing Documents, by the collateral trustee acting on behalf of the
Financing Parties). Assets of the Partnership shall be separately identified and
segregated. All of the Partnership's assets shall at all times be held by or on
behalf of the Partnership and, if held on behalf of the Partnership by another
entity, shall at all times be kept identifiable (in accordance with customary
usages) as assets owned by the Partnership. In no event shall any of the
Partnership's assets be held on its behalf or otherwise by any Clark Entity.
(e) Decisions with respect to the Partnership's business and daily
operations shall be independently made by the Partnership and will not be
dictated by any Clark Entity. All business transactions entered into by the
Partnership with any Clark Entity that are permitted shall be on terms and
conditions that are not more or less favorable to the Partnership than terms and
conditions available at the time to the Partnership for comparable transactions
with unaffiliated persons, or, if no such comparable transaction exists, on term
and conditions that are otherwise fair and reasonable. Any such business
transaction, and any distributions by the Partnership pursuant Section 5.2
hereof; must be approved by a majority of the Board of Directors of the General
Partner, which must include the Independent Director. The Partnership shall not
(i) guarantee or assume any liabilities or obligations of any Clark Entity, (ii)
permit any Clark Entity to assume or guarantee any liabilities of the
Partnership (provided that the Financing Parties may be included among the
beneficiaries of certain customary indemnification obligations of Clark under
the Project Documents). The Partnership shall not (i) acquire the obligations or
securities of, or make loans or advances to, any Clark Entity, other than the
Financing Company, (ii) guarantee, assume or become obligated for the debts of
any other entity, or (iii) hold out its credit as being available to satisfy
obligations of any other entity, other than the Financing Company.
(f) The Partnership will directly manage and pay its own liabilities
out of its own funds, including paying its own payroll and operating expenses.
In the event the employees of the Partnership participate in pension, insurance
and other benefit plans of any Affiliate
<PAGE>
12
thereof, the Partnership shall on a current basis reimburse such Affiliate for
the Partnership's pro rata share of the costs thereof.
SECTION 3.5 Limitations on the Partnership. Notwithstanding any
------------------------------
other provision of this Agreement and any provision of law that otherwise so
empowers the Partnership, the Partnership shall not do any of the following:
(i) engage in any business or activity other than as set forth in
Section 2.5 hereof;
(ii) dissolve or liquidate, in whole or in part;
(iii) consolidate or merge with or into any other entity or convey or
transfer its properties and assets substantially as an entirety to any
entity; or
(iv) while the Partnership is solvent, without the affirmative vote
of two-thirds of the members of the Board of Directors of the General
Partner, which must include the Independent Director, institute proceedings
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition seeking
or consent or acquiesce to the filing of a petition seeking reorganization
or relief under any applicable federal or state law relating to bankruptcy
or insolvency, or appoint, petition for or consent to the appointment of a
custodian, receiver, assignee, trustee, sequestrator (or other similar
official) of the Partnership or a substantial part of its property, or make
any assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt, or take any corporate action in
furtherance of any such action.
ARTICLE IV
Activities of Partner's Affiliates
----------------------------------
Except as expressly provided hereunder, this Agreement shall not be
construed in any manner to preclude any Affiliate of any Partner from engaging
in any activity whatsoever permitted by applicable law (whether or not such
activity might compete, or constitute a conflict of interest, with the
Partnership).
ARTICLE V
Capital Contributions;
----------------------
Distributions
-------------
SECTION 5.1 Capital Contributions. (a) Partners shall make Capital
---------------------
Contributions to the Partnership in such amounts and at such times as directed
by the General Partner pro rata in accordance with their respective Sharing
Percentages, which amounts shall be set forth in the books and records of the
Partnership.
<PAGE>
13
(b) No Partner shall be required to make a Capital Contribution
except as provided in this Article V. No Partner shall have any obligation to
restore any negative balance in the Partner's Capital Account upon liquidation
of the Partnership. No Partner shall be entitled to withdraw all or any part of
its Capital Contributions except as expressly provided in this Agreement. No
interest shall be payable by the Partnership on the Capital Contributions of any
Partner except as otherwise provided herein. In no event shall any Partner be
entitled to demand any property from the Partnership other than cash.
SECTION 5.2 Distributions. (a) Distributions shall be made in such
-------------
amounts and at such times as determined by the General Partner from time to
time.
(b) Each distribution of Non-Capital Proceeds or Capital Proceeds
shall be made to the Partners pro rata in accordance with their Sharing
--- ----
Percentages.
SECTION 5.3 Reimbursement of Expenses. Promptly after the date of
-------------------------
this Agreement, the Partnership, to the extent it does not pay such costs and
expenses directly, will reimburse each Partner for Organizational Expenses
incurred by such Partner and all other third-party out-of-pocket costs and
expenses incurred prior to the execution of this Agreement in connection with
the formation of the Partnership. Calculation of such reimbursement amounts
shall be made by the General Partner.
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations
-------------------------------------------------------------
SECTION 6.1 General Accounting Matters. (a) Allocations of Net
--------------------------
Income (Loss) pursuant to Section 6.4 shall be made by or under the direction of
the General Partner at the end of each Fiscal Period.
(b) Each Partner shall be supplied with the Partnership information
necessary to enable such Partner to prepare in a timely manner its Federal,
state and local income tax returns and such other financial or other statements
and reports that are approved by the General Partner.
(c) The General Partner shall keep or cause to be kept books and
records pertaining to the Partnership's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses, Partners'
Capital Accounts and all transactions entered into by the Partnership. Such
books and records of the Partnership shall be kept at the office of the
Partnership and the Partners and their representatives shall at all reasonable
times have free access thereto for the purpose of inspecting or copying the
same. The Partnership's books of account shall be kept on an accrual basis or as
otherwise provided by the General Partner and otherwise in accordance with
generally accepted accounting principles, except that for income tax purposes
such books shall be kept in accordance with applicable tax accounting
principles.
(d) All determinations, valuations and other matters of judgment
required to be made for accounting and tax purposes under this Agreement shall
be made by or under the
<PAGE>
14
direction of the General Partner and shall be conclusive and binding on all
Partners, former Partners, their successors or legal representatives and any
other person except for computational errors or fraud, and to the fullest extent
permitted by law no such person shall have the right to an accounting or an
appraisal of the assets of the Partnership or any successor thereto except for
computational errors or fraud.
(e) If approved the General Partner, the books of the Partnership
shall be examined, certified and audited annually as of the end of a Fiscal
Year, by a recognized firm of independent certified public accountants. For each
Fiscal Year of the Partnership that the General Partner has so approved an
audit, such accountants shall determine and prepare full financial statements,
including, without limitation, a balance sheet, an income statement, a statement
of changes in financial position and a statement of the Non-Capital Proceeds and
Capital Proceeds of the Partnership. The Tax Matters Partner shall promptly upon
receipt of any such financial statements transmit copies thereof to each
Partner, together with the report and management letter of such accountants
covering the results of such audit. The cost of all audits and reports provided
to the Partners pursuant to this Section shall be an expense of the Partnership.
SECTION 6.2 Certain Tax Matters.
-------------------
The taxable year of the Partnership shall be the same as its Fiscal
Year. The Tax Matters Partner shall cause to be prepared all Federal, state and
local tax returns of the Partnership for each year for which such returns are
required to be filed and shall cause such returns to be timely filed. The
General Partner shall determine the appropriate treatment of each item of
income, gain, loss, deduction and credit of the Partnership and the accounting
methods and conventions under the tax laws of the United States, the several
states and other relevant jurisdictions as to the treatment of any such item or
any other method or procedure related to the preparation of such tax returns.
The Tax Matters Partner shall make the election provided for in Section 754 of
the Code, if, and only if the Partner who or which has acquired an interest in
the Partnership or a distribution of Partnership property with respect to which
the election is made will have provided to the Tax Matters Partner concurrently,
or within 30 days after the Transfer of such interest, its undertaking to the
effect that it, and its successors in interest hereunder, will reimburse the
Partnership annually for its additional administrative costs incurred by reason
of such election as determined by the auditor of the Partnership. The Tax
Matters Partner shall also make the election to amortize Organizational Expenses
pursuant to Code Section 709 and the regulation promulgated thereunder. In
addition, the General Partner may cause the Partnership to make or refrain from
making any and all other elections permitted by the tax laws of the United
States, the several states and other relevant jurisdictions. The "tax matters
partner" for purposes of Section 6231(a)(7) of the Code (the "Tax Matters
-----------
Partner") shall be the General Partner. The Tax Matters Partner shall have all
- -------
of the rights, duties, powers and obligations provided for in Sections 6221
through 6232 of the Code with respect to the Partnership.
SECTION 6.3 Capital Accounts. There shall be established for each
----------------
Partner on the books of the Partnership as of the date hereof, or such later
date on which such Partner is admitted to the Partnership, a capital account
(each being a "Capital Account"). Each Capital Contribution shall be credited to
---------------
the Capital Account of such Partner on the date such contribution of capital is
paid to the Partnership. In addition, each Partner's Capital Account
<PAGE>
15
shall be (a) credited with such Partner's allocable share of any Net Income of
the Partnership, (b) debited with (i) distributions to such Partner of cash or
the fair market value of other property and (ii) such Partner's allocable share
of Net Loss of the Partnership and expenditures of the Partnership described or
treated under Section 704(b) as described in Section 705(a)(2)(B) of the Code,
and (c) otherwise maintained in accordance with the provisions of the Code. Any
other item which is required to be reflected in a Partner's Capital Account
under Section 704(b) of the Code or otherwise under this Agreement shall be so
reflected. Capital Accounts shall be appropriately adjusted to reflect transfers
of part (but not all) of a Partner's interest in the Partnership. Interest shall
not be payable on Capital Account balances. Notwithstanding anything to the
contrary contained in this Agreement, the Partnership shall maintain the Capital
Accounts of the Partners in accordance with the principles and requirements set
forth in section 704(b) of the Code and Regulations section 1.704-1(b)(2)(iv).
SECTION 6.4 Allocations. (a) Net Income (Loss) of the Partnership
-----------
shall be allocated among all Partners in proportion to their respective Sharing
Percentages.
(b) Notwithstanding anything herein to the contrary, in the event any
Partner unexpectedly receives any adjustments, allocations or distributions
described in paragraphs (b)(2)(ii)(d)(4), (5) or (6) of Section 1.704-1 of the
regulations under the Code, there shall be specially allocated to such Partner
such items of Partnership income and gain, at such times and in such amounts as
will eliminate as quickly as possible that portion of any deficit in its Capital
Account caused or increased by such adjustments, allocations or distributions.
To the extent permitted by the Code and the regulations thereunder, any special
allocations of items of income or gain pursuant to this Section 6.4(b) shall be
taken into account in computing subsequent allocations of Net Income (Loss)
pursuant to this Section 6.4 so that the net amount of any items so allocated
and the subsequent allocations of Net Income (Loss) to the Partners pursuant to
this Section 6.4 shall, to the extent possible, be equal to the net amounts that
would have been allocated to each such Partner pursuant to the provisions of
this Section 6.4 if such unexpected adjustments, allocations or distributions
had not occurred.
(c) All items of income, gain, loss, deduction and credit of the
Partnership shall be allocated among the Partners for Federal, state and local
income tax purposes consistent with the manner that the corresponding
constituent items of Net Income (Loss) shall be allocated among the Partners
pursuant to this Agreement, except as may otherwise be provided herein or by the
Code. To the extent Treasury Regulations promulgated pursuant to Subchapter K of
the Code (including under Sections 704(b) and (c) of the Code) require
allocations for tax purposes that differ from the foregoing allocations, the
General Partner determine the manner in which such tax allocations shall be made
so as to comply more fully with such Treasury Regulations or other applicable
law and, at the same time to the extent reasonably possible, preserve the
economic relationships among the Partners as set forth in this Agreement.
(d) Notwithstanding the provisions of this Section 6.4, net income,
net gain, and net loss of the Partnership (or items of income, gain, loss,
deduction, or credit, as the case may be) shall be allocated in accordance with
the following provisions of this Section 6.4 to the extent such provisions shall
be applicable.
<PAGE>
16
(i) Nonrecourse Deductions of the Partnership for any Fiscal Year
shall be specially allocated to the Partners in proportion to their Sharing
Percentages. Partner Nonrecourse Deductions of the Partnership for any
Fiscal Year shall be specially allocated to the Partner who bears the
economic risk of loss for the liability in question. The provisions of this
Section 6.4(d)(i) are intended to satisfy the requirements of Regulations
sections 1.704-2(e)(2) and 1.704-2(i)(1) and shall be interpreted in
accordance therewith for all purposes under this Agreement.
(ii) If there is a net decrease in the Minimum Gain of the
Partnership during any Partnership Fiscal Year, each Partner shall be
specially allocated items of Partnership income and gain for such year
equal to that Partner's share of the net decrease in Minimum Gain, within
the meaning of Regulations section 1.704-2(g)(2). The provisions of this
Section 6.4(d)(ii) are intended to comply with the Minimum Gain chargeback
requirements of Regulations section 1.704-2(f) and shall be interpreted in
accordance therewith for all purposes under this Agreement.
(iii) If there is a net decrease in Partner Nonrecourse Debt Minimum
Gain during any Fiscal Year, each Partner that has a share of such partner
Nonrecourse Debt Minimum Gain, determined in accordance with Regulations
section 1.704-2(i)(5), as of the beginning of such year shall be specially
allocated items of Partnership income and gain for such year (and, if
necessary, for succeeding years) equal to such Partner's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain. The provisions of this
Section 6.4(d)(iii) are intended to comply with the Partner Nonrecourse
Debt Minimum Gain chargeback requirement of Regulations section 1.704-
2(i)(4) and shall be interpreted in accordance therewith for all purposes
under this Agreement.
ARTICLE VII
Dissolution
-----------
SECTION 7.1 Dissolution. The Partnership shall be dissolved and
-----------
subsequently terminated upon the occurrence of the first of the following
events:
(a) decision by the General Partner to dissolve and subsequently
terminate the Partnership; and
(b) December 31, 2049
; provided, however, that in no event shall the Partnership be dissolved until
-------- -------
ninety one (91) days after all obligations under the Financing Documents have
been indefeasibly paid.
SECTION 7.2 Winding-up. When the Partnership is dissolved, the
----------
business and property of the Partnership shall be wound up and liquidated by the
General Partner (in such capacity, the "Liquidator"). The Liquidator shall use
----------
its best efforts to reduce to cash and cash equivalent items such assets of the
Partnership as the Liquidator shall deem it advisable to sell, subject to
obtaining fair value for such assets and any tax or other legal considerations.
<PAGE>
17
SECTION 7.3 Final Distribution. Within 90 calendar days after the
------------------
effective date of dissolution of the Partnership, the assets of the Partnership
shall be distributed in the following manner and order:
(a) to the payment of the expenses of the winding-up, liquidation and
dissolution of the Partnership;
(b) to pay all creditors of the Partnership, other than Partners,
either by the payment thereof or the making of reasonable provision
therefor;
(c) to establish reserves, in amounts established by the General
Partner or such Liquidator, to meet other liabilities of the Partnership;
and
(d) to pay, in accordance with the provisions of this Agreement
applicable to such loans or in accordance with the terms agreed among them
and otherwise on a pro rata basis, all creditors of the Partnership that
are Partners, either by the payment thereof or the making of reasonable
provision therefor.
The remaining assets of the Partnership shall be applied and distributed in
accordance with the positive balances of the Partners' Capital Accounts, as
determined after taking into account all adjustments to Capital Accounts for the
Partnership taxable year during which the liquidation occurs.
ARTICLE VIII
Transfer of Partner's Interests; Rights of First Refusal
--------------------------------------------------------
SECTION 8.1 Restrictions on Transfer of Partnership Interests. (a)
-------------------------------------------------
Except as permitted by the Financing Documents, no Partner may, directly or
indirectly, assign, sell, exchange, transfer, pledge, hypothecate or otherwise
dispose of all or any part of its interest in the Partnership (any assignment,
sale, exchange, transfer, pledge, hypothecation or other disposition of an
interest in the Partnership being herein collectively called a "Transfer") to
--------
any person, other than in accordance with paragraph (b) below.
(b) As required by the Financing Documents or otherwise on or after
the Financing Trigger Date, a Partner may mortgage, pledge, hypothecate or
otherwise encumber all or any portion of such Partner's interests as a Partner
under this Agreement, including its right to receive a portion of the
Non-Capital Proceeds, Capital Proceeds, Net Income and Net Losses provided,
--------
however, that upon a foreclosure of such mortgage, pledge, hypothecation or
- -------
encumbrance, the holder thereof (or its nominee) shall not be admitted as a
substitute Partner (a "Transferee") without the consent of the General Partner
----------
and its execution of an instrument satisfactory to the General Partner under
which it accepts and adopts all of the terms and provisions of the Agreement.
SECTION 8.2 Other Transfer Provisions. (a) Any purported Transfer by
-------------------------
a Partner of all or any part of its interest in the Partnership in violation of
this Article VIII shall be null and void and of no force or effect.
<PAGE>
18
(b) Notwithstanding anything to the contrary in (S)(S) 17-402(a)(4)
or (S)(S) 17-402(a)(5) of the Act, the General Partner shall not cease to be the
General Partner of the Partnership if such General Partner: (i) makes an
assignment for the benefit of creditors; (ii) files a voluntary petition in
bankruptcy; (iii) is adjudicated as bankrupt or insolvent, or has entered
against him an order for relief in any bankruptcy or insolvency proceeding; (iv)
files a petition or answer seeking for himself, or has commenced against him any
proceeding seeking, any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation;
(v) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against him in any proceeding of this
nature; or (vi) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of all or any
substantial part of his properties.
(c) Except as provided in this Article VIII, no Partner shall have
the right to withdraw from the Partnership prior to its termination and no
additional Partner may be admitted to the Partnership unless approved by the
General Partner. Notwithstanding any provision of this Agreement to the
contrary, a Partner may not Transfer all or any part of its interest in the
Partnership if such Transfer would jeopardize the status of the Partnership as a
partnership for federal income tax purposes, or would violate, or would cause
the Partnership to violate, any applicable law or regulation, including any
applicable federal or state securities laws.
(d) Concurrently with the admission of any substitute or additional
Partner, the General Partner shall forthwith cause any necessary papers to be
filed and recorded and notice to be given wherever and to the extent required
showing the substitution of a Transferee as a substitute Partner in place of the
Partner Transferring its interest, or the admission of an additional Partner,
all at the expense, including payment of any professional and filing fees
incurred, of such substituted or additional Partner. The admission of any person
as a substitute or additional Partner shall be conditioned upon such person's
written acceptance and adoption of all the terms and provisions of this
Agreement.
(e) If any interest in the Partnership is Transferred during any
accounting period in compliance with the provisions of this Article VIII, each
item of income, gain, loss, expense, deduction and credit and all other items
attributable to such interest for such period shall be divided and allocated
between the transferor and the transferee by taking into account their varying
interests during such period in accordance with Section 706(d) of the Code,
using any conventions permitted by law and selected by the General Partner. All
distributions on or before the date of such Transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.
Solely for purposes of making such allocations and distributions, the
Partnership shall recognize a Transfer on the date that the General Partner
receives notice of the Transfer which complies with this Article VIII from the
Partner Transferring its interest.
SECTION 8.3 Partnership Interests as Securities; Evidence of
------------------------------------------------
Partnership Interest. Pursuant to Section 8-103(c) of the Uniform Commercial
- --------------------
Code of the State of New York (the "UCC"), the interest of the Partners in the
Partnership are hereby expressly declared to be securities governed by Article 8
of the UCC and the Partnership is hereby authorized to issue certificates
governed by Article 8 of the UCC to the Partners to evidence their respective
interests in the Partnership.
<PAGE>
19
ARTICLE IX
Miscellaneous
-------------
SECTION 9.1 Equitable Relief. The Partners hereby confirm that
----------------
damages at law may be an inadequate remedy for a breach or threatened breach of
this Agreement and agree that, in the event of a breach or threatened breach of
any provision hereof, the respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other equitable remedy, but,
nothing herein contained is intended to, nor shall it, limit or affect any right
or rights at law or by statute or otherwise of a Partner aggrieved as against
the other for a breach or threatened breach of any provision hereof, it being
the intention by this Section 9.1 to make clear the agreement of the Partners
that the respective rights and obligations of the Partners hereunder shall be
enforceable in equity as well as at law or otherwise and that the mention herein
of any particular remedy shall not preclude a Partner from any other remedy it
or he might have, either in law or in equity.
SECTION 9.2 Officers. The Partnership and the General Partner on
--------
behalf of the Partnership, acting singly or jointly, may employ and retain
persons as may be necessary or appropriate for the conduct of the Partnership's
business (subject to the supervision and control of the General Partner),
including employees and agents who may be designated as officers with titles,
including, but not limited to, "chairman," "chief executive officer,"
"president," "vice president," "treasurer," "secretary," "director" and "chief
financial officer," as and to the extent authorized by the General Partner and
with such powers as authorized by the General Partner.
SECTION 9.3 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without regard to
any conflict of law provisions that would result in a choice of law other than
the laws of the State of Delaware. In particular, the Partnership is formed
pursuant to the Act, and the rights and liabilities of the Partners shall be as
provided therein, except as herein otherwise expressly provided.
SECTION 9.4 Successors and Assigns. This Agreement shall be binding
----------------------
upon and shall inure to the benefit of the parties hereto, their respective
successors and assigns.
SECTION 9.5 Access; Confidentiality. By executing this Agreement,
-----------------------
each Partner expressly agrees, at all times during the term of the Partnership
and thereafter and whether or not at the time a Partner of the Partnership (i)
not to issue any press release or advertisement or take any similar action
concerning the Partnership's business or affairs without first obtaining the
consent of the General Partner which shall not be unreasonably withheld, (ii)
not to publicize detailed financial information concerning the Partnership and
(iii) not to disclose the Partnership's affairs generally without using
reasonable efforts to consult with the General Partner prior to such disclosure;
provided, however, the foregoing shall not restrict any Partner from disclosing
- -------- -------
information concerning such Partner's investment in the Partnership to its
officers, directors, employees, agents, legal counsel, accountants, other
professional advisors, limited partners and Affiliates, or to prospective or
existing investors of such Partner or its Affiliates or to prospective or
existing lenders to such Partner or its Affiliates. The provisions of this
Section 9.5 shall survive the termination of the Partnership.
<PAGE>
20
SECTION 9.6 Notices. Whenever notice is required or permitted by
-------
this Agreement to be given, such notice may be in writing (including facsimile)
and if in writing shall be given to any Partner at its address or facsimile
number shown in the Partnership's books and records (including Schedule A
hereto).
SECTION 9.7 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which together shall constitute a single
instrument.
SECTION 9.8 Entire Agreement. This Agreement embodies the entire
----------------
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter hereof.
SECTION 9.9 Amendments. Any amendment to this Agreement shall be
----------
effective only if such amendment is evidenced by a written instrument duly
executed and delivered by the General Partner. Prior to the Financing Trigger
Date, the Partnership shall not amend, alter, change or repeal any provision of
Section 2.5, Article III, Article VII, Article VIII or this Section 9.9 without
the unanimous vote or prior written consent of the Board of Directors of the
General Partner, which shall include the Independent Director.
SECTION 9.10 Section Titles. Section titles are for descriptive
--------------
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text hereof.
SECTION 9.11 Representations and Warranties. Each Partner represents,
------------------------------
warrants and covenants to each other Partner and to the Partnership that:
(a) such Partner, if not a natural person, is duly formed and validly
existing under the laws of the jurisdiction of its organization with full
power and authority to conduct its business to the extent contemplated in
this Agreement;
(b) this Agreement has been duly authorized, executed and delivered
by such Partner and constitutes the valid and legally binding agreement of
such Partner enforceable in accordance with its terms against such Partner
except as enforceability hereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws relating to creditors' rights generally
and by general equitable principles;
(c) the execution and delivery of this Agreement by such Partner and
the performance of its duties and obligations hereunder do not result in a
breach of any of the terms, conditions or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, credit agreement,
note or other evidence of indebtedness, or any lease or other agreement, or
any license, permit, franchise or certificate, to which such Partner is a
party or by which it is bound or to which its properties are subject, or
require any authorization or approval under or pursuant to any of the
foregoing, or violate any statute, regulation, law, order, writ,
injunction, judgment or decree to which such Partner is subject;
<PAGE>
21
(d) such Partner is not in default (nor has any event occurred which
with notice, lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness or any lease or other agreement, or any license,
permit, franchise or certificate, to which it is a party or by which it is
bound or to which the properties of it are subject, nor is it in violation
of any statute, regulation, law, order, writ, injunction, judgment or
decree to which it is subject, which default or violation would materially
adversely affect such Partner's ability to carry out its obligations under
this Agreement;
(e) there is no litigation, investigation or other proceeding pending
or, to the knowledge of such Partner, threatened against such Partner or
any of its Affiliates which, if adversely determined, would materially
adversely affect such Partner's ability to carry out its obligations under
this Agreement;
(f) no consent, approval or authorization of, or filing, registration
or qualification with, any court or governmental authority on the part of
such Partner is required for the execution and delivery of this Agreement
by such Partner and the performance of its obligations and duties
hereunder.
<PAGE>
22
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Limited Partnership Agreement as of the day and year first above
written.
General Partner:
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
___________________________________
Name: Maura J. Clark
Title: Executive Vice Pres.
and Chief Financial Officer
Limited Partner:
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
___________________________________
Name: Maura J. Clark
Title: Executive Vice Pres.
and Chief Financial Officer
<PAGE>
SCHEDULE A
Partners of the Partnership
Sharing Percentage
Partners Address as of August 2, 1999
- -------- ------- --------------------
General Partner:
Sabine River Holding 1801 South Gulfway Drive 1%
Corp. Port Arthur, Texas 77641
Limited Partner:
Neches River Holding c/o Corporation Trust Company 99%
Corp. 1209 Orange Street
Wilmington, DE 19801
<PAGE>
Exhibit 4.01
EXECUTION COPY
===============================================================================
PORT ARTHUR FINANCE CORP.,
as Issuer,
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.,
as General Partner of the Partnership and Guarantor
and
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership and Guarantor
TO
HSBC BANK USA,
as Capital Markets Trustee for the Capital Markets Senior Lenders
and
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
______________
Indenture
Dated as of August 19, 1999
______________
12.50% Senior Secured Notes Due 2009
===============================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions................................................................................................... 2
SECTION 102. Compliance Certificates and Opinions.......................................................................... 10
SECTION 103. Form of Documents Delivered to Capital Markets Trustee........................................................ 11
SECTION 104. Acts of Holders; Record Dates................................................................................. 11
SECTION 105. Notices, Etc., to Capital Markets Trustee, the Issuer, the Guarantors and
the Collateral Trustee...................................................................................... 13
SECTION 106. Notice to Holders; Waiver..................................................................................... 14
SECTION 107. Conflict with Trust Indenture Act............................................................................. 14
SECTION 108. Effect of Headings and Table of Contents...................................................................... 15
SECTION 109. Successors and Assigns........................................................................................ 15
SECTION 110. Separability Clause........................................................................................... 15
SECTION 111. Benefits of Indenture......................................................................................... 15
SECTION 112. GOVERNING LAW................................................................................................. 15
SECTION 113. Legal Holidays................................................................................................ 15
SECTION 114. Execution of Other Documents; Conflicts....................................................................... 15
SECTION 115. Payments by the Collateral Trustee............................................................................ 16
SECTION 116. Information to Holders........................................................................................ 16
SECTION 117. Consent to Jurisdiction....................................................................................... 16
SECTION 118. Incorporation of Certain Terms of the Common Security Agreement............................................... 17
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally............................................................................................... 18
SECTION 202. Form of Face of Security...................................................................................... 20
SECTION 203. Form of Reverse of Security................................................................................... 25
SECTION 204. Form of Capital Markets Trustee's Certificate of Authentication............................................... 33
SECTION 205. Form of Guarantee............................................................................................. 33
</TABLE>
_________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
SECTION 206. Legends on Restricted Securities.............................................................................. 36
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms............................................................................................... 36
SECTION 302. Denominations................................................................................................. 37
SECTION 303. Execution, Authentication, Delivery and Dating................................................................ 37
SECTION 304. Temporary Securities.......................................................................................... 39
SECTION 305. Registration, Registration of Transfer and Exchange........................................................... 39
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.............................................................. 48
SECTION 307. Payment of Interest; Interest Rights Preserved................................................................ 49
SECTION 308. Persons Deemed Owners......................................................................................... 51
SECTION 309. Cancellation.................................................................................................. 51
SECTION 310. Computation of Interest....................................................................................... 51
SECTION 311. Security for and Parity of Securities; Ranking................................................................ 51
SECTION 312. CUSIP Numbers................................................................................................. 52
SECTION 313. Certification Forms........................................................................................... 52
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture....................................................................... 71
SECTION 402. Application of Trust Money.................................................................................... 72
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................................................................. 72
SECTION 502. Acceleration of Maturity; Rescission and Annulment............................................................ 72
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Capital
Markets Trustee............................................................................................. 74
SECTION 504. Capital Markets Trustee May File Proofs of Claim.............................................................. 74
</TABLE>
_________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-ii-
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
SECTION 505. Capital Markets Trustee May Enforce Claims Without
Possession of Securities.................................................................................... 75
SECTION 506. Application of Money Collected................................................................................ 75
SECTION 507. Limitation on Suits........................................................................................... 76
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest..................................... 77
SECTION 509. Restoration of Rights and Remedies............................................................................ 78
SECTION 510. Rights and Remedies Cumulative................................................................................ 78
SECTION 511. Delay or Omission Not Waiver.................................................................................. 78
SECTION 512. Control by Holders............................................................................................ 78
SECTION 513. Waiver of Past Defaults....................................................................................... 79
SECTION 514. Undertaking for Costs......................................................................................... 79
SECTION 515. Waiver of Usury, Stay or Extension Laws....................................................................... 80
ARTICLE SIX
THE CAPITAL MARKETS TRUSTEE
SECTION 601. Certain Duties and Responsibilities........................................................................... 80
SECTION 602. Notice of Defaults............................................................................................ 81
SECTION 603. Certain Rights of Capital Markets Trustee..................................................................... 82
SECTION 604. Not Responsible for Recitals or Issuance of Securities........................................................ 83
SECTION 605. May Hold Securities........................................................................................... 83
SECTION 606. Money Held in Trust........................................................................................... 83
SECTION 607. Compensation and Reimbursement................................................................................ 84
SECTION 608. Disqualification; Conflicting Interests....................................................................... 85
SECTION 609. Corporate Capital Markets Trustee Required; Eligibility....................................................... 85
SECTION 610. Resignation and Removal; Appointment of Successor............................................................. 86
SECTION 611. Acceptance of Appointment by Successor........................................................................ 87
SECTION 612. Merger, Conversion, Consolidation or Succession to Business................................................... 87
SECTION 613. Preferential Collection of Claims Against Issuer and the Guarantors........................................... 88
SECTION 614. Appointment of Authenticating Agent........................................................................... 88
SECTION 615. Appointment of Paying Agents and Transfer Agents.............................................................. 90
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY CAPITAL MARKETS TRUSTEE,
</TABLE>
_________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE>
<TABLE>
<CAPTION>
Section Page
ISSUER AND GUARANTORS
<S> <C>
SECTION 701. Issuer to Furnish Capital Markets Trustee Names and
Addresses of Holders..................................... 91
SECTION 702. Preservation of Information; Communications to Holders..... 91
SECTION 703. Reports by Capital Markets Trustee......................... 92
SECTION 704. Reports by Issuer and Guarantors........................... 92
SECTION 705. Information Provided by Issuer and Guarantors.............. 92
ARTICLE EIGHT
INTERCREDITOR ISSUES
SECTION 801. Senior Debt................................................ 92
SECTION 802. Actions to Be Taken by Capital Markets Trustee Under Common
Security Agreement....................................... 93
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders......... 94
SECTION 902. Supplemental Indentures with Consent of Holders............ 95
SECTION 903. Amendments to Certain Financing Documents Without Consent
of Holders............................................... 97
SECTION 904. Execution of Supplemental Indentures....................... 98
SECTION 905. Effect of Supplemental Indentures.......................... 98
SECTION 906. Conformity with Trust Indenture Act........................ 98
SECTION 907. Reference in Securities to Supplemental Indentures......... 98
SECTION 908. Notice of Supplemental Indenture........................... 98
ARTICLE TEN
COVENANTS
SECTION 1001. Covenants.................................................. 99
SECTION 1002. Payment of Principal, Premium and Interest................. 99
SECTION 1003. Maintenance of Office or Agency............................ 99
SECTION 1004. Money for Security Payments to Be Held in Trust............ 100
</TABLE>
_____________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE>
<TABLE>
<CAPTION>
Section Page
ISSUER AND GUARANTORS
<S> <C>
SECTION 1005. Statement by Officers as to Default..................... 100
SECTION 1006. Provision of Financial Information...................... 101
SECTION 1007. Available Information................................... 101
SECTION 1008. Waiver of Certain Covenants............................. 101
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption..................................... 102
SECTION 1102. Election to Redeem; Notice to Capital Markets Trustee... 102
SECTION 1103. Selection by Capital Markets Trustee of Securities to
Be Redeemed............................................ 102
SECTION 1104. Notice of Redemption.................................... 103
SECTION 1105. Deposit of Redemption Price............................. 103
SECTION 1106. Securities Payable on Redemption Date................... 104
SECTION 1107. Securities Redeemed in Part............................. 104
ARTICLE TWELVE
GUARANTEE
SECTION 1201. Guarantee of the Guarantors............................. 104
SECTION 1202. Execution and Delivery of Guarantee..................... 105
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Issuer's Option to Effect Defeasance or Covenant
Defeasance............................................. 105
SECTION 1302. Defeasance and Discharge................................ 105
SECTION 1303. Covenant Defeasance..................................... 106
SECTION 1304. Conditions to Defeasance or Covenant Defeasance......... 106
SECTION 1305. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions................ 108
SECTION 1306. Reinstatement........................................... 109
SIGNATURES AND SEALS................................................... 112
</TABLE>
_____________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE>
<TABLE>
<S> <C>
ACKNOWLEDGMENTS........................................................ 114
</TABLE>
_____________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Request for Information from the Capital Markets Trustee.. A-1
Exhibit B Form of Request for Financial Information from the Issuer or the
Partnership..................................................... B-1
</TABLE>
_____________
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE>
INDENTURE, dated as of August 19, 1999, among PORT ARTHUR FINANCING
CORP., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Issuer"), having its principal office at Port
Arthur, Texas, PORT ARTHUR COKER COMPANY L.P., a limited partnership duly
organized and existing under the laws of the State of Delaware (herein called
the "Partnership"), having its principal office at Port Arthur, Texas, SABINE
RIVER HOLDING CORP., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "General Partner"), having its
principal office at Port Arthur, Texas, NECHES RIVER HOLDING CORP., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Limited Partner" and, together with the Partnership and the
General Partner, the "Guarantors"), having its principal office at Port Arthur,
Texas, HSBC BANK USA, a New York banking corporation and trust company, as
Trustee hereunder (herein called the "Capital Markets Trustee") and BANKERS
TRUST COMPANY, a New York banking corporation and trust company (herein called
the "Collateral Trustee").
RECITALS
The Issuer has duly authorized the creation of an issue of its Senior
Secured Notes Due 2009 (the "Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Issuer has duly authorized
the execution and delivery of this Indenture. The Securities may consist of
Original Securities, Exchange Securities or Private Exchange Securities, each as
defined herein. The Original Securities, the Exchange Securities and the Private
Exchange Securities shall rank pari passu with one another and, except as
provided in Sections 201, 206, 303 and 305, shall have identical terms.
The Guarantors have duly authorized the execution and delivery of this
Indenture to provide for herein a Guarantee to the Holders.
All things necessary (i) to make the Securities, when executed by the
Issuer and authenticated and delivered hereunder and duly issued by the Issuer,
the valid obligations of the Issuer, in accordance with their terms, (ii) to
make this Indenture a valid agreement of the Issuer and the Guarantors, in
accordance with its terms, and (iii) to make the Guarantee a valid agreement of
the Guarantors for the guarantee of the Securities, in accordance with its
terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and of the covenants
contained herein and in the Common Security Agreement and in consideration of
the purchase of the Securities by the Holders thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) all capitalized terms used but not defined herein or in the Trust
Indenture Act shall have the meanings assigned to such terms in Appendix A
of the Common Security Agreement;
(2) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(3) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States at the date of such
computation;
(5) unless otherwise specifically set forth herein, all calculations
or determinations of a Person shall be performed or made in accordance with
generally accepted accounting principles consistently applied;
(6) unless the context otherwise requires, any reference to an
"Article" or a "Section" or an "Appendix" refers to an Article or a Section
or an Appendix, as the case may be, of this Indenture;
(7) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(8) references to any document or agreement, including this Indenture,
shall be to such document or agreement as amended, supplemented or replaced
from time to time in accordance with its terms; and
(9) references to any party to this Indenture or any other document or
agreement
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shall include its successors and permitted assigns.
"Act", when used with respect to any Holder, has the meaning specified
in clause (1) of Section 104.
"Agent Member" has the meaning specified in subclause (iii) of Section
305(3)(E).
"Applicable Procedures" means the rules and procedures of the U.S.
Depository, Euroclear and CEDEL, in each case to the extent applicable.
"Authenticating Agent" means any Person authorized by the Capital
Markets Trustee pursuant to Section 614 to act on behalf of the Capital Markets
Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Issuer
or any duly authorized committee of that board.
"Capital Markets Trustee" means the Person named as the "Capital
Markets Trustee" in the first paragraph of this instrument until a successor
Capital Markets Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Capital Markets Trustee" shall
mean such successor Capital Markets Trustee.
"CEDEL" means Cedelbank.
"Collateral Trustee" means the Person named as the "Collateral
Trustee" in the first paragraph of this instrument until a successor Collateral
Trustee shall have become such pursuant to the applicable provisions of the
Common Security Agreement, and thereafter "Collateral Trustee" shall mean such
successor Collateral Trustee.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Security Agreement" means the Common Security Agreement, dated
as of the date hereof, among Port Arthur Finance Corp., Port Arthur Coker
Company L.P., Sabine River Holding Corp., Neches River Holding Corp., Winterthur
International Insurance Company Limited, as Oil Payment Insurers Administrative
Agent, Bankers Trust Company, as Collateral Trustee for the Secured Parties,
Deutsche Bank AG, New York Branch, as Bank Senior Lenders Administrative Agent,
HSBC Bank USA, as Capital Markets Trustee for the Capital Markets Senior
Lenders, and Bankers Trust Company, as Depositary Bank, as the same may be
amended or supplemented in accordance with its terms and in effect from time to
time.
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<PAGE>
"Corporate Trust Office" means the principal corporate trust office of
the Capital Markets Trustee or the Collateral Trustee, as the case may be, in
The City of New York, New York, at which at any particular time its corporate
trust business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depository Securities Certification" means a Depository Securities
Certification substantially in the form set forth in clause (2) of Section 313.
"Distribution Compliance Period" means the period of 40 consecutive
days beginning on and including the first day after the later of (i) the day
that the Purchasers advise the Issuer, the Guarantors and the Capital Markets
Trustee is the day on which the Securities are first offered to persons other
than distributors (as defined in Regulation S) in reliance on Regulation S and
(ii) the Closing Date.
"Euroclear" means the Euroclear Clearance System.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the U.S. Securities Exchange Act of 1934
(including any successor act thereto), as it may be amended from time to time,
and (unless the context otherwise requires) includes the rules and regulations
of the Commission promulgated thereunder.
"Exchange Offer" means the offer by the Issuer and the Guarantors,
pursuant to an effective registration statement and the Registration Rights
Agreement, to Holders of Original Securities, to issue and deliver to such
Holders, in exchange for the Original Securities, a like aggregate principal
amount of Exchange Securities registered under the Securities Act.
"Exchange Securities" means the Securities issued pursuant to the
Exchange Offer and their Successor Securities.
"Further Notes" means securities issued pursuant to clause (7)(A) of
Section 901.
"General Partner" means the Person named as the "General Partner" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the
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applicable provisions of this Indenture, and thereafter "General Partner" shall
mean such successor Person.
"Global Security" means a Security that is registered in the Security
Register in the name of the U.S. Depository.
"Guarantee" means the obligations of the Guarantors set forth in
Section 205 and endorsed on a Security authenticated and delivered pursuant to
this Indenture.
"Guarantors" means the Persons named as the "Guarantors" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantors" shall mean such successor Persons.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Investment Company Act" means the Investment Company Act of 1940 and
any statute successor thereto, in each case as amended from time to time.
"Issuer" means the Person named as the "Issuer" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Issuer" shall mean
such successor Person.
"Issuer Order" or "Issuer Request" means, unless the context provides
otherwise, a written order or request signed on behalf of the Issuer by a
Responsible Officer of the Issuer and delivered to the Capital Markets Trustee.
"Limited Partner" means the Person named as the "Limited Partner" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Limited Partner" shall mean such successor Person.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
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<PAGE>
"Notice of Default" has the meaning specified in Section 602.
"Officers' Certificate" means a certificate signed by two Responsible
Officers and delivered to the Capital Markets Trustee. One of the Responsible
Officers signing an Officers' Certificate given pursuant to Section 1005 shall
be the principal executive, financial or accounting officer of the General
Partner.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer or the Partnership, as the case may be, and who shall be
acceptable to the Capital Markets Trustee.
"Original Securities" means the Securities issued by the Issuer to the
Purchasers pursuant to the Purchase Agreement and their Successor Securities.
"Other Yields" has the meaning set forth in Section 203.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Capital Markets
Trustee or delivered to the Capital Markets Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Capital Markets
Trustee or any Paying Agent in trust for the Holders of such Securities;
provided that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Capital Markets Trustee has been made;
(iii) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Capital Markets Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Issuer; and
(iv) Securities as to which Defeasance has been effected
pursuant to Section 1302;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Issuer or any other obligor upon the Securities or any
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Affiliate of the Issuer or of such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Capital Markets
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Capital Markets Trustee knows to be so owned shall be so disregarded. Securities
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Capital Markets Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Issuer or any other obligor upon the Securities or any Affiliate of
the Issuer or of such other obligor.
"Owner Securities Certification" means an Owner Securities
Certification substantially in the form set forth in clause (1) of Section 313.
"Partnership" means the Person named as the "Partnership" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Partnership" shall mean such successor Person.
"Partnership Order" or "Partnership Request" means, unless the context
provides otherwise, a written order or request signed on behalf of the
Partnership by a Responsible Officer of the General Partner and delivered to the
Capital Markets Trustee.
"Paying Agent" means any Person authorized by the Issuer pursuant to
Section 615 to pay the principal of (and premium, if any) or interest on any
Securities on behalf of the Issuer.
"Payment Date" means each January 15 and July 15 of each year,
commencing January 15, 2000 in the case of interest and July 15, 2002 in the
case of principal.
"Payment Default" means an Event of Default specified in clause (a) of
Section 10.01 of the Common Security Agreement.
"Place of Payment", when used with respect to the Securities, means
The Borough of Manhattan, The City of New York, and the place or places where
the principal of and any premium and interest on the Securities of that series
are payable as specified as contemplated by Section 301.
"Post-Default Rate" means in respect of any principal of any Security
Outstanding or any other amount under the Indenture (including interest) which
is not paid when due, a rate per annum equal to 2% plus the stated interest rate
for such Security.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence
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<PAGE>
the same debt as the mutilated, destroyed, lost or stolen Security.
"Primary Issue" has the meaning set forth in Section 203.
"Private Exchange Securities" has the meaning specified in Section 1
of the Registration Rights Agreement.
"Purchase Agreement" means the Purchase Agreement, dated as of August
10, 1999, among the Issuer, the Partnership, Sabine River Holding Corp., Neches
River Holding Corp., Clark Refining Holdings Inc. and the Purchasers.
"Purchasers" means Credit Suisse First Boston, Goldman, Sachs & Co.
and Deutsche Bank Securities Inc.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date set for a redemption of such Security by or pursuant to
this Indenture.
"Redemption Premium", when used with respect to any Security to be
redeemed, has the meaning specified in Section 203.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture in an amount equal to the unpaid principal amount of the Securities to
be redeemed plus accrued and unpaid interest thereon, if any, up to but
excluding the Redemption Date plus the applicable Redemption Premium, if any
(except that, with respect to a redemption pursuant to clause (a) and (c) of
Section 2.05 of the Common Security Agreement, as set forth in the second
paragraph of Section 203 of this Agreement, there shall be no Redemption
Premium).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Issuer, the Partnership,
Sabine River Holding Corp., Neches River Holding Corp., Clark Refining Holdings
Inc. and the Purchasers.
"Regular Record Date" for the interest payable on any Payment Date
means the January 1 or July 1 (whether or not a Business Day), as the case may
be, next preceding such Payment Date.
"Regulation S" means Regulation S under the Securities Act and any
successor thereto, in each case as amended from time to time.
"Regulation S Legend" means a legend substantially in the form of the
legend required in the form of Security set forth in Section 202 to be placed
upon a Regulation S Security.
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"Remaining Average Life" has the meaning set forth in Section 203.
"Required Filing Date" has the meaning specified in Section 1006.
"Responsible Officer" has the meaning specified in the Common Security
Agreement and when used with respect to the Capital Markets Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice-
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Capital Markets Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Global Security" has the meaning specified in Section 201.
"Restricted Securities" means all Original Securities or Private
Exchange Securities other than the Temporary Regulation S Global Security or
Unrestricted Global Security, provided that Restricted Securities shall cease to
be Restricted Securities upon the removal of the legends therefrom pursuant to
clause (2) of Section 305.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 202 to
be placed upon a Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act and any rule or
regulation successor thereto, in each case as amended from time to time.
"Rule 144A Information" means, as specified in Section 705, such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto).
"Securities" has the meaning specified in the first recital of this
Indenture and more particularly means the Original Securities, the Exchange
Securities and the Private Exchange Securities authenticated and delivered under
this Indenture, except that, with respect to the forms of certificates set forth
in clauses (1) through (8) of Section 313, "Securities" shall have the meaning
set forth therein, respectively.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
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"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Selected Documents" has the meaning set forth in Section 903.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or payment of interest thereon, means the date
specified in such Security as the fixed date on which such Security or such
installment of principal or payment of interest is due and payable.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Temporary Regulation S Global Security" has the meaning specified in
Section 201.
"Transfer" has the meaning specified in Section 607.
"Transfer Agent" means any Person authorized by the Issuer pursuant to
Section 615 register any transfer or exchange of the Securities or the Security
Register.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (including
any successor act thereto), as it may be amended from time to time, and (unless
the context otherwise requires) includes the rules and regulations of the
Commission promulgated thereunder.
"U.S. Depository" means The Depository Trust Company until a successor
U.S. Depository shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "U.S. Depository" shall mean such successor U.S.
Depository.
"U.S. Government Obligation" has the meaning specified in Section
1304.
"Unrestricted Global Security" has the meaning specified in Section
201.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Issuer or the Guarantors to the
Capital Markets Trustee to take any action under any provision of this Indenture
or, to the extent permitted
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and in the manner provided, under the Common Security Agreement, the Issuer or
the Guarantors, as the case may be, shall furnish to the Capital Markets Trustee
such certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Issuer or the Partnership, on
behalf of the Guarantors, or an Opinion of Counsel, if to be given by counsel,
and shall comply with the requirements of the Trust Indenture Act and any other
requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or the Common Security
Agreement shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or not
such covenant or condition has been complied with;
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with; and
(5) in the case of an Officer's Certificate, a statement by a
Responsible Officer that no Event of Default has occurred.
SECTION 103. Form of Documents Delivered to Capital Markets Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer or the General
Partner may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar
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as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer or the General Partner,
as the case may be, stating that the information with respect to such factual
matters is in the possession of the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture or the Common Security
Agreement to be given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in
person or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Capital Markets Trustee and, where it is hereby
expressly required, to the Issuer and the Partnership. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Sections 601 and 603) conclusive in favor of the Capital Markets
Trustee, the Issuer and the Partnership, if made in the manner provided in this
Section.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Capital Markets Trustee deems sufficient.
(3) (A) The Issuer and the Partnership may, in the circumstances
permitted by the Trust Indenture Act, set any day as a record date for the
purpose of determining the Holders of Outstanding Securities entitled to give,
make or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture or the Common
Security Agreement to be given, made or taken by Holders of Securities, provided
that the Issuer and the Partnership may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in subclause
(B) of this clause (3). If any record date is set pursuant to this paragraph,
the
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Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date. Nothing in this paragraph shall be
construed to prevent the Issuer and the Partnership from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Issuer and the Partnership, at their own expense, shall cause
notice of such record date and the proposed action by the Holders to be given to
the Capital Markets Trustee in writing and to each Holder of Securities in the
manner set forth in Section 106.
(B) The Capital Markets Trustee may set any day as a record date
(subject to, in the case of Global Securities, any requirements the Depository
may have with respect to the record date for such Global Securities from time to
time) for the purpose of determining the Holders of Outstanding Securities
entitled to join in the giving or making of (i) any Act of Holders under the
Common Security Agreement, (ii) any declaration of acceleration or the
rescission or annulment thereof referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(3) or (iv) any direction
referred to in Section 512. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record. Nothing
in this paragraph shall be construed to prevent the Capital Markets Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Capital Markets Trustee, at the Issuer and
Partnership's expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Issuer
and the Partnership in writing and to each Holder of Securities in the manner
set forth in Section 106.
(4) The ownership of Securities shall be proved by the Security
Register.
(5) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of that same Security and the Holder of every Security issued upon the
registration of transfer of or in exchange for or in lieu of a particular
Security in respect of anything done, omitted or suffered to be done by the
Capital Markets Trustee or the Issuer and the Guarantors in reliance thereon,
whether or not notation of such action is made upon such Security.
(6) Without limiting the foregoing, a Holder entitled hereunder to
take any action
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hereunder with regard to any particular Security may do so with regard to all or
any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Capital Markets Trustee, the Issuer, the
Guarantors and the Collateral Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Capital Markets Trustee by any Holder or by the Issuer or the
Guarantors shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Capital Markets Trustee and
received at its Corporate Trust Office, as follows: (i) by registered or
certified mail, postage prepaid, (ii) by overnight courier or (iii) by facsimile
transmission (with confirmation of receipt);
(2) the Issuer or the Guarantors by the Capital Markets Trustee or by
any Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to the Guarantors addressed to them at the address of their respective
principal offices specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Capital Markets Trustee by
the Guarantors; or
(3) the Collateral Trustee by the Capital Markets Trustee, by any
Holder, by the Issuer, by the Guarantors, or by an authorized agent shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Collateral Trustee at its Corporate Trust Office, as
follows: (i) by registered or certified mail, postage prepaid, (ii) by overnight
courier or (iii) by facsimile transmission (with confirmation of receipt).
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice for the purposes of this Indenture. Waivers of
notice by Holders shall be
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filed with the Capital Markets Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Capital Markets
Trustee shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article, Section and Appendix headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer and each
of the Guarantors shall bind their successors and assigns, whether so expressed
or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
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<PAGE>
SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
In any case where any Payment Date, Redemption Date or Stated Maturity
of any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of interest or
principal, as the case may be (and premium, if any), need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest shall accrue for the period from and after
such Payment Date, Redemption Date or Stated Maturity, as the case may be.
SECTION 114. Execution of Other Documents; Conflicts.
Prior to or simultaneously with the execution and delivery of this
Indenture, the Capital Markets Trustee shall enter into the Common Security
Agreement and the Transfer Restrictions Agreement, for and on behalf of itself
and all future Holders of any of the Securities. All rights, powers and
remedies available to the Capital Markets Trustee and all future Holders of any
of the Securities, with respect to the Collateral, or otherwise pursuant to the
Security Documents, shall be subject to the Common Security Agreement. In the
event of any conflict or inconsistency between the terms and conditions of this
Indenture and the terms and conditions of the Common Security Agreement and the
Security Documents, the terms and provisions of the Common Security Agreement
and the Security Documents shall govern and control.
SECTION 115. Payments by the Collateral Trustee.
The payment or deposit of any amount or amounts required to be paid or
deposited with the Capital Markets Trustee pursuant to this Indenture shall be
deemed to have been made by the Issuer or the Guarantors if such amount or
amounts shall have been paid or deposited with the Capital Markets Trustee by
the Collateral Trustee, provided that any such payment or deposit to the Capital
Markets Trustee by the Collateral Trustee shall be accompanied by notification
specifying the purpose for which it was made.
SECTION 116. Information to Holders.
With respect to the information and documents required to be delivered
to the Capital Markets Trustee by the Issuer or the Guarantors pursuant to Rule
144A(d) under the Securities Act or pursuant to the Common Security Agreement,
the Capital Markets Trustee shall deliver, at the
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expense of the Issuer and the Guarantors, any such documents and information (i)
to each Holder and (ii) to any beneficial holder of Securities who makes a
request to the Capital Markets Trustee (which request shall take the form of
Exhibit A hereto) (which request may indicate that it is a continuing request
for such information until further notice by such owner of a beneficial interest
in a Global Security to the contrary) for such documents or information. Upon
request (which request shall take the form of Exhibit B hereto) (which request
may indicate that it is a continuing request for such information until further
notice by such owner of a beneficial interest in a Global Security to the
contrary) of any owner of a beneficial interest in a Global Security or a Holder
of a certificated Security, the Issuer and the Guarantors shall deliver all
financial information required to be delivered to Senior Lenders by them
pursuant to the Common Security Agreement directly to such owner of a beneficial
interest in a Global Security or Holder. Further, the Issuer and the Guarantors
shall make available for inspection by the holders of beneficial interests in
the Securities or their agents at the principal executive office of the
Guarantors and the Issuer, upon their request, reasonable information regarding
the payment of all Taxes.
SECTION 117. Consent to Jurisdiction.
(1) Subject to clause (3) of this Section 117, each party hereto
hereby irrevocably consents and agrees, for the benefit of each other party
hereto, that any legal action, suit or proceeding against it with respect to its
obligations, liabilities or any other matter under or arising out of or in
connection with this Indenture or the Securities may be brought in any Federal
or State court located in the Borough of Manhattan, The City of New York, and
hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such court, to the exclusion of all other courts, with respect to any such
action, suit or proceeding. Each party hereto hereby waives to the fullest
extent permitted by applicable laws any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum.
(2) Each of the Borrower Parties hereby irrevocably appoints CT
Corporation System, with offices at the date hereof at 1633 Broadway, New York,
New York 10019, as its authorized agent on which any and all legal process may
be served in any such action, suit or proceeding brought in any Federal or state
court located in the Borough of Manhattan, The City of New York. Each Borrower
Party agrees that service of process in respect of it upon its respective agent,
together with written notice of such service given to it in the manner provided
in Section 105, shall be deemed to be effective service of process upon it in
any such action, suit or proceeding. Each of the Borrower Parties agrees that
the failure of its respective agent to give notice to it of any such service
shall not impair or affect the validity of such service or any judgment rendered
in any action, suit or proceeding based thereon. If for any reason any Borrower
Party's respective agent shall cease to be available to act as such, or if any
party hereto that was located in New York ceases to be so located, such party
agrees to designate a new agent in the Borough of Manhattan, The City of New
York, on the terms and for the purposes of this clause (2).
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(3) Notwithstanding the provision of clause (1) of this Section
117, nothing herein shall be deemed to limit the ability of any of the Holders,
the Collateral Trustee, the Capital Markets Trustee or any Applicable Agent to
serve any such legal process in any other manner permitted by applicable law or
to obtain jurisdiction over any of the Borrower or the Guarantors or bring
actions, suits or proceedings against any such party in such other jurisdiction,
including without limitation in any Federal or State court located in the State
of Texas, and in such manner, as may be permitted by applicable law.
(4) Each party hereto agrees that a final judgment against it in
any action, suit or proceeding taken in any Federal or State Court in the
Borough of Manhattan, The City of New York in accordance with clause (1) of this
Section 117 or, in the case of any of the Borrower or Guarantors, in any other
court in accordance with clause (3) of this Section 117, shall be conclusive and
may be enforced in any jurisdiction by suit on the judgment, a certified copy of
which judgment shall be conclusive evidence thereof, or by any other means
provided by law.
SECTION 118. Incorporation of Certain Terms of the Common Security Agreement.
The provisions of Sections 14.05, 14.06 and 14.11 of the Common
Security Agreement are incorporated in this Indenture by reference, as if set
out in this Indenture in full, mutatis mutandis, with all references to "this
Agreement" therein being deemed to be references to this Indenture for the
purposes hereof.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities, the Guarantees to be endorsed thereon and the Capital
Markets Trustee's certificates of authentication shall be in substantially the
form set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or depository therefor, the United
States Internal Revenue Code of 1986, as amended and the regulations thereunder,
or as may, consistently herewith, be determined by the officers executing such
Securities as evidenced by their execution thereof.
The definitive Securities and Guarantees shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities and
Guarantees, as evidenced by their execution of such Securities and Guarantees.
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Except as otherwise provided herein, Restricted Securities shall bear
the applicable legends as set forth in Section 202 and as provided in Section
206.
Securities offered and sold in their initial distribution in reliance
on Rule 144A under the Securities Act shall be issued in the form of one or more
Global Securities (collectively, the "Restricted Global Security") in
definitive, fully registered form without interest coupons, substantially in the
form of Security set forth in this Article, with such applicable legends as are
provided for in Section 202. Such Global Securities shall be registered in the
name of the U.S. Depository for such Global Securities or its nominee and
deposited with the Capital Markets Trustee, at its Corporate Trust Office, as
custodian for such U.S. Depository, duly executed on behalf of the Issuer and
authenticated by the Capital Markets Trustee as hereinafter provided. The
aggregate principal amount of the Restricted Global Security may from time to
time be increased or decreased by adjustments made on the records of the Capital
Markets Trustee, as custodian for the U.S. Depository for such Global Security,
as provided in Section 305, which adjustments shall be conclusive (absent
manifest error) as to the aggregate principal amount of any such Global
Security.
Securities offered and sold in their initial distribution in reliance
on Regulation S under the Securities Act shall be initially issued in the form
of one or more temporary Global Securities in definitive, fully registered form
without interest coupons, substantially in the form of Security set forth in
this Article, with such applicable legends as are provided for in Section 202.
Such Global Securities shall be registered in the name of the U.S. Depository or
its nominee and deposited with the Capital Markets Trustee, at its Corporate
Trust Office, as custodian for the U.S. Depository, duly executed by the Issuer
and authenticated by the Capital Markets Trustee as hereinafter provided, for
credit to the respective accounts of beneficial owners of such Global Securities
(or such other accounts as they may direct) at Morgan Guaranty Trust Company of
New York, Brussels office, as operator of Euroclear, or Citibank, N.A. as
operator of CEDEL. Until such time as the applicable Distribution Compliance
Period shall have terminated, the temporary Global Securities shall be referred
to herein collectively as the "Temporary Regulation S Global Security". On or
after the termination of the relevant Distribution Compliance Period, interests
in the Temporary Regulation S Global Security will be exchangeable for
corresponding interests in one or more unrestricted Global Securities
(collectively, the "Unrestricted Global Security"), in definitive, fully
registered form without interest coupons, substantially in the form set forth in
this Article, with such applicable legends as are provided for in Section 202 in
accordance with the certification requirements set forth in the immediately
following two paragraphs. The aggregate principal amount of the Temporary
Regulation S Global Security (or the aggregate principal amount of Securities
represented thereby) and the Unrestricted Global Security (or the aggregate
principal amount of Securities represented thereby) may from time to time be
increased or decreased by adjustments made on the records of the Capital Markets
Trustee, as custodian for the U.S. Depository for such Global Security, as
provided in Section 305, which adjustments shall be conclusive (absent manifest
error) as to the aggregate principal amount of any such Global Security. As
used herein, the term "Distribution Compliance Period", with respect to Global
Securities offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on
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and including the later of (i) the day on which the Securities of such series
are first offered to Persons other than distributors (as defined in Regulation
S) in reliance on Regulation S (according to a notice to the Issuer and the
Capital Markets Trustee provided by the Purchaser(s), if any, of the offering of
such Securities) and (ii) the date of the closing of such offering.
A holder of a beneficial interest in the Temporary Regulation S Global
Security may arrange to receive interest through Euroclear or CEDEL on such
Temporary Regulation S Global Security only after delivery by such Person to
Euroclear or CEDEL, as the case may be, of an Owner Securities Certification (as
defined below), and upon delivery by Euroclear or CEDEL, as the case may be, to
the principal Paying Agent of a Depositary Securities Certification (as defined
below). The delivery by such holder of a beneficial interest in such Temporary
Regulation S Global Security of such certification shall constitute an
irrevocable instruction by such holder to Euroclear or CEDEL, as the case may
be, to exchange such holder's beneficial interest in the Temporary Regulation S
Global Security for a beneficial interest in the Unrestricted Global Security
upon the expiration of the relevant Distribution Compliance Period in accordance
with the next succeeding paragraph. No interest shall be paid to any holder of
a beneficial interest in the Temporary Regulation S Global Security until the
foregoing Owner Securities Certification has been provided to Euroclear or
CEDEL, as the case may be, by such holder and no interest shall be paid to
Euroclear or CEDEL on such holder's interest in the Temporary Regulation S
Global Security unless Euroclear or CEDEL, as the case may be, has provided a
Depositary Securities Certification to the principal Paying Agent with respect
to such interest.
Upon (1) the expiration of the relevant Distribution Compliance
Period, (2) delivery by a beneficial owner of an interest in the Temporary
Regulation S Global Security to Euroclear or CEDEL, as the case may be, of an
appropriately completed certificate in substantially the form set forth in
Section 313(1) (an "Owner Securities Certification"), and upon delivery by
Euroclear or CEDEL to the Capital Markets Trustee of an appropriately completed
certificate in substantially the form set forth in Section 313(2) hereto (a
"Depositary Securities Certification"), (3) receipt by the U.S. Depository of
(a) written instructions given in accordance with the Applicable Procedures from
an Agent Member directing the U.S. Depository to credit or cause to be credited
to a specified Agent Member's account a beneficial interest in the Unrestricted
Global Security in a principal amount equal to that of the beneficial interest
in the Temporary Regulation S Global Security for which the necessary
certificates have been delivered and (b) a written order given in accordance
with the Applicable Procedures containing information regarding the account of
the Agent Member, and the Euroclear or CEDEL account for which such Agent
Member's account is held, to be credited with, and the account of the Agent
Member to be debited for, such beneficial interest and (4) receipt by the
Capital Markets Trustee of notification from the U.S. Depository of the
transactions described in (3) above, the Capital Markets Trustee, as Security
Registrar, shall instruct the U.S. Depository to reduce the principal amount of
the Temporary Regulation S Global Security and to increase the principal amount
of the Unrestricted Global Security by the principal amount of the beneficial
interest in the Temporary Regulation S Global Security to be so transferred, and
to credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the
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Unrestricted Global Security having a principal amount equal to the amount by
which the principal amount of the Temporary Regulation S Global Security was
reduced upon such transfer.
SECTION 202. Form of Face of Security.
[Include if Security is a Restricted Security Other than a Restricted
Global Security -- THIS SECURITY AND THE ACCOMPANYING GUARANTEE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) ACQUIRING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QUALIFIED INSTITUTIONAL BUYERS IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND
(B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS. THE TRANSFEROR IS REQUIRED TO DELIVER
WRITTEN CONFIRMATION TO THE COLLATERAL TRUSTEE THAT THE TRANSFER IS BEING MADE
IN COMPLIANCE WITH THE PARTICULAR RESTRICTIONS ON TRANSFER SPECIFIED IN CLAUSE
(A)(2) OR (A)(3) ABOVE. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUERS THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 FOR RESALES OF THIS SECURITY.]
[Include if Security is a Restricted Global Security -- THIS GLOBAL
SECURITY AND THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THIS GLOBAL SECURITY AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT: (A) (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION
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STATEMENT UNDER THE SECURITIES ACT, AND (B) IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE BLUE SKY OR SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. IN
CONNECTION WITH THE INITIAL TRANSFER OF THIS GLOBAL SECURITY (OR ANY INTEREST
HEREIN) IN COMPLIANCE WITH CLAUSE (A)(2) OR (A)(3) ABOVE, THE TRANSFEROR IS
REQUIRED TO DELIVER WRITTEN CONFIRMATION TO THE TRUSTEE THAT SUCH TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE PARTICULAR RESTRICTIONS ON TRANSFER SPECIFIED
IN SUCH CLAUSE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE
EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THIS SECURITY OR FOR BENEFICIAL
INTERESTS HEREIN.]
[Include if Security is a Temporary Regulation S Global Security --
THIS GLOBAL SECURITY AND THE ACCOMPANYING GUARANTEE ARE A TEMPORARY REGULATION S
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO.
EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN THE INDENTURE, NO TRANSFER OR EXCHANGE
OF AN INTEREST IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE MADE FOR AN
INTEREST IN THE RESTRICTED GLOBAL SECURITY. NO EXCHANGE OF AN INTEREST IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN THE
UNRESTRICTED GLOBAL SECURITY EXCEPT ON OR AFTER THE TERMINATION OF THE
DISTRIBUTION COMPLIANCE PERIOD AND UPON DELIVERY OF THE OWNER SECURITIES
CERTIFICATION AND THE DEPOSITORY SECURITIES CERTIFICATION RELATING TO SUCH
INTEREST IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.]
[Include if Security is a Regulation S Security -- THIS SECURITY AND
THE ACCOMPANYING GUARANTEE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, OR DELIVERED IN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON,
UNLESS THIS SECURITY AND THE ACCOMPANYING GUARANTEE ARE REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE.]
[Include if Security is a Global Security -- UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, 55
WATER STREET, NEW YORK, NEW YORK 10004, TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF CEDE & CO., AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CEDE
& CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
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ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS SECURITY AND THE ACCOMPANYING GUARANTEE ARE A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY AND THE
ACCOMPANYING GUARANTEE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY
REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR A NOMINEE
THEREOF EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[Insert any legend required by the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.]
PORT ARTHUR FINANCE CORP.
12.50% Senior Secured Note Due 2009
No. __________ $________
PORT ARTHUR FINANCE CORP., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to __________________, or registered
assigns, the principal sum of _____________________ Dollars [if the Security is
a Global Security, then include --, or such other principal amount specified on
Schedule A hereto, as it may from time to time be adjusted by endorsement on
Schedule A hereto] on the dates and in the amounts set forth on Schedule B
hereto or such earlier date as this Security may be redeemed, and to pay
interest thereon from August 19, 1999 or from the most recent Payment Date to
which interest has been paid or duly provided for, semi-annually on January 15
and July 15 in each year, commencing January 15, 2000, at the rate of 12.50% per
annum, until the principal hereof is paid or made available for payment and at
the rate of 14.50% per annum on any overdue principal and premium and on any
overdue installment of interest until paid, provided that such rate is subject
to increase under certain circumstances and for such periods as provided in the
Registration Rights Agreement hereinafter referred to. The interest so payable,
and punctually paid or duly provided for, on any Payment Date will, as provided
in such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the January 1 or July 1
(whether or not a Business Day), as the case may be, next preceding such Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date
-23-
<PAGE>
for the payment of such Defaulted Interest to be fixed by the Capital Markets
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Issuer maintained for that
purpose in The City of New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts, provided, however, that if the Security is ever
issued in other than global form, then, at the option of the Capital Markets
Trustee, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
in the case of a registered Holder of at least US$1,000,000 principal amount of
Securities, by wire transfer to a dollar account maintained and designated by
the payee with a bank in The City of New York, unless such Holder has given
timely notice otherwise.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Capital Markets Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated:
PORT ARTHUR FINANCE CORP.
By:
Name:
Title:
(Seal)
-24-
<PAGE>
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its $255,000,000 12.50% Senior Secured Notes Due 2009
(herein called the "Securities"), issued and to be issued under an Indenture,
dated as of August 19, 1999 (herein called the "Indenture", which term shall
have the meaning assigned to it in such instrument), among the Issuer, Port
Arthur Coker Company L.P. (herein called the "Partnership"), Sabine River
Holding Corp. (herein called the "General Partner") and Neches River Holding
Corp., (herein called the "Limited Partner" and, together with the Partnership
and the General Partner, the "Guarantors") Bankers Trust Company, as Collateral
Trustee (herein called the "Collateral Trustee", which term includes any
successor trustee under the Common Security Agreement), and HSBC Bank USA, as
Capital Markets Trustee (herein called the "Capital Markets Trustee", which term
includes any successor trustee under the Indenture), to which Indenture, all
indentures supplemental thereto and the Common Security Agreement reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Issuer, the Guarantors, the Collateral
Trustee, the Capital Markets Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
Upon receipt by the Collateral Trustee or the Partnership, as the case
may be, of any sums required under clauses (a) and (c) of Section 2.05 of the
Common Security Agreement to be applied as Mandatory Prepayments of Senior Debt,
the Issuer shall redeem Outstanding Securities on a pro rata basis in accordance
with Section 2.06 of the Common Security Agreement at the applicable Redemption
Price less any amount paid to the holders of other Senior Debt, provided that
Redemption Date shall fall within 10 days after the receipt by the Collateral
Trustee or the Partnership, as the case may be, of such amounts in an amount
equal to such sums so required to be applied as Mandatory Prepayments. Notice of
such redemption will be mailed by the Capital Markets Trustee to each Holder at
such Holder's address of record not less than 30 days nor more than 60 days
prior to the Redemption Date.
Subject to the terms of the Common Security Agreement, the Issuer
shall have the right, without the consent of Holders, to redeem all or any
portion of the Outstanding Securities, in whole or in part, at any time and from
time to time at the applicable Redemption Price.
"Redemption Premium" shall mean, an amount calculated by the Issuer as
of the Redemption Date as follows:
(A) the average life of the remaining scheduled payments of principal
in respect of the Outstanding Securities (the "Remaining Average Life")
shall be calculated as of the Redemption Date;
(B) the yield to maturity shall be calculated for the United States
Treasury security having an average life equal to the Remaining Average
Life and trading in the
-25-
<PAGE>
secondary market at the price closest to par (the "Primary Issue"),
provided, however, that if no United States Treasury security has an
average life equal to the Remaining Average Life, the yields (the "Other
Yields") for the two maturities of the United States Treasury securities
having average lives most closely corresponding to such Remaining Average
Life and trading in the secondary market at the price closest to par shall
be calculated, and the yield to maturity for the Primary Issue shall be the
yield interpolated or extrapolated from such Other Yields on a straight-
line basis, rounding in each of such relevant periods to the nearest month;
(C) the discounted net present value of the then remaining scheduled
payments of principal and interest (but excluding that portion of any
scheduled payment of interest that is actually due and paid on the
Redemption Date) in respect of Outstanding Securities shall be calculated
as of the Redemption Date using a discount factor equal to the sum of (x)
the yield to maturity of the Primary Issue, plus (y) 75 basis points; and
(D) the amount of premium in respect of Securities to be redeemed or
purchased shall be an amount equal to (i) the discounted net present value
of such Securities to be redeemed or purchased determined in accordance
with subclause (C) of this clause (1) minus (ii) the unpaid principal
amount of the Securities to be redeemed, provided, however, that the
premium shall not be less than zero.
Notice of such redemption will be mailed by the Capital Markets
Trustee to each Holder at such Holder's address of record not less than 30 days
nor more than 60 days prior to the Redemption Date.
On the Redemption Date on which any Security is to be redeemed, the
applicable Redemption Price will become due and payable on each Security to be
redeemed and interest thereon will cease to accrue on and after such date.
Any Security that is to be purchased only in part shall be surrendered
at a Place of Payment therefor (with due endorsement by, or a written instrument
of transfer in form satisfactory to the Issuer and the Capital Markets Trustee
duly executed by, the Holder thereof or its attorney duly authorized in
writing), and the Issuer shall execute, and the Capital Markets Trustee shall
authenticate and make available for delivery to the Holder of such Security
without service charge, a new Security or Securities, of any authorized
denomination requested by such Holder and of like tenor and in aggregated
principal amount equal to and in exchange for the remaining unpaid principal
amount of the Security so surrendered.
The Issuer shall make such calculations in good faith, which
calculations shall be conclusive in the absence of manifest error.
The Securities do not have the benefit of any sinking fund
obligations.
-26-
<PAGE>
Subject to the terms of the Common Security Agreement, the Issuer or
its Affiliates shall have the right at any time to purchase any Securities in
the open market or otherwise at any price agreed to between the Holders and the
purchaser of such Securities. Any Security so purchased by the Issuer must be
surrendered to the Capital Markets Trustee for cancellation and may not be re-
issued or resold.
[If a Global Security insert -- In the event of a deposit or
withdrawal of an interest in this Security (including upon an exchange,
transfer, redemption or purchase of this Security in part only) effected in
accordance with the Applicable Procedures, the Security Registrar, upon receipt
of notice of such event from the U.S. Depository's custodian for this Security,
shall make an adjustment on Schedule A hereto to reflect an increase or decrease
of the Outstanding principal amount of this Security resulting from such deposit
or withdrawal, as the case may be.]
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
As provided in the Indenture and the Common Security Agreement, the
obligations of the Issuer under the Indenture and this Security are
unconditionally guaranteed by the Guarantors pursuant to Guarantees endorsed
hereon as provided in the Indenture.
Subject to certain limitations in the Indenture, at any time when
neither the Issuer nor any of the Guarantors is subject to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), upon
the request of a Holder of a Security or of a beneficial owner of an interest in
a Global Security, the Issuer and each of the Guarantors will promptly furnish
or cause to be furnished Rule 144A Information (as defined below) to such Holder
or beneficial owner, or to a prospective purchaser of a Security or a beneficial
interest in a Global Security designated by such Holder or beneficial owner of
such interest, in order to permit compliance by such Holder or beneficial owner
with Rule 144A under the Securities Act of 1933, as amended (the "Securities
Act"). "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
Subject to the provisions of the Common Security Agreement, the
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and the
Guarantors and the rights of the Holders of the Securities under the Indenture
at any time by the Issuer, the Guarantors, the Collateral Trustee and the
Capital Markets Trustee with the consent of a certain percentage, as specified
in the Indenture and the Common Security Agreement, of the Holders in aggregate
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Issuer or any of the
Guarantors with certain provisions of the Indenture and certain past defaults
under the Indenture and their
-27-
<PAGE>
consequences, provided, however, that the waiver of compliance by the Issuer or
any of the Guarantors with certain provisions of the Financing Documents can be
made only by specified percentages in aggregate principal amount of Senior Debt
(including Bank Senior Debt) outstanding in accordance with the terms of the
Common Security Agreement. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
The Holder of this Security (and any Person that has a beneficial
interest in this Security) is entitled to the benefits of a Registration Rights
Agreement, dated as of August 19, 1999, and as the same may be amended from time
to time (the "Registration Rights Agreement"), executed by the Issuer, the
Guarantors and the other parties thereto. The Registration Rights Agreement
provides that the rate of interest borne by the Securities is subject to
increase for specified periods if the Issuer and the Guarantors do not comply
with certain of their obligations thereunder. Such provisions of the
Registration Rights Agreement are hereby incorporated by reference and made a
part hereof.
As provided in and subject to the provisions of the Indenture and the
Common Security Agreement, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for the appointment
of a receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Capital Markets Trustee written notice of a
continuing Default (other than a Default arising on the occurrence and
continuation of an Insolvency Event) with respect to the Securities, the Holders
of not less than 25% in principal amount of the Securities at the time
Outstanding shall have made written request to the Capital Markets Trustee to
institute proceedings in respect of such Default as Capital Markets Trustee and
offered the Capital Markets Trustee reasonable indemnity, and the Capital
Markets Trustee shall not have received from the Holders of a majority in
principal amount of Securities at the time Outstanding a direction inconsistent
with such request, and shall have failed to institute any such proceeding, for
60 days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security, the Guarantee endorsed hereon, the Indenture or of the Common Security
Agreement shall alter or impair the obligation of the Issuer or any of the
Guarantors, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for
-28-
<PAGE>
registration of transfer at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Guarantors, the Capital Markets Trustee and any agent
of the Issuer, the Guarantors or the Capital Markets Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and none of the Issuer, the
Guarantors, the Capital Markets Trustee nor any such agent shall be affected by
notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
All Securities issued and Outstanding hereunder rank on a parity with
each other Security, and each Security shall be secured by the Collateral
equally and ratably pursuant to this Indenture, the Common Security Agreement
and the other Security Documents with each other Security, without preference,
priority or distinction of any one thereof over any other by reason of
difference in time of issuance or otherwise, and each Security shall be entitled
to the same benefits and security in this Indenture, the Common Security
Agreement and the other Security Documents as each other Security. The Guarantee
is secured by the Collateral pursuant to the Common Security Agreement and the
other Security Documents. Except as set forth in Sections 5.05 and 10.12 of the
Common Security Agreement and other than in the case of claims which may be
granted preferential treatment pursuant to applicable law, (i) the Securities
shall rank pari passu with any other Securities issued under this Indenture and
with any Senior Debt Obligations incurred pursuant to a Senior Loan Agreement,
to which the Issuer or the Partnership is party, and any Oil Payment
Reimbursement Obligations incurred pursuant to the Oil Payment Reimbursement
Agreement, and (ii) the Guarantee shall rank pari passu with any Senior Debt
Obligations incurred pursuant to a Senior Loan Agreement, to which the Issuer or
the Partnership is party, and any Oil Payment Reimbursement Obligations incurred
pursuant to the Oil Payment Reimbursement Agreement, and
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<PAGE>
in each case shall be senior to all Subordinated Debt. In accordance with the
terms of the Common Security Agreement and the other Security Documents, the
Partnership shall be solely responsible for the continued maintenance, priority
and perfection of such security interests.
Each Holder and each beneficial owner of an interest in any Security
acknowledge that the Capital Markets Trustee has entered into the Common
Security Agreement on behalf of the Holders and all future Holders, and by its
acceptance of this Security agree that the Capital Markets Trustee shall have
the right and authority, subject to the terms and provisions of the Indenture,
to act for and on behalf of the Holders and all future Holders with respect to
the Financing Documents. Notwithstanding anything to the contrary expressed or
implied in the Indenture, all rights, powers and remedies available to the
Capital Markets Trustee, the Holders and all future Holders shall be subject to
the Common Security Agreement. In the event of any conflict or inconsistency
between the terms and provisions of the Indenture and the terms and provisions
of the Common Security Agreement, the terms and provisions of the Common
Security Agreement shall govern and control.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture or the Common Security
Agreement.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.
-30-
<PAGE>
[If Security is a Global Security, insert as a separate page --
Schedule A
SCHEDULE OF ADJUSTMENTS
<TABLE>
<CAPTION>
Principal Notation made
Date Principal Principal amount on behalf of
adjustment amount amount following the Security
made increase decrease adjustment Registrar
------ -------- -------- ---------- -----------
<S> <C> <C> <C> <C>
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
- --------------- -------------- -------------- ----------------- ----------------------
</TABLE>
-31-
<PAGE>
Schedule B
SCHEDULE OF PRINCIPAL PAYMENTS
Percentage
of Principal
Payment Date Amount Payable
------------ ----------------
July 15, 2002.................................. 1.70%
January 15, 2003............................... 1.70%
July 15, 2003.................................. 4.10%
January 15, 2004............................... 4.10%
July 15, 2004.................................. 6.00%
January 15, 2005............................... 6.00%
July 15, 2005.................................. 9.10%
January 15, 2006............................... 9.10%
July 15, 2006.................................. 9.10%
January 15, 2007............................... 9.10%
July 15, 2007.................................. 7.90%
January 15, 2008............................... 7.90%
July 15, 2008.................................. 12.10%
January 15, 2009............................... 12.10%
-32-
<PAGE>
SECTION 204. Form of Capital Markets Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
HSBC BANK USA,
as Capital Markets Trustee
By
Authorized Officer
SECTION 205. Form of Guarantee.
GUARANTEE
(1) Each of the Guarantors hereby unconditionally, jointly and
severally guarantees to each Holder (a) the due and punctual payment of the
principal of (premium on, if any,) and interest on each Security when and as the
same shall become due and payable, whether at the maturity thereof, by
declaration of acceleration or otherwise, in accordance with the terms of the
Indenture, the Securities and the Common Security Agreement and (b) the
performance by the Issuer of each of its other obligations under the Indenture
and the other Financing Documents. In the case of the failure of the Issuer or
any successor thereto punctually to pay to each Holder any such principal,
interest, Redemption Premium, if any, and any other amounts due under the
Indenture, the applicable Securities and the Common Security Agreement, each of
the Guarantors hereby agrees to cause any such payments to be made punctually
when and as the same shall become due and payable, whether at the maturity
thereof, by declaration of acceleration or otherwise, as if such payments were
made by the Issuer. Each of the Guarantors hereby agrees that its obligations
hereunder shall be as if it were a principal debtor and obligor and not merely a
surety, and shall be absolute and unconditional, irrespective of, and shall be
unaffected by, any invalidity, irregularity or unenforceability of any Senior
Loan or any provision of this Indenture or of the other Financing Documents, any
failure to enforce the provisions of any Security or any provision of the
Indenture or of the other Financing Documents, any waiver, modification or
indulgence granted to the Issuer with respect thereto by any Holder, the
Collateral Trustee, the Capital Markets Trustee or any Applicable Agent, any
recovery of any judgment against the Issuer to enforce the same, any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of the terms of any Securities, the Indenture or any other Financing Document or
any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or guarantor.
(2) Each of the Guarantors hereby expressly (a) waives (i)
promptness, diligence, presentment, demand of payment, filing of claims with a
court in the event of merger, bankruptcy
-33-
<PAGE>
or insolvency of the Issuer, any right to require a proceeding first against the
Issuer, the benefit of discussion, protest, order and notice with respect to any
Security or the Senior Debt evidenced thereby and all demands whatsoever and
(ii) any requirement that a Holder exhaust any right to take any action against
the Issuer or any other Person prior to or contemporaneously with proceeding to
exercise any right against the Guarantors and (b) covenants that this Guarantee
will not be discharged with respect to any Security except by payment in full of
the principal amount due thereunder and any interest thereon.
(3) Each of the Guarantors acknowledges and agrees for the benefit of
the Capital Markets Trustee on behalf of the Holders and the Holders that the
Capital Markets Trustee and such Holders may, subject to the other provisions of
the Indenture and the Common Security Agreement, directly and simultaneously
proceed against any or all of the Guarantors for the enforcement of this
Guarantee and against the Issuer. The obligations of the Guarantors under this
Guarantee are independent of the Senior Debt Obligations of the Issuer, and a
separate action or actions may be brought and prosecuted against any or all of
the Guarantors whether or not (a) any action or proceeding is brought against
the Issuer, (b) the Issuer is joined in any such action or proceeding against
any or all of the Guarantors or (c) the Capital Markets Trustee or such Holders
have taken any action to collect or attempted to collect otherwise such
obligations from the Issuer or any other Person liable therefor.
(4) Each of the Guarantors hereby irrevocably agrees that (a) this
Guarantee will constitute the direct and unconditional obligation of each of the
Guarantors and, (b) except as set forth in Sections 5.05 and 10.12 of the Common
Security Agreement and other than in the case of claims which may be granted
preferential treatment pursuant to applicable law, the Guarantee shall rank pari
passu with any Senior Debt Obligations incurred pursuant to a Senior Loan
Agreement, to which the Issuer or the Partnership is party, and any Oil Payment
Reimbursement Obligations incurred pursuant to the Oil Payment Reimbursement
Agreement, and in each case shall be senior to all Subordinated Debt.
(5) Each of the Guarantors hereby agrees that this Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time,
payment or any partial payment of any obligations or interest thereon is
rescinded or must otherwise be restored by a Holder to the Issuer upon the
bankruptcy or insolvency of the Issuer or any of the Guarantors.
(6) Each of the Guarantors hereby agrees that it will pay, or
reimburse any Holder on demand for, all reasonable costs and expenses (including
fees and disbursements of counsel) incurred by such Holder in connection with
any rescission or restoration of this Guarantee, including any such costs and
expenses incurred in defending against any claim alleging that any payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
(7) Each of the Guarantors hereby agrees that, until such time as the
Securities and
-34-
<PAGE>
all amounts payable under this Guarantee and the other Financing Documents are
paid in full, none of the Guarantors shall be entitled to enforce any claim or
other rights, whether presently or hereafter acquired against the Issuer, that
arise from the existence, payment, performance or enforcement of any of the
Guarantors' obligation under this Guarantee, including without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of any Holder of any Security
authenticated and delivered by the Capital Markets Trustee and the Capital
Markets Trustee on behalf of such Holder against the Issuer or any collateral
that any such Holder or the Capital Markets Trustee on behalf of such Holder
acquires under the Indenture, the Security Documents or any other Financing
Document, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including without limitation the right to take
or receive from the Issuer, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to any of the Guarantors in
violation of the preceding sentence at any time prior to the payment in full of
all Senior Debt Obligations and all other amounts payable under this Guarantee,
such amount shall be deemed to have been paid to the respective Guarantor or
Guarantors for the benefit of, and held in trust for the benefit of, the Holders
and the Capital Markets Trustee on behalf of the Holders, and shall forthwith be
paid to the Capital Markets Trustee for the benefit of the Holders to be
credited and applied upon such guaranteed Senior Debt Obligations, whether
matured or unmatured, in accordance with the terms of this Indenture and the
Common Security Agreement.
(8) The Guarantors shall give prompt written notice to the Capital
Markets Trustee of any fact known to any of the Guarantors that would prohibit
the making of any payment to the Capital Markets Trustee in respect of this
Guarantee.
IN WITNESS WHEREOF, the Guarantors have caused this Guarantee to be
duly executed.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By:
Name:
Title:
-35-
<PAGE>
SABINE RIVER HOLDING CORP.
By: _________________________________
Name:
Title
NECHES RIVER HOLDING CORP.
By: _________________________________
Name:
Title
SECTION 206. Legends on Restricted Securities.
Except as otherwise provided in this Indenture, all Securities issued
pursuant to this Indenture (including Securities issued upon registration of
transfer, in exchange for or in lieu of such Securities) shall be "Restricted
Securities", and shall bear the applicable legend(s) setting forth restrictions
on transfer provided in Section 202, provided, however, that the term
"Restricted Securities" shall not include (i) Temporary Regulation S Global
Securities or Unrestricted Global Securities, (ii) Securities as to which such
restrictive legend(s) shall have been removed pursuant to Section 305 and (iii)
Securities issued upon registration of transfer of, in exchange for or in lieu
of Securities that are not Restricted Securities, including without limitation
the Exchange Securities.
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $255,000,000
(subject to increase in connection with any issuance of Further Notes pursuant
to Section 901(7)) except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Section 304, 305, 306, 907 or 1107.
The Securities shall be known and designated as the "12.50% Senior
Secured Notes Due 2009", of the Issuer. The Stated Maturity of these Securities
shall be January 15, 2009, and they shall bear interest at the rate of 12.50%,
per annum, from August 19, 1999 or from the most recent Payment Date to which
interest has been paid or duly provided for, as the case may be, payable semi-
annually on January 15 and July 15, commencing January 15, 2000 until the
principal
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thereof is paid or made available for payment; provided that such rate is
subject to increase in certain circumstances as provided in the Registration
Rights Agreement, which is hereby incorporated by reference herein.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Issuer in The City of New York,
New York maintained for such purpose and at any other office or agency
maintained by the Issuer for such purpose, provided, however, that at the option
of the Issuer payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be unconditionally guaranteed by the Guarantors
as provided in Article Twelve.
The Securities shall be subject to defeasance at the option of the
Issuer as provided in Article Thirteen.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $100,000 and any integral multiple of
$1,000 in excess thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Issuer by a duly
authorized Responsible Officer of the Issuer. The accompanying Guarantees shall
be executed on behalf of the Guarantors by a duly authorized Responsible Officer
of each. The signature of any of these officers on the Securities or the
Guarantees may be manual or facsimile.
Securities or the accompanying Guarantees bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Issuer or any of the Guarantors, respectively, shall bind the Issuer or the
respective Guarantor, as the case may be, notwithstanding that such individuals
or any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or the accompanying Guarantees or did not hold such
offices at the date of such Securities or the accompanying Guarantees.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Securities executed by the Issuer, and
having endorsed thereon the Guarantee executed as provided in Section 1202 by
the Guarantors, to the Capital Markets Trustee for authentication, together with
an Issuer Order for the authentication and delivery of such Securities; and the
Capital Markets Trustee in accordance with such Issuer Order shall authenticate
and deliver
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such Securities with such Guarantees endorsed thereon as in this Indenture
provided and not otherwise.
At any time and from time to time after the execution and delivery of
this Indenture and after the effectiveness of a registration statement under the
Securities Act with respect thereto, the Issuer may deliver Exchange Securities
executed by the Issuer, and having endorsed thereon the Guarantee executed under
Section 1202 by the Guarantors, to the Capital Markets Trustee for
authentication, together with an Issuer Order for the authentication and
delivery of such Exchange Securities, and a like principal amount of Original
Securities for cancellation in accordance with Section 309 of this Indenture,
and the Capital Markets Trustee in accordance with the Issuer Order shall
authenticate and deliver such Securities, with the Guarantee endorsed thereon.
Each such Issuer Order shall be accompanied by an Opinion of Counsel stating in
substance
(a) that all conditions hereunder precedent to the authentication and
delivery of such Exchange Securities with the Guarantee of the Guarantors
endorsed thereon have been complied with and that such Exchange Securities
and the Guarantee of the Guarantors endorsed thereon have been duly
executed and, when such Securities have been duly authenticated and
delivered by the Capital Markets Trustee, will be duly issued and delivered
and will constitute valid and legally binding obligations of the Issuer and
the Guarantors, respectively, enforceable in accordance with their terms
and subject to the terms of and entitled to the benefits of this Indenture
and any other Financing Documents, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and
(b) that the issuance of the Exchange Securities in exchange for
Original Securities has been effected in compliance with the Securities
Act.
The Capital Markets Trustee shall also receive Officers' Certificates
from each of the Issuer and the Guarantors stating that, immediately after the
authentication and delivery of such Securities and the Guarantees endorsed
thereon, no Event of Default or Potential Default shall have occurred and that
such Exchange Securities are freely tradeable to the extent contemplated by the
prospectus delivered in connection with the Exchange Offer.
Each Security shall be dated the date of its authentication.
No Security or Guarantee shall be entitled to any benefit under this
Indenture, the Common Security Agreement or any other applicable Financing
Document or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Capital Markets Trustee by manual signature, and such
certificate upon any Security or Guarantee shall be conclusive evidence, and the
only evidence, that such Security or Guarantee has been duly authenticated and
delivered hereunder.
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SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Issuer may
execute, and upon an Issuer Order the Capital Markets Trustee shall authenticate
and deliver, temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and having endorsed thereon the Guarantee substantially of the tenor
of the definitive Guarantee in lieu of which they are issued duly executed by
the Guarantors and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Securities and Guarantees
may determine, as evidenced by their execution of such Securities and
Guarantees.
If temporary Securities are issued, the Issuer will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Issuer designated pursuant to Section 1003, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Issuer shall execute and the Capital Markets Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations and like tenor having endorsed
thereon Guarantees duly executed by the Guarantors. Until so exchanged the
temporary Securities and the temporary Guarantees endorsed thereon shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities and definitive Guarantees.
SECTION 305. Registration, Registration of Transfer and Exchange.
(1) The Issuer shall cause to be kept at the Corporate Trust Office of
the Capital Markets Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1003 being
herein sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Securities and of transfers of Securities. The
Capital Markets Trustee is hereby appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security and the
Guarantee endorsed thereon at an office or agency of the Issuer designated
pursuant to Section 1003 for such purpose, and subject to the other provisions
of this Section 305, the Issuer shall execute, and the Capital Markets Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities with accompanying Guarantees duly
executed by the Guarantors and endorsed thereon of any authorized denominations
and of a like aggregate principal amount.
At the option of the Holder, Securities and the Guarantees endorsed
thereon (subject, in the case of a Temporary Regulation S Global Security to the
requirements of Section 201) may
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be exchanged for other Securities, with accompanying Guarantees, of any
authorized denominations and of a like aggregate principal amount, upon
surrender of such Securities and such Guarantees endorsed thereon to be
exchanged at such office or agency. Whenever any Securities, with accompanying
Guarantees, are so surrendered for exchange, and subject to the other provisions
of this Section 305, the Issuer shall execute, and the Capital Markets Trustee
shall authenticate and deliver, the Securities with accompanying Guarantees duly
executed by the Guarantors and endorsed thereon that the Holder making the
exchange is entitled to receive.
All Securities and the Guarantees endorsed thereon issued upon any
registration of transfer or exchange of Securities, including without limitation
the Exchange Securities, shall be the valid obligations of the Issuer and the
Guarantors, respectively, and subject to the other provisions of this Section
305, evidencing the same debt, and entitled to the same benefits under this
Indenture and the other Financing Documents, as the Securities upon such
registration of transfer or exchange.
Every Security and accompanying Guarantee presented or surrendered for
registration of transfer or for exchange shall (if so required by the Capital
Markets Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities and accompanying Guarantees, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 907 or 1107 not
involving any transfer.
(2) Restricted Securities. Each Restricted Security, including any
Security issued upon transfer or exchange thereof (other than pursuant to the
Exchange Offer), shall be subject to the restrictions on transfer provided in
the applicable legend(s) required to be set forth on the face of each Restricted
Security pursuant to Section 202, unless such restrictions on transfer shall be
waived by the written consent of the Issuer, the Guarantors and the Capital
Markets Trustee, and the Holder of each Restricted Security, by such Holder's
acceptance thereof, agrees to be bound by such restrictions on transfer.
Whenever any Restricted Security is presented or surrendered for registration of
transfer or for exchange for a Security registered in a name other than that of
the Holder, such Restricted Security must be accompanied by an appropriately
completed certificate in substantially the form set forth in or contemplated by
clause (7) of Section 313 (which may be attached to or set forth in the
Restricted Security), dated the date of such surrender and signed by the Holder
of such Restricted Security, as to compliance with such restrictions on
transfer, unless the Issuer shall have notified the Capital Markets Trustee
pursuant to this Section 305 that there is an effective registration statement
under the Securities Act with respect to such Restricted Security. Neither the
Security Registrar nor any Transfer Agent shall be required to accept for such
registration of transfer or exchange any Restricted Security not so accompanied
by a properly completed certificate.
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Except as otherwise provided in the preceding paragraph, if Securities
are issued upon the transfer, exchange or replacement of Securities bearing a
legend or legends setting forth restrictions on transfer that are intended to
ensure compliance with the Securities Act, or if a request is made to remove
such legend(s) on a Security, the Securities so issued shall bear such
legend(s), or such legend(s) shall not be removed, as the case may be, unless
the transferor delivers to the Issuer and the Capital Markets Trustee such
satisfactory evidence (which may include an opinion of independent counsel
experienced in matters of United States securities law as may be reasonably
satisfactory to the Issuer and the Capital Markets Trustee), as may be
reasonably required by the Issuer and the Capital Markets Trustee, that neither
such legend(s) nor the restrictions on transfer set forth therein are required
to ensure that transfers thereof comply with the provisions of Rule 144A or Rule
144 or Regulation S under the Securities Act or that such Securities are not
"restricted securities" within the meaning of Rule 144 under the Securities Act.
Upon provision of such satisfactory evidence to the Issuer and the Capital
Markets Trustee, the Capital Markets Trustee, at the written direction of the
Issuer set forth in an Officers' Certificate, shall authenticate and deliver a
Security that does not bear such legend(s). In the absence of bad faith on its
part, the Capital Markets Trustee may conclusively rely upon such direction of
the Issuer in authenticating and delivering a Security that does not bear such
legend(s).
Upon registration of transfer of or exchange of Securities that are no
longer Restricted Securities, the Issuer shall execute, and the Capital Markets
Trustee shall authenticate and deliver, a Security that does not bear
restrictive legends.
The Exchange Securities shall not bear any restrictive legends.
As used in this Section 305(2), the term "transfer" encompasses any
sale, pledge or other transfer of any Securities referred to herein.
(3) Global Securities. This Section 305(3) shall apply to Global
Securities.
(A) Each Global Security authenticated under this Indenture shall be
registered in the name of the U.S. Depository designated for such Global
Security or a nominee thereof and delivered to such U.S. Depository or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture. The
Securities may be represented by one or more Global Securities, and such
Global Securities may be Restricted Global Securities, Temporary Regulation
S Global Securities, Regulation S Global Securities, or any combination
thereof.
(B) Except as provided under Section 305(3)(E)(vii), notwithstanding
any other provision in this Indenture, no Global Security may be exchanged
in whole or in part for Securities registered, and no transfer of a Global
Security in whole or in part may be registered, in the name of any Person
other than the U.S. Depository for such Global Security or a nominee
thereof unless (i) such U.S. Depository (a) has notified the Issuer that
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it is unwilling or unable to continue as U.S. Depository for such Global
Security, (b) has ceased to be a clearing agency registered under the
Exchange Act or (c) has announced an intention permanently to cease
business or has in fact done so and, in each case, a successor U.S.
Depository is not appointed within 90 days thereof, (ii) the Issuer
executes and delivers to the Capital Markets Trustee an Issuer Order
providing that such Global Security shall be so transferable, registrable
and exchangeable, and such transfers shall be registrable or (iii) there
shall have occurred and be continuing an Event of Default with respect to
the Securities. Owners of beneficial interests in such Global Security will
not be entitled to have any portions of such Global Security registered in
their names, will not receive or be entitled to receive physical delivery
of Securities in certificated, definitive form and will not be considered
the owners or the holders of the Global Securities (or any Securities
represented thereby) under the Indenture or the Securities. Upon the
occurrence of any of the events described in this subclause (B) that
entitle an owner of beneficial interests in a Global Security to receive a
certificated, definitive Security registered in such owner's name, the
Issuer will cause the appropriate certificated Securities to be delivered.
In addition, no beneficial owner of an interest in a Global Security will
be able to transfer that interest except in accordance with the U.S.
Depository's Applicable Procedures (in addition to those under the
Indenture referred to herein). Any Global Security exchanged pursuant to
subclause (i) of this subclause (B) shall be so exchanged in whole and not
in part and any Global Security exchanged pursuant to subclause (ii) or
(iii) of this subclause (B) may be exchanged in whole or from time to time
in part as directed by the U.S. Depository for such Global Security.
Notwithstanding any other provision in this Indenture, a Global Security to
which the restriction set forth in the second preceding sentence shall have
ceased to apply may be transferred only to, and may be registered and
exchanged for Securities registered only in the name or names of, such
Person or Persons as the U.S. Depository for such Global Security shall
have directed and no transfer thereof other than such a transfer may be
registered.
(C) Subject to subclause (B) of clause (3) of this Section 305, any
exchange of a Global Security for other Securities may be made in whole or
in part, and all Securities issued in exchange for such Global Security or
any portion thereof shall be registered in such name or names as the U.S.
Depository for such Global Security shall direct.
(D) (i) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 907 or
1107 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the U.S. Depository for such Global Security or a
nominee thereof and (ii) the U.S. Depository or its nominee, as registered
owner of a Global Security, shall be the Holder of such Global Security for
all purposes under the Indenture and the Securities, and owners of
beneficial interests in a Global Security shall hold such interests
pursuant to the Applicable Procedures. Accordingly, any such owner's
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beneficial interest in a Global Security will be shown only on, and the
transfer of such interest shall be effected only through, records
maintained by the U.S. Depository or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be
considered the owners or holders thereof.
(E) Notwithstanding any other provision of this Indenture or of the
Securities, transfers of interests in a Global Security of the kind
described in Section 201 and in subclauses (iii), (iv) or (v) of this
subclause (E), shall be made only in accordance with this subclause (E),
and all transfers of an interest in a Temporary Regulation S Global
Security shall comply with subclauses (ii), (v) and (viii) of this
subclause (E). The provisions of this clause (E) providing for transfers of
Securities of a series or beneficial interests in Global Securities of such
series to Persons who wish to take delivery in the form of beneficial
interests in a Restricted Global Security, a Temporary Regulation S Global
Security or an Unrestricted Global Security shall apply only if there is a
Restricted Global Security, Temporary Regulation S Global Security or
Unrestricted Global Security, as the case may be.
(i) Transfer of Global Security. A Global Security may not be
transferred, in whole or in part, to any Person other than the U.S.
Depository or a nominee thereof, and no such transfer to any such
other Person may be registered; provided that this subclause (i) shall
not prohibit any transfer of a Security that is issued in exchange for
a Global Security of the same series but is not itself a Global
Security. No transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until such Security
has been registered in the name of such Person. Nothing in this
Section shall prohibit or render ineffective any transfer of a
beneficial interest in a Global Security effected in accordance with
the other provisions of subclause (E) of clause (3) of Section 305.
(ii) Temporary Regulation S Global Security. If the holder of a
beneficial interest in a Temporary Regulation S Global Security wishes
to transfer such interest to a Person who wishes to take delivery
thereof in the form of a beneficial interest in such Temporary
Regulation S Global Security, such transfer may be effected, subject
to Applicable Procedures, only in accordance with this subclause (ii).
Upon delivery (a) by a beneficial owner of an interest in a Temporary
Regulation S Global Security to Euroclear or CEDEL, as the case may
be, of an Owner Securities Certification, (b) by the transferee of
such beneficial interest in the Temporary Regulation S Global Security
to Euroclear or CEDEL, as the case may be, of an appropriately
completed certificate in substantially the form set forth in or
contemplated by Section 313(3) and (c) by Euroclear or CEDEL, as the
case may be, to the Capital Markets Trustee, as Security Registrar, of
a U.S. Depository Securities Certification, the Capital Markets
Trustee may direct either Euroclear or CEDEL, as the case may be, to
reflect on its records the transfer of a beneficial interest in the
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Temporary Regulation S Global Security from the beneficial owner
providing the Owner Securities Certification to the Person providing
the certification in the form set forth in or contemplated by Section
313(3).
(iii) Restricted Global Security to Temporary Regulation S Global
Security. If the holder of a beneficial interest in a Restricted
Global Security wishes at any time to transfer such interest to a
Person who wishes to take delivery thereof in the form of a beneficial
interest in a Temporary Regulation S Global Security, such transfer
may be effected, subject to the Applicable Procedures, only in
accordance with the provisions of this subclause (iii). Upon receipt
by (x) the U.S. Depository of (a) written instructions given in
accordance with the Applicable Procedures from a member of, or
participant in, the U.S. Depository (each, an "Agent Member")
directing the U.S. Depository to credit or cause to be credited to a
specified Agent Member's account a beneficial interest in a Temporary
Regulation S Global Security in a principal amount equal to that of
the beneficial interest in the Restricted Global Security of the same
series to be so transferred, (b) a written order given in accordance
with the Applicable Procedures containing information regarding the
account of the Agent Member (and the Euroclear or CEDEL account, as
the case may be) to be credited with, and the account of the Agent
Member to be debited for, such beneficial interest, and (c) an
appropriately completed certificate in substantially the form set
forth in or contemplated by Section 313(4) given by the holder of such
beneficial interest in the Restricted Global Security, and (y) the
Capital Markets Trustee, as Security Registrar, at its Corporate Trust
Office of (a) notification from the U.S. Depository of the transaction
described in (x) above and (b) the certificate described in (x)(c)
above, the Capital Markets Trustee, as Security Registrar, shall
instruct the U.S. Depository for such Securities to reduce the
principal amount of the Restricted Global Security, and to increase
the principal amount of the Temporary Regulation S Global Security
(and, if so contemplated by such Security, an appropriate notation
shall be made on each such Security), by the principal amount of the
beneficial interest in the Restricted Global Security to be so
transferred, and to credit or cause to be credited to the account of
the Person specified in such instructions (which shall be the Agent
Member for Euroclear and/or CEDEL or both, as the case may be) a
beneficial interest in the Temporary Regulation S Global Security
having a principal amount equal to the amount by which the principal
amount of the Restricted Global Security was reduced upon such
transfer.
(iv) Restricted Global Security to Unrestricted Global Security.
If the holder of the beneficial interest in the Restricted Global
Security wishes at any time to transfer such interest to a Person who
wishes to take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Security, such transfer may be effected,
subject to the Applicable Procedures, only in accordance with this
subclause (iv). Upon receipt by (x) the U.S. Depository of (a) written
instructions
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given in accordance with the Applicable Procedures from an Agent
Member directing the U.S. Depository to credit or cause to be credited
to a specified Agent Member's account a beneficial interest in an
Unrestricted Global Security in a principal amount equal to that of
the beneficial interest in the Restricted Global Security to be so
transferred, (b) a written order given in accordance with the
Applicable Procedures containing information regarding the account of
the Agent Member (and, in the case of any such transfer pursuant to
Regulation S, the Euroclear or CEDEL account for which such Agent
Member's account is held) to be credited with, and the account of the
Agent Member to be debited for, such beneficial interest, and (c) an
appropriately completed certificate in substantially the form set
forth in or contemplated by Section 313(5) given by the holder of such
beneficial interest, and (y) the Capital Markets Trustee, as Security
Registrar, at its Corporate Trust Office of (a) notification from the
U.S. Depository of the transaction described in (x) above and (b) the
certificate described in (x)(c) above, the Capital Markets Trustee, as
Security Registrar, shall instruct the U.S. Depository for such
Securities to reduce the principal amount of the Restricted Global
Security, and to increase the principal amount of the Unrestricted
Global Security (and, if so contemplated by such Security, an
appropriate notation shall be made on each such Security), by the
principal amount of the beneficial interest in the Restricted Global
Security to be so transferred, and to credit or cause to be credited
to the account of the Person specified in such instructions a
beneficial interest in the Unrestricted Global Security having a
principal amount equal to the amount by which the principal amount of
the Restricted Global Security was reduced upon such transfer.
Thereafter, transfers of interests in such Unrestricted Global
Security shall not be subject to the foregoing requirements.
(v) Temporary Regulation S Global Security or Unrestricted Global
Security to Restricted Global Security. If the holder of a beneficial
interest in a Temporary Regulation S Global Security on or after the
termination of the Distribution Compliance Period or the holder of a
beneficial interest in an Unrestricted Global Security wishes at any
time to transfer such interest to a Person who wishes to take delivery
thereof in the form of a beneficial interest in a Restricted Global
Security, such transfer may be effected, subject to the Applicable
Procedures and only in accordance with this subclause (v), provided
that with respect to any transfer of a beneficial interest in a
Temporary Regulation S Global Security (except a transfer pursuant to
Section 305(3)(E)(vii)(b)), the transferor and Euroclear or CEDEL, as
the case may be, must have previously delivered the Owner Securities
Certification and U.S. Depository Securities Certification with
respect to such beneficial interest. Upon receipt by (x) the U.S.
Depository of (a) written instructions given in accordance with the
Applicable Procedures from an Agent Member directing the U.S.
Depository to credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the Restricted Global
Security equal to that of the
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beneficial interest in the Temporary Regulation S Global Security or
Unrestricted Global Security to be so transferred, (b) a written order
given in accordance with the Applicable Procedures containing
information regarding the account of the Agent Member to be credited
with, and the account of the Agent Member (and, if such account is
held for Euroclear or CEDEL, the Euroclear or CEDEL account, as the
case may be) to be debited for, such beneficial interest and (c) with
respect to a transfer of a beneficial interest in the Temporary
Regulation S Global Security or the Unrestricted Global Security, an
appropriately completed certificate in substantially the form set
forth in or contemplated by Section 313(6) given by the holder of such
beneficial interest and (y) the Capital Markets Trustee, as Security
Registrar, at its Corporate Trust Office of (a) notification from the
U.S. Depository of the transaction described in (x) above and (b) the
certificate described in (x)(c) above, and in the case of Temporary
Regulation S Global Securities, the Owner Securities Certification and
U.S. Depository Securities Certification, the Capital Markets Trustee,
as Security Registrar, shall instruct the U.S. Depository for such
Securities to reduce the principal amount of the Temporary Regulation
S Global Security or Unrestricted Global Security, as the case may be,
and to increase the principal amount of the Restricted Global Security
(and, if so contemplated by such Security, an appropriate notation
shall be made on each such Security), by the principal amount of the
beneficial interest in the Temporary Regulation S Global Security or
Unrestricted Global Security to be so transferred, and to credit or
cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Restricted Global Security
having a principal amount equal to the amount by which the principal
amount of the Temporary Regulation S Global Security or Unrestricted
Global Security was reduced upon such transfer.
(vi) Restricted Security (other than a Restricted Global
Security) to Global Security. If the Holder of a Restricted Security
(other than a Restricted Global Security) wishes at any time to
transfer such Security to a Person who wishes to take delivery thereof
in the form of a beneficial interest in such Restricted Global
Security, a Temporary Regulation S Global Security or an Unrestricted
Global Security, such transfer may be effected, subject to the other
provisions of this Indenture and the Applicable Procedures, only in
accordance with this subclause (vi). Upon receipt by (x) the U.S.
Depository of (a) written instructions given in accordance with the
Applicable Procedures from an Agent Member directing the U.S.
Depository to credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the Restricted Global
Security, a Temporary Regulation S Global Security or an Unrestricted
Global Security, as the case may be, in a principal amount equal to
the principal amount of the Restricted Security to be so transferred,
(b) a written order given in accordance with the Applicable Procedures
containing information regarding the account of the Agent Member (and,
in the case of any transfer pursuant to Regulation S, the Euroclear or
CEDEL
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account for which such Agent Member's account is held or, if such
account is held for Euroclear or CEDEL, the Euroclear or CEDEL
account, as the case may be) to be credited with such beneficial
interest, and (c) an appropriately completed certificate in
substantially the form set forth in or contemplated by Section 313(7)
and (y) the Capital Markets Trustee of (a) the Restricted Security to
be transferred, (b) notification from the U.S. Depository of the
transaction described in (x) above and (c) the certificate described
in (x)(c) above, the Capital Markets Trustee, as Security Registrar,
shall cancel the Restricted Security, the Issuer shall execute, and
the Capital Markets Trustee shall authenticate and deliver, a new
definitive Security for the principal amount of the Restricted
Security not so transferred, registered in the name of the Holder
transferring such Restricted Security, and the Capital Markets Trustee
shall instruct the U.S. Depository for such Securities to increase the
principal amount of the Restricted Global Security, the Temporary
Regulation S Global Security or Unrestricted Global Security, as the
case may be, by the remaining principal amount of the Restricted
Security so transferred, and to credit or cause to be credited to the
account of the Person specified in such instructions (which, in the
case of any increase of the principal amount of a Temporary Regulation
S Global Security, shall be the Agent Member for Euroclear or CEDEL or
both, as the case may be) a corresponding principal amount of the
Restricted Global Security, the Temporary Regulation S Global Security
or Unrestricted Global Security, as the case may be. The transfer of a
Restricted Security to a Person who wishes to take delivery thereof in
the form of a beneficial interest in a Global Security other than a
Restricted Global Security may be effected only in accordance with
Regulation S or Rule 144.
(vii) Other Exchanges. (a) In the event that a Global Security or
any portion thereof is exchanged for Securities other than Global
Securities, such other Securities may in turn be exchanged (on
transfer or otherwise) for Securities that are not Global Securities
or for beneficial interests in a Global Security (if any is then
Outstanding) only in accordance with such procedures, which shall be
substantially consistent with the provisions of subclauses (i) through
(vi) and this subclause (vii) of Section 305(3)(E) (including the
certification requirements intended to insure that transfers of
beneficial interests in a Global Security comply with Rule 144A, Rule
144 or Regulation S, as the case may be) and any Applicable
Procedures, as may be from time to time adopted by the Issuer and the
Capital Markets Trustee, provided that, except as permitted in
subclause (B) of clause (3) of this Section 305 hereof, no beneficial
interest in a Temporary Regulation S Global Security shall be
exchangeable for a definitive Security until the expiration of the
Distribution Compliance Period and then only if the certifications
described in Section 201 have been provided in respect of such
interest.
(b) Notwithstanding any other provision of this Section 305, a
lead
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underwriter or initial purchaser may exchange beneficial interests in
a Temporary Regulation S Global Security held by it for one or more
Restricted Securities (including an interest in a Restricted Global
Security) only after delivery by such underwriter and initial
purchaser, as the case may be, of instructions for such exchange of an
appropriately completed certificate substantially in the form set
forth in or contemplated by Section 313(7). Upon receipt of the
instruction described in the preceding sentence, the Capital Markets
Trustee shall instruct the U.S. Depository to reduce the principal
amount of a Temporary Regulation S Global Security by the principal
amount of the beneficial interest in such Temporary Regulation S
Global Security to be so transferred and either the Capital Markets
Trustee shall (a) instruct the U.S. Depository to increase the
principal amount of the Restricted Global Security and credit or cause
to be credited to the account of the lead underwriter and initial
purchasers a beneficial interest in such Restricted Global Security
have a principal amount equal to the amount by which the principal
amount of the Temporary Regulation S Global Security was reduced upon
such transfer or (b) authenticate and deliver one or more Restricted
Securities in the aggregate principal amount of the beneficial
interest in the Temporary Regulation S Global Security to be so
transferred, pursuant to the instructions described in the first
sentence of this subclause (b).
(viii) Interests in Temporary Regulation S Global Security to be
Held Through Euroclear or CEDEL. Until the later of termination of the
Distribution Compliance Period with respect to the Securities, and the
provision of the Owner Securities Certification and U.S. Depository
Securities Certification pursuant to Section 201, interests in any
Temporary Regulation S Global Security may be held only through Agent
Members acting for and on behalf of Euroclear and CEDEL, and any
purchaser of Securities in a sale made in reliance on Regulation S may
not sell or offer to sell such Securities within the United States or
to a U.S. Person or for the account or benefit of a U.S. Person within
the meaning of Regulation S, provided that this subclause (viii) shall
not prohibit any transfer in accordance with the other provisions of
Section 305(3)(E).
(ix) Successive registrations of transfer of Securities as
aforesaid may be made from time to time, and each such registration
shall be noted on the Security Registrar.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities .
If any mutilated Security is surrendered to the Capital Markets
Trustee, the Issuer shall execute, the Guarantors shall execute the Guarantee
endorsed thereon and the Capital Markets Trustee shall authenticate and deliver
in exchange therefor a new Security of like tenor and principal amount having
endorsed thereon the Guarantee executed by the Guarantors and bearing a number
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not contemporaneously outstanding.
If there shall be delivered to the Issuer, the Guarantors and the
Capital Markets Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Security and (ii) such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Issuer or the Capital Markets Trustee that
such Security has been acquired by a bona fide purchaser, the Issuer shall
execute, the Guarantors shall execute the Guarantee endorsed thereon and the
Capital Markets Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount having endorsed thereon the Guarantee executed by the Guarantors and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Issuer or any of the
Guarantors in its discretion may, instead of issuing a new Security, pay such
Security.
Upon the issuance of any new Security under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Capital Markets Trustee)
connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security, and the Guarantee endorsed thereon, shall
constitute an original additional contractual obligation of the Issuer and the
Guarantors, as the case may be, whether or not the destroyed, lost or stolen
Security and the Guarantee endorsed thereon shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Payment Date shall be paid to the Person in whose name
that Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest at the office or agency
of the Issuer maintained for such purpose pursuant to Section 1003, provided,
however, that each installment of interest may at the Issuer's option be paid by
(i) mailing a check for such interest, payable to or upon the written order of
the Person entitled thereto, to the address of such Person as it appears in the
Security Register or (ii) transfer to an account located in the United States
maintained by the payee.
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Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by any of the Issuer or the Guarantors, at its election in
each case, as provided in clause (1) or (2) below:
(1) The Issuer or any of the Guarantors may elect to make payment of
any Defaulted Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Issuer or the relevant Guarantor or
Guarantors, as the case may be, shall notify the Capital Markets Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and at the same time the Issuer or the
relevant Guarantor or Guarantors, as the case may be, shall deposit with the
Capital Markets Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Capital Markets Trustee for such deposit prior
to the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest as in
this clause provided. Thereupon the Capital Markets Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Capital Markets Trustee of
the notice of the proposed payment. The Capital Markets Trustee shall promptly
notify the Issuer and the Guarantors of such Special Record Date and, in the
name and at the expense of the Guarantors, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as it appears
in the Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause (2).
(2) The Issuer or the Guarantors may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the Issuer
to the Capital Markets Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Capital Markets
Trustee.
The Issuer hereby promises to pay to the Holders of any Security
Outstanding interest on the unpaid principal amount of each such Security of
each Holder from the date of issuance to but excluding the date such Security
shall be paid in full. If any installment of principal of any Security
Outstanding or any other amount (including interest) payable hereunder is not
paid in full when due (whether at the stated due date, by acceleration or
otherwise), the Issuers hereby agree to
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pay from time to time upon demand interest on the amount past due at a rate per
annum equal to the Post-Default Rate.
The Post-Default Rate shall be paid pursuant to the procedures for
payment of Defaulted Interest as set forth above.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Issuer, the Guarantors, the Collateral Trustee, the Capital Markets Trustee
and any agent of the Issuer, the Guarantors, the Collateral Trustee or the
Capital Markets Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 307) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Issuer, the Guarantors, the Capital Markets Trustee nor
any agent of the Issuer, the Guarantors, the Collateral Trustee or the Capital
Markets Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Capital
Markets Trustee, be delivered to the Capital Markets Trustee and shall be
promptly cancelled by it. The Issuer or the Guarantors may at any time deliver
to the Capital Markets Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Issuer or the Guarantors may
have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Capital Markets Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Capital Markets Trustee shall be disposed of as directed
by a Issuer Order.
Subject to the terms of the Common Security Agreement, the Issuer, the
Guarantors or their respective Affiliates may at any time purchase any
Securities in the open market or otherwise at any price, provided that any
Security so purchased by the Issuers must be surrendered to the Capital Markets
Trustee for cancellation in accordance with the foregoing paragraph and may not
be re-issued or resold.
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SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 311. Security for and Parity of Securities; Ranking.
All Securities issued and Outstanding hereunder rank on a parity with
each other Security, and each Security shall be secured by the Collateral
equally and ratably pursuant to this Indenture, the Common Security Agreement
and the other Security Documents with each other Security, without preference,
priority or distinction of any one thereof over any other by reason of
difference in time of issuance or otherwise, and each Security shall be entitled
to the same benefits and security in this Indenture, the Common Security
Agreement and the other Security Documents as each other Security. The Guarantee
is secured by the Collateral pursuant to the Common Security Agreement and the
other Security Documents. Except as set forth in Sections 5.05 and 10.12 of the
Common Security Agreement and other than in the case of claims that may be
granted preferential treatment pursuant to applicable law, (i) the Securities
shall rank pari passu with any Senior Debt Obligations incurred pursuant to a
Senior Loan Agreement, to which the Issuer or any of the Guarantors is party,
and any Oil Payment Reimbursement Obligations incurred pursuant to the Oil
Payment Reimbursement Agreement and (ii) the Guarantee shall rank pari passu
with any Senior Debt Obligations incurred pursuant to a Senior Loan Agreement,
to which the Issuer or any of the Guarantors is party, and any Oil Payment
Reimbursement Obligations incurred pursuant to the Oil Payment Reimbursement
Agreement, and in each case shall be senior to all Subordinated Debt. In
accordance with the terms of the Common Security Agreement and the other
Security Documents, the Partnership shall be solely responsible for the
continued maintenance, priority and perfection of such security interests.
SECTION 312. CUSIP Numbers.
The Issuer in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Capital Markets Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders, provided that the
Capital Markets Trustee shall assume no responsibility for the accuracy of such
numbers and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 313. Certification Forms.
The Capital Markets Trustee, as Security Registrar, shall have no
obligation or duty to inquire as to compliance with any restrictions on
transfers imposed hereunder or under applicable law with respect to any exchange
or transfer of any interest in any Security (including any transfer between
Agent Members or beneficial owners of any Global Security) other than to require
delivery of such certificates and other documentation or evidence as expressly
required hereby, and to do so
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if and when required by the terms hereof and to examine the same to determine
compliance as to form with the requirements hereof.
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(1)
FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS
OF BENEFICIAL INTEREST IN A TEMPORARY REGULATION S
GLOBAL SECURITY TO EUROCLEAR OR CEDEL
OWNER'S SECURITIES CERTIFICATION
(Certification Pursuant to (S) 201)
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE
as Operator of the Euroclear Clearance
System] [or] [CEDELBANK]
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to US$_________________ principal amount of
Securities which are evidenced by one or more Temporary Regulation S Global
Securities (CUSIP No. ______) and held with the Depository through Euroclear or
CEDEL (Common Code _________) in the name of [Insert Name of Holder] (the
"Holder").
This is to certify that, as of the date hereof, $_________ of the
above captioned Securities are beneficially owned by non-U.S. person(s) and are
not held for purposes of resale directly or indirectly to a U.S. Person or to a
person within the United States or its possessions.
As used in this paragraph the term "U.S. Person" has the meaning given
to it by Regulation S under Securities Act of 1933, as amended. As used herein,
"United States" means the United States of America, its territories and
possessions, any State of the United States, and the District of Columbia.
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We undertake to advise you immediately by tested telex on or prior to
the date on which you intend to submit your certification relating to the
Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuers and the lead underwriters and initial purchasers, if
any, of the Securities being transferred.
By:___________________________________________________
As, or as agent for, the beneficial owner(s) of
the Securities to which this certificate relates
Dated: ______________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
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(2)
FORM OF CERTIFICATION TO BE GIVEN BY THE EUROCLEAR
OPERATOR OR CEDEL, SOCIETE ANONYME
DEPOSITORY SECURITIES CERTIFICATION
(Certification Pursuant to (S) 201)
HSBC BANK USA, as Capital Markets Trustee
140 Broadway
New York, NY 10005-1180
Attn: James M. Foley, Issuer Services
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below (our "Member Organizations"), substantially
to the effect set forth in the Indenture, as of the date hereof, U.S.
$__________ aggregate principal amount of the above-captioned Securities are
beneficially owned by non-U.S. Persons and are not held for purposes of resale
directly or indirectly to a U.S. Person or to a person within the United States.
As used herein, "U.S. Person" has the meaning assigned to it in
Regulation S under the Securities Act of 1933, as amended. As used herein,
"United States" means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Temporary Regulation S Global Security excepted in such
certifications and (ii) that as of the date hereof we
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have not received any notification from any of our Member Organizations to the
effect that the statements made by such Member Organizations with respect to any
portion of the part submitted herewith for exchange (or, if relevant, exercise
of any rights or collection of any interest) are no longer true and cannot be
relied upon as of the date hereof.
We understand that this certification is required in connection with
certain securities laws of the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings. This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuers and the lead underwriters and
initial purchasers, if any, of the Securities being transferred.
By:________________________________________
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE,
as Operator of the Euroclear Clearance
System] [or] [CEDELBANK]
Dated: ______________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
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(3)
FORM OF CERTIFICATION TO BE GIVEN BY TRANSFEREE
OF BENEFICIAL INTEREST IN A TEMPORARY REGULATIONS
GLOBAL SECURITY
(Transferee Securities Certification Pursuant to (S) 305(3)(E)(ii)
of the Indenture)
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE
as Operator of the Euroclear Clearance System]
[or] [CEDELBANK]
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
For purposes of acquiring a beneficial interest in the Temporary
Regulation S Global Security, the undersigned certifies that it is not a U.S.
Person as defined by Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the Securities
held by you in which we intend to acquire a beneficial interest in accordance
with your operating procedures if any applicable statement herein is not correct
on such date, and in the absence of any such notification it may be assumed that
this certification applies as of such date.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested
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party in such proceeding. This certificate and the statements contained herein
are made for your benefit and the benefit of the Issuers and the lead
underwriters and initial purchasers, if any, of the Securities being
transferred.
By:__________________________________________
As, or as agent for, the beneficial
acquirer of the Securities to which this
certificate relates.
Dated: ________________________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
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(4)
FORM OF TRANSFER CERTIFICATE
FOR EXCHANGE OR TRANSFER FROM RESTRICTED GLOBAL
SECURITY TO TEMPORARY REGULATION S GLOBAL SECURITY
(Transfers pursuant to (S) 305(3)(E)(iii)
of the Indenture)
HSBC BANK USA, as Capital Markets Trustee
140 Broadway
New York, NY 10005-1180
Attn: James M. Foley, Issuer Services
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to US$_________________ principal amount of
Securities which are evidenced by one or more Restricted Global Securities
(CUSIP No. ______) and held with the Depositary in the name of [Insert Name of
Transferor] (the "Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest in the Securities to a Person who will take
delivery thereof in the form of an equal principal amount of Securities
evidenced by one or more Temporary Regulation S Global Securities (CUSIP No.
_______), which amount, immediately after such transfer, is to be held with the
Depositary through Euroclear or CEDEL or both (Common Code ________).
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such exchange or transfer has been effected
in accordance with the transfer restrictions set forth in the Securities and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor does hereby further certify that:
(a) the offer of the Securities was not made to a person in the
United
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States;
(b) either:
(A) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting on
its behalf reasonably believed and believes that the transferee was
outside the United States, or
(B) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(c) no directed selling efforts have been made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(e) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary through
Euroclear or CEDEL or both (Common Code ______).
We understand that this certificate is required in connection with certain
securities laws of the United States. In connection therewith, if administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This certificate
and the statements contained herein are made for your benefit and the benefit of
the
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Issuers and the lead underwriters or initial purchasers, if any, of the initial
offering of such Securities being transferred. Terms used in this certificate
and not otherwise defined in the Indenture have the meanings set forth in
Regulation S under the Securities Act.
[Insert Name of Transferor]
By:_______________________________
Name:
Title:
(If the registered owner is a corporation, partnership
or fiduciary, the title of the Person signing on
behalf of such registered owner must be stated)
Dated: ______________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
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(5)
FORM OF TRANSFER CERTIFICATE
FOR EXCHANGE OR TRANSFER FROM RESTRICTED GLOBAL
SECURITY TO UNRESTRICTED GLOBAL SECURITY
(Transfers Pursuant to (S) 305(3)(E)(iv))
of the Indenture)
HSBC BANK USA, as Capital Markets Trustee
140 Broadway
New York, NY 10005-1180
Attn: James M. Foley, Issuer Services
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to US$_________________ principal amount of
Securities which are evidenced by one or more Restricted Global Securities
(CUSIP No. ______) and held with the Depositary in the name of [Insert Name of
Transferor] (the "Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest in the Securities to a Person who will take
delivery thereof in the form of an equal principal amount of Securities
evidenced by one or more Unrestricted Global Securities (CUSIP No. _______), to
be held with the Depositary.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Securities and
pursuant to and in accordance with either (i) Regulation S or (ii) Rule 144
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and accordingly the Transferor does hereby further certify that:
(1) with respect to transfers made in reliance on Regulation S under
the Securities Act:
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(A) the offer of the Securities was not made to a person in the
United States;
(B) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or the
Transferor and any person acting on its behalf
reasonably believed and believes that the transferee
was outside the United States, or
(ii) the transaction was executed in, on or through the
facilities of a designated offshore securities market
and neither the Transferor nor any person acting on its
behalf knows that the transaction was prearranged with
a buyer in the United States;
(C) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as
applicable; and
(D) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; or
(2) if the transfer has been effected pursuant to Rule 144, the
Securities have been transferred in a transaction permitted by Rule 144 in
accordance with any applicable blue sky or securities laws of any state of
the United States.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the
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<PAGE>
Issuers and the lead underwriters and initial purchasers, if any, of the
Securities being transferred. Terms used in this certificate and not otherwise
defined in the Indenture have the meanings set forth in Regulation S under the
Securities Act.
[Insert Name of Transferor]
By:__________________________________
Name:
Title:
(If the registered owner is a corporation,
partnership or fiduciary, the title of the Person
signing on behalf of such registered owner must be
stated)
Dated: ______________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
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(6)
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER OR EXCHANGE FROM TEMPORARY REGULATION S
GLOBAL OR UNRESTRICTED GLOBAL SECURITY
SECURITY TO RESTRICTED GLOBAL SECURITY
(Transfers Pursuant to (S) 305(3)(E)(v)
of the Indenture)
HSBC BANK USA, as Capital Markets Trustee
140 Broadway
New York, NY 10005-1180
Attn: James M. Foley, Issuer Services
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to US$______________ principal amount of
Securities which are evidenced by one or more Temporary Regulation S Global
Securities or the Unrestricted Global Securities (CUSIP No. _______) and held
with the Depositary through Euroclear or CEDEL or both (Common Code __________)
in the name of [Insert Name of Transferor] (the "Transferor"). The Transferor
has requested a transfer of such beneficial interest in Securities to a Person
who will take delivery thereof in the form of an equal principal amount of
Securities evidenced by one or more Restricted Global Securities (CUSIP No.
________), to be held with the Depositary.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer is being effected pursuant to
and in accordance with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the Transferor does hereby
further certify that the Securities are being transferred to a Person that the
Transferor reasonably believes is purchasing the Securities for its own account,
or for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A,
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in each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable blue sky or securities laws of any state of the
United States.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuers and the lead underwriters and initial purchasers, if
any, of the Securities being transferred.
[Insert Name of Transferor]
By:________________________________
Name:
Title:
(If the registered owner is a corporation,
partnership or fiduciary, the title of the Person
signing on behalf of such registered owner must be
stated)
Dated: ______________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
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(7)
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER OR EXCHANGE OF RESTRICTED
SECURITY
(Transfers Pursuant to (S) 305(2) or 305(3)(E)(vi)
of the Indenture)
HSBC BANK USA, as Capital Markets Trustee
140 Broadway
New York, NY 10005-1180
Attn: James M. Foley, Issuer Services
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to US$______________ principal amount of
Securities presented or surrendered on the date hereof (the "Surrendered
Securities") which are registered in the name of [Insert Name of Transferor]
(the "Transferor"). The Transferor has requested an exchange or a transfer of
such Surrendered Securities to a Person other than the Transferor (each such
transaction being referred to herein as a "transfer").
In connection with such request and in respect of such Surrendered
Securities, the Transferor does hereby certify that:
[CHECK ONE]
[_] (1) the Surrendered Securities are being transferred to the Issuer;
or
[_] (2) the Surrendered Securities are being transferred pursuant to and
in
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accordance with Rule 144A under the United States Securities
Act of 1933 (the "Securities Act") and, accordingly, the
Transferor does hereby further certify that the Surrendered
Securities are being transferred to a Person that the Transferor
reasonably believes is purchasing the Surrendered Securities for
its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A, in each case in a transaction
meeting the requirements of Rule 144A and in accordance with any
applicable blue sky or securities laws of any state of the United
States;/1/
or
[_] (3) the Surrendered Securities are being transferred pursuant to and
in accordance with Regulation S under the Securities Act and:
(A) the offer of the Surrendered Securities was not made to
a person in the United States;
(B) either:
(i) at the time the buy order was originated,
the transferee was outside the United States
or the Transferor and any person acting on
its behalf reasonably believed and believes
that the transferee was outside the United
States, or
(ii) the transaction was executed in, on or
through the facilities of a designated
offshore securities market and neither the
Transferor nor any person acting on its
behalf knows that the transaction was
prearranged with a buyer in the United
States;
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
(D) the transaction is not part of a plan or scheme to
evade the
_______________________
/1/ Use for transfers of Restricted Security for Restricted Security or
interest in Restricted Global Security.
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registration requirements of the Securities Act /1/2/;
or
[_] (4) the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act and in accordance
with any applicable blue sky or securities laws of any state of
the United States/3/.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the underwriters and initial
purchasers, if any, of the Securities being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:_________________________________
Name:
Title:
(If the registered owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such registered
owner must be stated)
Dated: ______________, ____
cc: Port Arthur Finance Corp.
Port Arthur Coker Company L.P.
Sabine River Holding Corp.
Neches River Holding Corp.
(8)
_________________________
/1/ Use for transfers of Restricted Security pursuant to Rule 903 or Rule 904
after termination of Distribution Compliance Period.
/2/ Use for transfers of Restricted Security pursuant to Rule 903 or Rule 904
prior to termination of Distribution Compliance Period.
/3/ Use for transfers of Restricted Security for Unrestricted Security or
interest in Unrestricted Global Security.
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FORM OF INSTRUCTION FOR EXCHANGE
EXCHANGE INSTRUCTIONS
(Exchange Pursuant to (S) 305(3)(E)(vii)
of the Indenture)
Re: Port Arthur Finance Corp.
12.50% Senior Secured Notes Due 2009 (the "Securities")
-------------------------------------------------------
Reference is hereby made to the Indenture, dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee and HSBC Bank USA, as Capital Markets Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
[Name of Initial Purchaser] hereby requests that U.S.$__________
aggregate principal amount of the above-captioned Securities held by you for our
account as a Temporary Regulation S Global Security (CUSIP No._______) (as
defined in the Indenture) be exchanged for one or more Restricted Global
Securities (CUSIP No.______) in the denominations and registered in the names of
the holders requested as set forth below:
Denominations Registered Name
- ------------- ---------------
____________________ ____________________
____________________ ____________________
____________________ ____________________
____________________ ____________________
Dated:______________ [Name of Initial Purchaser]
By:_________________
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
Upon an Issuer Request, this Indenture shall cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Capital Markets
Trustee, on demand of and at the expense of the Issuer and the Guarantors, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) the Issuer or the Guarantors have paid and discharged, or have
caused to be paid and discharged, the entire Indebtedness under this
Indenture by (a) paying in full the outstanding principal of, and accrued
and unpaid interest (and premium, if any) on the Securities as and when
payable, (b) depositing with the Capital Markets Trustee cash in a
sufficient amount to redeem or purchase all Outstanding Securities in
accordance with their terms together with proof that notice of redemption
or purchase has been given or waived or an irrevocable order of the Issuer
or the Guarantors directing the Capital Markets Trustee to give such notice
or (c) delivering to the Capital Markets Trustee for cancellation all
Outstanding Securities; and
(2) the Issuer or the Partnership has delivered to the Capital
Markets Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
Upon satisfaction of the aforesaid conditions, the Capital Markets
Trustee shall, upon receipt of an Issuer Request, acknowledge in writing the
satisfaction and discharge of this Indenture and take all other action
reasonably requested by the Issuer or the Guarantors to evidence the termination
of any and all Liens created by or with respect to this Indenture or the
Financing Documents.
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to this Article Four, the obligations of the Issuer to the Capital
Markets Trustee under Section 607, the obligations of the Capital Markets
Trustee to any Authenticating Agent under Section 614, the obligation of the
Issuer to any Paying Agent or Transfer Agent under Section 615 and, if money
shall have been deposited with the Capital Markets Trustee pursuant to subclause
(b) of clause (1) of this Section, the obligations of the Capital Markets
Trustee under Section 402 and the last paragraph of Section 1004, any rights of
registration and transfer, exchange or replacement of securities provided in
Sections 304, 305, 306, 907 or 1107, shall survive.
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SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1004, all
money deposited with the Capital Markets Trustee pursuant to Section 401 shall
be held in trust and applied by it, in accordance with the provisions of the
Securities, this Indenture and the Common Security Agreement, to the payment,
either directly or through any Paying Agent as the Capital Markets Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Capital Markets Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default. Each of the following events shall be an
"Event of Default":
(a) Payment Default. The Issuer or the Guarantors shall have failed
to make any payment due under the Securities when and as such shall be due and
payable, and such failure shall remain uncured or unwaived for more than five
Business Days.
(b) Breach of Covenant. The Issuer or the Guarantors shall fail to
observe or perform any obligation (other than an Event of Default specified in
clause (a) above) to be observed or performed by it under this Agreement, and
such failure shall continue unwaived or unremedied for any applicable grace
period.
(c) Events of Default Under the Common Security Agreement. Any Event
of Default under the Common Security Agreement (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body).
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
Upon the occurrence and continuation of any Event of Default, Holders
of Securities at the time Outstanding shall have the rights set forth in the
Common Security Agreement and the other applicable Financing Documents.
Subject to the terms and provisions of the Common Security Agreement,
upon the occurrence of an Event of Default that is Continuing (other than an
Event of Default arising in connection with any Insolvency Event specified in
clause (f) of Section 10.01 of the Common Security Agreement) with respect to
Securities at the time Outstanding, then in every such case the Capital Markets
Trustee on behalf of the Holders of such Securities shall, if so directed in
writing,
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by (i) the Holders of not less than 25% in principal amount of the Outstanding
Securities with respect to an Event of Default specified in clause (a) of
Section 10.01 of the Common Security Agreement or (ii) Majority Lenders with
respect to any other Event of Default deliver a certificate to the Collateral
Trustee pursuant to Section 10.02 of the Common Security Agreement certifying
that the Event of Default or Events of Default set out in (i) or (ii), as the
case may be, have occurred and is or are Continuing, as the case may be, and
instructing the Collateral Trustee to declare a Default pursuant to Section
10.02 of the Common Security Agreement, and upon such declaration by the
Collateral Trustee, the Holders of Outstanding Securities shall have those
applicable remedies set forth in Section 10.04 of the Common Security Agreement,
which Section is incorporated herein by reference, mutatis mutandis.
Upon the occurrence of an Event of Default arising in connection with
an Insolvency Event specified in clause (f) of Section 10.01 of the Common
Security Agreement with respect to Securities at the time Outstanding, the
principal amount of all the Securities shall automatically, and without any
declaration or other action on the part of the Capital Markets Trustee or any
Holder, become immediately due and payable.
Subject to Section 14.14 of the Common Security Agreement, at any time
after such a declaration of acceleration or automatic acceleration, as the case
may be, with respect to the Securities has been made and before a judgment or
decree for payment of the money due has been obtained by the Capital Markets
Trustee as hereinafter in this Article Five provided that Majority Bondholders,
by written notice to the Issuer, the Guarantors, the Collateral Trustee and the
Capital Markets Trustee, may rescind and annul any such declaration,
acceleration or automatic acceleration and its consequences if:
(1) the Issuer or the Guarantors have paid or deposited with the
Capital Markets Trustee a sum sufficient to pay
(A) all overdue interest (including interest at a Post-Default Rate)
on all Securities,
(B) the principal of (and premium, if any, on) any Securities which
have become due otherwise than by such declaration of acceleration and
interest thereon at the rate or rates borne by the Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate borne by the Securities, and
(D) all sums paid or advanced by the Capital Markets Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Capital Markets Trustee and the Collateral Trustee, and
their agents and counsel;
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and
(2) all Events of Default or Potential Defaults (whether or not any
declaration of acceleration under any other Senior Loan Agreement has been
made), other than the non-payment of the principal of Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Capital
Markets Trustee.
Subject to the terms of the Common Security Agreement, the Issuer and
each of the Guarantors each covenants that if acceleration in accordance with
the terms set forth herein or under the Common Security Agreement with respect
to any Securities has been declared, it will, upon demand of the Capital Markets
Trustee, pay to the Capital Markets Trustee or the Collateral Trustee, as the
case may be, for the benefit of the Holders of such Securities, the whole amount
then due and payable, as a Pro Rata Payment under the Common Security Agreement
or otherwise, on such Securities for principal (and premium, if any) and
interest, and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal (and premium, if any) and on any
overdue interest (if any), at the rate or rates (including interest at a Post-
Default Rate, as the case may be) prescribed therefor in the Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Capital Markets Trustee and the Collateral
Trustee, and their agents and counsel.
If an Event of Default occurs, has not been waived or cured and is
Continuing, the Capital Markets Trustee may in its discretion, subject to the
terms and conditions herein and in the Common Security Agreement, proceed to
protect and enforce the rights vested in it hereunder and under the Common
Security Agreement and the rights of the Holders by such appropriate judicial
proceedings as the Capital Markets Trustee shall deem most effectual to protect
and enforce any such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement in
this Indenture or any other applicable Financing Document or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Capital Markets Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Issuer or the
Guarantors (or any other obligor upon the Securities), their property or their
creditors, the Capital Markets Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have claims of the Holders
and the
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Capital Markets Trustee allowed in any such proceeding. In particular, the
Capital Markets Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Capital Markets Trustee and, in the
event that the Capital Markets Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Capital Markets Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Capital Markets Trustee, its agents and counsel, and any other
amounts due the Capital Markets Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Capital Markets Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Capital Markets Trustee to vote in respect of the claim of any Holder in any
such proceeding, provided, however, that the Capital Markets Trustee may, on
behalf of the Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other similar committee.
SECTION 505. Capital Markets Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
or the Guarantee may be prosecuted and enforced by the Capital Markets Trustee
without the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Capital
Markets Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, pursuant to and subject to the terms of the
Common Security Agreement, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Capital Markets
Trustee, its agents and counsel, be for the ratable benefit of the Holders of
the Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to the terms and conditions of the Common Security Agreement,
any money collected by the Capital Markets Trustee pursuant to this Article Five
and in accordance with the Common Security Agreement in respect of any
Securities shall be applied in the following order, at the date or dates fixed
by the Capital Markets Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
several Securities in respect of which moneys have been collected and stamping
(or otherwise noting) thereon the payment, or issuing Securities in reduced
principal amounts in exchange for the presented Securities if only partially
paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to such
Securities in
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respect of which moneys have been collected, including all fees and
expenses and liabilities incurred, and all advances made, by the Capital
Markets Trustee and each predecessor Indenture Trustee, as provided in
Section 607, except as a result of negligence or willful misconduct, and
all other amounts due to the Indenture Trustee or any predecessor Indenture
Trustee pursuant to Section 607;
SECOND: In case the principal of the Securities in respect of which
moneys have been collected shall not have become and be then due and
payable, to the payment of overdue interest on such Securities in default
in the order of the maturity of the installments of such interest, with
interest (to the extent that such interest has been collected by the
Capital Markets Trustee) upon the overdue installments of interest at the
rate or rates of interest specified in such Securities, such payments to be
made pro rata to the Persons entitled thereto in accordance with Section
2.06 and 2.08 of the Common Security Agreement, without discrimination or
preference;
THIRD: In case the principal of the Securities in respect of which
moneys have been collected shall have become and shall be then due and
payable, to the payment of the whole amount then owing and unpaid upon all
such Securities for principal and interest, with interest upon the overdue
principal, and (to the extent that such interest has been collected by the
Capital Markets Trustee) upon overdue installments of interest at the rate
or rates of interest specified in such Securities; and in case such moneys
shall be insufficient to pay in full the whole amount so due and unpaid
upon such Securities, then to the payment of such principal and interest,
without preference or priority of principal over interest, or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security, pro
rata to the aggregate of such principal and accrued and unpaid interest in
accordance with Section 2.08 of the Common Security Agreement; and
FOURTH: To the payment of the remainder, if any, to the Guarantors or
any other Person lawfully entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to the Securities, this
Indenture, the Common Security Agreement or any other applicable Financing
Document, or for the appointment of a receiver or trustee, or for any other
remedy hereunder or under the Securities, the Common Security Agreement or any
other applicable Financing Document, unless
(1) such Holder has previously given written notice to the Capital
Markets Trustee of an Event of Default that is continuing with respect to
the Securities or requested the Capital Markets Trustee exercise voting or
other rights or take, or cause to be taken,
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action under the Common Security Agreement pursuant to an instruction,
direction or Act of the Holders hereunder;
(2) a Holder or Holders have made written request to the Capital
Markets Trustee to institute proceedings in respect of an Event of Default
arising in connection with an Insolvency Event specified in clause (f) of
Section 10.01 of the Common Security Agreement in its own name as Capital
Markets Trustee hereunder;
(3) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Capital
Markets Trustee to institute proceedings in respect of an Event of Default
arising in connection with a Payment Default specified in clause (a) of
Section 10.01 of the Common Security Agreement in its own name as Capital
Markets Trustee hereunder;
(4) Majority Lenders shall have made written request to the Capital
Markets Trustee to institute proceedings in respect of such Event of
Default (other than an Event of Default arising in connection with a
Payment Default or an Insolvency Event specified in clauses (a) or (f) of
Section 10.01 of the Common Security Agreement) in its own name as Capital
Markets Trustee hereunder;
(5) the Holders in principal amount of Outstanding Securities, of not
less than the specified percentage required to give, make or take such a
request, demand, authorization, direction, notice, consent, waiver or other
Act hereunder or under the Common Security Agreement, shall have made
written request to the Capital Markets Trustee to exercise voting or other
rights or take or cause to be taken action under the Common Security
Agreement in respect of such request, demand, authorization, direction,
notice, consent, waiver or other Act;
(6) such Holder or Holders have offered to the Capital Markets
Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(7) the Capital Markets Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(8) no direction inconsistent with such written request has been
given to the Capital Markets Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over
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any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture or the Common
Security Agreement, the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Section 307) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Capital Markets Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture, the Common
Security Agreement or any other applicable Financing Document and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Capital Markets Trustee or to such Holder, then and
in every such case, subject to any determination in such proceeding, the Issuer,
the Guarantors, the Capital Markets Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereunder,
as the case may be, and thereafter all rights and remedies of the Capital
Markets Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein, in the Common Security Agreement or
any other applicable Financing Document conferred upon or reserved to the
Capital Markets Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or thereunder, as the case may be, or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder or thereunder as the case may be, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Capital Markets Trustee or of any Holder
of any Security to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article, the Common Security Agreement, any other applicable Financing
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Document or by law to the Capital Markets Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Capital Markets Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
Subject to Section 603(5), Majority Bondholders shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Capital Markets Trustee or exercising any trust or power (which
shall include any determination and exercise of any voting or other rights or
taking of any other action under the Common Security Agreement or any other
applicable Financing Document, as the case may be,) conferred on the Capital
Markets Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or the Common Security Agreement, and
(2) the Capital Markets Trustee may take any other action deemed
proper by the Capital Markets Trustee which is not inconsistent with such
direction.
SECTION 513. Waiver of Past Defaults.
Majority Bondholders may on behalf of the Holders of all Securities
waive any past default, Potential Default or Event of Default hereunder or under
the Common Security Agreement and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default, Potential Default or Event of
Default shall cease to exist, the Issuer, the Guarantors, the Capital Markets
Trustee and the Holders of the Securities shall be restored to their former
positions and rights hereunder, and, where applicable, any Potential Default or
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture and the Capital Markets Trustee shall be
authorized to deliver any and all such notices required to be delivered under
the Common Security Agreement to ensure such Potential Default or Event of
Default shall also be deemed to have been cured for the purpose of the Common
Security Agreement; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
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SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Capital Markets Trustee for any action
taken, suffered or omitted by it as Capital Markets Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; but the provisions of this
Section shall not apply to any suit instituted by the Capital Markets Trustee or
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Outstanding Securities, or to
any suit instituted by any Holder of any Security for the enforcement of the
payment of the principal of or any premium or interest on such Security on or
after the Stated Maturity thereof (including, in the case of redemption, on or
after the Redemption Date).
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Issuer and each of the Guarantors covenant (to the extent that
they may each lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any usury, stay or extension law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture or
any obligation arising under the Securities issued hereunder; and the Issuer and
each of the Guarantors (to the extent that they may each lawfully do so) hereby
expressly waive all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Capital Markets Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE SIX
THE CAPITAL MARKETS TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(1) Except when an Event of Default shall have occurred and be
Continuing (including after the curing or waiving of all Events of Default),
(A) the Capital Markets Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and the
other Financing Documents to which it is party, and no implied covenants or
obligations shall be read into this Indenture and the other Financing
Documents against the Capital Markets Trustee; and
(B) in the absence of bad faith on its part, the Capital Markets
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions
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expressed therein, upon certificates, requests, orders or opinions
delivered to the Capital Markets Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or opinions
which by any provision hereof or of the other Financing Documents are
specifically required to be delivered to the Capital Markets Trustee, the
Capital Markets Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture
or the other Financing Documents, as the case may be, but need not verify
the contents thereof.
(2) In case an Event of Default has occurred (which has not been
cured or waived) and is Continuing, the Capital Markets Trustee shall exercise
such of the rights and powers vested in it by this Indenture and the Common
Security Agreement, and use the same degree of care and skill in their exercise,
as a prudent Person would exercise or use under the circumstances in the conduct
of his own affairs.
(3) No provision of this Indenture shall be construed to relieve the
Capital Markets Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that
(A) this clause (3) shall not be construed to limit the effect of
clause (1) of this Section;
(B) the Capital Markets Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Capital Markets Trustee was negligent in ascertaining the
pertinent facts;
(C) the Capital Markets Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a majority in principal amount (or
such other amount as may be provided in or pursuant to this Indenture) of
the Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Capital Markets
Trustee, or exercising any trust or power conferred upon the Capital
Markets Trustee, under this Indenture or the Common Security Agreement; and
(D) no provision of this Indenture or the Common Security Agreement
shall require the Capital Markets Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
(4) Whether or not herein or therein expressly so provided, every
provision of this Indenture or the Common Security Agreement, respectively,
relating to the conduct or affecting
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the liability of or affording protection to the Capital Markets Trustee shall be
subject to the provisions of this Section and subject to Sections 315 and 316 of
the Trust Indenture Act.
SECTION 602. Notice of Defaults.
After the occurrence of any default hereunder and the expiration of
any applicable grace period, the Capital Markets Trustee shall transmit by mail
to all Holders of the Securities affected thereby, as their names and addresses
appear in the Security Register, in the manner provided in Section 106, notice
of such default hereunder known to the Capital Markets Trustee (each a "Notice
of Default"), unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of or interest on any Security, the Capital Markets Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Capital Markets Trustee in good faith determines that the withholding of such
notice is in the best interests of the Holders. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default.
SECTION 603. Certain Rights of Capital Markets Trustee.
Subject to the provisions of Section 601:
(1) the Capital Markets Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties or with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it from Holders holding a sufficient percentage of
Securities to give such direction as permitted hereunder;
(2) any request or direction of the Issuer or the Partnership
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate, an Issuer Request, an Issuer Order, a Partnership Request or a
Partnership Order;
(3) whenever in the administration of this Indenture or the Common
Security Agreement the Capital Markets Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting
any action hereunder, the Capital Markets Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(4) the Capital Markets Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder or under the
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Common Security Agreement in good faith and in reliance thereon;
(5) the Capital Markets Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture or the
Common Security Agreement at the request or direction of any of the Holders
pursuant to this Indenture, unless such Holders shall have offered to the
Capital Markets Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Capital Markets Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital Markets Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Capital Markets Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Issuer and the
Guarantors, personally or by agent or attorney;
(7) the Capital Markets Trustee may execute any of the trusts or
powers hereunder or under the Common Security Agreement or perform any
duties hereunder either directly or by or through agents or attorneys and
the Capital Markets Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Capital Markets Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights of powers conferred
upon it by this Indenture or the Common Security Agreement with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it from Holders holding a sufficient percentage of
Securities to give such direction as permitted by this Indenture.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein, in the Common Security Agreement, the
Securities and the Guarantee, except the Capital Markets Trustee's certificates
of authentication, shall be taken as the statements of the Issuer and the
Guarantors and the Capital Markets Trustee assumes no responsibility for their
correctness. The Capital Markets Trustee makes no representations as to the
validity or sufficiency of this Indenture, the Common Security Agreement or of
the Securities or of the Guarantees endorsed thereon. The Capital Markets
Trustee shall not be accountable for the use or application by the Issuer or the
Guarantors of Securities or the proceeds thereof.
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SECTION 605. May Hold Securities.
The Capital Markets Trustee, any Authenticating Agent, any Paying
Agent, any Transfer Agent, any Security Registrar or any other agent of the
Issuer or the Guarantors, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 609 and 614, may
otherwise deal with the Issuer and the Guarantors with the same rights it would
have if it were not the Capital Markets Trustee, Authenticating Agent, Paying
Agent, Transfer Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Capital Markets Trustee in trust hereunder need not
be segregated from other funds except to the extent required by law. The
Capital Markets Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Issuer or the
Guarantors, as the case may be.
SECTION 607. Compensation and Reimbursement.
The Issuer and the Guarantors jointly and severally unconditionally
agree:
(1) to pay to the Capital Markets Trustee (all references in this
Section 607 to the Capital Markets Trustee shall be deemed to apply to it
in its capacities as Capital Markets Trustee, Authenticating Agent, Paying
Agent, Transfer Agent and Securities Registrar hereunder or as Applicable
Agent under the Common Security Agreement and any other Financing
Documents) from time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Capital Markets Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Capital Markets Trustee
in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith or wilful misconduct;
(3) to indemnify the Capital Markets Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence or bad faith or wilful misconduct on its part, arising out of or
in connection with the acceptance or administration of this trust or in
connection with the Securities or the Common Security Agreement, including
the costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder; and
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(4) The obligations of the Issuer and the Guarantors under this
Section 607 to compensate the Capital Markets Trustee, to pay or reimburse
the Capital Markets Trustee for expenses, disbursements and advances and to
indemnify and hold harmless the Capital Markets Trustee shall be payable in
accordance with Sections 5.05, 5.06 or 10.12, as the case may be, of the
Common Security Agreement and shall survive the satisfaction and discharge
of this Indenture.
When the Capital Markets Trustee incurs expenses or renders services
after the occurrence of an Event of Default under clause (f) of Section 10.01 of
the Common Security Agreement, the parties hereto and the Holders by their
acceptance of the Securities hereby agree that the expenses and the compensation
for the services of the Capital Markets Trustee are intended to constitute
expenses of administration under any applicable bankruptcy law.
Upon its resignation or removal, the Capital Markets Trustee shall be
entitled to the prompt payment by the Issuer and the Guarantors of its
compensation and indemnification for the services rendered under this Indenture
and the other Financing Documents, and to reimbursement of all reasonable out-
of-pocket expenses up to the date of resignation or removal (including without
limitation the reasonable fees and expenses of counsel, if any), incurred in
connection with the performance of such services.
If the Capital Markets Trustee (or an agent thereof) takes title to
the assets of the Issuer or the Guarantors pursuant to a foreclosure proceeding
(a "Transfer"), then the Issuer and the Guarantors will indemnify, on a joint
and several basis, the Capital Markets Trustee for liabilities arising out of
any violation of environmental law by the Issuer or the Guarantors, whether
known at the time of the Transfer or discovered subsequent to the Transfer, with
respect to such assets that resulted from action occurring prior to the
Transfer, provided that the Issuer and the Guarantors shall not indemnify the
Capital Markets Trustee for any such liability that is attributable to a change
in environmental law (including any change in interpretation effected through a
formal, written substantive policy directive or decision of Governmental
Authority) after the date of such Transfer. The foregoing indemnity shall be for
the sole benefit of the Capital Markets Trustee (and any agent thereof who takes
title to assets of the Issuer or the Guarantors in a foreclosure proceeding) and
rights thereunder may not be assigned or otherwise transferred other than to a
successor Capital Markets Trustee hereunder. Holders of Securities shall not
have any rights under the foregoing indemnity.
The obligation of the Issuer and the Guarantors under this Section 607
shall survive satisfaction of the Securities and the expiration, cancellation,
termination or modification of this Indenture and the other Financing Documents.
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SECTION 608. Disqualification; Conflicting Interests.
If the Capital Markets Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Capital Markets
Trustee shall either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the Trust Indenture Act
and this Indenture.
SECTION 609. Corporate Capital Markets Trustee Required; Eligibility.
There shall at all times be a Capital Markets Trustee hereunder which
shall be a Person that is eligible pursuant to the Trust Indenture Act to act as
such and has a combined capital and surplus of at least $50,000,000 and its
Corporate Trust Office in The Borough of Manhattan, The City of New York. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Capital Markets Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(1) No resignation or removal of the Capital Markets Trustee and no
appointment of a successor Capital Markets Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Capital Markets Trustee under Section 611.
(2) The Capital Markets Trustee may resign at any time by giving
written notice thereof to the Issuer and the Guarantors. If an instrument of
acceptance by a successor Capital Markets Trustee shall not have been delivered
to the Capital Markets Trustee within 30 days after the giving of such notice of
resignation, the resigning Capital Markets Trustee may petition any court of
competent jurisdiction for the appointment of a successor Capital Markets
Trustee.
(3) The Capital Markets Trustee may be removed at any time by Act of
the Majority Bondholders, delivered to the Capital Markets Trustee and to the
Issuer and the Guarantors.
(4) If at any time:
(A) the Capital Markets Trustee shall fail to comply with Section 608
after written request therefor by the Issuer and the Partnership or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(B) the Capital Markets Trustee shall cease to be eligible under
Section 609 and
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shall fail to resign after written request therefor by the Issuer and the
Partnership or by any such Holder, or
(C) the Capital Markets Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Capital
Markets Trustee or of its property shall be appointed or any public officer
shall take charge or control of the Capital Markets Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Issuer, by an Issuer Order, and the Partnership,
by a Partnership Order, may remove the Capital Markets Trustee, or (ii) subject
to Section 514, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Capital
Markets Trustee and the appointment of a successor Capital Markets Trustee.
(5) If the Capital Markets Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Capital
Markets Trustee for any cause, the Issuer, by an Issuer Order, and the
Partnership, by a Partnership Order, shall promptly appoint a successor Capital
Markets Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Capital Markets
Trustee shall be appointed by Act of the Holders of a majority in principal
amount of the Outstanding Securities delivered to the Issuer and the Guarantors
and the retiring Capital Markets Trustee, the successor Capital Markets Trustee
so appointed shall, forthwith upon its acceptance of such appointment, become
the successor Capital Markets Trustee and supersede the successor Capital
Markets Trustee appointed by the Issuer and the Partnership. If no successor
Capital Markets Trustee shall have been so appointed by the Issuer and the
Partnership or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Capital
Markets Trustee.
(6) The Issuer and the Partnership shall give notice of each
resignation and each removal of the Capital Markets Trustee and each appointment
of a successor Capital Markets Trustee to all Holders in the manner provided in
Section 106. Each notice shall include the name of the successor Capital
Markets Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Capital Markets Trustee appointed hereunder shall
execute, acknowledge and deliver to the Issuer and the Guarantors and to the
retiring Capital Markets Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Capital Markets Trustee
shall become effective and such successor Capital Markets Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and
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duties of the retiring Capital Markets Trustee; but, on request of the Issuer
and the Partnership or the successor Capital Markets Trustee, such retiring
Capital Markets Trustee shall, upon payment of its charges, execute and deliver
an instrument transferring to such successor Capital Markets Trustee all the
rights, powers and trusts of the retiring Capital Markets Trustee and shall duly
assign, transfer and deliver to such successor Capital Markets Trustee all
property and money held by such retiring Capital Markets Trustee hereunder. Upon
request of any such successor Capital Markets Trustee, the Issuer and the
Guarantors shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Capital Markets Trustee all such
rights, powers and trusts.
No successor Capital Markets Trustee shall accept its appointment
unless at the time of such acceptance such successor Capital Markets Trustee
shall be qualified and eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Capital Markets Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Capital Markets
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Capital Markets Trustee, shall be the
successor of the Capital Markets Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Capital Markets Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Capital Markets
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Capital Markets Trustee
had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Issuer and the
Guarantors.
If and when the Capital Markets Trustee shall be or become a creditor
of the Issuer or the Guarantors (or any other obligor upon the Securities), the
Capital Markets Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of claims against the Issuer or the
Guarantors (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Capital Markets Trustee may appoint an Authenticating Agent or
Agents which shall be authorized to act on behalf of the Capital Markets Trustee
to authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption or pursuant to Section 306, and
Securities so authenticated, and the Guarantees endorsed thereon, shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated
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by the Capital Markets Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Capital
Markets Trustee or the Capital Markets Trustee=s certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Capital Markets Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Capital Markets Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Issuer and the Guarantors and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section 614, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Capital Markets Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Capital Markets Trustee and to the Issuer and the
Guarantors. The Capital Markets Trustee may at any time terminate the agency of
an Authenticating Agent by giving written notice thereof to such Authenticating
Agent and to the Issuer and the Guarantors. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Capital Markets Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Guarantors
and shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the Security
Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Issuer agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Capital Markets Trustee shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 607.
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If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Capital Markets Trustee=s certificate
of authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
HSBC BANK USA,
As Capital Markets Trustee
By___________________________,
As Authenticating Agent
By___________________________
Authorized Officer
SECTION 615. Appointment of Paying Agents and Transfer Agents.
The Issuer and the Guarantors may appoint a Paying Agent, a Transfer
Agent or other agents (which in each case shall not be the Issuer, the
Guarantors or their respective Affiliates) in addition to the Capital Markets
Trustee, which shall be authorized to act on behalf of the Capital Markets
Trustee to make payments under or transfer such Securities of such series on the
Security Register issued upon original issue and upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306.
A Paying or Transfer Agent may resign at any time by giving written
notice thereof to the Capital Markets Trustee and to the Issuer and the
Guarantors. The Issuer and the Guarantors may at any time terminate the agency
of a Paying Agent or Transfer Agent by giving written notice thereof to such
Paying Agent or Transfer Agent and to the Capital Markets Trustee. Upon
receiving such a notice of resignation or upon such a termination, the Issuer
and the Guarantors may appoint one or more successor Paying Agents or Transfer
Agents and shall give notice of such appointment in the manner provided in
Section 106 to all Holders of Securities of the series with respect to which
such Paying Agent or Transfer Agent will serve. Any successor Paying Agent or
Transfer Agent upon acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as a Paying Agent or Transfer Agent.
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Any corporation into which a Paying Agent or Transfer Agent, as the
case may be, may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
such Paying Agent or Transfer Agent shall be a party, or any corporation
succeeding to the corporate agency or corporate trust business of a Paying Agent
or Transfer Agent, shall continue to be a Paying Agent or Transfer Agent
(provided such corporation shall be otherwise eligible), without the execution
or filing of any paper or any further act on the part of the Trustee or the
Paying Agent or Transfer Agent.
The Issuer and the Guarantors agree to pay to each Paying Agent or
Transfer Agent from time to time reasonable compensation for its services under
this Section 615.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY CAPITAL MARKETS TRUSTEE,
ISSUER AND GUARANTORS
SECTION 701. Issuer to Furnish Capital Markets Trustee Names and
Addresses of Holders.
The Issuer shall furnish or cause to be furnished to the Capital
Markets Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Capital Markets Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date, and
(b) at such other times as the Capital Markets Trustee may request in
writing, within 30 days after the receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Capital Markets
Trustee in its capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Capital Markets Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Capital Markets Trustee as provided in
Section 701 and the names and addresses of Holders received by the Capital
Markets Trustee in its capacity as Security Registrar. The Capital Markets
Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
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(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Capital Markets Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Issuer, the Guarantors and the Capital Markets Trustee that
neither the Issuer, the Guarantors nor the Capital Markets Trustee nor any agent
of any of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 703. Reports by Capital Markets Trustee.
(a) The Capital Markets Trustee shall transmit to Holders such reports
concerning the Capital Markets Trustee and its actions under this Indenture as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Capital Markets Trustee with each stock exchange
upon which the Securities are listed, with the Commission, with the Issuer and
with the Guarantors. The Issuer will notify the Capital Markets Trustee when
the Securities are listed on any stock exchange.
SECTION 704. Reports by Issuer and Guarantors.
The Issuer and the Guarantors shall file with the Capital Markets
Trustee and the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant to such
Act, provided that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Capital Markets Trustee within 15 days after the same is
so required to be filed with the Commission.
SECTION 705. Information Provided by Issuer and Guarantors.
At any time when neither the Issuer nor any of the Guarantors is
subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder
or a beneficial owner of an interest in a Global Security, the Issuer and the
Guarantors shall promptly furnish or cause to be furnished information required
to be delivered under subsection (d)(4) of Rule 144A ("Rule 144A Information")
to such Holder or beneficial owner, or to a prospective purchaser of such
Security or beneficial interest in a Global Security designated by such Holder
or beneficial owner, in order to permit compliance by such Holder or beneficial
owner with Rule 144A in connection with the resale of such Security by such
Holder or beneficial owner, provided, however, that the Issuer and the
Guarantors shall not be required to furnish such information in connection with
any request made
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by the Holder of a Security or a beneficial owner of an interest in a Global
Security, or to a prospective purchaser of such Security or interest, if such
Security or Global Security is not a Restricted Security.
ARTICLE EIGHT
INTERCREDITOR ISSUES
SECTION 801. Senior Debt.
The Holders of Outstanding Securities shall be deemed to have
acknowledged and agreed to (i) the terms and conditions set forth in the Common
Security Agreement, this Indenture and the other applicable Financing Documents
and consented to the execution by the Capital Markets Trustee on behalf of each
such Holder and for their account the Common Security Agreement and the other
applicable Financing Documents and (ii) designating the Capital Markets Trustee
as the Applicable Agent on behalf of Holders of the Securities and as Senior
Lender under the Common Security Agreement for the Securities.
SECTION 802. Actions to Be Taken by Capital Markets Trustee Under Common
Security Agreement.
Notwithstanding any other provision contained herein to the contrary
and subject to clause (1) of Section 104, in the event that any determination,
exercise of voting or other rights or any other action, request, demand,
authorization, direction, notice, consent, approval, waiver or other Act of the
Holders of Securities Outstanding is sought by the Capital Markets Trustee or
the Collateral Trustee pursuant to the Common Security Agreement and the matter
with respect to which such determination, exercise of voting or other rights or
such other action, request, demand, authorization direction, notice, consent,
approval, waiver or Act is a matter that the Capital Markets Trustee is entitled
to vote on under the Common Security Agreement as representative and agent of
such Holders, the Capital Markets Trustee, promptly upon the receipt of notice
from the Collateral Trustee describing the action to be voted on in accordance
with the Common Security Agreement, shall promptly notify the Holders thereof
not less than 15 Business Days notice thereof, such notice to specify the date,
time and place of such meeting and the general nature of the business proposed
to be dealt with, and duly convene a meeting of Holders to canvass the Holders
as to votes to be cast by the Capital Markets Trustee in respect of such matter.
With respect to any such determination, exercise of voting or other
rights or any other action, request, demand, authorization, direction, notice,
consent, approval, waiver or Act by the Holders of a specified percentage in
principal amount of Securities Outstanding, the Capital Markets Trustee shall
vote, for the purposes of the Common Security Agreement, 100% of the Securities
Outstanding in the manner determined by such Holders, provided, however, that in
the case when the Holders of Securities Outstanding, together with any other
Senior Lenders (including Bank Senior Lenders) or Secured Parties, as the case
may be, make any such determination, exercise of
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voting or other rights or any other action, request, demand, authorization,
direction, notice, consent, approval, waiver or Act as one class, pursuant to
the terms of the Common Security Agreement, the Capital Markets Trustee shall
vote, both for and against the actual amount of Securities Outstanding that
voted for or against such determination, exercise of voting or other rights or
any other action, request, demand, authorization, direction, notice, consent,
approval, waiver or Act; and the Capital Markets Trustee shall not exercise any
vote with respect to the Securities Outstanding that have not so voted.
If no instructions are so issued under the foregoing paragraphs, the
Capital Markets Trustee shall abstain from voting under the Common Security
Agreement. In no event shall the Capital Markets Trustee be deemed to be a
Senior Lender (either separately or as a member of a Senior Lender Group) (i)
for payment of principal, interest, indemnification, contribution, or any other
similar amounts owed by any Senior Lender pursuant to the Common Security
Agreement, (ii) when calculating percentages of the specified percentage
required hereunder or under the Common Security Agreement, (iii) as an owner of
a Senior Debt Obligation, (iv) for purposes of declaring or waiving an Event of
Default under Section 513 or covenants under Section 1008 (except as a
representative in accordance with the voting procedures set forth above), or (v)
otherwise where the use of such term would be manifestly inappropriate for a
financial intermediary which is not an ultimate beneficial holder of securities.
In no event shall the Capital Markets Trustee be deemed to be a Senior
Lender (either separately or as a member of the Senior Lender Group) (i) for
payment of principal, interest, indemnification, contribution, or any other
similar amounts owed by any Senior Lender pursuant to the Common Security
Agreement, (ii) when calculating percentages of the requisite voting percentage
required under the Common Security Agreement, (iii) as an owner of a Senior Debt
Obligation, or (iv) otherwise where the use of such term would be manifestly
inappropriate for a financial intermediary which is not an ultimate beneficial
holder of securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without notice to, or the consent of, the Holders, the Issuer, when
authorized by an Officers' Certificate, the Guarantors, each when authorized by
an Officers' Certificate, and the Capital Markets Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Capital Markets Trustee, for any of the following purposes,
subject in all cases to terms and conditions set forth in the Financing
Documents:
(1) to effectuate and evidence the succession of another Person to the
Issuer or any of the Guarantors, and the assumption by any such successor
of the covenants and obligations of the Issuer or the relevant Guarantor
herein, in any Financing Document to
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which the Issuer or the relevant Guarantor is party, in the Securities or
in the Guarantee, as the case may be, or
(2) to add to the covenants of the Issuer or any of the Guarantors for
the benefit of the Holders, or to surrender any right or power herein
conferred upon the Issuer, or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Capital Markets Trustee with respect to the
Securities, or
(4) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act in connection with the issuance of the Exchange Securities
and thereafter maintain the qualification of this Indenture under the Trust
Indenture Act, or
(5) to comply with any rules or regulations of any securities exchange
on which any Securities issued hereunder may be listed, or
(6) to cure any ambiguity, to correct or supplement any provision
herein that may be misleading, defective or inconsistent with any other
provision herein, or to make any other provisions with respect to matters
or questions arising under this Indenture or any Transaction Documents,
provided that such action pursuant to this clause (6) shall not adversely
affect the interests of the Holders in any material respect, or
(7) subject to Sections 2.09 and 2.10 of the Common Security
Agreement, to (A) create and issue Further Notes ranking equally and
ratably with the Securities (x) in all respects, (y) in all respects except
for the payment of interest accruing prior to the issue date of such
Further Notes or (z) except for the first payment of interest following the
issue date of such Further Notes, and so that, in each case, such Further
Notes will be consolidated and form a single series with the Securities and
will have the same terms as to status, redemption or otherwise as the
Securities or (B) issue additional debt securities on terms agreed by the
Issuer and the underwriters of those securities, or
(8) to take any other action which may be taken, without the consent
of the Holders, under the Common Security Agreement, the other Financing
Documents (including this Indenture) and the Project Documents.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of Majority Bondholders, by Act of such Majority
Bondholders delivered to the Issuer, the Guarantors and the Capital Markets
Trustee, the Issuer, when authorized by an Officers' Certificate, the
Guarantors, each when authorized by an Officers' Certificate, and the Capital
Markets Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions
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of this Indenture or the other Financing Documents, provided, however, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of any Security, or the Stated Maturity
of any installment of principal on any Security, or of any payment of
interest on any Security, or reduce the principal amount thereof or the
rate of interest thereon, or the dates or circumstances of any premium
payable, if any, on any Security or change the principal amount thereof or
the interest thereon or any premium payable upon the redemption or
purchase thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment of principal or interest on or after the Stated Maturity
thereof (or, in the case of redemption or purchase, on or after the
Redemption Date) or such payment of premium, if any, on or after the date
such premium becomes due and payable, or change in the Redemption Date or
terms of payment or redemption or purchase,
(2) modify the rights and obligations of the Issuer or the Guarantors
to make Pro Rata Payments (including as set forth in Article II of the
Common Security Agreement),
(3) modify the Intercreditor Agreement,
(4) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or any amendments, supplements or other
modifications to the Transaction Documents (other than this Indenture) or
the consent of whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture and the Common Security Agreement or
certain defaults hereunder and thereunder and their consequences), or to
give, make or take any request, demand, authorization, direction, notice,
consent, determination or other Act provided for in this Indenture or under
the Common Security Agreement, or
(5) modify any of the provisions of this Section, Section 513, Section
903 or Section 1008, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby.
Further, no such supplemental indenture shall, without the consent of
Requisite Secured Parties, permit the creation of any Lien prior to or pari
passu with the Lien of the Security Documents with respect to any of the
Collateral or terminate the Liens of the Security Documents, on any Collateral
or deprive any Holder of the security afforded by the Lien of the Security
Documents, except to the extent expressly permitted by this Indenture, the
Common Security Agreement or any of the Security Documents. Also, subject to
Section 903 of this Indenture and clause (u) of Section 4.01 of the Common
Security Agreement, no such supplemental indenture
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shall, without the consent of Supermajority Secured Parties, permit any
modification of the provisions of Project Documents.
Upon receipt by the Capital Markets Trustee of Officers' Certificates
of the Issuer and the Guarantors and such other documentation as the Capital
Markets Trustee may reasonably require and upon the filing with the Capital
Markets Trustee of evidence of the Act of said Holders, the Capital Markets
Trustee shall join in the execution of such supplemental indenture or other
instrument, as the case may be, subject to the provisions of Sections 904 and
905 hereof and the Common Security Agreement.
It shall not be necessary for any Act of Holders under this Section
902 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Amendments to Certain Financing Documents Without Consent of
Holders.
Without the consent of any Holders, the Issuer, when authorized by an
Officers' Certificate, the Guarantors, each when authorized by an Officers'
Certificate, the Collateral Trustee and the Capital Markets Trustee, on behalf
of Holders, at any time and from time to time, may enter, subject to the
provisions of the relevant Financing Documents, into one or more amendments,
supplements or other modifications to any Financing Documents (other than the
Indenture which is governed by the provisions of this Article) (the "Selected
Documents"), for any of the following purposes:
(1) to effectuate and evidence the succession of another Person to the
Issuer or any of the Guarantors and the assumption by any such successor of
the covenants of the Issuer or the relevant Guarantor, as the case may be,
under the Selected Documents,
(2) to add to the covenants of the Issuer or any of the Guarantors for
the benefit of the Holders or to surrender any right or power herein
conferred upon the Issuer or the Guarantors,
(3) to transfer, mortgage or pledge to the Collateral Trustee on
behalf of the Holders as security for the Securities any property or
assets,
(4) to add any additional Events of Default for the benefit of the
Holders,
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Capital Markets Trustee with respect to the
Securities, pursuant to the requirements of Section 610,
(6) to cure any ambiguity, to correct or supplement any provision in
any Selected Documents which may be defective or inconsistent with any
provision herein, the Common
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Security Agreement or therein or to make any other provisions with respect
to matters or questions arising under this Indenture, provided that such
action pursuant to this clause (6) shall not adversely affect the interests
of the Holders in any material respect,
(7) to reflect the incurrence of permitted Indebtedness under the
Common Security Agreement and the granting of Permitted Liens pursuant to
the Common Security Agreement, or
(8) to take any other action which may be taken without the consent of
the Holders under the Indenture, the Common Security Agreement or the
Selected Documents.
The Capital Markets Trustee may enter into amendments, supplements or
other modifications to the Selected Documents for any purpose not set forth in
this Section 903, with the consent of at least a majority of Holders in
principal amount of the Outstanding Securities unless such amendments,
supplements or modifications have the effect set forth in Section 902, in which
case the consent of such Holders will be required as is specified in Section
902.
SECTION 904. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Capital Markets Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Capital Markets Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Capital Markets Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 905. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 906. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 907. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Capital Markets Trustee, bear a
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notation in form approved by the Capital Markets Trustee as to any matter
provided for in such supplemental indenture. If the Issuer and the Guarantors
shall so determine, new Securities so modified as to conform, in the opinion of
the Capital Markets Trustee, the Issuer and the Guarantors, to any such
supplemental indenture may be prepared and executed by the Issuer, the
Guarantees may be endorsed thereon and such new Securities may be authenticated
and delivered by the Capital Markets Trustee in exchange for Outstanding
Securities.
SECTION 908. Notice of Supplemental Indenture.
Promptly after execution by the Issuer and the Guarantors of any
supplemental indenture pursuant to Section 901, the Issuer and the Guarantors
shall transmit to the holders a notice setting forth the substance of such
supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Covenants.
The Issuer and the Guarantors covenant and agree for the benefit of
the Holders of Securities Outstanding, that so long as any Security is
Outstanding, each of them shall duly perform, observe and comply with all of its
obligations, covenants and agreements set forth in the Common Security
Agreement, including without limitation the covenants set forth in Section 4.01
of the Common Security Agreement, all of which, together with any schedules,
appendices, defined terms related thereto, as in effect, are hereby incorporated
by reference herein mutatis mutandis for the benefit of the Holders of
Securities.
SECTION 1002. Payment of Principal, Premium and Interest.
The Issuer covenants and agrees for the benefit of the Holders of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities in accordance with terms of the Securities, this
Indenture and the Common Security Agreement.
SECTION 1003. Maintenance of Office or Agency.
The Issuer and the Guarantors will maintain in The City of New York,
New York an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer or the Guarantors,
in respect of the Securities and this Indenture may be served. The Issuer and
the Guarantors will each give prompt written notice to the Capital Markets
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuer or any of the Guarantors shall fail to
maintain any such required office or agency or shall fail to furnish the
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Capital Markets Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Capital Markets Trustee, and the Issuer and the Guarantors hereby
appoint the Capital Markets Trustee as their agent to receive all such
presentations, surrenders, notices and demands.
The Issuer and the Guarantors may also from time to time designate one
or more other offices or agencies (in or outside The City of New York, New York)
where the Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Issuer
and the Guarantors of their obligation to maintain an office or agency in The
City of New York, New York for such purposes. The Issuer and the Guarantors
will each give prompt written notice to the Capital Markets Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 1004. Money for Security Payments to Be Held in Trust.
Whenever the Issuer and the Guarantors shall have one or more Paying
Agents, the Issuer or the Guarantors will, prior to each due date of the
principal of (and premium, if any) or interest on any Securities, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Capital Markets Trustee) the Issuer will promptly notify the Capital Markets
Trustee of its action or failure so to act.
The Issuer or the Guarantors will cause each Paying Agent other than
the Capital Markets Trustee to execute and deliver to the Capital Markets
Trustee an instrument in which such Paying Agent shall agree with the Capital
Markets Trustee, subject to the provisions of this Section, that such Paying
Agent will (i) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent and (ii) during the continuance of any default by the
Issuer or the Guarantors (or any other obligor upon the Securities) in the
making of any payment in respect of the Securities, upon the written request of
the Capital Markets Trustee, forthwith pay to the Capital Markets Trustee all
sums held in trust by such Paying Agent as such.
The Issuer or the Guarantors may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Issuer Order or Partnership Order, as the case may be,
direct any Paying Agent to pay, to the Capital Markets Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Capital Markets Trustee
upon the same trusts as those upon which such sums were held by such Paying
Agent; and, upon such payment by any Paying Agent to the Capital Markets
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Capital Markets Trustee or any Paying
Agent in trust for the payment of the principal of (and premium, if any) or
interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
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payable shall be paid to the Partnership on Partnership Request; and the Holder
of such Security shall thereafter, as an unsecured general creditor, look only
to the Issuer and the Guarantors for payment thereof, and all liability of the
Capital Markets Trustee or such Paying Agent with respect to such trust money
shall thereupon cease, provided, however, that the Capital Markets Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Issuer and the Guarantors cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Partnership.
SECTION 1005. Statement by Officers as to Default.
The Issuer and the Guarantors will deliver to the Capital Markets
Trustee, within 120 days after the end of each fiscal year of the Issuer or each
of the Guarantors, as the case may be, ending after the date hereof, an
Officers' Certificate, stating whether or not any of the Issuer or the
Guarantors is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if any of the Issuer or
the Guarantors shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
SECTION 1006. Provision of Financial Information.
After the effectiveness of the Registration Statement, whether or not
the Issuer or the Guarantors are required to be subject to Section 13(a) or
15(d) of the Exchange Act, the Issuer and the Guarantors shall file with the
Commission the annual reports, quarterly reports and other documents which the
Issuer and the Guarantors would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Issuer and the Guarantors were so required, such documents to be filed with
the Commission on or prior to the respective dates (the "Required Filing Dates")
by which the Issuer and the Guarantors would have been required so to file such
documents if the Issuer and the Guarantors were so required. The Issuer and the
Guarantors shall also in any event (a) within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear in
the Security Register, without cost to such Holders, and (ii) file with the
Capital Markets Trustee, copies of the annual reports, quarterly reports and
other documents which the Issuer and the Guarantors file with the Commission
pursuant to such Section 13(a) or 15(d) or would have been required to file with
the Commission pursuant to such Section 13(a) or 15(d) if the Issuer and the
Guarantors were required to be subject to such Sections and (b) if filing such
documents by the Issuer and the Guarantors with the Commission is not permitted
under the Exchange Act, promptly upon written request supply copies of such
documents to any prospective Holder.
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SECTION 1007. Available Information.
Until such time as all Outstanding Securities are freely transferable
without restriction under the Securities Act, the (i) Issuer and the Guarantors
will use their best efforts to be subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act and to file in a timely manner
all reports and other documents required to be filed pursuant thereto or in
connection therewith and (ii) the Issuer and the Guarantors will each take, all
actions necessary to permit resales of the Securities and the Guarantees
endorsed thereon pursuant to Rule 144A, including furnishing to any Holder (or
of a beneficial interest in a Security), or to any prospective purchaser
designated by such a Holder or beneficial owner, upon request of such Holder or
beneficial owner, financial and other information required to be delivered under
paragraph (d)(4) of Rule 144A.
SECTION 1008. Waiver of Certain Covenants.
Except as otherwise specified herein or as set forth in the Common
Security Agreement, the Issuer may with respect to the Securities, omit in any
particular instance to comply with any term, provision or condition set forth in
any covenant or obligation provided pursuant to this Indenture (including
Section 901(2), Section 903(2), any covenant incorporated by reference in
Section 1001 or provided pursuant to Sections 1002 through 1007 inclusive) for
the benefit of the Holders, if before the time for such compliance the Holders
of at least a majority in principal amount of the Outstanding Securities shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Issuer and the Guarantors and the duties of the Capital Markets Trustee
in respect of any such covenant or condition shall remain in full force and
effect, provided that, subject to clause (u) of Section 4.01 of the Common
Security Agreement, Supermajority Secured Parties must approve any waiver of the
provisions of the Project Documents, and provided, further, that all Secured
Parties must approve any waiver with respect to any matter involving the release
of Collateral.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
The Securities may be redeemed at the election of the Issuer, and the
Issuer is required to redeem the Securities, as set forth in Section 203.
Redemption of Securities as permitted by Section 203 shall be made in accordance
with such provision and this Article.
SECTION 1102. Election to Redeem; Notice to Capital Markets Trustee.
The election of the Issuer to redeem any Securities pursuant to
Section 1101 shall be evidenced by an Officers' Certificate. In case of any
redemption at the election of the Issuer of less than all the Securities, the
Issuer shall, at least 60 days prior to the Redemption Date fixed by the Issuer
(unless a shorter notice shall be satisfactory to the Capital Markets Trustee),
notify the Capital Markets Trustee of such Redemption Date and of the principal
amount of Securities to be redeemed. The Issuer shall also furnish to the
Capital Markets Trustee an Officers' Certificate stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts
showing that the condition or conditions precedent to the right of the Issuer so
to redeem have occurred or been satisfied and an Opinion of Counsel stating that
the conditions precedent to the right of the Issuer so to redeem have occurred
and been satisfied.
SECTION 1103. Selection by Capital Markets Trustee of Securities to Be
Redeemed.
In the case of a partial redemption of the Securities, the principal
amount of the Securities to be redeemed shall be selected, not more than 60 days
prior to the Redemption Date by the Capital Markets Trustee, on a pro rata basis
from the Outstanding Securities which process may provide for the selection for
redemption of portions (equal to $1,000 or any integral multiple thereof) of the
principal amount of Securities of a denomination larger than $1,000.
The Capital Markets Trustee shall promptly notify the Issuer and the
Guarantors and each Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
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SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the event giving rise to the redemption pursuant to Section 203,
(2) the Redemption Date,
(3) the Redemption Price,
(4) in the case of partial redemption of any Securities, the principal
amounts of the Securities to be redeemed,
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date, and
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Issuer shall be given by the Issuer or, upon an Issuer Request, by the
Capital Markets Trustee in the name and at the expense of the Issuer.
SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Issuer or the Guarantors shall
deposit with the Capital Markets Trustee or, at the direction of the Capital
Markets Trustee, with a Paying Agent an amount of money sufficient to pay the
Redemption Price and (except if the Redemption Date shall be a Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as set forth in Section 1104,
the Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Issuer and the Guarantors shall default in the payment of the
Redemption Price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Issuer or the Guarantors at the
Redemption Price together with accrued
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interest to the Redemption Date; provided, however, that installments of
principal or payments of interest thereon whose Stated Maturity is on or prior
to the Redemption Date shall be payable to the Holders of such Securities, or
one or more Predecessor Securities, registered as such at the close of business
on the relevant Record Dates according to their terms and the provisions of
Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
SECTION 117. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Issuer designated for that purpose pursuant to
Section 1002 (with, if the Issuer or the Capital Markets Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Issuer and the Capital Markets Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Issuer shall execute, and
the Capital Markets Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
GUARANTEE
SECTION 1201. Guarantee of the Guarantors. Each of the Guarantors by its
execution of this Indenture hereby (1) agrees with each Holder of a Security
authenticated and delivered by the Capital Markets Trustee and with the Capital
Markets Trustee on behalf of such Holder to be unconditionally and jointly and
severally bound by the terms and provisions of the Guarantee set forth in
Section 205 and (2) authorizes the Issuer, in the name and on behalf of such
Guarantor, to confirm such Guarantee to the Holder of each such Security by its
execution and delivery of each such Security, with such Guarantee endorsed
thereon, authenticated and delivered by the Capital Markets Trustee.
SECTION 1202. Execution and Delivery of Guarantee.
To evidence the Guarantee set forth in Section 1201 hereof, the
Guarantors agree that a notation of the Guarantee substantially in the form set
forth in Section 205 shall be endorsed on each Security authenticated and
delivered by the Capital Markets Trustee and that this Indenture shall be
executed on behalf of the Guarantors by a Responsible Officer of each.
The Guarantors agree that the Guarantee set forth in this Article
Twelve will remain
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<PAGE>
in full force and effect and apply to all the Securities notwithstanding any
failure to endorse on each Security a notation of the Guarantee.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Issuer's Option to Effect Defeasance or Covenant Defeasance.
The Issuer may elect, at its option at any time, to have Section 1302
or Section 1303 applied to any Securities upon compliance with the conditions
set forth below in this Article. Any such election shall be evidenced by an
Issuer Order or in another manner specified as contemplated by Section 301 for
such Securities.
SECTION 1302. Defeasance and Discharge.
Upon the Issuer's exercise of its option (if any) to have this Section
applied to any Securities the Issuer shall be deemed to have been discharged
from its obligations with respect to such Securities and the Guarantors shall be
deemed to have been discharged from their obligations with respect to its
Guarantee as provided in this Section 1302 on and after the date the conditions
set forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For
this purpose, such Defeasance means that (i) the Issuer and the Guarantors shall
be deemed to have paid and discharged the entire Indebtedness represented by
such Securities and the Guarantees endorsed thereon and to have satisfied all
their other obligations under such Securities and Guarantees, respectively, this
Indenture and any other applicable Financing Document insofar as such Securities
are concerned (and the Capital Markets Trustee, at the expense of the Issuer,
shall execute instruments in form and substance satisfactory to the Issuer and
the Guarantors acknowledging the same) and (ii) subject to the provisions of the
Common Security Agreement, all of the Collateral shall be released, without
requiring the consent of any Holder, from any and all security interests to the
extent held directly or indirectly for the benefit of the Holders, subject to
the following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Securities to receive, solely from
the trust fund described in Section 1304 and as more fully set forth in such
Section 1304, payments in respect of the principal of, any premium payable upon
the redemption or purchase thereof and any other premium and interest on such
Securities when payments are due, (2) the Issuer's obligations with respect to
such Securities under Sections 304, 305, 306, 1003 and 1004, (3) the rights,
powers, trusts, duties and immunities of the Capital Markets Trustee hereunder
and (4) this Article. Subject to compliance with this Article, the Issuer may
exercise its option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of their option (if any) to have Section 1303
applied to such Securities.
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<PAGE>
SECTION 1303. Covenant Defeasance.
Upon the Issuer's exercise of its option (if any) to have this Section
applied to any Securities, with respect to such Securities, (1) the Issuer shall
be released from its covenants and obligations incorporated by reference in
Section 1001 from the Common Security Agreement (except for covenants or other
obligations to make any payments), any other covenants and obligation in the
Common Security Agreement (except for covenants or other obligations to make any
payments) and any covenants pursuant to Section 901(2), 901(7) and 1002 through
1007 inclusive hereunder, each provided for the benefit of the Holders of such
Securities and (2) the occurrence of any event specified in Section 10.01 of the
Common Security Agreement (with respect to any such covenants or obligations),
shall be deemed not to be or result in an Event of Default, in each case with
respect to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to such Securities, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenants or obligations (to the extent so specified in the case of Section
10.01 of the Common Security Agreement), whether directly or indirectly by
reason of any reference elsewhere herein to any such Section or by reason of any
reference in any such covenant or obligation to any other provision herein or in
any other document, but the remainder of this Indenture and such Securities
shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section
1302 or Section 1303 to any Securities or any series of Securities, as the case
may be:
(1) The Issuer shall irrevocably have deposited or caused to be
deposited with the Capital Markets Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their Security will provide, not later than one
day before the due date of any payment, money in an amount, or (C) a
combination thereof, in each case sufficient, in the opinion of an
internationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Capital Markets
Trustee, to pay and discharge, and which shall be applied by the Capital
Markets Trustee (or any such other qualifying trustee) to pay and
discharge, the principal of, any premium payable upon the redemption or
purchase thereof, and any other premium and interest on such Securities on
or prior to the respective Stated Maturities, in accordance with the
Security of this Indenture and such Securities. As used herein, "U.S.
Government Obligation" means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency
or instrumentality of the United
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<PAGE>
States of America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America, which, in
either case (i) or (ii), is not callable or redeemable at the option of the
issuer thereof, and (y) any depository receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act) as custodian with respect to any
U.S. Government Obligation which is specified in clause (x) above and held
by such bank for the account of the holder of such depository receipt, or
with respect to any specific payment of principal of or interest on any
U.S. Government Obligation which is so specified and held, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by
such depository receipt.
(2) If any such deposit of money shall have been made prior to the
Stated Maturity of the final installment of principal or Redemption Date of
such Securities, the Issuer shall have delivered to the Capital Markets
Trustee an Issuer Order stating that such money shall be held by the
Capital Markets Trustee, in trust, as provided in Section 1305 hereof.
(3) In the case of redemption or purchase of Securities, the notice
requisite to the validity of such redemption or purchase shall have been
given, or irrevocable instructions shall have been given by the Issuer to
the Capital Markets Trustee to give such notice, under arrangements
satisfactory to the Capital Markets Trustee.
(4) In the event of an election to have Section 1302 apply to any
Securities, the Issuer shall have delivered to the Capital Markets Trustee
an Opinion of Counsel stating that (A) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or (B)
since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case (A) or (B) to the effect
that, and based thereon such opinion shall confirm that, the Holders of
such Securities will not recognize gain or loss for Federal income tax
purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would be the case if such deposit, Defeasance and discharge were not to
occur.
(5) In the event of an election to have Section 1303 apply to any
Securities, the Issuer shall have delivered to the Capital Markets Trustee
an Opinion of Counsel to the effect that the Holders of such Securities
will not recognize gain or loss for Federal income tax purposes as a result
of the deposit and Covenant Defeasance to be effected with respect to such
Securities and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit
and Covenant Defeasance were not to occur.
(6) The Issuer shall have delivered to the Capital Markets Trustee an
Officers'
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<PAGE>
Certificate to the effect that such Securities, if then listed on any
securities exchange, will be delisted as a result of such deposit.
(7) No Potential Default or Event of Default with respect to such
Securities shall have occurred and be Continuing at the time of such
deposit or, with regard to any such event specified in clause (f) of
Section 10.01 of the Common Security Agreement, at any time on or prior to
the 90th day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 90th day).
(8) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a Potential Default, an Event of
Default or a default under, any other agreement or instrument to which the
Issuer or any of the Guarantors is a party or by which the Issuer or any of
the Guarantors is bound including without limitation the Transaction
Documents.
(9) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act unless such trust shall be
registered under such Act or exempt from registration thereunder.
(10) The Issuer and the Guarantors shall have delivered to the Capital
Markets Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent with respect to such Defeasance or
Covenant Defeasance have been complied with.
In the event that Securities which shall be deemed to have been paid
as provided in this Section 1304 do not mature and are not to be redeemed or
purchased within the 60-day period commencing on the date of the deposit with
the Capital Markets Trustee of monies, the Issuer shall, as promptly as
practicable, give a notice, in the same manner as a notice of redemption or
purchase with respect to such Securities, to the Holders of such Securities to
the effect that the Issuer is deemed to have made full payment on such
Securities and the circumstances thereof.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1004, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Capital Markets Trustee or other qualifying trustee (solely for
purposes of this Section and Section 1306, the Capital Markets Trustee and any
such other trustee are referred to collectively as the ATrustee@) pursuant to
Section 1304 in respect of any Securities shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Securities and this
Indenture and the Common Security Agreement to the payment, either directly or
through any such Paying Agent as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon in respect
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<PAGE>
of principal of, any premium payable upon the redemption or purchase thereof,
and any other premium and interest, but money so held in trust need not be
segregated from other funds except to the extent required by law.
The Issuer and the Guarantors shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 1304 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuer from time to time upon receipt of an Issuer
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 with respect to any Securities which, in the opinion of an
internationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or Governmental Authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities and the Common Security Agreement from which the
Issuer have been discharged or released pursuant to Section 1302 or 1303 shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article with respect to such Securities, until such time as the Trustee or
Paying Agent is permitted to apply all money held in trust pursuant to Section
1305 with respect to such Securities in accordance with this Article; provided,
however, that if the Issuer or the Guarantors makes any payment of principal of
or any premium or interest on any such Security following such reinstatement of
its obligations, the Issuer or the Guarantors shall be subrogated to the rights
(if any) of the Holders of such Securities to receive such payment from the
money so held in trust.
____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate or partnership seals to be
hereunto affixed and attested, all as of the day and year first above written.
PORT ARTHUR FINANCE CORP.
By: /s/ Maura J. Clark
-------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Richard A. Keffer
- --------------------------
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: /s/ Maura J. Clark
-------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Richard A. Keffer
- --------------------------
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
-------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Richard A. Keffer
- --------------------------
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<PAGE>
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
-------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Richard A. Keffer
- --------------------------
BANKERS TRUST COMPANY, as Collateral Trustee
By: /s/ James McDonough
-------------------------------------
Name: James McDonough
Title: Vice President
By: /s/ William T. Jenkins
--------------------------------------
Name: William T. Jenkins
Title: Assistant Vice President
HSBC BANK USA, as Capital Markets Trustee
By: /s/ James M. Foley
--------------------------------------
Name: James M. Foley
Title: Assistant Vice President
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<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the 19/th/ day of August, 1999, before me personally came Maura
Clark, to me known, who, being by me duly sworn, did depose and say that [he--
she] is EVP & CFO of Port Arthur Finance Corp., one of the corporations
described in and which executed the foregoing instrument; that [he -- she] knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation, and that [he -- she] signed [his -- her] name thereto by like
authority.
/s/ Marisa Gondrez
--------------------------------------
Marisa S. Gondrez
Notary Public state of New York
No. 01G06012061
Qualified in Queens Count
Certificate Filed in New York County
Commission Expires Aug. 17, 2000
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the 19/th/ day of August, 1999, before me personally came Maura
Clark, to me known, who, being by me duly sworn, did depose and say that [he--
she] is EVP & CFO of Sabine River Holding Corp., one of the corporations
described in and which executed the foregoing instrument; that [he -- she] knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation, and that [he -- she] signed [his -- her] name thereto by like
authority.
/s/ Marisa Gondrez
-------------------------------------
Marisa S. Gondrez
Notary Public state of New York
No. 01G06012061
Qualified in Queens Count
Certificate Filed in New York County
Commission Expires Aug. 17, 2000
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<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the 19/th/ day of August, 1999, before me personally came Maura
Clark, to me known, who, being by me duly sworn, did depose and say that [he--
she] is EVP & CFO of Neches River Holding Corp., one of the corporations
described in and which executed the foregoing instrument; that [he -- she] knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation, and that [he -- she] signed [his -- her] name thereto by like
authority.
/s/ Marisa Gondrez
-------------------------------------
Marisa S. Gondrez
Notary Public state of New York
No. 01G06012061
Qualified in Queens Count
Certificate Filed in New York County
Commission Expires Aug. 17, 2000
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<PAGE>
EXHIBIT A
to Indenture
FORM OF REQUEST FOR INFORMATION
FROM THE CAPITAL MARKETS TRUSTEE
Via Facsimile: (___) _________
HSBC Bank USA
140 Broadway
New York, NY 10005-1180
Attn: James M. Foley, Issuer Services
Pursuant to Section 116 of the Indenture dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., as Issuer, Port Arthur Coker
Company L.P., Sabine River Holding Corp. and Neches River Holding Corp., all as
Guarantors (collectively, the "Guarantors"), Bankers Trust Company, as
Collateral Trustee, and HSBC Bank USA, as Capital Markets Trustee, [Name of
holder], as beneficial holder, hereby requests, which request is a continuing
request until further notice to the contrary, that you deliver to us at [Address
of holder], Attention: [_________] all information and copies of all documents
that the Issuer or the Partnership are required to deliver to you pursuant to
Rule 144A under the Securities Act of 1933, as amended, or pursuant to the
Common Security Agreement (as defined in the Indenture). [Name of holder] hereby
certifies that it is a beneficial holder of 12.50% Senior Secured Notes Due 2009
of the Issuer.
[Name of holder]
_____________________________ _______________
Authorized Signature Date
A-1
<PAGE>
EXHIBIT B
to Indenture
FORM OF REQUEST FOR FINANCIAL INFORMATION
FROM THE ISSUER OR THE PARTNERSHIP
Via Facsimile: (___) ___________
Port Arthur Finance Corp.
1801 S. Gulfway Drive, Office No. 36
Port Arthur, Texas 77640
Attention: Directors
Port Arthur Coker Company L.P.
1801 S. Gulfway Drive, Office No. 36
Port Arthur, Texas 77640
Pursuant to Section 116 of the Indenture dated as of August 19, 1999
(the "Indenture"), among Port Arthur Finance Corp., as Issuer, Port Arthur Coker
Company L.P., Sabine River Holding Corp. and Neches River Holding Corp., all as
Guarantors (collectively, the "Guarantors"), Bankers Trust Company, as
Collateral Trustee, and HSBC Bank USA, as Capital Markets Trustee, [Name of
holder], as beneficial holder, hereby requests, which request is a continuing
request until further notice to the contrary, that the Issuer (with respect to
itself) and the Partnership (with respect to itself) deliver all financial
information required to be delivered to the Secured Parties by you pursuant to
the Common Security Agreement directly to us at [Address of holder], Attention:
[___________]. [Name of holder] hereby certifies that it is a beneficial holder
of 12.50% Senior Secured Notes Due 2009 of the Issuer.
[Name of holder]
_____________________________ _______________
Authorized Signature Date
B-1
<PAGE>
Exhibit 4.03
EXECUTION COPY
PORT ARTHUR FINANCE CORP.
$255,000,000
12.50% Senior Secured Exchange Notes due 2009
Unconditionally Guaranteed Jointly and Severally by
PORT ARTHUR COKER COMPANY L.P.
SABINE RIVER HOLDING CORP.
NECHES RIVER HOLDING CORP.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
August 19, 1999
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Deutsche Bank Securities Inc.
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen
Port Arthur Finance Corp., a Delaware corporation (the "Issuer"), proposes
to issue and sell to Credit Suisse First Boston Corporation, Goldman, Sachs &
Co. and Deutsche Bank Securities Inc. (collectively, the "Initial Purchasers"),
upon the terms set forth in a purchase agreement dated August 10, 1999 (the
"Purchase Agreement"), an aggregate of $255,000,000 principal amount of its
12.50% Senior Secured Notes due 2009 (the "Initial Securities"). The Initial
Securities will be unconditionally guaranteed jointly and severally by Port
Arthur Coker Company L.P., a Delaware limited partnership (the "Partnership"),
Sabine River Holding Corp., a Delaware corporation and general partner of the
Partnership (the "General Partner"), and Neches River Holding Corp., a Delaware
corporation and limited partner of the Partnership (the "Limited Partner" and,
together with the General Partner, the "Partners"). The Initial Securities will
be issued
<PAGE>
pursuant to an indenture, dated as of the Closing Date (as defined below), among
the Issuer, the Partnership, the Partners and HSBC Bank USA, as Indenture
Trustee. As an inducement to the Initial Purchasers to enter into the Purchase
Agreement, the Issuer, the Partnership, the Partners and Clark Refining Holdings
Inc. agree with the Initial Purchasers, for the benefit of the holders of the
Initial Securities (including without limitation the Initial Purchasers), the
Exchange Securities (as defined below) and the Private Exchange Securities (as
defined below) (collectively the "Holders"), as follows:
1. Registered Exchange Offer. Each of the Issuer, the Partnership and the
Partners (hereinafter referred to collectively as the "Issuer Group"), jointly
and severally, shall, at its own cost, prepare and, not later than 120 days
after the date of original issue of the Initial Securities (the "Issue Date"),
file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the
Holders of Transfer Restricted Securities (as defined in Section 6 hereof) who
are not prohibited by any law or policy of the Commission from participating in
the Registered Exchange Offer to issue and deliver to such Holders, in exchange
for the Initial Securities, a like aggregate principal amount of Exchange Notes
(the "Exchange Securities") of the Issuer issued under the Indenture and
identical in all material respects to the Initial Securities (except for the
transfer restrictions relating to the Initial Securities and the provisions
relating to the matters described in Section 6 hereof) but that are registered
under the Securities Act. The Issuer Group shall use its reasonable best efforts
to cause such Exchange Offer Registration Statement to become effective under
the Securities Act within 240 days after the Issue Date of the Initial
Securities and shall keep the Exchange Offer Registration Statement effective
for not less than 20 business days (or longer, if required by applicable law)
after the date notice of the Registered Exchange Offer is mailed to the Holders
(such period being called the "Exchange Offer Registration Period").
If the Issuer Group effects the Registered Exchange Offer, the Issuer Group
will be entitled to close the Registered Exchange Offer 20 business days after
the commencement thereof provided that the Issuer Group has accepted all the
Initial Securities theretofore validly tendered in accordance with the terms of
the Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Issuer Group shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities (as defined in Section 6
hereof) electing to exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of any member of the Issuer Group
within the meaning of the Securities Act, acquires the Exchange Securities in
the ordinary course of such Holder's business, has no arrange-
2
<PAGE>
ments with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.
The Issuer Group acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell
Securities (as defined below) acquired in exchange for Initial Securities
constituting any portion of an unsold allotment is required to deliver a
prospectus containing the information required by Item 507 or 508 of Regulation
S-K under the Securities Act, as applicable, in connection with such sale.
The Issuer Group shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by an Exchanging Dealer or an Initial Purchaser, such period
shall be the lesser of 120 days and the date on which all Exchanging Dealers and
the Initial Purchasers have sold all Exchange Securities held by them (unless
such period is extended pursuant to Section 3(j) below) and (ii) the Issuer
Group shall make such prospectus and any amendment or supplement thereto
available to any broker-dealer for use in connection with any resale of any
Exchange Securities for a period of not less than 120 days after the
consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Issuer Group, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Issuer
issued under the Indenture and identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several
3
<PAGE>
states of the United States, but excluding provisions relating to the matters
described in Section 6 hereof) to the Initial Securities (the "Private Exchange
Securities"). The Initial Securities, the Exchange Securities and the Private
Exchange Securities are herein collectively called the "Securities".
In connection with the Registered Exchange Offer, the Issuer Group shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20 business
days (or longer, if required by applicable law) after the date notice thereof is
mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange Offer
with an address in the Borough of Manhattan, The City of New York, which may be
the Indenture Trustee or an affiliate of the Indenture Trustee;
(d) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York time, on the last business day on which the
Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or
the Private Exchange, as the case may be, the Issuer Group shall:
(x) accept for exchange all the Securities validly tendered and not
withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;
(y) deliver to the Indenture Trustee for cancellation all the Initial
Securities so accepted for exchange; and
(z) cause the Indenture Trustee to authenticate and deliver promptly to
each Holder of the Initial Securities, Exchange Securities or Private Exchange
Securities, as the case may be, equal in principal amount to the Initial
Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be subject
to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.
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Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Issuer that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of any member of the Issuer Group or if it is an
affiliate, such Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, (iv) if such Holder
is not a broker-dealer, that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Issuer Group will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Issuer
Group is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within
270 days of the Issue Date, (iii) any Initial Purchaser so requests with respect
to the Initial Securities (or the Private Exchange Securities) not eligible to
be exchanged for Exchange Securities in the Registered Exchange Offer and held
by it following consummation of the Registered Exchange Offer, (iv) any
applicable law or interpretations do not permit any Holder to
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<PAGE>
participate in the Registered Exchange Offer, or (v) any Holder that
participates in the Registered Exchange Offer does not receive freely tradeable
Exchange Securities on the date of the exchange, or (vi) we so elect, the Issuer
Group shall take the following actions:
(a) The Issuer Group shall, at its cost, as promptly as practicable (but
in no event less than 120 days after the Issue Date or more than 60 days after
so required or requested pursuant to this Section 2) file with the Commission
and thereafter shall use its reasonable best efforts to cause to be declared
effective a registration statement (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, a "Registration
Statement") on an appropriate form under the Securities Act relating to the
offer and sale of the Transfer Restricted Securities (as defined in Section 6
hereof) by the Holders thereof from time to time in accordance with the methods
of distribution set forth in the Shelf Registration Statement and Rule 415 under
the Securities Act (hereinafter, the "Shelf Registration"); provided, however,
that no Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement unless such
Holder agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder.
(b) The Issuer Group shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period of two years (or for such longer period if
extended pursuant to Section 3(j) below) from the date of its effectiveness or
such shorter period that will terminate when all the Securities covered by the
Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no
longer restricted securities (as defined in Rule 144 under the Securities Act,
or any successor rule thereof). The Issuer Group shall be deemed not to have
used its reasonable best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action that
would result in Holders of Securities covered thereby not being able to offer
and sell such Securities during that period, unless such action is required by
applicable law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Issuer Group shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (i) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
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<PAGE>
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Issuer Group shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that an Initial Purchaser (with respect to any portion
of an unsold allotment from the original offering) is participating in the
Registered Exchange Offer or the Shelf Registration Statement, the Issuer Group
shall use its reasonable best efforts to reflect in each such document, when so
filed with the Commission, such comments as such Initial Purchaser reasonably
may propose; (ii) include the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement and include the information set forth in Annex D hereto
in the Letter of Transmittal delivered pursuant to the Registered Exchange
Offer; (iii) if requested by an Initial Purchaser (with respect to any portion
of any unsold allotment from the original offering), include the information
required by Item 507 or 508 of Regulation S-K under the Securities Act, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement; (iv) include within the prospectus contained in the Exchange Offer
Registration Statement a section entitled "Plan of Distribution," reasonably
acceptable to the Initial Purchasers, which shall contain a summary statement of
the positions taken or policies made by the staff of the Commission with respect
to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of Exchange Securities received by such
broker-dealer in the Registered Exchange Offer (a "Participating Broker-
Dealer"), whether such positions or policies have been publicly disseminated by
the staff of the Commission or such positions or policies, in the reasonable
judgment of the Initial Purchasers based upon advice of counsel (which may be
in-house counsel), represent the prevailing views of the staff of the
Commission; and (v) in the case of a Shelf Registration Statement, include the
names of the Holders who propose to sell Securities pursuant to the Shelf
Registration Statement as selling security holders.
(b) The Issuer Group shall give notice to CSFBC on behalf of the Initial
Purchasers, the Holders of the Securities and any Participating Broker-Dealer
from whom the Issuer Group has received prior notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer (which notice
pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made):
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<PAGE>
(i) when the Registration Statement or any amendment thereto has been
filed with the Commission and when the Registration Statement or any post-
effective amendment thereto has become effective (which notice may be in the
form of a copy of such Registration Statement as filed or as it became
effective);
(ii) after the effectiveness thereof, of any request by the Commission
for amendments or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose;
(iv) of the receipt by the Issuer Group or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) after the effectiveness thereof, of the happening of any event that
requires the Issuer Group to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the prospectus do not
contain an untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the prospectus, in light of the circumstances under which they were
made) not misleading.
(c) The Issuer Group shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Issuer Group shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one copy
of the Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing and unless such exhibits are available under the EDGAR system, all
exhibits thereto (including those, if any, incorporated by reference).
(e) The Issuer Group shall deliver to each Exchanging Dealer and CSFBC
on behalf of the Initial Purchasers, and to any other Holder who so requests in
writing, without charge, at least one copy of the Exchange Offer Registration
Statement as it became effective and any post-effective amendment thereto,
including financial statements and schedules, and, if CSFBC or any such Holder
requests in writing and unless such exhibits are available under the EDGAR
system, all exhibits thereto (including those incorporated by reference).
8
<PAGE>
(f) The Issuer Group shall, during the Shelf Registration Period, deliver
to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. Each
member of the Issuer Group consents, subject to the provisions of this
Agreement, to the use of the prospectus or any amendment or supplement thereto
by each of the selling Holders of the Securities in connection with the offering
and sale of the Securities covered by the prospectus, or any amendment or
supplement thereto, included in the Shelf Registration Statement.
(g) During the period described herein the Issuer Group shall deliver to
each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer
and such other persons required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus included
in the Exchange Offer Registration Statement and any amendment or supplement
thereto as such persons may reasonably request. The Issuer Group consents,
subject to the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by any Initial Purchaser, if necessary, any
Participating Broker-Dealer and such other persons required to deliver a
prospectus following the Registered Exchange Offer in connection with the
offering and sale of the Exchange Securities covered by the prospectus, or any
amendment or supplement thereto, included in such Exchange Offer Registration
Statement.
(h) Prior to any public offering of the Securities pursuant to any
Registration Statement the Issuer Group shall register or qualify or cooperate
with the Holders of the Securities included therein and their respective counsel
in connection with the registration or qualification of the Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the Securities covered by such Registration Statement;
provided, however, that no member of the Issuer Group shall be required to (i)
qualify generally to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject.
(i) The Issuer Group shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Issuer Group
is required to maintain
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<PAGE>
an effective Registration Statement, the Issuer Group shall promptly prepare and
file a post-effective amendment to the Registration Statement or a supplement to
the related prospectus and any other required document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Issuer Group notifies the Initial Purchasers, the Holders
of the Securities and any known Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made, then
the Initial Purchasers, the Holders of the Securities and any such Participating
Broker-Dealers shall suspend use of such prospectus, and the period of
effectiveness of the Shelf Registration Statement provided for in Section 2(b)
above and the Exchange Offer Registration Statement provided for in Section 1
above shall each be extended by the number of days from and including the date
of the giving of such notice to and including the date when the Initial
Purchasers, the Holders of the Securities and any known Participating Broker-
Dealer shall have received such amended or supplemented prospectus pursuant to
this Section 3(j).
(k) Not later than the effective date of the applicable Registration
Statement, the Issuer Group will provide a CUSIP number for the Initial
Securities, the Exchange Securities or the Private Exchange Securities, as the
case may be, and provide the applicable trustee with certificates for the
Initial Securities, the Exchange Securities or the Private Exchange Securities,
as the case may be, in a form eligible for deposit with the Indenture Trustee as
custodian for The Depository Trust Company.
(l) The Issuer Group will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Registered
Exchange Offer or the Shelf Registration and will make generally available to
its security holders (or otherwise provide in accordance with Section 11(a) of
the Securities Act) an earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Issuer's first fiscal quarter commencing after the effective date
of the Registration Statement, which statement shall cover such 12-month period.
(m) The Issuer Group shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and containing such
changes, if any, as shall be necessary for such qualification. In the event that
such qualification would require the appointment of a new trustee under the
Indenture, the Issuer Group shall appoint a new trustee thereunder pursuant to
the applicable provisions of the Indenture.
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<PAGE>
(n) The Issuer Group may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Issuer such
information regarding the Holder and the distribution of the Securities as the
Issuer Group may from time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Issuer Group (i) may exclude from such
registration the Securities of any Holder that unreasonably fails to furnish
such information within a reasonable time after receiving such request and (ii)
shall not be obligated to pay Additional Interest on such Securities to such
Holder from the date of such failure.
(o) The Issuer Group shall enter into such customary agreements
(including, if requested by the Holders of a majority in aggregate principal
amount of the Exchange Securities, an underwriting agreement in customary form)
and take all such other action, if any, as any Holder of the Securities shall
reasonably request in order to facilitate the disposition of the Securities
pursuant to any Shelf Registration, provided that the Issuer Group shall not be
required to do more than one underwritten offering in any 12-month period.
(p) In the case of any Shelf Registration, the Issuer Group shall (i) make
reasonably available for inspection by the Holders of the Securities, any
underwriter participating in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent retained by the Holders of
the Securities or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of any member of the Issuer Group
and (ii) cause the officers, directors, employees, accountants and auditors of
any member of the Issuer Group to supply all relevant information reasonably
requested by the Holders of the Securities or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration Statement, in each
case, as shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
provided, however, that the foregoing inspection and information gathering shall
be coordinated on behalf of the Initial Purchasers by you and on behalf of the
other parties, by one counsel designated by and on behalf of such other parties
as described in Section 4 hereof; provided, further, that, any person to whom
confidential information is provided agrees in writing to reasonable and
customary confidentiality restrictions in respect of such information
(q) In the case of any Shelf Registration, each member of the Issuer
Group, if requested by a managing underwriter or the Holders of a majority in
principal amount of the Securities covered thereby, shall cause (i) its counsel
to deliver an opinion and updates thereof relating to the Securities in
customary form addressed to such Holders and the managing underwriters, if any,
thereof and dated, in the case of the initial opinion, the effective date of
such Shelf Registration Statement (it being agreed that the matters to be
covered by such opinion shall include, without limitation, the due incorporation
and good standing of the Issuer Group and its subsidiaries; the qualification of
the members
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of the Issuer Group and their respective subsidiaries to transact business as
foreign corporations; the due authorization, execution and delivery of the
relevant agreement of the type referred to in Section 3(o) hereof; the due
authorization, execution, authentication and issuance, and the validity and
enforceability, of the applicable Securities; the absence of material legal or
governmental proceedings involving the members of the Issuer Group and their
respective subsidiaries; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration Statement, the offering and
sale of the applicable Securities, or any agreement of the type referred to in
Section 3(o) hereof; the compliance as to form of such Shelf Registration
Statement and any documents incorporated by reference therein and of the
Indenture with the requirements of the Securities Act and the Trust Indenture
Act, respectively; and, as of the date of the opinion and as of the effective
date of the Shelf Registration Statement or most recent post-effective amendment
thereto, as the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented, and from
any documents incorporated by reference therein of an untrue statement of a
material fact or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange
Act)); (ii) its officers to execute and deliver all customary documents and
certificates and updates thereof requested by any underwriters of the applicable
Securities and (iii) its independent public accountants and the independent
public accountants with respect to any other entity for which financial
information is provided in the Shelf Registration Statement to provide to the
selling Holders of the applicable Securities and any underwriter therefor a
comfort letter in customary form and covering matters of the type customarily
covered in comfort letters in connection with primary underwritten offerings,
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(r) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Initial Securities by Holders to the Issuer
(or to such other Person as directed by the Issuer) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Issuer
shall mark, or caused to be marked, on the Initial Securities so exchanged that
such Initial Securities are being canceled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall the Initial Securities be marked as paid or otherwise satisfied.
(s) The Issuer Group will use its reasonable best efforts to confirm that
the Securities covered by any Registration Statement will continue to be rated
by the Credit Rating Agencies in accordance with subparagraph (ee) of Section
4.01 of the Common Security Agreement.
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(t) In connection with a Shelf Registration Statement, in the event that
any broker-dealer registered under the Exchange Act shall underwrite any
Securities or participate as a member of an underwriting syndicate or selling
group or "assist in the distribution" (within the meaning of the Conduct Rules
(the "Rules") of the National Association of Securities Dealers, Inc. ("NASD"))
thereof, whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
the Issuer Group will assist such broker-dealer in complying with the
requirements of such Rules, including, without limitation, by (i) if such Rules,
including Rule 2720, shall so require, engaging a "qualified independent
underwriter" (as defined in Rule 2720) to participate in the preparation of the
Registration Statement relating to such Securities, to exercise usual standards
of due diligence in respect thereto and, if any portion of the offering
contemplated by such Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 5 hereof and
(iii) providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules.
(u) The Issuer Group shall use its reasonable best efforts to take all
other steps necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
4. Registration Expenses. The Issuer Group shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 1 through 3 hereof, whether or not the Registered Exchange Offer or a
Shelf Registration is filed or becomes effective, and, in the event of a Shelf
Registration, shall bear or reimburse the Holders of the Securities covered
thereby for the reasonable fees and disbursements of one firm of counsel
designated by the Holders of a majority in principal amount of the Securities
covered thereby to act as counsel for the Holders of the Securities in
connection therewith.
5. Indemnification. (a) The Issuer Group agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and each
person, if any, who controls such Holder or such Participating Broker-Dealer
within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary
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prospectus relating to a Shelf Registration, or arise out of, or are based upon,
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
provided, however, that (i) the Issuer Group shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Issuer by or on behalf of such
Holder specifically for inclusion therein and (ii) with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus relating to a Shelf Registration Statement, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Holder or Participating Broker-Dealer from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder or Participating Broker-Dealer under the Securities Act
in connection with such purchase and any such loss, claim, damage or liability
of such Holder or Participating Broker-Dealer results from the fact that there
was not sent or given to such person, at or prior to the written confirmation of
the sale of such Securities to such person, a copy of the final prospectus if
the Issuer Group had previously furnished copies thereof to such Holder or
Participating Broker-Dealer; provided further, however, that this indemnity
agreement will be in addition to any liability which the Issuer Group may
otherwise have to such Indemnified Party. The Issuer Group shall also indemnify
underwriters, their officers and directors and each person who controls such
underwriters within the meaning of the Securities Act or the Exchange Act to the
same extent as provided above with respect to the indemnification of the Holders
of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless each member of the Issuer Group and each person, if
any, who controls the Issuer Group within the meaning of the Securities Act or
the Exchange Act from and against any losses, claims, damages or liabilities or
any actions in respect thereof, to which the Issuer Group or any such
controlling person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written
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information pertaining to such Holder and furnished to the Issuer by or on
behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Issuer Group for any legal or other expenses reasonably incurred
by the Issuer Group or any such controlling person in connection with
investigating or defending any loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have to the Issuer Group or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section 5 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the exchange of the Securities, pursuant to
the Registered Exchange Offer, or (ii) if the allocation provided by the
fore-going clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand and the indemnified party on
15
<PAGE>
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Issuer
Group on the one hand or such Holder or such other indemnified party, as the
case may be, on the other, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Securities pursuant to a
Registration Statement exceeds the amount of damages which such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Issuer Group within
the meaning of the Securities Act or the Exchange Act shall have the same rights
to contribution as the Issuer Group.
(e) The agreements contained in this Section 5 shall survive the sale of
the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Initial Securities and
the Private Exchange Securities shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (iii) below a
"Registration Default":
(i) If by 120 days following the Issue Date neither the Exchange Offer
Registration Statement nor a Shelf Registration Statement has been filed with
the Commission (or, in the case of a Shelf Registration Statement required to be
filed in response to a change in law or applicable interpretation of the
Commission Staff, if later, such Shelf Statement has not been filed within 60
days after publication of the change in law or interpretation, but in no event
before 120 days after the Issue Date);
16
<PAGE>
(ii) If by 270 days following the Issue Date neither the Registered
Exchange Offer is consummated nor, if required in lieu thereof, the Shelf
Registration Statement is declared effective by the Commission (or, in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or applicable interpretation of the Commission staff, if later, such
Shelf Registration Statement has not been declared effective within 120 days
after the publication of the change in law or interpretation but in no event
before 270 days after the Issue Date); or
(iii) If after 270 days following the Issue Date the Exchange Offer
Registration Statement or, if after 120 days after a filing obligation arises in
the case of a Shelf Registration Statement as described above, the Shelf
Registration Statement is declared effective (A) such Registration Statement
thereafter ceases to be effective or (B) such Registration Statement or the
related prospectus ceases to be usable except as permitted hereby in connection
with resales of Transfer Restricted Securities during the periods specified
herein because either (1) any event occurs as a result of which the related
prospectus forming part of such Registration Statement would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or (2) it shall be necessary to amend such
Registration Statement or supplement the related prospectus, to comply with the
Securities Act or the Exchange Act or the respective rules thereunder.
Additional Interest shall accrue on the Initial Securities and the Private
Exchange Notes over and above the interest set forth in the title of the
Securities from and including the date on which any such Registration Default
shall occur to but excluding the date on which all such Registration Defaults
have been cured, at a rate of 0.50% per annum (the "Additional Interest Rate").
Notwithstanding the foregoing, Additional Interest shall not be payable on any
Security to the extent that the Holder of such Security has failed to comply
with its obligations to furnish information pursuant to Section 3(n).
(b) A Registration Default referred to in Section 6(a)(iii) hereof shall
be deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Issuer Group where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events (including
without limitation potential corporate transactions) with respect to the Issuer
Group that would need to be described in such Shelf Registration Statement or
the related prospectus and (ii) in the case of clause (y), the Issuer Group is
either proceeding promptly and in good faith to amend or supplement such Shelf
Registration Statement and related prospectus to
17
<PAGE>
describe such events or has a bona fide business reason for delaying such
amendment or supplement; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days,
Additional Interest shall be payable in accordance with the above paragraph from
the day such Registration Default occurs until such Registration Default is
cured.
(c) Any amounts of Additional Interest due pursuant to clause (i), (ii) or
(iii) of Section 6(a) above will be payable in cash on the regular interest
payment dates with respect to the Securities. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Initial Securities or Private Exchange Notes, as the
case may be, to which such Registration Default relates, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered
Exchange Offer of an Initial Security for an Exchange Security, the date on
which such Exchange Security is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Security has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Security is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act.
7. Rules 144 and 144A. The Issuer Group shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Issuer Group is
not required to file such reports, it will, upon the request of any Holder of
Securities, make publicly available other information so long as necessary to
permit sales of their securities pursuant to Rules 144 and 144A. The Issuer
Group covenants that it will take such further action as any Holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Issuer Group will
provide a copy of this Agreement to prospective purchasers of Initial Securities
identified to the Issuer Group by the Initial Purchasers upon request. Upon the
written request of any Holder of Initial Securities prior to the filing of a
Registration Statement, the Issuer Group shall deliver to such Holder a written
statement as to whether it has complied with such requirements.
18
<PAGE>
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Issuer Group to register any of its securities pursuant to the
Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering.
No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all question-naires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
9. Miscellaneous.
(a) Joint and Several Obligations; Guarantee. Each member of the Issuer
Group shall be jointly and severally liable for all obligations of the Issuer
Group under this Agreement. Clark Refining Holdings hereby guarantees, as if it
were principal obligor and not merely as surety, for the benefit of Holders the
full and prompt performance by the Issuer Group of each of its obligations under
this Agreement (other than any obligation of the Issuer Group to pay Additional
Interest).
(b) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Issuer with the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Issuer.
19
<PAGE>
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(3) if to any member of the Issuer Group, at the following
address:
Port Arthur Finance Corp.
1801 S. Gulfway Drive, Office No. 36
Port Arthur, Texas 77640
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
(4) if to Clark Refining Holdings, at the following
address:
Clark Refining Holdings, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(d) No Inconsistent Agreements. No member of the Issuer Group has, as of
the date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to the Issuer's securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
20
<PAGE>
(e) Successors and Assigns. This Agreement shall be binding upon each
member of the Issuer Group and Clark Refining Holdings and each of their
respective successors and assigns.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(j) Securities Held by the Issuer Group. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by any member of the Issuer Group or their
respective affiliates (other than subsequent Holders of Securities if such
subsequent Holders are deemed to be affiliates solely by reason of their
holdings of such Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(k) Agent for Service; Submission to Jurisdiction; Waiver of Immunities.
By the execution and delivery of this Agreement, each member of the Issuer Group
(i) acknowledges that it has, by separate written instrument, irrevocably
designated and appointed CT Corporation System and any successor entity), as its
authorized agent upon which process may be served in any suit or proceeding
arising out of or relating to this Agreement that may be instituted in any
federal or state court in the State of New York or brought under federal or
state securities laws, and acknowledges that CT Corporation System has accepted
such designation, (ii) submits to the nonexclusive jurisdiction of any such
court in any such suit or proceeding, and (iii) agrees that service of process
upon CT Corporation System and written notice of said service to the Issuer
Group shall be deemed in every respect effective service of process upon it in
any such suit or proceeding. Each member of the Issuer Group further agrees to
take any and all action, including the execution and filing of any and all such
documents and instruments, as may be necessary to continue such designation and
appointment of CT Corporation System in full force and effect so long as any of
the Securities shall be outstanding. To the extent that any member of the Issuer
Group may acquire any immunity from jurisdiction of any court or from any legal
process (whether
21
<PAGE>
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, it
hereby irrevocably waives such immunity in respect of this Agreement, to the
fullest extent permitted by law.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Issuer a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the several Initial Purchasers, the Issuer Group and Clark Refining Holdings in
accordance with its terms.
Very truly yours,
Port Arthur Finance Corp.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Port Arthur Coker Company L.P.
By: Sabine River Holding Corp.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Sabine River Holding Corp.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
Neches River Holding Corp.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
22
<PAGE>
Clark Refining Holdings, Inc.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
The foregoing Registration
Rights Agreement is hereby
confirmed and accepted as
of the date first above written.
Credit Suisse First Boston Corporation
By: /s/ Bryce Lee
-----------------------
Name: Bryce Lee
Title: Director
Goldman, Sachs & Co.
By: /s/ Goldman Sachs & Co.
----------------------------
Name: J.O. Curtis
Title: MD
Deutsche Bank Securities Inc.
By: /s/ Paul McKeon
-------------------------
Name: Paul McKeon
Title: Managing Director
By: /s/ Paul Brown
-----------------------
Name: Paul Brown
Title: Vice President
23
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Issuer Group has
agreed that, for a period of 120 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
24
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in
exchange for Initial Securities, where such Initial Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
25
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Issuer Group
has agreed that, for a period of 120 days after the Expiration Date, it will
make this prospectus, as amended or supplemented, available to any broker-dealer
for use in connection with any such resale. In addition, dealers effecting
transactions in the Exchange Securities may be required to deliver a prospectus.
The Issuer Group will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 120 days after the Expiration Date the Issuer Group will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuer Group has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
26
<PAGE>
ANNEX D
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ____________________________________________
Address: __________________________________________
__________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Initial Securities that
were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Securities; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
27
<PAGE>
Exhibit 4.04
================================================================================
COMMON SECURITY AGREEMENT
among
PORT ARTHUR FINANCE CORP.,
as Borrower,
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.,
as General Partner of the Partnership,
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership,
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of the Bank Senior Lenders,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
for itself and as Administrative Agent for and on behalf
of the Oil Payment Insurers,
HSBC BANK USA,
as Capital Markets Trustee for the Capital Markets Senior Lenders,
BANKERS TRUST COMPANY,
as Depositary Bank
and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
as Insurer under the Debt Service Reserve Insurance Guarantee
Dated as of August 19, 1999
================================================================================
<PAGE>
Table of Contents
Section Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions........................................................... 2
1.02 Interpretation........................................................ 2
1.03 Conflict.............................................................. 3
ARTICLE II
SENIOR DEBT
2.01 Senior Debt Obligations and Oil Payment Reimbursement Obligations
Secured Hereby........................................................ 3
2.02 Pari Passu Treatment.................................................. 3
2.03 Guaranteed Senior Debt Obligations.................................... 3
2.04 Optional Prepayments.................................................. 4
2.05 Mandatory Prepayments................................................. 4
2.06 Pro Rata Payment of Senior Debt Obligations and Oil Payment
Reimbursement Obligations............................................. 6
2.07 Non-Pro Rata Prepayments.............................................. 6
2.08 Insufficient Payments................................................. 7
2.09 Additional Senior Debt................................................ 8
2.10 Replacement Senior Debt............................................... 9
2.11 Replacement for Oil Payment Insurance Policy.......................... 11
2.12 Extraordinary Prepayments; Substitution of "Compensating Letter
of Credit"............................................................ 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower, the Partnership
and the Partners....................................................... 13
i
<PAGE>
Section Page
ARTICLE IV
COVENANTS
4.01 Covenants of the Borrower and the Partnership......................... 24
4.02 Covenants of the Partners............................................. 37
4.03 Common Covenant....................................................... 40
ARTICLE V
ACCOUNTS
5.01 Accounts.............................................................. 40
5.02 Subaccounts........................................................... 44
5.03 Deposits of Project Funds............................................. 44
5.04 Investment of Funds in Accounts....................................... 46
5.05 Withdrawals from Accounts Pre-Default................................. 47
5.06 Withdrawals from Accounts During the Continuance of a Default......... 50
5.07 Principal & Interest Accrual Account.................................. 51
5.08 Tranche B Amortization Account........................................ 51
5.09 Debt Service Reserve Account.......................................... 52
5.10 PMI Surplus Reserve Account........................................... 53
5.11 Tax Reserve Account................................................... 53
5.12 Major Maintenance Account............................................. 54
5.13 Contingency Reserve Account........................................... 55
5.14 Mandatory Prepayment Account.......................................... 55
5.15 Estimated Payment Certificate......................................... 56
5.16 Reports and Certifications............................................ 56
ARTICLE VI
SECURITY INTERESTS
6.01 Property and Improvements of the Partnership.......................... 57
6.02 General Partner's Interest in the Partnership......................... 58
6.03 Limited Partnership Interest in the Partnership....................... 59
6.04 The Partnership's Shares in the Borrower.............................. 61
6.05 Interests in Accounts and Authorized Investments...................... 62
6.06 The Project Documents, Sales Agreements and Spot Contracts............ 62
6.07 Insurance and Insurance Proceeds; Reinsurance......................... 64
6.08 All Personal Property Including Machinery and Equipment,
Technology General Intangibles, Accounts and Other
Personal Property..................................................... 65
6.09 The Partnership's Interest in Crude Oil,
Intermediate Products and Refined Products............................ 65
6.10 Permitted Hedging Arrangements........................................ 66
ii
<PAGE>
Section Page
6.11 Rights under Capital Contribution Agreements; Intercompany Loans
from the Borrower to the Partnership from............................. 66
6.12 Proceeds, Products, etc............................................... 67
6.13 Perfection and Maintenance of Security Interests...................... 67
6.14 Rights in Collateral Prior to Enforcement Direction................... 69
6.15 Liability of Borrower Parties......................................... 70
6.16 Release of Security Interests......................................... 71
6.17 PMI Subordinated Lien................................................. 71
ARTICLE VII
INSURANCE
7.01 Maintenance of Insurance.............................................. 71
7.02 Additional Insureds and Loss Payees Provisions........................ 71
7.03 Other Lender Provisions in Policies................................... 72
7.04 Payment, Assignment, Etc. of Reinsurance or Co-Insurance.............. 72
7.05 Rated Insurers........................................................ 73
7.06 Payment of Premiums................................................... 73
7.07 Application of Insurance Proceeds..................................... 73
7.08 Information........................................................... 74
7.09 Insurance Consultant.................................................. 75
7.10 Delivery of Cover Notes and Policies.................................. 75
ARTICLE VIII
REPORTING
8.01 Regular Reporting..................................................... 76
8.02 Notice of Extraordinary Events........................................ 79
8.03 Books and Records..................................................... 80
ARTICLE IX
COMMON CONDITIONS PRECEDENT
9.01 Common Conditions Precedent to Initial
Disbursements of Senior Loans......................................... 80
9.02 Common Conditions Precedent to Initial and
Subsequent Disbursements of Senior Loans.............................. 85
9.03 Pro Rata Drawdowns; Pro Rata Reductions in
Initial Senior Debt Commitments....................................... 86
iii
<PAGE>
Section Page
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default.................................................... 87
10.02 Declaration of Default............................................... 90
10.03 Cessation of Default................................................. 90
10.04 Remedies............................................................. 90
10.05 Enforcement Action................................................... 92
10.06 Incidents of Sale.................................................... 92
10.07 Collateral Trustee May File Proofs of Claim.......................... 93
10.08 Collateral Trustee May Enforce Claims................................ 93
10.09 Control of Enforcement Action........................................ 94
10.10 Limitation on Suits.................................................. 94
10.11 Enforcement Proceeds Account......................................... 95
10.12 Application of Enforcement Proceeds.................................. 95
10.13 Action under Oil Payment Insurance Policy............................ 96
ARTICLE XI
RESTRICTED PAYMENTS
11.01 Restricted Payments.................................................. 96
ARTICLE XII
GUARANTEE
12.01 Guarantee by the Partnership and the Partners........................ 97
ARTICLE XIII
THE COLLATERAL TRUSTEE
13.01 Appointment of Collateral Trustee.................................... 98
13.02 Delivery of Documentation............................................ 98
13.03 Attorney-in-Fact..................................................... 99
13.04 Authority to Act for Secured Parties................................. 100
13.05 Reliance............................................................. 100
13.06 Liability............................................................ 101
13.07 Consultation with Counsel, Etc....................................... 101
13.08 Duties............................................................... 101
13.09 Resignation, Replacement and Successor Collateral Trustee............ 102
13.10 Indemnities.......................................................... 103
13.11 Compensation......................................................... 104
13.12 Certificates......................................................... 104
iv
<PAGE>
Section Page
13.13 Information.......................................................... 105
13.14 Books and Accounts................................................... 105
13.15 Limitation on Collateral Trustee's Duties in Respect of Collateral... 105
13.16 Right to Initiate Judicial Proceedings, Etc.......................... 106
13.17 Exculpatory Provisions............................................... 106
13.18 Merger of the Collateral Trustee..................................... 106
13.19 Treatment of Senior Lenders by Collateral Trustee.................... 106
13.20 Miscellaneous........................................................ 107
ARTICLE XIV
MISCELLANEOUS
14.01 Termination.......................................................... 108
14.02 Calculation of Floating Rate Obligations............................. 108
14.03 GOVERNING LAW........................................................ 109
14.04 Waiver of Jury Trial................................................. 109
14.05 Severability......................................................... 109
14.06 Entire Agreement..................................................... 109
14.07 Restrictions on Assignments and Participations....................... 109
14.08 Notices.............................................................. 110
14.09 Benefits of Agreement................................................ 110
14.10 Remedies............................................................. 110
14.11 Execution in Counterparts............................................ 111
14.12 Consent to Jurisdiction.............................................. 111
14.13 Amendments, Etc...................................................... 112
14.14 Conflicts............................................................ 113
14.15 Effectiveness........................................................ 113
14.16 Compliance with Applicable Law....................................... 113
14.17 Indemnification...................................................... 114
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APPENDICES
A. Definitions
B. Initial Senior Lender Group
C. Base Case Model
D. Form of Assignment and Acceptance
E-1. Consents and Approvals for Agreements
E-2. Consents and Approvals for Project
F. Tax Payment Undertaking
G. Major Maintenance Reserve Payment Certificate
H. Form of Mortgage
I-1. Form of Consent and Acknowledgment
J. Schedule of Required Insurance
K. Initial Construction Budget
L-1. Form of Opinion of Mexican Counsel to PMI
L-2. Form of Opinion of Mexican Counsel to Pemex
L-3. Form of Opinion of U.S. Counsel to PMI and Pemex
L-4. Form of Opinion of Counsel to EPC Contractor and EPC Guarantor
L-5 Form of Opinion of Counsel to Hydrogen Supplier
L-6. Form of Opinion of the General Counsel to the Clark Entities
L-7. Form of Opinion of New York Counsel to the Borrower, the
Partnership, the Partners, the Clark Entities and Blackstone
L-8. Form of Opinion of Texas Real Estate Counsel to the Borrower,
the Partnership and the Partners
L-9. Form of Opinion of Texas Environmental Counsel to the Borrower,
the Partnership and the Partners
L-10 Form of Opinion of Texas Counsel to the Borrower, the Partnership
and the Partners
L-11. Form of Opinion of Counsel to Occidental Petroleum
L-12. Form of Opinion of Cayman Islands counsel to Blackstone
L-13. Form of Opinion of English Counsel to the Oil Payment Insurers
M. Insurance Consultant's Report
N. Independent Engineer's Reports
O. Notice of Borrowing
P. Notices
Q. Subordination Terms
SCHEDULES
3.01(x). Environmental Disclosure
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COMMON SECURITY AGREEMENT
This Agreement, dated as of August 19, 1999, is made among:
PORT ARTHUR FINANCE CORP., corporation organized under the laws of the
State of Delaware,
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under
the laws of the State of Delaware,
SABINE RIVER HOLDING CORP., a corporation organized under the laws of
the State of Delaware,
NECHES RIVER HOLDING CORP., a corporation organized under the laws of
the State of Delaware,
BANKERS TRUST COMPANY, a banking corporation incorporated under the
laws of the State of New York, as Collateral Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH, a New York State licensed branch of
a German bank, as Administrative Agent for and on behalf of the Bank Senior
Lenders,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, for itself and as Administrative Agent
for and on behalf of the Oil Payment Insurers,
HSBC BANK USA, a New York banking corporation and trust company, as
Capital Markets Trustee for the Capital Markets Senior Lenders,
BANKERS TRUST COMPANY, a banking corporation incorporated under the
laws of the State of New York, as Depositary Bank, and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, as Insurer under the Debt Service
Reserve Insurance Guarantee.
WHEREAS:
A. The Borrower proposes to incur Senior Debt and loan all the
proceeds of the Senior Loans to the Partnership and has authorized the execution
and delivery of this Agreement;
B. The Partnership, the General Partner and the Limited Partner
propose to guarantee and secure the Senior Debt Obligations and have authorized
the execution and
<PAGE>
delivery of this Agreement to induce the Senior Lenders to provide Senior Debt
to the Borrower, and the Oil Payment Insurers to provide the Oil Payment
Insurance Policy;
C. The Borrower, the Partnership, the General Partner, the Limited
Partner, the Shareholders, the Clark Entities, the Senior Lenders and the Oil
Payment Insurers have entered into the Transfer Restrictions Agreement to
induce the Senior Lenders to provide Senior Debt to the Borrower and the Oil
Payment Insurers to provide the Oil Payment Insurance Policy;
D. The Borrower, the Partnership and the General Partner, have
entered into the Capital Contribution Agreements with Blackstone and Occidental
Petroleum, respectively, to induce the Senior Lenders to provide Senior Debt to
the Borrower and the Oil Payment Insurers to provide the Oil Payment Insurance
Policy; and
E. All things have been done that are necessary to constitute this
Agreement the valid and legally binding contract and security agreement of the
Borrower, the Partnership, the General Partner and the Limited Partner.
NOW, THEREFORE, to secure the Senior Debt Obligations and the Oil
Payment Reimbursement Obligations and the performance of all obligations under
the Senior Loan Agreements, the Notes, the Reimbursement Agreement, this
Agreement and the other Security Documents, and in consideration of the premises
and of the execution of the Senior Loan Agreements by the Senior Lenders and of
the making of the Senior Loans thereunder and execution and delivery of the Oil
Payment Insurance Policy by the Oil Payment Insurers, the Borrower, the
Partnership, the General Partner and the Limited Partner hereby agree with the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the Oil
Payment Insurers Administrative Agent, the Capital Markets Trustee, the
Depositary Bank, the Senior Lenders and the Oil Payment Insurers as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions. Defined terms in this Agreement and the Appendices
to this Agreement, which may be identified by the capitalization of the first
letter of each principal word thereof, have the meanings assigned to them in
Appendix A.
1.02 Interpretation. In this Agreement and in the Appendices hereto,
except to the extent that the context otherwise requires:
(a) the Table of Contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;
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(b) unless otherwise specified, references to Articles, Sections,
clauses and Appendices are references to Articles, Sections, clauses, and
Appendices to this Agreement;
(c) references to any document or agreement, including without
limitation this Agreement, shall be deemed to include references to such
document or agreement (together with all appendices, annexes and schedules
thereto) as amended, supplemented, replaced or restated from time to time
in accordance with its terms and (where applicable) subject to compliance
with the requirements set forth therein;
(d) references to any party to this Agreement or any other document or
agreement shall include its successors and permitted assigns; and
(e) accounting terms not otherwise defined shall be construed in
accordance with GAAP.
1.03 Conflict. In the event of any conflict between this Agreement
and any other Financing Document, this Agreement shall govern.
ARTICLE II
SENIOR DEBT
2.01 Senior Debt Obligations and Oil Payment Reimbursement
Obligations Secured Hereby. All Senior Debt Obligations and Oil Payment
Reimbursement Obligations shall be secured by and entitled to the benefits of
this Agreement and the security interests granted by or pursuant to this
Agreement and the Security Documents. The Initial Senior Lenders, the Initial
Senior Debt, the Initial Senior Debt Commitments, the Initial Senior Loan
Agreements, the initial Oil Payment Insurers and the Oil Payment Commitment are
each identified in Appendix B.
2.02 Pari Passu Treatment. All Senior Debt Obligations shall rank in
right of payment, upon liquidation and in all other respects pari passu without
preference among Senior Debt Obligations by reason of date of incurrence or
otherwise. All Oil Payment Reimbursement Obligations shall rank in right of
payment and upon liquidation pari passu with all Senior Debt Obligations without
any preference by reason of the date of incurrence or otherwise, except as set
forth in Sections 5.05 and 10.12.
2.03 Guaranteed Senior Debt Obligations. All Senior Debt Obligations
of the Borrower shall be unconditionally guaranteed by the Partnership in
accordance with Article XII.
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2.04 Optional Prepayments. Subject to Sections 2.06 and 2.12 and the
Senior Loan Agreements, the Partnership, or the Borrower at the direction of the
Partnership, shall have the right to make Optional Prepayments in respect of
Senior Loans at any time or from time to time, provided that:
(a) subject to the respective Senior Loan Agreements, the Borrower
Parties shall give not less than 30 days' prior notice of any Optional
Prepayment to the Collateral Trustee, the Bank Senior Lenders
Administrative Agent and, in the case of a prepayment of Capital Markets
Senior Debt, the Capital Markets Trustee;
(b) Optional Prepayments under this Section 2.04 shall be made in
accordance with, and shall be accompanied by any prepayment compensation
required by, the applicable Senior Loan Agreement or Senior Loan
Agreements; and
(c) Optional Prepayments (including Optional Prepayments made pursuant
to Section 2.10) of Bank Senior Debt shall be applied to the remaining
principal installments of Senior Loans in the order such remaining
principal installments come due.
2.05 Mandatory Prepayments.
(a) Prepayments of Senior Debt with Certain Proceeds. The
Partnership, or the Borrower at the direction of the Partnership, shall apply
any of the following to the prepayment of Senior Loans (and, at any time on or
after a Priority Termination Date, Oil Payment Reimbursement Obligations):
(i) any Loss Proceeds in respect of any casualty, other than any
Catastrophic Casualty, to Project Property (other than any shipment of
crude oil for which (A) the Oil Payment Insurers have made, or are
obligated to make, payment to PMI under the Oil Payment Insurance Policy or
(B) the Bank Senior Lenders have provided cash advances or letters of
credit under the Secured Working Capital Facility), to the extent such Loss
Proceeds are not applied toward repairing, replacing or restoring the
relevant Project Property in accordance with Section 7.07; and
(ii) upon receipt, (A) any Late Payments, to the extent that the
Partnership (1) does not utilize such Late Payments to make payments to PMI
pursuant to Section 4.4 or 16.5 of the Long-Term Oil Supply Agreement, (2)
need not direct such Late Payments to the payment of interest on the Senior
Debt or (3) to the extent such Late Payments represent lost profits, does
not cause such Late Payments to be deposited into the Project Revenue
Account, or (B) Buydown Payments made by the EPC Contractor under Section
6 of the EPC Contract or any amounts recovered from the EPC Contractor
under the EPC Contract for failure to achieve any of the Guaranteed Values
or the Guaranteed Performance Dates,
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<PAGE>
in each case in accordance with Article V and the Senior Loan Agreements (and
the Reimbursement Agreement, if applicable).
(b) Prepayments of Bank Senior Debt with Excess Cash Flow. After
Start-up, on each Payment Date on which any Bank Senior Debt or Oil Payment
Reimbursement Obligation remains outstanding, the Partnership, or the Borrower
at the direction of the Partnership, shall prepay the Senior Loans (and, at any
time on or after a Priority Termination Date, Oil Payment Reimbursement
Obligations) in an amount, if any, equal to the amount credited to the Mandatory
Prepayment Account in accordance with clause (b) of Section 5.05.
(c) Prepayments of Senior Debt and Oil Payment Reimbursement
Obligations. The Partnership, or the Borrower at the direction of the
Partnership, shall apply any of the following to the prepayment of Senior Bank
Loans and Oil Payment Reimbursement Obligations:
(i) any Loss Proceeds in respect of any Catastrophic Casualty to
Project Property (other than any shipment of crude oil for which (A) the
Oil Payment Insurers have made, or are obligated to make, payment to PMI
under the Oil Payment Insurance Policy or (B) the Bank Senior Lenders have
provided cash advances or letters of credit under the Secured Working
Capital Facility), in each case to the extent that such Loss Proceeds are
not applied toward repairing, replacing or restoring the relevant Project
Property in accordance with Section 7.07;
(ii) any delay in start-up, business interruption or contingent
business interruption insurance proceeds that are not transferred to the
Project Revenue Account in accordance with clause (c) of Section 7.07; and
(ii) upon receipt, any Condemnation Compensation,
in each case in accordance with Article V, the Senior Loan Agreements and the
Reimbursement Agreement. In addition, upon the occurrence of a Constructive
Total Loss of Project Property, the Partnership, or the Borrower at the
direction of the Partnership, shall prepay in full all Senior Loans and Oil
Payment Reimbursement Obligations then outstanding.
(d) Application of Prepayments. If any Mandatory Prepayments required
to be made pursuant to clauses (a), (b) or (c) of this Section 2.05 are applied
to Oil Payment Reimbursement Obligations outstanding at the time of prepayment,
the amount or amounts prepaid shall be applied pro rata between (i) Senior Debt
(or, in the case of clause (b) of this Section 2.05, Bank Senior Debt) and (ii)
such Oil Payment Reimbursement Obligations. Mandatory Prepayments required to be
made pursuant to clause (a) or (c) of this Section 2.05 shall be applied to
reduce the remaining principal installments of Senior Loans pro rata as to each
remaining principal installment outstanding. Mandatory Prepayments required to
be made pursuant to clause (b) of this Section 2.05 shall be applied in direct
order of maturity
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<PAGE>
until the principal due on the immediately succeeding Payment Date has been paid
in full and then shall be applied to reduce the remaining principal installments
of Senior Bank Loans in the inverse order of their maturity.
2.06 Pro Rata Payment of Senior Debt Obligations and Oil Payment
Reimbursement Obligations. (a) Each payment, Optional Prepayment or
Mandatory Prepayment, other than an Optional Prepayment or Mandatory Prepayment
made in accordance with Section 2.07, by the Partnership, or the Borrower at the
direction of the Partnership, to a Senior Lender (or an Oil Payment Insurer, if
applicable) in respect of Senior Debt Obligations (which term shall include, for
purposes of this clause (a) only, at any time on or after a Priority Termination
Date, any Oil Payment Reimbursement Obligations then outstanding) shall be a Pro
Rata Payment.
(b) Each payment, Optional Prepayment or Mandatory Prepayment, at any
time prior to a Priority Termination Date, by the Partnership, or the Borrower
at the direction of the Partnership, to an Oil Payment Insurer or a Senior
Lender in respect of Oil Payment Reimbursement Obligations shall be a Pro Rata
Payment.
2.07 Non-Pro Rata Prepayments. Notwithstanding Sections 2.06 and
2.12, subject to the terms of the Senior Loan Agreements, the Borrower Parties
may:
(a) make an Optional Prepayment, in whole or in part, of Senior Loans
owed to Senior Lenders in one or more Senior Lender Groups without making a
Pro Rata Payment to any Senior Lenders in any other Senior Lender Group if
(i) such payment or prepayment is made with Equity Funding, (ii) such
payment or prepayment is made with the proceeds of Replacement Senior Debt
incurred by the Borrower in compliance with the requirements of Section
2.10 or (iii) such payment or prepayment is made from funds otherwise
available for Restricted Payments pursuant to Section 11.01. Each such
Optional Prepayment shall be a Pro Rata Payment among the Senior Lenders in
each Senior Lender Group being prepaid;
(b) make an Optional Prepayment of Senior Loans owed to all Senior
Lenders without making a Pro Rata Payment to the Capital Markets Senior
Lenders, provided that such Optional Prepayment is a Pro Rata Payment among
all Senior Lenders (other than the Capital Markets Senior Lenders);
(c) make a Mandatory Prepayment in whole or in part of Senior Debt
Obligations owed to (i) any Bank Senior Lender if such Mandatory Prepayment
is made in accordance with Section 5.01 or 5.03 of the Bank Senior Loan
Agreement, or (ii) any other Senior Lender that is entitled to or has
received such Mandatory Prepayment as compensation for costs incurred by it
in connection with making or maintaining its Senior Loans under its Senior
Loan Agreement in excess of costs incurred generally by the other Senior
Lenders, or because it has become unlawful for it to honor its obligation
to make or maintain Senior Loans under its Senior Loan Agreement and it has
not become unlawful generally for the other Senior Lenders to
6
<PAGE>
honor their obligations to make or maintain Senior Loans to the Borrower
under their Senior Loan Agreements, in each of cases (i) and (ii) without
making a Pro Rata Payment to any other Senior Lenders, provided that (x)
such payment or prepayment is made with Equity Funding, (y) such payment or
prepayment is made with the proceeds of Replacement Senior Debt incurred by
the Borrower in compliance with the requirements of Section 2.10 or (z)
such payment or prepayment is made from funds otherwise available for
Restricted Payments pursuant to Section 11.01;
(d) make the prepayments of Bank Senior Debt under the Tranche A Bank
Facility permitted by Section 7.01 of the Bank Senior Loan Agreement in
accordance with Section 2.12 without making a Pro Rata Payment to any
Senior Lenders not referred to in such Section 7.01; and
(e) make an Optional Prepayment of Senior Loans owed to Bank Senior
Lenders under the Tranche A Bank Facility or the Tranche B Bank Facility in
connection with the issuance of additional Capital Markets Senior Debt.
2.08 Insufficient Payments. (a) If at any time at which any Senior
Debt Obligations are payable by the Partnership, or the Borrower at the
direction of the Partnership, to a Senior Lender and such Senior Lender receives
insufficient funds from the Partnership or the Borrower, as the case may be, to
pay in full all Senior Debt Obligations payable to such Senior Lender at such
time pursuant to its Senior Loan Agreement or this Agreement, the funds so
received by such Senior Lender shall be applied to the payment of amounts owing
by the Borrower as such Senior Lender may determine from time to time and in any
order of priority, provided that, so long as no Senior Loan has been
accelerated, such funds shall be applied in a manner that is consistent with the
following order of priority:
first, to pay outstanding fees, costs, expenses, reimbursements and
indemnities then due and payable to the Collateral Trustee, the Depositary
Bank or any Applicable Agent;
second, to pay interest (other than overdue interest), fees, expenses,
indemnities and breakage costs then due and payable to such Senior Lender;
third, to pay overdue interest then due and payable to such Senior
Lender;
fourth, to pay principal (other than overdue principal) and redemption
or prepayment premiums then due and payable to such Senior Lender; and
fifth, to pay overdue principal then due and payable to such Senior
Lender.
2.09 Additional Senior Debt. (a) At any time, and from time to
time the Partnership, or the Borrower at the direction of the Partnership, may
enter into agreements providing for commitments to lend, and may incur, in
addition to the Initial Senior Debt, the Oil Payment Reimbursement Obligations
and any Replacement Senior Debt, without the
7
<PAGE>
prior consent of Senior Lenders or Oil Payment Insurers, Indebtedness secured by
the Collateral and entitled to the benefits of this Agreement and the Security
Documents ("Additional Senior Debt"), provided that in each case such Additional
Senior Debt shall be incurred subject to the following conditions:
(i) if the proceeds of such Additional Senior Debt incurred or
committed will be used solely to finance or refinance Mandatory Capital
Expenditures permitted to be made by the Partnership under the Financing
Documents, a Responsible Officer certifies to the Collateral Trustee and
the Independent Engineer confirms that (A) no Event of Default or Potential
Default has occurred and is continuing, (B) the amount and scope of such
Mandatory Capital Expenditures are (1) necessary to comply with a change in
applicable environmental, health, safety or other laws or regulations
binding on the Partnership or (2) otherwise necessary to operate the Heavy
Oil Processing Facility in accordance with the Base Case Model and (C)
after giving effect to the incurrence of all Additional Senior Debt, and
based on reasonable assumptions verified by the Independent Engineer, (1)
the minimum Debt Service Coverage Ratio for each remaining calendar year
through final maturity of the Senior Debt (as such final maturity is set
forth in the Base Case Model) shall be not less than 1.5:1.0 and (2) the
average annual Debt Service Coverage Ratio from the date of incurrence of
such Additional Senior Debt through final maturity of the Senior Debt (as
such final maturity is set forth in the Base Case Model) shall be not less
than 2.0:1.0;
(ii) at any time after Substantial Reliability, if the proceeds of
such Additional Senior Debt incurred or committed will be used solely to
finance or refinance Discretionary Capital Expenditures permitted to be
made by the Partnership under the Financing Documents, a Responsible
Officer certifies to the Collateral Trustee and the Independent Engineer
confirms that (A) no Event of Default or Potential Default has occurred and
is continuing, (B) Substantial Reliability has occurred, (C) after giving
effect to the incurrence of all Additional Senior Debt, and based on
reasonable assumptions verified by the Independent Engineer, (1) the
minimum Debt Service Coverage Ratio for each remaining calendar year
through final maturity of the Senior Debt (as such final maturity is set
forth in the Base Case Model) shall be not less than 2.0:1.0 and (2) the
average annual Debt Service Coverage Ratio from the date of incurrence of
such Additional Senior Debt through final maturity of the Senior Debt (as
such final maturity is set forth in the Base Case Model) shall be not less
than 2.6:1.0, (D) the Partnership obtains a Ratings Reaffirmation and (E)
the aggregate principal amount of all such Additional Senior Debt for
Discretionary Capital Expenditures does not exceed (x) at any time that any
Bank Senior Debt remains outstanding, $20 million or (y) at any time that
no Bank Senior Debt remains outstanding, $50 million;
(iii) such Additional Senior Debt (A) ranks in right of payment,
upon liquidation and in all other respects pari passu with all other
Senior Debt without
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preference among Senior Debt Obligations by reason of date of incurrence
or otherwise and (B) has none of the preferences set forth in Sections
5.05(a)(ii) and 10.12(b) with respect to Oil Payment Reimbursement
Obligations; and
(iv) the lender of the Additional Senior Debt (or an agent or trustee
therefor and on behalf thereof) shall have executed and delivered to the
Collateral Trustee an agreement in substantially the form of the assumption
agreement attached as Appendix D hereto pursuant to which such lender (or
an agent or trustee therefor and on behalf thereof) agrees (A) to become a
party to this Agreement and the Transfer Restrictions Agreement, (B) to be
bound as a Senior Lender by all the terms and conditions of this Agreement
and the Transfer Restrictions Agreement and (C) to perform all the
obligations of a Senior Lender under this Agreement and the Transfer
Restrictions Agreement in accordance with the terms hereof and thereof, and
which assumption agreement shall have attached thereto a copy of the
proposed Senior Loan Agreement relating to the Additional Senior Debt
(which shall disclose the tenor and amortization schedule of such
Additional Senior Debt and the rate, or the rate basis and margin in the
case of a floating rate, at which such Additional Senior Debt shall bear
interest).
(b) Commitments for Additional Senior Debt permitted under this
Section 2.09 shall be considered Senior Debt Commitments for all purposes of
this Agreement. Loan agreements pursuant to which such Additional Senior Debt
is incurred or committed to be lent shall be considered Senior Loan Agreements
for all purposes of this Agreement. Appendix B shall be deemed to be amended
from time to time to make reference to any such Senior Loan Agreements.
(c) Any incurrence of Additional Senior Debt other than in accordance
with clause (a) of this Section 2.09 shall require the prior consent of
Requisite Lenders (or, at any time on or after a Priority Termination Date,
Requisite Secured Parties).
2.10 Replacement Senior Debt. (a) At any time, and from time to
time, the Partnership, or the Borrower at the direction of the Partnership, may
enter into commitments to incur, and may incur, to replace the Initial Senior
Debt, without the consent of the Senior Lenders or the Oil Payment Insurers,
Indebtedness secured by the Collateral and entitled to the benefits of this
Agreement and the Security Documents for the purpose of paying or prepaying all
or any part of the Initial Senior Debt in accordance with Section 2.07
(including any redemption and prepayment premiums and other refinancing fees or
expenses) or replacing all or part of the unutilized or canceled part of the
related outstanding Senior Debt Commitments ("Replacement Senior Debt"),
provided that in each case the following conditions shall have been satisfied:
(i) (A) the aggregate principal amount of such Replacement Senior
Debt does not exceed the sum of the amount of Senior Debt Obligations being
paid or prepaid and the unutilized or canceled part of the Senior Debt
Commitments being
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replaced, (B) such Replacement Senior Debt has a Weighted Average Life no
shorter, and a final maturity date no earlier, than that of the Senior Debt
being replaced, (C) the projected average Debt Service Coverage Ratio
through January 15, 2009, calculated on a pro forma basis reflecting the
incurrence of such Replacement Senior Debt (but not modifying any of the
other assumptions made in the Base Case Model), is not less than 2.2:1.0
and (D) the Partnership has obtained a Ratings Reaffirmation, provided that
no Ratings Reaffirmation shall be required if such Replacement Senior Debt
(1) is Bank Senior Debt, (2) bears interest at a rate (or in the case of a
floating rate facility, a margin) that is equal to or lower than that
applicable to the Bank Senior Debt being replaced and (3) differs from the
Bank Senior Debt being replaced in no other respect, except for
administrative, procedural, mechanical or other de minimis changes;
(ii) the Partnership shall have delivered to the Collateral Trustee
no less than 30 Business Days prior to the date such Replacement Senior
Debt is to be incurred or such agreements providing for such commitments
are entered into a certificate signed by a Responsible Officer (A)
identifying the lender of the Replacement Senior Debt, (B) certifying that
the Replacement Senior Debt is or will be incurred solely for the purposes
of making a payment or prepayment of Senior Debt Obligations (including any
redemption and prepayment premiums and other refinancing fees or expenses)
or for replacing all or any part of the unutilized or canceled part of any
outstanding Senior Debt Commitment, and (C) certifying that the conditions
set forth in subclause (i) of this clause (a) have or will have been
satisfied upon incurrence of the Replacement Senior Debt; and
(iii) the lender of the Replacement Senior Debt (or an agent or
trustee therefor and on behalf thereof) shall have executed and delivered
to the Collateral Trustee an agreement in substantially the form of the
assumption agreement attached as Appendix D hereto pursuant to which such
lender (or an agent or trustee therefor and on behalf thereof) agrees (A)
to become a party to this Agreement and the Transfer Restrictions
Agreement, (B) to be bound as a Senior Lender by all the terms and
conditions of this Agreement and the Transfer Restrictions Agreement and
(C) to perform all the obligations of a Senior Lender under this Agreement
and the Transfer Restrictions Agreement in accordance with the terms hereof
and thereof, and which assumption agreement shall have attached a copy of
the proposed Senior Loan Agreement relating to the Replacement Senior Debt
(which shall disclose the tenor and amortization schedule of such
Replacement Senior Debt and the rate, or the rate basis and margin in the
case of a floating rate, at which such Replacement Senior Debt shall bear
interest).
(b) Commitments for Replacement Senior Debt permitted under this
Section 2.10 shall be considered Senior Debt Commitments for all purposes of
this Agreement. Loan agreements pursuant to which such Replacement Senior Debt
is incurred or committed to be lent shall be considered Senior Loan Agreements
for all purposes of this
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Agreement. Appendix B shall be deemed to be amended from time to time to make
reference to any such Senior Loan Agreements.
(c) Any incurrence of Replacement Senior Debt other than in accordance
with clause (a) of this Section 2.10 shall require the prior consent of
Requisite Lenders.
(d) Notwithstanding anything in this Section 2.10 to the contrary, any
Replacement Senior Debt incurred pursuant to clause (a) of this Section 2.10
shall be incurred, (i) in the case of Capital Markets Senior Debt, pursuant to a
supplemental indenture in accordance with Article Nine of the Indenture and (ii)
in the case of Bank Senior Debt, pursuant to a Senior Loan Agreement on terms no
less favorable to the Partnership or the Borrower (as applicable) than those set
forth in the applicable Initial Bank Senior Loan Agreement.
2.11 Replacement for Oil Payment Insurance Policy. (a) At any time,
and from time to time, the Partnership, or the Borrower at the direction of the
Partnership, may enter into one or more letters of credit or similar instruments
satisfying the requirements of Section 11.4 of the Long-Term Oil Supply
Agreement to replace the Oil Payment Insurance Policy in its entirety (but not
in part), without the consent of the Senior Lenders or the Oil Payment Insurers,
provided that in each case the following conditions shall have been satisfied:
(i) (A) the maximum amount of coverage under such letter or letters
of credit or similar instrument or instruments is equal to the coverage
under the Oil Payment Insurance Policy and (B) any suspension, termination
or similar rights of the provider or providers of such letter or letters of
credit or similar instrument or instruments, as the case may be, are
substantially similar to those available to the Oil Payment Insurers under
the Reimbursement Agreement;
(ii) the Partnership shall have delivered to the Collateral Trustee
no less than 30 days prior to the date such letter or letters of credit or
similar instrument or instruments, as the case may be, are entered into a
certificate signed by a Responsible Officer (A) identifying the provider or
providers of such letter or letters of credit or similar instrument or
instruments, as the case may be, (B) certifying that such letter or letters
of credit or similar instrument or instruments, as the case may be, will be
entered into solely for the purpose of replacing the Oil Payment Insurance
Policy in its entirety and (C) certifying that the conditions set forth in
subclause (i) of this clause (a) have or will have been satisfied upon the
entering into of such letter or letters of credit or similar instruments or
instruments, as the case may be; and
(iii) each provider of such letter of credit or similar instrument
(or an agent or trustee therefor and on behalf thereof) shall have executed
and delivered to the Collateral Trustee an agreement in substantially the
form of the assumption agreement attached as Appendix D hereto pursuant to
which such provider (or an agent or trustee therefor and on behalf thereof)
agrees (A) to become a party to this
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Agreement and the Transfer Restrictions Agreement, (B) to be bound as an
Oil Payment Insurer and Oil Payment Insurers Administrative Agent by all
the terms and conditions of this Agreement and the Transfer Restrictions
Agreement and (C) to perform all the obligations of an Oil Payment Insurer
and Oil Payment Insurers Administrative Agent under this Agreement and the
Transfer Restrictions Agreement in accordance with the terms hereof and
thereof, and which assumption agreement shall have attached a copy of the
proposed letter of credit or similar instrument (which shall disclose the
maximum amount of coverage thereunder and any suspension, termination or
similar rights).
(b) Any letter of credit or similar instrument replacing the Oil
Payment Insurance Policy other than in accordance with clause (a) of this
Section 2.11 shall require the prior written consent of Requisite Lenders.
2.12 Extraordinary Prepayments; Substitution of "Compensating Letter
of Credit". (a) Notwithstanding anything in this Agreement to the contrary,
the Partnership, or the Borrower at the direction of the Partnership, may make
prepayments of (i) Bank Senior Debt under the Tranche A Bank Facility pursuant
to, and in accordance with, Section 2.01 of the Bank Senior Loan Agreement and
(ii) of any "Unpaid Drawing" under the Secured Working Capital Facility with the
proceeds of any Loans borrowed in accordance with Article II thereof.
(b) Notwithstanding anything in this Agreement to the contrary, the
Partnership or the Borrower may enter into arrangements in form and substance,
and with such counterparty or counterparties, satisfactory to the Bank Senior
Lenders Administrative Agent providing for a substitution of the "Compensating
Letter of Credit" and "Compensating L/C Commitments" under the Secured Working
Capital Facility.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower, the Partnership
and the Partners. Each of the Borrower, the Partnership and the Partners
represents and warrants to the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Oil Payment Insurers Administrative Agent, the Capital
Markets Trustee, the Depositary Bank, the Oil Payment Insurers and each Senior
Lender that:
(a) Organization and Business. It is a corporation, in the case of
the Borrower and each of the Partners, or a limited partnership, in the
case of the Partnership, duly organized, validly existing and in good
standing under the laws of the State of Delaware, has all power and
authority (corporate and other) necessary under the laws of the State of
Delaware to own its properties and to carry on the business of the Coker
Project, has been duly qualified as a foreign corporation or
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partnership, as the case may be, for the transaction of business and is in
good standing under the laws of the State of Texas. Its executive office
and principal place of business are maintained at 1801 S. Gulfway Drive,
Office No. 36, Port Arthur, Texas 77640. It does not own any properties or
assets other than those relating to the Coker Project and has not engaged
in any business or activity other than the business of the Coker Project.
None of the Borrower, the Partnership nor either of the Partners is a party
to any agreement relating to or affecting the Borrower, the Partnership or
the Coker Project, other than the Transaction Documents in the form
provided to the Collateral Trustee and the Applicable Agents in accordance
with clauses (c), (d) and (e) of Section 9.01 and the Purchase Agreement.
(b) Ownership. The General Partner is the sole general partner of the
Partnership; the Limited Partner is the sole limited partner of the
Partnership; the Partners together own direct and beneficial interests in
all the partnership capital of the Partnership, free and clear of all
liens, encumbrances, equities or claims (other than those in favor of the
Secured Parties); and no other person has any other interest in or right to
any of the Partnership's partnership capital. Clark Holdings owns 90% and
Occidental Petroleum owns 10% of the outstanding shares of capital stock of
the General Partner, free and clear of all liens, encumbrances, equities or
claims; no other person is a shareholder of the General Partner or has any
interest in or rights to any shares of capital stock of the General
Partner; and all outstanding shares of capital stock of the General Partner
have been duly and validly authorized and issued and are fully paid and
non-assessable. The General Partner owns all of the outstanding shares of
capital stock of the Limited Partner, free and clear of all liens,
encumbrances, equities or claims; no other person is a shareholder of the
Limited Partner or has any interest in or rights to any shares of capital
stock of the Limited Partner; and all the outstanding shares of capital
stock of the Limited Partner have been duly and validly authorized and
issued and are fully paid and non-assessable. The Partnership owns all the
outstanding shares of capital stock of the Borrower, free and clear of all
liens, encumbrances, equities or claims; no other person is a shareholder
of the Borrower or has any interest in or rights to any shares of capital
stock of the Borrower; and all the outstanding shares of capital stock of
the Borrower have been duly and validly authorized and issued and are fully
paid and non-assessable. None of the Borrower, the Partnership nor either
of the Partners owns, directly or indirectly, any capital stock or other
ownership interests in any Person other than as set forth herein.
(c) Authority. It (i) has full power and authority to execute and
deliver this Agreement and each of the other Transaction Documents to which
it is a party and to grant to the Collateral Trustee for the benefit of the
Secured Parties the security interests in the Collateral provided for in
this Agreement and the Security Documents and to perform and incur its
obligations under each such Transaction Document and (ii) will have full
power and authority to execute and deliver any
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Notes, Security Documents, Financing Documents and Project Documents to
which it will be a party and that it will execute and deliver after the
date hereof.
(d) Binding Agreement. It has duly authorized and, in the case of
Transaction Documents entered into on or prior to the date hereof, has
duly executed and delivered, each Transaction Document to which it is a
party and each such Trans action Document entered into on or prior to the
date hereof constitutes its valid and legally binding obligation,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles. Any Transaction Documents referred to in
the preceding sentence that will be executed and delivered by it after the
date hereof (and, in the case of those that have been executed and
delivered on or prior to the date hereof, any future modifications,
supplements or amendments thereto), when executed and delivered by it, will
constitute its valid and legally binding obligation enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(e) Consents and Approvals for Agreements.
(i) All Third-Party Authorizations that are necessary for (A) the
execution, delivery and performance by it of each Transaction Document
to which it is a party, (B) the incurrence of Senior Debt by the
Borrower, (C) the guarantee of the Senior Debt by the Partnership, and
(D) the grant to the Secured Parties of the security interests in the
Collateral under this Agreement and the Security Documents are listed
in Appendix E-1, have been obtained and are in full force and effect,
are held in the appropriate party's name, are not subject to appeal,
are free from conditions or requirements that cannot be met or
complied with and are free from conditions or requirements the
compliance with which could reasonably be expected to have a Material
Adverse Effect.
(ii) All Third-Party Authorizations that are necessary for the
execution, delivery and performance by each of the Clark Entities of
the Transaction Documents to which it is a party have been obtained
and are in full force and effect, are held in the appropriate party's
name, are not subject to appeal, are free from conditions or
requirements that cannot be met or complied with and are free from
conditions or requirements the compliance with which could reasonably
be expected to have a Material Adverse Effect.
(iii) Other than those that are not necessary as of such time
and that are expected to be obtained in the ordinary course as and
when required, at every time after the date of this Agreement on which
this representation is
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deemed to be made, all Third-Party Authorizations that are necessary
for all of the actions referred to in subclauses (i) and (ii) of this
clause (e) have been obtained, are in full force and effect, are held
in the appropriate party's name, are not subject to appeal, are free
from conditions or requirements that cannot be met or complied with
and are free from conditions or requirements the compliance with which
could reasonably be expected to have a Material Adverse Effect.
(f) Consents and Approvals for Coker Project.
(i) All (A) Third-Party Authorizations, (B) easements, leases,
rights-of-way, auxiliary rights and other real property rights and (C)
licenses and other rights to use Technology, in each case that are
necessary in order to develop, construct, operate, maintain and
finance the Coker Project in the manner contemplated by the
Transaction Documents are listed in Appendix E-2, have been obtained
and are in full force and effect (unless otherwise noted in such
Appendix E-2), are held in the appropriate party's name, are not
subject to appeal, are free from conditions or requirements that
cannot be met or complied with and are free from conditions or
requirements the compliance with which could reasonably be expected to
have a Material Adverse Effect.
(ii) All (A) Third-Party Authorizations, (B) easements, leases,
rights-of-way, auxiliary rights and other real property rights, and
(C) licenses and other rights to use Technology, in each case that are
necessary in order for Clark R&M to develop, construct, operate and
maintain the Coker Project pursuant to its obligations under the
Project Documents to which it is a party have been obtained and are in
full force and effect, are held in the appropriate party's name, are
not subject to appeal, are free from conditions or requirements that
cannot be met or complied with and are free from conditions or
requirements the compliance with which could reasonably be expected to
have a Material Adverse Effect.
(iii) It has no reason to believe that any of the Third-Party
Authorizations that have not been obtained as of the date hereof, but
that will be required in the future, will not be obtained in the
ordinary course as and when required, will be subject to conditions or
requirements that cannot be met or complied with or will be subject to
conditions or requirements the compliance with which could reasonably
be expected to have a Material Adverse Effect.
(iv) Other than those that are not necessary as of such time and
that are expected to be obtained in the ordinary course as and when
required, at every time after the date of this Agreement on which this
representation is
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deemed to be made, all Third-Party Authorizations that are necessary
for all of the actions referred to in subclauses (i) and (ii) of this
clause (f) have been obtained, are in full force and effect, are held
in the appropriate party's name, are not subject to appeal, are free
from conditions or requirements that cannot be met or complied with
and are free from conditions or requirements the compliance with which
could reasonably be expected to have a Material Adverse Effect.
(g) Coker Project Information.
(i) There are no facts or circumstances known to it (A) that,
individually or in the aggregate, could have a Material Adverse Effect
and that have not been disclosed in writing to the Senior Lenders (or
any Independent Consultant acting on their behalf) or (B) that could
cause any information provided to the Senior Lenders (or any
Independent Consultant acting on their behalf) in connection with the
Coker Project to be materially incorrect or materially misleading as
of the date of this Agreement. Without limiting the generality of the
foregoing, the financial statements most recently furnished to the
Senior Lenders and the Collateral Trustee are true and correct in all
material respects as of the date of this Agreement.
(ii) The information contained in each of the Offering Circular
and the Information Memorandum (other than Parts I. and J. of the
"Executive Summary", the "Summary Terms of Debt Facilities", the
"Financial Projections" and Appendices A through D thereto) is true
and correct in all material respects as of the date of this Agreement
and does not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(iii) All information supplied by or on behalf of the
Partnership to the Independent Engineer in connection with the Coker
Project, as such information may have been superseded or corrected in
writing prior to the date hereof, is true and correct in all material
respects as of the date of this Agreement. All financial projections
and other forward-looking statements and forecasts supplied by or on
behalf of the Partnership to the Independent Engineer in connection
with the preparation of the Base Case Model have been prepared in good
faith with due care on the basis of the assumptions stated therein
(which assumptions, to the best of the Partnership's knowledge, are
appropriate and reasonable). The Base Case Model, including the
forecasted balance sheets, income statements and cash flow statements
as well as other financial projections and other forward-looking
statements and forecasts with respect to the Partnership and the Coker
Project (including without limitation those contained in the Offering
Circular, the Rating
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Agencies Presentation and the Information Memorandum) delivered to the
Senior Lenders and the Collateral Trustee were prepared in good faith
with due care on the basis of the assumptions stated therein (which
assumptions, to the best of the Partnership's knowledge, are
appropriate and reasonable), are consistent in all material respects
with the Partnership's own assumptions, projections and forecasts for
the applicable periods, with the Partnership's own expectations as to
future conditions and its course of action given the occurrence of any
applicable hypothetical events and with the provisions of the Project
Documents as in effect on the date of this Agreement and represent, as
of the date of this Agreement, a reasonable estimate of the
Partnership's future financial performance.
(h) No Conflicts. The compliance by it with all of the provisions of
the Transaction Documents to which it is a party and the consummation of
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it is bound or to which it or any of its property or assets may be
subject, nor will such action result in any violation of the provisions of
its organizational documents or any applicable statute or any order, rule,
regulation, injunction, decree, writ or judgment of any court, judicial
body, governmental agency or other body having jurisdiction over it or any
of its properties or assets.
(i) No Conflicts with Obligations of the Clark Entities. To the best
of its knowledge after due inquiry, the compliance by it with all the
provisions of the Transaction Documents to which it is a party and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
any of the Clark Entities is a party or by which any of them is bound or to
which any of them or any of their property or assets may be subject, nor
will such action result in any violation of the provisions of the Clark
Entities' organizational documents or any applicable statute or any order,
rule, regulation, injunction, decree, writ or judgment of any court,
judicial body, governmental agency or other body having jurisdiction over
any of the Clark Entities or any of their properties or assets.
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(j) Reporting Requirements of Clark Entities. To the best of its
knowledge after due inquiry, the annual reports, financial statements and
such other information, documents and other reports required to be filed by
any of the Clark Entities with the Commission under the Exchange Act are
true and correct in all material respects as of the date of this Agreement
and do not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(k) Compliance with Laws; No Litigation. It is in compliance with all
applicable laws, rules, regulations and orders of Governmental Authorities
and there are no actions, suits or legal, governmental or arbitration
proceedings pending to which it is a party, affecting it or to which any of
its property or assets is subject, and to the best of its knowledge, no
such proceedings are threatened or contemplated by any Person.
(l) Clark Entities' Compliance with Laws; No Litigation. To the best
of its knowledge after due inquiry, each of the Clark Entities is in
compliance in all material respects with all applicable laws, rules,
regulations and orders of Governmental Authorities and there are no
actions, suits or legal, governmental or arbitration proceedings pending to
which any of the Clark Entities is a party, affecting any of them or to
which any of their property or assets is subject, in each case that could
be materially adverse to such Clark Entity or to the Coker Project, other
than as disclosed in the annual and quarterly reports of any of the Clark
Entities as filed with the Commission, and to the best of its knowledge, no
such proceedings are threatened or contemplated by any Person.
(m) Title to Properties; Security Interests.
(i) It has good and valid title to, or a valid, subsisting and
enforceable leasehold interest, easement, right of way or auxiliary
rights in, all properties (including real property) it purports to
own, lease or hold any such interest or rights in, all its assets and
all its revenues (including good, legal and valid title to, or a
valid, subsisting and enforceable leasehold interest in, the
Collateral, in which it agrees, or purports in this Agreement or the
Security Documents, to grant a security interest); and there are no
mortgages, liens, charges, pledges, security interests or encumbrances
of any nature whatsoever, and no adverse or competing claims, against
such properties, assets or revenues except Permitted Liens. To the
extent indicated in the forms of legal opinions set forth in Appendix
L, this Agreement creates in favor of the Secured Parties or the
Collateral Trustee for the benefit of the Secured Parties each
security interest purported to be created hereunder and each Security
Document, when executed and delivered as contemplated hereby, will
create in favor of the Secured Parties or the Collateral Trustee for
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the benefit of the Secured Parties each security interest purported to
be created thereby. To the extent indicated in the forms of legal
opinions set forth in Appendix L, each such security interest is and,
in the case of those required to be created as a condition to the
initial disbursement of Senior Loans hereunder and the provision of
the Oil Payment Insurance Policy, will be, as of the Closing Date,
valid and binding, and upon the filing and recording or publication
required by this Agreement, will constitute, under applicable law,
fully perfected first priority security interests, superior in right
to any other Liens, except Permitted Liens, and enforceable against
the grantor of such security interests, any trustee in bankruptcy and
any attaching creditor or third party. No currently effective
financing statement or other instrument or recordation covering all or
any part of the Collateral purported to be covered by this Agreement
or the other Security Documents is on file in any recording office,
except such as may have been filed in favor of the Secured Parties or
the Collateral Trustee on behalf of the Secured Parties for the direct
or indirect benefit of the Secured Parties or the Collateral Trustee
on behalf of the Secured Parties or in respect of any Permitted Lien.
(ii) The property interests, easements, rights of way, auxiliary
rights and other rights and interests obtained or to be obtained, and
the material to be supplied, pursuant to the Project Documents (A)
comprise all of the rights and interests necessary to secure any right
or privilege which is material to the development, construction,
operation and maintenance of the Coker Project in accordance with the
Project Documents, all requirements of law and the Base Case Model,
(B) collectively are sufficient to enable the Coker Project to be
located, constructed and operated at the Refinery and (C) provide
adequate ingress and egress from the Coker Project as may be required
in connection with the construction and operation of the Coker
Project.
(n) Mechanical Completion, Substantial Reliability and Final
Completion of the Coker Project; Available Financing. It has no reason to
believe that (i) Mechanical Completion and Final Completion will not occur
on or prior to the Guaranteed Mechanical Completion Date and the Guaranteed
Final Completion Date, respectively, (ii) Substantial Reliability will not
occur on or prior to October 1, 2001, (iii) all project costs required to
be paid in order to complete the Coker Project and achieve Mechanical
Completion, Substantial Reliability and Final Completion will exceed
amounts in the aggregate budgeted therefor, (iv) there are material project
costs that have not been budgeted and (v) the Coker Project will not comply
fully with all applicable requirements of law and all Third-Party
Authorizations.
(o) Taxes. It has filed or caused to be filed all tax returns
required to be filed by it, and has paid and discharged all Taxes shown to
be due and payable on such returns or lawfully imposed on it or its
property (including interest and
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penalties) unless such Taxes are being contested in good faith and by
appropriate proceedings and appropriate reserves are being maintained with
respect thereto in accordance with GAAP. No disputes are pending between it
and any Governmental Authority relating to Taxes as of the date of this
Agreement and, to the extent this representation is made or deemed made
after the date of this Agreement, it has notified the Collateral Trustee in
reasonable detail of any disputes pending between it and any Governmental
Authority relating to Taxes after the date of this Agreement which
disputes, if resolved adversely to it, could reasonably be expected to have
a Material Adverse Effect. Its Partners have not incurred and to the best
of its knowledge will not incur any tax liability in connection with the
Coker Project or the other transactions contemplated by the Transaction
Documents that (i) has not been disclosed in writing to the Collateral
Trustee and the Senior Lenders or (ii) is not specifically reflected in the
Base Case Model.
(p) Ranking.
(i) The obligations of the Borrower under each Senior Loan
Agreement, the Senior Loans made thereunder and any Notes evidencing
such Senior Loans, will at all times rank in right of payment, in
right of collateral security, upon liquidation and in all other
respects pari passu with the Borrower's obligations under each other
Senior Loan Agreement, the Senior Loans made thereunder and any Notes
evidencing such Senior Loans. The Borrower has no obligations other
than in connection with (A) the Senior Loan Agreements, the Senior
Loans made thereunder, any Notes evidencing such Senior Loans and (B)
the Debt Service Reserve Guarantee Arrangement.
(ii) The obligations of the Partnership under the Guarantee of
each Senior Loan Agreement, the Senior Loans made thereunder and any
Notes evidencing such Senior Loans, will at all times rank in right of
payment, in right of collateral security, upon liquidation and in all
other respects (A) pari passu with the Partnership's obligations
under the Guarantee of each other Senior Loan Agreement, the Senior
Loans made thereunder and any Notes evidencing such Senior Loans, (B)
pari passu with its Oil Payment Reimbursement Obligations, except as
set forth in Sections 5.05 and 10.12, and (C) senior to the
Partnership's obligations under the Partnership Notes, any
Subordinated Debt and all its other obligations other than those that
have priority under applicable law.
(q) No Default. It is not in violation of any of its constitutive
partnership or corporate documents or in default in the performance or
observance of any obligation, covenant or condition contained in this
Agreement, any other Transaction Document or any other indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties or assets may be subject.
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(r) Arm's-Length Transactions. It has not entered into any
transaction or agreement (including any Authorized Investments) with any
Affiliate other than transactions or agreements that (i) are bona fide
business transactions or agreements reasonably related to the conduct of
its business in accordance with clause (c) of Section 4.01, (ii) are on
terms that are no less favorable to it than those that could have been
obtained at such time by it in a comparable arm's-length transaction and
(iii) have been disclosed in writing to the Collateral Trustee, the Senior
Lenders and the Oil Payment Insurers. All dealings by it with Persons other
than Affiliates also will be conducted on an arm's-length basis.
(s) Copies of Documents. The copies of the Transaction Documents,
other documents, its charter and other constitutive and governing
documents, consents, approvals, budgets, maintenance and Major Maintenance
Plans, insurance binders, certificates and policies, and any amendments to
any of the foregoing provided by it to the Collateral Trustee and the
Applicable Agents are true and complete copies thereof. Such Transaction
Documents and such charters, documents, consents, approvals, budgets,
maintenance and Major Maintenance Plans and insurance binders, certificates
and policies are in full force and effect and there have been no amendments
other than those that have been provided to the Collateral Trustee and the
Applicable Agents.
(t) Year 2000 Compliance. Its computer hardware, software, systems
and its machinery and equipment are Year 2000 Compliant and there are no
existing circumstances or contemplated changes in its computer hardware,
software, systems and other operations that are not Year 2000 Compliant
and, to its best knowledge, the computer hardware, software, systems and
operations of its material suppliers, customers, and others with which it
conducts business (including, but not limited to, the Clark Entities) are
Year 2000 Compliant.
(u) Investment Company Act. It is not and, after giving effect to the
issuance or incurrence by the Borrower and the Guarantee by the Partnership
of the Senior Debt it will not be, an "investment company", or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(v) Margin Regulations. None of the transactions contemplated by this
Agreement (including the use of the proceeds of any Senior Debt) will
violate or result in a violation of Section 7 of the Exchange Act, or any
regulation promulgated thereunder, including Regulations T, U and X of the
Board of Governors of the Federal Reserve System.
(w) No Immunity. Neither it nor any of its properties or assets has
any immunity from jurisdiction of any court otherwise having valid subject
matter and personal jurisdiction or from any other legal process in the
United States (whether
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through service, notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise).
(x) Environmental Laws. (i) Its operations and properties have
complied and are complying in all material respects with all applicable
Environmental Laws, and it has obtained all permits, licenses and other
approvals and authorizations necessary for the business of the Coker
Project, (ii) other than as disclosed in the Information Memorandum and
the Offering Circular or as set forth on Schedule 3.01(x), neither the
Coker Project site nor the Refinery is contaminated with any Hazardous
Substance that could be expected to require investigation or remediation
under any applicable Environmental Law, (iii) it has not received any
notice indicating that it may be in material violation of, or liable under,
any Environmental Law in connection with the ownership or operation of its
businesses, (iv) to the best of its knowledge after due inquiry, except as
disclosed in the Offering Circular or in public filings of the Clark
Entities or as set forth on Schedule 3.01(x) none of the Clark Entities has
received any unresolved notice indicating that it may be in material
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of the Refinery, (v) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or, to the best of its knowledge after due inquiry,
threatened against it alleging any violation of or obligation under any
Environmental Law, (vi) other than as disclosed in the Information
Memorandum and the Offering Circular, the construction of the Coker Project
will not trigger any additional material compliance expenditures or
material obligations relating to any Environmental Law, (vii) no Hazardous
Substance has been disposed of, transferred, released or transported on or
from the Coker Project, other than as could not be expected to result in
claims or liability under applicable Environmental Law, and (viii) it is
not subject to any liabilities (fixed or contingent) relating to any suit,
settlement, court order, administrative order, judgment or claim asserted
or arising under or relating to any Environmental Law. There have been no
environmental investigations, studies, audits, reviews or other analyses
conducted by it or that are in its possession that contain information that
would be material to an assessment of the environmental impact or cost of
the Coker Project as presently constituted that have not been made
available or otherwise disclosed in writing to the Independent Engineer.
(y) ERISA. It does not sponsor, maintain or contribute to any
employee benefit plan as defined in Section 3(3) of ERISA, and has not at
any time sponsored, maintained or contributed to any such employee benefit
plan.
(z) Independence of Independent Consultants. None of the Independent
Consultants or their Affiliates or their respective partners, shareholders,
principals or professional employees providing or overseeing the provision
of services contemplated by this Agreement, (i) had, or was committed to
acquire, any direct
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material financial interest or material indirect financial interest in the
Partnership or any of its Affiliates or (ii) was, or will be connected as,
a promoter, underwriter, voting trustee, director, officer or employee of
the Partnership or any of its Affiliates.
(aa) Accounting and Cost Control Systems. It will maintain
management information and cost accounting systems for the Coker Project
at all times in accordance with recognized industry procedures.
(bb) Labor Relations. It, and to the best of its knowledge after due
inquiry, each of the Clark Entities is in compliance with any collective
bargaining agreement in any way relating to, or affecting, the Refinery to
which such party is a party and there are no strikes, slowdowns or work
stoppages currently threatened by its employees or suppliers or
contractors, including without limitation the Clark Entities, involved in
the Coker Project that, in each case, could reasonably be expected to have
a Material Adverse Effect.
(cc) No Force Majeure Event. No Event of Force Majeure has occurred
that would excuse it, or, to the best of its knowledge after due inquiry,
any other party to any Project Document from the duty to perform any
obligation under a Project Document.
(dd) Separate Identity. It has (i) maintained all aspects of its
business and operations, including but not limited to its construction,
operations, accounts, assets, liabilities, financial statements and books
and records, separate and apart from the Clark Entities and has held itself
out generally as an entity independent from the Clark Entities; (ii) not
(A) commingled any of its funds, properties or assets with those of any
Clark Entity (except for any commingling of crude oil or other feedstocks
within the Coker Complex or in any related storage or piping facilities),
(B) guaranteed or become obligated for debts of any Clark Entity or held
out its credit as being available to satisfy the obligations of any Clark
Entity, (C) acquired obligations or securities of any Clark Entity, (D)
pledged its assets for the benefit of, or made any loans or advances to,
any Clark Entity or (E) incurred, created or assumed any indebtedness on
behalf of, or transferred or leased its properties or assets or any
interest therein to, any Clark Entity, except in each case (A) through (E)
as may be permitted by the terms of any of the Finance Documents; (iii)
made all decisions with respect to its business and operations
independently from the Clark Entities (it being understood that most of the
Borrower's directors and officers are individuals employed by a Clark
Entity); and (iv) has entered into all business transactions previously
entered into with any Clark Entity on terms and conditions that at such
time were no less favorable to it than those that could have reasonably
been obtained by it at such time in a comparable arm's-length transaction.
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(ee) Insurance. All contracts and other documents relating to
Required Insurance are in full force and effect and collectively satisfy
all requirements of the Financing Documents and the Project Documents.
(ff) Adequacy of Services. Each of the services, utilities,
materials, licenses and other rights made available or to be made available
to the Partnership under the Project Documents are adequate and sufficient
for the Partnership to develop, construct, operate and maintain the Coker
Project in accordance with the Base Case Model.
(gg) Sole Purpose of Borrower. The Borrower's sole business purpose
is to incur Senior Debt and directly to loan 100% of the proceeds of such
Senior Debt to the Partnership.
ARTICLE IV
COVENANTS
4.01 Covenants of the Borrower and the Partnership. Each of the
Borrower and the Partnership covenants and agrees with the Collateral Trustee
and each of the Secured Parties that so long as any Senior Debt or Senior Debt
Commitment shall remain outstanding and until all Senior Debt Obligations and
Oil Payment Obligations due and to become due shall have been paid in full:
(a) Maintenance of Existence. It shall do all things necessary to
maintain: (i) its due organization, valid existence and good standing as a
corporation, in the case of the Borrower, and a limited partnership, in the
case of the Partnership, under the laws of the State of Delaware; (ii) the
power and authority (corporate and otherwise) necessary under the laws of
the State of Delaware to own its properties and to carry on the business of
the Coker Project; and (iii) its qualification as a foreign corporation or
limited partnership, as the case may be, for the transaction of business in
good standing under the laws of the State of Texas. In the event that any
change in corporate form or status is required under any applicable law, it
shall take such measures as are necessary to protect the integrity and
effectiveness of its obligations, including without limitation all its
covenants and all security interests created, under this Agreement and the
other Transaction Documents to which it is party. It shall not dissolve,
liquidate, enter into any merger or consolidation, or sell or transfer all
or substantially all of its assets.
(b) No Modification. It shall not take any action to amend or
modify, in the case of the Borrower, its Certificate of Incorporation or
Bylaws and, in the case of the Partnership, its Certificate of Limited
Partnership or Partnership Agreement, and, in both cases, any other
constitutive or governing documents in any respect unless (i) a copy of
such amendment or modification has been delivered to the
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Collateral Trustee reasonably in advance of the effective date thereof,
having attached a certificate of a Responsible Officer certifying that such
amendment or waiver could not reasonably be expected to have a Material
Adverse Effect, and such amendment or waiver could not reasonably be
expected to have a Material Adverse Effect or (ii) it has obtained the
prior consent of Supermajority Lenders (or, at any time on or after a
Priority Termination Date, Supermajority Secured Parties).
(c) Business. The Partnership shall conduct no business or activity
other than the business of the Coker Project (and such business reasonably
incidental thereto) and shall not change the purpose, nature or scope of
the Coker Project from that described in (i) the definition of "Coker
Project" in Appendix A and (ii) to the extent consistent therewith, the
Partnership Agreement and any other constitutive or governing documents of
the Partnership. The Borrower shall not have any assets other than the
Partnership Notes and its rights under the Transaction Documents to which
it is a party and shall not conduct any business other than as necessary to
perform its respective obligations under such Transaction Documents to
which it is a party.
(d) Principal Place of Business. It shall maintain its executive
office and principal place of business in Port Arthur, Texas and shall
maintain in such place originals or copies of the principal books and
records relating to its business.
(e) Accounting and Cost Control Systems. It shall maintain, or cause
to be maintained, its own management information and cost accounting
systems for the Coker Project at all times in accordance with Prudent
Industry Practice and separate and apart from all management information
and cost accounting systems of any of the Clark Entities, and shall employ
independent auditors of recognized national standing to audit annually its
financial statements.
(f) Access. It shall grant the Collateral Trustee, each Bank Senior
Lender, Oil Payment Insurers Administrative Agent and the Capital Markets
Trustee or their designees (which may include any Independent Consultant)
from time to time, including but not limited to during the pendency of an
Event of Default or Potential Default, complete access to its books and
records, quality control and performance test data, all other data relating
to the Coker Project and construction progress and the physical facilities
of the Coker Project and an opportunity to discuss accounting matters with
its independent auditors, provided that all such inspections are conducted
during normal business hours in a manner that does not unreasonably disrupt
the construction or operation of the Coker Project. Each of the
Independent Consultants, Bank Senior Lenders, the Collateral Trustee, the
Oil Payment Insurers Administrative Agent and the Capital Markets Trustee
shall also have the right to monitor, witness and appraise the
construction, testing and operation of the Coker Project. It shall offer
and cause its officers, employees, agents and contractors to offer all
reasonable assistance to the Persons making any such visit. So long as any
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Event of Default or Potential Default has occurred and is Continuing, the
reasonable fees and documented expenses of such Persons shall be for the
account of the Partnership.
(g) Environmental Audits. If the Collateral Trustee, any Bank Senior
Lender, the Oil Payment Insurers Administrative Agent or the Capital
Markets Trustee or any of its designees reasonably believes that a Release,
threat of Release or violation of any Environmental Law may have occurred,
or if an Event of Default or Potential Default has occurred, it shall, upon
receipt of a written communication setting forth the basis for such belief,
grant access to and assist any environmental consultants for the purpose of
conducting any environmental compliance or contamination audits requested
by any of the Collateral Trustee, any Bank Senior Lender, the Oil Payment
Insurers Administrative Agent or the Capital Markets Trustee in its sole
discretion and all costs associated with any such audits shall be paid by
the Partnership.
(h) Preservation of Assets.
(i) It shall maintain its assets in good repair and shall make
such repairs and replacements as are required in accordance with
Prudent Industry Practice. The Partnership shall not sell, assign,
lease, transfer or otherwise dispose of any Project Property without
the prior consent of Supermajority Lenders (or, at any time on or
after a Priority Termination Date, Supermajority Secured Parties),
except for (A) dispositions of Project Production other than
dispositions prohibited by the terms of clause (t) of this Section
4.01, (B) dispositions of Project Property that has become obsolete or
redundant, (C) dispositions made in the ordinary course of its
business, (D) dispositions of Project Property the net proceeds of
which are used within 90 days of such disposition to replace such
Project Property with similar productive property or assets of the
Partnership pursuant to a binding agreement for the purchase of such
replacement Project Property entered into by the Partnership on or
prior to the date of such disposition or (E) dispositions of Project
Property approved by the Bank Senior Lenders Administrative Agent up
to an aggregate value of $50 million in the form of a sale-and-
leaseback transaction as part of a tax-exempt bond financing under the
laws of the State of Texas to replace Senior Debt in accordance with
the terms and conditions of Section 2.10 within the first five years
following the date hereof, provided that, with respect to dispositions
excepted under (B), (C), (D) or (E), as the case may be, of this
subclause (i), the Partnership shall deliver to the Collateral Trustee
no later than the date of such disposition a certificate of a
Responsible Officer, in a form approved by the Independent Engineer,
that such disposition is being made in accordance with (B), (C), (D)
or (E), as the case may be. Neither the Borrower, the Partnership nor
either of the Partners shall sell, assign, lease, transfer or
otherwise dispose of any
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Project Property whatsoever other than in accordance with the
Financing Documents.
(ii) As soon as practicable after certification by the
Partnership to the Collateral Trustee, in a form acceptable to the
Collateral Trustee, to the effect that it intends to dispose of an
asset in accordance with clause (h)(i) of this Section 4.01, the
Collateral Trustee, each Bank Senior Lender, the Oil Payment Insurers
Administrative Agent and the Capital Markets Trustee, at the
Partnership's request and expense, shall execute and deliver, file and
record any notice, waiver, termination statement, instruments of
satisfaction, discharge and release of security as may be necessary to
release any security interest in such asset created by or pursuant to
this Agreement or any Security Document and to release or waive any
restriction on the transferability of such asset contained in any
Financing Document, including this Agreement or any Security Document.
(i) Taxes. It shall (i) file or cause to be filed all returns
required to be filed by it, and (ii) pay and discharge, before the same
shall become delinquent, after giving effect to any applicable extensions,
all Taxes imposed on it or its property (including interest and penalties)
unless such Taxes are being contested in good faith and by appropriate
proceedings, appropriate reserves are maintained with respect thereto in
accordance with GAAP and such proceedings, if adversely determined, could
not reasonably be expected to have a Material Adverse Effect. It shall
notify the Collateral Trustee promptly following the occurrence thereof, in
reasonable detail, of any disputes pending between it and any Governmental
Authority relating to Taxes.
(j) Compliance with Law. It shall comply, and use its reasonable best
efforts to cause its contractors to comply, with all applicable (or, in the
case of compliance by such contractors only, all material) laws, rules,
regulations and orders of Governmental Authorities (including without
limitation securities laws, Environmental Laws, health and safety laws and
laws relating to the disposal and clean-up of hazardous wastes in effect
from time to time) unless the necessity of compliance therewith is being
contested in good faith by appropriate proceedings, appropriate reserves
have been established and are maintained with respect thereto in accordance
with GAAP and such proceedings, if adversely determined, could not
reasonably be expected to have a Material Adverse Effect. It shall notify
the Collateral Trustee, promptly following the initiation of any such
proceedings, in reasonable detail of any disputes pending between it or any
of its contractors and any Governmental Authority relating to compliance or
noncompliance with any such law, rule, regulation or order.
(k) Maintenance of Approvals for Agreements. It shall maintain or
cause to be maintained all Third-Party Authorizations that are necessary
for (i) the
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execution, delivery and performance by it of each Transaction Document to
which it is a party, (ii) the incurrence and guarantee of the Senior Debt
Obligations, as the case may be, and (iii) the performance of its
obligations under the Financing Documents, in good standing, in full force
and effect, in its name or in the name of its contractors, not subject to
appeal and free from conditions or requirements, except to the extent that
a failure so to maintain such Third-Party Authorizations could not
reasonably be expected to have a Material Adverse Effect. It shall promptly
upon receipt or publication furnish to each of the Collateral Trustee and
the Applicable Agents a copy of all such Third-Party Authorizations,
including any amendment, supplement or modification thereto.
(l) Maintenance of Approvals for Coker Project. It shall maintain,
and to the extent not obtained on or prior to the date hereof, obtain on or
before the date on which they are required to be obtained, or cause to be
so maintained or obtained, all (i) Third-Party Authorizations, (ii)
easements, leases, rights-of-way, auxiliary rights and other real property
rights and (iii) licenses and other rights to use Technology, in each case
that are necessary in order to develop, construct, operate, maintain and
finance the Coker Project in the manner contemplated by the Transaction
Documents, in good standing, in full force and effect, in its name or in
the name of its contractors, not subject to appeal and free from conditions
or requirements, except to the extent that a failure to do so could not
reasonably be expected to result in a Material Adverse Effect. It shall
promptly upon receipt or publication furnish to each of the Collateral
Trustee and the Applicable Agents a copy of all such Third-Party
Authorizations; easements, leases, rights-of-way, auxiliary rights and
other real property rights, and licenses and other rights to use
Technology, including any amendment, supplement or modification thereto.
(m) Maintenance of Supply. The Partnership shall maintain at all
times supplies of, or contracts providing for supplies of, hydrogen,
electricity, steam, natural gas and other feedstock and utilities,
telecommunications services and other inputs necessary to conduct its
business in accordance with Prudent Industry Practice and to comply in all
respects with its obligations under and to derive all benefits from the
Transaction Documents to which it is a party, except where a failure to
maintain such supplies or contracts could not reasonably be expected to
have a Material Adverse Effect.
(n) Maintenance of Crude Oil Supply. The Partnership shall, (i)
subject to force majeure and any other disruptions of supplies outside its
control, at all times maintain supplies of crude oil necessary to conduct
its business in accordance with the Base Case Model and to produce the
Required Product Mix under the Product Purchase Agreement, (ii) during the
term of the Long-Term Oil Supply Agreement (A) comply in all respects with
its obligations, derive all its benefits and enforce all its rights under
the Long-Term Oil Supply Agreement, the Long-Term Oil Supply Agreement
Guarantee and the PMI Consent and Agreement and (B) to the extent
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required by the Long-Term Oil Supply Agreement, maintain in full force and
effect the Oil Payment Insurance Policy.
(o) Arm's-Length Transactions. It shall not enter into any
transaction or agreement (including any Authorized Investment) with any
Affiliate unless such transaction or agreement (i) is a bona fide business
transaction or agreement reasonably related to the conduct of its business
in accordance with clause (c) of Section 4.01, (ii) is on terms that at
such time are no less favorable to it than those that could be obtained by
it at such time in a comparable arm's length transaction, and (iii) has
been disclosed to the Collateral Trustee, the Senior Lenders and the Oil
Payment Insurers Administrative Agent. All dealings by it with Persons
other than Affiliates also shall be conducted on an arm's-length basis.
(p) Year 2000 Compliance. It shall ensure that its computer hardware,
software, systems and other operations are Year 2000 Compliant and shall
use its reasonable best efforts to ensure that the computer hardware,
software, systems and operations of its material suppliers, customers, and
others with which it conducts business (including without limitation the
Clark Entities) to be Year 2000 Compliant.
(q) Construction and Completion of the Coker Project; Changes to
Facilities and Improvements.
(i) The Partnership shall (A) cause the Coker Complex to be
constructed in all respects in accordance with the Turnkey
Specifications, cause Mechanical Completion to occur on or before
March 1, 2001 (or October 1, 2001 if the conditions set forth in
clause (n) of Section 10.01 are satisfied), cause Substantial
Reliability to occur on or before October 1, 2001 and cause Final
Completion to occur on or before the Guaranteed Final Completion Date,
all as set forth in the EPC Contract as in effect on the date hereof,
(B) require Clark R&M to cause the Ancillary Equipment to be upgraded
and completed in all respects, on or before October 1, 2000 in
accordance with the specifications set forth in the Clark EPC Contract
in effect on the date hereof (or February 1, 2001 if the conditions
set forth in clause (o) of Section 10.01 are satisfied) and (C) cause
the Hydrogen Plant to be constructed in all respects in accordance
with the specifications set forth in the Hydrogen Supply Agreement as
in effect on the date hereof on or before December 6, 2000 (or March
1, 2001 if the conditions set forth in clause (p) of Section 10.01
have been satisfied). The Partnership may change the physical
facilities of the Coker Complex from those set forth in the Turnkey
Specifications, or may approve a change in the upgrade of the
Ancillary Equipment from those set forth in the specifications set
forth in the Clark EPC Contract, without the consent of the Secured
Parties by providing notice to the Collateral Trustee, the Independent
Engineer and each Credit Rating Agency then rating the Capital Markets
Senior Debt describing such
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change, provided that each of the following conditions has been
satisfied: (1) such change does not have a Material Adverse Effect,
(2) regardless of whether such change is made prior to or after
Substantial Reliability, such change would not materially increase the
unit cash operating costs of the Coker Project or the frequency or
scope of any required maintenance, materially change its design
capacity or materially decrease capacity utilization, (3) if such
change is made after Substantial Reliability, (a) there is no
shortfall in the Principal & Interest Accrual Account or Debt Service
Reserve Account and (b) the Partnership will have access to sufficient
funds to fund as incurred the costs associated with such change
(including without limitation any Principal & Interest Accrual Account
expected to be due and payable during any related construction period
shutdown) and (4) after giving effect to the projected costs and
revenues associated with such change, (x) the minimum Debt Service
Coverage Ratio for each remaining year through final maturity of the
Senior Debt in the Base Case Model shall be not less than 2.1:1.0 and
(y) the average annual Debt Service Coverage Ratio through final
maturity of the Senior Debt in the Base Case Model shall be not less
than 2.4:1.0. Any notice delivered by the Partnership pursuant to the
immediately preceding sentence shall be accompanied by a certificate
of a Responsible Officer as to the satisfaction of the conditions set
forth in this subclause (i), provided that any certifications of the
Partnership in respect of the conditions set forth in subclause (A),
(B)(2), (B)(3) and (B)(4) of the proviso to the immediately preceding
sentence shall be confirmed by the Independent Engineer.
(ii) In the event that the Partnership desires to undertake a
change in the Coker Complex or approve a change in the upgrade of the
Ancillary Equipment that does not comply with the requirements set
forth in subclause (i) of this clause (q), the Partnership shall
notify the Collateral Trustee, each Applicable Agent, the Independent
Engineer and each Credit Rating Agency then rating the Capital Markets
Senior Debt of the proposed change. Each such notice shall be
accompanied by a statement of the Partnership describing in reasonable
detail such proposed change and the reasons for, and desirability of,
such change, together with the Partnership's opinion as to each of the
matters set forth in subclause (i) of this clause (q). The Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent and the Capital
Markets Trustee may consult with the Independent Engineer in respect
of such proposed change and request certification from the Independent
Engineer with respect to any of the Partnership's opinions as to the
matters set forth in subclause (i) of this clause (q); and any such
proposed change shall become effective only with the prior consent of
Requisite Secured Parties).
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(iii) The Partnership shall deliver to the Independent Engineer,
and make available to the Collateral Trustee upon request, a copy of
the Turnkey Specifications and the specifications for the Ancillary
Equipment as amended from time to time in accordance with this clause
(q).
(r) Operation of the Project. The Partnership shall (i) cause the
Coker Project to be constructed, developed, operated, repaired and
maintained at all times in accordance with Prudent Industry Practice, the
Transaction Documents, the Major Maintenance Plan and the Base Case Model
(as updated from time to time by an Annual Budget and Operating Plan), (ii)
maintain or caused to be maintained such spare parts and inventory as are
consistent with the Transaction Documents and Prudent Industry Practice,
(iii) maintain or caused to be maintained at the Coker Project site a
complete set of plans and specifications for the Coker Project and (iv) at
all times maintain or cause to be maintained appropriate security at the
Coker Project site in accordance with Prudent Industry Practice.
(s) Environmental Compliance. The Partnership shall (i) conduct its
operations and maintain its properties and assets in material compliance
with all applicable Environmental Laws, permits, licenses and other
approvals and authorizations, (ii) dispose or cause to be disposed all
Hazardous Substances relating to the Coker Project in material compliance
with all, and so as would not result in a material liability under any,
Environmental Laws, permits, licenses and other approvals and
authorizations and (iii) promptly notify the Collateral Trustee, the Senior
Lenders and the Oil Payment Insurers Administrative Agent of the
commencement of any civil, criminal, or administrative actions or suits,
and any material environmental investigations, studies, audits, tests,
reviews or other analyses, environmental demands, claims, hearings,
investigations or proceedings.
(t) Project Production. The Partnership shall (i) enter into sales
agreements for the sale or disposition of all Project Production, including
without limitation the Product Purchase Agreement, on terms and conditions
(including, if appropriate in light of the nature and credit quality of the
counterparty, credit support arrangements) consistent with Prudent Industry
Practice, (ii) undertake any such sales or disposition of Project
Production on fair and commercially reasonable terms on an arm's-length
basis and (iii) in the case of the Product Purchase Agreement and the
Services and Supply Agreement, promptly bill, and cause to be collected
from, Clark R&M amounts due in respect of Project Production sold and
services rendered and instruct Clark R&M to send all payments directly to
the Project Revenue Account.
(u) Project Documents. It shall comply in all respects with, and
enforce against other parties all its rights (including without limitation
any third-party beneficiary rights) under, the Project Documents. It shall
not agree to any amendment, waiver, modification, termination or assignment
of any of its rights or obligations under any Project Document to which it
is or becomes a party (other than
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the Bylaws, the Charters, the Partnership Agreement and the Insurance
Policies, which are subject to the provisions of clause (b) of this Section
4.01 and Article VII, respectively) or the Marine Dock and Terminaling
Agreement, or provide any consent thereunder, unless (i) (A) a copy of such
amendment, waiver, modification, termination, assignment or consent has
been delivered to the Collateral Trustee at least 10 Business Days in
advance of the effective date thereof, having attached a certificate of a
Responsible Officer (with the verification of the Independent Engineer)
certifying that the proposed amendment, waiver, modification, termination,
assignment or consent could not reasonably be expected to have a Material
Adverse Effect, and (B) such proposed amendment, waiver, modification,
termination, assignment or consent could not reasonably be expected to have
a Material Adverse Effect, or (ii) the Partnership has obtained the prior
written consent of Supermajority Secured Parties, provided that nothing in
this clause (u) shall obligate the Partnership to take any action in
connection with a termination of the Marine Dock and Terminaling Agreement
by Sun Pipe Line Company in accordance with the terms of such agreement.
(v) Maintenance of Separate Identity. It shall (i) maintain all
aspects of its business and operations, including but not limited to its
construction operations, Heavy Oil Processing Facility operations,
accounts, assets, liabilities, financial statements and books and records,
separate and apart from the Clark Entities and shall hold itself out to the
public as an entity independent from the Clark Entities; (ii) not (A)
commingle any of its funds, properties or assets with those of any Clark
Entity (except for any commingling of crude oil or other feedstocks within
the Coker Complex or in any related storage or pipeline facilities), (B)
guarantee or become obligated for debts of any Clark Entity or hold out its
credit as being available to satisfy any obligations of any Clark Entity,
(C) acquire obligations or securities of any Clark Entity, (D) pledge its
assets for the benefit of, or make any loans or advances to, any Clark
Entity, or (E) incur, create or assume any indebtedness on behalf of, or
transfer or lease its assets or any interest therein to, any Clark Entity,
except in each case (A) through (E) as may be permitted or required by the
terms of any of the Financing Documents; (iii) make all decisions with
respect to its business and operations independently from the Clark
Entities; (iv) enter into all business transactions with any Clark Entity
on terms and conditions that at such time are no less favorable to it than
those that could been obtained by it at such time in a comparable arm's-
length transaction and (v) take all steps necessary to correct any
misunderstanding regarding its separate identity. For purposes of this
clause (v), common tankage of oil and other fungible products shall not
constitute commingling so long as the volumes of such products owned by the
Partnership are adequately reflected in the relevant Clark Entity's
records.
(w) Limitation on Indebtedness. The Partnership shall not create,
incur, assume or suffer to exist any Indebtedness other than Permitted
Indebtedness. The
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Borrower shall not create, incur, assume or suffer to exist any trade
accounts payable or other accrued liability or any Indebtedness other than
Senior Debt.
(x) Preservation of Security Interests; Limitation on Liens and
Encumbrances. It (i) shall preserve, maintain and perfect the first
priority security interests granted under this Agreement and the Security
Documents and preserve and protect the Collateral as set forth in Article
VI and the Security Documents and (ii) shall not, without the consent of
Supermajority Secured Parties, create, assume, incur, permit or suffer to
exist any Lien upon, or any security interest in, any of its property,
assets or contractual rights, whether now owned or hereafter acquired,
except for Permitted Liens.
(y) Limitation on Investments and Loans. It shall not make any
investments or loans or advances to any Person, except for (i) Authorized
Investments, (ii) down payments or prepayments to suppliers or service
providers (other than to any Clark Entity) in the ordinary course of
business and on customary commercial terms and (iii) receivables arising in
the ordinary course of business.
(z) Limitation on Guarantees. It shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any other Person except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business, (ii) guarantees provided in connection with
the granting of performance bonds to contractors and suppliers and
Governmental Authorities made in the ordinary course of business, and (iii)
guarantees expressly permitted or required under the Financing Documents.
(aa) Hedging. It shall not enter into any swap agreements, option
contracts, future contracts, options on future contracts, spot or forward
contracts, caps, floors, collars or other agreements to purchase or sell or
any other hedging arrangements, in each case in respect of currencies,
interest rates, commodities or otherwise other than Permitted Hedging
Arrangements. If at any time 6-month LIBOR shall have been in excess of
6.25% per annum for at least one month, the Borrower shall promptly, but in
any event within 30 days following the expiration of such 30-day period,
enter into and maintain in effect, with respect to not less than 50% of the
aggregate principal amount of Bank Senior Term Debt from time to time
outstanding, Permitted Hedging Arrangements reasonably satisfactory to the
Bank Senior Lenders Administrative Agent that effectively provide a cap of
7.50% on the LIBOR component of the interest rate of the Bank Senior Term
Debt from time to time. If subsequently LIBOR ceases to be in excess of
6.25% per annum and remains at or below such level for at least 90
consecutive days, the Borrower may terminate such Permitted Hedging
Arrangements.
(bb) Use of Proceeds. All proceeds of the Initial Senior Debt (other
than the Secured Working Capital Facility) shall be used solely to
reimburse Clark R&M
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for Project Expenses incurred prior to the date hereof and to pay Project
Expenses. All proceeds of Additional Senior Debt incurred to finance or
refinance Mandatory Capital Expenditures or Discretionary Capital
Expenditures pursuant to Section 2.09 shall be used solely to finance or
refinance such Mandatory Capital Expenditures or Discretionary Capital
Expenditures, as the case may be. All proceeds of Replacement Senior Debt
shall be used to pay or prepay Senior Debt or to replace Senior Debt
Commitments in accordance with Section 2.10. Proceeds of the Senior Debt
may be invested in Authorized Investments prior to being used in accordance
with this clause (bb).
(cc) Independent Consultants. The Partnership, on behalf of the
Secured Parties, has appointed, and the Secured Parties have accepted,
Purvin & Gertz as the initial Independent Engineer and as the initial
Marketing Consultant and Sedgwick of Tennessee, Inc. as the initial
Insurance Consultant. Majority Secured Parties, upon 15 days prior written
notice to the Collateral Trustee and each Applicable Agent, shall have the
right to remove an Independent Consultant if, in the opinion of Majority
Secured Parties, such Independent Consultant (i) ceases to be a consulting
firm of recognized international standing, (ii) has become an Affiliate of
the Partnership, the Borrower, any of the Partners, the Clark Entities, the
Oil Payment Insurers, an Applicable Agent, or a Secured Party, (iii) has
developed a conflict of interest that calls into question such firm's
capacity to exercise independent judgment in the performance of its duties
in connection with the Coker Project, or (iv) has failed to charge
commercially reasonable compensation for its duties. If any Independent
Consultant is removed or resigns and thereby ceases to act as an
Independent Consultant and any Bank Senior Debt or Bank Senior Debt
Commitments remain outstanding, the Bank Senior Lenders Administrative
Agent shall promptly designate a replacement Independent Consultant of
recognized international standing and notify the Capital Markets Trustee
and the Oil Payment Insurers Administrative Agent thereof. Such selection
shall become final unless, within 10 days following such notification, the
Capital Markets Trustee reasonably objects to the designated replacement
Independent Consultant, in which case the Bank Senior Lenders
Administrative Agent shall select another replacement Independent
Consultant of recognized international standing and notify the Capital
Markets Trustee and the Oil Payment Insurers Administrative Agent thereof.
If the Capital Markets Trustee does not object to such selection within 10
days following the date of notification thereof, the replacement
Independent Consultant shall be deemed to have been accepted. If the
Capital Markets Trustee does so object, the Bank Senior Lenders
Administrative Agent shall repeat the selection process in accordance with
the two foregoing sentences until a replacement Independent Consultant is
found that is reasonably acceptable to the Capital Markets Trustee. If no
Bank Senior Debt or Bank Senior Debt Commitments remain outstanding, the
Capital Markets Trustee shall promptly designate a replacement Independent
Consultant of recognized international standing. The Partnership shall pay
for the reasonable and documented fees and expenses of each Independent
Consultant
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incurred in connection with (i) the preparation of the initial report of
such Independent Consultant and all other work performed by it, prior to
the date of this Agreement and (ii) verification of Mechanical Completion,
Substantial Reliability, Final Completion, all annual reviews of the Coker
Project performed by such Independent Consultant on behalf of the Secured
Parties and any other work relating to or reasonably requested by the
Collateral Trustee, the Bank Senior Lenders, the Oil Payment Insurers
Administrative Agent or the Capital Markets Trustee in connection with the
transactions contemplated by this Agreement.
(dd) Subsidiaries. The Partnership shall not at any time own any
capital stock or other ownership interest in any Person other than the
Borrower. Neither the Partnership nor the Borrower shall form any new
Subsidiary. The Partnership and the Borrower shall at all times maintain
the status of the Borrower as a wholly owned subsidiary of the Partnership.
(ee) Credit Rating Agencies. So long as any Capital Markets Senior
Debt is outstanding, the Partnership shall take all actions as may be
necessary or appropriate from time to time to cause such Capital Markets
Senior Debt to be rated by Moody's Investors Service, Inc. and Standard &
Poor's Inc. (the "Credit Rating Agencies"). If Moody's Investors Service,
Inc. or Standard & Poor's Inc. ceases to be a "nationally recognized
statistical rating organization" registered with the Commission or ceases
to be in the business of rating securities of the type and nature of the
Capital Markets Senior Debt, the Partnership may replace it with any other
"nationally recognized statistical rating organization" in the business of
rating securities of the type and nature of the Capital Markets Senior Debt
nominated by the Partnership and approved by Majority Bank Lenders and
Majority Bondholders, following which such nominee shall be a "Credit
Rating Agency" for all purposes of this Agreement.
(ff) Accounts. The Partnership shall cause the Accounts to be
established and maintained at all times in accordance with Article V, shall
maintain no bank accounts other than the Accounts and the Operating Account
and shall make no transfer, deposit or withdrawal from any Account, except
in either case as specifically permitted in Article V. The Borrower shall
not establish or maintain any bank account.
(gg) Insurance. The Partnership shall maintain at all times the
insurance required to be maintained in Article VII on the terms and
conditions set forth therein.
(hh) ERISA. It shall not adopt, sponsor, maintain, administer,
contribute to, or become required to contribute to any employee benefit
plan as defined in Section 3(3) of ERISA.
(ii) Further Assurances. It agrees to do all things reasonably
requested by the Collateral Trustee, the Bank Senior Lenders, the Oil
Payment Insurers
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Administrative Agent or the Capital Markets Trustee to consummate and make
effective, as soon as practicable, the transactions contemplated by, and to
carry out the purposes of, this Agreement and the other Transaction
Documents, including without limitation the timely obtaining of consents,
authorizations, orders and approvals of any Governmental Authority and the
providing of such additional certificates, legal opinions and other
documentation as may be requested from time to time by the Collateral
Trustee, the Bank Senior Lenders, the Oil Payment Insurers Administrative
Agent or the Capital Markets Trustee in order to provide assurances to the
Collateral Trustee, the Bank Senior Lenders, the Oil Payment Insurers
Administrative Agent or the Capital Markets Trustee, as the case may be,
regarding the continued compliance with the terms and conditions of the
Transaction Documents.
(jj) Oil Payment Insurance Policy. The Partnership shall maintain in
place, and make all payments required to be made in respect of, the Oil
Payment Insurance Policy unless and until the rating of the Partnership's
long-term senior unsecured debt obligations has been at least Baa2 by
Moody's and BBB by S&P for at least 12 consecutive months.
(kk) Independent Director. The Borrower shall give each Applicable
Agent not less than 45 days' prior notice of any appointment of an
independent director to its board of directors in accordance with Section 6
of the Borrower's Certificate of Incorporation, and the Borrower shall not
make such appointment if any Applicable Agent objects within such 45-day
period to such proposed appointment.
(ll) Technology. The Partnership shall (i) take all such actions as
may be necessary to ensure that it possesses, or has the right to use, all
licenses and other rights with respect to Technology prior to Final
Completion (or at such earlier time as may be required under the
circumstances) and (ii) maintain in place all licenses and other rights
with respect to Technology to the extent necessary for the development,
construction, operation or maintenance of the Project at any time.
(mm) Pipeline and Terminal Easement. The Partnership shall cause
Clark R&M to obtain, within six months following the date hereof, a
mortgagee policy of title insurance for the Mortgage to the extent it
relates to the Lucas Terminal Property, naming the Secured Parties as the
insured, insuring that the insured Mortgage is a valid, first priority lien
on the Lucas Terminal Property encumbered thereby, subject to such
exceptions as may be reasonable under the circumstances, as determined in
the reasonable judgment of the Bank Senior Lenders Administrative Agent.
(nn) Amounts Received from PMI. The Partnership shall cause any and
all amounts repaid to the Partnership by PMI, whether as the result of
defenses exercised
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by the Partnership or for any other reason, to the extent such amounts
relate to any shipment of Maya crude oil for which the Oil Payment Insurers
have made payment to PMI under the Oil Payment Insurance Policy, promptly
to be paid directly to the Oil Payment Insurers Administrative Agent.
(oo) Tax Sharing Arrangements. Notwithstanding anything to the
contrary in the Partnership Agreement or any other agreement, but subject to
Section 11.01, the Partnership shall not distribute to the Partners in any
taxable year an amount that would exceed the Partners' share of the actual tax
liability of the group of companies that includes the Partners in respect of the
Partnership's income.
4.02 Covenants of the Partners. Each of the Partners covenants and
agrees with the Collateral Trustee and each of the Secured Parties that so long
as any Senior Debt or Senior Debt Commitment remains outstanding and until all
Senior Debt Obligations due and to become due shall have been paid in full:
(a) Maintenance of Existence. It shall do all things necessary to
maintain (i) its due organization, valid existence and good standing as a
corporation under the laws of the State of Delaware, (ii) the power and
authority (corporate and otherwise) necessary under the laws of the State
of Delaware to own its properties and to carry on its business, and (iii)
its qualification as a foreign corporation for the transaction of business
in good standing under the laws of the State of Texas. In the event that
any change in corporate form or status is required under any applicable
law, it shall take such measures as are necessary to protect the integrity
and effectiveness of its obligations under this Agreement and the other
Transaction Documents to which it is party. It shall not dissolve,
liquidate, enter into any merger or consolidation, or sell or transfer all
or substantially all of its assets.
(b) No Modification. It shall not take any action to amend or modify
its Certificate of Incorporation or Bylaws or any other constitutive or
governing documents in any respect unless (i) a copy of such amendment or
modification has been delivered to the Collateral Trustee reasonably in
advance of the effective date thereof, having attached a certificate of a
Responsible Officer certifying that such amendment or waiver could not
reasonably be expected to have a Material Adverse Effect, and such
amendment or waiver could not reasonably be expected to have a Material
Adverse Effect or (ii) it has obtained the prior consent of Supermajority
Lenders (or, at any time on or after a Priority Termination Date,
Supermajority Secured Parties).
(c) Business. It shall not conduct any business or have any assets
other than as necessary to perform its respective obligations under the
Transaction Documents to which it is a party.
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(d) Preservation of Assets. It shall not sell, assign, lease,
transfer or otherwise dispose of any of its assets other than as permitted
or required by the Financing Documents.
(e) Taxes. It shall (i) file or cause to be filed all returns
required to be filed by it, and (x) pay and discharge, before the same
shall become delinquent, after giving effect to any applicable extensions,
all Taxes imposed on it or its property (including interest and penalties)
unless such Taxes are being contested in good faith and by appropriate
proceedings, appropriate reserves are maintained with respect thereto in
accordance with GAAP and such proceedings, if adversely determined could
not reasonably be expected to have a Material Adverse Effect. It shall
notify the Collateral Trustee, promptly following the occurrence thereof,
in reasonable detail, of any disputes pending between it and any
Governmental Authority relating to Taxes.
(f) Compliance with Law. It shall comply with all applicable laws,
rules, regulations and orders of Governmental Authorities, unless the
necessity of compliance therewith is being contested in good faith by
appropriate proceedings, appropriate reserves have been established and are
maintained with respect thereto in accordance with GAAP and such
proceedings, if adversely determined could not reasonably be expected to
have a Material Adverse Effect. It shall notify the Collateral Trustee,
promptly following the initiation of any such proceedings, in reasonable
detail, of any disputes pending between it and any Governmental Authority
relating to its compliance or noncompliance with any such law, rule,
regulation or order.
(g) Maintenance of Approvals for Agreements. It shall maintain all
Third-Party Authorizations that are necessary for the execution, delivery
and performance by it of its obligations under each Transaction Document to
which it is a party, in good standing, in full force and effect, in its
name, not subject to appeal and free from conditions or requirements,
except to the extent that a failure so to maintain such Third-Party
Authorizations could not reasonably be expected to have a Material Adverse
Effect. It shall promptly upon receipt or publication furnish to each of
the Collateral Trustee and the Applicable Agents a copy of all such Third-
Party Authorizations, including any amendment, supplement or modification
thereto.
(h) Arm's-Length Transactions. It shall not enter into any
transaction or agreement with any Affiliate other than pursuant to the
Transaction Documents.
(i) Maintenance of Separate Identity. It shall (i) maintain all
aspects of its business and operations, including but not limited to its
accounts, assets, liabilities, financial statements and books and records,
separate and apart from the Clark Entities and shall hold itself out to the
public as an entity independent from the Clark Entities; (ii) not (A)
commingle any of its funds, properties or assets with those
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of any Clark Entity (except for any commingling of crude oil in the crude
unit of the Coker Complex), (B) guarantee or become obligated for debts of
any Clark Entity or hold out its credit as being available to satisfy any
obligations of any Clark Entity, (C) acquire obligations or securities of
any Clark Entity, (D) pledge its assets for the benefit of, or make any
loans or advances to, any Clark Entity, or (E) incur, create or assume any
indebtedness on behalf of, or transfer or lease its assets or any interest
therein to, any Clark Entity, except in each case (A) through (E) as may be
permitted or required by the terms of any of the Financing Documents; (iii)
make all decisions with respect to its business and operations
independently from the Clark Entities; (iv) enter into all business
transactions with any Clark Entity on terms and conditions that at such
time are no less favorable to it than those that could been obtained by it
at such time in a comparable arm's-length transaction and (v) take all
steps necessary to correct any misunderstanding regarding its separate
identity.
(j) Limitation on Indebtedness. It shall not create, incur, assume or
suffer to exist any Indebtedness other than as expressly permitted or
required by and subject to the terms of the Financing Documents.
(k) Limitation on Liens and Encumbrances. It shall not create,
assume, incur, permit or suffer to exist any Lien upon, or any security
interest in, any of its property, assets or contractual rights, whether now
owned or hereafter acquired, other than as required under the Financing
Documents.
(l) Limitation on Investments and Loans. It shall not make any
investments or loans or advances to any Person, other than as required
under the Financing Documents.
(m) Limitation on Guarantees. It shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any other Person except guarantees specifically required
under the Financing Documents.
(n) Subsidiaries. It shall not at any time own any capital stock or
other ownership interest in any Person other than the Partnership and it
shall not form any new Subsidiary.
(o) Accounts. It shall not establish or maintain any bank account.
(p) Further Assurances. It agrees to do all things reasonably
requested by the Secured Parties to consummate and make effective, as soon
as practicable, the transactions contemplated by, and to carry out the
purposes of, this Agreement and the other Transaction Documents, including
without limitation the timely obtaining of consents, authorizations, orders
and approvals of any Governmental Authority and the providing of such
additional certificates, legal opinions and other documentation as may be
requested from time to time by the Collateral Trustee, the Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent or the Capital
Markets
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Trustee in order to provide assurances to the Collateral Trustee, the Bank
Senior Lenders, the Oil Payment Insurers Administrative Agent or the
Capital Markets Trustee, as the case may be, regarding the continued
compliance with the terms and conditions of the Transaction Documents.
(q) Independent Director. It shall give each Applicable Agent not
less than 45 days' prior notice of any appointment of an independent
director to its board of directors in accordance with Section 5 of its
Certificate of Incorporation, and it shall not make such appointment if any
Applicable Agent objects within such 45-day period to such proposed
appointment.
4.03 Common Covenant. Each of the Borrower, Partnership and the
Partners will not agree, without the consent of each Senior Lender Group and the
Oil Payment Insurers, to any amendment or modification of any Senior Loan
Agreement, the Oil Payment Insurance Policy or the Reimbursement Agreement, as
the case may be, that would have the effect of (i) materially altering, to the
advantage of the Senior Lenders party thereto or the Oil Payment Insurers, as
the case may be, the timing (or conditions or event that control the timing) of
payment of any amount payable (or that might become payable) by the Borrower or
the Partnership, (ii) imposing additional or more stringent conditions precedent
to the disbursement of Senior Loans thereunder or (iii) increasing the rate (or
the method of calculation) at which interest is payable on Senior Loans
thereunder.
ARTICLE V
ACCOUNTS
5.01 Accounts. (a) The Partnership shall direct the Collateral
Trustee to, and the Collateral Trustee shall, on or prior to Closing, establish
and maintain the following secured accounts in the name of the Collateral
Trustee at the Depositary Bank in The City of New York ("Accounts"), provided
that the actual designation of each Account shall consist of the words "Bankers
Trust Company, as Collateral Trustee", followed by the respective defined term
set forth below in parentheses:
(i) "Bank Loan Drawdown and Equity Funding Account", into which
deposits shall be made in accordance with clause (a) of Section 5.03;
(ii) "Bond Proceeds Account", into which deposits shall be made in
accordance with clause (a) of Section 5.03;
(iii) "Project Revenue Account", into which deposits shall be made in
accordance with clauses (a), (b), (c), (d) and (j) of Section 5.03;
(iv) "PMI Premium Reserve Account", into which deposits shall be made
in accordance with clause (a)(i)(C) of Section 5.05;
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(v) "Principal & Interest Accrual Account", into which deposits
shall be made in accordance with clause (h) of Section 5.03, clause (a)(iv)
of Section 5.05, clause (b) of Section 5.06 and Section 5.07;
(vi) "Tranche B Amortization Account", into which deposits shall be
made in accordance with clause (a) of Section 5.08;
(vii) "Tax Reserve Account", into which deposits shall be made in
accordance with clause (i) of Section 5.03, clause (a)(v) of Section 5.05,
clause (b) of Section 5.06 and Section 5.11;
(viii) "Major Maintenance Account", into which deposits shall be
made in accordance with clause (i) of Section 5.03, clause (a)(vi) of
Section 5.05, clause (b) of Section 5.06 and Section 5.12;
(ix) "PMI Surplus Reserve Account", into which deposits shall be
made in accordance with clause (i) of Section 5.03, clause (a)(viii) of
Section 5.05 and Section 5.10;
(x) "Debt Service Reserve Account", into which deposits shall be
made in accordance with clause (i) of Section 5.03, clauses (a)(vii) and
(c) of Section 5.05, clause (b) of Section 5.06 and Section 5.09;
(xi) "Casualty and Insurance Account", into which deposits shall be
made in accordance with clause (e) of Section 5.03;
(xii) "Catastrophic Casualty Account", into which deposits shall be
made in accordance with clause (f) of Section 5.03;
(xiii) "Mandatory Prepayment Account", into which deposits shall be
made in accordance with clause (g) of Section 5.03, clause (b) of Section
5.05, clause (b) of Section 5.06 and Section 5.14;
(xiv) "Contingency Reserve Account", into which deposits may be
made in accordance with clause (i) of Section 5.03 and Section 5.13; and
(xv) "Distribution Account", into which deposits may be made in
accordance with clause (d) of Section 5.05.
Each Account may have one or more Subaccounts as provided in Section
5.02. All moneys held in the Accounts shall be trust funds held by the
Collateral Trustee for the purpose of making payments therefrom in accordance
with this Agreement. Only the Collateral Trustee shall have the right to make
withdrawals and payments from the Accounts, upon instruction or direction, as
provided in this Agreement.
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The Depositary Bank hereby agrees to act as, and the Partnership
acknowledges that the Depositary Bank shall act as, "securities intermediary"
(as defined in the NY UCC) in respect of the Accounts and Subaccounts under this
Agreement. The Partnership, the Collateral Trustee and the Depositary Bank
agree that (A) each Account and Subaccount shall be treated as a "securities
account" (within the meaning of Section 8-501(a) of the NY UCC and the
Collateral Trustee shall be the named "entitlement holder" (within the meaning
of Section 8-102(a)(7) of the NY UCC) in respect thereof, (B) each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to any Account or Subaccount shall be treated as a "financial
asset" (within the meaning of Section 8-102(a)(9) of the NY UCC), and all
financial assets in registered form or payable to a person or persons or to
order and credited to any Account or any Subaccount shall be registered in the
name of, payable to or to the order of, or specially endorsed to, the Depositary
Bank or in blank, or credited to another securities account maintained by
another securities intermediary in the name of the Depositary Bank, and in no
case will any financial asset credited to any Account or Subaccount be
registered in the name of, payable to or to the order of, or specially endorsed
to the Partnership except to the extent the foregoing have been specially
endorsed by the Partnership to the Depositary Bank or in blank, (C) the
Depositary Bank shall comply solely with "entitlement orders" (within the
meaning of Section 8-102(8) of the NY UCC) issued by the Collateral Trustee and
relating to any financial asset held in any Account or Subaccount without
further consent from the Partnership, (D) on any date on which the Collateral
Trustee is required by the terms of this Agreement to transfer any funds on
deposit in any Account or Subaccount, the Collateral Trustee shall cause the
Depositary Bank to make such transfer as provided herein and (E) the Depositary
Bank shall not change the name or account number of any Account or Subaccount
without the prior consent of the Collateral Trustee.
In the event that the Depositary Bank has or subsequently obtains by
agreement, operation of law or otherwise a lien or security interest in any
Account or Subaccount or any "security entitlement" (as defined in the NY UCC)
credited thereto, the Depositary Bank agrees that such lien or security interest
shall be subordinate to the lien and security interest of the Collateral
Trustee. The financial assets standing to the credit of the Accounts and
Subaccounts will not be subject to deduction, set-off, banker's lien, or any
other right in favor of any Person other than the rights of the Collateral
Trustee set forth in this Agreement. The Depositary Bank hereby waives any
right of banker's lien, set-off or counterclaim in respect of any assets
contained in any Account or Subaccount or otherwise that are held by the
Depositary Bank hereunder.
The Depositary Bank and the Partnership have not entered into any
agreement with respect to the Accounts or the Subaccounts or any financial
assets credited to any Account or Subaccount other than this Agreement, the Debt
Service Reserve Guarantee Arrangement and the Security Documents. The
Depositary Bank has not entered into any agreement with the Partnership or any
other Person purporting to limit or condition the obligation of the Depositary
Bank to comply with entitlement orders originated by the Collateral Trustee in
accordance with this clause (a).
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Except for the claims and interest of the Collateral Trustee and the
Partnership in each of the Accounts and Subaccounts, the Depositary Bank does
not have actual knowledge of any claim to, or interest in, any Account or
Subaccount or in any financial asset credited thereto. If any Person asserts
any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against any
Account or Subaccount or in any financial asset credited thereto, the Depositary
Bank shall promptly notify the Collateral Trustee, the Bank Senior Lenders, the
Capital Markets Trustee, the Oil Payment Insurers Administrative Agent and the
Partnership thereof.
The rights and powers granted to the Depositary Bank by the Collateral
Trustee have been granted in order to perfect its lien and the security
interests in the Accounts and the Subaccounts, and are powers coupled with an
interest and will neither be affected by the bankruptcy of the Partnership nor
the lapse of time.
The Partnership shall not have any rights against or to monies held in
the Accounts or Subaccounts, as third party beneficiary or otherwise, except the
right to receive or make requisitions of monies held in the Accounts or
Subaccounts as permitted by this Agreement, and to direct the investment of
monies held in the Accounts or Subaccounts as permitted by Section 5.04. In no
event shall any amounts or Authorized Investments deposited in or credited to
any Account or Subaccount be registered in the name of the Partnership, payable
to the order of the Partnership or specially endorsed to the Partnership except
to the extent that the foregoing have been specially endorsed to the Collateral
Trustee or in blank.
For purposes of the NY UCC, the Depositary Bank confirms and agrees
that the "securities intermediary's jurisdiction" (as defined in the NY UCC)
with respect to the Accounts and the Subaccounts is the State of New York.
(b) The Partnership shall instruct the Collateral Trustee to
disburse funds from the Accounts or Subaccounts only in accordance with Section
5.05 and Section 5.06. The Partnership shall not, and shall not permit any
Person to, make any transfer, deposit or withdrawal in respect of any Account or
Subaccount other than pursuant to (i) this Article V or (ii) a valid and binding
order of a court of competent jurisdiction, provided that any withdrawal or
transfer from an Account or Subaccount pursuant to a valid and binding order of
a court of competent jurisdiction that is not otherwise expressly permitted by
the terms of this Article V shall constitute an "Event of Default" under clause
(a) of Section 10.01 after the expiration of the applicable period of grace set
forth therein.
(c) The Partnership shall establish an unsecured operating account
(the "Operating Account") with the Depositary Bank, into which deposits shall be
made in accordance with clause (a)(i)(B) of Section 5.05.
5.02 Subaccounts. (a) Subject to clause (b) of this Section 5.02,
each Account may include one or more secured accounts ("Subaccounts"),
established and maintained in The City of New York by the Collateral Trustee in
the name of the Collateral
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Trustee, with the Depositary Bank designated as the "securities intermediary".
Each Subaccount shall be identified with the particular Account to which it
relates and shall be segregated from any other Subaccount.
(b) The Partnership shall give the Collateral Trustee at least 20
days' prior notice of its intention to establish a Subaccount and Majority
Lenders shall have the right within such 20 day period, in their sole
discretion, to reject the establishment of such Subaccount.
(c) Unless otherwise specified in this Agreement, all references to
any Account shall include references to all related Subaccounts thereof and such
Subaccounts shall be subject to the same restrictions and limitations as the
Accounts to which they relate.
(d) No Subaccount may itself include another Subaccount.
5.03 Deposits of Project Funds. (a) Senior Loan Drawdowns.
Borrowings under Senior Loans (other than Capital Markets Senior Debt) shall be
paid directly into the Bank Loan Drawdown and Equity Funding Account.
Simultaneously with any deposit of proceeds of Senior Bank Loans, a pro rata
portion of the Capital Commitments shall be paid directly into the Bank Loan
Drawdown and Equity Funding Account. The net proceeds from the issuance of
Capital Markets Senior Debt shall be paid directly to the Bond Proceeds Account.
After Substantial Reliability, the Partnership shall instruct the Collateral
Trustee to transfer all funds remaining in the Bank Loan and Equity Funding
Account and the Bond Proceeds Account to the Project Revenue Account and, at the
discretion of the Partnership, an amount no greater than the Contingency Reserve
Amount to the Contingency Reserve Account, and, thereafter, the Collateral
Trustee shall instruct the Depositary Bank to close the Bank Loan and Equity
Funding Account and the Bond Proceeds Account.
(b) Proceeds from Project Production. In accordance with Section
6.06, the Partnership shall cause each purchaser of Product Production from the
Partnership (including without limitation Clark R&M) or any Person making
payment on behalf of any such purchaser (including financial institutions making
payments on its behalf under letters of credit or otherwise), to make all such
payments directly into the Project Revenue Account.
(c) Proceeds from Project Documents. The Partnership shall cause
the parties to the Project Documents and any Persons making any payments on
behalf of each of them (including financial institutions making payments on any
such Person's behalf under letters of credit or otherwise) to make any and all
payments required to be made to the Partnership under such Project Documents
(other than payments giving rise to Mandatory Prepayments under Section 2.05)
directly into the Project Revenue Account.
(d) Proceeds from Sale of Project Property and Condemnation
Compensation. The Partnership shall cause the purchaser of any Project Property
and any Persons making any payments on behalf of such purchaser (including
financial institutions making payments on its behalf under letters of credit or
otherwise) to make any and all such
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payments directly into the Project Revenue Account. Proceeds received in respect
of any Condemnation Compensation shall be paid directly into the Mandatory
Prepayment Account.
(e) Proceeds from Casualty Insurance. The Partnership shall cause the
proceeds from insurance for any casualty (other than any Catastrophic Casualty)
suffered by Project Property to be paid directly into the Casualty and Insurance
Account for application in accordance with Section 7.07.
(f) Proceeds from Catastrophic Casualty Insurance. The Partnership
shall cause the proceeds from insurance for any Catastrophic Casualty suffered
by Project Property to be paid directly into the Catastrophic Casualty Account
for application in accordance with Section 7.07.
(g) Mandatory Prepayments. Notwithstanding clauses (a) through (f) of
this Section 5.03, the Partnership shall direct the Collateral Trustee to
deposit any amounts subject to mandatory prepayment pursuant to Section 2.05
directly into the Mandatory Prepayment Account.
(h) Permitted Hedging Arrangements. The Partnership shall direct that
the proceeds of all Permitted Hedging Arrangements be paid directly into the
Principal & Interest Accrual Account.
(i) Debt Service Reserve, PMI Surplus Reserve, Tax Reserve, Major
Maintenance Reserve and Contingency Reserve Payments. Payments into the Debt
Service Reserve Account, the PMI Surplus Reserve Account, the Tax Reserve
Account, the Major Maintenance Account and the Contingency Reserve Account shall
be made in accordance with Sections 5.09, 5.10, 5.11, 5.12 and 5.13,
respectively.
(j) Other Project Funds. Other than as specified in clauses (a)
through (i) of this Section 5.03, all Project Funds (except for any amounts
repaid to the Partnership by PMI, whether as the result of defenses exercised by
the Partnership or for any other reason, to the extent such amounts relate to
any shipment of Maya crude oil for which the Oil Payment Insurers have made
payment to PMI under the Oil Payment Insurance Policy) shall be deposited
directly into the Project Revenue Account.
(k) If, notwithstanding the instructions required to be given in
accordance with this Section 5.03, any payments are remitted to the Partnership
or another Person other than by deposit into the Accounts in accordance with
this Agreement (it being the intent and understanding of the parties hereto that
such payments are not to be made directly to the Partnership or any other Person
but directly into the Accounts for application in accordance with this Article
V), then, to the fullest extent permitted by applicable law, the Partnership or
such other Person shall receive such payments in a constructive trust for the
Secured Parties and subject to the Secured Parties' security interest, and shall
(or shall cause the Person receiving such payments to) promptly remit them to
the Collateral Trustee for deposit in the Account or Accounts designated by this
Section 5.03.
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5.04 Investment of Funds in Accounts. (a) Unless a Default has
occurred and is Continuing, the Collateral Trustee shall invest funds (and vary
and redeem such investments) in the Accounts as directed by the Partnership,
provided that such investments shall be made only in Authorized Investments and
shall be at the expense of the Partnership.
(b) If a Default has occurred and is Continuing, the Collateral
Trustee shall, to the extent so notified as contemplated by clause (a) of
Section 5.06, invest funds (and vary and redeem such investments) in the
Accounts as directed by the Person designated in the notice given pursuant to
clause (a) of Section 5.06, provided that such funds may be invested only in
Authorized Investments and shall be at the expense of the Partnership.
(c) If at any time the Collateral Trustee has not received
instructions as to the investments of funds (or variation or redemption of such
investments) in the Accounts, it shall use its reasonable efforts (without
waiting for further instructions) to, and shall in any event within 10 days
following receipt of funds, invest such funds to the extent practicable in
Authorized Investments that mature no later than the next Business Day. All
investments of funds in the Accounts pursuant to this Section 5.04 shall be made
on behalf of the Collateral Trustee and shall be reflected as such on the books
and records of the Collateral Trustee and shall be at the expense of the
Partnership.
(d) Whenever directed to make a withdrawal or transfer of funds, the
Collateral Trustee (unless, so long as no Default is Continuing, otherwise
directed by the Partnership) is authorized to liquidate any investment, to the
extent that, after application of all other available funds, liquidation of such
investment is necessary to make such transfer. The Collateral Trustee shall use
its reasonable efforts to liquidate investments in a manner that minimizes
interest costs and penalties (unless, so long as no Default is Continuing,
otherwise directed by the Partnership). The Collateral Trustee (in its
individual and trust capacities) shall have, however, no liability with respect
to any interest cost or penalty on the liquidation of any investment pursuant to
this clause (d), nor shall the Collateral Trustee (in its individual and trust
capacities) have any liability with respect to investments of moneys held in the
Accounts (or any losses resulting therefrom) made in accordance with this
Section 5.04.
(e) All references in this Agreement to Accounts, and to cash,
moneys or funds therein or balances thereof, shall include Authorized
Investments in which such moneys are then invested and the proceeds thereof.
5.05 Withdrawals from Accounts Pre-Default. (a) Subject to clause
(e) of this Section 5.05, at any time and from time to time, unless a Default
shall have occurred and be Continuing, the Partnership shall on the first
Business Day of each calendar month, and shall have the right at any other time
to, direct the Collateral Trustee to withdraw funds from the Bank Loan Drawdown
and Equity Funding Account, the Bond Proceeds Account or Project Revenue
Account, and apply such funds in the following order of priority, provided that
withdrawals from the Project Revenue Account for any purpose other than those
described in subclause (i) below shall be permitted only if and to the extent
that the funds on
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deposit in the Project Revenue Account at any time exceed the aggregate amount
of all invoices then outstanding in respect of the Partnership's payment
obligations (including without limitation in respect of any premium payable to
PMI pursuant to Article 18 of the Long-Term Oil Supply Agreement) under the
Long-Term Oil Supply Agreement, as certified in a certificate delivered to the
Collateral Trustee by a Responsible Officer of the Partnership:
(i) first, (A) to pay Project Expenses then due and payable, as
evidenced by invoices provided to the Collateral Trustee, (B) thereafter,
to transfer funds into the Operating Account in an amount equal to 30 days
of Estimated Project Expenses (other than Project Expenses relating to the
purchase of crude oil), as certified by the Partnership in an Estimated
Payment Certificate and (C) thereafter, to transfer funds into the PMI
Premium Reserve Account in an amount equal to the Quarterly Surplus
received by the Partnership in the relevant quarter to the extent such
funds are required, based upon calculations delivered by PMI and reasonably
acceptable to the Partnership, for payments of premiums to PMI pursuant in
the subsequent quarter or quarters;
(ii) second, to pay Oil Payment Reimbursement Obligations then due
and payable;
(iii) third, to pay Senior Debt Obligations then due and payable
(other than those to be withdrawn in accordance with subclause (x) below);
(iv) fourth, to transfer funds to the Principal & Interest Accrual
Account in an amount equal to (A) all Senior Debt Obligations to become due
prior to and including the immediately succeeding Payment Date, less any
balance in the Principal & Interest Accrual Account and (B) on each of the
last three Payment Dates or, if necessary to preserve the Debt Service
Coverage Ratios for each remaining year set forth in the Base Case Model in
the case of a reallocation of Loans pursuant to Section 7.01 of the Bank
Senior Loan Agreement, four Payment Dates, Payment Dates, one-third or one-
fourth, as the case may be, of the aggregate principal amount of all Senior
Loans then outstanding under the Tranche B Bank Facility;
(v) fifth, to transfer funds to the Tax Reserve Account in an amount
equal to the Projected Tax Reserve Amount less the balance in the Tax
Reserve Account;
(vi) sixth, to transfer funds to the Major Maintenance Account in an
amount not less than the Minimum Major Maintenance Reserve Payment due on
the immediately succeeding Payment Date and not exceeding the Maximum Major
Maintenance Reserve Payment with respect to such Payment Date;
(vii) seventh, to transfer to the Debt Service Reserve Account an
amount equal to the Debt Service Reserve Shortfall (except to the extent
such Debt Service Reserve Shortfall results from a drawing under the Debt
Service Reserve Guarantee Arrangement that has not yet been repaid);
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(viii) eighth, without duplication of its obligation to transfer
funds into the PMI Premium Reserve Account, to transfer funds to the PMI
Surplus Reserve Account in an amount equal to the amount, if any, by which
the PMI Surplus under the Long-Term Oil Supply Agreement exceeds the
balance in the PMI Surplus Reserve Account, up to an amount not exceeding
the PMI Surplus Reserve Amount;
(ix) ninth, (A) to pay interest in respect of any outstanding
amounts drawn under the Debt Service Reserve Guarantee Arrangement and (B)
thereafter, on the sixth Payment Date and each subsequent Payment Date
until the aggregate principal amount available under the Debt Service
Reserve Guarantee Arrangement has been reduced to zero in accordance with
clause (b)(i) of Section 5.09, to transfer the Debt Service Reserve Accrual
Amount to the Debt Service Reserve Account, provided that, if the Debt
Service Reserve Accrual Amount is not so transferred on any such Payment
Date, the Debt Service Reserve Accrual Amount due on the next succeeding
Payment Date, if any, shall be increased by such unpaid amount or amounts;
and
(x) tenth, to apply any Excess Cash Flow in accordance with clauses
(b) and (c) of this Section 5.05; and
(xi) eleventh, after Final Completion, to make Restricted Payments
in accordance with Section 11.01.
(b) Prepayments of Bank Senior Debt with Excess Cash Flow. After
Start-up, at any time at which any Bank Senior Term Debt remains outstanding, on
(but not prior to) each Payment Date, the Partnership shall instruct the
Collateral Trustee to transfer funds to the Mandatory Prepayment Account in an
amount equal to 75% of excess cash flow ("Excess Cash Flow"), consisting of:
(i) the balance in the Project Revenue Account (after application in accordance
with subclauses first through ninth of clause (a) of this Section 5.05), plus
(ii) the balance in the Principal & Interest Accrual Account, if any, in excess
of the Senior Debt Obligations to be paid with such funds on or before such
Payment Date, plus (iii) the balance in the Tax Reserve Account, if any, in
excess of the Projected Tax Reserve Amount, plus (iv) the balance in the Major
Maintenance Account, if any, in excess of the Maximum Accrued Major Maintenance
Reserve Amount after taking into account the Major Maintenance Reserve Payment
to be paid on such Payment Date, plus (v) the balance in the PMI Surplus Reserve
Account in excess of the PMI Surplus Reserve Amount, plus (vi) the balance in
the Debt Service Reserve Account, if any, in excess of (A) the Debt Service
Reserve Amount, less (B) the aggregate principal amount then available under the
Debt Service Reserve Guarantee Arrangement. On each such Payment Date, the
balance in the Mandatory Prepayment Account on account of this clause (b) shall
be applied to the prepayment of Bank Senior Term Debt in accordance with the
Bank Senior Loan Agreements.
(c) Debt Service Reserve Principal Repayments and Funding with
Residual Excess Cash Flow. On each Payment Date after Start-up on which any
Bank Senior Term Debt remains outstanding, the Partnership shall instruct the
Collateral Trustee to apply
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funds in an amount equal to the 25% of Excess Cash Flow not covered by clause
(b) of this Section 5.05 (or in an amount equal to 100% Excess Cash Flow if and
when all Bank Senior Term Debt has been repaid) (i) to repay any principal
amounts drawn down under the Debt Service Reserve Guarantee Arrangement and (ii)
thereafter, to fund the Debt Service Reserve Account.
(d) Payments to the Distribution Account. Within 30 days following
each Payment Date after Final Completion, the Partnership may instruct the
Collateral Trustee to transfer funds in an amount equal to any remaining Excess
Cash Flow after the application of clauses (b) and (c) of this Section 5.05 to
the Distribution Account. At the Partnership's discretion, funds on deposit in
the Distribution Account may be used (i) after Substantial Reliability, to make
Restricted Payments pursuant to and in accordance with the terms of Section
11.01 of this Agreement or (ii) to pay Senior Debt Obligations when due. Funds
on deposit in the Distribution Account may be transferred upon the instruction
of the Partnership (or, if a Default has occurred and is Continuing, by the
Collateral Trustee pursuant to clause (a) of Section 5.06).
(e) Withdrawals from Bond Proceeds Account. The Collateral Trustee,
acting at the instruction of the Partnership, shall not withdraw any funds on
deposit in the Bond Proceeds Account for any reason unless and until the
Independent Engineer has confirmed that the funds disbursed to the Partnership
to date in accordance with this Section 5.05 have been spent (i) in accordance
with the Initial Construction Budget, as amended from time to time by each
Annual Budget and Operating Plan and as modified by any Change Orders expressly
permitted under this Agreement and authorized by the Independent Engineer, and
(ii) as described under the headings "Use of Proceeds" and "Financing Plan" in
the Offering Circular.
(f) Withdrawals from PMI Premium Reserve Account. The Collateral
Trustee, acting at the instruction of the Partnership, shall transfer any funds
on deposit in the PMI Premium Reserve Account to the Project Revenue Account
when and to the extent required to pay any premium on the purchase price of Maya
to PMI pursuant to Article 18 of the Long-Term Oil Supply Agreement.
5.06 Withdrawals from Accounts During the Continuance of a Default.
(a) If a Default shall have been declared and is Continuing, the Senior
Lender(s) declaring a Default in accordance with Section 10.02 may notify the
Collateral Trustee (with a copy to the Partnership) that, as contemplated by
this Agreement, the Collateral Trustee shall no longer accept instructions from
the Partnership for the investment, withdrawal or transfer of funds or
investments in the Accounts. The Depositary Bank shall thereafter accept
instructions for the investment, withdrawal or transfer of funds or investments
in such Accounts solely from the Collateral Trustee or other Person(s)
designated by the Collateral Trustee (as designated in the notice given under
this clause (a)). The Collateral Trustee shall invest Project Funds only in
Authorized Investments. The Collateral Trustee shall give the Depositary Bank
prompt notice of the circumstances expressly contemplated by this clause (a).
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(b) Following the receipt by the Collateral Trustee of a notice
pursuant to clause (a) of this Section 5.06, and until such time as a Cessation
Notice has been given under clause (c) of this Section 5.06, or Enforcement
Action is taken by the Senior Lenders so entitled in accordance with Section
10.04, the Collateral Trustee shall exercise its rights to instruct the
Depositary Bank in a manner that causes available funds in the Accounts to be
applied in the order of priority set forth in clause (a) of Section 5.05, except
that (i) no funds shall be credited to the Distribution Account and (ii) any Oil
Payment Reimbursement Obligations that remain unpaid on a Priority Termination
Date shall rank pari passu in right of payment with the Senior Debt Obligations
then due and payable, in each of cases (i) and (ii) until such time as a
Cessation Notice has been delivered under clause (c) of this Section 5.06 and
the provisions of clauses (b) and (c) of Section 5.05 shall continue to apply.
Funds not distributed pursuant to the foregoing provisions or Sections 5.05
shall remain in the Project Revenue Account.
(c) Upon receipt by the Collateral Trustee of a Cessation Notice
with respect to a Default that is Continuing, the Collateral Trustee shall
immediately notify the Depositary Bank, with a copy to the Partnership,
directing them once again to accept the directions of the Partnership, and the
Collateral Trustee and the Depositary Bank shall again accept the directions of
the Partnership in respect of investment, withdrawal and transfer of funds in
the Accounts on the terms and conditions of this Agreement.
(d) Immediately before unpaid Oil Payment Reimbursement Obligations
become pari passu in right of payment with Senior Debt Obligations, as provided
in clause (b)(ii) of this Section 5.06, the Collateral Trustee shall, without
further instruction by the Senior Lenders or the Partnership, apply any and all
funds then on deposit in the Project Revenue Account, less any amounts that the
Collateral Trustee determines (based on a certificate delivered to it by a
Responsible Officer of the Partnership) are necessary to pay outstanding
invoices for (i) purchases of crude oil (including without limitation in respect
of any premium payable to PMI pursuant to Article 18 of the Long-Term Oil Supply
Agreement) or (ii) other Project Expenses, in each of cases (i) and (ii) in the
ordinary course of business, to the repayment of any and all Oil Payment
Reimbursement Obligations then outstanding.
5.07 Principal & Interest Accrual Account.
(a) Deposits. To the extent available from funds in the Project
Revenue Account, funds shall be deposited into the Principal & Interest Accrual
Account at any time and from time to time when there exists a Principal &
Interest Accrual Account Shortfall until the balance in the Principal & Interest
Accrual Account is in an amount not less than all Senior Debt Obligations that
are or will become due and payable prior to or on the immediately succeeding
Payment Date.
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(b) Withdrawals.
(i) Funds deposited into the Principal & Interest Accrual Account in
accordance with clause (a)(iv)(A) of Section 5.05 shall be applied to pay
Senior Debt Obligations as and when due, upon the instruction of the
Partnership in accordance with Section 5.05 or the Collateral Trustee in
accordance with Section 5.06, as the case may be. Notwithstanding anything
in the foregoing sentence to the contrary, at any time on or after a
Priority Termination Date, any funds that have been so deposited into the
Principal & Interest Accrual Account after the giving of the relevant
Priority Termination Notice shall be applied to pay Senior Debt Obligations
and Oil Payment Reimbursement Obligations as and when due, upon the
instruction of the Collateral Trustee in accordance with Section 5.06.
(ii) Funds deposited into the Principal & Interest Accrual Account in
accordance with clause (a)(iv)(B) of Section 5.05 on each of the last three
Payment Dates or, if necessary to preserve the Debt Service Coverage Ratios
for each remaining year set forth in the Base Case Model in the case of a
reallocation of Loans pursuant to Section 7.01 of the Bank Senior Loan
Agreement, four Payment Dates, Payment Dates shall be transferred to the
Tranche B Amortization Account on such Payment Date.
5.08 Tranche B Amortization Account.
(a) Deposits. Funds shall be deposited into the Tranche B
Amortization Account pursuant to clause (b)(ii) of Section 5.07.
(b) Withdrawals. Funds on deposit in the Tranche B Amortization
Account shall be applied to repay the principal of all Senior Loans outstanding
under the Tranche B Bank Facility upon maturity.
5.09 Debt Service Reserve Account.
(a) Deposits.
(i) To the extent available, funds shall be deposited into the Debt
Service Reserve Account pursuant to clauses (a)(vii), (a)(ix)(B) and (c) of
Section 5.05 and clause (b) of Section 5.06. In addition, any funds drawn
down under the Debt Service Reserve Guarantee Arrangement shall be
deposited in the Debt Service Reserve Account.
(ii) The balance in the Debt Service Reserve Account at any time of
determination shall be deemed to be the aggregate at such time of (A) the
amount of cash on deposit in such account, (B) the market value of
Authorized Investments in respect of funds deposited therein and (C) the
amount available for drawings under the Debt Service Reserve Guarantee
Arrangement. At or prior to Substantial
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Reliability, the Partnership shall deposit or cause to be deposited funds
in the Debt Service Reserve Account so that the balance in such Account
shall be in an amount not less than the Debt Service Reserve Amount.
The Partnership shall have made a "Debt Service Reserve Payment" to
the extent that it deposits funds, including Authorized Investments, by way of
transfer from other Accounts or otherwise, to the Debt Service Reserve Account
or procures the Debt Service Reserve Guarantee Arrangement. A withdrawal or
transfer from the Debt Service Reserve Account shall have been made to the
extent that funds, including Authorized Investments, are transferred out of the
Debt Service Reserve Account or the Debt Service Reserve Guarantee Arrangement
is reduced or terminated.
(b) Withdrawals from the Debt Service Reserve Account. Funds in the
Debt Service Reserve Account may be withdrawn only as follows:
(i) Debt Service Reserve Guarantee Arrangement. The aggregate
principal amount of the Debt Service Reserve Guarantee Arrangement shall be
automatically reduced to the extent that the Partnership pays Debt Service
Reserve Accrual Amounts pursuant to clause (a)(ix)(B) of Section 5.05 or
makes Debt Service Reserve Payments pursuant to clause (c) of Section 5.05,
provided that, in each case, after giving effect thereto, there shall be no
Debt Service Reserve Shortfall.
(ii) Transfers to Pay Senior Debt. The Partnership may direct the
Collateral Trustee to, and the Collateral Trustee shall, apply all or a
part of the funds in the Debt Service Reserve Account at any time to pay
Senior Debt Obligations (and, at any time on or after a Priority
Termination Date, Oil Payment Reimbursement Obligations) due and payable on
the date of the withdrawal or within five Business Days thereafter to the
extent that there are insufficient funds in the Principal & Interest
Accrual Account available to make such payments, provided that no Default
shall have occurred and be Continuing on the date of payment.
(iii) Post-Default. Upon the occurrence of a Default, the Collateral
Trustee shall retain the funds on deposit in the Debt Service Reserve
Account in such account and the Collateral Trustee shall apply such funds
in accordance with clause (b) of Section 5.06.
5.10 PMI Surplus Reserve Account. (a) Deposits. To the extent
available from funds in the Project Revenue Account, funds shall be deposited
into the PMI Surplus Reserve Account pursuant to clause (a)(viii) of Section
5.05 and clause (b) of Section 5.06 at any time and from time to time when the
then existing PMI Surplus exceeds the balance in the PMI Surplus Reserve Account
(each such amount, a "PMI Surplus Reserve Payment") until the balance in the PMI
Surplus Reserve Account is an amount not less than the PMI Surplus Reserve
Amount.
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(b) Withdrawals. Funds in the PMI Surplus Reserve Account may be
withdrawn only as follows:
(i) Shortfalls in Principal & Interest Accrual Account. The
Partnership shall direct the Collateral Trustee to transfer to the
Principal & Interest Accrual Account an amount equal to the difference
between the balance of the Principal & Interest Accrual Account and the
Senior Debt Obligations (and, at any time on or after a Priority
Termination Date, Oil Payment Reimbursement Obligations) that are or will
become due and payable prior to or on the immediately succeeding Payment
Date.
(ii) Payment of Senior Debt. Funds on deposit in the PMI Surplus
Reserve Account shall be transferred in accordance with clause (b)(i) of
this Section 5.10, provided, however, that if funds are otherwise
unavailable in any Account, funds on deposit in the PMI Surplus Reserve
Account shall be used for the payment of Senior Debt Obligations (and, at
any time on or after a Priority Termination Date, Oil Payment Reimbursement
Obligations) that are then due and payable.
5.11 Tax Reserve Account. (a) Deposits. To the extent available
from funds in the Project Revenue Account, funds shall be deposited in the Tax
Reserve Account pursuant to clause (a)(v) of Section 5.05 and clause (b) of
Section 5.06 at any time when the then existing Projected Tax Reserve Amount
exceeds the balance in the Tax Reserve Account.
(b) Withdrawals.
(i) At any time when funds are on deposit in the Tax Reserve
Account, the Partnership may direct the Collateral Trustee to instruct the
Depositary Bank to pay an amount equal to the General Partner's or the
Limited Partner's income or franchise taxes then due and payable (including
without limitation any amounts required to be paid to Clark Holdings, the
General Partner or the Limited Partner under the Tax Sharing Agreement) to
an account designated by the Partnership upon receipt by the Collateral
Trustee from Clark Holdings of a Tax Payment Undertaking in the form
attached hereto as Appendix F.
(ii) At any time when funds are on deposit in the Tax Reserve
Account, the Partnership may direct the Collateral Trustee to instruct the
Depositary Bank to transfer funds to the Operating Account in an amount
equal to any Taxes imposed on the Partnership, itself, that are then due
and payable (other than with respect to any income or franchise taxes of,
or that are required to be paid by, the General Partner or the Limited
Partner under the Tax Sharing Agreement, or operational taxes that are
considered to be Project Expenses) upon receipt by the Collateral Trustee
from the Partnership of a Tax Payment Undertaking in the form attached
hereto as Appendix F.
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(iii) Notwithstanding subclauses (i) and (ii) of this clause (b), if
funds are otherwise unavailable in any Account, funds on deposit in the Tax
Reserve Account shall be used for the payment of Senior Debt Obligations
(and, at any time on or after a Priority Termination Date, Oil Payment
Reimbursement Obligations) that are then due and payable.
5.12 Major Maintenance Account. (a) On each Payment Date, to the
extent available from funds in the Project Revenue Account, funds shall be
deposited in the Major Maintenance Account pursuant to clause (a)(vi) of Section
5.05 and clause (b) of Section 5.06 in an amount not less than the Minimum Major
Maintenance Reserve Payment and not in excess of the Maximum Major Maintenance
Reserve Payment in respect of such Payment Date until the balance in the Major
Maintenance Reserve Account is not less than the amount budgeted to complete the
Major Maintenance Plan on the next scheduled Major Maintenance. The Minimum
Major Maintenance Reserve Payment shall be an amount equal to (i) (A) the amount
budgeted to complete the Major Maintenance Plan on the next scheduled Major
Maintenance, less (B) the balance in the Major Maintenance Account, divided by
(ii) the number of Payment Dates from and including the current Payment Date
until the date of the commencement of the next scheduled Major Maintenance. The
Maximum Major Maintenance Reserve Payment shall be an amount equal to (i) the
amount budgeted to complete the Major Maintenance Plan on the next scheduled
Major Maintenance, divided by (ii) the number of Payment Dates equal to the
number of Payment Dates from and including the Payment Date immediately
following the last scheduled Major Maintenance, or if no Major Maintenance had
previously been scheduled following Substantial Reliability, less two Payment
Dates. The Partnership shall deliver to the Collateral Trustee and the
Independent Engineer, at least two Business Days prior to each Payment Date on
which a Major Maintenance Reserve Payment is required to be made, an officer's
certificate, in the form attached hereto as Appendix G, setting forth the basis
and calculations for the payments required to be made in this Section 5.12.
Such Major Maintenance Reserve Payment Certificate shall be reviewed and
confirmed by the Independent Engineer.
(b) Funds on deposit in the Major Maintenance Account shall be
transferred to the Operating Account in the amount set forth for Major
Maintenance expenses in the applicable Estimated Payment Certificate and shall
be used solely for the payment of Major Maintenance expenses or, if funds are
otherwise unavailable in any Account, withdrawn for the payment of Senior Debt
Obligations that are then due and payable, provided that, if the Major
Maintenance Reserve Payments allocated for a particular scheduled Major
Maintenance exceed the actual Major Maintenance expenses for such scheduled
Major Maintenance and if the Independent Engineer confirms or has confirmed that
such scheduled Major Maintenance has been completed and the Major Maintenance
expenses relating thereto have been paid, the Partnership shall instruct the
Collateral Trustee to transfer such unused Major Maintenance Reserve Payments to
the Project Revenue Account to be applied in accordance with Section 5.05 or
Section 5.06, as the case may be.
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5.13 Contingency Reserve Account. (a) Deposits. On the Final
Completion Date, the Partnership may direct the Collateral Trustee to transfer
an amount not exceeding in the aggregate the Contingency Reserve Amount, if any,
from the Bank Loan and Equity Funding Account and the Bond Proceeds Account to
the Contingency Reserve Account.
(b) Withdrawals. At any time and from time to time, the Partnership
may direct the Collateral Trustee to transfer funds on deposit in the
Contingency Reserve Account (i) to the Operating Account to be applied either
(A) to fund the cost (including operating expenses) of necessary repairs and
maintenance of the Heavy Oil Processing Facility to be incurred within the 30
days immediately succeeding such transfer, (B) to fund Mandatory Capital
Expenditures to be incurred within the 30 days immediately succeeding such
transfer or (C) to fund the cost of converting the Coker Project to stand-alone
operation, or (ii) to the Debt Service Reserve Account, provided, however, that
if funds are otherwise unavailable in any Account, funds on deposit in the
Contingency Reserve Account shall be used for the payment of Senior Debt
Obligations that are then due and payable. If the Partnership shall elect to
apply funds on deposit in the Contingency Reserve Account for the purposes set
forth in subclause (i) of this clause (b), at least two Business Days prior to
such transfer, the Partnership shall deliver to the Collateral Trustee a
certificate setting forth in reasonable detail the necessary repairs and
maintenance or the Mandatory Capital Expenditures, as the case may be, which
certificate shall be reviewed and confirmed by the Independent Engineer.
5.14 Mandatory Prepayment Account. (a) Deposits. The Partnership
shall deposit funds, or shall cause the Collateral Trustee to transfer funds,
into the Mandatory Prepayment Account in accordance with the terms set forth in
clause (a) of Section 2.05 or clause (b) of Section 5.05, as the case may be.
(b) Withdrawals. All funds deposited into the Mandatory Prepayment
Account in accordance with the terms set forth in clause (a) of Section 2.05
shall within two Business Days of such deposit be applied to the prepayment of
Senior Debt in accordance with clause (a) of Section 2.05 and the Senior Loan
Agreements (and, at any time on or after a Priority Termination Date, to the
prepayment of Oil Payment Reimbursement Obligations). All funds deposited into
the Mandatory Prepayment Account in accordance with the terms set forth in
clause (b) of Section 2.05 shall be applied to the prepayment of Bank Senior
Debt in accordance with clause (b) of Section 2.05 and the Bank Senior Loan
Agreements (and, at any time on or after a Priority Termination Date, to the
prepayment of Oil Payment Reimbursement Obligations). All funds deposited into
the Mandatory Prepayment Account in accordance with the terms set forth in
clause (c) of Section 2.05 shall within two Business Days of such deposit be
applied to the prepayment of Senior Debt and Oil Payment Reimbursement
Obligations in accordance with clause (c) of Section 2.05 and the Senior Loan
Agreements.
5.15 Estimated Payment Certificate. Before directing the Collateral
Trustee to make transfers to the Operating Account in accordance with clause
(a)(i) of Section 5.05, the Partnership shall deliver to the Collateral Trustee
at least two Business
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Days prior to the date of the applicable transfer, an Officer's Certificate (an
"Estimated Payment Certificate") setting forth in reasonable detail (i) the
amount of Project Expenses, including without limitation Major Maintenance
expenses separately identified, then due and payable but unpaid, (ii) the
Partnership's estimate of the amount of Project Expenses, including Major
Maintenance expenses separately identified, that will become due and payable
within the 30 days immediately succeeding such transfer, and (iii) the aggregate
amount of cash in the Operating Account as of the date of the Estimated Payment
Certificate (the sum of (i) and (ii) less (iii) being the "Estimated Project
Expenses"). Each such Estimated Payment Certificate shall contain (i) a warranty
that the funds disbursed by the Collateral Trustee from the Project Revenue
Account and the Major Maintenance Account, as the case may be, to the Operating
Account shall be used solely to pay Estimated Project Expenses as described in
such Estimated Payment Certificate and (ii) a certification as to the aggregate
amount of funds in the Operating Account. The Collateral Trustee may
conclusively rely upon the contents of such Estimated Payment Certificate. Such
Estimated Payment Certificate shall also be reviewed and confirmed by the
Independent Engineer if any of the Collateral Trustee, the Administrative
Agents, the Capital Markets Trustee or Majority Lenders (or, at any time on or
after a Priority Termination Date, Majority Secured Parties) shall request such
review and acceptance.
5.16 Reports and Certifications. (a) The Collateral Trustee shall
deliver to the Partnership and to the Oil Payment Insurers Administrative Agent,
the Capital Markets Trustee and each Bank Senior Lender, no later than 20 days
after the end of each month following the Closing Date, copies of the account
statements for all Accounts for such month prepared or compiled by the
Collateral Trustee. Such account statements shall indicate, with respect to each
such account, deposits and withdrawals, investments made and closing balances.
(b) Each time the Partnership directs that a transfer or
withdrawal be made from an Account, it will be deemed to represent and warrant
for the benefit of the Collateral Trustee and the Secured Parties that such
transfer or withdrawal is being made in an amount, and will be applied solely
for the purposes, permitted by this Article V. Any direction for transfer or
withdrawal of funds from any Account for purposes of making a Restricted Payment
pursuant to Section 11.01 shall contain express identification of such purpose.
(c) The Collateral Trustee shall maintain all such accounts, books
and records as may be necessary to record all transactions carried out by it
under this Agreement. The Collateral Trustee shall permit the Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent, the Capital Markets
Trustee, the Partnership and their authorized representatives to examine such
accounts, books and records, provided that any such examination shall occur upon
reasonable notice and during normal business hours.
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ARTICLE VI
SECURITY INTERESTS
6.01 Property and Improvements of the Partnership. (a) On or prior
to the Closing Date, the Partnership shall execute and record in all necessary
places a mortgage, substantially in the form of Appendix H attached hereto (the
"Mortgage"), in favor of the Collateral Trustee for the benefit and on behalf of
the Secured Parties, as security for the full payment of the Senior Debt
Obligations and the Oil Payment Reimbursement Obligations and the performance of
the other obligations of the Borrower, the Partnership and the Partners under
the Financing Documents, covering all the Partnership's estate, right, title and
interest that it now has or that shall hereafter arise in and to (i) the Coker
Complex and all related units owned by the Partnership, (ii) the Ancillary
Equipment Site Lease, (iii) the Ground Lease and Blanket Easement and (iv) any
and all Permits, all as described more fully in the attachments, annexes and
appendices to the Mortgage. All improvements as of the Closing Date or
thereafter created on the property described in the Mortgage and all equipment
and fixtures as of the Closing Date or thereafter attached to the property
described in the Mortgage, all of which, including without limitation
replacements and additions thereto, shall be deemed to be and remain a part of
the property covered by the Mortgage. As consideration for the disbursement of
the Senior Debt, in addition to the Mortgage, the Partnership agrees that, if it
acquires any real property, improvements, real estate leases or other property
of the same or similar type described in this clause (a) and such real property,
improvements, real estate leases or other property are not then subject to the
Mortgage, any other mortgage granted to the Collateral Trustee for the benefit
of the Secured Parties or an existing pledge to the Collateral Trustee for the
benefit of the Secured Parties, the Partnership shall, within 30 days of such
acquisition, execute, record and deliver to the Collateral Trustee for the
benefit of the Secured Parties a mortgage substantially in the form of Appendix
H covering all right, title and interest in such property.
(b) The Partnership hereby grants, transfers and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
hereby grants a lien on and first priority security interest in, all the
Partnership's estate, right, title and interest that it now has or that shall
hereafter arise in and to the mortgaged property and improvements described in
clause (a) of Section 6.01 (including after-acquired property), all as more
fully described in the Mortgage, including without limitation all attachments,
annexes, and appendices thereto. The Partnership shall make or cause to be made
any filings or recordations, give or cause to be given any notices and take or
cause to be taken any other actions as may be reasonably necessary in the State
of New York and in the State of Texas to perfect the grant of the first priority
security interest in the property described in this Section 6.01.
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6.02 General Partner's Interest in the Partnership. (a) The General
Partner hereby grants, transfers, delivers, pledges and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
following:
(i) all the General Partner's right, title and ownership interests
in and to the Partnership, which interests presently are designated as the
General Partnership Interest and represent a 1% interest in the Partnership
issued and outstanding as of the date hereof, and all the General Partner's
other legal, equitable or beneficial interests in the Partnership, whether
now owned or hereafter acquired by the General Partner;
(ii) all certificates representing or evidencing the General
Partnership Interest and any options, warrants or other rights to purchase
the General Partnership Interest or certificates at any time owned by the
General Partner, including, without limitation, all the General Partnership
Interest or certificates, options, warrants or other rights acquired by the
General Partner in the future, (collectively, the "GP Certificates") and
any other certificates or instruments representing the GP Certificates,
accompanied by certificate transfers duly executed in blank, and all cash,
securities, distributions and other property at any time in the future and
from time to time received, receivable or otherwise distributed, in respect
of or in exchange for any or all of the GP Certificates;
(iii) all securities in substitution for or in addition to any of the
foregoing, any certificates representing or evidencing such securities, and
all cash, securities, distributions and other property at any time and from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the foregoing;
(iv) all other claims of any kind or nature, and any instruments,
certificates, chattel paper or other writings evidencing such claims,
whether in contract or tort, and whether arising by operation of law,
consensual agreement or otherwise, at any time acquired by the General
Partner in respect of any or all of the foregoing against the Partnership;
and
(v) to the extent not included in the foregoing, all cash and
non-cash proceeds, products, rents, revenues, issues, profits, royalties,
income, benefits, additions, substitutions, replacements, and accessions of
and to any and all of the foregoing, including without limitation (A) all
rights of the General Partner to receive monies due and to become due under
or pursuant to the General Partnership Interest; (B) all rights of the
General Partner to receive any indemnity, warranty or guarantee with
respect to the General Partnership Interest; and (C) to the extent not
included in
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the foregoing, all additions to and replacements of the General Partnership
Interest and all proceeds receivable or received when any and all of the
General Partnership Interest is sold, collected, exchanged or otherwise
disposed whether voluntarily or involuntarily.
(b) Any additional GP Certificates at any time or from time to time
after the Closing Date acquired by the General Partner (by purchase,
distribution or otherwise) shall form part of the General Partnership Interest
and the General Partner will forthwith pledge and deposit such GP Certificates
to and with the Collateral Trustee, promptly take all such other actions
required to perfect the security interest therein of the Collateral Trustee
under any requirement of law (including without limitation under the uniform
commercial code as adopted in any appropriate jurisdiction), deliver to the
Collateral Trustee certificates therefor accompanied by certificate transfers
duly executed in blank by the General Partner or such other instruments of
transfer as are acceptable to the Collateral Trustee and promptly thereafter
deliver, or cause to be delivered, to the Collateral Trustee a certificate
describing such GP Certificates and certifying that the same have been duly
deposited with, and are subject to the security interest in favor of, the
Collateral Trustee for the benefit and on behalf of the Secured Parties
hereunder.
(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this Section 6.02, if any partnership interest of the General
Partner in the Partnership (owned or hereafter acquired) is not evidenced by a
certificated security, the General Partner shall promptly notify the Collateral
Trustee and shall promptly take all actions required to perfect the security
interest therein of the Collateral Trustee under any requirement of law
(including without limitation under the uniform commercial code as adopted in
any appropriate jurisdiction).
6.03 Limited Partnership Interest in the Partnership. (a) The
Limited Partner hereby grants, transfers, delivers, pledges and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
following:
(i) all the Limited Partner's right, title and ownership interests
in and to the Partnership, which interests presently are designated as the
Limited Partnership Interest and represent a 99% interest in the
Partnership issued and outstanding as of the date hereof, and all the
Limited Partner's other legal, equitable or beneficial interests in the
Partnership, whether now owned or hereafter acquired by the Limited
Partner;
(ii) all certificates representing or evidencing the Limited
Partnership Interest and any options, warrants or other rights to purchase
the Limited Partnership Interest or certificates at any time owned by the
Limited Partner, including, without
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limitation, all the Limited Partnership Interest or certificates, options,
warrants or other rights acquired by the Limited Partner in the future,
(collectively, the "LP Certificates") and any other certificates or
instruments representing the LP Certificates, accompanied by certificate
transfers duly executed in blank, and all cash, securities, distributions
and other property at any time in the future and from time to time
received, receivable or otherwise distributed, in respect of or in exchange
for any or all of the LP Certificates;
(iii) all securities in substitution for or in addition to any of
the foregoing, any certificates representing or evidencing such securities,
and all cash, securities, distributions and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing;
(iv) all other claims of any kind or nature, and any instruments,
certificates, chattel paper or other writings evidencing such claims,
whether in contract or tort, and whether arising by operation of law,
consensual agreement or otherwise, at any time acquired by the Limited
Partner in respect of any or all of the foregoing against the Partnership;
and
(v) to the extent not included in the foregoing, all cash and
non-cash proceeds, products, rents, revenues, issues, profits, royalties,
income, benefits, additions, substitutions, replacements, and accessions of
and to any and all of the foregoing, including without limitation (A) all
rights of the Limited Partner to receive monies due and to become due under
or pursuant to the Limited Partnership Interest; (B) all rights of the
Limited Partner to receive any indemnity, warranty or guarantee with
respect to the Limited Partnership Interest; and (C) to the extent not
included in the foregoing, all additions to and replacements of the Limited
Partnership Interest and all proceeds receivable or received when any and
all of the Limited Partnership Interest is sold, collected, exchanged or
otherwise disposed whether voluntarily or involuntarily.
(b) Any additional LP Certificates at any time or from time to time
after the Closing Date acquired by the Limited Partner (by purchase,
distribution or otherwise) shall form part of the Limited Partnership Interest
and the Limited Partner will forthwith pledge and deposit such LP Certificates
to and with the Collateral Trustee, promptly take all such other actions
required to perfect the security interest therein of the Collateral Trustee
under any requirement of law (including without limitation under the uniform
commercial code as adopted in any appropriate jurisdiction), deliver to the
Collateral Trustee certificates therefor accompanied by certificate transfers
duly executed in blank by the Limited Partner or such other instruments of
transfer as are acceptable to the Collateral Trustee and promptly thereafter
deliver, or cause to be delivered, to the Collateral Trustee a certificate
describing such LP Certificates and certifying that the same have been duly
deposited with, and are subject to the security interest in favor of, the
Collateral Trustee for the benefit and on behalf of the Secured Parties
hereunder.
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(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this Section 6.03, if any partnership interest of the Limited
Partner in the Partnership (owned or hereafter acquired) is not evidenced by a
certificated security, the Limited Partner shall promptly notify the Collateral
Trustee and shall promptly take all actions required to perfect the security
interest therein of the Collateral Trustee under any requirement of law
(including without limitation under the uniform commercial code as adopted in
any appropriate jurisdiction).
6.04 The Partnership's Shares in the Borrower. The Partnership
hereby grants, transfers, delivers, pledges and assigns to the Collateral
Trustee for the benefit of the Secured Parties, as security for the full payment
of the Senior Debt Obligations and the Oil Payment Reimbursement Obligations and
for the performance of the other obligations of the Borrower, the Partnership
and the Partners under the Financing Documents, and hereby grants a lien on and
first priority security interest in, all right, title and interest that it now
has or that shall hereafter arise in and to the Shares of the Borrower, together
with all shares, coupons or securities issued as a dividend on such Shares or
representing a distribution or return of capital upon or in respect of such
Shares or warrants or any subscription or other purchase rights with respect to
such Shares. On or prior to the Closing Date, the Partnership shall deliver to
the Collateral Trustee for the benefit of the Secured Parties the certificates
representing the Shares of the Borrower and, promptly following receipt, any of
such other shares, securities, warrants, coupons, rights or other relevant
documentation together in each case with stock powers, duly executed by the
Partnership in blank with appropriate signature guarantees, to be held by the
Collateral Trustee for the benefit of the Secured Parties pursuant to the pledge
made hereby. The Partnership agrees that it shall not permit the Certificate of
Incorporation or Bylaws of the Borrower or any other governing and constituent
documents of the Borrower to be amended or modified in any manner that would
cause the Partnership to hold less than 100% share of the aggregate voting power
represented by the Shares or otherwise deprive the Partnership of control of the
Borrower.
6.05 Interests in Accounts and Authorized Investments. The
Partnership hereby grants, transfers, pledges, hypothecates, assigns and sets
over to the Collateral Trustee for the benefit of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and for the performance of the other obligations of
the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
Accounts and Subaccounts and, to the fullest extent possible under applicable
law, to the money, certificated and uncertificated securities, security
entitlements, instruments, all investments made with or arising out of such
funds, all claims thereunder or in connection therewith, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of such accounts, such funds or such investments and, in
each case, proceeds therefrom. Funds and investments in the Accounts and
Subaccounts are trust funds held by the Collateral Trustee for application as
provided in this Agreement. Accordingly, notwithstanding the foregoing grant,
transfer and assignment, the Collateral Trustee shall
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apply such funds and investments strictly in accordance with the terms of this
Agreement. Whether or not Senior Lenders shall have taken Enforcement Action,
none of the Borrower, the Partnership, the Partners, the Collateral Trustee
(other than to the extent expressly provided herein), nor any Secured Party
shall have the right to withdraw, apply, invest or offset the money and
investments in the Accounts and Subaccounts, nor shall any such Person exercise
any right it may have to attach or garnish such money, certificated and
uncertificated securities, instruments, other investments, if any, or proceeds
in any such account, in each case otherwise than as provided in this Agreement,
and the Partnership and the Senior Lenders shall have only those rights to
direct the Collateral Trustee as to the application of funds and investments as
are provided in this Agreement.
6.06 The Project Documents, Sales Agreements and Spot Contracts.
(a) Assignment of Rights.
(i) Without limiting the generality of any other provisions of this
Agreement, including without limitation Section 6.08, the Partnership
hereby grants, transfers and assigns to the Collateral Trustee for the
benefit of the Secured Parties, as security for the full payment of the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations and
for the performance of the other obligations of the Borrower, the
Partnership and the Partners under the Financing Documents, and hereby
grants to the Collateral Trustee for the benefit of the Secured Parties a
lien on and first priority security interest in, all right, title and
interest (but not obligations or duties) that it now has or that shall
hereafter arise in and to (A) the Project Documents, Sales Agreements or
Spot Contracts to which it is a party, whether now existing or hereafter
arising, (B) all rights to payment, claims, powers, privileges, proceeds,
titles, interests and remedies of the Partnership, whether arising under
any of the Project Documents, Sales Agreements or Spot Contracts, by
statute, at law, in equity or otherwise, resulting from any failure of
performance or compliance with any of the provisions of any such Project
Document, Sales Agreement or Spot Contract, together with full power and
authority, in its own name or in the name of the Partnership or otherwise
(but subject to subclause (ii) of this clause (a)), to enforce such Project
Documents, Sales Agreements or Spot Contracts against counterparties
thereto or guarantors thereunder, as the case may be, and to collect,
receive and give receipts and releases for proceeds or other amounts
payable under such Projects Documents, Sales Agreements or Spot Contracts
and (C) all rights of the Partnership to terminate, amend, supplement,
modify or waive performance under any Project Document, Sales Agreement or
Spot Contract, in each case as such Project Document, Sales Agreement of
Spot Contract may be amended, supplemented, renewed or otherwise modified,
including without limitation any agreement, contract or document replacing
or substituting for such Project Document, Sales Agreement or Spot Contract
from time to time;
(ii) The Partnership shall make all requests for and in respect of
any moneys due under any such Project Document, Sales Agreement or Spot
Contract,
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and, if for any reason the Partnership fails to do so within two Business
Days of a request by the Collateral Trustee, the Collateral Trustee may
make such requests as assignee with the same force and effect as if made by
the Partnership. The Partnership agrees promptly to provide the Collateral
Trustee at its request with copies of all requests made by it in respect of
moneys due from a party to any such Project Document, Sales Agreement or
Spot Contract under any such Project Document, Sales Agreement or Spot
Contract. The Partnership and the Collateral Trustee agree that all funds
received by them in respect of the rights assigned under subclause (i) of
this clause (a) shall be deposited or caused to be deposited by them into
the Project Revenue Account.
(b) Notice.
(i) Concurrently with entering into any of the Project Documents,
Sales Agreements or Spot Contracts, the Partnership shall give or cause to
be given written notice to the counterparty thereunder of the security
interest therein granted by clause (a) of this Section 6.06. Such notice
shall irrevocably instruct such counterparty to make or cause to be made
all payments due under such Project Document, Sales Agreement or Spot
Contract directly to the Project Revenue Account.
(ii) The Partnership shall obtain from the counterparty under each
Project Document and shall deliver or cause to be delivered to the
Collateral Trustee, on or prior to the Closing Date (but, with respect to
any Project Documents entered into after the Closing Date, promptly after
entering into such Project Documents) a signed consent and acknowledgment
addressed to the Collateral Trustee and substantially in the form set forth
in Appendix I-1 hereto, to the effect that such counterparty has received
notice from the Partnership of the security interest granted by clause (a)
of this Section 6.06 in such Project Document, that such counterparty shall
notify the Collateral Trustee of any breach of material obligations by the
Partnership under such Project Document and that such counterparty will
make any and all payments due thereunder directly to the Project Revenue
Account.
(iii) The Partnership shall obtain from the counterparty under each
Sales Agreement and shall deliver or cause to be delivered to the
Collateral Trustee promptly after entering into such Sales Agreement a
signed consent and acknowledgment addressed to the Collateral Trustee and
substantially in the form set forth in Appendix I-1 hereto (with such
changes as reasonably acceptable to the Bank Senior Lenders Administrative
Agent), to the effect that such counterparty has received notice from the
Partnership of the security interest granted by clause (a) of this Section
6.06 in such Sales Agreement, that such counterparty shall notify the
Collateral Trustee of any breach of material obligations by the Partnership
under such Project Documents and that such counterparty will make any and
all payments due thereunder directly to the Project Revenue Account.
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(iv) Promptly after entering into any Project Document, Sales
Agreement or Spot Contract after the Closing Date (unless such Spot
Contract is not in writing), the Partnership shall deliver a copy thereof
to the Collateral Trustee, together with the related counterparty's consent
and acknowledgment (if required).
6.07 Insurance and Insurance Proceeds; Reinsurance. (a) Without
limiting the generality of any other provisions of this Agreement, including
without limitation Section 6.08, the Partnership hereby grants, transfers and
assigns to the Collateral Trustee for the benefit of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and for the performance of the other obligations of
the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants to the Collateral Trustee for the benefit of the Secured
Parties a lien on and first priority security interest in, all right, title and
interest that it now has or that shall hereafter arise in and to any and all
insurance policies issued to the Partnership with respect to any Required
Insurance (other than any insurance policy in respect of third-party liability
insurance and workmen's compensation) and all proceeds thereof. The Partnership
hereby authorizes the Collateral Trustee to collect and receive such proceeds
and shall direct the issuer of each of such insurance policy to make payment for
all such losses directly and solely to the Collateral Trustee in accordance with
Article VII.
(b) The Partnership shall, subject to commercial availability and if
requested by the Bank Senior Lenders Administrative Agent or the Collateral
Trustee: (i) cause each of its insurers to grant, transfer and assign to the
Collateral Trustee for the benefit of the Secured Parties, as security for the
full payment of the Senior Debt Obligations and the Oil Payment Reimbursement
Obligations and for the performance of the other obligations of the Borrower,
the Partnership and the Partners under the Financing Documents, and to grant to
the Collateral Trustee for the benefit of the Secured Parties a first priority
security interest in, all right, title and interest that such insurer may have
or that may thereafter arise in and to any and all reinsurance policies issued
by such insurers' reinsurers in respect of any Required Insurance (other than
any reinsurance policy in respect of third-party liability insurance and
workmen's compensation) and all proceeds thereof; and (ii) cause each of the
reinsurers providing reinsurance coverage in respect of any Required Insurance
to include a cut-through endorsement in favor of the Collateral Trustee for the
benefit of the Secured Parties in its reinsurance policy.
6.08 All Personal Property Including Machinery and Equipment,
Technology General Intangibles, Accounts and Other Personal Property. Without
limiting the generality of any other provisions of this Agreement, including
without limitation this Section 6.08, the Partnership hereby grants, transfers
and assigns to the Collateral Trustee for the benefit and on behalf of the
Secured Parties, as security for the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents and
hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to all
equipment, fixtures, goods,
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general intangibles, accounts and intellectual property and all other personal
property (tangible or intangible), including without limitation: (a) machinery,
equipment, fixtures, chattels, and all other personal property and substitutions
and replacements thereof, now or hereafter owned by the Partnership or in which
the Partnership has or shall acquire an interest and (b) all general
intangibles, licenses, authorizations, trademarks and other intellectual
property, including without limitation, the Technology relating to the design,
development, operation, management and use of the Heavy Oil Processing Facility,
provided that the Collateral Trustee shall have no obligation to take any action
in respect of any such intellectual property unless and until it has been duly
notified of the existence of such intellectual property.
6.09 The Partnership's Interest in Crude Oil, Intermediate Products
and Refined Products. (a) Without limiting the generality of any other
provisions of this Agreement, including without limitation Section 6.08, the
Partnership hereby grants, transfers and assigns to the Collateral Trustee for
the benefit of the Secured Parties, as security for the full payment of the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations and for
the performance of the other obligations of the Borrower, the Partnership and
the Partners under the Financing Documents, and hereby grants a lien on and
first priority security interest in, all right, title and interest that the
Partnership now has or that shall hereafter arise in and to all inventory
including without limitation (i) any and all crude oil purchased or otherwise
acquired from and any other products supplied by PMI pursuant to the Long-Term
Oil Supply Agreement or otherwise supplied to the Partnership pursuant to the
Long-Term Oil Supply Agreement Guarantee, (ii) any and all crude oil and other
feedstocks purchased or otherwise acquired from and any other products supplied
by any Person, including without limitation Clark R&M, and (iii) any and all
Partnership Intermediate and Refined Products, with such security interest in
the Partnership Intermediate and Refined Products to be retained by the
Collateral Trustee until the Partnership has been paid in full in respect of
such Partnership Intermediate and Refined Products, including without limitation
pursuant to the Product Purchase Agreement, and with respect to the foregoing,
all proceeds thereof, together with full power and authority, in its own name or
in the name of the Partnership or otherwise, to collect, receive and give
receipts and releases for proceeds, (iv) all goods in which the Partnership has
an interest in mass or a joint or other interest or right of any kind and (v)
all goods which are returned to or repossessed by the Partnership, and all
negotiable and non-negotiable documents of title (including without limitation
warehouse receipts, common carrier and pipeline receipts, dock receipts and
bills of lading) issued by any Person covering any inventory. The Partnership
hereby agrees to promptly deliver to the Collateral Trustee (x) any and all
bills of lading or any other document of title received by it under Article 11.6
of the Long-Term Oil Supply Agreement and (y) any and all negotiable and non-
negotiable documents of title (including without limitation warehouse receipts,
common carrier and pipeline receipts, dock receipts and bills of lading issued
by any Person covering any inventory.
6.10 Permitted Hedging Arrangements. Without limiting the generality
of any other provisions of this Agreement, including without limitation Section
6.08, the
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Partnership hereby grants, transfers and assigns to the Collateral Trustee for
the benefit of the Secured Parties, as security for the full payment of the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations and for
the performance of the other obligations of the Borrower, the Partnership and
the Partners under the Financing Documents, and hereby grants a lien on and
first priority security interest in, all right, title and interest the
Partnership that shall hereafter arise in and to Permitted Hedging Arrangements
and all claims resulting from any failure of performance or compliance with any
of the provisions of any of the Permitted Hedging Arrangements, together with
full power and authority, in its own name or in the name of the Partnership or
otherwise, to enforce Permitted Hedging Arrangements against the counterparties
thereto. Concurrently with entering into a Permitted Hedging Arrangement, the
Partnership shall give or cause to be given written notice to the counterparties
thereto of the security interest hereby granted and shall obtain from each such
counterparty an acknowledgment thereof and furnish it to the Collateral Trustee.
6.11 Rights under Capital Contribution Agreements; Intercompany Loans
from the Borrower to the Partnership. (a) On or prior to the Closing Date,
each of the Partnership and the Partners shall grant, transfer and assign to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
grant to the Collateral Trustee for the benefit of the Secured Parties a first
priority security interest in, all right, title and interest that the
Partnership or such Partner, as the case may be, now has or that shall hereafter
arise in and to each of the Capital Contribution Agreements, which grant,
transfer and assignment may be contained in the Capital Contribution Agreements.
(b) The Borrower hereby grants, transfers, and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and for the performance of the other obligations of
the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to any
intercompany loans to the Partnership that the Borrower has made or will make,
including without limitation (i) each intercompany loan and all promissory
notes, documents, agreements and other instruments evidencing such intercompany
loan, or executed and delivered in connection with such intercompany loan, (ii)
any and all collateral security for any intercompany loan, including without
limitation all mortgages, deeds of trust, security agreements, collateral
assignments, guaranties, pledges, letters of credit, chattel paper and similar
instruments, and any shares, securities, money or other property delivered by
the Partnership in respect of such intercompany loan, (iii) all UCC-1 financing
statements filed in connection with the intercompany loans and (iv) any other
instruments and documents included in the mortgage file relating to such
intercompany loan, and all rights to payment, claims, powers, privileges,
proceeds, titles, interests and remedies of the Borrower, whether arising under
any of the documents, instruments or other agreements evidencing such
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intercompany loan, by statute, at law, in equity or otherwise, resulting from
any failure of performance or compliance with any of the provisions such
intercompany loan, together with full power and authority to enforce such
intercompany loan against counterparties thereto or guarantors thereunder, as
the case may be, and to collect, receive and give receipts and releases for
proceeds or other amounts payable under such intercompany loan.
6.12 Proceeds, Products, etc. To the extent not otherwise included
in any of the foregoing provisions of this Article VI, each of the Borrower,
the Partnership, the Limited Partner and the General Partner hereby grants,
transfers and assigns to the Collateral Trustee for the benefit of the Secured
Parties, as security for the full payment of the Senior Debt Obligations and the
Oil Payment Reimbursement Obligations and for the performance of all other
obligations of the Borrower, the Partnership and the Partners under the
Financing Documents, and hereby grants a lien on and first priority security
interest in, all right, title and interest that it now has or that shall
hereafter arise in and to all proceeds of any and all of the Collateral covered
by the foregoing provisions of this Article VI and all additions and accessions
to, substitutions and replacements for, and rents, profits, royalties, revenues,
issues, income, benefits, product and offspring of any and all of such
Collateral.
6.13 Perfection and Maintenance of Security Interests. (a)
Notwithstanding any other provision of this Article VI, at any time and from
time to time, upon demand of the Collateral Trustee and pursuant to Article IX,
in each case on behalf and at the direction of any Secured Party, (i) each of
the Borrower, the Partnership and the Partners shall give, execute, file and
record any notice, financing statement, continuation statement, public deed,
instrument, document or agreement and use its best efforts to obtain such
governmental approvals, consents, licenses or authorizations that such Secured
Party may consider necessary or desirable, and shall take all other necessary
action as required or advisable, to create, preserve, continue, perfect or
validate any security interest granted under the Security Documents, hereunder
or pursuant hereto in the Collateral or to enable the Collateral Trustee on
behalf of such Secured Party to exercise or enforce its rights hereunder or
under the Security Documents with respect to such security interest, (ii) each
of the Borrower, the Partnership and the Partners shall give, execute, file and
record any notice, financing statement, continuation statement, public deed,
instrument, document or agreement and use its best efforts to obtain such
governmental approvals, consents, licenses or authorizations, that such Secured
Party may consider necessary or desirable, and shall take all other necessary
action as required or advisable, to create, preserve, continue, perfect or
validate any security interest in any written agreement to which any of the
Borrower, the Partnership and the Partners is a party and (iii) each of the
Borrower, the Partnership and the Partners shall obtain written consents to
assignment from the counterparties to the Project Documents, where appropriate,
acknowledging the rights of Secured Parties. Without limiting the generality of
the foregoing, each of the Borrower, the Partnership and the Partners shall make
or cause to be made any filings or recordations, give or cause to be given any
notices and take or cause to be taken any other actions as may be necessary in
any and all applicable jurisdictions and filing offices including without
limitation in the State of New York, the State of Texas and the United Mexican
States, to perfect the grant of the first priority security
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interest in the Collateral, and each constituent item thereof, as described in
this Article VI and the Collateral Trustee, on behalf of the Secured Parties, is
authorized to file, under the Uniform Commercial Code of any state of the United
States of America or other applicable law, financing statements, continuation
statements or other documents relating to the Collateral necessary to preserve a
security interest in the Collateral, in each case without the signature of any
of the Borrower, the Partnership and the Partners (to the extent permitted by
applicable law). The Collateral Trustee shall execute all public deeds or other
documents as required by applicable law and regulation and as requested by the
Secured Parties to duly create and register security interests provided for by
this Article VI, provided, however, that neither the Collateral Trustee nor the
Secured Parties have any responsibility for the creation, perfection, validity
or enforceability of any security interest created or intended to be created
hereby or pursuant to this Agreement or for the maintenance or perfection of any
such security interest. Any Secured Party taking action under this Section 6.12
shall use reasonable efforts to notify the Partnership thereof following the
taking of such action. Each of the Borrower, the Partnership and the Partners
shall notify the Collateral Trustee upon or prior to entering into any Project
Document in which any of them are or may be required to grant a security
interest pursuant to this Article VI.
(b) None of the Borrower, the Partnership nor either of the Partners
shall take any actions that would impair or render ineffective or adversely
affect the perfection or the priority of any of the security interests granted
in, or pursuant to, this Agreement or any Security Document.
(c) On or prior to the Closing Date, each of the Borrower, the
Partnership and the Partners agrees to execute and deliver to the Depositary
Bank and the Collateral Trustee for the benefit of the Secured Parties, and
register in every public registry in any state of the United States of America
in which such registration is necessary, an irrevocable power of attorney, in a
form required by such registry, for a term equal to such time as the Senior
Loans are outstanding or the Oil Payment Insurance Policy and the Reimbursement
Agreement are in effect granting the Collateral Trustee, as attorney-in-fact of
each of the Borrower, the Partnership and the Partners, the power and right, in
the name or on behalf of each of them without notice to or assent by any of
them, to the extent permitted by applicable law, to take any action and execute
any instruments which any Secured Party may deem reasonably necessary or
advisable to create, preserve, continue, perfect or validate any security
interest granted under or pursuant to this Agreement or any Security Document.
(d) The Security Documents to be entered into under the laws of the
State of New York or the State of Texas, and the consents and acknowledgments to
be obtained from third parties referred to in this Article VI, shall be
substantially in the forms most recently agreed with the Applicable Agents and
furnished to the Secured Parties prior to the Closing Date.
(e) Each of the Borrower, the Partnership and the Partners and the
Collateral Trustee (on behalf of itself and the Senior Lenders), as the case may
be, prior to or concurrently with the time or times that Senior Lenders other
than the Senior Lenders
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party to this Agreement on the date hereof (including without limitation
successors, transferees and assigns of such Senior Lenders) become holders of
Senior Loans secured by and entitled to the benefits of this Agreement, shall
amend each of the Security Documents to which it is a party to identify
specifically such additional Senior Lenders and the Senior Loans held or to be
held thereby and to state that the Senior Loans held by such additional Senior
Lenders shall have the benefit of the security interests referred to therein,
and the Borrower, the Partnership and the Partners shall be required to pay any
filing or recording fees payable in the State of New York or the State of Texas
in respect of Collateral in connection with any such amendments.
6.14 Rights in Collateral Prior to Enforcement Direction. (a)
Notwithstanding the security interests created and to be created pursuant to
this Agreement, unless otherwise provided in this Agreement (including without
limitation under Section 10.02) or the Transfer Restrictions Agreement or unless
the Collateral Trustee shall have received an Enforcement Direction with respect
to any Collateral, the Borrower, the Partnership and the Partners shall retain
and be entitled to exercise all their respective rights relating to such
Collateral, subject to the terms and conditions of this Agreement and of the
security interests created or to be created hereunder or by any of the Security
Documents, including without limitation as follows: (i) possessing and using the
Project Property and altering or disposing of any part thereof; (ii) exercising
all rights relating to the Project Documents; (iii) renewing insurance policies,
making claims and instituting and settling proceedings against insurers
thereunder; (iv) transferring (in accordance with the Transfer Restrictions
Agreement and the terms hereof) any Partnership Interests in the Partnership,
receiving the profits to be derived from any of the Partnership Interests in the
Partnership and exercising rights as shareholder, general partner or limited
partner of any of the Borrower, the Partnership and the Partners, as the case
may be, under their respective organizational documents (and the Collateral
Trustee shall execute and deliver to such parties, where appropriate, all such
proxies, powers of attorney, dividend and other orders, and all such instruments
as they may reasonably request for the purpose of enabling them to exercise the
rights and powers which they are entitled to exercise pursuant to this clause);
(v) amending the Subordinated Loan Agreements and assigning the Subordinated
Loan Agreements (in accordance with the Transfer Restrictions Agreement); and
(vi) subject to clause (u) of Section 4.01 of this Agreement, amending each of
the Project Documents, making waivers and elections thereunder and instituting
and settling proceedings for the enforcement of rights thereunder, provided that
such amendment, waiver, election or settlement does not have a Material Adverse
Effect.
(b) Except as otherwise provided in this Agreement, unless the
Collateral Trustee shall have received an Enforcement Direction with respect to
such Collateral, the Collateral Trustee and the Depositary Bank shall, at the
request and cost of any of the Borrower, the Partnership and the Partners, as
the case may be, execute such documents and take such action and do such things
as may be necessary or desirable to enable such grantor of the security interest
in such Collateral to exercise the rights retained by them in such Collateral,
provided that such execution or action does not have a Material Adverse Effect.
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(c) Without limiting the generality of this Article VI, upon the
receipt by the Collateral Trustee of an Enforcement Direction, the Collateral
Trustee shall be entitled, without limitation as to any other Enforcement Action
available, to (i) transfer title of the General Partnership Interest and Limited
Partnership Interest in the Partnership and the Shares in the Borrower to the
Collateral Trustee, the Secured Parties or any other Person, (ii) receive all
dividends and other distributions payable to owners of the General Partnership
Interest and Limited Partnership Interest in the Partnership and the Shares in
the Borrower, (iii) exercise all voting and other rights pertaining to the
General Partnership Interest and Limited Partnership Interest in the Partnership
and the Shares in the Borrower as so directed and (iv) freely sell and dispose
of the General Partnership Interest and Limited Partnership Interest in the
Partnership and the Shares in the Borrower, in each case, subject to the terms
and conditions of this Agreement, the Security Documents and applicable law.
6.15 Liability of Borrower Parties. Notwithstanding any other
provision of this Agreement or the Security Documents, subject to applicable
law:
(a) Each of the Borrower, the Partnership and the Partners shall
remain liable under all agreements and contracts included in the Collateral
to the extent provided therein;
(b) The exercise by the Collateral Trustee or any Secured Party of
any of their respective rights under this Agreement or the Security
Documents shall not release any of the Borrower, the Partnership or either
of the Partners from any of its duties or obligations under any contracts
or agreements included in the Collateral except to the extent provided
therein; and
(c) Neither the Collateral Trustee nor any Secured Party shall have
any obligation or liability under any such contracts or agreements included
in the Collateral by reason of this Agreement or the Security Documents,
nor shall the Collateral Trustee or any Secured Party be obligated to
perform any of the obligations or duties of any of the parties thereunder
or to take any action or collect or enforce any claim for payment assigned
hereunder.
6.16 Release of Security Interests. Except as otherwise provided in
this Agreement, the release of any security interest under this Agreement and
the Security Documents requires the consent of the Capital Markets Senior Lender
Group, each of the Bank Senior Lenders and each of the Oil Payment Insurers.
6.17 PMI Subordinated Lien. The Partnership may at any time execute
documentation granting the PMI Subordinated Lien, provided that such
documentation shall include subordination provisions in form and substance
satisfactory to the Bank Senior Lenders Administrative Agent.
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ARTICLE VII
INSURANCE
7.01 Maintenance of Insurance. The Partnership shall at all times
keep all Project Property of an insurable nature and of a character usually
insured, insured with insurers and reinsurers that are Rated Insurers selected
by it against such risks, with all risk property and general liability coverage
(including deductibles and exclusions) and in such form and amounts as are
customary for project facilities of similar type and scale to the Heavy Oil
Processing Facility (including insurance against sudden and accidental
environmental damage and, prior to Final Completion, delay in start-up coverage
and, after Final Completion, business interruption and contingent business
interruption insurance). The Partnership shall, at a minimum and without
limiting the generality of the immediately preceding sentence, obtain and
maintain at least the coverage set forth on the schedule of Required Insurance
set forth in Appendix J. The schedule of Required Insurance set forth in
Appendix J may be amended by the Partnership, after consultation with the
Insurance Consultant, from time to time upon the prior consent of Requisite
Lenders (or, at any time on or after a Priority Termination Date, Requisite
Secured Parties).
7.02 Additional Insureds and Loss Payees Provisions. The Partnership
shall irrevocably cause (a) each of its insurance policies and, subject to
commercial availability and if requested by the Bank Senior Lenders
Administrative Agent or the Collateral Trustee, the related reinsurance policies
(other than policies in respect of workers' compensation or third-party
liability insurance) to name the Collateral Trustee on behalf of the Secured
Parties and the Secured Parties as additional (and not joint) insureds and sole
loss payees as their interests may appear and (b) each of its insurance policies
(other than any policy in respect of third-party liability insurance and
workers' compensation) to require all payment of proceeds directly to the
Casualty and Insurance Account or the Catastrophic Casualty Account, as the case
may be, in accordance with Section 7.07 with words to substantially the
following effect: "All recoveries hereunder shall be paid in full to Bankers
Trust Company or to its order without any deduction or deductions whatsoever for
deposit into [details for Casualty and Insurance Account] or, if such recoveries
in the aggregate exceed $50 million, into [details for Catastrophic Casualty
Account]." The Partnership shall cause each insurance policy in respect of
third-party liability insurance (including automobile and directors' and
officers' liability insurance) and workmen's compensation to designate such
third parties as the loss payee in words to substantially the following effect:
"All proceeds of insurance arising hereunder that are payable for the benefit of
third parties shall at all times be paid directly to such third parties provided
such person has executed a discharge of all claims against the insured parties
in respect of the risk or liability in relation to which the claim was made
unless the insurer is satisfied that the relevant insured parties have fully and
unconditionally discharged the claim or liability when such sums shall be paid
to the said insured parties."
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7.03 Other Lender Provisions in Policies. The Partnership shall
procure and shall cause its insurers and reinsurers to procure the inclusion in
each insurance policy or reinsurance policy, as the case may be, issued to the
Partnership or for the benefit of the Partnership provisions (a) that require
the insurer or reinsurer to give at least 60 days' notice to the Collateral
Trustee before the cancellation or non-renewal of any insurance policy takes
effect or, if commercially available, 30 days', or if not so available, 15 days'
notice in case of any cancellation or non-renewal due to non-payment of
premiums, to the Collateral Trustee, (b) that require the insurer or reinsurer
to give notice to the Collateral Trustee of a default by the Partnership in the
payment of any premium when due for payment under such insurance or reinsurance
policy, (c) that require the insurer or reinsurer to waive all rights of
subrogation it may have against any insured and the respective directors,
officers and employees of the insured, (d) that require the insurer or reinsurer
to waive all rights of set-off in respect of recoveries due thereunder, (e) that
require the insurer or reinsurer to waive any right to invalidate any policy
based on any act or failure to act by any other insured (including without
limitation the right to void coverage on the grounds of a breach of warranty by,
or misrepresentation or omission of, the Partnership), except that such waiver
shall apply only in respect of the Secured Parties' interest during the
construction period, and (f) that ensure the severability of interests of the
insureds, provided that the requirements set forth in this sentence in respect
of reinsurers shall be subject to commercial availability and shall apply only
if requested by the Bank Senior Lenders Administrative Agent or the Collateral
Trustee.
7.04 Payment, Assignment, Etc. of Reinsurance or Co-Insurance. The
Partnership shall ensure that all its insurers, reinsurers and co-insurers agree
to arrangements designed to produce the following results: (a) that, after the
Collateral Trustee exercises its security interest in insurance, the claims of
the Collateral Trustee prevail over any competing claims of the Partnership; (b)
that such insurers, reinsurers or co-insurers pay any claims under such
insurance, reinsurance or co-insurance policies directly to the Collateral
Trustee in the manner contemplated by Section 6.07 and clause (b) of Section
7.02; and (c) that the Partnership or, if applicable, the Collateral Trustee, be
permitted to make claims under such reinsurance or co-insurance policies
directly against such reinsurers or co-insurers in the event its insurers fail
to do so or fail to do so to the full satisfaction of the Partnership or, if
applicable, the Collateral Trustee, or are insolvent, in liquidation or
bankrupt, provided that the requirements set forth in this sentence in respect
of reinsurers and co-insurers shall be subject to commercial availability and
shall apply only if requested by the Bank Senior Lenders Administrative Agent or
the Collateral Trustee. Such arrangements shall be in accordance with the
requirements set forth in clause (b) of Section 6.07.
7.05 Rated Insurers. Notwithstanding anything in this Article VII to
the contrary, the Partnership shall at all times ensure that it is party to
insurance policies and, to the extent necessary, its insurers and reinsurers are
party to reinsurance policies such that (a) 100% of the risk in respect of the
Project Property insured pursuant to Section 7.01 is ultimately borne by a Rated
Insurer and (b) the Collateral Trustee has, to the fullest extent permitted by
applicable law, the benefit of effective cut through endorsement clauses as from
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time to time may be necessary to allow the Collateral Trustee to bring a direct
claim against a Rated Insurer in respect of 100% of the insured Coker Project
risk.
7.06 Payment of Premiums. The Partnership shall pay all premiums and
other sums payable in respect of its insurance when due, provided, however, that
the Collateral Trustee shall be entitled (but not obligated) to pay premiums and
other sums due in respect of the Partnership's insurance if such insurance would
expire or otherwise be canceled or suspended within 10 days thereafter as a
result of a failure to pay such premiums or sums. If the Collateral Trustee
pays any premiums or sums pursuant to the immediately preceding sentence, the
Collateral Trustee shall be entitled to reimbursement therefor as a Senior Debt
Obligation.
7.07 Application of Insurance Proceeds. All proceeds of insurance
or, if applicable, reinsurance shall be applied as follows:
(a) Any sum paid in settlement of a liability to a third party shall
be paid to the Person to whom the liability shall have been incurred or, if
such liability shall have been paid by the insured party, to or to the
order of the insured party;
(b) Any other sum paid in respect of any casualty to Project
Property, including without limitation in respect of any Catastrophic
Casualty, or any proceeds of business interruption or contingent business
interruption insurance, if any, shall be paid by the insurer or reinsurer,
if applicable, as contemplated in Section 7.02, deposited in the Casualty
and Insurance Account or the Catastrophic Casualty Account, as the case may
be. Without limiting the obligations of the Partnership under this
Agreement, subject to clause (c) of this Section 7.07, the Partnership
shall promptly restore, repair or replace any Project Property affected or
damaged by a casualty loss, in each case (i) to the extent necessary in
accordance with Prudent Industry Practice to restore the unit cash
operating margin of the Coker Project, the frequency and scope of any
required maintenance and the Coker Project's design capacity and capacity
utilization to the levels that existed immediately prior to such casualty
loss and (ii) to the extent of any casualty insurance proceeds received in
respect thereof;
(c) Within 60 days following the occurrence of a Catastrophic
Casualty, the Partnership shall deliver to the Collateral Trustee a plan
for the application of casualty insurance proceeds in respect thereof and
other funds available to the Partnership to restore, repair or replace the
Project Property. If, within 45 days following the later of the receipt by
the Collateral Trustee of such plan and the deposit of such proceeds into
the Catastrophic Casualty Account, Majority Lenders (or, at any time on or
after a Priority Termination Date, Majority Secured Parties) notify the
Partnership that in their reasonable judgment it is unlikely that, after
implementation of the Partnership's plan, the Partnership would be able to
pay the Senior Debt Obligations as and when they come due or be able to
produce Product Production of substantially the same (or higher) quality
and quantity as it had prior
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to such loss or series of losses, such casualty insurance proceeds shall
remain in the Catastrophic Casualty Account. In the event that (x) Majority
Lenders (or Majority Secured Parties, as the case may be) so notify the
Partnership or (y) if the plan shall not have been delivered, then Majority
Lenders (or Majority Secured Parties, as the case may be) shall have the
right to require the Partnership to apply such proceeds to prepay Senior
Debt and to direct the Collateral Trustee to transfer such casualty
insurance proceeds from the Catastrophic Casualty Account to the Mandatory
Prepayments Account. Prepayments under this clause (c) shall be made within
two Business Days following such transfer and shall be applied to reduce
the remaining principal installments of Senior Loans pro rata as to each
remaining principal installment outstanding. The Senior Lenders (or Secured
Parties, as the case may be) shall have the option, at the Partnership's
expense, to consult with the Independent Engineer for purposes of reviewing
any plan for the application of such casualty insurance proceeds with
respect to which Majority Lenders (or Majority Secured Parties, as the case
may be) have the right to object.
(d) Notwithstanding anything else in this Section 7.07 to the
contrary, promptly upon the receipt of any Loss Proceeds relating to any
shipment of Maya crude oil, the Partnership shall instruct the Collateral
Trustee to transfer such Loss Proceeds, to the extent the Oil Payment
Insurers have made, or are obligated to make, payment to PMI under the Oil
Payment Insurance Policy in respect of such shipment, from the Casualty and
Insurance Account or the Catastrophic Casualty Account, as the case may be,
to an account specified for such purpose by the Oil Payment Insurers
Administrative Agent.
7.08 Information. The Partnership shall promptly notify the
Collateral Trustee of (a) any material dispute with an insurer, (b) the failure
by the Partnership to pay any premium under any insurance policy when due, (c)
the failure by the Partnership, for any reason, to maintain in full force and
effect the insurance coverage set forth in Appendix J, as it may be amended from
time to time in accordance with Section 7.01, (d) any proposed amendment to the
schedule of minimum insurance requirements set forth in Appendix J, (e) any
reduction in any insurance coverage maintained by the Partnership and (f) any
insurance claim or casualty loss or series of losses in excess of $5 million.
Not less than 15 days prior to the effective date of any issuance, renewal or
replacement of any insurance policy, the Partnership shall deliver to the
Collateral Trustee and the Insurance Consultant copies of any certificate of
insurance, binder or broker's undertaking letter or policy, as the case may be,
in respect of renewal or replacement of any insurance policy. The Collateral
Trustee, in consultation, at the Collateral Trustee's option, with the Insurance
Consultant, shall be entitled to review (and the Partnership shall promptly
furnish or cause to be furnished) the proposed final wording for any such policy
to ensure compliance with the terms hereof. If in the judgment of any of the
Administrative Agent, the Capital Markets Trustee, the Collateral Trustee, the
Insurance Consultant or Majority Lenders such proposed final wording does not so
comply, the Partnership shall amend, or shall cause to be amended, such wording
so that it does so comply in the reasonable judgment of the relevant party. The
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Partnership shall also provide the Collateral Trustee and Insurance Consultant
with any other information relating to the Partnership's insurance or
reinsurance or any claims thereunder that may be requested by any of the
Administrative Agent, the Capital Markets Trustee, the Collateral Trustee or the
Insurance Consultant. To ensure compliance with the terms hereof, the
Partnership shall permit the Insurance Consultant, at the expense of the
Partnership, to examine insurance policies issued to the Partnership or the
brokers at the places where they are kept upon reasonable notice and during
normal business hours.
7.09 Insurance Consultant. The Partnership shall reimburse the
Insurance Consultant and the Secured Parties for the reasonable fees and
expenses of the Insurance Consultant retained by the Partnership on behalf of
the Secured Parties in connection with (a) its initial review of the
information, insurance plan (including the minimum insurance schedule) and
schedules in connection with the documentation, closing and initial funding of
the Senior Debt, (b) any request by the Partnership for a waiver of, or
amendment to, the minimum insurance requirements set forth in Appendix J or (c)
any review of information received from the Partnership under Section 7.07.
7.10 Delivery of Cover Notes and Policies. The Partnership shall
deliver to the Collateral Trustee certified copies of (i) cover notes on or
prior to the date of this Agreement and (ii) policies within 120 days following
the date of this Agreement, in each case from insurers for each policy required
to be procured and maintained hereunder during the construction period as
described in Appendix J. Such cover notes shall, to the satisfaction of the
Insurance Consultant, confirm the scope of coverage (including without
limitation amounts insured, deductible levels and endorsements) required hereby.
Not less than 30 days prior to the expiration of the policies referred to in
Appendix J in effect during the construction period, the Partnership shall
deliver policies or, if not yet available, other evidence of coverage, including
without limitation drafts of approved policy wording from insurers and, to the
extent reinsurance policies are required pursuant to this Article VII,
reinsurers for each policy required to be procured and maintained during the
Coker Project's commercial operation.
ARTICLE VIII
REPORTING
8.01 Regular Reporting.
(a) Construction and Operating Reports. The Partnership shall
furnish to the Collateral Trustee (for delivery to each of the Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent and the Capital Markets
Trustee), each Credit Rating Agency and the Independent Engineer:
(i) Prior to Final Completion. Prior to the Final Completion Date,
the Partnership shall furnish to the Collateral Trustee, for the benefit of
the Secured
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Parties, a copy of all progress reports and each monthly Construction
Report prepared by the EPC Contractor, and all Change Orders requested by
the EPC Contractor, promptly upon receipt thereof by the Partnership. Not
later than 30 days after the end of each calendar month ending prior to the
Final Completion Date, the Partnership shall also furnish the Collateral
Trustee, for the benefit of the Secured Parties, a summary of the progress
of the Coker Project during such month describing: (A) physical progress
and expenditure and any material deviations from the Initial Construction
Budget during such month, (B) cumulative expenditures for the current
quarter through the end of such month, (C) the Partnership's then-current
estimates of expenditures by month for the next two following quarters, (D)
the Partnership's then-current estimates of total Project Expenses to be
incurred prior to the Final Completion Date, and the expected dates for
Mechanical Completion, Substantial Reliability and Final Completion, (E) if
such month is the end of the calendar quarter, an environmental progress
report describing any adverse change with respect to environmental permits
and approvals and compliance with permit and approval conditions and
applicable environmental regulations during such quarter (provided that no
such report shall be required if no such adverse change has occurred during
such quarter), (F) any occurrence of which the Partnership is aware that
could be expected to increase materially the total capital costs of the
Coker Project above those in the Initial Construction Budget, to delay the
dates for Mechanical Completion, Substantial Reliability or Final
Completion beyond the then-current estimates, increase unit operating costs
or the frequency and scope of any required maintenance, materially change
design capacity or materially decrease expected capacity utilization or
materially change design capacity or have any other Material Adverse Effect
before or after the Final Completion Date, (G) physical progress and
status, then-current cost estimates and expected timing of completion of
the work to be performed by the EPC Contractor under the Clark EPC Contract
and (H) physical progress and status, then-current cost estimates and
expected timing of completion of the construction of the Hydrogen Plant by
the Hydrogen Supplier. In addition, following the initial production of
Project Production, such report shall describe the volume of Project
Production during such month and the amount of revenues received from the
sale of Project Production or the provision of processing services to Clark
R&M and the operating costs incurred by the Partnership during such month.
(ii) After Substantial Reliability. Not later than 45 days after the
end of each of the Partnership's fiscal quarters ending after Substantial
Reliability, a summary of operations during such quarter, including
information in reasonable detail concerning (A) the Debt Service Coverage
Ratio for such quarter, the Historical Twelve-Month Period ended on the end
of such quarter and the Projected Twelve-Month Period beginning on the end
of such quarter, and the total Senior Debt Obligations, Project Expenses,
Mandatory Capital Expenditures, Discretionary Capital Expenditures, if any,
for each month during such quarter as compared with the Annual Budget and
Operating Plan and the Major Maintenance Plan last
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delivered to the Collateral Trustee, (B) the calculation of any adjustments
to the Partnership's payment obligations under the Long-Term Oil Supply
Agreement pursuant to Section 11.1 of such agreement during such quarter,
(C) the Partnership's most recent cash planning forecast by month covering
at least the next quarter, (D) any adverse change with respect to
environmental permits and approvals and compliance with permit and approval
conditions and applicable environmental regulations during such quarter,
(E) the nature and duration of any operational or production disruptions or
limitations that affected the Coker Project during such period, (F) the
progress, schedule and actual to-date and expected aggregate costs of any
Mandatory Capital Expenditures or Discretionary Capital Expenditures, as
the case may be, and the Partnership's then-current expectations as to the
effect of such Mandatory Capital Expenditures or Discretionary Capital
Expenditures, as the case may be, on unit operating costs, the frequency
and scope of required Coker Project maintenance, including Major
Maintenance, design capacity and capacity utilization, (G) Project
Production under the Product Purchase Agreement during such quarter, (H)
sales during such quarter, and inventories remaining at quarter end, (I)
the amount of the Clark Processing Fee and the volume of product processed
for Clark R&M during such quarter, (J) the amount of fees paid to Clark R&M
for services provided under the Services and Supply Agreement and the
Ancillary Equipment Site Lease for such quarter and (K) any material
developments during such quarter in Coker Project operations, including
without limitation technical problems, interruptions of operations,
disputes with Governmental Authorities, labor problems or declines in
prices for Project Production or any other matter that could be expected to
have a Material Adverse Effect.
(b) Annual Budget and Operating Plan. The Partnership shall furnish
to the Collateral Trustee each Credit Rating Agency and the Independent
Engineer, (i) promptly after they become available, copies of the proposed
Annual Budget and Operating Plan and the proposed Major Maintenance Plan for
each fiscal year, (ii) not less than 30 days prior to the commencement of the
fiscal year to which it relates, a copy of the final Annual Budget and Operating
Plan and the final Major Maintenance Plan for each fiscal year, together with a
detailed discussion and analysis thereof, (iii) not less than 30 days prior to
the effective date of any amendment proposed to be made to the Annual Budget and
Operating Plan or the Major Maintenance Plan, copies of such proposed
amendments, and (iv) promptly following receipt, quarterly reports delivered to
the Partnership from Clark R&M pursuant to Section 6.3 of the Services and
Supply Agreement. Each proposed Annual Budget and Operating Plan, final Annual
Budget and Operating Plan and any proposed amendment to the Annual Budget and
Operating Plan shall be accompanied by the Independent Engineer's certification
as to the reasonableness of such Annual Budget and Operating Plan or amendment.
The Partnership shall reasonably consider in good faith the views expressed by
any Senior Lender in response to a delivery made to the Senior Lenders pursuant
to this clause (b), and shall reasonably consult with such Senior Lender as to
the appropriateness of any particular forecast, assumption or expenditure that
may be identified by such Senior Lender as being of concern to it.
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(c) Financial Statements. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and the Independent Engineer:
(i) Quarterly. Within 45 days after the end of each of the first
three quarters of each fiscal year, unaudited quarterly Partnership
Financial Statements and Borrower Financial Statements prepared in
accordance with GAAP. Such Partnership Financial Statements and Borrower
Financial Statements shall be accompanied by a certificate of a Responsible
Officer attesting that (except as may otherwise be noted in such
certificate) such Partnership Financial Statements or Borrower Financial
Statements, as the case may be, are presented in conformity with GAAP on a
basis consistent with that of the most recent audited Partnership Financial
Statements or Borrower Financial Statements, as the case may be;
(ii) Annual. Within 90 days after the end of each fiscal year,
annual Partnership Financial Statements and Borrower Financial Statements
presented in conformity with GAAP, audited by independent public
accountants of recognized international standing appointed from time to
time by the Partnership together with the opinion of such accountants; and
(iii) No Default Certificate. On the date of delivery of quarterly
or annual Partnership Financial Statements pursuant to this clause (c), (A)
a certificate of a Responsible Officer certifying that no Event of Default
or Potential Default has occurred and is Continuing on such date and (B)
solely in the case of the delivery of annual Partnership Financial
Statements, a certificate of the independent public accountants of the
Partnership certifying that, after their audit of such annual Partnership
Financial Statements, no facts are known to them that would cause them to
believe that an Event of Default or Potential Default has occurred and is
Continuing on such date, in each of cases (A) and (B), other than Events of
Default or Potential Defaults disclosed to the Collateral Trustee, each
Credit Rating Agency and each Independent Consultant in accordance with
clause (a) of Section 8.02.
(d) Permitted Hedging Arrangements. The Partnership shall, if
applicable, deliver to the Collateral Trustee, each Credit Rating Agency and the
Independent Engineer on the date of the delivery of its quarterly and annual
financial statements pursuant to clause (c) of this Section 8.01, a report
listing all Permitted Hedging Arrangements entered into or terminated in the
current quarter.
(e) Major Maintenance. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and the Independent Engineer not
less than 90 days in advance of any Major Maintenance, a notice describing the
expected date of commencement of such Major Maintenance and its duration, the
facilities to be affected, the purpose for the maintenance or other activities
to be conducted during such Major Maintenance and the Partnership's current
estimate of the funds that will be available to pay the expenses of any Major
Maintenance and any Senior Debt Obligations that become due during such Major
Maintenance.
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(f) Other Information. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and each Independent Consultant
such other information related to the Coker Project as it shall reasonably
request from time to time, including in connection with any Independent
Consultant's annual review of the Project.
8.02 Notice of Extraordinary Events. The Partnership shall promptly
deliver to the Collateral Trustee, the Applicable Agents, each Credit Rating
Agency and the Independent Engineer notice upon its discovery of:
(a) any Event of Default or Potential Default and any breach of its
obligations under this Agreement, any Senior Loan Agreement, the Oil
Payment Insurance Policy or the Reimbursement Agreement that does not of
itself constitute an Event of Default or a Potential Default;
(b) any material default (including without limitation any material
payment default) under, or any amendment or termination of, any Project
Document or any material disputes in respect thereof with counterparties
thereof;
(c) the occurrence of any Event of Force Majeure that excuses the
performance of any obligation under, or allows the termination of, any
Transaction Document;
(d) any litigation, arbitration, administrative, governmental or
other similar proceeding that is instituted or threatened against any of
the Borrower, the Partnership, the General Partner or the Limited Partner
or any of their respective property or assets, that, if adversely
determined, could be expected to have a Material Adverse Effect;
(e) any transaction with an Affiliate of the Partnership; and
(f) other developments in construction or operation of the Coker
Project, if not otherwise reported in any report of the Partnership
required to be provided hereunder, that could reasonably be expected to
have a Material Adverse Effect; and
(g) any facts or circumstances regarding the matters described
in the representations set forth in Section 3.01 that would render any such
representation untrue if being made at the time of discovery by the
Partnership;
in each case describing the nature thereof and any action the Partnership
proposes to take with respect thereto.
8.03 Books and Records. Each of the Partnership and the Borrower
shall (a) keep proper books of record and account in which entries will be made
of transactions of or in relation to its business and (b) keep accounts and
financial and cost records, and
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prepare the Partnership Financial Statements or Borrower Financial Statements,
as the case may be, referred to in clause (c) of Section 8.01 in accordance with
GAAP.
ARTICLE IX
COMMON CONDITIONS PRECEDENT
9.01 Common Conditions Precedent to Initial Disbursements of Senior
Loans. The obligation of each Senior Lender to make the initial disbursement of
a Senior Loan under its Senior Loan Agreement shall be subject to (i) the
satisfaction or waiver by it of each of the conditions precedent set forth in
such Senior Lender's Senior Loan Agreement and (ii) each of the following common
conditions precedent, provided that the obligation of each Bank Senior Lender to
make the initial disbursement of a Senior Loan under its Bank Senior Loan
Agreement shall be subject to the further condition that the Borrower has
previously or simultaneously incurred not less than $255 million of Capital
Markets Senior Debt and such Capital Markets Senior Debt remains outstanding
after the application of proceeds from the initial disbursement of such Senior
Loans:
(a) Authorizations, Etc. The Collateral Trustee and each Applicable
Agent shall have received certified copies of the Certificates of
Incorporation and the Bylaws, or the Certificate of Limited Partnership and
the Partnership Agreement, as the case may be, and all other constitutive
and governing documents of each of Borrower, the Partnership, the General
Partner and the Limited Partner, the Shareholders and the Clark Entities
and of the necessary actions of its respective managing committees or
boards of directors taken to authorize the execution and delivery of each
Transaction Document to which it is a party, and the performance by it of
its obligations thereunder.
(b) Incumbency and Signatures. The Collateral Trustee and each
Applicable Agent shall have received a certificate of each of the Borrower,
the Partnership, the General Partner, the Limited Partner, the Shareholders
and Clark R&M in respect of the authority and incumbency of each Person who
has signed or will sign the Transaction Documents, in each case to which it
is a party, on its behalf, or who will, until replaced by another Person or
Persons duly authorized for that purpose, otherwise act as representative
for the purposes of signing documents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby.
(c) Financing Documents. Each of this Agreement and the other
Financing Documents shall have been executed and delivered by each of the
parties named as proposed signatories hereto and thereto to the Collateral
Trustee, each Applicable Agent and the Secured Parties. The Partnership
and the Borrower shall have paid in full the premium required to be paid
for the first annual policy period
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under the Oil Payment Insurance Policy and the Debt Service Reserve
Guarantee Arrangement, respectively.
(d) Security Documents. Each of the Security Documents referred
to in Article VI to be delivered on or prior to the Closing Date shall have
been executed by the party required hereby to execute such Security
Documents and each of the Borrower, the Partnership, the General Partner
and the Limited Partner, as applicable, shall have taken any other steps,
or made arrangements acceptable to the Collateral Trustee to take such
other steps, required, under the laws of the United Mexican States, the
State of New York or the State of Texas or any other applicable law, to
perfect the security interests granted by such Security Documents (or to
make effective such amendment, assignment or powers of attorney), including
without limitation the filing of financing statements, recordation of
mortgages, giving of receipts and receipt of consents, and notarized copies
thereof, together with evidence of filing or any other steps required to
perfect such security interests, if applicable, shall have been delivered
to the Collateral Trustee, the Applicable Agents, each of the Bank Senior
Lenders and the Capital Markets Trustee.
(e) Project Documents. True and complete certified copies of each
of the Project Documents, in form and substance reasonably satisfactory to
the Senior Lenders, shall have been executed and delivered to the
Collateral Trustee, each Bank Senior Lender, the Oil Payment Insurer
Administrative Agent and the Capital Markets Trustee, and each such Project
Document shall be in full force and effect.
(f) Consents and Approvals. Each of the Borrower, the Partnership,
the General Partner and the Limited Partner shall have delivered to the
Collateral Trustee, each Applicable Agent and the Independent Engineer true
and complete certified copies of all Third-Party Authorizations in clause
(e) of Section 3.01 and clause (f) of Section 3.01.
(g) Insurance. (i) The Required Insurance then to be in effect
pursuant to Article VII shall be in full force and effect, (ii) the
Partnership shall have delivered to the Collateral Trustee (for delivery to
each Bank Senior Lender and the Capital Markets Trustee) letters from the
Partnership's insurance brokers (commonly referred to as "undertaking
letters"), dated not earlier than 15 days prior to the Closing Date,
stating with respect to each insurance policy required to be in effect on
the Closing Date pursuant to Article VII that (x) such insurance is in full
force and effect, (y) all premiums theretofore due for payment thereon have
been paid and (z) the underwriters of such insurance have agreed that the
policies, when issued, will contain the provisions required under Sections
7.02, 7.03, 7.04 and, as necessary, Section 7.05 and (iii) the Collateral
Trustee and each Applicable Agent shall have received a certificate of the
Insurance Consultant to the effect that the coverage under the
Partnership's insurance policies and the undertaking letters conforms to
the requirements of Article VII and Appendix J.
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(h) Acceptance of Appointment of Agent for Service. The Collateral
Trustee and each Applicable Agent shall have received acknowledgment of the
irrevocable appointment of agents for service in New York and Texas in
accordance with clause (b) of Section 14.12, clause (b) of Section 4.08 of
the Transfer Restrictions Agreements and any applicable Sections of the
Senior Loan Agreements.
(i) Accounts. The Collateral Trustee and each Applicable Agent shall
have received written notification from the Depositary Bank that each of
the Accounts has been established in accordance with Section 5.01.
(j) Representations and Warranties. The representations and
warranties made in this Agreement and the Transfer Restrictions Agreement
shall be true and correct in all material respects as of the Closing Date
as if made on the Closing Date, as certified in a certificate delivered by
two Responsible Officers of the relevant party.
(k) Legal Opinions. The Collateral Trustee and each Applicable Agent
shall have received the following legal opinions dated the Closing Date and
addressed to the Collateral Trustee, the Applicable Agents and the Secured
Parties:
(i) the opinion of Mexican counsel to PMI, in the form set
forth in Appendix L-1;
(ii) the opinion of Mexican counsel to Pemex, in the form set
forth in Appendix L-2;
(iii) the opinion of U.S. counsel to PMI and Pemex, in the form
set forth in Appendix L-3;
(iv) the opinion of the counsel to the EPC Contractor and the
EPC Guarantor, in the form set forth in Appendix L-4;
(v) the opinion of the counsel to the Hydrogen Supplier, in
the form set forth in Appendix L-5;
(vi) the opinion of the General Counsel to the Clark Entities,
in the form set forth in Appendix L-6;
(vii) the opinions of Simpson Thacher & Bartlett, New York
counsel to the Borrower, the Partnership, the Partners, the Clark Entities
and Blackstone, in the form set forth in Appendix L-7;
(viii) the opinions of Mayer Brown & Platt, Texas real estate
counsel to the Borrower, the Partnership and the Partners, in the form set
forth in Appendix L-8;
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(ix) the opinion of Vinson & Elkins L.L.P., Texas environmental
counsel to the Borrower, the Partnership and the Partners, in the form set
forth in Appendix L-9;
(x) the opinion of Benckenstein & Oxford, L.L.P., Texas
counsel to the Borrower, the Partnership and the Partners, in the form set
forth in Appendix L-10.
(xi) the opinion of the counsel to Occidental Petroleum, in the
form set forth in Appendix L-11;
(xii) the opinion of W.S. Walker & Company, Cayman Islands
counsel to Blackstone, in the form set forth in Appendix L-12.
(xiii) the opinion of Sullivan & Cromwell, New York counsel
to the Secured Parties, in form and substance reasonably satisfactory to
the Secured Parties; and
(xiv) the opinion of Barlow Lyde & Gilbert, English counsel to
the Oil Payment Insurers, in the form set forth in Appendix L-13.
(l) Initial Construction Budget. On or prior to the execution of this
Agreement, the Partnership shall have delivered to the Collateral Trustee
and each Applicable Agent a copy of the Initial Construction Budget
substantially in the form previously approved by the Bank Senior Lenders
Administrative Agent.
(m) Payment of Fees. The Partnership shall have paid, or shall have
given an irrevocable instruction for the payment out of the proceeds of
such Senior Loans, all fees and expenses in respect of the transactions
contemplated by this Agreement then due and payable to each of the
Collateral Trustee, the Senior Lenders, the Oil Payment Insurers
Administrative Agent, the Capital Markets Trustee, the Independent Engineer
and the Insurance Consultant.
(n) Insurance Consultant's Report. The Insurance Consultant's Report
set forth in Appendix M shall have been delivered to the Collateral Trustee
and each Applicable Agent, in form and substance reasonably satisfactory to
the Bank Senior Lenders, the Oil Payment Insurers Administrative Agent and
the Capital Markets Trustee.
(o) Independent Engineer's Reports. All the Independent Engineer's
Reports set forth in Appendix N shall have been delivered to the Collateral
Trustee and each Applicable Agent in form and substance reasonably
satisfactory to the Bank Senior Lenders, the Oil Payment Insurer
Administrative Agent and the Capital Markets Trustee.
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(p) Independent Accountants. The Partnership shall have provided
evidence reasonably satisfactory to the Collateral Trustee and each
Applicable Agent of the appointment of independent public accountants of
recognized national standing.
(q) Licenses and Other Rights. The Partnership shall have delivered
to the Collateral Trustee and each Applicable Agent (i) a letter or
certificate to the effect that the Partnership has obtained all licenses
and other rights to use Technology that are necessary in order to develop,
construct, operate and maintain the Coker Project as contemplated by this
Agreement and the report of the Independent Engineer delivered to the
Collateral Trustee and each Applicable Agent pursuant to clause (o) of this
Section 9.01.
(r) Credit Rating. The Project shall have received and maintained
ratings of not less than BB and Ba3 from Standard & Poor's, Inc. and
Moody's Investors Service, Inc., respectively.
(s) Financial Statements. Each of the Borrower Parties shall have
delivered to the Collateral Trustee and each Applicable Agent copies of its
most recent audited financial statements (or, if it has no audited
financial statements, its most recent unaudited annual financial
statements), in each case certified by a Responsible Officer.
(t) Title to Properties; Security Interests. Each of the Borrower,
the Partnership and the Partners shall have provided satisfactory evidence
with respect to the matters set forth in its representation contained in
clause (m) of Section 3.01 to the Collateral Trustee and each Applicable
Agent.
(u) Capital Contributions. (i) The Partnership shall have provided
satisfactory evidence of its receipt of each of the Initial Capital
Contributions from the Shareholders to the Collateral Trustee and each
Applicable Agent and (ii) each of the conditions specified in Section 12 of
each of the Capital Contribution Agreements with Blackstone and Occidental
Petroleum, respectively, shall have been satisfied.
(v) Ancillary Equipment Upgrade Account. Clark R&M shall have
provided the EPC Contractor with a standby letter of credit in an initial
amount equal to $97 million in accordance with the Clark EPC Contract.
(w) Officers' Certificate. Each of the Borrower Parties shall have
certified, in a certificate delivered to the Secured Parties executed by
two Responsible Officers of the respective party, that all conditions to
disbursement set forth in this Section 9.01 and Section 9.02 have been
satisfied at or prior to the date hereof.
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9.02 Common Conditions Precedent to Initial and Subsequent
Disbursements of Senior Loans. The obligation of each Senior Lender to make the
initial and any subsequent disbursement of a Senior Loan under its Senior Loan
Agreement shall be subject to satisfaction or waiver by it of each of the
conditions precedent set forth in such Senior Loan Agreement and each of the
following common conditions precedent:
(a) Absence of Certain Defaults. (i) No Event of Default or
Potential Default and (ii) no event or condition that with the giving of
notice or lapse of time, or both, would be or is reasonably likely to
result in a material default under any Transaction Document, in each of
cases (i) and (ii) shall have occurred and be continuing.
(b) Notice of Borrowing. Each Bank Senior Lender shall have
received a notice of borrowing from the Borrower and the Partnership
substantially in the form set forth in Appendix O, or in any other form as
the Borrower, the Partnership and such Bank Senior Lender may agree (a
"Notice of Borrowing").
(c) Accuracy of Representations and Warranties. Each representation
and warranty either (i) made in Article III of this Agreement or (ii) set
forth in the Notice of Borrowing provided by the Borrower and the
Partnership in accordance with clause (b) of this Section 9.02 shall be
true and correct in all material respects as of the date of such borrowing
as if made on and as of that date.
(d) No Abandonment. The Partnership shall not have received at
least five Business Days prior to the proposed disbursement date, a notice
from the Collateral Trustee, delivered at the instruction of Majority
Lenders, that they have determined that there has been an Abandonment.
(e) No Material Adverse Change. The Partnership shall not have
received, at least five Business Days prior to the proposed disbursement
date, a notice from the Collateral Trustee, delivered at the instruction of
Majority Lenders, that Majority Lenders have determined in their reasonable
judgment that a material adverse change has occurred in (i) the financial
condition of the Partnership or the engineering, construction, development,
operation or performance of the Coker Project or (ii) the financial
condition of the Borrower, Clark R&M, the Hydrogen Supplier, PMI, Pemex,
the EPC Contractor or the EPC Guarantor that could reasonably be expected
to have a material adverse effect on the financial condition of the
Partnership or the engineering, construction, development, operation or
performance of the Coker Project, provided that (x) the occurrence of any
change in general economic conditions or market prices for crude oil or
refined products or (y) any downgrade in the senior unsecured long-term
debt rating of Clark R&M by one or more Credit Rating Agencies of not more
than one rating category ("notch") shall not be deemed to constitute such a
material adverse change (it being understood that such a downgrade by more
than one rating category shall constitute such a material adverse change
only if it could reasonably be expected to have a material adverse
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effect on the financial condition of the Partnership or the engineering,
construction, development, operation or performance of the Coker Project),
provided, further, that such notice may be delivered within such five-
Business Day period if such material adverse change first occurs during
such five-Business Day period. Any notice delivered by the Collateral
Trustee in accordance with the foregoing shall set forth a reasonably
detailed explanation of the material adverse change that has occurred.
(f) Pro Rata Equity Funding. Prior to or concurrently with any
disbursement of Bank Senior Loans, the Partnership shall have received at
least a pro rata Capital Contribution of its total Capital Commitments
based on the ratio of the sum of such Bank Senior Loans to the total of
all outstanding Bank Senior Debt Commitments and Bank Senior Loans. The
Partnership shall have provided satisfactory evidence of its receipt of
such pro rata Capital Contribution to the Collateral Trustee and each
Applicable Agent.
(g) Other Documents. The Collateral Trustee, each Applicable Agent,
the Independent Engineer and the Insurance Consultant shall have received
such other approvals, documents, certificates and opinions as they may
reasonably request.
9.03 Pro Rata Drawdowns; Pro Rata Reductions in Initial Senior Debt
Commitments.
(a) The Borrower shall borrow concurrently under the Senior Loan
Agreements of all Senior Lender Groups (other than the Capital Markets Senior
Lenders) whose Senior Debt Commitments have not then been fully borrowed, in the
case of each Senior Lender Group, in the proportion that the aggregate
unborrowed portion of its Senior Debt Commitment bears to the total of the
unborrowed portion of all Senior Debt Commitments. If drawdowns from the Senior
Lender Groups cannot be made exactly in such proportion due to minimum drawdown
amounts and required integral multiples of drawdowns under the Senior Loan
Agreements, drawdowns shall be made in amounts as near to such exactly
proportionate amounts as possible and shall be deemed to be drawdowns in
compliance with this Section 9.03. The Borrower shall promptly notify the
Collateral Trustee if funds are not received from any Senior Lender by the close
of business in The City of New York on the day after the date any such drawdown
is due to be received.
(b) Other than in connection with the obtaining of Senior Debt
Commitments in respect of Replacement Senior Debt in accordance with Section
2.10 or a payment or prepayment under Section 2.07, the Borrower shall not
reduce or terminate the unused portion of Senior Debt Commitments under any
Senior Loan Agreement without concurrently reducing or terminating, pro rata
based on the undrawn Senior Debt Commitments, the unused Senior Debt Commitments
under the other Senior Loan Agreements. Any reduction or termination of Senior
Debt Commitments under a Senior Loan Agreement shall automatically amend
Appendix B for all purposes hereunder.
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default. Each of the following events shall be an
"Event of Default":
(a) Payment Default. Either the Borrower or the Partnership shall
default in the payment when due of (i) principal, interest, premium or
other amounts owing in respect of any Senior Debt or (ii) any Oil Payment
Reimbursement Obligation, and, in each of cases (i) and (ii), such default
remains uncured or unwaived for more than five Business Days;
(b) Breach of Representation and Warranty. Any representation or
warranty made by any of the Borrower, the Partnership, the General Partner,
the Limited Partner or the Shareholders or in any Financing Document shall
prove to have been false or misleading in any material respect when made;
(c) Breach of Covenant. Any of the Borrower, the Partnership, the
General Partner or the Limited Partner shall fail to observe or perform any
obligation to be observed or performed by it under this Agreement and such
failure shall continue unwaived or unremedied for 30 days;
(d) Default under the Financing Documents. An event of default
shall have occurred and be Continuing under any Financing Document;
(e) Default Under or Termination of the Project Documents. Any
party to a Project Document shall fail in any material respect to observe
or perform any covenant or other obligation to be observed or performed by
it or to pay any amounts owing by it thereunder and such failure shall
continue uncured, unwaived or unremedied, (i) in the case of any failure
under any Project Document to which an Affiliate of the Partnership is a
party or in the case of a failure to pay any amounts owing under the EPC
Contract, the Long-Term Oil Supply Agreement or the Hydrogen Supply
Agreement, for more than 30 days, (ii) in the case of any other failure
under the EPC Contract, the Long-Term Oil Supply Agreement or the Hydrogen
Supply Agreement, for more than 60 days (which grace period shall be
extended to no more than 180 days in the aggregate if the Partnership is
diligently pursuing a remedy for such failure, including without limitation
by replacing the relevant Project Document) and (iii) in the case of any
other failure under any other Project Document, for more than 30 days;
(f) Insolvency. An Insolvency Event shall have occurred with
respect to, (i) at any time, any of the Borrower, the Partnership, the
General Partner or the Limited Partner and (ii) prior to Substantial
Reliability, Blackstone;
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(g) Cross-Acceleration. (i) Any Indebtedness in an aggregate
principal amount in excess of $5 million of any of the Borrower, the
Partnership, the General Partner or the Limited Partner shall have been
declared due and payable or required to be prepaid or redeemed (other than
by regularly scheduled required prepayment or redemption) prior to the
stated maturity thereof, or (ii) any event or condition shall have occurred
that would permit a holder of such Indebtedness to make such a declaration
and any applicable grace period in the financing documents under which such
Indebtedness was incurred shall have expired;
(h) Attachment of Collateral. A Person other than the Collateral
Trustee, any Applicable Agents, any of the Secured Parties or any of their
authorized representatives shall have attached (i) any Account or
Subaccount or funds in any Account or Subaccount or (ii) any portion of the
property and assets of any of the Borrower, the Partnership, the General
Partner or the Limited Partner which property and assets, individually or
in the aggregate, have a book value in excess of $5 million, and, in the
case of subclause (ii) only, such attachment shall remain unlifted,
unstayed or undischarged for a period of 30 days;
(i) Security Interests Invalid. Any security interests created or
purported to be created by or pursuant to this Agreement or any Security
Document shall, in the reasonable opinion of counsel to the Secured
Parties, not be valid, perfected, first priority security interests in
favor of the Collateral Trustee for the benefit of the Secured Parties
(except to the extent specified in the forms of legal opinions set forth in
Appendix L);
(j) Unsatisfied Judgments. A final judgment or final judgments (i) in
the aggregate in excess of $5 million with respect to any of the Borrower,
the Partnership, the General Partner or the Limited Partner shall have been
rendered by a court or other competent tribunal against any of the
Borrower, the Partnership, the General Partner or the Limited Partner and
shall have remained unpaid, unstayed, undischarged, unbonded or undismissed
after the right to appeal has expired;
(k) Unenforceability of Agreements. Any Transaction Document shall
have been repudiated or terminated by any party thereto, by operation of
law or otherwise, or any material provision of any Transaction Document
shall have ceased for any other reason to be valid, legally binding or
enforceable against any party thereto other than the Secured Parties if
such cessation is not cured within 30 days after notice to the Partnership;
(l) Abandonment. Abandonment shall have occurred;
(m) Failure to Achieve Substantial Reliability. The Partnership shall
have failed to achieve Substantial Reliability by October 1, 2001;
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(n) Failure to Achieve Mechanical Completion. The Partnership
shall have failed to achieve Mechanical Completion by March 1, 2001 (or
October 1, 2001 if, commencing on March 1, 2001 (i) the Borrower Parties
continue to pay the Senior Debt Obligations as and when they become due,
(ii) the Borrower Parties accrue monthly all Senior Debt Obligations due
and payable on the immediately succeeding Payment Date and deposit such
funds at the end of each calender month into an escrow account pledged to
the Collateral Trustee for the benefit of the Secured Parties, (iii) the
Partnership continues to pursue diligently the achievement of Mechanical
Completion at the earliest practicable date and (iv) the Partnership has
delivered to the Collateral Trustee a certificate setting forth in
reasonable detail (A) the actions being taken by the Partnership to achieve
Mechanical Completion and (B) the proposed timetable for taking such
actions, which certificate shall be reviewed and confirmed by the
Independent Engineer);
(o) Clark EPC Contract. The work to be performed under the Clark
EPC Contract shall have failed to have been substantially completed by
October 1, 2000, subject to an extension to February 1, 2001 if the
Independent Engineer confirms to the Collateral Trustee that such extension
will not have a Material Adverse Effect;
(p) Hydrogen Supply Plant. The Hydrogen Plant shall have failed to
have been completed by December 6, 2000 (or March 1, 2001 if, commencing on
December 6, 2000 (i) the Borrower Parties continue to pay the Senior Debt
Obligations as and when due and (ii) the Partnership continues to pursue
diligently the achievement of completion of the Hydrogen Plant, by the
Hydrogen Supplier or by itself, at the earliest practicable date);
(q) Failure to Deposit Funds in Accounts. The Partnership shall
fail to cause funds to be deposited into the Accounts in accordance with
the terms set forth in Article V and such failure shall continue unwaived
or unremedied for five Business Days.
10.02 Declaration of Default. Upon receipt by the Collateral Trustee
of one or more of the following:
(a) a certificate from a Senior Lender or Senior Lender Group
(or, at any time on or after a Priority Termination Date, the Oil Payment
Insurers Administrative Agent) stating that an Event of Default described
in clause (a) (insofar as either such Event of Default relates to such
Senior Lender or Senior Lender Group) of Section 10.01 has occurred and is
Continuing and instructing the Collateral Trustee to declare a Default; or
(b) a certificate from Majority Lenders (or, at any time on or
after a Priority Termination Date, Majority Secured Parties) stating that
an Event of Default has occurred and is Continuing and instructing the
Collateral Trustee to declare a Default under this Agreement,
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then, by notice to the Partnership, a "Default" shall occur, provided that a
"Default" shall occur without such declaration or other notice (which
declaration or notice shall, for purposes of the Senior Loan Agreements, be
deemed to have been given) upon the occurrence of an Event of Default described
in clause (f) of Section 10.01.
10.03 Cessation of Default. Any Senior Lender or Senior Lender Group
that has given a certificate pursuant to Section 10.02 shall promptly notify the
Collateral Trustee, the Borrower, the Partnership and each other Secured Party
upon learning of the cessation of the Event of Default to which such certificate
related. Any notice given pursuant to this Section 10.03 shall be a "Cessation
Notice." A Cessation Notice shall be effective upon receipt thereof by the
Borrower or the Partnership and the Default to which such notice relates shall
be deemed no longer to be Continuing for all purposes hereunder.
10.04 Remedies. At any time when a Default has occurred and is
Continuing,
(a) in the case of a Default arising in connection with an Event of
Default described in clause (f)(i) of Section 10.01, without any
declaration or other action on the part of the Collateral Trustee, any
Applicable Agent or any Secured Party, all Senior Debt Commitments shall
automatically terminate and 100% of the outstanding principal amount of the
Senior Debt, together with any premium, accrued interest, fees and other
amounts due under the Senior Loan Agreements shall become immediately due
and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrower and the
Partnership, anything contained herein to the contrary notwithstanding;
(b) in the case of any Default,
(i) Subject to the rights of the Secured Parties set forth in
subclause (ii) of this clause (b):
(A) the Collateral Trustee, at the direction of Majority Lenders
(or, at any time on or after a Priority Termination Date, Majority Secured
Parties), shall take the actions in respect of the Accounts required by
Section 5.06;
(B) Majority Lenders (or, at any time on or after a Priority
Termination Date, Majority Secured Parties) shall have the right, at
their sole option, to require the Partnership to continue to operate
the Heavy Oil Processing Facility or to require the Partnership to
appoint a manager or operator on terms and conditions acceptable to
such Majority Lenders (or Majority Secured Parties, as the case may
be) for the purpose of performing such duties for and rendering such
assistance on behalf of the Partnership as is required by a committee
or other group of representatives of Senior Lenders. The manager or
operator shall be entitled, on behalf of the Partnership, to operate
and manage the Heavy Oil Processing Facility, incur
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expenses, including capital expenditures necessary or advisable in its
reasonable discretion, enter into contracts with one or more third
parties, acquire, sell, lease or dispose of assets (other than the
Heavy Oil Processing Facility as a whole), protect and preserve the
Heavy Oil Processing Facility and take all other necessary or
advisable actions relating thereto, all at the expense and for the
account of the Partnership; and
(C) Each Senior Lender Group shall have the right to apply the
relevant interest rate provided for in its respective Senior Loan
Agreement.
(ii) (A) Majority Lenders (or, at any time on or after a
Priority Termination Date, Majority Secured Parties) shall have the
right to give the Collateral Trustee a notice identified as an
enforcement direction, together with a certification that such notice
is given in accordance with this Agreement (an "Enforcement
Direction"), directing the Collateral Trustee to take Enforcement
Action;
(B) During the period following the declaration of any Default
and preceding the issuance of an Enforcement Direction, the
Partnership shall use its reasonable best efforts to cure the Event of
Default giving rise to such Default and to mitigate any adverse
consequences to the Heavy Oil Processing Facility of such Event of
Default.
(C) Nothing in this subclause (ii) shall prevent the Collateral
Trustee or the Secured Parties from taking action with respect to the
Collateral to preserve and protect their rights in, or to prevent any
diminution in the value, utility or condition of, such Collateral; and
(c) in the case of any Default, and in addition to any of the rights
specified in clauses (a) and (b) of this Section 10.02, Majority Lenders
shall have the right, at their sole option, to notify the Oil Payment
Insurers Administrative Agent that the second payment priority with respect
to Oil Payment Reimbursement Obligations pursuant to clause (a)(ii) of
Section 5.05 shall terminate (such notice, the "Priority Termination
Notice"). Concurrently with the Priority Termination Notice to the Oil
Payment Insurers Administrative Agent in accordance with the foregoing
sentence, the Bank Senior Lenders Administrative Agent may notify PMI that
the coverage provided by the Oil Payment Insurance Policy shall be
suspended on the earliest date permitted under the terms of the Oil Payment
Insurance Policy. If Majority Lenders do not so notify PMI, the Oil
Payment Insurers Administrative Agent, promptly upon receipt of the
Priority Termination Notice, shall notify PMI that the coverage provided by
the Oil Payment Insurance Policy shall be suspended on the earliest date
permitted under the terms of the Oil Payment Insurance Policy. Upon the
expiration of 30 days following the effectiveness (determined in accordance
with the terms of the Oil Payment Insurance Policy) of such notice by the
Bank Senior Lenders Administrative Agent or the Oil Payment Insurers
Administrative
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Agent, as the case may be, to PMI (such date, the "Priority Termination
Date"), the second payment priority with respect to Oil Payment Insurance
Obligations shall terminate in accordance with clause (b)(ii) of Section
5.06, provided that if the Oil Payment Insurers Administrative Agent
receives a Priority Termination Notice after it has notified PMI that the
coverage provided by the Oil Payment Insurance Policy shall be suspended or
terminated for any reason, the Priority Termination Date shall be the date
that is 30 days after the later of (i) the date on which the Oil Payment
Insurers Administrative Agent receives such Priority Termination Notice and
(ii) the date on which such suspension or termination of the coverage
provided by the Oil Payment Insurance Policy becomes effective in
accordance with the terms thereof.
10.05 Enforcement Action. Upon receipt of an Enforcement Direction,
the Collateral Trustee shall, as promptly as practicable, if so instructed by
the Secured Party or Secured Parties giving such Enforcement Direction, subject
to applicable law, take Enforcement Action.
10.06 Incidents of Sale. Upon any sale of any of the Collateral made
or caused to be made by the Collateral Trustee, whether made under the power of
sale hereby given or pursuant to judicial proceedings, to the extent permitted
by applicable law:
(a) any Secured Party may bid for and purchase the property offered
for sale, and upon compliance with the terms of sale may hold and dispose
of such property;
(b) the Collateral Trustee may, but shall not be obligated to, make
and deliver to the purchaser or purchasers a good and sufficient deed, bill
of sale and instrument of assignment and transfer of the property sold; and
(c) the Collateral Trustee, in its own name or pursuant to the
power of attorney granted in or pursuant to clause (c) of Section 6.12 by
the Borrower, the Partnership and each of the Partners, may make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold and for that purpose the Collateral Trustee may
execute all necessary deeds, bills of sale and instruments of assignment
and transfer, and may substitute one or more Persons with like power (and
the Borrower, the Partnership and each of the Partners hereby ratifies and
confirms all that its said attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by the Collateral Trustee
or by any purchaser, the Borrower, the Partnership and each of the
Partners, as the case may be, shall ratify and confirm any such sale or
transfer by executing and delivering to the Collateral Trustee or to such
purchaser or purchasers all proper deeds, bills of sale, instruments of
assignment and transfer and releases as may be designated in any such
request).
Upon a sale of the General Partnership Interest or the Limited
Partnership Interest or substantially all the Project Property, whether made
under the power of sale hereby given or pursuant to judicial proceedings, the
Partnership shall permit, to the extent
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permitted by applicable law, the purchaser thereof and its successors and its
and their assigns to take and use the name of the Partnership and to carry on
business under such name or any variant or variants thereof and to use and
employ any and all other trade names and trademarks of the Partnership.
10.07 Collateral Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Borrower, the Partnership, each of the Partners or
the Collateral, the Collateral Trustee (irrespective of whether the principal of
the Senior Debt shall then be due and payable) shall be entitled and empowered,
by intervention in such proceeding or otherwise, (a) to file and prove a claim
for the whole amount of the Senior Debt Obligations or the Oil Payment
Reimbursement Obligations owing and unpaid and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Collateral Trustee (including any claim for the reasonable compensation,
disbursements and advances of the Collateral Trustee, in its individual or trust
capacity, its agents and counsel) and of the Secured Parties allowed in such
judicial proceeding and (b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, Collateral Trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Secured Party to make such payments to the Collateral Trustee.
10.08 Collateral Trustee May Enforce Claims. All rights of action and
claims under this Agreement may be prosecuted and enforced by the Collateral
Trustee in its own name as Collateral Trustee of an express trust, provided,
however, that the Collateral Trustee is also hereby appointed as agent for the
Secured Parties for this and the other purposes of this Agreement, and the
Collateral Trustee may, if necessary under applicable law, take such action
solely as agent for the Secured Parties. Any recovery of judgment by the
Collateral Trustee shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Collateral Trustee,
its agents and counsel, be for the benefit of the Secured Parties and deposited
to the Enforcement Proceeds Account for application as provided in Section
10.12.
10.09 Control of Enforcement Action. Subject to the receipt by the
Collateral Trustee of indemnity satisfactory to it, the Secured Party or Secured
Parties giving an Enforcement Direction shall have the right, after the giving
of an Enforcement Direction:
(a) to require the Collateral Trustee to enforce this Agreement,
either by judicial proceedings for the enforcement of the payment of Senior
Debt and the Oil Payment Reimbursement Obligations and the enforcement of
the security interests created under this Agreement and any of the Security
Documents, the sale of the Collateral or any part thereof or otherwise or
by the exercise of the power of entry and/or sale hereby conferred; and
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(b) to direct the time, method and place of conducting any
proceeding for any remedy available to the Collateral Trustee, or
exercising any trust or power conferred upon the Collateral Trustee under
this Agreement, provided that (i) such direction shall not be in conflict
with applicable law, this Agreement or any of the Security Documents and
(ii) the Collateral Trustee may take any other action incidental to
carrying out any direction of such Secured Party or Secured Parties.
10.10 Limitation on Suits. (a) No Secured Party (except through the
giving of an Enforcement Direction properly given under Section 10.04) shall
have the right in respect of the Senior Debt Obligations or otherwise under its
Senior Loan Agreement or in respect of the Oil Payment Reimbursement Obligations
or otherwise under the Reimbursement Agreement to commence any proceeding,
judicial or otherwise, against the Borrower, the Partnership or either of the
Partners under any bankruptcy law or other reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency, liquidation or
similar law or for the appointment of a receiver, Collateral Trustee or other
officer or representative of a court or of creditors.
(b) None of the Secured Parties (except through the giving of an
Enforcement Direction properly given under Section 10.04) shall have the right
to commence any proceeding, judicial or otherwise, to enforce any judgment
obtained by it, in respect of the Senior Debt Obligations or otherwise under its
Senior Loan Agreement or in respect of the Oil Payment Reimbursement Obligations
or otherwise under the Reimbursement Agreement, against the Borrower, the
Partnership or either of the Partners or their assets or properties, to enforce
any provision of this Agreement, any Security Document or the security interests
granted hereby or pursuant hereto, it being understood and intended that none of
the Secured Parties shall have any rights in any manner whatever to affect,
disturb or prejudice the security interests created hereby or pursuant hereto or
the rights of any of the other Secured Parties, or to obtain or seek to obtain
priority or preference over any other Secured Party or to enforce any rights
under this Agreement, any Security Document or its Senior Loan Agreement or, in
the case of the Oil Payment Insurers, the Reimbursement Agreement, except in the
manner herein or therein provided.
10.11 Enforcement Proceeds Account. Upon receipt of an Enforcement
Direction, the Collateral Trustee shall establish and thereafter maintain in its
name a segregated bank account in New York, New York ("Enforcement Proceeds
Account") for the purpose of depositing therein: (a) any balances then standing
in the Accounts or the Subaccounts or received therein from time to time
thereafter; (b) the proceeds of any sale (net of the costs and expenses of such
sale and any taxes, assessments or prior liens) or Enforcement Action (net of
the costs and expenses of such action) taken pursuant to this Article X; (c) the
proceeds of any insurance referred to in Section 7.07; and (d) all proceeds and
any moneys otherwise received for satisfaction of the Senior Debt Obligations or
the Oil Payment Reimbursement Obligations. All moneys held in the Enforcement
Proceeds Account shall be trust funds held by the Collateral Trustee for the
benefit of Secured Parties for the purpose of making payments therefrom in
accordance with Section 10.12.
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10.12 Application of Enforcement Proceeds. Proceeds from the
Enforcement Proceeds Account shall be applied promptly by the Collateral
Trustee, at the direction of Majority Lenders (or, at any time on or after a
Priority Termination Date, Majority Secured Parties), in the following order of
priority:
(a) first, to the payment of all fees, indemnities and any other
amounts owed to the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Oil Payment Insurers Administrative Agent, the
Capital Markets Trustee and the Depositary Bank in their individual or
trust capacity (but not, where applicable, as Senior Lender) relating to
services rendered in their capacity as Collateral Trustee (including in
connection with the taking of any Enforcement Action), Bank Senior Lenders
Administrative Agent, Oil Payment Insurers Administrative Agent, Capital
Markets Trustee or Depositary Bank, as the case may be.
(b) second, to the payment of all fees, costs, expenses,
indemnities and any other amounts owed to the Secured Parties and the whole
amount then outstanding of Senior Debt Obligations or Oil Payment
Reimbursement Obligations and in case such moneys shall not be sufficient
to pay in full the whole amount so due and unpaid, then to make Pro Rata
Payments, without any preference or priority, as among the Secured Parties,
provided that any amounts owed to the Oil Payment Insurers in respect of
Oil Payment Reimbursement Obligations relating to shipments of Maya crude
oil pursuant to the Long-Term Oil Supply Agreement for which title passed
to the Partnership after notice of the Event of Default underlying the
Enforcement Action was given by the Partnership to the Collateral Trustee
and the Administrative Agents in accordance with clause (a) of Section 8.02
(or, if no such notice was given, after the date on which such notice
should have been given in accordance with clause (a) of Section 8.02) shall
have priority over any amounts owed to the Senior Lenders in respect of
Senior Debt Obligations, except to the extent that such Oil Payment
Reimbursement Obligations have been satisfied prior to the relevant
Priority Termination Date, provided, further, that no such priority shall
apply in respect of any Oil Payment Reimbursement Obligations relating to
shipments of Maya crude oil pursuant to the Long-Term Oil Supply Agreement
for which title passed to the Partnership after the relevant Priority
Termination Date; and
(c) third, after the payment in full of the Senior Debt Obligations
and the Oil Payment Reimbursement Obligations, to the payment of the
remainder, if any, to the Partnership or its successors, or in the case of
proceeds from the transfer or disposition of all or part of the interests
in the General Partner or Limited Partner to the Shareholders or the
General Partner, as the case may be, or as a court of competent
jurisdiction may otherwise direct.
10.13 Action under Oil Payment Insurance Policy. Nothing in this
Article X shall limit the right of the Oil Payment Insurers Administrative Agent
to suspend or terminate the coverage under the Oil Payment Insurance Policy in
accordance with the terms of the Reimbursement Agreement, and any such
suspension or termination shall not
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constitute Enforcement Action or another remedy based upon the occurrence or
declaration of an Event of Default for purposes of this Article X.
ARTICLE XI
RESTRICTED PAYMENTS
11.01 Restricted Payments. (a) Subject to clause (b) of this
Section 11.01, no Restricted Payments may be made by the Partnership unless
each of the following conditions has been met:
(i) Final Completion has occurred;
(ii) immediately prior and after giving effect to such
Restricted Payment, no Event of Default or Potential Default or full
or partial Downtime has occurred and is Continuing;
(iii) immediately prior and after giving effect to such
Restricted Payment, the PMI Premium Reserve Account, Debt Service
Reserve Account, the Principal & Interest Accrual Account, the Tax
Reserve Account, the PMI Surplus Reserve Account and the Major
Maintenance Account shall be fully funded and all Project Expenses and
Mandatory Capital Expenditures that have become due and payable have
been paid;
(iv) (A) the projected Debt Service Coverage Ratio for the
Projected Twelve-Month Period beginning on the first day after such
Restricted Payment is made and (B) the historical Debt Service
Coverage Ratio for the Historical Twelve-Month Period ended on the
date such Restricted Payment is made, in each case (A) and (B) is not
less than 1.6:1.0 (or, if the Capital Markets Senior Debt then has an
Investment Grade Rating, 1.35:1.0);
(v) no Insolvency Event with respect to Clark R&M shall have
occurred and be continuing; and
(vi) such Restricted Payment is made within 30 days immediately
following a Payment Date.
(b) The Partnership may direct the Collateral Trustee to make
distributions to the General Partner and the Limited Partner in an
aggregate amount not to exceed $100,000 in each calendar year solely for
the purpose of permitting the Partners to pay their respective directors'
fees, accounting expenses and other administrative expenses.
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(c) The Partnership shall give the Collateral Trustee not less than
five Business Days prior notice of the proposed date of any Restricted
Payment to be made pursuant to this Section 11.01, which notice shall have
attached thereto a certificate of the Partnership signed by a Responsible
Officer certifying that the conditions to such Restricted Payment set forth
in clause (a) have been satisfied, together with information and
computations demonstrating compliance with such conditions.
ARTICLE XII
GUARANTEE
12.01 Guarantee by the Partnership and the Partners. (a) Subject
to clause (b) of this Section 12.01, each of the Partnership and the Partners
hereby unconditionally guarantees, jointly and severally, to each Senior Lender
and the Collateral Trustee (a) the due and punctual payment of the principal of
and interest on each Senior Debt Obligations when and as the same shall become
due and payable, whether at the maturity thereof, by declaration of acceleration
or otherwise, in accordance with the terms of the Senior Debt and this Agreement
and (b) the performance by the Borrower of each of its other obligations under
this Agreement and the other Financing Documents. Each of the Partnership and
the Partners hereby agrees that its obligations hereunder shall be as if it were
a principal debtor and obligor and not merely a surety, and shall be absolute
and unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any Senior Loan or any provision of this
Agreement or of the other Financing Documents, any failure to enforce the
provisions of any Senior Loan or any provision of this Agreement or of the other
Financing Documents, any waiver, modification or indulgence granted to the
Borrower with respect thereto by any Senior Lender, the Collateral Trustee or
any Applicable Agent, or any other circumstances which may otherwise constitute
a legal or equitable discharge of a surety or guarantor. Each of the
Partnership and the Partners hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger, bankruptcy or
insolvency of the Borrower, any right to require a proceeding first against the
Borrower, the benefit of discussion, protest or notice with respect to any
Senior Loan or the Senior Debt evidenced thereby and all demands whatsoever, and
covenants that this Guarantee will not be discharged with respect to any Senior
Loan except by payment in full of the principal amount due thereunder and any
interest thereon. Each of the Partnership and the Partners hereby agrees that
it will pay, or reimburse any Senior Lender and the Collateral Trustee on demand
for, all reasonable costs and expenses (including fees and disbursements of
counsel) incurred by such Senior Lender or the Collateral Trustee in connection
with any rescission or restoration of this Guarantee, including any such costs
and expenses incurred in defending against any claim alleging that any payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
(b) Notwithstanding anything in this Section 12.01 to the contrary,
the guarantee under clause (a) of this Section 12.01 shall not apply to the
extent any obligation
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is guaranteed pursuant to (i) the guarantee attached to the securities
evidencing Capital Markets Senior Debt in accordance with Section 205 and
Article 12 of the Indenture, (ii) the guarantee of Bank Senior Debt pursuant to
Article XI of the Bank Senior Loan Agreement or Article X of the Secured Working
Capital Facility or (iii) the guarantee of the Borrower's obligations under the
Secured Working Capital Facility.
ARTICLE XII
THE COLLATERAL TRUSTEE
13.01 Appointment of Collateral Trustee. Bankers Trust Company is
hereby appointed as Collateral Trustee hereunder (the "Collateral Trustee") and
hereby accepts the trust created in this Agreement upon the terms and conditions
hereof.
13.02 Delivery of Documentation. Executed counterparts of the
Financing Documents have been delivered to the Collateral Trustee and the
Collateral Trustee acknowledges receipt thereof. The Borrower, the Partnership
and each of the Partners and each Applicable Agent agree to deliver to the
Collateral Trustee any Senior Loan Agreement relating to Additional Senior Debt
or Replacement Senior Debt and any instrument amending or modifying any
agreement to which it is a party previously delivered to the Collateral Trustee.
Amendments or modifications of the aforementioned agreements shall be in writing
and shall not affect the duties and obligations of the Collateral Trustee
hereunder unless (a) the Collateral Trustee has received a copy of such
amendment or modification and (b) with respect to any amendment or modification
which, in the opinion of the Collateral Trustee, modifies the Collateral
Trustee's duties, obligations, or responsibility, the Collateral Trustee has
consented in writing thereto within 10 Business Days of receiving a copy
thereof.
13.03 Attorney-in-Fact. The Collateral Trustee or any officer or
agent thereof, with full power of substitution, is hereby appointed the
attorney-in-fact of each of the Borrower, the Partnership, the General Partner
and the Limited Partner for the purpose of carrying out the provisions of this
Agreement and any of the Financing Documents and taking any action and executing
any instruments which the Collateral Trustee, at the direction of Majority
Lenders; may deem necessary or advisable to accomplish the purposes hereof and
thereof, which appointment as attorney-in-fact is coupled with an interest and
irrevocable and, without limiting the generality of the foregoing, which
appointment hereby gives the Collateral Trustee the power and right on behalf of
each of the Borrower, the Partnership, the General Partner and the Limited
Partner without notice to or assent by any of the foregoing, to the extent
permitted by applicable law, to do the following when and to the extent it is
authorized or directed to do so pursuant to the terms of this Agreement or any
of the Security Documents:
(i) to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due with respect to,
and to the extent of, the rights assigned to it by any of the Borrower, the
Partnership, the General Partner and
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the Limited Partner to the extent of the interest therein of any Secured
Party in the Collateral;
(ii) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and non-
negotiable instruments, documents and chattel paper taken or received by
the Collateral Trustee in connection with this Agreement or any of the
Financing Documents;
(iii) to commence, file, prosecute, defend, settle, compromise,
adjust, revoke, cancel, annul, move to dismiss or otherwise undo any claim,
suit, action or proceeding with respect to the security interests granted
for the benefit of the Secured Parties in the Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of this
Agreement and the Financing Documents; and
(v) to do, at its option and at the expense and for the account
of any of the Borrower, the Partnership, the General Partner and the
Limited Partner at any time or from time to time, all acts and things which
the Collateral Trustee deems necessary to protect or preserve the
Collateral and to realize upon such Collateral.
Each of the Borrower, the Partnership, the General Partner and the
Limited Partner agrees, if required by applicable law or reasonably requested by
the Collateral Trustee, to execute and deliver to the Collateral Trustee, and
register in every public registry in the State of Texas, the State of New York
or the United Mexican States in which such registration is necessary, a
notarized public deed or other instrument constituting such power of attorney.
The Collateral Trustee shall not be responsible for the negligence or misconduct
of any attorney-in-fact selected by it without gross negligence or willful
misconduct.
13.04 Authority to Act for Secured Parties. (a) The Collateral
Trustee or any officer or agent thereof, with full power of substitution, is
hereby appointed the attorney-in-fact of each of the Secured Parties to act for
and on behalf of the Secured Parties with respect to this Agreement, the
Security Documents and the other Financing Documents, including but not limited
to the right to accept and execute this Agreement, the Security Documents and
the other Financing Documents and any and all amendments (subject to Section
14.13) and renewals of such documents and, on behalf of the Secured Parties, to
exercise in accordance with the provisions hereof the Secured Parties' rights
under this Agreement, the Security Documents and the other Financing Documents
as the same may be amended or renewed from time to time.
(b) Each Secured Party agrees, if required by applicable law or
reasonably requested by the Collateral Trustee, to execute and deliver to the
Collateral Trustee, and register in every public registry in which such
registration is necessary, a notarized public deed or other instrument
appointing the Collateral Trustee and any officer or agent thereof,
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with full power of substitution, its attorney-in-fact for purposes of exercising
the rights and remedies of such Secured Party under this Agreement and the
Financing Documents and taking all action on behalf of the Secured Parties that
the Collateral Trustee is authorized to take pursuant to this Agreement.
13.05 Reliance. The Collateral Trustee shall be entitled to act upon
any notice, certificate, instrument, demand, request, direction, instruction,
waiver, receipt, consent, agreement or other document or communication furnished
hereunder or under the Security Documents or the other Financing Documents,
which it in good faith believes and on its face appears to be genuine, and it
shall be entitled to rely upon the due execution, validity and effectiveness,
and the truth and acceptability, of any provisions contained therein. The
Collateral Trustee shall not have any responsibility to make any investigation
into the facts or matters stated in any notice, certificate, instrument, demand,
request, direction, instruction, waiver, receipt, consent, agreement or other
document or communication furnished to it hereunder or under the Security
Documents or the other Financing Documents. Each of the Borrower, the
Partnership, the General Partner and the Limited Partner shall deliver to the
Collateral Trustee a list of authorized signatories of any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent,
agreement or other document or communication furnished to the Collateral Trustee
hereunder or under the Security Documents or the other Financing Documents, and
the Collateral Trustee shall be entitled to rely on such list until a new list
is furnished by the Borrower, the Partnership, the General Partner or the
Limited Partner, as the case may be, to the Collateral Trustee.
13.06 Liability. The Collateral Trustee shall not be liable for any
error of judgment or for any act done or omitted to be done by it in good faith
or for any mistake of fact or law, or for anything that it may do or refrain
from doing except for its own gross negligence or willful misconduct. The
Secured Parties shall in no event be liable for any act done or omitted to be
done by the Collateral Trustee or by any of its officers or employees.
13.07 Consultation with Counsel, Etc. The Collateral Trustee may
consult with, and obtain advice from, legal counsel, accountants and other
experts, in connection with the performance of its duties hereunder or under the
Security Documents or the other Financing Documents, and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the opinion and advice of such counsel, accountants and other experts. The
Collateral Trustee shall not be responsible for the negligence or misconduct of
any counsel, accountants and other experts selected by it without gross
negligence or willful misconduct on its part.
13.08 Duties. The Collateral Trustee shall have no duties other than
those specifically set forth or provided for in the Financing Documents and no
implied covenants or obligations of the Collateral Trustee shall be read into
the Financing Documents or any related agreement to which the Collateral Trustee
is a party. The Collateral Trustee shall have no obligation to familiarize
itself with and shall have no responsibility with respect to any other agreement
or document relating to the transactions contemplated by the Financing
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Documents (except such sections of such agreements or documents referred to
herein) nor any obligation to inquire whether any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent,
document, communication, statement or calculation is in conformity with the
terms of any such other agreement, except those irregularities or errors
manifestly apparent on the face of such document or to the actual knowledge of
the Collateral Trustee. Except to the extent that the Collateral Trustee is
acting on express instructions, the Collateral Trustee shall at all times take
such care in dealing with the Collateral as it would in dealing with its own
property or similar property under its care. The Collateral Trustee shall, upon
receipt of an Enforcement Direction and acceptable indemnification, exercise the
rights and powers vested in it by this Agreement or by any Security Document
which it is directed by Majority Lenders (or Majority Secured Parties, as the
case may be) to exercise and the Collateral Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in accordance with the
direction of such Majority Lenders (or Majority Secured Parties, as the case may
be) or any action in connection therewith undertaken by it in good faith and
without gross negligence or wilful misconduct.
13.09 Resignation, Replacement and Successor Collateral Trustee.
The Collateral Trustee at any time may resign as Collateral Trustee under this
Agreement and any other documents to which it is a party upon giving not less
than three months' notice in writing to the Partnership, the Applicable Agents,
the Bank Senior Lenders and the Capital Markets Trustee. The Collateral Trustee
may be removed as Collateral Trustee hereunder by an instrument in writing
signed by Majority Secured Parties. Upon resignation or removal of the
Collateral Trustee, so long as any Bank Senior Debt or Bank Senior Debt
Commitments remain outstanding, the Bank Senior Lenders Administrative Agent
shall appoint a successor Collateral Trustee and shall notify the Capital
Markets Trustee and the Oil Payment Insurers Administrative Agent thereof. Such
selection shall become final unless within 10 days of such notification, the
Capital Markets Trustee reasonably objects to the designated replacement
Collateral Trustee, in which case the Bank Senior Lenders Administrative Agent
shall select another replacement Collateral Trustee and notify the Capital
Markets Trustee and the Oil Payment Insurers Administrative Agent thereof. If
the Capital Markets Trustee does not reasonably object to such selection within
10 days from the date of notification thereof, the replacement Collateral
Trustee shall be deemed to have been accepted. If the Capital Markets Trustee
does so object, the Bank Senior Lenders Administrative Agent shall repeat the
selection process in accordance with the two foregoing sentences until a
replacement Collateral Trustee is found that is reasonably acceptable to the
Capital Markets Trustee. If no Bank Senior Debt or Bank Senior Debt Commitments
remain outstanding, the Capital Markets Trustee shall appoint a replacement
Collateral Trustee. No resignation or removal of the Collateral Trustee and no
appointment of a successor trustee shall be effective until (i) the successor
Collateral Trustee has accepted its appointment, (ii) all indemnities,
compensation and expenses required by Sections 13.10 and 13.11 shall have been
paid or provided for and (iii) the Collateral Trustee shall have executed and
delivered to the successor Collateral Trustee a notarized instrument delegating
its rights and responsibilities hereunder and under the other Financing
Documents to the successor
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Collateral Trustee. If no successor trustee shall have been so appointed and
shall have accepted such appointment within 30 days after the date fixed for
such resignation or such removal, the Collateral Trustee may, at the expense of
the Partnership, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may prescribe, appoint a successor trustee. Any successor trustee
appointed pursuant to this Section 13.09 shall be a bank or trust company
organized under the laws of the United States or of the State of New York,
having its principal corporate trust office in The City of New York and a
combined capital and surplus of at least $500 million. Any successor trustee
shall evidence its acceptance of the trust hereunder by executing and delivering
to the Partnership, each Bank Senior Lender, the Capital Markets Trustee and the
Collateral Trustee an instrument accepting this trust and its appointment as
Collateral Trustee hereunder and under the other Financing Documents, and
thereupon such successor Collateral Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder and under the other Financing Documents
with like effect as if originally named as Collateral Trustee herein and
therein, and such predecessor shall have no further obligation or liability
thereunder except for liability with respect to its acts or omissions prior to
such succession pursuant to Section 13.06; nevertheless, on the request of any
party hereto or such successor trustee, the Collateral Trustee ceasing to act
shall execute and deliver instruments transferring to such successor trustee all
rights and powers of the Collateral Trustee so ceasing to act, including any
such instruments necessary to assign the rights under this Agreement and the
other Financing Documents and to transfer the Accounts to such successor
trustee, and shall deliver to such successor trustee all property held by it in
trust hereunder. The Partnership shall promptly notify the Credit Rating
Agencies of any resignation, removal or replacement of the Collateral Trustee or
any action in connection therewith undertaken by it in good faith and without
gross negligence or wilful misconduct.
13.10 Indemnities. (a) The Partnership agrees to indemnify the
Collateral Trustee in its individual and trust capacity, including without
limitation in its capacity as Depositary Bank, and its Affiliates, officers,
agents and employees for, and to hold each of them harmless against, any loss,
liability, claim, judgment, settlement, compromise, obligation, damage, penalty,
cost, expense or disbursement of any kind or nature whatsoever (including
reasonable attorney's fees and expenses) with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and the
other Financing Documents, unless arising from the gross negligence, bad faith
or willful misconduct of such of the Collateral Trustee or the agents that are
seeking indemnification, including the costs and expenses of defending itself
against any claim of liability in the premises. As security for such payment,
the Collateral Trustee in its individual capacity shall have an interest prior
to the Secured Parties upon all Collateral and other property and funds held or
collected by the Collateral Trustee as part of the trust established hereunder.
(b) In any suit, proceeding or action brought by the Collateral
Trustee in its individual capacity, or by any of its Affiliates, officers,
agents and employees, under or with respect to the Collateral for any sum owing
hereunder or under any other Financing
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Document, or to enforce any provisions hereof or of any other Financing
Document, the Partnership will save, indemnify and keep the Collateral Trustee
in its individual capacity harmless from and against all expense, loss or damage
(including reasonable attorney's fees and expenses) suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction of liability whatsoever
of the obligee thereunder, arising out of a breach by any of the Borrower, the
Partnership, the General Partner, the Limited Partner of any of their
obligations hereunder or under any other Financing Document or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of such obligee or its successors from the Borrower, the Partnership, the
General Partner or the Limited Partner, and all such obligations of the
Borrower, the Partnership, the General Partner and the Limited Partner shall be
and remain enforceable against and only against each of them and shall not be
enforceable against the Collateral Trustee (in its individual or trust capacity)
or any Secured Party.
(c) Each of the Bank Senior Lenders, the Capital Markets Senior
Lenders and the Oil Payment Insurers, ratably in accordance with its pro rata
share of the sum of (i) the aggregate amount of Senior Debt Obligations and (ii)
the Oil Payment Reimbursement Obligations, agrees to indemnify the Collateral
Trustee and its Affiliates and its, and its Affiliates', officers, agents and
employees for, and to hold each of them harmless against, any loss, liability,
claim, judgment, settlement, compromise, obligation, damage, penalty, cost,
expense or disbursement of any kind or nature whatsoever arising prior to the
Guaranteed Final Completion Date with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and the other
Financing Documents (to the extent not reimbursed under clause (a) of this
Section 13.10, but without limiting the obligations of the Partnership
thereunder), unless arising from the gross negligence, bad faith or willful
misconduct of such of the Collateral Trustee or the agents that are seeking
indemnification, including the costs and expenses of defending itself against
any claim of liability in the premises.
(d) The agreements in this Section 13.10 shall survive
resignation or removal of the Collateral Trustee and the termination of the
other provisions of this Agreement.
(e) All references in this Section 13.10 to the Collateral Trustee
shall be deemed to apply to the Collateral Trustee in its capacities as
Collateral Trustee and Depositary Bank, as applicable.
13.11 Compensation. The Collateral Trustee shall be entitled to
reasonable compensation (which shall not be limited by any provision of law in
regard to compensation of a Collateral Trustee of an express trust) as may be
agreed from time to time between the Partnership and the Collateral Trustee for
all services rendered under this Agreement and the other Financing Documents and
such compensation, together with reimbursement of the Collateral Trustee in its
individual capacity for its advances, disbursements and expenses in connection
with the performance of the trust provided for herein (including the reasonable
fees and expenses of its agents and of counsel, accountants and other experts
referred to in
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Section 13.07), shall be paid by the Partnership promptly upon demand from the
Collateral Trustee from time to time as services are rendered and expenses are
incurred. Except to the extent otherwise contemplated by clause (c) of Section
13.10, the Secured Parties shall have no liability for any fees, expenses or
disbursements of the Collateral Trustee. Any reasonable and documented fees,
compensation, indemnity amounts (unless such indemnity amounts are subject to
dispute among the parties hereto) or expenses of the Collateral Trustee (in its
individual or trust capacity) or its counsel not paid as provided for herein may
be taken from any property held by the Collateral Trustee hereunder
notwithstanding any provisions herein to the contrary.
13.12 Certificates. Whenever in the administration of the trusts of
this Agreement the Collateral Trustee shall deem it necessary or desirable that
a matter be proved or established in connection with taking or omitting any
action by the Collateral Trustee hereunder or under any other Financing
Document, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of gross negligence or willful
misconduct on the part of the Collateral Trustee, be deemed to be conclusively
proved or established by a written certificate of the Partnership delivered to
the Collateral Trustee.
13.13 Information. (a) The Partnership agrees that, from time to
time upon request of the Collateral Trustee, the Partnership shall deliver to
the Collateral Trustee a list setting forth, by each Senior Loan Agreement (i)
the aggregate principal amount outstanding thereunder and (ii) the interest rate
then in effect thereunder.
(b) Each Applicable Agent shall deliver to the Collateral Trustee
an authority and incumbency certificate setting forth the names and specimen
signatures of the persons authorized to provide instructions or directions to
the Collateral Trustee as of the date of its Senior Loan Agreement or the
Reimbursement Agreement, as the case may be, and shall promptly provide any
changes thereto from time to time thereafter. The Collateral Trustee shall be
entitled to rely conclusively on such certificate until it receives a
certificate specifically stating that it is a superseding certificate.
13.14 Books and Accounts. (a) The Collateral Trustee shall maintain
all such accounts, books and records as may be necessary properly to record all
transactions carried out by it under this Agreement.
(b) On or before the tenth Business Day in New York of each
calendar month, the Collateral Trustee shall send to each Applicable Agent a
statement indicating the amount of funds on deposit in each Account and the
nature of any investments thereof as of the end of the preceding calendar month
and identifying all deposits to and payments from such account during such
calendar month, including the date on which made (but only to the extent such
information is available to the Collateral Trustee from the Depositary Bank.
Upon the request and at the expense of any Secured Party, the Collateral Trustee
shall at any time inform each Secured Party of deposits, investments, payments,
balances and any other information they may request (and that is reasonably
available to the Collateral Trustee) regarding the Accounts. The Collateral
Trustee shall also promptly forward to the Partnership
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and each Applicable Agent a copy of any such statement it receives from the
Depositary Bank.
13.15 Limitation on Collateral Trustee's Duties in Respect of
Collateral. Beyond its express duties set forth in this Agreement or in the
other Financing Documents as to the custody thereof and the accounting to the
Partnership and the Secured Parties for moneys received hereunder, the
Collateral Trustee shall not have any duty to the Borrower, the Partnership, the
General Partner, the Limited Partner or the Secured Parties with respect to any
Collateral in its possession or control or in the possession or control of its
agent or nominee, any income thereon, or the priority or preservation of rights
against prior parties or any other rights pertaining thereto. To the extent,
however, that the Collateral Trustee or an agent or nominee of the Collateral
Trustee maintains possession or control of any of the Collateral or the Security
Documents at any office of the Collateral Trustee, the Collateral Trustee shall,
or shall instruct such agent or nominee to, grant the Borrower, the Partnership,
the General Partner, the Limited Partner and the Secured Parties the access to
such Collateral or Security Documents which they require for the conduct of
their businesses, except, in the case of the Borrower, if and to the extent that
the Collateral Trustee shall have received an Enforcement Direction.
13.16 Right to Initiate Judicial Proceedings, Etc. If the Collateral
Trustee shall have received an Enforcement Direction and during such time as
such Enforcement Direction shall not have been withdrawn (a) the Collateral
Trustee shall have the right and power to institute and maintain such suits and
proceedings (subject to the instructions of Majority Lenders or Majority Secured
Parties, as the case may be) as it may deem appropriate to protect and enforce
the rights vested in it by this Agreement and the other Financing Documents and
(b) the Collateral Trustee may, either after entry or without entry, proceed
(subject to the instructions of Majority Lenders or Majority Secured Parties, as
the case may be) by suit or suits at law or in equity to enforce such rights and
to foreclose upon the Collateral assigned for the benefit and to the extent of
the interest therein of such Secured Parties and to realize upon all or, from
time to time, any of the property of the trust established hereunder for the
benefit of such Secured Parties under the judgment or decree of a court of
competent jurisdiction.
13.17 Exculpatory Provisions. The Collateral Trustee makes no
representations as to the value or condition of the trust created under this
Agreement or any part thereof, or as to the title of the Borrower, the
Partnership, the General Partner or the Limited Partner thereto or as to the
rights and interests granted or the security afforded by this Agreement or any
of the Security Documents or as to the validity, execution (except by itself),
enforceability, legality or sufficiency of this Agreement, any other Financing
Document or the Senior Debt secured hereby, and the Collateral Trustee (in its
individual and trust capacities) shall incur no liability or responsibility in
respect of any such matters.
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13.18 Merger of the Collateral Trustee. Any corporation into which
the Collateral Trustee in its individual capacity shall be merged, or with which
it shall be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Trustee (in its individual capacity) shall
be a party, shall be the Collateral Trustee under this Agreement, without the
execution or filing of any paper or any further act on the part of the parties
hereto, provided that such party shall meet the requirements of Section 13.09.
13.19 Treatment of Senior Lenders by Collateral Trustee. (a) The
Collateral Trustee may treat the Senior Lenders as the holders of the Notes
evidencing Senior Debt Obligations and as the absolute owners thereof for all
purposes under this Agreement and the other Financing Documents unless the
Collateral Trustee shall receive notice to the contrary from the Applicable
Agent.
(b) Any Person that shall be designated as the duly authorized
representative of one or more of the Senior Lenders to act as such in connection
with any matters pertaining to this Agreement, or any other Financing Document
or the Collateral shall present to the Collateral Trustee such documents,
including without limitation opinions of counsel, as the Collateral Trustee may
reasonably request, in order to demonstrate to the Collateral Trustee the
authority of such Person to act as the representative of such Senior Lenders.
The Collateral Trustee may rely upon such documents until it receives documents,
including without limitation opinions of counsel, as the Collateral Trustee may
reasonably request, specifically stating that they are superseding documents.
13.20 Miscellaneous. (a) The Collateral Trustee shall have the
right at any time to seek instructions concerning the administration of this
trust from any court of competent jurisdiction. In the event that any
disagreement between the other parties to this Agreement results in adverse
claims being made in connection with property held by the Collateral Trustee and
the terms of this Agreement do not unambiguously mandate the action the
Collateral Trustee is to take or not to take in connection therewith under the
circumstance then existing, or the Collateral Trustee is in doubt as to what
action it is required to take or not to take, the Collateral Trustee shall be
entitled to refrain from taking any action until directed otherwise in writing
by a request signed jointly by the parties hereto entitled to give such
direction or by order of a court of competent jurisdiction.
(b) None of the provisions of this Agreement or the other Financing
Documents shall be construed to require the Collateral Trustee in its individual
or trust capacity to expend or risk its own funds or otherwise to incur any
personal financial liability in the performance of any of its duties hereunder
or thereunder if it shall have reasonable grounds for belief that repayment of
such funds or indemnity against such risk or liability is not reasonably assured
to it. The Collateral Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or the other Financing
Documents, at the request or direction of the Borrower, the Partnership, the
General Partner or the Limited Partner or any Secured Party, unless the
Collateral Trustee shall have been offered security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities
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which might be incurred by it in compliance with such request or direction
(including interest thereon from the time incurred until reimbursed).
(c) The Collateral Trustee in its individual capacity (or any
parent, subsidiary or associated person) may accept deposits from, lend money
to, and generally engage in any business with, any of the Borrower, the
Partnership, the General Partner, the Limited Partner, any Shareholder, any
Clark Entity, any party to a Project Document, any Secured Party, or any of
their Affiliates, without affecting the validity of the trust created hereby or
the right to enforce any Senior Debt Obligations or Oil Payment Reimbursement
Obligations or other right to payment or security interest created hereunder or
pursuant hereto as freely as if it were not the Collateral Trustee hereunder.
The Collateral Trustee shall notify each Secured Party at any time it believes
it has any interest conflicting with its obligations hereunder. The Collateral
Trustee in its individual capacity (without prejudice to its rights under
Section 13.10 and the last sentence of Section 13.11) hereby waives any right of
banker's lien, set-off or counterclaim in respect of any assets contained in the
Accounts or otherwise that are held by the Collateral Trustee as trustee
hereunder.
(d) The Collateral Trustee in its individual capacity shall not be
personally liable for debts contracted or liabilities or damages incurred in the
management or operations of the trust hereunder, except for those contracted or
incurred as a result of its gross negligence or willful misconduct.
(e) Except to the extent this Agreement and any other Financing
Documents expressly contemplates that the Collateral Trustee is allowed to act
through agents or other third parties, the Collateral Trustee shall not
delegate, assign, or otherwise transfer any of its obligations, duties or
responsibilities hereunder to any Person other than any of its Affiliates
without the prior consent of the Partnership and Requisite Lenders (or, at any
time on or after a Priority Termination Date, Requisite Secured Parties),
provided, however, that no such consent shall be required in connection with the
enforcement of remedies hereunder on behalf of the Secured Parties.
ARTICLE XIV
MISCELLANEOUS
14.01 Termination. Subject to clause (b) of Section 14.17, upon
satisfaction of each of the following conditions precedent, this Agreement and
the security interests and rights created by or pursuant to this Agreement or
any Security Document shall terminate, and the Secured Parties and their
respective attorneys-in-fact shall, at the expense of the Partnership, execute
and deliver a termination statement and such instruments of satisfaction,
discharge and release of security in respect of all Collateral as may be
requested by the Partnership, the Collateral Trustee shall pay, assign, transfer
and deliver to or to the order of the Partnership all moneys and investments in
the Accounts and Subaccounts, and the Collateral Trustee shall deliver to the
Partnership, the General Partner and the Limited
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Partner the Shares of the Borrower, the certificates representing the General
Partnership Interest in the Partnership and the certificates representing the
Limited Partnership Interest in the Partnership, respectively, and any other
securities held by it:
(a) all Senior Debt Obligations and all Oil Payment Reimbursement
Obligations have been paid in full and all lending commitments have
terminated or expired; and
(b) the Partnership shall have delivered to the Collateral
Trustee a certificate stating that the conditions precedent to termination
pursuant to this Section 14.01 have been satisfied.
The obligations of Senior Lenders to make further disbursements of
Senior Loans under their respective Senior Loan Agreements shall terminate in
accordance with each such Senior Loan Agreement and, in any case, upon the
termination of this Agreement. The obligation of the Oil Payment Insurers to
provide coverage with respect to shipments of Maya crude oil in accordance with
the Oil Payment Insurance Policy shall terminate in accordance with the Oil
Payment Insurance Policy and the Reimbursement Agreement and, in any case, upon
the termination of this Agreement.
14.02 Calculation of Floating Rate Obligations. In calculating the
amount of the Senior Debt Obligations payable for purposes of determining the
Debt Service Coverage Ratio for any future period, and any other amounts to be
calculated under this Agreement where the following estimation would be
necessary, any interest payable on Senior Debt bearing interest at a floating
rate, unless such rate is known for the entire period, shall be included in such
calculation at a single fixed interest rate (the "Equivalent Fixed Rate") equal
to the fixed interest rate that could be obtained by the Partnership in exchange
for such floating interest rate in an interest rate swap transaction with a
notional amount equal to the principal amount of such Senior Debt and a term and
a notional amortization schedule equal to that of such Senior Debt, assuming the
Partnership entered into such swap transaction on any reference date no fewer
than 30 days prior to the date of calculation. In determining the Equivalent
Fixed Rate, the Partnership shall select no fewer than four published quotations
of recognized dealers in The City of New York of the highest credit standing,
and the applicable Equivalent Fixed Rate shall be equal to the highest
applicable fixed interest rate quoted by any such dealer.
14.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
14.04 Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding directly or indirectly arising out of or relating to
this Agreement or the transactions contemplated hereby.
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14.05 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
14.06 Entire Agreement. This Agreement (including Appendices) and
the other Financing Documents constitute the entire agreement and
understanding, and supersede all prior agreements and understandings (both
written and oral), between the Borrower, the Partnership, the General Partner
and the Limited Partner, on the one hand, and the Collateral Trustee, any
Applicable Agent and the Secured Parties, on the other hand. The Senior Lenders
shall have no benefit, any legal or equitable right or remedy under any
Transaction Documents except as expressly provided herein or therein.
14.07 Restrictions on Assignments and Participations. (a) The Senior
Lenders may assign any rights or any payments due or to become due under the
Senior Loan Agreements providing for their Senior Loans or grant any
participation in their Senior Loans and (b) the Oil Payment Insurers may assign
any rights or any payments due or to become due under the Reimbursement
Agreement or grant any participation in their Oil Payment Reimbursement
Obligations, in each of cases (a) and (b) without the prior consent of any of
the Borrower Parties, provided that written notice thereof shall be provided to
the Partnership promptly after such assignment.
14.08 Notices. (a) Any notice, claim, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder or under any Senior Loan Agreement will be deemed duly
given when given or made in writing and (i) personally delivered, (ii) sent by
facsimile transmission (with written confirmation or acknowledgment of receipt,
whether written or oral) or (iii) five days have elapsed after mailing by
certified or registered mail, postage pre-paid, return receipt requested, in
each case addressed to a party at its address or facsimile transmission number
as indicated in Appendix P or to such other address or facsimile transmission
number of which such party has given notice. Any notice to be given by or on
behalf of any of the Borrower, the Partnership, the General Partner and the
Limited Partner to any Senior Lender Group may be sent to the Applicable Agent
on behalf of the Bank Senior Lenders, Capital Markets Senior Lenders or Oil
Payment Insurers, as the case may be. Notice of any address or facsimile number
change shall be effective only upon receipt. Notices and all written documents
to be provided to the Collateral Trustee under this Agreement shall be deemed
received by the Collateral Trustee only if addressed in accordance with the
requirements of Appendix P hereto, including but not limited to the addressee
thereon.
(b) The Collateral Trustee shall promptly forward to the Applicable
Agent copies of any notice, claim, certificate, report instrument, demand,
request, direction, instruction, designation, waiver, receipt, consent or other
communication or document, including the reports received pursuant to Article
VIII, that it receives in connection with the Project Documents or the Financing
Documents unless the Collateral Trustee reasonably believes that such material
has already been provided by to such Person.
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14.09 Benefits of Agreement. Nothing in this Agreement, in any
Senior Loan Agreement or any other Financing Document, express or implied, shall
give to any Person, other than the parties hereto, the Secured Parties and their
respective successors and permitted assigns hereunder, under the Financing
Documents any benefit or any legal or equitable right or remedy under this
Agreement or any other Financing Documents.
14.10 Remedies. (a) No remedy herein conferred upon the Collateral
Trustee, any Applicable Agent or the Secured Parties is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or under or any other
Financing Document or now or hereafter existing at law or in equity or by
statute or otherwise.
(b) The amounts payable by the Borrower at any time under each
Senior Loan Agreement or the Reimbursement Agreement shall be a separate and
independent debt and each Senior Lender or the Oil Payment Insurer, as the case
may be, except as otherwise specifically provided in this Agreement or any other
Financing Document, shall be entitled to protect and enforce its rights arising
out of this Agreement or any other Financing Document and its right, (i) in the
case of a Senior Lender, to cancel or suspend its commitment to make Senior
Loans and to accelerate the maturity of amounts due under its Senior Loan
Agreement, and (ii) in the case of an Oil Payment Insurer, to suspend or
terminate the coverage provided by the Oil Payment Insurance Policy under such
Policy. Except as aforesaid, it shall not be necessary for any other Senior
Lender or Oil Payment Insurer to consent to, or be joined as an additional party
in, any proceedings for such purposes.
(c) No failure on the part of any Secured Party to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power,
or privilege under this Agreement or any other Financing Document, shall operate
as a waiver thereof nor shall any single or partial exercise of any right, power
or privilege under any such document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Neither the
Collateral Trustee nor any Applicable Agent nor any Secured Party shall be
responsible for the failure of any other Secured Party to perform its
obligations hereunder, under any Senior Loan Agreement or the Reimbursement
Agreement.
(d) In case any Secured Party, or the Collateral Trustee on
behalf of any Secured Party, shall have proceeded to enforce any right, remedy
or power under this Agreement or any other Financing Document and the proceeding
for the enforcement thereof shall have been discontinued or abandoned for any
reason or shall have been determined adversely to such Secured Party, then and
in every such case the Borrower, the Partnership, the General Partner and the
Limited Partner and the Secured Parties shall, subject to any effect of or
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder and under such other Financing
Document and thereafter all rights, remedies and powers of the Secured Parties
shall continue as though no such proceeding had been taken.
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14.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
14.12 Consent to Jurisdiction. (a) Subject to clause (c) of this
Section 14.12, each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement, any Senior Loan
Agreement, the Reimbursement Agreement, any Note or the Senior Debt Obligations
or the Oil Payment Reimbursement Obligations may be brought in any Federal or
State court located in the Borough of Manhattan, The City of New York, and
hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such court, to the exclusion of all other courts, with respect to any such
action, suit or proceeding. Each party hereto hereby waives to the fullest
extent permitted by applicable laws any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum.
(b) Each of the Borrower Parties hereby irrevocably appoints CT
Corporation System, with offices at the date hereof at 1633 Broadway, New York,
New York 10019, as its authorized agent on which any and all legal process may
be served in any such action, suit or proceeding brought in any Federal or State
court located in the Borough of Manhattan, The City of New York. Each of the
Borrower Parties agrees that service of process in respect of it upon its
respective agent, together with written notice of such service given to it in
the manner provided in Section 14.08, shall be deemed to be effective service of
process upon it in any such action, suit or proceeding. Each of the Borrower
Parties agrees that the failure of its respective agent to give notice to it of
any such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. If for any
reason any Borrower Party's respective agent shall cease to be available to act
as such, or if any party hereto that was located in New York ceases to be so
located, such party agrees to designate a new agent in the Borough of Manhattan,
The City of New York, on the terms and for the purposes of this clause (b).
(c) Notwithstanding the provision of clause (a) of this
Section 14.12, nothing herein shall be deemed to limit the ability of any of the
Secured Parties, the Collateral Trustee or any Applicable Agent to serve any
such legal process in any other manner permitted by applicable law or to obtain
jurisdiction over any of the Borrower, the Partnership, the General Partner or
the Limited Partner or bring actions, suits or proceedings against any such
party in such other jurisdiction, including without limitation in any Federal or
State court located in the State of Texas, and in such manner, as may be
permitted by applicable law.
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(d) Each party hereto agrees that a final judgment against it in
any action, suit or proceeding taken in any Federal or State Court in the
Borough of Manhattan, The City of New York in accordance with clause (a) of this
Section 14.12 or, in the case of any of the Borrower, the Partnership, the
General Partner or the Limited Partner, in any other court in accordance with
clause (c) of this Section 14.12, shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment, a certified copy of which judgment shall
be conclusive evidence thereof, or by any other means provided by law.
14.13 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, no provision of this Agreement may be amended, modified,
supplemented or waived except by an agreement in writing signed by (a) the
Borrower and the General Partner on behalf of the Partnership and (b) one or
more of the Applicable Agents, as appropriate, on behalf of and pursuant to the
prior written instructions of Requisite Lenders (or, at any time on or after a
Priority Termination Date, Requisite Secured Parties), provided that: (A) no
amendment, modification, supplement or waiver shall, unless by an instrument
signed by each Senior Lender, the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Oil Payment Insurers Administrative Agent and the
Capital Markets Trustee modify in any manner (1) the rights and obligations of
the Borrower or the Partnership to prepay Senior Loans; (2) the rights and
obligations of the Borrower or the Partnership to make Pro Rata Payments; (3)
the conditions precedent set forth in Article IX; (4) the obligations of any
Senior Lender (unless such modification does not create any additional
obligation of such Senior Lender); (5) the amount or term of any Senior Debt
Commitment; (6) Sections 10.02 and 10.04; or (7) the definitions of
"Supermajority Lenders", "Requisite Lenders", "Majority Lenders" or any of the
defined terms used in such definitions, or the number or percentage of Senior
Lenders required to make any determinations or waive any rights under this
Agreement or to modify any provision hereof; (B) no amendment, modification,
supplement or waiver shall, unless by an instrument signed by each Senior
Lender, the Collateral Trustee and each Applicable Agent, modify in any manner
(1) the obligations of the Borrower and the Partnership described in clause (r)
of Section 4.01 or (2) the definitions of "Supermajority Secured Parties",
"Requisite Secured Parties", "Majority Secured Parties" or any of the defined
terms used in such definitions, or the number or percentage of Secured Parties
required to make any determinations or waive any rights under this Agreement or
to modify any provision hereof; (C) any amendment, modification, supplement or
waiver in respect of Article XIII or that affects the rights and obligations of
the Collateral Trustee shall require the consent of the Collateral Trustee; and
(D) any amendment, modification, supplement or waiver that affects the rights
and obligations of any Applicable Agent shall require the consent of such
Applicable Agent. Notwithstanding the preceding sentence, the Borrower, the
Partnership, the Collateral Trustee, each Applicable Agent and Supermajority
Bank Lenders may, without the consent of any other Senior Lender, at any time
and from time to time, enter into one or more amendments hereto, in the form
satisfactory to each, to cure any ambiguity, to correct or supplement any
provision in this Agreement that may be misleading, defective or inconsistent
with any other provision herein or to make any other provisions with respect to
matters or questions arising under this Agreement, in each cases, so long as
such action shall not adversely affect the interest of the other Senior Lenders.
This Section
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14.13 shall not apply to any automatic amendment to Appendix B upon
satisfaction of the conditions for such automatic amendment set forth herein.
14.14 Conflicts. In case of any conflict or inconsistency between
this Agreement and any Financing Document, this Agreement shall control.
14.15 Effectiveness. This Agreement shall come into full force and
effect upon its execution and delivery by each of the parties named on the
signature pages hereof.
14.16 Compliance with Applicable Law. Notwithstanding any provision
of this Agreement, but without in any way limiting the rights of the Collateral
Trustee or the Secured Parties under Article X in connection with any Event of
Default resulting from the taking or refraining from taking of any action
pursuant to any law, statute, regulation, rule, order, injunction, decree, writ
or judgment binding on it or affecting its properties, none of the Borrower, the
Partnership, the General Partner or the Limited Partner shall be obligated to
take or refrain from taking any action otherwise required under this Agreement
if at the time such party is to take or refrain from taking such action, such
action is contrary to any law, statute, regulation, rule, order, injunction,
decree, writ or judgment binding on it or affecting its properties.
14.17 Indemnification. (a) The Borrower, the Partnership, the
General Partner and the Limited Partner, jointly and severally, assume full
liability for, and agree to and shall indemnify and hold harmless the Collateral
Trustee, each Applicable Agent, each Secured Party and their respective
affiliates, officers, directors, employees, agents and servants (each, an
"Indemnified Person") against and from any and all liabilities, obligations,
losses, damages (compensatory, punitive or otherwise), penalties, claims,
actions, duties, suits, costs and expenses (including reasonable fees of legal
counsel and expenses and costs of investigation) of whatsoever kind and nature,
including, without prejudice to the generality of the foregoing, those arising
in contract or tort (including negligence) or by strict liability or otherwise,
which are imposed on, incurred by or asserted against any Indemnified Person
(whether or not also indemnified by any other Person under any other document)
and which in any way relate to or arise out of, whether directly or indirectly:
(i) the Senior Loan Agreements, the Senior Debt Obligations, the
Reimbursement Agreement, the Oil Payment Reimbursement Obligations or any
actual or proposed use of the proceeds of the Senior Loans;
(ii) any Environmental Law applicable to the past, present or future
operations of the Partnership or any predecessor in interest to the
Partnership or the environmental contamination of any site or facility
owned, operated or leased at any time by the Partnership (or any such
predecessor in interest) in connection with the Coker Project, any
contamination or any Release or threatened Release of any Hazardous
Substance by the Partnership (or any predecessor in interest or third
party) at, onto or from any such site or facility; or
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(iii) the exercise by the Collateral Trustee, each Applicable Agent
and each Secured Party of any of their respective rights and remedies
under any of the Financing Documents;
provided that no Indemnified Person shall have any right to be indemnified
hereunder for its own willful misconduct or gross negligence.
(b) The indemnities provided by the Borrower, the Partnership, the
General Partner and the Limited Partner pursuant to this Agreement shall survive
the expiration, cancellation, termination or modification of this Agreement and
the other Financing Documents and the provision of any subsequent or additional
indemnity by any Person.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed.
PORT ARTHUR FINANCE CORP.
By: /s/ Maura J. Clark
-------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: /s/ Maura J. Clark
-------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
-------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
-------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
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BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By: /s/ James C. McDonough
-----------------------
Name: James C. McDonough
Title: Vice President
By: /s/ William T. Jenkins
-----------------------
Name: William T. Jenkins
Title: Assistant Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of
the Bank Senior Lenders
By: /s/ Cynthia Jo Powell
----------------------
Name: Cynthia Jo Powell
Title: Associate
By: /s/ Lydia Zaininger
--------------------
Name: Lydia Zaininger
Title: Vice President
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED,
for itself and as Administrative Agent for
and on behalf of the Oil Payment Insurers
By: /s/ Eileen McCusker
--------------------
Name: Eileen McCusker
Title: Property Underwriting Manager
By: /s/ Malcolm Newman
-------------------
Name: Malcolm Newman
Title: Chief Financial Officer
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HSBC BANK USA,
as Capital Markets Trustee for the Capital
Markets Senior Lenders
By: /s/ James M. Foley
-------------------
Name: James M. Foley
Title: Assistant Vice President
BANKERS TRUST COMPANY,
as Depositary Bank
By: /s/ James C. McDonough
-----------------------
Name: James C. McDonough
Title: Vice President
By: /s/ William T. Jenkins
-----------------------
Name: William T. Jenkins
Title: Assistant Vice President
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED, as Insurer under the Debt
Service Reserve Insurance Guarantee
By: /s/ Eileen McCusker
--------------------
Name: Eileen McCusker
Title: Property Underwriting Manager
By: /s/ Malcolm Newman
-------------------
Name: Malcolm Newman
Title: Chief Financial Officer
117
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Appendix A
to Common Security Agreement
DEFINITIONS
In this Appendix A, the Common Security Agreement and the other
Appendices hereto and in any other document that refers to this Appendix A, the
following terms shall have the meanings assigned below (the singular includes
the plural and vice versa) (unless otherwise specified, section references in
this Appendix A are to sections of the Common Security Agreement):
"Abandonment" shall occur if (a)(i) the Partnership publicly announces
the permanent shutdown of all or substantially all engineering, development,
construction or production activities of the Coker Project or (ii) Clark R&M
publicly announces the permanent shutdown of all or substantially all production
activities of the Refinery or (b)(x) the Partnership ceases all or substantially
all engineering, development, construction or production activities of the Coker
Project or (y) Clark R&M ceases all or substantially all production activities
of the Refinery and, with regard to (b)(x) and (y), such cessation continues
without interruption for 90 days and either the Collateral Trustee or any Senior
Lender requests the Partnership or Clark R&M, as the case may be, to confirm in
writing that they have not, or do not currently intend to, shut down permanently
all or substantially all engineering, development, construction or production
activities of the Coker Project or the Refinery, as the case may be, and the
Partnership or Clark R&M, as the case may be, fails to provide such confirmation
within 30 days following such request or, in any event, fails to resume such
engineering, development, construction or production activities, as the case may
be, within 60 days following such request. For purposes of this definition, the
Partnership and Clark R&M shall not be deemed to have ceased engineering,
development or construction or production activities of the Coker Project or the
Refinery, as the case may be, if such cessation is caused by an Event of Force
Majeure unless and until such Event of Force Majeure lasts more than 180 days.
"Accounts" has the meaning set forth in Section 5.01.
"Additional Senior Debt" has the meaning set forth in clause (a) of
Section 2.09.
"Affiliate" means, with respect to any Person, any other Person that
directly controls, is controlled by, or is under common control with such other
Person. For purposes of this definition, "control" when used with respect to
any Person means (a) the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, or (b) the direct or indirect beneficial
ownership of 25% equity interest in such Person.
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"Ancillary Equipment" has the meaning set forth in the Ancillary
Equipment Site Lease.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site
Lease and Easement Agreement, dated August 19, between the Partnership and Clark
R&M, as the same may be amended from time to time in accordance with its terms
and the restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement.
"Annual Budget and Operating Plan" has the meaning set forth in
Section 6 of the Services and Supply Agreement as in effect on the date hereof.
"Applicable Agent" means, (a) in the case of the Capital Markets
Senior Lender Group, the Capital Markets Trustee, (b) in the case of the Initial
Bank Senior Lender Group, the Bank Senior Lenders Administrative Agent, (c) in
the case of any other Senior Lender Group, the Person notified to the Collateral
Trustee as the Applicable Agent for such Senior Lender Group, and (d) in the
case of the Oil Payment Insurers, the Oil Payment Insurers Administrative Agent.
"Authorized Investments" means (a) investments maturing within one
year after the acquisition thereof in (i) obligations of, or guaranteed as to
principal and interest by, the United States Government or any agency thereof
the obligations of which are backed by the full faith and credit of the United
States, (ii) certificates of deposit of, and time and demand deposits (including
Eurodollar deposits) with, banks or trust companies with a rating of at least A-
1 from Moody's and A from S&P and at least $500 million of shareholders' equity
or (iii) commercial paper by an issuer rated at least P-1 from Moody's and A-1
from S&P as to principal and interest and which has at least $500 million of
shareholders' equity; or (b) investments in any money market fund having a
rating in the highest investment category granted by Moody's or S&P at the time
of acquisition (including without limitation any such fund for which the
Depositary Bank or any Affiliate thereof serves as investment manager,
administrator or custodian).
"Bank Loan Drawdown and Equity Funding Account" has the meaning set
forth in Section 5.01.
"Bank Senior Debt" means Senior Debt held by Bank Senior Lenders.
"Bank Senior Debt Commitments" means the commitments to provide Bank
Senior Debt.
"Bank Senior Lender Group" means any Senior Lender Group which is a
party to the same Bank Senior Loan Agreement.
"Bank Senior Lenders" means the Initial Bank Senior Lenders and any
other commercial financial institutions (other than a Shareholder or any
Affiliate of a Shareholder)
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that have provided Additional Senior Debt or Replacement Senior Debt or have
entered into commitments to provide Additional Senior Debt or Replacement Senior
Debt.
"Bank Senior Lenders Administrative Agent" means Deutsche Bank AG, New
York Branch, in its capacity as Administrative Agent under the Bank Senior Loan
Agreement.
"Bank Senior Loan Agreements" means (a) the Bank Senior Loan
Agreement, dated as of the date hereof, by and among the Borrower, the
Guarantors, the Bank Senior Lenders party thereto and the Bank Senior Lenders
Administrative Agent, (b) the Secured Working Capital Facility and (c) any other
loan agreements relating to Bank Senior Debt.
"Bank Senior Term Debt" means Bank Senior Debt other than that
outstanding under the Secured Working Capital Facility.
"Base Case Model" means the Base Case Model attached as Appendix C.
"Blackstone" means, collectively, Blackstone Capital Partners III
Merchant Banking Fund L.P., a limited partnership organized under the laws of
the State of Delaware, Blackstone Offshore Capital Partners III L.P., a limited
partnership organized under the laws of the Cayman Islands, and Blackstone
Family Investment Partnership III L.P., a limited partnership organized under
the laws of the State of Delaware.
"Bondholders" means holders of the Notes.
"Bond Proceeds Account" has the meaning set forth in Section 5.01.
"Borrower" means Port Arthur Finance Corp., a Delaware corporation.
"Borrower Financial Statements" means, for any quarter or year, the
balance sheet of the Borrower as of the close of such quarter or year, as the
case may be, and statements of income and expense and cash flow and changes in
financial position from the beginning to the close of such quarter or year, as
the case may be, setting forth in comparative form the corresponding figures for
the corresponding periods in the preceding year or for the preceding year, as
the case may be.
"Borrower Parties" means the Borrower, the Partnership and the
Partners.
"Business Day" means a day on which commercial banks are generally
open for business in the Borough of Manhattan, The City of New York.
"Buydown Payment" has the meaning set forth in Section 6 of the EPC
Contract.
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"Bylaws" means the Bylaws of each of the General Partner, the Limited
Partner and the Borrower, dated July 30, 1999, July 30, 1999 and August 3, 1999,
respectively, all as may be amended from time to time in accordance with their
terms and the restrictions on amendments set forth in this Agreement.
"Capital Commitments" means the commitments of the Shareholders
pursuant to the Capital Contribution Agreements to contribute not less than $135
million in the form of equity or Subordinated Debt, directly or indirectly, to
the Partnership.
"Capital Contribution" means any contribution made to capital of the
Partnership or any Subordinated Debt provided to the Partnership by or on behalf
of a Partner pursuant to the Capital Contribution Agreements or the Partnership
Agreement.
"Capital Contribution Agreements" means the separate Capital
Contribution Agreements, each dated as of the Closing Date, entered into by the
Borrower, the Partnership and the General Partner with Blackstone and Occidental
Petroleum, respectively.
"Capital Markets Senior Debt" means Senior Debt provided under the
Indenture.
"Capital Markets Senior Lender Group" means the Senior Lender Group
which is party to the Indenture.
"Capital Markets Senior Lenders" means the beneficial holders of
Capital Markets Senior Debt.
"Capital Markets Trustee" means HSBC Bank USA in its capacity as
trustee under the Indenture.
"Cash Proceeds" means, with respect to any period, all funds received
or projected to be received by the Partnership during such period including
without limitation (a) cash flow generated by the Project in the ordinary course
of business; (b) earnings on funds held in the Accounts and any other accounts
of the Partnership; and (c) insurance proceeds for business interruption.
"Casualty and Insurance Account" has the meaning set forth in Section
5.01.
"Catastrophic Casualty" means any actual or constructive casualty loss
or series of related losses in respect of Project Property in excess of $50
million.
"Catastrophic Casualty Account" has the meaning set forth in Section
5.01.
"Certificate of Incorporation" means (a) with respect to the General
Partner, the Amended and Restated Certificate of Incorporation, dated September
2, 1999 and
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amended on September 13, 1999, (b) with respect to the Limited Partner, the
Amended and Restated Certificate of Incorporation, dated September 2, 1999 and
amended on September 13, 1999 and (c) with respect to the Borrower, the
Certificate of Incorporation, dated August 2, 1999, all as may be amended from
time to time in accordance with their terms and the restrictions on amendments
set forth in this Agreement and the Transfer Restrictions Agreement.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership, dated May 4, 1999, as the same may be amended
from time to time in accordance with their terms and the restrictions on
amendments set forth in this Agreement and the Transfer Restrictions Agreement.
"Cessation Notice" has the meaning set forth in Section 10.03 of this
Agreement.
"Change Order" has the meaning set forth in Section 12.4 of the EPC
Contract.
"Charter" means the Certificate of Incorporation of each of the
General Partner, the Limited Partner and the Borrower, all as may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"Clark Entities" means Clark Holdings, Clark USA and Clark R&M.
"Clark EPC Contract" means the Engineering, Procurement and
Construction Agreement, dated March 24, 1998, between Clark R&M and the EPC
Contractor, as amended by Amendment No. One thereto, dated as of August 19,
1999, as the same may be further amended or supplemented from time to time in
accordance with its terms and the restrictions on amendments set forth in this
Agreement and the Transfer Restrictions Agreement.
"Clark Holdings" means Clark Refining Holdings Inc.
"Clark Processing Fee" means the fee payable by Clark R&M to the
Partnership for processing services rendered by the Partnership pursuant to the
Services and Supply Agreement.
"Clark R&M" means Clark Refining & Marketing, Inc.
"Clark USA" means Clark USA, Inc.
"Closing" means the satisfaction or waiver of all conditions precedent
to the making of Senior Loans.
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"Closing Date" means the date on which the Closing occurs.
"Coker Complex" has the meaning set forth in the Services and Supply
Agreement.
"Coker Project" means the construction, ownership, development,
operation and maintenance of the Heavy Oil Processing Facility.
"Collateral" means all property, rights and other interests of the
Borrower, the Partnership, the General Partner and the Limited Partner in which
security interests, trusts or mortgages are created for the benefit of the
Secured Parties under or pursuant to the Security Documents.
"Collateral Trustee" means Bankers Trust Company, in its capacity as
Collateral Trustee under this Agreement.
"Commission" means the Securities and Exchange Commission or any
successor entity.
"Compensating Collateral" has the meaning set forth in the Long-Term
Oil Supply Agreement.
"Condemnation Compensation" means all value (whether in the form of
money, property or otherwise) paid or payable to the Partnership by any
Governmental Authority as compensation for or in respect of any act or series of
acts of condemnation of Project Property.
"Construction Report" has the meaning set forth in Section 2.14 of the
EPC Contract.
"Constructive Total Loss" means any single casualty loss or a series
of related casualty losses to any Project Property for which the costs of
replacing such damaged Project Property or repairing it to at least the same
operating standards that existed immediately prior to such loss or series of
losses would exceed, or the Independent Engineer estimates it would exceed, $250
million.
"Contingency Reserve Account" has the meaning set forth in Section
5.01 of this Agreement.
"Contingency Reserve Amount" means, at the Final Completion Date, the
unused amount remaining from the amount budgeted for contingencies during the
construction of the Coker Project as set forth in the Base Case Model.
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"Continuing" means, with respect to a Default, that such Default has
been declared as provided in Section 10.02 and that neither the Borrower nor the
Partnership has received a Cessation Notice with respect thereto pursuant to
Section 10.03.
"Credit Interest" has the meaning set forth in the Long-Term Oil
Supply Agreement.
"Credit Rating Agency" means each of Moody's and S&P and their
respective successors.
"Debt Service Coverage Ratio" means for any period, the ratio of (a)
the aggregate of Cash Proceeds minus Project Expenses for such period to (b)
Senior Debt Obligations (other than pursuant to Optional Prepayments or
Mandatory Prepayments), paid or expected to be paid during such period, as the
case may be.
"Debt Service Reserve Account" has the meaning set forth in Section
5.01.
"Debt Service Reserve Accrual Amount" means, with respect to each of
the Payment Dates specified in clause (a)(ix) of Section 5.05, one-fifth of the
aggregate principal amount then available under the Debt Service Reserve
Guarantee Arrangement.
"Debt Service Reserve Amount" means, on any date, the sum of (a) the
aggregate amount of principal payments scheduled to be due on the immediately
succeeding Payment Date when a principal payment is scheduled to be made and (b)
the aggregate amount of Senior Debt Obligations (other than principal payments)
scheduled to be due on or prior to the immediately succeeding Payment Date.
"Debt Service Reserve Guarantee Arrangement" means the Debt Service
Reserve Account Insurance Guarantee, dated as of the date hereof, pursuant to
which Winterthur International Insurance Company Limited has undertaken to
guarantee an aggregate principal amount of up to $60 million (subject to
reduction in accordance with clause (b)(i) of Section 5.09) for payments of
Senior Debt Obligations in accordance with clause (b)(ii) of Section 5.09.
"Debt Service Reserve Shortfall" means, on any date, the excess, if
any, of (a) the Debt Service Reserve Amount over (b) the balance in the Debt
Service Reserve Account on such date, as determined in clause (a)(ii) of Section
5.09.
"Default" has the meaning set forth in Section 10.02.
"Depositary Bank" means the corporate trust office of Bankers Trust
Company appointed by the Collateral Trustee to maintain the Accounts.
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"Discretionary Capital Expenditures" means capital expenditures
(including any financing costs and related fees and expenses) other than
Mandatory Capital Expenditures in respect of the Coker Project that the
Partnership may make at its discretion in accordance with the terms of this
Agreement.
"Distribution Account" has the meaning set forth in Section 5.01 of
this Agreement.
"Downtime" means the temporary cessation of all or any substantial
part of the operation of the Heavy Oil Processing Facility or the Refinery.
"DSRIG Provider" means Winterthur International Insurance Company
Limited, as Insurer under the Debt Service Reserve Guarantee Arrangement.
"Enforcement Action" means, after the issuance of an Enforcement
Direction, any or all of the following: (a) the application of funds in the
Accounts or Subaccounts to the payment of Senior Debt Obligations and the Oil
Payment Reimbursement Obligations; (b) the declaration of the principal of the
Senior Debt immediately due and payable; (c) the exercising of any power of sale
or other rights granted by this Agreement or any of the Security Documents; (d)
the sale of the Collateral either as an entirety or, if permitted by applicable
law, in parcels to the highest bidder at a public auction at such place and at
such time and upon such terms as the Senior Lender(s) or Oil Payment Insurer(s)
issuing the relevant Enforcement Direction may specify or may be required by
applicable law; (e) the proceeding to protect and enforce the rights of the
Secured Parties under this Agreement, the Security Documents or any other
Financing Document by sale pursuant to judicial proceedings or by a proceeding
in equity or at law or otherwise, whether for the enforcement of the security
interests created under or pursuant to this Agreement or any other Security
Document or for the enforcement of any other legal, equitable or other remedy;
(f) the exercising in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to the Secured Parties, to
the extent permitted by applicable law, of all the rights and remedies of a
secured party upon default under the NY UCC or the Texas UCC; (g) the charge,
set-off or other application of all or any part of the Senior Debt Obligations
against the Accounts or Subaccounts or any part thereof; and (h) the taking of
any other legal, equitable or other remedy or action permitted by this
Agreement or applicable law.
"Enforcement Direction" has the meaning set forth in Section 10.04.
"Enforcement Proceeds Account" has the meaning set forth in Section
10.11.
"Environmental Law" means any law, regulation, judgment, consent
decree, agreement, agency requirement or common law duty relating to the
protection of the environment or human health and safety.
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"EPC Contract" means the Engineering, Procurement and Construction
Contract, dated July 12, 1999, between the Partnership and the EPC Contractor,
as the same may be amended from time to time in accordance with its terms and
the restrictions on amendments set forth in this Agreement.
"EPC Contract Guarantee" means the EPC Contract Guarantee, dated July
13, 1999, between the Partnership and the EPC Guarantor, as the same may be
amended from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"EPC Contractor" means Foster Wheeler USA Corporation.
"EPC Guarantor" means Foster Wheeler Corporation.
"Equity Funding" means direct or indirect cash contributions to the
Partnership from the Shareholders (in the form of contributions of equity
capital or Subordinated Debt, as the Shareholders shall in their sole discretion
decide).
"Equivalent Fixed Rate" has the meaning set forth in Section 14.02.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Estimated Payment Certificate" has the meaning set forth in Section
5.15.
"Estimated Project Expense" has the meaning set forth in Section 5.15.
"Eurodollar Business Day" shall mean any day on which banks are
generally open for business in London, England.
"Event of Default" has the meaning set forth in Section 10.01.
"Event of Force Majeure" means, with respect to any Project Document,
any event or circumstance defined in such Project Document as an event of force
majeure.
"Excess Cash Flow" has the meaning set forth in clause (b) of Section
5.05 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Final Completion" has the meaning set forth in the EPC Contract as in
effect on the date hereof.
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"Final Maturity" means (a) with respect to the Tranche A Bank
Facility, January 15, 2007, (b) with respect to the Tranche B Bank Facility,
July 15, 2007, and (c) with respect to the Capital Markets Senior Debt, January
15, 2009.
"Financing Documents" means this Agreement, the Senior Loan
Agreements, the Notes, the Transfer Restrictions Agreement, the Security
Documents, the Intercreditor Agreement, the Oil Payment Insurance Policy, the
Reimbursement Agreement, the Debt Service Reserve Guarantee Arrangement, the
Capital Contribution Agreements and any ancillary documents, including fee
letters and all certificates, delivered under or in connection therewith.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"General Partner" means Sabine River Holding Corp., a Delaware
Corporation.
"General Partnership Interest" means the interest in the Partnership
owned by the General Partner.
"Governmental Authority" means any government, any governmental
administration, agency, instrumentality or other instrumentality or other
political subdivision thereof or any court, commission or other governmental
authority of competent jurisdiction.
"GP Certificates" has the meaning set forth in subclause (ii) of
clause (a) of Section 6.02.
"Ground Lease and Blanket Easement" means the Coker Complex Ground
Lease and Blanket Easement Agreement, dated August 19, 1999, between the
Partnership and Clark R&M, as amended from time to time in accordance with its
terms and the restrictions on amendments set forth in this Agreement and the
Transfer Restrictions Agreement.
"Guarantee" means the obligations of the Partnership set forth in
Article XII of this Agreement.
"Guaranteed Final Completion Date" has the meaning set forth in the
EPC Contract as in effect on the date thereof.
"Guaranteed Mechanical Completion Date" has the meaning set forth in
the EPC Contract as in effect on the date thereof.
"Guaranteed Performance Dates" has the meaning set forth in the EPC
Contract as in effect on the date thereof.
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"Guaranteed Values" has the meaning set forth in the EPC Contract as
in effect on the date thereof.
"Guarantor" means the Partnership.
"Hazardous Substance" means any substance in any concentration that is
now or hereafter listed, classified or regulated pursuant to any Environmental
Law including any petroleum products or by-products, asbestos-containing
material, polychlorinated biphenyls, refinery wastes, lead and radioactive
materials.
"Heavy Oil Processing Facility" has the meaning set forth in the
Services and Supply Agreement as in effect on the date hereof.
"Historical Twelve-Month Period " means, in relation to any date, the
period commencing on the day falling 364 days prior to either (a) the month-end
immediately preceding such date or (b) such date, if such date is a month-end,
and ending on such month-end.
"Hydrogen Supplier" means Air Products and Chemicals, Inc.
"Hydrogen Plant" has the meaning set forth in the Hydrogen Supply
Agreement.
"Hydrogen Supply Agreements" means (a) the Hydrogen Supply Agreement,
dated August 1, 1999, between the Hydrogen Supplier and the Partnership, as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement and (b) the Product Supply Agreement, dated August 1,
1999, between the Hydrogen Supplier and Clark R&M, as the same may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement and the Transfer Restrictions Agreement.
"Hydrogen Supply Agreement Guarantee" has the meaning set forth in the
Hydrogen Supply Agreements.
"Indebtedness" means, whether recourse is to all or a portion of the
assets of such Person and whether or not contingent, (a) every obligation of
such Person for money borrowed, (b) every obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) every reimbursement
obligation of such Person, contingent or otherwise, with respect to letters of
credit, bankers' acceptances or similar facilities, whether issued for the
account of such Person or otherwise, (d) every obligation of such Person
incurred or assumed as the deferred purchase price of property or services
(excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business), (e) every capital lease obligation of such Person and (f)
every obligation of the type referred to in
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clauses (a) through (e), inclusive, of another Person and all dividends of
another Person, the payment of which, in either case, such Person has guaranteed
or is responsible or liable for, directly or indirectly, as obligor, guarantor
or otherwise.
"Indemnified Person" has the meaning set forth in clause (a) of
Section 14.17.
"Indenture" means the trust indenture, dated as of the date hereof,
among the Borrower, the Guarantors and the Capital Markets Trustee pursuant to
which the Capital Markets Senior Debt will be issued, as amended from time to
time.
"Independent Consultant" means each of the Independent Engineer, the
Marketing Consultant, the Insurance Consultant and any other Person appointed
pursuant to clause (cc) of Section 4.01.
"Independent Engineer" means the consulting engineering firm appointed
pursuant to clause (cc) of Section 4.01.
"Independent Engineer's Reports" means the reports set forth in
Appendix N to this Agreement.
"Information Memorandum" means the final confidential Information
Memorandum, dated July, 1999, delivered by the Partnership to the Bank Senior
Lenders.
"Initial Bank Senior Debt" means the indebtedness of the Borrower to
the Initial Bank Senior Lenders under the Initial Bank Senior Loan Agreements.
"Initial Bank Senior Lenders" means the Senior Lenders that are party
to the Initial Bank Senior Loan Agreements.
"Initial Bank Senior Loan Agreements" means the Bank Senior Loan
Agreements, dated as of the date hereof, listed under the heading "Initial Bank
Senior Debt" in Appendix B, as the same may be amended or otherwise modified
from time to time. The Indenture shall not be considered an Initial Bank Senior
Loan Agreement for any purpose under this Agreement.
"Initial Capital Contributions" means the Capital Contributions of not
less than $20 million required to be made by the Shareholders under the Capital
Contribution Agreements on the Closing Date.
"Initial Construction Budget" means the Construction Budget most
recently prepared and delivered to the Collateral Trustee on behalf of the
Secured Parties on or prior to the date hereof and set forth as Appendix K.
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"Initial Senior Debt" means the Senior Debt provided under the Initial
Senior Loan Agreements.
"Initial Senior Debt Commitments" means the commitments to provide the
Initial Senior Debt.
"Initial Senior Lenders" means the Senior Lenders that are party to
the Initial Senior Loan Agreements.
"Initial Senior Loan Agreements" means the Initial Bank Senior Loan
Agreement, the Secured Working Capital Facility and the Indenture.
"Insolvency Event", with respect to any Person, means (a) entry by any
competent Governmental Authority of any jurisdiction or a court having
jurisdiction in the premises of (i) a decree or order for relief in respect of
such Person in an involuntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization, dissolution, winding-up or other similar
law or (ii) an involuntary or contested decree or order adjudging such Person a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, dissolution, winding-up or composition
of or in respect of such Person under any applicable law, or appointing a
custodian, receiver, liquidator, assignee, Collateral Trustee, sequestrator or
other similar official of such Person or of any substantial part of the property
of such Person, or ordering the winding up or liquidation of the affairs of such
Person and the continuance of any such decree or order unstayed and in effect
for a period of 30 consecutive days or (b) commencement of a voluntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization,
dissolution, winding-up or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by such Person to the
entry of a decree or order for relief in respect of such Person in an
involuntary case or proceeding under any applicable bankruptcy, insolvency,
reorganization, dissolution, winding-up or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against such
Person, or the filing by such Person of a petition or answer or consent seeking
reorganization or relief under any applicable law; or consent by such Person to
the filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, Collateral Trustee, sequestrator or
other similar official of such Person or of any substantial part of the property
of such Person, or the making by such Person of an assignment for the benefit of
creditors, or the admission by such Person in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by
such Person in furtherance of any such action.
"Insurance Consultant" means the insurance consulting firm appointed
pursuant to clause (cc) of Section 4.01.
"Insurance Consultant's Report" means the report set forth in Appendix
M to this Agreement.
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"Insurance Policies" means the insurance policies providing for
Required Insurance.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as
of the date hereof, among the Senior Lenders, the Oil Payment Insurers, the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the Oil
Payment Insurers Administrative Agent and the Capital Markets Trustee.
"Investment Grade Rating" means a rating of at least "investment
grade" from each of S&P and Moody's.
"Late Payments" has the meaning set forth in the EPC Contract.
"LIBOR" has the meaning set forth in the Bank Senior Loan Agreement.
"Lien" means, with respect to any property or assets, any Sale and
Leaseback Transaction and any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such property or assets, or any
preferential arrangement of any kind or nature whatsoever having the practical
effect of constituting a security interest on or with respect to such property
or assets. For the purposes of this definition, a Person shall be deemed to own
subject to a Lien any property or assets that it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sales or other title
retention agreement.
"Limited Partner" means Neches River Holding Corp., a Delaware
corporation, and its successors.
"Limited Partnership Interest" means the interest in the Partnership
owned by the Limited Partner, and its successors.
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sales
Agreement, dated March 10, 1998, between Clark R&M and PMI, and assigned to the
Partnership as of the date hereof, as amended and supplemented by the First
Amendment and Supplement thereto, dated August 19, 1999, as the same may be
further amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement.
"Long-Term Oil Supply Agreement Guarantee" means the Long-Term Oil
Supply Agreement Guarantee, dated March 10, 1998, between Clark R&M and Pemex,
and assigned to the Partnership on the date hereof, as the same may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
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"Loss Proceeds" means all proceeds from insurance or other recovery,
excluding any portion of such proceeds relating to the interruption of business,
loss of profits or similar matters or any sum paid in settlement of a liability
to a third party or any reimbursement to any insured party in respect of any
such payment.
"LP Certificates" has the meaning set forth in subclause (ii) of
clause (a) of Section 6.03.
"Lucas Terminal Property" means all pipelines, oil handling facilities
and terminaling facilities (including in each case any and all easements
relating thereto) referred to in Section 2.2(c) of the Ground Lease and Blanket
Easement.
"Major Maintenance" means a major maintenance of the Heavy Oil
Processing Facility scheduled in the most recent Major Maintenance Plan, as
amended from time to time in accordance with clause (b) of Section 8.01 of this
Agreement.
"Major Maintenance Account" has the meaning set forth in Section 5.01
of this Agreement.
"Major Maintenance Plan" means the plan prepared by the Partnership in
accordance with clause (b) of Section 8.01 of this Agreement describing the next
scheduled Major Maintenance.
"Major Maintenance Reserve Payment" means the payment made by the
Partnership to the Major Maintenance Account on a Payment Date in accordance
with the terms set forth in Section 5.12 of this Agreement.
"Majority Bank Lenders" means holders of more than 50% of the
aggregate outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments.
"Majority Bondholders" means holders of more than 50% of the aggregate
outstanding principal amount of Capital Markets Senior Debt.
"Majority Lenders" means, (a) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is equal to or exceeds 15% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments, either (i) Majority Bank
Lenders or (ii) holders of more than 25% of the aggregate outstanding principal
amount of Capital Markets Senior Debt, and (b) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is less than 15% of the aggregate outstanding principal amount of
Senior Debt and Senior Debt Commitments, the holders of more than 25% of the
aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments.
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"Majority Secured Parties" means either (a) holders of more than 50%
of the aggregate principal amount of Bank Senior Debt outstanding, Bank Senior
Debt Commitments and the Oil Payment Commitment (or, at any time on or after a
Priority Termination Date, the aggregate principal amount of Oil Payment
Reimbursement Obligations then outstanding), taken together, or (b) holders of
more than 25% of the aggregate outstanding principal amount of Capital Markets
Senior Debt.
"Mandatory Capital Expenditures" means capital expenditures (including
any financing costs and related fees and expenses) in respect of the Coker
Project that (a) the Partnership is required to make in order to comply with a
change in environmental, health, safety or other laws or regulations binding on
the Partnership or (b) are otherwise necessary to continue to operate the Coker
Project in accordance with the Base Case Model.
"Mandatory Prepayment" means a prepayment made pursuant to Section
2.05 of this Agreement and the Senior Loan Agreements.
"Mandatory Prepayment Account" has the meaning set forth in Section
5.01 of this Agreement.
"Marine Dock and Terminaling Agreement" means the Marine Dock and
Terminaling Agreement, dated August 17, 1999, between Sun Pipe Line Company and
Clark R&M, as the same may be amended from time to time in accordance with the
terms and restrictions on amendments set forth in this Agreement.
"Marketing Consultant" means Purvin & Gertz, the marketing consultant
firm hired by the Partnership on behalf of the Senior Lenders.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, properties, financial condition or prospects of
any of the Borrower, the Partnership or either of the Partners, (b) the
Partnership's ability to construct, or cause to be constructed, the Coker
Project and operate, or cause to be operated, the Heavy Oil Processing Facility
substantially in the manner contemplated by this Agreement, the other
Transaction Documents and the Base Case Model, including without limitation the
ability to achieve Mechanical Completion by March 1, 2001 and Substantial
Reliability by October 1, 2001, (c) the rights and remedies of the Collateral
Trustee, any Secured Party or any Applicable Agent under any Transaction
Document, (d) the ability of the Partnership or the Borrower to make payment of
any Senior Debt Obligations when due or (e) the ability of any of the
Partnership, the Borrower or either of the Partners, any Affiliate thereof, any
Shareholder, any Clark Entity or any other party to perform its material
obligations under any Transaction Document to which it is a party.
"Maximum Accrued Major Maintenance Reserve Amount" means an amount
equal to the aggregate of the Maximum Major Maintenance Reserve Payments that
the
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Partnership had been permitted to make in accordance with the terms set
forth in Section 5.12.
"Maximum Major Maintenance Reserve Amount" means the maximum payment
permitted to be made by the Partnership to the Major Maintenance Account on a
Payment Date in accordance with the terms set forth in Section 5.12 of this
Agreement.
"Mechanical Completion" has the meaning set forth in the EPC Contract
as in effect on the date hereof.
"Minimum Major Maintenance Reserve Payment" means the minimum payment
required to be made by the Partnership to the Major Maintenance Account on a
Payment Date in accordance with the terms set forth in Section 5.12 of this
Agreement.
"Moody's" means Moody's Investors Services, Inc. and its successors.
"Mortgage" has the meaning set forth in clause (a) of Section 6.01 of
this Agreement.
"Notes" means (a) with respect to the Bank Senior Debt, any notes
issued in respect of the Senior Bank Loans, (b) with respect to the Oil Payment
Reimbursement Obligations, the notes issued in respect thereof and (c) with
respect to the Capital Markets Senior Debt, the bonds issued in respect thereof.
"Notice of Borrowing" has the meaning set forth in clause (b) of
Section 9.02 of this Agreement.
"NY UCC" means the New York Uniform Commercial Code as in effect from
time to time.
"Occidental Petroleum" means Occidental Petroleum Corporation.
"Offering Circular" means the final confidential Offering Circular
dated as of August 10, 1999.
"Oil Payment Commitment" means $150 million, the aggregate limit of
liability under the Oil Payment Insurance Policy.
"Oil Payment Insurance Policy" means the Guaranty Insurance Policy,
dated as of the date hereof, and each renewal thereof, issued by Winterthur
International Insurance Company Limited for the benefit of PMI, to provide
insurance coverage for the Partnership's payment obligations for crude oil
purchased under the Long-Term Oil Supply Agreement, as amended from time to
time.
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"Oil Payment Insurers" means Winterthur International Insurance
Company Limited and any and all other insurers or reinsurers that may from time
to time underwrite, reinsure, or participate in, all or part of the insurance
coverage provided by the Oil Payment Insurance Policy.
"Oil Payment Insurers Administrative Agent" means Winterthur
International Insurance Company Limited, in its capacity as Administrative Agent
under the Reimbursement Agreement.
"Oil Payment Reimbursement Obligations" means the obligations to pay
the principal of and interest on (including any interest accruing after the
filing of a petition with respect to, or the commencement of, any proceeding in
bankruptcy, liquidation or analogous laws, whether or not a claim for post-
petition interest is allowed in such proceeding) all amounts at any time
outstanding, as well as any and all commissions, fees, indemnities, prepayment
premiums and other amounts payable by the Borrower or the Partnership (including
without limitation pursuant to the Partnership's obligations under the
Guarantee), under (a) the Reimbursement Agreement with respect to any payments
made by the Oil Payment Insurers to PMI under the Oil Payment Insurance Policy
or (b) the Secured Working Capital Facility with respect to any cash advances or
letters of credit provided for purchases, or refinancing purchases, of crude oil
(excluding the Compensating Collateral), including, in each of cases (a) and (b)
all renewals, extensions or refundings thereof or amendments, modifications or
supplements thereto.
"Operating Account" has the meaning set forth in clause (c) of Section
5.01.
"Optional Prepayments" means a prepayment of the principal amount of
the Senior Loans made in accordance with this Agreement and the Senior Loan
Agreements, other than a Mandatory Prepayment.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Port Arthur Coker Company L.P., a limited
partnership organized under the laws of Delaware.
"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Port Arthur Coker Company, L.P., dated August 2, 1999,
among the General Partner and the Limited Partner, as the same may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"Partnership Financial Statements" means, for any quarter or year, the
consolidated balance sheet of the Partnership as of the close of such quarter or
year, as the case may be, and consolidated statements of income and expense and
cash flow and changes in financial position from the beginning to the close of
such quarter or year, as the case may
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be, setting forth in comparative form the corresponding consolidated figures for
the corresponding periods in the preceding year or for the preceding year, as
the case may be.
"Partnership Interest" has the meaning set forth in the Partnership
Agreement, as in the effect on the date hereof.
"Partnership Intermediate and Refined Products" means the
Partnership's ownership interest in its share of the intermediate and refined
products produced by the Heavy Oil Processing Facility as determined in
accordance with Section 9-315 of the Texas UCC.
"Partnership Notes" means promissory notes issued by the Partnership
to the Borrower representing the obligation of the Partnership to repay the
intercompany loans from the Borrower.
"Payment Date" means each January 15 and July 15 of each year,
commencing on January 15, 2000 in the case of interest and January 15, 2002 in
the case of principal.
"Pemex" means Petroleos Mexicanos, the parent of PMI.
"Permits" means the Permits, as defined in the Services and Supply
Agreement, needed to operate the Project.
"Permitted Hedging Arrangements" means interest rate swaps, option
contracts, futures contracts, options on futures contracts, caps, floors,
collars or any other hedging arrangements entered into by the Borrower with one
or more Bank Senior Lenders to hedge the Borrower's exposure to movements in
interest rates on the Bank Senior Term Debt, and not for purposes of
speculation.
"Permitted Indebtedness" means (a) Indebtedness in respect of the
Senior Debt Obligations, the Oil Payment Reimbursement Obligations, the
Partnership's obligations under the Debt Service Reserve Guarantee Arrangement
and the other obligations of the Partnership and the Borrower under the
Financing Documents, (b) Permitted Hedging Arrangements, (c) trade accounts
payable in the ordinary course of business to the extent incurred for the
construction or operation of the Coker Project and not for the borrowing of
money and (d) Subordinated Debt.
"Permitted Liens" means (a) Liens for taxes not delinquent or being
contested in good faith and by appropriate proceedings, (b) Liens, constituting
deposits or pledges to secure obligations under workmen's compensation, social
security or similar laws, or under unemployment insurance, (c) Liens
constituting deposits or pledges or secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of
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business, (d) mechanics', workmen's, materialmen's or other like Liens arising
in the ordinary course of business with respect to obligations that are not due
or that are being contested in good faith, (e) Liens constituting easements and
imperfections of title on real estate, provided that such easements and
imperfections do not render title unusable for purposes of the Coker Project,
(f) Liens to secure Senior Debt Obligations, (g) Liens securing judgments,
decrees or orders of any court (i) that are not currently dischargeable or (ii)
that have been discharged or stayed or appealed within 30 days after the date of
such judgment, decree or order (in the case of a stay or appeal, during the
period of such stay or appeal), (h) the PMI Subordinated Lien and (i) liens on
cash eligible for Restricted Payments in accordance with Section 11.01.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government agency, government or political subdivision thereof.
"PMI" means PMI Comercio Internacional, S.A. de C.V.
"PMI Consent and Agreement" means the Consent and Agreement, dated as
of the date hereof, among PMI, the Partnership and the Secured Parties.
"PMI Premium Reserve Account" has the meaning set forth in Section
5.01.
"PMI Subordinated Lien" means a subordinated lien over certain Project
Property granted to PMI in accordance with Section 29.5(c) of the Long-Term Oil
Supply Agreement
"PMI Surplus" means the amount of Quarterly Surpluses accrued under
the Long-Term Oil Supply Agreement (a) with respect to which the Partnership has
not paid a premium on the purchase price of crude oil purchased under the
Long-Term Oil Supply Agreement and (b) that have not been offset by Quarterly
Shortfalls and Credit Interest under the Long-Term Oil Supply Agreement.
"PMI Surplus Reserve Account" has the meaning set forth in Section
5.01.
"PMI Surplus Reserve Amount" means, at any one time, the amount of the
PMI Surplus subject to a maximum amount equal to $75 million, which maximum
amount shall be automatically reduced to $50 million upon the repayment in full
of all Bank Senior Term Debt.
"PMI Surplus Reserve Payment" has the meaning set forth in clause (a)
of Section 5.10.
"Potential Default" means an event or condition that after the
expiration of any applicable grace period (whether specified in this Agreement,
any Project Document or
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otherwise) or the delivery of notice (or both) will or could be expected to
become an Event of Default.
"Principal & Interest Accrual Account" has the meaning set forth in
Section 5.01.
"Principal & Interest Accrual Account Shortfall" means, on any date,
the excess of (a) the amount of the Senior Debt Obligations due and payable or
to become due and payable on or prior to the immediately succeeding Payment Date
over (b) the balance in the Principal & Interest Accrual Account.
"Priority Termination Date" has the meaning specified in clause (c) of
Section 10.04.
"Priority Termination Notice" has the meaning specified in clause (c)
of Section 10.04.
"Pro Rata Payment" means a payment to a Senior Lender or holder of Oil
Payment Reimbursement Obligations, as the case may be, on any date on which a
payment on or in respect of Senior Debt Obligations or Oil Payment Reimbursement
Obligations, as the case may be, is made in which:
(a) interest (other than overdue interest), fees, expenses,
indemnities and breakage costs paid to such Senior Lender or holder of Oil
Payment Reimbursement Obligations, as the case may be, on such date bear
the same proportion to the total payments of interest (other than overdue
interest), fees, expenses, indemnities and breakage costs made to all
Senior Lenders or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date as (i) the total Senior Debt Obligations or Oil
Payment Reimbursement Obligations, as the case may be, for interest (other
than overdue interest), fees, expenses, indemnities and breakage costs due
to such Senior Lender or holders of Oil Payment Reimbursement Obligations,
as the case may be, on such date bear to (ii) the total Senior Debt
Obligations or Oil Payment Reimbursement Obligations, as the case may be,
for interest (other than overdue interest), fees, expenses, indemnities and
breakage costs due to all Senior Lenders or holders of Oil Payment
Reimbursement Obligations, as the case may be, on such date;
(b) overdue interest paid to such Senior Lender or holders of Oil
Payment Reimbursement Obligations, as the case may be, on such date bears
the same proportion to the total payments of overdue interest made to all
Senior Lenders or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date as (i) the total Senior Debt Obligations or Oil
Payment Reimbursement Obligations, as the case may be, for overdue interest
due to such Senior Lender or holders of Oil Payment Reimbursement
Obligations, as the case may be, on such date bear to (ii)
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the total Senior Debt Obligations or Oil Payment Reimbursement
Obligations, as the case may be, for overdue interest due to all Senior
Lenders or holders of Oil Payment Reimbursement Obligations, as the case
may be, on such date;
(c) payments of principal (other than overdue principal) and
redemption or prepayment premiums paid to such Senior Lender or holders of
Oil Payment Reimbursement Obligations, as the case may be, on such date
bear the same proportion to the total principal (other than overdue
principal), and redemption or prepayment premiums made to all Senior
Lenders on or holders of Oil Payment Reimbursement Obligations, as the case
may be, such date as (i) the total Senior Debt Obligations or Oil Payment
Reimbursement Obligations, as the case may be, for principal (other than
overdue principal) and redemption or prepayment premiums due to such Senior
Lender or holders of Oil Payment Reimbursement Obligations, as the case may
be, on such date bear to (ii) the total Senior Debt Obligations or Oil
Payment Reimbursement Obligations, as the case may be, for principal (other
than overdue principal) and redemption or prepayment premiums due to all
Senior Lenders or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date; or
(d) overdue principal payable by way of acceleration paid to such
Senior Lender or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date bears the same proportion to the total overdue
principal payable by way of acceleration on such date as (i) the total
Senior Debt Obligations or Oil Payment Reimbursement Obligations, as the
case may be, for overdue principal payable by way of acceleration to such
Senior Lender or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date bear to (ii) the total Senior Debt Obligations or
Oil Reimbursement Obligations, as the case may be, for overdue principal
payable by way of acceleration to all Senior Lenders or holders of Oil
Payment Reimbursement Obligations, as the case may be, on such date;
provided that in each of cases (a) through (d), inclusive, if payments cannot be
made exactly in such proportion due to minimum required payment amounts and
required integral multiples of payments under any of the Senior Loan Agreements
or the Reimbursement Agreement, as the case may be, payments made in amounts as
near as such exactly proportionate amounts as possible shall be deemed to be Pro
Rata Payments.
"Product Purchase Agreement" means the Product Purchase Agreement,
dated the date hereof, between the Partnership and Clark R&M, dated August 19,
1999, as the same may be amended from time to time in accordance with its terms
and the restrictions on amendments set forth in this Agreement.
"Project Documents" means the EPC Contract, EPC Contract Guarantee,
Clark EPC Contract, Long-Term Oil Supply Agreement, Long-Term Oil Supply
Agreement Guarantee, PMI Consent and Agreement, Services and Supply Agreement,
Product Purchase
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Agreement, Hydrogen Supply Agreements, Ground Lease and Blanket Easement,
Ancillary Equipment Site Lease, Permits, Charter and Bylaws of each of the
Borrower, General Partner and Limited Partner, the Partnership Agreement,
Insurance Policies, Debt Service Reserve Guarantee Arrangement and Marine Dock
and Terminaling Agreement.
"Project Entities" means each of the Clark Entities, the Partners, the
Partnership and the Borrower.
"Project Expenses" means cash items of expenditure (other than
Discretionary Capital Expenditures) for purposes of the Coker Project (whether
incurred in connection with the construction or the operation of the Coker
Project), including without limitation wages, salaries, purchases of crude oil
or diluent, employment, sales and other similar operational taxes, indemnities
(including indemnities payable to the initial purchasers of the Capital Markets
Senior Debt) fees and expenses of lenders and trustees, professional fees and
expenses, legally imposed cash reserve or other similar obligations, premiums or
fees under or in connection with the Oil Payment Insurance Policy or the Debt
Service Reserve Guarantee Arrangement, expenditures for utilities, spares and
other capital goods inventory, capital expenses related to the construction and
start-up of the Coker Project, Mandatory Capital Expenditures, expenditures for
ordinary repair and maintenance, scheduled maintenance expenditures (including
Major Maintenance) and other amounts payable under Project Documents, but in
each case excluding Senior Debt Obligations, Oil Payment Reimbursement
Obligations, Restricted Payments and Subordinated Debt Obligations.
"Project Funds" means (a) all proceeds of sale of or other disposition
of Project Production, (b) all Senior Debt proceeds, (c) all Equity Funding,
including without limitation proceeds from Subordinated Debt, (d) all insurance
proceeds in respect of the Coker Project, and (e) all damages and awards paid to
the Borrower, the Partnership or the Partners.
"Project Production" means all the Partnership's production from the
Coker Project including intermediate and refined products, sulfur and related
products and Petroleum Coke and any other products or by products of the Coker
Project.
"Project Property" means all property, assets and rights, real and
personal, tangible and intangible, whether now owned or hereafter acquired,
wherever located, of the Partnership or the Borrower, including without
limitation the Accounts and the Subaccounts, and the rights of the Partnership
or the Borrower under the Project Documents and any other contract or agreement
to which it is a party or beneficiary.
"Project Revenue Account" has the meaning set forth in Section 5.01.
"Projected Tax Reserve Amount" means the total of (a) the amount of
Taxes (other than income or franchise taxes or operational taxes that are
considered Project Expenses) projected to become due and payable on or before
the next two succeeding
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Payment Dates and (b) the amount of income or franchise taxes projected to be
incurred or that will become due and payable on or before the next two
succeeding Payment Dates by the General Partner or the Limited Partner either
directly to a taxing authority or pursuant to the Tax Sharing Agreement, in each
case in respect of its allocable share of the taxable income of the Partnership.
"Projected Twelve-Month Period" means, in relation to any date, the
period commencing on the first day after either (a) the month-end immediately
preceding such date or (b) such date, if such date is a month-end, and ending on
the day falling 364 days following such month-end.
"Prudent Industry Practice" means, at any time, practices, methods,
acts, techniques and standards in effect that are consistent with (a) the best
practice refinery standards generally followed by the crude oil refinery
industry in the United States or (b) such higher standards as may be applied or
followed by Clark R&M or any of its Affiliates in the performance of similar
tasks in respect of operations at the Refinery.
"Purchase Agreement" means the Purchase Agreement, dated as of August
10, 1999, among the Borrower, the Partnership, each of the Partners, Clark
Holdings and the Underwriters.
"Quarterly Shortfalls" has the meaning set forth in the Long-Term Oil
Supply Agreement.
"Quarterly Surplus" means has the meaning set forth in the Long-Term
Oil Supply Agreement.
"Rated Insurer" means an insurance or reinsurance company that has a
rating by Best's Rating Service of not less than A- and a "Financial Size
Category of Class IX".
"Ratings Reaffirmation" means written notice from each Credit Rating
Agency that, after taking into account any event or action causing such Ratings
Reaffirmation to be required, its rating of all Capital Markets Senior Debt will
be equal to or higher than its then-current rating of such Capital Markets
Senior Debt, without negative implication.
"Refinery" has the meaning set forth in the Services and Supply
Agreement as in effect on the date hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Borrower, the Partnership,
each of the Partners, Clark Holdings and the Underwriters.
"Reimbursement Agreement" means the Oil Payment Reimbursement
Agreement, dated as of the date hereof, by and among the Borrower, the
Partnership, the
A-24
<PAGE>
Partners, Winterthur International Company Limited, as Primary Insurer, and the
Oil Payment Insurers Administrative Agent, as amended from time to time.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, discharge, dispersal, escaping, leaching or migration into
the environment, including the movement of any Hazardous Substance through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata and the contamination of structures, surfaces and buildings.
"Reliability Test Buy Down Date" has the meaning set forth in the EPC
Contract.
"Replacement Senior Debt" has the meaning set forth in clause (a) of
Section 2.10.
"Required Insurance" means the minimum amount of insurance coverage
set forth in Appendix J required to be maintained by the Partnership.
"Requisite Bank Lenders" means holders of more than 66 2/3% of the
aggregate principal amount of Bank Senior Debt and Bank Senior Debt Commitments.
"Requisite Bondholders" means holders of more than 66 2/3% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
"Requisite Lenders" means (a) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is equal to or exceeds 15% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments, (i) Requisite Bank Lenders
and (ii) either (A) Majority Bondholders (or, in the case of clause (c) of
Section 2.09 of this Agreement, Requisite Bondholders) or (B) a Ratings
Reaffirmation and (b) at any time when the aggregate outstanding principal
amount of Bank Senior Debt and Bank Senior Debt Commitments is less than 15% of
the aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments, either (i) the holders of more than 50% of the aggregate
outstanding principal amount of Senior Debt and Senior Debt Commitments or (ii)
a Ratings Reaffirmation.
"Requisite Secured Parties" means (a) holders of more than 66 2/3%
of the aggregate principal amount of Bank Senior Debt outstanding, Bank Senior
Debt Commitments and the Oil Payment Commitment (or, at any time on or after a
Priority Termination Date, the aggregate principal amount of Oil Payment
Reimbursement Obligations then outstanding), taken together, and (b) either (i)
Majority Bondholders (or, in the case of Section 2.09(c) of this Agreement,
Requisite Bondholders) or (ii) a Ratings Reaffirmation.
A-25
<PAGE>
"Responsible Officer" means (a) in the case of the Partnership and the
General Partner, a senior executive officer of the General Partner and (b) in
the case of the Borrower, means a senior executive officer of the Borrower.
"Restricted Payment" means any payments or distributions from the
Accounts of amounts for uses other than those described in the first, second,
third, fourth, fifth, sixth, seventh, eighth, ninth or tenth priority category
set forth in clause (a) or in clause (b), (c) or (d) of Section 5.05 of this
Agreement, including without limitation any principal, interest or other
payments due on or in respect of any Subordinated Debt.
"S&P" means Standard & Poor's Ratings Services and its successors.
"Sale and Leaseback Transaction" means any arrangement with a lender
or investor or to which such lender or investor is a party, having a term of
more than one year, providing for the leasing by a Person of real or personal
property which was sold or transferred by such Person to such lender or investor
or to any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property.
"Sales Agreement" means a written contract or agreement (other than
the Product Purchase Agreement or a Spot Contract) entered into by the
Partnership for the sale or other disposition of Project Production.
"Secured Parties" means the Senior Lenders, the Oil Payment Insurers,
the Applicable Agents, the Collateral Trustee and the DSRIG Provider.
"Secured Working Capital Facility" means the Secured Working Capital
Facility, dated as of the date hereof, by and among the Bank Senior Lenders and
the Partnership, pursuant to which the Partnership is permitted to draw (a) one
or more letters of credit up to an aggregate principal amount of $40 million for
the purpose of providing Compensating Collateral to PMI in accordance with
Section 29.5 of the Long-Term Oil Supply Agreement and (b) cash advances or one
or more letters of credit, for the purpose of providing credit support for
purchases, or refinancing purchases, of crude oil, up to an aggregate principal
amount of $35 million.
"Security Documents" means the security documents, conditional
assignments and powers of attorney, consents to assignment, this Agreement, the
Mortgage and any other agreement or document signed, recorded, registered or
filed by any of the Borrower, the Partnership or either of the Partners or any
other Person in order to create, preserve, continue, perfect or validate any
security interest in the Collateral in favor of the Secured Parties as security
for Senior Debt Obligations and the Oil Payment Reimbursement Obligations.
"Senior Bank Loans" means the individual loans pursuant to which the
Bank Senior Debt is incurred by the Borrower under the Bank Senior Loan
Agreements.
A-26
<PAGE>
"Senior Debt" means the aggregate disbursed amount of the Bank Senior
Debt, Capital Markets Senior Debt, Additional Senior Debt and Replacement Senior
Debt.
"Senior Debt Commitments" means the aggregate principal amount any
Senior Lender is committed to disburse to the Borrowers under any Senior Loan
Agreement as set forth in Appendix B. The Indenture shall not be considered a
Senior Debt Commitment for any purpose.
"Senior Debt Obligations" means the obligations to pay the principal
of and interest on the Senior Debt (including any interest accruing after the
filing of a petition with respect to, or the commencement of, any proceeding in
bankruptcy, liquidation or analogous laws, whether or not a claim for post-
petition interest is allowed in such proceeding), as well as any and all
commissions, fees, indemnities, prepayment premiums and other amounts payable by
the Borrower or the Partnership (including without limitation pursuant to the
Partnership's obligations under the Guarantee) under this Agreement or any other
Financing Document, in each case including all renewals, extensions or
refundings thereof or amendments, modifications or supplements thereto, but
excluding any obligations that are Oil Payment Reimbursement Obligations.
"Senior Lenders" means the holders from time to time of Senior Debt
under the Senior Loan Agreements, provided that, for purposes of the Capital
Markets Senior Debt, the Capital Markets Trustee will constitute the sole Senior
Lender for the purposes of representing the Capital Markets Senior Lenders,
except as otherwise provided herein or in the Indenture.
"Senior Lender Group" shall mean each group of Senior Lenders that is
party to the same Senior Loan Agreement.
"Senior Loan Agreements" means the Initial Bank Senior Loan Agreement,
the Secured Working Capital Facility, the Indenture and any loan agreement set
forth in Appendix B entered into by the Borrower, an Applicable Agent, if any,
and any lenders of Additional Senior Debt or Replacement Senior Debt, in each
case as amended or otherwise modified from time to time.
"Senior Loans" means the individual loans or other debt pursuant to
which Senior Debt is incurred by the Borrower under the Senior Loan Agreements.
"Services and Supply Agreement" means the Services and Supply
Agreement, dated August 19, 1999, between the Partnership and Clark R&M, as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement.
A-27
<PAGE>
"Shareholder" means each of Blackstone, Occidental Petroleum and Clark
Holdings and each other shareholder, directly or indirectly, holding the
outstanding capital stock of the General Partner.
"Shares" means all the shares of capital stock of the Borrower.
"Spot Contract" means a written contract or agreement for the sale or
other disposition of Project Production with a term of 30 days or less or any
oral contract or arrangement evidenced by a confirmation receipt entered into by
the Partnership for the sale or other disposition of Project Production.
"Start-up" has the meaning set forth in the EPC Contract.
"Subaccounts" has the meaning set forth in Section 5.02 of this
Agreement.
"Subordinated Debt" means unsecured Indebtedness of the Partnership,
whether currently outstanding or hereafter created, held by a Shareholder or an
Affiliate of a Shareholder (other than Clark R&M or Clark USA), ranking in right
of payment and upon liquidation and in all other respects junior to the Senior
Debt Obligations in accordance with the subordination terms set forth in
Appendix Q.
"Subordinated Debt Obligations" means the obligations to pay the
principal of and interest on the Subordinated Debt, and other amounts payable to
the Subordinated Lenders.
"Subordinated Lender" means any holder of Subordinated Debt.
"Subsidiary" of a Person means (a) any corporation more than 50% of
the outstanding voting shares of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (b) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Substantial Reliability" has the meaning set forth in the EPC
Contract.
"Supermajority Bank Lenders" means holders of more than 75% of the
aggregate outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments.
"Supermajority Bondholders" means holders of more than 75% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
A-28
<PAGE>
"Supermajority Lenders" means (a) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is equal to or exceeds 15% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments, (i) Supermajority Bank
Lenders and (ii) either (A) Supermajority Bondholders or (B) a Ratings
Reaffirmation, and (b) at any time when the aggregate outstanding principal
amount of Bank Senior Debt and Bank Senior Debt Commitments is less than 15% of
the aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments, (i) holders of more than 75% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments or (B) a Ratings
Reaffirmation.
"Supermajority Secured Parties" means (a) holders of more than 75% of
the aggregate outstanding principal amount of Bank Senior Debt outstanding, Bank
Senior Debt Commitments and the Oil Payment Commitment (or, at any time on or
after a Priority Termination Date, the aggregate principal amount of Oil Payment
Reimbursement Obligations then outstanding), taken together, and (b) either (i)
Supermajority Bondholders or (ii) a Ratings Reaffirmation.
"Tax Payment Undertaking" means the Tax Payment Undertaking in the
form of Appendix F to this Agreement.
"Tax Reserve Account" has the meaning set forth in Section 5.01.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of
the date hereof, among the General Partner, the Limited Partner, Clark Holdings
and the other parties thereto.
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use, excise,
franchise, employment, value added, real estate, withholding or similar taxes,
assessments, fees, liabilities or other charges, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.
"Technology" means all proprietary technology and know-how (including
without limitation inventions, formulas and formulations, specifications,
manufacturing methods and processes, designs, quality control data, design and
manufacturing tolerances and testing, performance and raw material data),
research materials, drawings and other intellectual property relating to the
development, construction, operation or maintenance of the Project.
"Texas UCC" means the Texas Uniform Commercial Code as in effect from
time to time.
A-29
<PAGE>
"Third-Party Authorizations" means all authorizations, approvals,
franchises, licenses, permits (including the Permits) and consents issued by a
Governmental Authority or other third party.
"Tranche A Bank Facility" has the meaning set forth in the Bank Senior
Loan Agreement, dated as of the date hereof, by and among the Borrower, the
Guarantors, the Bank Senior Lenders party thereto and the Bank Senior Lenders
Administrative Agent.
"Tranche B Amortization Account" has the meaning set forth in Section
5.01.
"Tranche B Bank Facility" has the meaning set forth in the Bank Senior
Loan Agreement, dated as of the date hereof, by and among the Borrower, the
Guarantors, the Bank Senior Lenders party thereto and the Bank Senior Lenders
Administrative Agent.
"Transaction Documents" means the Financing Documents, the Project
Documents, the Purchase Agreement, the Registration Rights Agreement and any
ancillary documents delivered under or in connection therewith.
"Transfer Restrictions Agreement" means the Transfer Restrictions
Agreement, dated as of the date hereof, among the Borrower, the Partnership, the
General Partner, the Limited Partner, Blackstone, Clark Holdings, the Collateral
Trustee, the Bank Senior Lenders Administrative Agent, the Capital Markets
Trustee and the Oil Payment Insurers Administrative Agent as the same may be
amended from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"Turnkey Specifications" has the meaning set forth in the EPC
Contract.
"Underwriters" means Credit Suisse First Boston Corporation, Goldman,
Sachs & Co. and Deutsche Bank Securities Inc.
"Weighted Average Life" means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (a) the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the numbers of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (b) the then outstanding principal amount of such
Indebtedness.
"Year 2000 Compliant" with respect to any Person means the ability of
the software and other processing capabilities of such Person to interpret and
manipulate correctly all data, in whatever form including printed form, screen
displays, financial records, calculations and loan-related data so as to avoid
errors in processing that may otherwise occur because of the inability of the
software or other processing capabilities to recognize accurately the year 2000
or subsequent dates.
A-30
<PAGE>
Appendix B
to Common Security Agreement
INITIAL SENIOR LENDERS
- --------------------------------------------------------------------------------
Initial Senior Debt
and
Senior Debt Commitment Initial Senior
Initial Senior Lender of each Senior Lender Loan Agreements
- --------------------------------------------------------------------------------
1. Bank Senior Lender Group U.S. $325,000,000 Bank Senior Loan
o Credit Suisse First Agreement, dated as of
Boston August 19, 1999, among
o Deutsche Bank AG, the Borrower, each of the
New York Branch Guarantors, the Bank
o Goldman Sachs Senior Lenders
Credit Partners L.P. Administrative Agent and
o Citibank, N.A. the Bank Senior Lenders
o General Electric party thereto.
Capital Corporation
o Fuji Bank Ltd.
o Heller Financial, Inc.
- ------------------------------------------------------------------------------
2. Bank Senior Lender Group U.S. $75,000,000 Secured Working Capital
o Credit Suisse First Facility, dated as of
Boston August 19, 1999, among
o Deutsche Bank AG, the Borrower, each of the
New York Branch Guarantors, the Bank
o Goldman Sachs Senior Lenders
Credit Partners L.P. Administrative Agent and
the Bank Senior Lenders
party thereto.
- ------------------------------------------------------------------------------
3. Capital Markets Senior U.S. $255,000,000 Indenture, dated as of
Lender Group August 19, among the
Borrower, each of the
Guarantors, the Capital
Market Trustee and the
Collateral Trustee.
- ------------------------------------------------------------------------------
B-1
<PAGE>
Appendix C
to Common Security Agreement
BASE CASE MODEL*
_____________
* Not filed with this registration statement.
<PAGE>
Appendix D
to Common Security Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bank Senior Loan Agreement, dated as of
August 19, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Bank Senior Loan Agreement"), among PORT ARTHUR FINANCE CORP., a
corporation organized under the laws of the State of Delaware (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under the laws
of Delaware (the "Partnership"), SABINE RIVER HOLDING CORP., a corporation
organized under the laws of the State of Delaware (the "General Partner"), and
NECHES RIVER HOLDING CORP., a corporation organized under the laws of the State
of Delaware (the "Limited Partner" and, together with the Partnership and the
General Partner, the "Guarantors") (together, the "Borrowers"), the Bank Senior
Lenders from time to time party thereto (the "Bank Senior Lenders") and Deutsche
Bank AG, New York Bank, as Administrative Agent for the Bank Senior Lenders.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed thereto in the Bank Senior Loan Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and
the Assignee identified on Schedule I hereto (the "Assignee") hereby agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule I hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Bank Senior Loan Agreement with respect to those Bank Senior Loans contained
in the Bank Senior Loan Agreement as are set forth on Schedule I hereto
(individually, an "Assigned Loan"; collectively, the "Assigned Loans"), in a
principal amount for each Assigned Loan as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statement, warranties or representations made
in or in connection with any Financing Document, or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Financing Document or any other instrument or document furnished pursuant
thereto, other than that the Assignor has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and clear
of any such adverse claim; (b) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrowers or
any other obligor or the performance or observance by the Borrowers or any other
obligor of any of their respective obligations under any Financing Document or
D-1
<PAGE>
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches any Senior Notes held by it evidencing the Assigned Loans and (i)
requests that the Administrative Agent exchange the attached Senior Notes for
new Senior Notes payable to the Assignee and (ii) if the Assignor has retained
any interest in the Assigned Loan, requests that the Administrative Agent
exchange the attached Senior Notes for new Senior Notes payable to the Assignor
and the Assignee, in each case in amounts which reflect the assignment being
made hereby (and after giving effect to any other assignments which have become
effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
a copy of the Financing Documents together with copies of the financial
statements or other information delivered pursuant to clause (d) of Section
12.06 of the Bank Senior Loan Agreement referred to therein and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank Senior Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Financing
Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to take such
action as agent (in its capacity as Administrative Agent under the Bank Senior
Loan Agreement) on its behalf and to exercise such powers and discretion under
the Financing Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Financing Documents and will
perform in accordance with its terms all the obligations which by the terms of
the Financing Documents are required to be performed by it as a Bank Senior
Lender.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be earlier than five
Business Days after the date of such acceptance and recording by the
Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts that have accrued prior to the Effective Date and to
the Assignee for amounts which have accrued on and subsequent to the Effective
Date. The Assignor and the
D-2
<PAGE>
Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party to
the Bank Senior Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Bank Senior Lender
thereunder and under such other agreements and shall be bound by the provisions
thereof and (b) the Assignor shall, to the extent provided in this Agreement and
Acceptance, relinquish its rights and be released from its obligations under the
Bank Senior Loan Agreement and such other agreements.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule I hereto.
D-3
<PAGE>
Schedule I
to Assignment and Acceptance
Name of Assignor: __________________________________________
Name of Assignee: __________________________________________
Effective Date of Assignment: ______________________________
<TABLE>
<CAPTION>
Commitment Commitment
Principal Amount Principal Amount Percentage Percentage
Assigned of Assigned of Assigned of Assigned of
Tranche A Facility Tranche B Facility Tranche A Facility Tranche B Facility
================== ================== ================== ==================
<S> <C> <C> <C>
$________________ $_________________ _________________% _________________%
$________________ $_________________ _________________% _________________%
</TABLE>
[Name of Assignee] [Name of Assignor]
By:______________________________ By:______________________________
Name: Name:
Title: Title:
Consented to:
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of
the Bank Senior Lenders
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
D-4
<PAGE>
Received:
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:___________________________________
Name:
Title:
PORT ARTHUR FINANCE CORP.
By:___________________________________
Name:
Title:
D-5
<PAGE>
Appendix E-1
to Common Security Agreement
CONSENTS AND APPROVALS FOR AGREEMENTS
E-1-1
<PAGE>
Appendix E-2
to Common Security Agreement
CONSENTS AND APPROVALS FOR PROJECT
E-2-1
<PAGE>
Appendix F
to Common Security Agreement
TAX PAYMENT UNDERTAKING
Bankers Trust Company,
as Collateral Trustee for the Secured Partner
Corporate Trust & Agency Servicer
Four Albany Street, 4th Floor
New York, NY 10006
Attention: James McDonough
We hereby certify that the proposed disbursement of funds from the
Tax Reserve Account, in the amount of $_________, is being made in compliance
with clause (b)(i) or (b)(ii), as the case may be, of Section 5.11 of the Common
Security Agreement, dated as of August 19, 1999, among Port Arthur Finance
Corp., Port Arthur Coker Company L.P., Sabine River Holding Corp., Neches River
Holding Corp., Winterthur International Insurance Company Limited, as Oil
Payment Insurers Administrative Agent, Bankers Trust Company, as Collateral
Trustee for the Secured Parties, Deutsche Bank AG, New York Branch, as Bank
Senior Lenders Administrative Agent, HSBC Bank USA as Capital Markets Trustee
for the Capital Markets Senior Lenders, and Bankers Trust Company, as Depositary
Bank, as the same may be amended or supplemented in accordance with its terms
and in effect from time to time.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Common Security Agreement, as the case may be.
Very truly yours.
PORT ARTHUR COKER COMPANY L.P.
By: ______________________________
Name:
Title:
F-1
<PAGE>
Appendix G
to Common Security Agreement
MAJOR MAINTENANCE RESERVE PAYMENT CERTIFICATE
Bankers Trust Company,
as Collateral Trustee for the Secured Partner
Corporate Trust & Agency Servicer
Four Albany Street, 4th Floor
New York, NY 10006
Attention: James McDonough
We, ___________ and ___________, [title of most senior officer] and
[title of second most senior officer], respectively, of Port Arthur Coker
Company L.P., after due inquiry, hereby certify that the proposed disbursement
of funds from the Major Maintenance Account, in the amount of $________, is
being made in compliance with clause (a) of Section 5.12 of the Common Security
Agreement, dated as of August 19, 1999, among Port Arthur Finance Corp., Port
Arthur Coker Company L.P., Sabine River Holding Corp., Neches River Holding
Corp., Winterthur International Insurance Company Limited, as Oil Payment
Insurers Administrative Agent, Bankers Trust Company, as Collateral Trustee for
the Secured Parties, Deutsche Bank AG, New York Branch, as Bank Senior Lenders
Administrative Agent, HSBC Bank USA as Capital Markets Trustee for the Capital
Markets Senior Lenders, and Bankers Trust Company, as Depositary Bank, as the
same may be amended or supplemented in accordance with its terms and in effect
from time to time.
We also certify that the basis and calculation for such payment, as
set forth below, are true and correct in all material respects.
[set forth basis and calculation]
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Common Security Agreement.
G-1
<PAGE>
IN WITNESS WHEREOF, we have hereunto signed our names and affixed
the seal of the Company.
Dated: August ___, 1999
_____________________________________
Name:
Title: [most senior officer]
_____________________________________
Name:
Title: [second most senior officer]
G-2
<PAGE>
Appendix H
to Common Security Agreement
FORM OF MORTGAGE
H-1
<PAGE>
DEED OF TRUST, ABSOLUTE ASSIGNMENT
OF RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
Dated as of August 19, 1999
Made by
Port Arthur Coker Company L.P.
as Mortgagor,
to
J. Hoke Peacock II
as Trustee,
for the benefit of
Bankers Trust Company
as Mortgagee.
After recording please return to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Christopher L. Mann, Esq.
<PAGE>
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
THE STATE OF TEXAS ss.
ss.
COUNTY OF JEFFERSON ss.
THIS DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT (this "Deed of Trust") is made by PORT ARTHUR COKER
COMPANY L.P., a limited partnership organized under the laws of the State of
Delaware ("Mortgagor"), to J. Hoke Peacock II of Jefferson County, Texas, as
Trustee ("Trustee"), for the benefit of BANKERS TRUST COMPANY, as Collateral
Trustee under that certain Common Security Agreement referred to below
("Mortgagee").
For $10 and other consideration, Mortgagor grants to Trustee the
Mortgaged property (defined below) in trust, to secure the payment of the Debt
(defined below), and grants Mortgagee a security interest in and to all
currently owned or hereafter acquired Collateral (defined below), to secure
payment of the Debt. As additional consideration, Mortgagor presently and
absolutely assigns to Mortgagee the Rents (defined below). The conveyance of the
Mortgaged Property is subject to the Permitted Encumbrances (defined below).
Mortgagor agrees as follows:
1. Definitions:
(a) "Mortgaged Property" means:
(i) (A) All of Mortgagor's estate, right, title and interest owned
as of now or hereafter acquired in and to the tracts or parcels of land,
situated in Jefferson County, Texas described in Exhibit A, (B)
Mortgagor's leasehold estate created under that certain Coker Complex
Ground Lease and Blanket Easement Agreement between Clark Refining &
Marketing, Inc. ("Ground Lessor") and Mortgagor, dated as of August 19,
1999 (as amended from time to time, the "Ground Lease and Blanket
Easement"), together with all of the easements and other rights
appurtenant granted to Mortgagor in the Ground Lease and Blanket Easement,
(C) Mortgagor's leasehold estate created under that certain Ancillary
Equipment Site Lease and Easement Agreement between Ground Lessor and
Mortgagor, dated as of August 19,
<PAGE>
1999 (as amended from time to time, the "Ancillary Equipment Site Lease"),
and (D) all rights of way or use, sidewalks, alleys, strips, gores, rights
including rights in streets (including those vacated or to be vacated),
privileges, air rights and development rights, sewer rights, waters, water
courses, water rights and powers, interest in the bed of any stream, creek
or waterway, servitudes, estates, licenses, easements, tenements,
hereditaments and appurtenances incident, belonging or pertaining to such
land, including any mineral, mining, oil and gas rights and rights to
produce or share in the production of anything related thereto similar or
comparable rights of any nature whatsoever now or hereafter appurtenant)
(collectively, the "Land"), and all rights of ingress and egress, and all
other present or future easements and rights appurtenant to, serving or
benefitting the Land;
(ii) All of Mortgagor's estate, right title and interest in the
buildings, structures, fixtures and improvements of every type now or
hereafter located or placed on the Land (which buildings and improvements,
together with any additions thereto or alterations or replacements
thereof, are referred to as the "Improvements"); and
(iii) All of Mortgagor's rights under the following:
(A) All equipment (including without limitation all machinery,
apparatus, materials and fittings) and all fixtures, chattels,
articles of personal property and all other property (real, personal
or mixed), and all appurtenances and additions thereto and
betterments, renewals, substitutions and replacements thereof, now
or hereafter owned by Mortgagor or in which Mortgagor has or shall
acquire an interest (to the extent of such interest), including
without limitation all reactors, tanks, vessels, pumps, valves,
piping, controls, heat exchangers, tools, furniture and furnishings,
heating, lighting, plumbing, water heating, monitoring, ventilating,
air conditioning, refrigerating, sanitation, waste removal,
incinerating or compacting plants, systems, fixtures and equipment,
elevators, escalators, vacuum systems, call systems, sprinkler
systems and other fire prevention and extinguishing apparatus and
materials, alarms, telecommunications, security systems and
equipment, motors, machinery, ducts, (collectively, "Equipment"; the
Land, Improvements and Equipment are collectively referred to herein
as the "Premises").
(B) All present and future general intangibles (including all
contracts between Mortgagor and any original contractor (as defined
in Texas Property Code Chapter 53) or any other person) relating to
construction or improvement (including furnishing materials or
supplies for construction or improvement) of any Mortgaged Property.
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<PAGE>
(C) All present and future plans, specifications and drawings
prepared by any architect or engineer relating to the Mortgaged
Property, and all present and future agreements between Mortgagor
and any person relating to the provision of architectural,
engineering or other design services relating to the Mortgaged
Property.
(D) Any commitment of any lender or investor other than
Mortgagee to finance or invest in any of the Mortgaged Property.
(E) Any completion, performance, payment or other bond
relating to any of the Mortgaged Property or any contract for
construction on the Mortgaged Property.
(F) All existing and future leases (whether written or oral)
of any of the Mortgaged Property (the "Leases"), maintenance and
other contracts relating to the Land or the Improvements, all tenant
deposits under any Leases, all licenses, permits and certificates.
(G) All present and after acquired accounts, instruments,
documents and general intangibles (including trade names and symbols
used in connection with the Land and Improvements).
(H) All wastewater, fresh water and other utility capacity and
facilities available to or allocated to the Land or the
Improvements, and all other present or future rights and privileges
relating to the Land or the Improvements.
(I) All real estate tax refunds and credits and all awards or
payments, including interest on any of them, and the right to
receive the same which Mortgagor may have, which may be made with
respect to any of the Premises whether from a Condemnation thereof
or for any other injury to, decrease in the value of, or other
occurrence affecting an of the Premises.
(J) All other personal property, tangible or intangible, now
or hereafter owned by Mortgagor.
(K) All proceeds of any and all of the foregoing and all
additions and accessions to, substitutions and replacements for, and
profits, royalties, revenues, issues, income, benefits, products and
offspring of any and all of the foregoing.
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<PAGE>
(b) "Collateral" means all property described in paragraph (iii) of the
definition of Mortgaged Property, to the extent it is personal property under
applicable law, and all proceeds thereof and all proceeds of the property
described in (i), (ii) and (iii) of the definition of Mortgaged Property.
(c) "Condemnation" shall mean a taking or voluntary conveyance during the
term hereof of all or any part of the Mortgaged Property or any interest therein
or right accruing thereto or use thereof, as the result of, or in settlement of,
any condemnation or other eminent domain proceeding by any Governmental
Authority, whether or not the same shall have actually been commenced.
(d) "Rents" means all rent and other income from the Mortgaged Property.
(e) "Debt" means: (i) all Senior Debt Obligations and the Oil Payment
Reimbursement Obligations; (ii) all payment obligations of Mortgagor and Port
Arthur Finance Corp., a Delaware corporation, which is a wholly owned subsidiary
of Mortgagor under the Debt Service Reserve Account Insurance Guarantee dated
August 19, 1999 (as amended from time to time, the "Debt Service Reserve
Guarantee Arrangement") between Mortgagor and Winterthur International Insurance
Company Limited, a company incorporated under the laws of England
("Winterthur"); (iii) all amounts for which Mortgagor may become obligated to
Mortgagee pursuant to this Deed of Trust; (iv) all other obligations of
Mortgagor under any other documents from time to time evidencing, securing or
relating to the Senior Loan Agreements, the Reimbursement Agreement or the Debt
Service Reserve Guarantee Arrangement (collectively, the "Loan Documents"); and
(v) all other obligations of the Borrower, the Mortgagor or the Partners under
the Financing Documents. The total amount of the Debt is $865 million with a
final maturity date of January 15, 2009.
(f) "Governmental Authority" means national or federal government, any
state, regional, local or other political subdivision thereof with jurisdiction
and any person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government or
quasi-governmental issues (including, without limitation, any court).
(g) "Permitted Encumbrances" means the liens, easements and encumbrances
to title described on Exhibit B, to the extent each is valid, subsisting and
affects title to the Mortgaged Property.
(h) All terms defined in the Uniform Commercial Code as in effect in the
State of Texas as of the date hereof (the "UCC") have the same meanings in this
Deed of Trust as in the UCC.
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<PAGE>
(i) Initially capitalized terms not defined in this Deed of Trust shall
have the meanings specified in the Common Security Agreement, dated as of August
19, 1999, among Port Arthur Finance Corp., as Borrower, Port Arthur Coker
Company L.P., as Partnership and Guarantor, Sabine River Holding Corp., as
General Partner of the Partnership, Neches River Holding Corp., as Limited
Partner of the Partnership, Bankers Trust Company, as Collateral Trustee for the
Secured Parties, Deutsche Bank AG, New York Branch, as Administrative Agent for
and on behalf of the Bank Senior Lenders, Winterthur, for itself and as
Administrative Agent for and on behalf of the Oil Payment Insurers, HSBC Bank
USA, as Capital Markets Trustee for the Capital Markets Senior Lenders, Bankers
Trust Company, as Depositary Bank, and Winterthur, as Insurer under the Debt
Service Reserve Insurance Guarantee.
2. Mortgagor's Representations and Agreements.
(a) Title to Property. Mortgagor will warrant and defend Trustee's title
to and Mortgagee's security interest in the Mortgaged Property against any
person who claims any of it. No person owns any lien or other interest in the
Mortgaged Property except the lien and security interest created by this Deed of
Trust, other liens and security interests for the benefit of Mortgagee,
Permitted Encumbrances and the statutory lien for taxes not yet due. No person
other than Mortgagee owns any interest in the Rents. No lien document or
financing statement affecting any Mortgaged Property or the Rents, other than
lien documents and financing statements in favor of Mortgagee, is on file in any
public office. If any person claims any interest or encumbrance, except for
Permitted Encumbrances, Mortgagor will promptly remove any such adverse claim,
lien or encumbrance from the Mortgaged Property, or the Rents. Mortgagor will
give Mortgagee prompt notice of an assertion by any person of any interest or
encumbrance affecting, or any legal proceeding affecting, any part of the
Mortgaged Property or the Rents. Mortgagor will take any action Mortgagee
requires to protect, assure or enforce the lien and security interest of this
Deed of Trust and the assignment of the Rents. This paragraph will survive
termination or foreclosure of this Deed of Trust.
(b) Homestead. Mortgagor represents that at the time of execution and
delivery of this Deed of Trust, no part of the Mortgaged Property is any part of
Mortgagor's residential or business homestead.
3. Collection and Application of Insurance and Condemnation
Proceeds. Mortgagor assigns to Mortgagee all amounts received by Mortgagor or
Mortgagee as proceeds of insurance and proceeds of Condemnation proceedings as
additional security for the Debt. Mortgagor will promptly give Mortgagee notice
of any material damage to or condemnation proceeding affecting the Mortgaged
Property. Mortgagee may file or prosecute (or both) any insurance or
Condemnation claim. Mortgagee may collect and give receipts for any money
payable under any insurance policy by reason of loss of or damage
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<PAGE>
to the Improvements. Mortgagee may settle or compromise, on any terms and for
any amount it selects, the liability of any insurance company or companies on
any policy, and execute and deliver releases and discharges of liability binding
Mortgagor and Mortgagee. Mortgagee may, collect and give receipts for any money
payable to Mortgagor because of Condemnation proceedings affecting any Mortgaged
Property. Mortgagor RELEASES Mortgagee from any liability in connection with any
settlement or compromise of any insurance or Condemnation claim. Mortgagee shall
apply all insurance or condemnation proceeds in accordance with the terms of the
Common Security Agreement.
4. Events of Default; Acceleration; Appointment of Receiver. (a) The
occurrence of any Default or Event of Default set forth in Article X of the
Common Security Agreement shall constitute an "Event of Default" for all
purposes of this Deed of Trust.
(b) If any Event of Default shall occur and be continuing, then the
Mortgagee shall have (in addition to any and all other available remedies at law
and equity including, without limitation, the remedy provided in clause (c)of
this Section 4 and in Section 5 hereof) each of the remedies set forth in
Article X of the Common Security Agreement.
(c) If any Event of Default shall occur and be continuing, Mortgagee may,
without demand presentment or notice of any kind (including notice of default,
notice of intent to accelerate the maturity of the Debt, or notice of actual
acceleration), all of which Mortgagor waives, declare all of the Debt
immediately due and payable, and may request that Trustee exercise any of
trustee's remedies under this Deed of Trust. In addition, if an Event of Default
occurs, Trustee will be entitled as a matter of right to the appointment of a
receiver or receivers of the Mortgaged Property, and of all its rent and other
income. Notwithstanding the appointment of any receiver, Trustee will be
entitled to the possession and control of any cash or other instruments that
this Deed of Trust requires Mortgagor to deliver or pay to Trustee. If an Event
of Default occurs, Mortgagee may demand that Mortgagor surrender possession of
the Mortgaged Property to Mortgagee. If Mortgagee takes possession of the
Mortgaged Property, Mortgagee will not be liable to Mortgagor for any rental of
the Mortgaged property, nor for any failure to rent or inadequacy of rental of
the Mortgaged Property, nor for any damage to or waste of the Mortgaged
Property, WHETHER OR NOT DUE TO MORTGAGEE'S NEGLIGENCE, except as a result of
the gross negligence or willful misconduct of Mortgagee.
5. Trustee's Sale.
(a) If an Event of Default shall occur and be continuing, Trustee will, at
the request of Mortgagee, sell all or any part of the Mortgaged Property as an
entirety or in parcels, by one sale or by several sales held at one time or at
different times, all as Trustee in Trustee's discretion elects. The sale will be
made in accordance with Texas Property Code Section 51.002 or any successor
statute. If the Land is situated in more than one
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<PAGE>
county, then required notices will be given in both or all of such counties, the
Mortgaged Property may be sold in either or any such county, and such notices
shall designate the county where the Mortgaged Property will be sold. The
affidavit of any person having knowledge of the facts to the effect that require
notices were posted, filed or mailed will be prima facie evidence of the facts
recited in the affidavit. The Trustee's deed at any such sale will be with
general warranty, and Mortgagor will warrant and forever defend the title of the
purchaser or purchasers. Mortgagee may be the purchaser at any sale made
hereunder, and credit the sale price against the Debt. Any deed so executed by
Trustee will be prima facie proof of all factual matters stated in it. The
purchaser or purchasers named in any such deed, and all persons subsequently
dealing with the property purported to be thereby conveyed, will be fully
protected in relying upon the truthfulness of factual matters stated in the
deed. After any Trustee's sale, Mortgagor will surrender immediate possession
and control of the property purchased to the purchaser. If Mortgagor falls to
surrender possession, Mortgagor will be a tenant at will.
(b) Mortgagee may at any time before the sale direct Trustee to abandon
the sale, and may at any time thereafter direct Trustee to again commence
foreclosure. Whether or not foreclosure is commenced by Trustee, Mortgagee may
at any time after an Event of Default occurs institute suit for collection of
all or any part of the Debt or foreclosure of the lien of this Deed of Trust or
both. If Mortgagee institutes suit for collection of the Debt and foreclosure of
the lien of this Deed of Trust, Mortgagee may at any time before the entry of
final judgment dismiss the same, and require Trustee to sell the Mortgaged
Property in accordance with the provisions of this Deed of Trust. No single sale
or series of sales under this Deed of Trust or by judicial foreclosure will
extinguish the lien or exhaust the power of sale under this Deed of Trust except
with respect to the items of property sold.
(c) Trustee will apply the proceeds of sale, first to the payment of all
expenses of the sale, second to the payment of the Debt in any order Mortgagee
chooses and third the balance, if any, to any person who is entitled to it. This
paragraph does not give any right, remedy or claim to any holder of any
obligation or lien, other than Mortgagee.
6. Alternative Procedures under UCC. In addition to all other rights
and remedies granted in this Deed of Trust, Mortgagee has the rights of a senior
secured party under the UCC as to any of the Collateral. After an Event of
Default occurs, Mortgagee may require Mortgagor to assemble the Collateral and
make it available to Mortgagee at a reasonably convenient place Mortgagee
designates. Mortgagor authorizes each obligor on any Collateral to make payment
and performance to Mortgagee upon Mortgagee's demand, and payment or performance
to Mortgagee will discharge the obligor's duty as if it had been rendered to
Mortgagor, even if Mortgagor notifies the obligor that payment or performance
should not be made to Mortgagee. Mortgagor irrevocably appoints Mortgagee as its
attorney-in-fact to do all things Mortgagor is required to do under this Deed of
Trust. This appointment is coupled with an interest. Except for the safe custody
of any Collateral in its
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<PAGE>
possession and accounting for money actually received by it, Mortgagee has no
duty as to any Collateral, including the duty to preserve rights against prior
parties. Written notice to Mortgagor mailed 10 days prior to public or private
sale is reasonable notice.
7. Change of Trustee. Trustee may be removed at any time with or
without cause, at the option of Mortgagee, by written declaration of removal
executed by Mortgagee, without any notice to or demand upon Trustee, Mortgagor
or any other person. If at any time Trustee is removed, dies or refuses, fails
or is unable to act as Trustee, Mortgagee may appoint any person as successor
Trustee hereunder, without any formality other than a written declaration of
appointment executed by Mortgagee. Immediately upon appointment, the successor
Trustee so appointed automatically will be vested with all the estate and title
in the Mortgaged Property, and with all of the rights, powers, privileges,
authority, options and discretions, and charged with all of the duties and
liabilities, vested in or imposed upon Trustee by this instrument, and any
conveyance executed by any successor Trustee will have the same effect and
validity as if executed by the Trustee named in this Deed of Trust.
8. Fair Market Value for Calculating Deficiencies. If Mortgagee sues
Mortgagor, Borrower or any other party obligated on the Debt or any guarantor of
any Debt to collect any deficiency owing after foreclosure of the Mortgaged
Property, "fair market value" of the Mortgaged Property under Sections 51.003,
51.004, and 51.005 of the Texas Property Code (as amended from time to time)
(the "Deficiency Statutes") will be determined as follows:
(a) Any valuation of the Mortgaged Property will be based on "as is"
condition on the foreclosure date, without any assumption or expectation that
the Mortgaged Property will be repaired or improved in any manner before a
resale of the Mortgaged Property after foreclosure.
(b) Any valuation will assume that the foreclosure purchaser desires
resale of the Mortgaged Property for cash promptly (but no later than twelve
months) following the foreclosure sale.
(c) All reasonable closing costs customarily borne by the seller in a
commercial real estate transaction, including brokerage commissions, title
insurance, a survey of the Mortgaged Property, tax prorations, attorney's fees,
and marketing costs, will be deducted from the gross fair market value of the
Mortgaged Property.
(d) Any valuation will further discount the gross fair market value of the
Mortgaged Property to account for any estimated holding costs associated with
maintaining the Mortgaged Property pending sale, including utilities expenses,
property management fees, taxes and assessments, and other maintenance expenses.
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<PAGE>
(e) Any expert opinion testimony given or considered in connection with a
determination of the fair market value of the Mortgaged Property must be given
by persons who have at least five years experience in appraising property
similar to the Mortgaged Property and who have conducted and prepared a complete
written appraisal of the Mortgaged Property taking into consideration the
factors set forth above.
9. All Security Cumulative; Subrogation; Waiver of Marshalling. The
execution of this instrument does not impair any other security for the payment
of any Debt. Mortgagee may take additional security for any Debt in the future
without altering or impairing the lien of this Deed of Trust. Mortgagee may
release any Mortgaged Property or any other security for the Debt without
altering or impairing the lien of this Deed of Trust as to the Mortgaged
Property not released. All present and future security will be cumulative.
Mortgagee is subrogated to all rights, liens or interests in any of the
Mortgaged Property securing the payment of any obligation satisfied or paid off
out of the proceeds of the loans evidenced by the Loan Documents. Mortgagor
waives any right of marshalling of assets or sale in inverse order of
alienation, and all present or future appraisal rights and equity of redemption
rights.
10. Limitations on Amount of Interest. Mortgagor and Mortgagee
intend to conform strictly to applicable usury laws. Therefore, the total amount
of interest (as defined under applicable law) contracted for, charged or
collected under the Debt or this Deed of Trust will never exceed the highest
amount permitted by applicable law. If Mortgagee contracts for, charges or
receives any excess interest, it will be deemed a mistake. Any unlawful contract
or charge will be automatically reformed to conform to applicable law, and if
Mortgagee has received excess interest, Mortgagee will either refund the excess
to Mortgagor or credit the excess on the unpaid amounts owing under the Debt or
this Deed of Trust. All amounts constituting interest will be spread throughout
the full term of the Debt in determining whether interest exceeds lawful
amounts.
11. Financing Statement; Mortgagor's Covenant. This Deed of Trust
may be filed in the real property records as a fixture filing, and may be filed
as a financing statement in any other place which is necessary or desirable to
perfect the security interests granted in this Deed of Trust. A carbon,
photographic or other reproduction of this Deed of Trust or a financing
statement relating to this Deed of Trust is sufficient as a financing statement.
The secured party is Mortgagee and the address of the secured party is set forth
in Section 12. The debtor is Mortgagor and the mailing address of the debtor is
set forth in Section 12. Mortgagor will promptly notify Mortgagee of any change
in Mortgagor's location, name, identity or organizational structure.
12. Notices. Except as otherwise provided, any notice, request or
demand under this Deed of Trust must be in writing and will be sufficient if
either delivered personally or deposited in the United States mail in a postpaid
envelope addressed to the
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<PAGE>
mailing address set forth below. A party may designate a different address by
notice given in compliance with this Section. Any notice to Mortgagee must be
sent or delivered to the officer named below or to another officer designated
for receipt of such notices by Mortgagee. The names and mailing addresses of
Mortgagor and Mortgagee are as follows:
Mortgagor: Mortgagee:
Port Arthur Coker Company L.P. Bankers Trust Company
Port Arthur Refinery Corporate Trust & Agency Services
1801 S. Gulfway Drive, Office Four Albany Street, 4th Floor
No. 36 New York, New York 10006
Port Arthur, Texas 77640 Attn: James McDonough
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908)
with a copy to:
Port Arthur Coker Company L.P.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Legal Department
13. Additional Agreements. This Deed of Trust benefits the
successors, assigns and legal representatives of Trustee and Mortgagee and binds
any successors or transferees of Mortgagor (however, this provision does not
permit Mortgagor to transfer the Mortgaged Property). Each reference to
Mortgagor, Trustee or Mortgagee includes their respective successors, assigns
and legal representatives. No modification or waiver of this Deed of Trust will
be effective unless in writing and signed by Mortgagee. Mortgagee may waive any
default without waiving any other prior or subsequent default. Mortgagee's
failure to exercise or delay in exercising any rights under this Deed of Trust
will not operate as a waiver of those rights. If any provision of this Deed of
Trust is unenforceable or invalid, that provision will not affect the
enforceability or validity of any other provision. If the application of any
provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable, that application will not affect the legality or enforceability
of the provision as to any other person or circumstance. If more than one person
executes this Deed of Trust as Mortgagor, their obligations under this Deed of
Trust are joint and several.
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<PAGE>
14. Rules of Construction. The section headings or captions in this
instrument are for convenience and are not a part of this instrument for any
purpose. Any action permitted to Mortgagee may be taken by any authorized
officer, employee or agent of Mortgagee, or any attorney, accountant,
environmental consultant or other advisor or professional retained by Mortgagee.
Use of the term "including" does not imply any limitation on (but may expand)
the antecedent reference. Unless the context clearly requires otherwise, the
term "may" does not imply any obligation to act. Any reference to exhibits or
schedules means the exhibits or schedules to this Deed of Trust, which are fully
incorporated by reference into this Deed of Trust. Any reference to a particular
document includes all modifications, supplements, replacements, renewals or
extensions of that document, but this rule of construction does not authorize
amendment of any document without Mortgagee's consent.
15. Security Interest Absolute. All rights of Mortgagee and the
liens and security interests granted by this Deed of Trust, and all obligations
of Mortgagor hereunder, are and will be absolute and unconditional, irrespective
of: (i) any lack of validity or enforceability of the Common Security Agreement
or any other Loan Documents; (ii) any change in the time, manner, or place of
payment of, or in any other term of, all or any of the Debt or any other
amendment or waiver of or any consent to any departure from the Common Security
Agreement or any other Loan Documents; (iii) any exchange, release or
non-perfection of any other collateral, or any release or amendment or waiver of
or consent to departure from any guaranty, for all or any of the Debt; or (iv)
any other circumstance which might otherwise constitute a defense available to,
or a discharge of, the Borrower or a third party grantor of a security interest.
16. Mortgagor Further Assurances. Mortgagor agrees to execute,
acknowledge, deliver, file and record such further certificates, amendments,
instruments and documents, and to do all such other acts and things, as may be
required by law or as, in the reasonable judgment of the Mortgagee, may be
necessary or advisable to carry out the intent and purpose of this Deed of Trust
17. Mutual Agreements.
(a) THIS DEED OF TRUST MAY BE EXECUTED IN SEPARATE COUNTERPARTS, EACH OF WHICH
WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO BE AN ORIGINAL AND ALL
OF WHICH COUNTERPARTS TAKEN TOGETHER SHALL CONSTITUTE BUT ONE AND THE SAME
INSTRUMENT.
(b) THIS DEED OF TRUST SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS.
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(c) EACH OF THE MORTGAGOR AND THE MORTGAGEE HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(d) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE MORTGAGEE, IN
EXERCISING ANY RIGHTS OR ENFORCING ANY REMEDIES UNDER THIS DEED OF TRUST
FOR THE BENEFIT AND ON BEHALF OF WINTERTHUR, AS INSURER UNDER THE DEBT
SERVICE RESERVE GUARANTEE ARRANGEMENT, SHALL BE AND AT ALL TIMES REMAIN
SUBJECT TO THE SUBORDINATION PROVISIONS SET FORTH IN ARTICLE IV OF THE
INTERCREDITOR AGREEMENT.
(e) THIS DEED OF TRUST, THE COMMON SECURITY AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENTORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
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<PAGE>
Mortgagor has executed this instrument to be effective as of
August 19, 1999.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
its General Partner
By: /s/ Maura Clark
-----------------------------
Maura Clark
Executive Vice President and
Chief Financial Officer
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
This instrument was acknowledged before me on the 19th day of
August, 1999, by Maura Clark, Executive Vice President and Chief Financial
Officer of Sabine River Holding Corp., a corporation incorporated under the laws
of the State of Delaware, on behalf of said corporation acting as General
Partner of Port Arthur Coker Company L.P., a partnership formed under the laws
of the State of Delaware.
/s/ Marisa Gondrez
--------------------------------
Notary Public, State of New York
Name:
MARISA S. GONDREZ
Notary Public, State of New York
No. 01GO6012061
Qualified in Queens County
Certificate Files in New York County
Commission Expires Aug. 17, 2000
My commission expires:
_____________________________
<PAGE>
Mortgagee is executing this Deed of Trust solely to acknowledge its agreement to
the last numbered section above.
BANKERS TRUST COMPANY
By: /s/ James C. McDonough
-----------------------------
Name: James C. McDonough
Title: Vice President
By: /s/ William T. Jenkins
-----------------------------
Name: WILLIAM T. JENKINS
Title: ASSISTANT VICE PRESIDENT
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
This instrument was acknowledged before me on the 19th day of
August, 1999, by James C. McDonough, Vice President of ____________ and William
T. Jenkins, Asst. Vice President of Bankers Trust Corporation, a banking
corporation incorporated under the laws of the State of New York, on behalf of
said banking corporation.
/s/ Marisa Gondrez
--------------------------------
Notary Public, State of New York
Name:
My commission expires:
_____________________________
MARISA S. GONDREZ
Notary Public, State of New York
No. 01GO6012061
Qualified in Queens County
Certificate Files in New York County
Commission Expires Aug. 17, 2000
<PAGE>
Exhibit A
Description of Land
[Description of the Land on which the Coker, the Hydrocracker, the Sulfur Plant,
the Sour Water Stripper and the Amine Treating Unit are situated. The
description should be exactly the same, word for word, as the description in the
Title Insurance Policy.]
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Exhibit B
Permitted Encumbrances
(1) Liens for taxes not delinquent or being contested in good faith and by
appropriate proceedings.
(2) Liens, constituting deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under
unemployment insurance.
(3) Liens constituting deposits or pledges or secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business.
(4) Mechanics', workmen's, materialmen's or other like liens arising in the
ordinary course of business with respect to obligations that are not due
or that are being contested in good faith.
(5) Liens constituting easements and imperfections of title on real estate,
provided that such easements and imperfections do not render title
unusable for purposes of the Coker Project.
(6) Liens securing judgments, decrees or orders of any court (A) that are not
currently dischargeable or (B) that have been discharged or stayed or
appealed within 30 days after the date of such judgment, decree or order
(in the case of a stay or appeal, during the period of such stay or
appeal).
(7) Any other lien or encumbrance permitted under, or consented to as provided
in, the Common Security Agreement.
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Appendix I
to Common Security Agreement
FORM OF CONSENT AND ACKNOWLEDGMENT
CONSENT AND AGREEMENT, dated as of _______, among
_______________________________, _______________________ (the "Contractor"),
BANKERS TRUST COMPANY, a New York banking corporation, as Collateral Trustee for
the benefit of the Secured Parties (as hereinafter defined) (in such capacity,
together with its successors and assigns, the "Collateral Trustee"), and PORT
ARTHUR COKER COMPANY L.P., a Delaware limited partnership (the "Partnership").
WHEREAS, the Partnership is constructing and will own and operate a
new delayed coker facility and certain related refinery equipment, located at
Contractor's refinery in Port Arthur, Texas (the "Coker Complex")
WHEREAS, Contractor and the Partnership have entered into the
_______________ and dated as of___________ (the "Agreement"), in connection with
the [construction and ]operation of the Coker Complex;
WHEREAS, in order to finance the construction and operation of the
Coker Complex, the Partnership has entered into financing arrangements (as the
same may be amended, supplemented or otherwise modified, or extended or
refinanced, from time to time, the Financing Arrangements") with the banks and
other financial institutions from time to time parties thereto (together with
their respective successors and assigns, the "Financing Parties")
WHEREAS, the Financing Arrangements provide, among other things, for
the making of the loans and other extensions of credit to the Partnership, the
proceeds of which are to be applied to finance the construction of the Coker
Complex;
WHEREAS, the loans, bonds and other obligations of the Partnership
incurred in connection with the Financing Arrangements will be secured by
substantially all of the assets of the Partnership pursuant to a Common Security
Agreement, dated as of August 19, 1999, entered into by the Partnership in favor
of the Collateral Trustee, pursuant to which the Partnership has assigned to the
Collateral Trustee for the benefit of the Secured Parties, as collateral
security for the Senior Debt Obligations, all of the Partnership's right, title
and interest in, to and under among other things the Agreements;
WHEREAS, it is an obligation of Contractor under the Financing
Arrangements that Contractor execute and deliver this Consent;
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NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
(a) Defined Terms. The following terms shall have the meanings indicated:
"Agreements" has the meaning specified in the recitals to this Consent.
"Coker Complex" has the meaning specified in the recitals.
"Collateral Trustee" has the meaning specified in the caption of this
Consent.
"Common Security Agreement" means the Common Security Agreement, dated as
of August 19, 1999, among the Partnership, the Collateral Trustee and the other
parties named therein, as the same may be amended, supplemented or otherwise
modified from time to time.
"Consent" means this Consent and Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Contractor" has the meaning specified in the caption of this Consent.
"Default Notice" has the meaning specified in Section 5(a).
"Event of Default" means any of the events listed in Section 10.1 of the
Common Security Agreement.
"Financing Arrangements" has the meaning specified in the recitals to this
Consent.
"Financing Documents" means the Common Security Agreement and any other
agreement or instrument entered into by the Partnership or any other Person
pursuant to the Financing Arrangements which secures, evidences or governs
payment or performance of any of the Senior Debt Obligations.
"Financing Parties" has the meaning specified in the recitals to this
Consent.
"Nominee" has the meaning specified in Section 5(b).
"Notice" has the meaning specified in Section 5(a).
"Partnership" has the meaning specified in the caption of this Consent.
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"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other legal entity of whatever nature.
"Project Revenue Account" has the meaning specified in the Common Security
Agreement.
"Refinancing" means any financing transaction or debt offering
transaction, or series of such transactions, all or part of the proceeds of
which are used to repay the Senior Debt Obligations or otherwise are used to
provide financing for the Coker Complex.
"Replacement Party" has the meaning specified in Section 5(c).
"Secured Parties" has the meaning specified in the Common Security
Agreement.
"Senior Debt Obligations" has the meaning specified in the Common Security
Agreement.
"Transferee" has the meaning specified in Section 5(b)(i).
(b) Other Definitional Provisions.
(i) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Consent shall refer to this Consent as a whole
and not to any particular provision of this Consent, and section and subsection
references are to this Consent unless otherwise specified.
(ii) Each reference in this Consent to an agreement, instrument or
document shall be deemed to refer to such agreement, instrument or document as
the same may be amended, supplemented or otherwise modified from time to time.
(iii) Any term defined by reference to an agreement, instrument or
other document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.
(iv) Each reference in this Consent to a Person shall be deemed to
include such Person's successors and assigns.
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SECTION 2. CONSENTS TO ASSIGNMENTS, ETC.
Contractor hereby:
(a) acknowledges that the Secured Parties have entered into the Financing
Arrangements in reliance upon the performance by Contractor of its obligations
under the Agreement and this Consent, and irrevocably consents to the assignment
of the Agreement, pursuant to Section ____ of the Agreement, to the Collateral
Trustee for the benefit of the Secured Parties as collateral security for the
Senior Debt Obligations of all of Partnership's right, title and interest,
(whether now existing or hereafter arising) in, to and arising under the
Agreement;
(b) irrevocably consents, pursuant to Section ____ of the Agreement, to
any subsequent assignment of the Agreement by the Collateral Trustee pursuant to
Section 5(b), upon and after receipt by Contractor of written notice from the
Collateral Trustee that it desires to exercise its rights and remedies as a
secured party, or as trustee for the benefit of the Secured Parties, in respect
of the Senior Debt Obligations (but without any right or obligation of
Contractor to know or confirm whether any such subsequent assignment is
permitted under the Financing Documents), including the acquisition of all of
the Partnership's existing and future rights under the Agreement by sale,
foreclosure or otherwise, or the construction and/or operation of the Coker
Complex pending sale or foreclosure through a receiver or otherwise, or the
assignment of the Agreement to any Person who is a Transferee; and Contractor
will, at the request of any such Transferee, enter into a consent and agreement
in connection therewith having terms the same as the terms of this Consent,
except such terms as may be inapplicable;
(c) confirms that the assignment of the Partnership's right, title and
interest in, to and arising under the Agreement pursuant to Section 6.06 of the
Common Security Agreement is in accordance with all applicable provisions of the
Agreement;
(d) irrevocably agrees that the Collateral Trustee and the other Secured
Parties shall not be subject to any liability or obligation under the Agreement
nor shall the Collateral Trustee or any Secured Party be obligated or required
(A) to perform any of the Partnership's obligations under the Agreement or (B)
to take any action to collect or enforce any claim for payment assigned to it
under the Common Security Agreement or otherwise;
(e) acknowledges the right of the Collateral Trustee and the other Secured
Parties to cure defaults by the Partnership under the Agreement pursuant to the
terms of this Consent (notwithstanding anything to the contrary contained in
such Agreement), without assuming or being responsible for any of the
obligations of the Partnership thereunder;
(f) acknowledges the right of the Collateral Trustee, following the
occurrence of an Event of Default under the Common Security Agreement, to
exercise its rights thereunder as a secured creditor and collateral assignee of
the Agreement to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Agreement and to enforce the
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Agreement against Contractor, notwithstanding anything to the contrary contained
in the Agreement (but without any right or obligation of Contractor to know or
confirm whether any such subsequent assignment is permitted under the Financing
Documents);
(g) acknowledges and irrevocably agrees, notwithstanding anything to the
contrary contained in the Agreement, but subject to the provisions of this
Consent, that none of the following shall constitute in and of itself, as
between Contractor and the Collateral Trustee or any other Secured Party, a
default or breach by Partnership under the Agreement:
(i) the collateral assignment of the Agreement to the Collateral
Trustee for the benefit of the Secured Parties;
(ii) the sale, foreclosure or other enforcement by the Collateral
Trustee or any other Secured Party of secured creditor remedies;
(iii) the acquisition of the rights of the Partnership under the
Agreement by the Collateral Trustee or any other Person as a result of sale or
foreclosure (or acceptance of an absolute assignment of the Agreement in lieu of
sale or foreclosure) or the exercise of other secured creditor remedies; or
(iv) the assignment of the Agreement by the Collateral Trustee or
any other Secured Party or a Nominee to any other Person, following the
acquisition of the Agreement by the Collateral Trustee or any other Secured
Party or Nominee in the exercise of rights and remedies as a secured creditor
(or in lieu of the exercise of such rights and remedies); and
(h) irrevocably agrees at the request of the Partnership, to enter into a
consent and agreement in connection with a Refinancing having terms the same as
this Consent, except such terms as may be inapplicable or other non-substantive
change.
SECTION 3. PAYMENT OF ASSIGNED SUMS.
Until notified in writing by the Collateral Trustee that the Senior Debt
Obligations have been paid in full, Contractor shall pay by wire transfer in
U.S. dollars of same day funds directly to the Project Revenue Account or as
otherwise instructed in writing by the Collateral Trustee any and all amounts,
if any, payable by Contractor to the Partnership under the Agreement or as a
result of a breach thereof. The making of such payment into the Project Revenue
Account, and the currency of such payment are of the essence of this Consent.
All amounts paid to the Collateral Trustee shall be accompanied by a notice
specifying the amount of such payment and the purpose for which such payment is
being made. After Contractor has been notified in writing by the Collateral
Trustee that the Senior Debt Obligations have been paid in full, Contractor
shall pay such amounts directly to Partnership.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF CONTRACTOR.
Contractor hereby represents and warrants that:
(a) Organization. It is a corporation duly organized and existing under
the laws of ________ and has the legal capacity to enter into and perform this
Consent.
(b) Government Authorizations. It has obtained all necessary
authorizations from the competent governmental authorities for the execution of
this Consent and the performance of its obligations hereunder.
(c) Corporate Authority. The execution and performance by Contractor of
this Consent has been duly authorized by all necessary corporate action. This
Consent has been duly executed by Contractor and, assuming the due authorization
and execution of this Consent by the Partnership and the Collateral Trustee,
constitutes the legal, valid and binding obligation of Contractor, enforceable
against Contractor in accordance with its terms.
(d) No Conflict. Neither the execution of this Consent by Contractor nor
the performance by Contractor of its obligations hereunder will conflict with or
result in any breach of, or constitute a violation of or default under, any
applicable law or regulation, Contractor's charter or by-laws, or any indenture,
mortgage, deed of trust, or other instrument or agreement (including, without
limitation, any negative pledge or similar clause), to which Contractor or any
of its affiliates is a party, or by which any of them may be bound, or to which
any of their respective property or assets may be subject.
(e) No Litigation. No lawsuit or other proceeding is pending or, to the
knowledge of Contractor, threatened against Contractor which, if determined
adversely to Contractor, may materially and adversely affect its business or
financial condition or the consummation of the transactions contemplated by, or
the performance of its obligations under, this Consent or the Agreement. No
action or proceeding has been instituted and no order, decree, injunction or
judgment of any kind from any court or other governmental authority has been
issued to avoid, restrain or in any other manner prevent the consummation of the
transactions contemplated by this Consent or the Agreement.
(f) Enforcement. The Agreement and this Consent are in proper legal form
to be enforced against Contractor, and it is not necessary to ensure the
legality, validity, enforceability or admissibility into evidence of the
Agreement or this Consent that they be filed, recorded or enrolled with any
governmental authority, or that any such document be stamped with any stamp,
registration or similar transaction tax.
(g) Execution. Delivery: Binding Agreement. The Agreement is in full force
and effect and the Agreement has not been assigned by Contractor. Except for the
assignments referred to
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in Section 2(a) hereof, Contractor has not received any notice of transfer or
assignment of the Agreement by the Partnership.
(h) No Default or Amendment. Neither Contractor nor, to its knowledge, the
Partnership is in default under the Agreement. Contractor has no existing
claims, counterclaims, offsets or defenses against the Partnership in respect of
the Agreement. The Agreement has not been amended, modified or supplemented in
any manner.
SECTION 5. RIGHTS OF COLLATERAL TRUSTEE.
Contractor agrees that the Collateral Trustee, for the benefit of the
Secured Parties, so long as any Senior Debt Obligations remain outstanding,
shall have the following rights with respect to the Agreement:
(a) Notwithstanding anything to the contrary contained in the Agreement,
the Agreement shall not be terminated or canceled by action of Contractor as the
result of any breach or default of the Partnership without prior notice in
writing to the Collateral Trustee, specifying the basis therefor (hereinafter
called a "Notice"). In the event of a default by Partnership under the
Agreement, Contractor (i) will give prompt written notice to the Collateral
Trustee (a "Default Notice") of such default and any cure period pursuant to the
Agreement (the "Partnership's Cure Period"), (ii) will allow the Collateral
Trustee and the other Secured Parties to cure the default during the
Partnership's Cure Period (whether or not the Partnership or any equity investor
in the Partnership also has the right to cure such default during such period)
and (iii) prior to the exercise by Contractor of any right to terminate the
Agreement, will afford the Collateral Trustee and the other Secured Parties the
longer of (A) 120 days after the receipt by the Collateral Trustee of the
Default Notice and (B) 60 days after the expiration of the Partnership's Cure
Period (the "Secured Parties' Cure Period") to cure such default, provided that
the Secured Parties' Cure Period shall be extended for such longer period of
time as is necessary as long as the Collateral Trustee or any other Secured
Party shall be diligently acting in good faith to cure such default or to obtain
title to the Coker Complex; and provided, further, that notwithstanding the
foregoing, in no event shall the Secured Parties' Cure Period with respect to a
payment default by the Partnership exceed 90 days after the Default Notice from
Contractor. No curing of any defaults under the Agreement shall be construed as
an assumption by the Collateral Trustee or the Secured Party of any of the
obligations, covenants or Agreement of the Partnership under the Agreement.
(b) If the Collateral Trustee or any other Secured Party, or a Nominee (as
defined below), shall become the legal or beneficial owner of the Coker Complex,
or shall become entitled to cause the disposition of the Coker Complex pursuant
to the exercise of its rights and remedies as a secured creditor, then:
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(i) Such Person, at its election, may continue the Agreement by
delivering to Contractor a written notice of continuation. Such Person may
thereafter cause the Partnership's interest in the Agreement to be transferred
to itself or to a third party by delivering to Contractor a written notice of
such transfer and an agreement from such Person or such third party satisfying
the conditions of Section 5(b)(ii) hereof (such Person or such third party, as
the case may be, being herein called a "Transferee"), and in the event of any
transfer and any successive transfers thereafter, (A) Contractor will continue
to perform, for the benefit of such Transferee, its obligations under the
Agreement pursuant to its terms as modified hereby, without regard to any
default by the Partnership thereunder, (B) the Partnership shall remain liable
to Contractor for all its obligations and duties under the Agreement, and (C)
any Transferee shall become liable, not personally but solely to the extent of
its direct or indirect right, title and interest in and to the Coker Complex and
the operating contracts relating thereto, to perform the duties and obligations
of the Partnership under the Agreement only as arise in respect of the period
commencing on the date of such Transferee's succession. Only the Transferee, and
not the Person delivering a notice of continuation, shall have liabilities and
obligations under the Agreement.
(ii) Any agreement delivered pursuant to the second sentence of
subparagraph (i) of this Section 5(b) shall provide that the Transferee shall
(A) assume and agree to perform all future obligations of the Partnership under
the Agreement and agree to be bound by the terms of the Agreement in connection
therewith and (B) be bound by all actions taken and notices given by the parties
under the Agreement prior to any such transfer.
(iii) As used in this Section 5, "Nominee" shall mean (A) any Person
or entity that is directly or indirectly owned and controlled by the Collateral
Trustee, the Collateral Trustee or any other Secured Party and (B) which has
acquired the Partnership's right, title and interest in the Coker Complex.
(c) If (i) the Partnership or a trustee or receiver or any Person
exercising the powers of a trustee or receiver in any bankruptcy, insolvency,
receivership, arrangement, liquidation or similar proceeding applicable to the
Partnership rejects the Agreement, or (ii) the Agreement is terminated (x) by
reason of any bankruptcy, insolvency, receivership, arrangement, liquidation or
similar proceeding applicable to the Partnership or (y) by reason of any default
by the Partnership under the Agreement, and if, in any such case, within 90 days
after such termination, the Collateral Trustee shall so request, Contractor will
execute and deliver to the Collateral Trustee, one or more of the Secured
Parties, a Nominee or a Transferee, as shall be designated by the Collateral
Trustee (herein called the "Replacement Party"), a new contract with the
Replacement Party. The new contract shall contain substantially the same terms
and provisions as the Agreement for the balance of the unexpired term thereof.
(d) If the Collateral Trustee, for the benefit of the Secured Parties, or
any Replacement Party is prohibited from curing any default by the Partnership
under the Agreement by any process, stay or injunctions issued by any
governmental authority or pursuant to any bankruptcy
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or insolvency proceeding involving the Partnership, then the Secured Parties=
Cure Period shall be extended for the period of such prohibition.
SECTION 6. AGREEMENTS OF CONTRACTOR
(a) Continuation of Performance. Contractor agrees to continue the
performance of its obligations under the Agreement notwithstanding any default
by the Partnership under any Financing Document, or the exercise by any Person
of its rights under any Financing Document.
(b) No Set-Offs. Deductions or Counterclaim. Contractor agrees that no
amounts due to the Partnership under the Agreement shall be subject to any
reduction for any set-off, deduction, counterclaim or otherwise based upon any
claim against the Partnership. Contractor shall not assert any claim it may have
by reason of the Partnership's default under the Agreement as a defense to
performance of its obligations under any other agreement with the Partnership or
any affiliate of the Partnership or under this Consent. Nothing contained in
this paragraph (c) shall waive Contractor's rights to enforce any such claim as
a cause of action against the Partnership.
(c) Compliance with Instructions from Collateral Trustee. Contractor
hereby agrees that it shall (i) comply with any and all written instructions
received from the Collateral Trustee pursuant to the Financing Documents, (ii)
treat such instructions as coming directly from the Partnership, (iii) disregard
any contradictory instructions received from the Partnership and (iv) with
effect as of the date of receipt of such instructions, direct to the Collateral
Trustee (with a copy to the Partnership) all communications and correspondence
arising out of or in connection with the Agreement.
(d) Notices. All notices or other communications to be delivered to the
Collateral Trustee or the other Secured Parties pursuant to this Consent or the
Agreement shall be delivered to the Collateral Trustee at the address specified
in Section 8 below and, in the case of Contractor or the Partnership, to each of
these respective entities at the addresses specified in Section 8 below.
(e) Amendments of Agreement. Etc. Contractor will not agree to any
amendment, cancellation or early termination of the Agreement, and will not
assign its rights or obligations under the Agreement to a third party, without
the prior written consent of the Collateral Trustee.
(f) Reservation of Rights. Contractor expressly reserves all rights and
remedies available at law or in equity under the Agreement, except to the extent
expressly modified in this Consent.
(g) Copies of Notices to Partnership. Contractor will deliver to the
Collateral Trustee a copy of each notice given by it to the Partnership
concurrently with delivery of such notice to the Partnership.
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SECTION 7. FURTHER ASSURANCES
The parties hereto hereby agree to provide to each other such
documents and to take such other action as may be reasonably necessary to
effectuate fully the purposes of this Consent.
SECTION 8. NOTICES
All notices and other communication under or in connection with this
Consent shall be in writing, shall refer on their face to the Agreement
(although failure to so refer shall not render any such notice or communication
ineffective), shall be sent by first class registered or certified mail, by
facsimile, by hand or by overnight courier service and shall be addressed:
(i) if to Contractor, in accordance with the Agreement;
(ii) if to the Collateral Trustee, to
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4th Floor
New York, New York 10006
Attention: James McDonough
(iii) if to the Partnership, in accordance with the Agreement; or
(iv) to such other address as Contractor, the Partnership or the
Collateral Trustee, as the case may be, may designated by prior written notice
to the other parties given pursuant hereto.
SECTION 9. MISCELLANEOUS
(a) Separate Counterparts; Amendments, Waiver. This Consent may be
executed in separate counterparts, each of which when so executed and delivered
shall be an original but all of such counterparts together shall constitute one
and the same instrument. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by Contractor, the Collateral Trustee and the Partnership.
(b) Severability. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition
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or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(c) Successors and Assigns. This Consent shall be binding upon and inure
to the benefit of Contractor, the Collateral Trustee, the other Secured Parties,
the Partnership and their respective successors and permitted assigns.
(d) GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(e) Submission to Jurisdiction. Contractor hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof or the enforcement of an award rendered pursuant to
Section ___ of the Agreement, to the non-exclusive general jurisdiction of the
courts of the State of New York located in the Borough of Manhattan, City of New
York and the Federal courts of the U.S. for the Southern District of New York
located in the Borough of Manhattan, City of New York; and, (ii) notwithstanding
anything to the contrary contained in the Agreement, consents that any action or
proceeding in connection with the Agreement may be brought by the Collateral
Trustee and the Financing Parties in such courts and waives any objection that
it may now or hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same.
(f) Enforcement of Judgments. Contractor agrees that a final judgment
against it in any action, suit or proceeding brought in any New York State or
Federal court in accordance with paragraph (e) above shall be conclusive and may
be enforced in any jurisdiction by suit on the judgment, a certified copy of
which judgment shall be conclusive evidence thereof, or by any other means
provided by law.
(g) No Implied Waiver. Failure or delay on the part of any party hereto to
exercise a right under this Consent shall not operate as a waiver thereof; nor
shall any single or partial exercise of a right preclude any other future
exercise thereof.
(h) Agent for Service of Process. Contractor hereby irrevocably and
unconditionally appoints CT Corporation, with an office on the date hereof at
1633 Broadway, 23rd Floor, New York, New York 10019, as its agent, which shall
be a commercial process agent (the "Process Administrative Agent") to receive on
behalf of Contractor and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding in such New York State or Federal court. In any such action or
proceeding, such service may be made on Contractor by delivering a copy of such
process to Contractor in care of the Process Administrative Agent at the Process
Administrative Agent's above address and by depositing a copy of such process in
the mails by certified or registered air mail, addressed to Contractor at its
address set forth beneath its signature hereto (such service to be effective
upon
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such receipt by the Process Administrative Agent and the depositing of such
process in the mails as aforesaid). Contractor hereby further irrevocably and
unconditionally authorizes and directs such Process Administrative Agent to
accept such service on its behalf. If for any reason the Process Administrative
Agent shall cease to be available to act as such, Contractor agrees to designate
a new agent in New York City on the terms and for the purposes of this provision
satisfactory to the Collateral Trustee. As an alternate method of service,
Contractor irrevocably and unconditionally consents to the service of any and
all process in any such action or proceeding in such New York State or Federal
court by mailing of copies of such process to Contractor by certified or
registered air mail at its address set forth in the Agreement, such service to
become effective 30 days after such mailing. Nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction. Contractor hereby agrees that,
to the fullest extent permitted by applicable law, a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law'.
-------------------------
By:_____________________________________
Name:
Title:
Acknowledged and agreed:
BANKERS TRUST COMPANY, as Collateral
Trustee for the benefit of the Secured
Parties
By:_____________________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP., as
General Partner
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By:_____________________________________
Name:
Title:
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Appendix J
to Common Security Agreement
SCHEDULE OF REQUIRED INSURANCE
The Partnership shall maintain or cause to be maintained the following
minimum insurance requirements ("Required Insurance") during the term of this
Agreement, in such form and with a Rated Carrier or such carriers as acceptable
to the Collateral Trustee.
1.0 Construction Period - Partnership
Prior to or upon the Closing Date and until the placement of Operational
Insurance as set forth in 3.0 below, the Partnership shall at all times keep in
force:
1.1 Workers Compensation/Employer's Liability: Workers Compensation
as required by applicable law or authorized governmental authority covering all
persons employed by the Partnership in accordance with the laws of the state in
which the Partnership may be required to pay compensation. Limits for Employers
Liability shall be a minimum of $1,000,000 per accident or disease, aggregate as
to disease and Workers Compensation benefits to full statutory obligations. To
the extent that applicable exposure exists, coverage shall include Jones Act,
USL & H and FELA.
1.2 Automobile Liability: Automobile liability insurance on licensed
motor vehicles owned, non-owned, rented or leased by the Partnership covering
Bodily Injury and Property Damage Liability to a combined inclusive limit of
$1,000,000.
1.3 Commercial General Liability: Commercial General Liability with
Limits of $2,000,000 inclusive per occurrence, and $4,000,000 in the aggregate
annually and such aggregate to apply on a per site or per location basis, for
bodily injury, death and damage to property including loss of use thereof.
Coverage shall be written on occurrence policy forms and specifically be subject
to the following inclusions of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations including cover for a period
not less than 12 months post the issuance of the Certificate of Final
Completion
(iii) Warranty Work extending one year after Final Completion
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
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<PAGE>
(vi) Broad-form property damage
(vii) Severability of interests clause
(viii) Cross Liability cover
(ix) Contractor Protective
1.4 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under 1.1 (excess over Employers Liability only), 1.2
and 1.3 in an amount not less than $48,000,000 per occurrence and in the
aggregate annually, with such aggregate to apply on a per site or per project
basis. Such insurance shall be written on occurrence policy forms.
1.5 Aircraft Insurance: Aircraft Liability Insurance with respect to
owned or non-owned aircraft to the extent used directly or indirectly in the
performance of the construction of the Project Property for limits not less than
$25 million each occurrence without aggregate, for bodily injury, death
(including the passenger hazard) and damage to property including loss of use
thereof
1.6 Marine Liability/Physical Damage Insurance: Hull and Machinery
insurance covering the full replacement value of any barges, scows or watercraft
used in connection with the construction of the Project Property. Marine
Liability or Protection Indemnity insurance on any barges, scows or other
watercraft used in connection with the construction of the Project Property
including coverage for special operations, pollution liability and voluntary
removal of wreck for limits which are the greater of those afforded under a
Protection and Indemnity Club or $25 million per occurrence, without aggregate.
In the event such vessels are not entered in a Protection and Indemnity Club,
and American policy form including special operations and pollution liability
shall be acceptable.
1.7 Marine Cargo Insurance and Consequential Loss: The Partnership
shall insure equipment and materials for incorporation into the Project
Property, while in the course of marine, air and inland transit. Coverage shall
be in force from the time that such insured property leaves the last factory or
warehouse of the Contractor, Sub-Contractors or suppliers, for shipment, and
terminates after discharge at Site. Coverage shall be on a full replacement cost
basis with a limit equivalent to the value of the greatest shipment. Coverage
shall include both loading and unloading and shall remain in effect until
property in transit is delivered to the Project site, unloaded and comes under
the cover of the Builders All Risk Policy (1.8). Deductible shall not exceed
$25,000. Marine cargo insurance shall apply with respect to all equipment valued
in excess of $50,000.
Marine Consequential Insurance covering only the Partnership as
Insured for loss of net income and fixed and semi variable expenses insured
resulting from a loss insured under the Marine Cargo policy described above
which necessarily delays the project beyond the
J-2
<PAGE>
substantial completion or turnover date. Such insurance shall provide a limit of
$90 million and be subject to a 6-month indemnity period. Deductible or waiting
period shall not exceed 30 days or other collectively agreed period between
Lender and Owner and Contractor.
1.8 All Risks Builders Risk/Delay in Startup: All Risk Builders Risk
insurance including the Partnership, Contractor as named insured and
Contractor's Sub-Contractors as additional insureds, to a limit of the value of
the full replacement cost of the Project, any one occurrence covering physical
loss or damage to the Project Property, the materials, operating equipment, and
supplies for incorporation therein, including temporary or off-site storage and
Project lay-down areas, expendable construction tools, and all temporary
structures used in the erection of the Work while in transit to and from the
site or in storage, while at the site, before and during erection and until
completed and while waiting tests and during tests and until the latter of the
date the Project has achieved Substantial Reliability, or the date the
Operational All Risk insurance has been put into effect.
This insurance shall be subject to London Design/Error DE5 coverage
or equivalent and be subject to a 12 month guaranteed maintenance period. Such
policy shall not contain exclusions with respect to manufacturer, supplier or
Contractor warranty. Deductible shall not exceed $100,000 for material damage
and $250,000 for commissioning and start-up or other collectively agreed
provisions between the Collateral Trustee and the Financing Parties.
Delay in Start Up insurance covering only the Partnership as Insured
for the loss of profit and fixed and semi variable expenses (including but not
limit to interest during construction, debt repayment, mobilization costs,
demobilization costs, fixed takes on supply agreements, etc.) resulting from a
loss insured under the All Risk Builders Risk policy described above. Such
insurance shall provide a limit of $334 million and subject to a 12-month
indemnity period. Deductible or waiting period shall not exceed 30 days.
1.9 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be to the account of the Partnership and
the Collateral Trustee and the Financing Parties shall have no
responsibility for deductibles established herein.
(b) The Partnership shall provide the Collateral Agent and the
Financing Parties with complete wordings prior to the Closing Date;
otherwise, agreed upon wording or expanded cover notes, acceptable to the
Collateral Agent and Financing Parties, until such time as actual policy
wording can be delivered to the Financing Parties. The Collateral Trustee
and the Financing Parties shall review and approve wording with respect to
1.3, 1.4, 1.6, 1.7 and 1.8 prior to each policy being put into effect, and
provided any disclosure of such policy wording shall be made under binder
of secrecy.
J-3
<PAGE>
(c) Prior to the Closing Date, the Partnership shall supply to the
Collateral Trustee and the Financing Parties a certification from the
Partnership's insurance representative or a senior officer of the
Partnership to the effect that insurance coverages for which they have
responsibility to put into effect meet the terms and conditions of Article
VII and Appendix J, and that all premiums, then due and payable, have been
paid.
(d) With the exception of 1.7 and 1.8, insurances shall not be
cancellable without 60 days advance written notice of such cancellation to
the Owner and the Financing Parties. Cover under 1.7 and 1.8 shall be
written on policies which are non-cancellable, with the exception of
non-payment of premiums and industry provisions as respects certain perils
on the marine covers. Any notice of cancellation will require no less than
fifteen days prior written notice to the Collateral Trustee and the
Financing Parties.
(e) A waiver of subrogation shall be provided by the insurers to the
Partnership, the Collateral Trustee and the Financing Parties for
coverages under all policies except 1.1 and 1.2.
(f) The Collateral Trustee and the approved Financing Parties as
designated by Partnership, shall be included as Additional Insured under
all policies except 1.1.
(g) With respect to 1.7 and 1.8, the Collateral Trustee or its
assigns shall be named as sole loss payee, on a loss payable/mortgagee
clause equivalent to 438 BFU or as otherwise approved by the Collateral
Trustee.
(h) Coverage provided for the benefit of the Partnership, the
Collateral Trustee and the Financing Parties shall not be invalidated or
vitiated by actions or inactions of others.
2.0 Construction Period -- Contractor
The Partnership will require the Contractor to provide and maintain in
full force and effect with financially responsible insurance carriers meeting
the definition of a Rated Carrier unless otherwise approved by the Partnership
and the Collateral Trustee, from the effective date of the Engineering,
Procurement and Construction Services Agreement ("EPC") until the date of Final
Completion, the following insurance:
2.1 Workers Compensation/Employer's Liability: Workers Compensation
insurance as required by applicable law or authorized governmental authority
covering all persons employed by Contractor for work performed under the EPC in
accordance with the laws of the state in which the Contractor may be required to
pay compensation. Limits for Employers Liability shall be a minimum of
$1,000,000 per accident or disease, aggregate as to disease and
J-4
<PAGE>
Workers Compensation benefits to hill statutory obligations. To the extent that
applicable exposure exists, coverage shall include Jones Act, USL & H and FELA.
2.2 Automobile Liability: Automobile Liability insurance on licensed
motor vehicles owned, non-owned rented or leased by contractor and used in
connection with the work to be performed under the EPC covering Bodily Injury
and Property Damage Liability to a combined inclusive limit of $25,000,000.
2.3 Contractors Equipment: Contractors Equipment Insurance covering
equipment and tools, owned, rented or leased for the full replacement cost of
such equipment on an All Risks basis including marine based risk subject to
normal exclusions.
2.4 Commercial General Liability: Commercial General Liability with
limits of $2,000,000 inclusive per occurrence, and $4,000,000 in the aggregate
annually, for bodily injury, death and damage to property including loss of use
thereof. This insurance shall be maintained continuously from commencement of
the Work until the date of Final Completion of the work performed under the EPC,
as set out in the Certificate of Final Completion of the Work, or until the
certificate of Final Completion of the Work is issued, whichever is the later.
Deductibles shall not exceed $50,000 per occurrence with an aggregate limit of
$250,000. The Partnership shall pay up to $250,000 of the deductibles, and any
amount less than $250,000 shall be refunded to the Partnership. Contractor shall
pay all deductibles in excess of $250,000, except for Pollution Liability
Coverage.
Coverage shall specifically be subject to the following inclusions
of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations including cover for a period
not less than 12 months post the issuance of the Certificate
of Final Completion
(iii) Warranty Work extending one year after Final Completion
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
(vi) Broad-form property damage
(vii) Railway Liability
(viii) Pollution Liability coverage on at least a Sudden &
Accidental basis
(ix) Severability of interests clause
J-5
<PAGE>
(x) Cross Liability cover
(xi) Contractor Protective
2.5 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under Articles 2.1 (excess over Employer's
Liability), 2.2, and 2.4 in an amount not less than $48,000,000 per occurrence
and in the aggregate annually. Such insurance shall be written on occurrence
policy forms unless otherwise approved by the Partnership.
2.6 Pollution Liability: Contractor shall provide a wrap-up
insurance program to provide Pollution Liability coverage on at least a sudden
and accidental basis, with primary coverage of $1,000,000 occurrence/aggregate
and $5,000,000 occurrence/aggregate coverage in excess of the primary coverage.
2.7 Aircraft Liability: Aircraft Liability Insurance with respect to
owned or non-owned aircraft to the extent used directly or indirectly in the
performance of the work under the EPC for limits not less than $25 million each
occurrence without aggregate, for bodily injury, death (including the passenger
hazard) and damage to property including loss of use thereof.
2.8 Watercraft Liability: Watercraft Liability Insurance with
respect to owned or non-owned watercraft to the extent used directly or
indirectly in the performance of the work under the EPC for limits not less than
$25 million each occurrence without aggregate, for bodily injury, death and
damage to property including loss of use thereof.
2.9 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be the responsibility of the
Contractor and/or its Sub-Contractors
(b) Contractor shall provide the Partnership and Financing
Parties, with complete wordings prior to the Notice to Proceed;
otherwise, agreed upon wording or expanded cover notes, acceptable
to the Partnership and the Collateral Agent, until such time as
actual policy wording can be delivered to the Partnership and the
Collateral Trustee. The Partnership and the Financing Parties shall
review and approve wording with respect to 2.4, 2.5 and 2.6 prior to
each policy being put into effect, and provided that to the extent
that policy wording is supplied, any disclosure of such policy
wording shall be made under binder of secrecy.
(c) Insurances shall not be cancellable without 90 days
advance written notice of such cancellation to the Partnership, the
Collateral Trustee and the Financing Parties.
J-6
<PAGE>
(d) A waiver of subrogation shall be provided by the insurers
to the Contractor, the Partnership, the Collateral Trustee and the
Financing Parties for coverages under 2.1 (to the extent permitted
by law), 2.3 and 2.4 and 2.5.
(e) Unless covered as a Named Insured, The Partnership, the
Collateral Trustee and the approved Financing Parties as designated
by the Partnership, shall be included as Additional Insured under
coverages 2.4, 2.5, 2.6 and 2.7.
(f) The Contractor will supply and cause all subcontractors
awarded subcontracts by Contractor after the EPC is signed by the
Partnership and the Contractor, procure coverage as set forth above
under 2.1, 2.1. and 2.4 above and to supply certificates of
insurance to the Partnership, the Collateral Trustee and the
Financing Parties.
3.0 Operational Phase -- Partnership
Prior to the expiration of insurance coverages set forth in 1.0 above, the
Partnership shall at all times keep in force:
3.1 Workers Compensation/Employer's Liability: Workers Compensation
as required by applicable law or authorized governmental authority covering all
persons employed by the Partnership in accordance with the laws of the state in
which the Partnership may be required to pay compensation. Limits for Employers
Liability shall be a minimum of $1,000,000 per accident or disease, aggregate as
to disease and Workers Compensation benefits to full statutory obligations. To
the extent that applicable exposure exists, coverage shall include Jones Act,
USL & H and FELA.
3.2 Automobile Liability: Automobile liability insurance on licensed
motor vehicles owned, non-owned, rented or leased by the Partnership covering
Bodily Injury and Property Damage Liability to a combined inclusive limit of
$1,000,000.
3.3 Commercial General Liability: Commercial General Liability with
Limits of $1,000,000 inclusive per occurrence, and $2,000,000 in the aggregate
annually and such aggregate to apply on a per site or per location basis, for
bodily injury, death and damage to property including loss of use thereof
Coverage shall be written on occurrence policy forms and specifically be subject
to the following inclusions of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations
(iii) Personal injury
J-7
<PAGE>
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
(vi) Broad-form property damage
(vii) Severability of interests clause
(viii) Cross Liability cover
(ix) Contractor Protective
3.4 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under 3.1 (excess over Employers Liability only), 1.2
and 1.3 in an amount not less than $49,000,000 per occurrence and in the
aggregate annually, with such aggregate to apply on a per site or per project
basis. Such insurance shall be written on occurrence policy forms.
3.5 Aircraft Insurance: Aircraft Liability Insurance with respect to
owned or non-owned aircraft to the extent used directly or indirectly in the
performance of the operation of the Project Property for limits not less than
$25 million each occurrence without aggregate, for bodily injury, death
(including the passenger hazard) and damage to property including loss of use
thereof
3.6 Marine Liability/Physical Damage Insurance: Hull and Machinery
insurance, to the extent that exposure exist, covering the full replacement
value of any barges, scows or watercraft used in connection with the operation
of the Project Property. Marine Liability or Protection Indemnity insurance on
any barges, scows or other watercraft used in connection with the operation of
the Project Property including coverage for special operations, pollution
liability and voluntary removal of wreck for limits which are the greater of
those afforded under a Protection and Indemnity Club or $25 million per
occurrence, without aggregate. In the event such vessels are not entered in a
Protection and Indemnity Club, and American policy form including special
operations and pollution liability shall be acceptable.
3.7 All Risks Property/Machinery Breakdown/Business Interruption:
All Risk Property insurance, with a limit equal to the full replacement cost of
the Project, any one occurrence and shall cover physical loss or damage to the
Project Property on an all risk basis, including but not limited to earthquake,
flood, collapse, hurricane, storm, etc. Such policy shall include off-site and
transit insurance (inland and ocean) to the extent exposure exists, in a limit
adequate to protect against loss or damage to the values at risk at any one
time. Additional coverages to be provided, subject to sublimits consistent with
industry practice, include but are limited to debris removal, demolition and
increased cost of construction, off-premises power interruption, pollution
cleanup following loss from a covered peril and building ordinance cover.
J-8
<PAGE>
The Partnership shall also provide machinery breakdown insurance on
a repair and replacement basis in an amount sufficient to cover the full
insurable value of objects and equipment qualifying for machinery breakdown
cover. In the event the all risk property cover and the machinery breakdown
cover are written by separate insurers, each policy shall contain a joint loss
agreement.
Policies shall be written on a "no coinsurance" basis. Deductibles
shall not exceed $100,000 for physical damage perils and $250,000 for machinery
breakdown cover.
Business interruption insurance covering only the Partnership as
Insured for the loss of profit and fixed and semi variable expenses (including
but not limited to interest during construction, debt repayment, mobilization
costs, demobilization costs, fixed takes on supply agreements, etc.) resulting
from a loss insured under the All Risk Builders Risk policy described above.
Such insurance shall provide a limit of $334 million and subject to a 12-month
indemnity period. The Partnership will submit business interruption worksheets
to the Collateral Trustee annually for review and approval. The Partnership will
also maintain contingent business interruption insurance with respect to the
Clark R&M Refinery and the Air Products facilities in an amount not less than
the equivalent of twelve months debt service and fixed expenses. Unless included
in the business interruption cover, the Partnership shall also provide no less
than $5,000,000 extra expense and $5,000,000 expediting insurance. Deductible or
waiting period shall not exceed 30 days.
3.8 Additional Insurance -- The Partnership shall procure such
additional insurance as the Collateral Trustee and the Financing Parties may
from time to time reasonably request, subject to commercial availability and
economic feasibility. In the event the Partnership fails to procure any of the
coverages set forth above, the Collateral Trustee and the Financing Parties have
the right, but not the obligation, to procure such insurance and charge the
costs back to the Partnership.
3.9 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be to the account of the Partnership and
the Collateral Trustee and the Financing Parties shall have no
responsibility for deductibles established herein.
(b) The Partnership shall provide the Collateral Agent and the
Financing Parties with complete wordings prior to the Closing Date;
otherwise, agreed upon wording or expanded cover notes, acceptable to the
Collateral Agent and Financing Parties, until such time as actual policy
wording can be delivered to the Financing Parties. The Collateral Trustee
and the Financing Parties shall review and approve wording with respect to
3.3, 3.4 and 3.7 prior to each policy being put into effect, and provided
that to the extent that policy forms are supplied, any disclosure of such
policy wording shall be made under binder of secrecy.
J-9
<PAGE>
(c) Prior to the transition from Construction insurance to
Operational insurance, and annually thereafter, the Partnership shall
supply to the Collateral Trustee and the Financing Parties a certification
from the Partnership's insurance representative or a senior officer of the
Partnership to the effect that insurance coverages for which they have
responsibility to put into effect meet the terms and conditions of Article
VII and Appendix 1, and that all premiums, then due and payable, have been
paid.
(d) Insurances shall not be cancellable without 60 days advance
written notice of such cancellation to the Partnership, the Collateral
Trustee and the Financing Parties. Any notice of cancellation with respect
to nonpayment of premiums will require no less than fifteen days prior
written notice to the Collateral Trustee and the Financing Parties.
(e) A waiver of subrogation shall be provided by the insurers to the
Partnership, the Collateral Trustee and the Financing Parties for
coverages under all policies except 3.1 and 3.2.
(f) The Collateral Trustee and the approved Financing Parties as
designated by Partnership, shall be included as Additional Insured under
all policies except 3.1.
(g) With respect to 3.7, the Collateral Trustee or its assigns shall
be named as sole loss payee, on a loss payable/mortgagee clause equivalent
to 438 BFU or as otherwise approved by the Collateral Trustee.
(h) Coverage provided for the benefit of the Partnership, the
Collateral Trustee and the Financing Parties shall not be invalidated or
vitiated by actions or inactions of others.
4.0 Operational Phase -- Operator
The Partnership will require the Operator to provide and maintain in full
force and effect with financially responsible insurance carriers meeting the
definition of a Rated Carrier unless otherwise approved by the Partnership and
the Collateral Trustee, from the effective date of the operating agreement, or
equivalent, until the expiration of said contract, the following insurance:
4.1 Workers Compensation/Employer's Liability: Workers Compensation
insurance as required by applicable law or authorized governmental authority
covering all persons employed by Operator in accordance with the laws of the
state in which the Operator may be required to pay compensation. Limits for
Employers Liability shall be a minimum of $1,000,000 per accident or disease,
aggregate as to disease and Workers Compensation benefits to full statutory
obligations. To the extent that applicable exposure exists, coverage shall
include Jones Act, USL & H and FELA.
J-10
<PAGE>
4.2 Automobile Liability: Automobile Liability insurance on licensed
motor vehicles owned, non-owned rented or leased by Operator and used in
connection with the work to be performed covering Bodily Injury and Property
Damage Liability to a combined inclusive limit of $25,000,000.
4.3 Commercial General Liability: Commercial General Liability with
limits of $2,000,000 inclusive per occurrence, and $4,000,000 in the aggregate
annually, for bodily injury, death and damage to property including loss of use
thereof Coverage shall be written on "occurrence" policy forms. Deductibles
shall not exceed $50,000 per occurrence with an aggregate limit of $250,000.
Coverage shall specifically be subject to the following inclusions
of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations
(iii) Warranty Work extending one year after Final Completion
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
(vi) Broad-form property damage
(vii) Pollution Liability coverage on at least a Sudden & Accidental
basis
(viii) Severability of interests clause
(ix) Cross Liability cover
(x) Contractor Protective
4.4 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under Articles 4.1 (excess over Employer's
Liability), 4.2, and 4.3 in an amount not less than $10,000,000 per occurrence
and in the aggregate annually. Such insurance shall be written on occurrence
policy forms unless otherwise approved by the Partnership.
4.5 Other Insurance -- Operator shall provide other insurance as the
Partnership deems appropriate based upon changes in exposure or operations that,
in the opinion of the Partnership, merit additional coverage or higher limits.
J-11
<PAGE>
4.6 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be the responsibility of the Operator
(b) Contractor shall provide the Partnership and Financing Parties,
with certificates of insurance prior to the expiration of any coverage required
above
(c) Insurances shall not be cancellable without 45 days advance
written notice (10 days for nonpayment of premiums) of such cancellation to the
Partnership, the Collateral Trustee and the Financing Parties.
(d) A waiver of subrogation shall be provided by the insurers to the
Partnership, the Collateral Trustee and the Financing Parties for coverages
under 4.1 (to the extent permitted by law), 4.3 and 4.4.
(e) The Partnership, the Collateral Trustee and the approved
Financing Parties as designated by the Partnership, shall be included as
Additional Insured under coverages 4.3 and 4.4.
J-12
<PAGE>
Appendix K
to Common Security Agreement
INITIAL CONSTRUCTION BUDGET
K-1
<PAGE>
CLARK PAYMENT SCHEDULE
$ MM
<TABLE>
<CAPTION>
Rev 2
- --------------------------------------------------------------------------------------------------------------------
MONTH ENGINEERING (1) MATERIALS CONSTRUCTION (1) OH & P/CONTINGENCY (2) $ TOTALS
Progress Progress Progress Progress Progress Progress
Pmt % Payment $ Payment $ Pmt % Payment $ Payment $
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Apr98-Jul99 F'cast 77.0% $61.600 $70.200 $12.4% $19.460 $0.00 $151.260
Aug-99 (3) 7.0% $5.629 $40.500 3.3% $5.186 $28.17 $79.485
Sep-99 6.0% $4.829 $34.600 4.0% $6.286 $4.14 $49.855
Oct-99 4.0% $3.229 $31.000 5.0% $7.856 $4.18 $46.265
Nov-99 3.0% $2.429 $17.500 5.5% $8.646 $3.78 $32.355
Dec-99 1.0% $0.829 $9.800 6.6% $10.366 $2.77 $23.765
Jan-00 1.0% $0.829 $8.600 7.3% $11.466 $2.77 $23.665
Feb-00 1.0% $0.829 $8.600 8.1% $12.726 $2.92 $25.075
Mar-00 $7.500 9.1% $14.296 $2.88 $24.676
Apr-00 $5.900 6.6% $10.366 $2.15 $18.416
May-00 $2.100 7.0% $10.996 $1.73 $14.826
Jun-00 $1.400 6.1% $9.586 $1.45 $12.436
Jul-00 $0.970 6.4% $10.056 $1.43 $12.456
Aug-00 $3.000 5.9% $9.266 $1.23 $13.496
Sep-00 $2.638 4.0% $6.286 $0.83 $9.754
Oct-00 $0.000 2.0% $3.146 $0.42 $3.566
Nov-00 $1.600 0.7% $1.106 $0.15 $2.856
TOTALS 100.0% $80.200 $245,908 100.0% $157.100 $61.00 $544.208
</TABLE>
Notes:
(1) Engineering & Construction progress payments based on earned value (%
complete)
(2) OH&P/Contingency progress payment based on overall composite % of total
EPC
(3) Aug99 payments will include a reconciliation to account for any unbilled
charges due Foster Wheeler at the time of financial closure.
<PAGE>
Appendix L
to Common Security Agreement
FORMS OF LEGAL OPINIONS*
_____________
* Not filed with this registration statement.
<PAGE>
Appendix L-1
to Common Security Agreement
FORM OF OPINION OF MEXICAN COUNSEL TO PMI
L-1
<PAGE>
Appendix L-2
to Common Security Agreement
FORM OF OPINION OF MEXICAN COUNSEL TO PEMEX
L-2
<PAGE>
Appendix L-3
to Common Security Agreement
FORM OF OPINION OF U.S. COUNSEL TO PMI AND PEMEX
L-3
<PAGE>
Appendix L-4
to Common Security Agreement
FORM OF OPINION OF COUNSEL TO EPC CONTRACTOR AND
EPC GUARANTOR
L-4
<PAGE>
Appendix L-5
to Common Security Agreement
FORM OF OPINION OF COUNSEL TO HYDROGEN SUPPLIER
L-5
<PAGE>
Appendix L-6
to Common Security Agreement
FORM OF OPINION OF THE GENERAL COUNSEL TO THE CLARK ENTITIES
L-6
<PAGE>
Appendix L-7
to Common Security Agreement
FORM OF OPINION OF NEW YORK COUNSEL TO THE BORROWER, THE PARTNERSHIP, THE
PARTNERS, THE CLARK ENTITIES AND BLACKSTONE
L-7
<PAGE>
Appendix L-8
to Common Security Agreement
FORM OF OPINION OF TEXAS REAL ESTATE COUNSEL TO THE BORROWER,
THE PARTNERSHIP AND THE PARTNERS
L-8
<PAGE>
Appendix L-9
to Common Security Agreement
FORM OF OPINION OF TEXAS ENVIRONMENTAL COUNSEL TO THE BORROWER,
THE PARTNERSHIP AND THE PARTNERS
L-9
<PAGE>
Appendix L-10
to Common Security Agreement
FORM OF OPINION OF COUNSEL TO OCCIDENTAL PETROLEUM
L-10
<PAGE>
Appendix L-11
to Common Security Agreement
FORM OF OPINION OF CAYMAN ISLANDS COUNSEL TO BLACKSTONE
L-11
<PAGE>
Appendix L-12
to Common Security Agreement
FORM OF OPINION OF NEW YORK COUNSEL TO THE SECURED PARTIES
L-12
<PAGE>
Appendix L-13
to Common Security Agreement
FORM OF OPINION OF ENGLISH COUNSEL TO THE OIL PAYMENT INSURERS
ADMINISTRATIVE AGENT
L-13
<PAGE>
Appendix M
to Common Security Agreement
INSURANCE CONSULTANT'S REPORT
M-1
<PAGE>
Appendix N
to Common Security Agreement
INDEPENDENT ENGINEER'S REPORTS
N-1
<PAGE>
Appendix O
to Common Security Agreement
NOTICE OF BORROWING
Deutsche Bank, AG, New York Branch,
as Administrative Agent for the Bank Senior Lenders party
to the Bank Senior Loan Agreement
referred to below,
31 West 52nd Street
New York, New York 10019 [date]
Attention: o
Ladies and Gentlemen:
Reference is made to the Bank Senior Loan Agreement, dated as of
August 19, 1999 (as amended or modified from time to time, the "Bank Senior Loan
Agreement", the terms defined therein being used herein as therein defined),
among the undersigned, the Bank Senior Lenders party thereto and Deutsche Bank
AG, New York Branch, as Administrative Agent for the Bank Senior Lenders (the
"Administrative Agent"). We hereby give you notice, irrevocably, pursuant to
Section 4.04 of the Bank Senior Loan Agreement that we request a borrowing under
the Bank Senior Loan Agreement and set forth below the information relating to
such borrowing (the "Proposed Borrowing") as required by Section 4.04 of the
Bank Senior Loan Agreement and clause (b) of Section 9.02 of the Common Security
Agreement, dated as of August 19, 1999 (said Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "Common
Security Agreement"), among Port Arthur Coker Company L.P., Port Arthur Finance
Corp., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee for the Secured Parties, Deutsche Bank AG, New
York Branch, as Administrative Agent for and on behalf of the Bank Senior
Lenders., Winterthur International Insurance Company Limited, as Administrative
Agent for and on behalf of the Oil Payment Insurers, HSBC Bank USA, as Capital
Markets Trustee for the Capital Markets Senior Lenders, and Bankers Trust
Company, as Depositary Bank:
(i) The Business Day of the Proposed Borrowing is [_______].
(ii) The aggregate amount of the Proposed Borrowing is
$[__________] [, $__________ of which shall be made under the
Tranche A Facility and $___ of which shall be made under the
Tranche B Facility].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:
O-1
<PAGE>
(A) Each of the representations and warranties contained in Section
3.01 of the Common Security Agreement is correct immediately before and will be
correct immediately after giving effect to, the Proposed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date;
(B) The proceeds from the Proposed Borrowing are scheduled to be,
and the proceeds of any and all borrowings under the Bank Senior Loan Agreement
to date have been or are being, utilized in accordance with the provisions of
Section 4.01 (bb) of the Common Security Agreement as confirmed in the
certificate of the Independent Engineer attached hereto.
(C) All of the disbursements of Senior Loans to date (if any) have
been utililized in accordance with the Initial Construction Budget, as amended
from time to time by each Annual Budget and Operating Plan, as certified by the
Independent Engineer in the certificate attached hereto.
(D) Each of the conditions precedent applicable to the Proposed
Borrowing pursuant to Sections 9.01 and 9.02 of the Common Security Agreement
has been satisfied.
[If the Disbursement Date is the Closing Date, (D) above should read:
The undersigned hereby certifies that each of the conditions
precedent to the Proposed Borrowing pursuant to Sections 9.01 and 9.02 of the
Common Security Agreement will be satisfied on the date of the Proposed
Borrowing.]
The undersigned hereby agree that, if prior to its receipt of the
disbursement requested hereby it determines that any matter certified by it
herein will not be true and correct as of the time of such receipt, it will
promptly so notify the Administrative Agent.
O-2
<PAGE>
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Bank Senior Loan Agreement or the Common Security
Agreement, as the case may be.
Very truly yours.
PORT ARTHUR FINANCE CORP.
By:_____________________________________
Name:
Title:
With copies to: The Collateral Trustee,
Each of the Bank Senior Lenders party to
the Bank Senior Loan Agreement and
The Bank Senior Lenders Administrative Agent,
at their respective addresses set forth in
Appendix P to the Common Security Agreement
O-3
<PAGE>
Appendix P
to Common Security Agreement
NOTICES
If to the Borrower, the Partnership, the General Partner or the Limited Partner:
Port Arthur Finance Corp. / Port Arthur Coker Company L.P. / Sabine River
Holding Corp. / Neches River Holding Corp.
1801 5. Gulfway Drive, Office No. 36
Port Arthur, Texas 77640
Phone:409-982-7491
Facsimile: 409-985-6397
Attention: Legal Department
If to the Collateral Trustee or the Depositary Bank:
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4th Floor
New York, New York 10006
Phone:212-250-3754
Facsimile: 212-250-6725
Attention: James McDonough
If to the Bank Senior Lenders Administrative Agent:
Deutsche Bank AG, New York Branch
31 West 52nd Street, 14th Floor,
New York, NY 10019
Attention: Virag Patel
Deutsche Bank AG, New York Branch
130 Liberty Street
New York, NY 10006
Phone:212-250-2500
Facsimile: 212-669-5405
Attention: Marcus Tarkington
P-1
<PAGE>
If to the Capital Markets Trustee:
HSBC Bank USA
Issuer Services
140 Broadway
New York, NY 10005-1180
Phone:212-658-2979
Facsimile: 212-658-6425
Attention: James M. Foley
If to the Oil Payment Insurers Administrative Agent:
Winterthur International Insurance Company Limited
34 Leadenhall Street
London, EC3A, 1 AX
England
Attention: Eileen McCusker
Telephone: (44) (171) 369-1432
Facsimile: (44) (171) 929-3537
P-2
<PAGE>
Appendix Q
to Common Security Agreement
SUBORDINATION TERMS
1. General: Payment of the principal of and interest on Subordinated Debt
(and all premiums and other amounts payable on or in respect thereof)
shall be subordinate and subject in right of payment to the prior payment
in full of all Senior Debt Obligations and in respect of Oil Payment
Reimbursement Obligations (which terms, as used herein, shall include
without limitation the obligations to pay principal and interest on the
Senior Debt and in respect of Oil Payment Reimbursement Obligations, and
all commissions, fees, indemnities, prepayment premiums and other amounts
payable to the Bank Senior Lenders, the Capital Markets Senior Lenders,
the Oil Payment Insurers, the Oil Payment Insurers Administrative Agent,
the Collateral Trustee, the Bank Senior Lenders Administrative Agent, the
Capital Markets Trustee or any other Applicable Agent under the Financing
Documents, and postpetition interest and postpetition attorneys' fees and
costs, whether or not allowable in bankruptcy, in each case to the extent
such items constitute Senior Debt Obligations or Oil Payment Reimbursement
Obligations or both, as the case may be, due and payable at the time of
any such payment in respect of Subordinated Debt). Each Subordinated
Lender agrees that it will not ask, demand, sue for, take or receive from
the Partnership, by set-off or in any other manner, or retain, payment (in
whole or in part) of the Subordinated Debt, or any security therefor,
other than Restricted Payments permitted under the Common Security
Agreement, unless and until all of the Senior Debt Obligations and Oil
Payment Reimbursement Obligations have been paid in full. Each
Subordinated Lender directs the Borrower to make, and the Borrower agrees
to make, such prior payment of the Senior Debt Obligations and Oil Payment
Reimbursement Obligations.
2. Payment Upon Dissolution, Etc.: In the event of (a) any insolvency or
bankruptcy case or proceeding in connection therewith, relative to the
Partnership or to its creditors as such, or to its assets, or (b) any
liquidation, receivership, dissolution or other winding up of the
Partnership, whether partial or complete and whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy or (c)
any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of the Partnership, then and in any such event the
Bank Senior Lenders, the Capital Markets Senior Lenders, the Oil Payment
Insurers, the Oil Payment Insurers Administrative Agent, the Collateral
Trustee, the Bank Senior Lenders Administrative Agent, the Capital Markets
Trustee or any other Applicable Agent shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all Senior
Debt Obligations or Oil Payment Reimbursement Obligations or both, as the
case may be, under the Financing Documents before any of the Subordinated
Lenders shall be entitled to receive any payment on account of the
Subordinated Debt (whether in respect of principal, interest premium,
fees, indemnities, commissions or otherwise) and to that end, any payment
or distribution of
Q-1
<PAGE>
any kind or character, whether in cash, property or securities which may
be payable or deliverable in respect of the Subordinated Debt in any such
case, proceeding, dissolution, liquidation or other winding up or event
shall instead be paid or delivered to the Secured Parties for application
to Senior Debt Obligations and Oil Payment Reimbursement Obligations,
whether or not due, until Senior Debt Obligations and Oil Payment
Reimbursement Obligations shall have first been fully paid and satisfied
in cash.
3. No Payment When Senior Debt in Default: In the event and during the
continuation of any Event of Default or Default, unless and until such
Event of Default or Default shall have been remedied or waived then no
payment (including no Restricted Payment) shall be made by the Borrower on
or in respect of the Subordinated Debt.
4. Proceeding Against the Borrower; No Collateral: Whether or not any default
in payment shall exist under any Senior Loan Agreement, Subordinated
Lenders shall not, without the prior consent of Majority Secured Parties,
(a) commence any proceeding against the Partnership with respect to the
Subordinated Debt or (b) take any collateral security for the Subordinated
Debt.
5. Payment to Senior Lenders of Certain Amounts Received by Subordinated
Lenders: In the event that any Subordinated Lender receives on account or
in respect of the Subordinated Debt any distribution of assets by the
Partnership or payment by or on behalf of the Partnership of any kind or
character, whether in cash, securities or other property, other than
Restricted Payments permitted under the Common Security Agreement, the
Subordinated Lender shall hold or shall cause to be held in trust (as
property of the Senior Lenders) for the benefit of, and immediately upon
receipt thereof, shall pay over or deliver to the Secured Parties such
distribution or payment in precisely the form received (except for the
endorsement or assignment by the Subordinated Lender where necessary) for
application in accordance with the Common Security Agreement. In the event
of failure of the Subordinated Lender to make any such endorsement or
assignment, the Secured Parties irrevocably are authorized and empowered
by and on behalf of each Subordinated Lender to make the same.
6. Authorizations to Senior Lenders and the Collateral Trustee: Each
Subordinated Lender (a) irrevocably authorizes and empowers (without
imposing any obligation on) the Secured Parties and the Collateral Trustee
to demand, sue for, collect, receive and receipt for all payments and
distributions on or in respect of its Subordinated Debt which are required
to be paid or delivered to the Secured Parties, as provided herein, and to
file and prove all claims therefor and take all such other action, in the
name of the Subordinated Lender or otherwise, as the Secured Parties may
determine to be necessary or appropriate for the enforcement of these
subordination provisions, all in such manner as Majority Secured Parties
shall instruct or otherwise in accordance with the Common Security
Agreement, (b) irrevocably authorizes and empowers (without imposing any
obligation) the Secured Parties and the Collateral Trustee to vote the
Subordinated Debt
Q-2
<PAGE>
(including, without limitation, voting the Subordinated Debt in favor of
or in opposition to any matter which may come before any meeting of
creditors of the Partnership generally or in connection with, or in
anticipation of, any insolvency or bankruptcy case or proceeding, or any
proceeding under any laws relating to the relief of debtors, readjustment
of indebtedness, arrangements, reorganizations, compositions or extensions
relative to the Borrower) in such manner as Majority Secured Parties shall
instruct or otherwise in accordance with the Common Security Agreement and
(c) agrees to execute and deliver to the Secured Parties and the
Collateral Trustee all such further instruments confirming the above
authorization, and all such powers of attorney, proofs of claim,
assignments of claim and other instruments, and to take all such other
action, as may be requested by the Secured Parties or the Collateral
Trustee in order to enable the Secured Parties to enforce all claims upon
or in respect of the Subordinated Debt.
7. Notice: The Subordinated Lenders agree, for the benefit of each Secured
Party, that they will give the Collateral Trustee prompt notice of any
default by the Partnership in respect of the Subordinated Debt.
8. No Waiver; Modification to Senior Debt: No failure on the part of the
Secured Parties or the Collateral Trustee, and no delay in exercising, any
right, remedy or power hereunder shall operate as a waiver thereof by the
Secured Parties or the Collateral Trustee, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or
future exercise by the Secured Parties or the Collateral Trustee of any
other right, remedy or power. Each and every right, remedy and power
granted to the Secured Parties or the Collateral Trustee, or allowed the
Secured Parties or the Collateral Trustee by law or other agreement shall
be cumulative and not exclusive, and may be exercised by the Secured
Parties or the Collateral Trustee, from time to time.
Without in any way limiting the generality of the foregoing, at any time,
without the consent of or notice to the Subordinated Lenders, without
incurring responsibility or liability to the Subordinated Lenders and
without impairing or releasing the subordination provided herein or the
obligations hereunder of the Subordinated Lenders, the Secured Parties may
do any one or more of the following: (a) change the manner, place or terms
of payment of or extend the time of payment of, or renew or alter, Senior
Debt Obligations or Oil Payment Reimbursement Obligations or any
collateral security or guaranty therefor, or otherwise amend or supplement
in any manner Senior Debt Obligations or Oil Payment Reimbursement
Obligations or any instruments evidencing the same or any agreement under
which Senior Debt Obligations are outstanding or any Financing Document;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt Obligations or Oil Payment
Reimbursement Obligations; (c) release any Person liable in any manner for
the Senior Debt Obligations or Oil Payment Reimbursement Obligations; and
(d) exercise or refrain from exercising any rights against the Borrower
and any other Person. Each Subordinated
Q-3
<PAGE>
Lender unconditionally waives notice of the incurring of Senior Debt
Obligations or Oil Payment Reimbursement Obligations or any part thereof.
9. Subrogation: Subject to the payment in full of all Senior Debt Obligations
and Oil Payment Reimbursement Obligations, the Subordinated Lenders shall
be subrogated to the rights of each of the Bank Senior Lenders, the
Capital Markets Senior Lenders, the Collateral Trustee, the Oil Payment
Insurers, the Oil Payment Insurers Administrative Agent, the Bank Senior
Lenders Administrative Agent, the Capital Markets Trustee and any other
Applicable Agent to receive distribution of assets of the Partnership, or
payments by or on behalf of the Partnership, made on the Senior Debt
Obligations or Oil Payment Reimbursement Obligations, as the case may be,
until Subordinated Debt shall be paid in full. For purposes of such
subrogation, no payments over, including no payments or distributions to
any of the Bank Senior Lenders, the Capital Markets Senior Lenders, the
Oil Payment Insurers, the Oil Payment Insurers Administrative Agent, the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the
Capital Markets Trustee or any other Applicable Agent of any cash,
property or securities to which the Subordinated Lenders would be entitled
except for the provisions hereof, pursuant to the provisions hereof, to
any of the Bank Senior Lenders, the Capital Markets Senior Lenders, the
Oil Payment Insurers, the Oil Payment Insurers Administrative Agent, the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the
Capital Markets Trustee or any other Applicable Agent by the Subordinated
Lenders shall, as among the Partnership, its creditors other than the Bank
Senior Lenders, the Capital Markets Senior Lenders, the Oil Payment
Insurers, the Oil Payment Insurers Administrative Agent, the Collateral
Trustee, the Bank Senior Lenders Administrative Agent, the Capital Markets
Trustee or any other Applicable Agent and the Subordinated Lenders, be
deemed to be a payment or distribution by the Partnership on account of
the Senior Debt Obligations or Oil Payment Reimbursement Obligations, as
the case may be.
10. Benefit of Subordination Provisions: Nothing contained herein shall (a)
impair, as among the Partnership, its creditors other than the Secured
Parties and the Subordinated Lenders, the obligations of the Partnership,
which is absolute and unconditional (and which, subject to the rights
hereunder of the Secured Parties, is intended to rank equally with all
other unsecured obligations of the Partnership), to pay the principal of
and interest on the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof or (b) affect the
relative rights against the Partnership of the Subordinated Lender and
creditors of the Partnership other than Bank Senior Lenders, the Capital
Markets Senior Lenders, the Oil Payment Insurers, the Oil Payment Insurers
Administrative Agent, the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Capital Markets Trustee or any other Applicable
Agent.
11. Further Assurances: The Subordinated Lender, at its own cost, shall take
any further action as the Secured Parties may reasonably request in order
to carry out more fully the intent and purpose of these subordination
provisions.
Q-4
<PAGE>
12. Governing Law: These subordination provisions shall be governed by and
construed in accordance with the laws of the State of New York.
13. Amendment: These subordination provisions may not be amended or modified
without the prior consent of each of the Bank Senior Lenders, the Capital
Markets Senior Lenders, the Oil Payment Insurers, the Oil Payment Insurers
Administrative Agent, the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Capital Markets Trustee or any other Applicable
Agent.
14. Transfers: The Subordinated Debt may not be transferred, assigned or
encumbered in any manner other than in accordance with the Common Security
Agreement and Transfer Restrictions Agreement.
15. Successors and Assigns: The Agreement shall be binding and insure to the
benefit of the Subordinated Lenders, the Secured Parties and their
respective successors and permitted assigns.
16. Ranking: All Subordinated Debt shall be unsecured, shall rank junior to
the Senior Debt Obligations and the Oil Payment Reimbursement Obligations,
and shall be pledged as security for the Senior Debt Obligations and the
Oil Payment Reimbursement Obligations.
Q-5
<PAGE>
Schedule 3.01(x)
to Common Security Agreement
ENVIRONMENTAL DISCLOSURE
Hartford Administrative Complaint
On July 6, 1999, Clark Refining & Marketing, Inc. was served with a
civil administrative complaint by the United States Environmental Agency Region
5, alleging certain violations of the Emergency Planning and Community
Right-to-Know Act, and regulations promulgated thereunder, with respect to
certain record-keeping and reporting requirements relating to the Hartford
refinery. The administrative complaint seeks a civil penalty of $498,000. No
estimate can be made at this time of the company's potential liability, if any,
as a result of this matter.
Port Arthur NRDA
Clark Refining & Marketing, Inc. has received correspondence dated
June 7, 1999 from federal and Texas state natural resource trustees requesting a
meeting to discuss potential natural resource damage at the Clark Port Arthur
refinery site, as well as issues regarding a potential Natural Resource Damage
Assessment. No estimate can be made at this time of the company's potential
liability, if any, with respect to this matter.
<PAGE>
Exhibit 4.05
EXECUTION COPY
================================================================================
TRANSFER RESTRICTIONS AGREEMENT
among
PORT ARTHUR FINANCE CORP.
PORT ARTHUR COKER COMPANY L.P.
CLARK REFINING HOLDINGS INC.
SABINE RIVER HOLDING CORP.
NECHES RIVER HOLDING CORP.
BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P.
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of the Bank Senior Lenders
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
for itself and as Administrative Agent for and on behalf of the Oil Payment
Insurers,
and
HSBC BANK USA,
as Capital Markets Trustee for the Capital Markets Senior Lenders
Dated as of August 19, 1999
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Section PAGE
<S> <C>
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.01 Definitions .................................................................... 3
1.02 Interpretation ................................................................. 4
ARTICLE II
COVENANTS ON TRANSFERS
2.01 General Rule ................................................................... 4
2.02 Transfers by the Blackstone Entities of their Equity Interests in Clark Holdings 4
2.03 Restriction on Clark Holding's Acquisition of Interests in the General Partner . 5
2.04 Transfers by Clark Holdings of its Interest in the Refinery, Clark R&M and
the Partnership .............................................................. 5
2.05 Conditions for Authorized Transfers ............................................ 5
2.06 Assumption of Obligations; Novation ............................................ 6
2.07 Involuntary Transfers .......................................................... 6
2.08 Effect on Security Interests ................................................... 6
2.09 Transfers Not Permitted Under this Article II .................................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties ................................................. 7
ARTICLE IV
MISCELLANEOUS
4.01 Termination .................................................................... 9
4.02 GOVERNING LAW .................................................................. 9
4.03 Waiver of Jury Trial ........................................................... 9
4.04 Severability ................................................................... 9
4.05 Notices ........................................................................ 9
4.06 Execution in Counterparts ...................................................... 9
4.08 Consent to Jurisdiction ........................................................ 9
4.09 No Recourse .................................................................... 11
4.10 Amendments ..................................................................... 11
4.11 Conflicts ...................................................................... 11
4.12 Effectiveness .................................................................. 11
</TABLE>
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<PAGE>
TRANSFER RESTRICTIONS AGREEMENT
This Agreement, dated as of August 19, 1999, is made among:
PORT ARTHUR FINANCE CORP., a company incorporated under the laws of
the State of Delaware (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under
the laws of the State of Delaware (the "Partnership"),
CLARK REFINING HOLDINGS INC., a company incorporated under the laws of
the State of Delaware ("Clark Holdings"),
SABINE RIVER HOLDING CORP., a company incorporated under the laws of
the State of Delaware (the "General Partner"),
NECHES RIVER HOLDING CORP., a company incorporated under the laws of
the State of Delaware (the "Limited Partner"),
BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P., a limited
partnership organized under the laws of the State of Delaware ("Blackstone
Capital Partners"),
BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P., a limited partnership
organized under the laws of the Cayman Islands ("Blackstone Offshore Partners"),
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P., a limited
partnership organized under the laws of the State of Delaware ("Blackstone
Family Partnership", and together with Blackstone Capital Partners and
Blackstone Offshore Partners, the "Blackstone Entities"),
BANKERS TRUST COMPANY, a New York banking corporation and trust
company, as Collateral Trustee for the Secured Parties (the "Collateral
Trustee"),
DEUTSCHE BANK AG, NEW YORK BRANCH, a New York State licensed branch of
a German bank, as Administrative Agent for and on behalf of the Bank Senior
Lenders (the "Bank Senior Lenders Administrative Agent"),
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, for itself and as Administrative Agent
for and on behalf of the Oil Payment Insurers (the "Oil Payment Insurers
Administrative Agent"); and
<PAGE>
HSBC BANK USA, a New York banking corporation and trust company, as
Capital Markets Trustee for the Capital Markets Senior Lenders (the "Capital
Markets Trustee").
WHEREAS:
A. The Partnership proposes (i) to develop, construct, own and
operate the Project for the primary purpose of refining heavy sour crude oil and
(ii) to undertake all other activities necessary in connection with the
financing, development, operation and maintenance of the Project;
B. In order to finance the cost of the Project, the Borrower
proposes to incur Senior Debt and loan all the proceeds thereof to the
Partnership.
C. The Partnership and the Oil Payment Insurers Administrative Agent
propose to enter into agreements pursuant to which the Oil Payment Insurers
Administrative Agent, on behalf of the Oil Payment Insurers, will guarantee, for
the benefit of PMI, the payment by the Partnership of its payment obligations
under the Long-Term Oil Supply Agreement, and the Partnership will reimburse the
Oil Payment Insurers Administrative Agent, on behalf of the Oil Payment
Insurers, for any such payments they so make.
D. The Partnership proposes to guarantee the Senior Debt and secure
the Senior Debt Obligations and the Oil Payment Insurance Obligations;
E. The Blackstone Entities collectively own 68% and Occidental
Petroleum owns 31% of the outstanding capital stock of Clark Holdings;
F Clark Holdings owns 90% and Occidental owns 10% of the
outstanding capital stock of the General Partner.
G. Clark Holdings owns 100% of the outstanding capital stock of
Clark USA;
H. Clark USA owns 100% of the outstanding capital stock of Clark
R&M;
I. The General Partner owns 100% of the outstanding capital stock of
the Limited Partner;
J. The General Partner owns a 1% general partnership interest in,
and the Limited Partner a 99% limited partnership interest in, the Partnership,
and the Partners
-2-
<PAGE>
have entered into a Partnership Agreement, dated as of the date hereof, for the
formation of the Partnership;
K. The Partnership owns 100% of the outstanding capital stock of the
Borrower;
L. The Partnership and Clark R&M propose to enter into the
Intercompany Agreements in connection with the operation of the Project;
M. Each of the parties hereto has authorized the execution and
delivery of this Agreement to undertake specified obligations to induce the
Senior Lenders to provide Senior Debt to the Borrower and to induce the Oil
Payment Insurers to provide the coverage under the Oil Payment Insurance Policy;
N. The parties hereto desire to provide for certain restrictions on
direct and indirect transfers of any of the parties' or their Affiliates' direct
or indirect interests in the Project; and
O. All things have been done which are necessary to constitute this
Agreement a valid contract.
NOW, THEREFORE, in consideration of the premises and of the execution
of the Senior Loan Agreements by the Senior Lenders and of the Oil Payment
Insurance Policy and Oil Payment Reimbursement Agreement by the Oil Payment
Insurers and of the making of Senior Loans and the Oil Payment Commitment,
respectively thereunder, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions. Except for terms defined herein, defined terms
in this Agreement, which may be identified by the capitalization of the first
letter of each principal word thereof, have the meanings assigned to them in the
Common Security Agreement (including Appendix A thereto), dated as of the date
hereof, among the Borrower, the Partnership, the General Partner, the Limited
Partner, the Collateral Trustee, the Bank Senior Lenders Administrative Agent,
the Oil Payment Insurers Administrative Agent, the Capital Markets Trustee and
the Depositary Bank as that agreement may be amended, supplemented or replaced
from time to time (the "Common Security Agreement"). For purposes of this
Agreement and the Common Security Agreement, any permitted assignee of a Person
under Article II hereof shall be a "Permitted Assignee" of such Person.
-3-
<PAGE>
1.02 Interpretation. The rules of interpretation set forth in Section
1.02 of the Common Security Agreement shall apply mutatis mutandis to this
Agreement as if set forth in full in this Section 1.02.
ARTICLE II
COVENANTS ON TRANSFERS
2.01 General Rule. None of the Blackstone Entities nor Clark Holdings
(together, the "Restricted Parties") shall effect, or permit any Affiliate to
effect, any transfer, assignment, pledge, sale or other disposition (whether
directly or indirectly, in whole or in part, including without limitation with
respect to an intermediate holding company) (collectively, "Transfer") of its
respective direct or indirect interest, if any, in Clark Holdings, the
Partnership, Clark R&M or the Refinery, subject to Section 2.09, except for (a)
the grant of security interests under or pursuant to the Common Security
Agreement and the Security Documents and (b) any Transfer expressly permitted
under this Article II ((a) and (b) collectively, "Permitted Transfers"). Any of
the Restricted Parties, the Borrower, the Partnership, the General Partner or
the Limited Partner, as the case may be, shall notify each Credit Rating Agency
then rating the Senior Debt of any Transfer promptly after it becomes aware of
such Transfer.
2.02 Transfers by the Blackstone Entities of their Equity Interests in
Clark Holdings.
(a) The Blackstone Entities shall have the right to Transfer their
respective equity interests in Clark Holdings:
(i) prior to Final Completion,
(A) in whole or in part to (1) a transferee that is a single entity
or group of related entities that is rated investment grade by both Credit
Rating Agencies after giving effect to such transfer or (2) any other
transferee with (x) the prior consent of Majority Bank Lenders and (y)
either the prior consent of Majority Bondholders or a Ratings
Reaffirmation, provided in either of case (1) or (2) that either the
Blackstone Entities retain their several obligations to fund their pro rata
portion of any unfunded Capital Commitment, including without limitation
any unfunded Initial Capital Contribution (such pro rata portion, the
"Blackstone Capital Commitment") or such transferee assumes such
obligations; or
(B) in part but not in whole by means of a primary or secondary
public offering, a Rule 144A offering or private sale, provided that the
Blackstone Entities collectively (1) retain not less than 40% of the total
capital stock outstanding of Clark
-4-
<PAGE>
Holdings or (2) retain the largest single direct or indirect shareholding
in Clark Holdings and maintain the direct or indirect right to appoint no
fewer than one-third of the members of the board of directors of Clark
Holdings, and provided, further, that, in any case, the Blackstone Entities
retain their several obligations to fund the Capital Commitment; or
(ii) following Final Completion, in any manner.
(b) Any Blackstone Capital Commitment continuing after a Transfer
pursuant to clause (a) of this Section 2.02 shall be limited to the maximum
unfunded amount of the Blackstone Capital Commitment prior to such Transfer.
2.03 Restriction on Clark Holding's Acquisition of Interests in the
General Partner. Clark Holdings may not acquire any of the 10% equity interest
in the General Partner held by Occidental Petroleum unless, after giving effect
to such acquisition, the Senior Debt and the senior unsecured long-term debt of
Clark R&M and Clark USA are rated investment grade by the Credit Rating
Agencies.
2.04 Transfers by Clark Holdings of its Interest in the Refinery,
Clark R&M and the Partnership. Following Final Completion, Clark Holdings may
Transfer, upon not less than 30 days' prior written notice to the Secured
Parties, its indirect interest in the Refinery, Clark R&M and the Partnership in
whole but not in part to a transferee that is engaged as one of its businesses
in petroleum refinery operations, provided that if such Transfer is to a
transferee that is not rated investment grade by both Credit Rating Agencies
after giving effect to such Transfer, (a) Clark Holdings has obtained the prior
consent of Majority Lenders (or, after 30 days following the giving of a
Priority Termination Notice in accordance with clause (c) of Section 10.04 of
the Common Security Agreement, Majority Secured Parties) and (b) the Credit
Rating Agencies have reaffirmed without negative implication the rating on the
Senior Debt at or above the then-current rating, provided, further, that, in any
case, if such Transfer is by means other than a Transfer of all the shares of
Clark R&M or Clark USA, such transferee assumes all obligations of Clark R&M
under the Project Documents to which Clark R&M is party.
2.05 Conditions for Authorized Transfers. Any Transfer pursuant to
this Article II shall be permitted only if the following conditions are
satisfied.
(a) The transferee and transferor execute and deliver an instrument
in form and substance reasonably satisfactory to the Secured Parties that
contains representations, warranties and agreements confirming the compliance of
such Transfer with this Agreement and the other Transaction Documents and
otherwise effecting the requirements of this Agreement and other Transaction
Documents in connection with such Transfer;
-5-
<PAGE>
(b) Any such Transfer shall not (i) give rise to a right to
accelerate any Indebtedness in an aggregate principal amount in excess of $5
million of any of the Borrower, the Partner, the General Partner or the Limited
Partner or (ii) constitute a material breach of any agreement to which any of
the Borrower, the Partnership, the General Partner, the Limited Partner or the
Clark Entities is party;
(c) The transferor and the transferee shall deliver to the Secured
Parties such legal opinions to the effect that (i) the instrument of assignment
has been duly authorized, executed and delivered, (ii) the assignment is
enforceable against the parties thereto in accordance with its terms, (iii) the
Transfer does not result in a violation of the Securities Act or any other
applicable federal or state law or an order of any court having jurisdiction
over the Borrower, the Partnership, the General Partner, the Limited Partner,
any of the Blackstone Entities, the Clark Entities or the Coker Project and (iv)
the Transfer does not (A) give rise to a right to accelerate any Indebtedness in
an aggregate principal amount in excess of $5 million of any of the Borrower,
the Partner, the General Partner or the Limited Partner or (B) constitute a
material breach of any agreement to which any of the Borrower, the Partnership,
the General Partner, the Limited Partner or the Clark Entities is party; and
(d) The Transferor becomes a party to this Agreement.
2.06 Assumption of Obligations; Novation. No Transfer pursuant to
this Article II shall be effective unless the Permitted Assignee assumes in
writing all of the obligations of the transferor under this Agreement and the
Common Security Agreement with respect to the interest being transferred. The
transferor shall be relieved of all such obligations assumed by its Permitted
Assignee pursuant to this clause subject, with respect to the Blackstone
Entities, to clause (a) of Section 2.02.
2.07 Involuntary Transfers. A Transfer that is not permitted under
this Agreement which results from any actions by any Person other than the
transferor or an Affiliate thereof and as to which neither the transferor nor
the respective Affiliate has consented in writing, shall not result in a breach
of the obligations of the parties hereto under this Agreement unless such
Transfer is not reversed within 60 days of the occurrence thereof, provided,
however, that the transferor shall have given written notice of such involuntary
Transfer to the Secured Parties within 30 days of the date of such Transfer.
2.08 Effect on Security Interests. Notwithstanding the foregoing, no
Transfer that is permitted by this Article shall be made (a) if such Transfer
would have a material adverse effect upon the security interests created under
or pursuant to the Common Security Agreement and the Security Documents and (b)
unless the Partnership has delivered to the Secured Parties 21 days' prior
written notice of the proposed Transfer and a written opinion or opinions of any
of the General Counsel of the Partnership, Mayer Brown & Platt (as to matters of
Texas law), Simpson Thacher & Bartlett (as to matters of New York law)
-6-
<PAGE>
or such other counsel selected by it (and not objected to by Secured Parties
within 30 days of the Partnership notifying Secured Parties of the identity of
such counsel) in the appropriate jurisdictions to the effect that no material
adverse effect would result from such Transfer.
2.09 Transfers Not Permitted Under this Article II. Any Transfer
other than as set forth above shall require the consent of Requisite Lenders
(or, after 30 days following the giving of a Priority Termination Notice in
accordance with clause (c) of Section 10.04 of the Common Security Agreement,
Requisite Secured Parties). A request for the consent of Requisite Lenders or
Requisite Secured Parties, as the case may be, shall be submitted in writing to
each Senior Lender Group (and, after 30 days following the giving of a Priority
Termination Notice in accordance with clause (c) of Section 10.04 of the Common
Security Agreement, the Oil Payment Insurers Administrative Agent) and the
Collateral Trustee by the party seeking such consent and shall set forth in
reasonable detail (i) the terms and conditions of the proposed Transfer,
including without limitation the identity of the proposed transferee and, if
applicable, of the ultimate beneficial owner thereof (and the proposed
assumption of obligations under the Financing Documents), (ii) the date upon
which the Transfer is proposed to be made (if known) and (iii) any other
information reasonably requested by Senior Lenders (or, after 30 days following
the giving of a Priority Termination Notice in accordance with clause (c) of
Section 10.04 of the Common Security Agreement, Secured Parties).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties. Each of the Borrower, the
Partnership, the General Partner, the Limited Partner, Clark Holdings and the
Blackstone Entities, insofar as the following applies to itself, represents and
warrants to the Collateral Trustee, the Bank Senior Lenders Administrative
Agent, the Oil Payment Insurers Administrative Agent and the Capital Markets
Trustee, as of the date hereof:
(a) Organization. It is a corporation, in the case of the Borrower,
Clark Holdings and each of the Partners, and a limited partnership, in the case
of the Partnership and each of the Blackstone Entities, duly organized and
validly existing in good standing under the laws of its jurisdiction of
incorporation or organization, as the case may be.
(b) Ownership. (i) The Blackstone Entities collectively (A) directly
own 68% of the outstanding capital stock of Clark Holdings and (B) indirectly
own 90% of the outstanding capital stock of the General Partner, (ii) Occidental
Petroleum directly owns 31% of the outstanding capital stock of Clark Holdings
and 10% of the outstanding capital stock of the General Partner, (iii) Clark
Holdings directly owns 100% of the outstanding capital stock of Clark USA, Inc.
and 90% of the outstanding capital stock of the General Partner,
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<PAGE>
(iv) Clark USA, Inc. directly owns 100% of the outstanding capital stock of
Clark R&M, (v) the General Partner directly owns 100% of the outstanding capital
stock of the Limited Partner and the 1% general partnership interest in the
Partnership, (vi) the Limited Partner directly owns the 99% limited partnership
interest in the Partnership and (vii) the Partnership directly owns 100% of the
outstanding capital stock of the Borrower.
(c) Authority. It has full power and authority to execute and
deliver this Agreement and to incur and perform its obligations hereunder in
accordance with the terms provided herein.
(d) Binding Agreement. This Agreement has been duly authorized,
executed and delivered by it and constitutes a valid and legally binding
agreement of such party enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) Consents and Approvals for this Agreement. All Third-Party
Authorizations that are necessary for the execution and delivery by it of this
Agreement and the performance of its obligations hereunder have been obtained
and are in full force and effect.
(f) Conflicts. There is no provision of law, statute, regulation,
rule, order, injunction, decree, writ or judgment, no provision of its charter
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Agreement.
(g) No Immunity. Neither it nor any of its properties has any
immunity from jurisdiction of any court or from any legal process in the United
States (whether through service, notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).
(h) No Legal Proceedings. There are no legal actions, suits or
proceedings pending or, to its knowledge, threatened against or affecting it or
any of its properties in any court, before or by any governmental department,
board, agency, administration or instrumentality or before any arbitrator, and
no existing default by it under any applicable order, writ, injunction, decree
or other decision of any court, governmental department, board agency,
administrator or instrumentality or any arbitrator, in each case, (i) that could
be expected to have a material adverse effect on its ability to perform its
obligations under this Agreement, or (ii) which could be expected to render this
Agreement unenforceable.
-8-
<PAGE>
ARTICLE IV
MISCELLANEOUS
4.01 Termination. This Agreement shall terminate on the earlier of
(a) the date on which the Common Security Agreement shall terminate and (b) as
to any party to this Agreement to whom the transfer restrictions apply, the date
on which the applicable Transfer restrictions applicable to such party cease to
apply to it. Upon the termination of this Agreement, the obligations of the
party or parties as to which this Agreement shall have terminated shall cease to
apply.
4.02 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4.03 Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
4.04 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
4.05 Notices. Any notice, claim, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder shall be given in writing and will be deemed duly given
when (a) personally delivered, (b) sent by facsimile transmission (with written
confirmation or acknowledgment of receipt, whether written or oral) or (c) five
days have elapsed after mailing by certified or registered mail, postage pre-
paid, return receipt requested, in each case addressed to a party at its address
or facsimile transmission number as set forth in Appendix P to the Common
Security Agreement or to such other address or facsimile transmission number of
which that party has given notice. Notice of address or facsimile number change
shall be effective only upon receipt.
4.06 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
4.08 Consent to Jurisdiction. (a) Subject to clause (c) of this
Section 4.08, each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement,
-9-
<PAGE>
may be brought in any Federal or State court located in the Borough of
Manhattan, The City of New York, and hereby irrevocably accepts and submits to
the exclusive jurisdiction of each such court, to the exclusion of all other
courts, with respect to any such action, suit or proceeding. Each party hereto
hereby waives to the fullest extent permitted by applicable laws any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions, suits or proceedings, brought in any such court and hereby
further waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum.
(b) Each of the Restricted Parties (other than the Blackstone
Entities) hereby irrevocably appoints CT Corporation System, with offices at the
date hereof at 1633 Broadway, New York, New York 10019, as its authorized agent
on which any and all legal process may be served in any such action, suit or
proceeding brought in any Federal or State court located in the Borough of
Manhattan, The City of New York. Each party hereto agrees that service of
process in respect of it upon its respective agent, together with written notice
of such service given to it in the manner provided in Section 4.05, shall be
deemed to be effective service of process upon it in any such action, suit or
proceeding. Each of the Restricted Parties (other than the Blackstone Entities)
agrees that the failure of its respective agent to give notice to it of any such
service shall not impair or affect the validity of such service or any judgment
rendered in any action, suit or proceeding based thereon. If for any reason any
such Restricted Party's respective agent shall cease to be available to act as
such, or if any of the Blackstone Entities ceases to be located in New York,
such party agrees to designate a new agent in the Borough of Manhattan, The City
of New York, on the terms and for the purposes of this clause (b).
(c) Notwithstanding the provision of clause (a) of this Section 4.08,
nothing herein shall be deemed to limit the ability of any of the Secured
Parties, the Collateral Trustee or any Applicable Agent to serve any such legal
process in any other manner permitted by applicable law or to obtain
jurisdiction over any of the Restricted Parties or bring actions, suits or
proceedings against any such party in such other jurisdiction, including without
limitation in any Federal or State court located in the State of Texas, and in
such manner, as may be permitted by applicable law.
(d) Each party hereto agrees that a final judgment against it in any
action, suit or proceeding taken in any Federal or State Court in the Borough of
Manhattan, The City of New York in accordance with clause (a) of this Section
4.08 or, in the case of any of the Borrower, the Partnership, the General
Partner or the Limited Partner, in any other court in accordance with clause (c)
of this Section 4.08, shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment, a certified copy of which judgment shall
be conclusive evidence thereof, or by any other means provided by law.
4.09 No Recourse. Unless expressly provided herein or in any of
the Senior Loan Agreements, Security Documents or any other agreement in
connection herewith or
-10-
<PAGE>
therewith (collectively, the "Senior Debt Documents"), no recourse shall be had
by the Collateral Trustee, the Applicable Agents or any other Secured Party in
an action to collect any Senior Debt Obligations against any principal, partner,
shareholder, officer, director, employee, trustee, beneficiary, tenant in
common, agent or Affiliate (other than the Borrower Parties) of the Partnership
(collectively "Exculpated Persons"), provided that this Section 4.09 shall be
inapplicable to the extent of gross negligence or willful misconduct by such
Exculpated Person.
4.10 Amendments. Except to the extent provided in Section 2.06, this
Agreement may be amended only by an agreement in writing signed by each party
hereto. Except as otherwise expressly provided herein, no waiver or consent of
any term or condition of this Agreement in favor of any party hereto (other than
the Secured Parties) may be given or granted except by the written agreement of
all Secured Parties.
4.11 Conflicts. In case of any conflict or inconsistency between this
Agreement and any Senior Loan Agreement or the Oil Payment Reimbursement
Agreement, this Agreement shall control.
4.12 Effectiveness. This Agreement shall come into full force and
effect upon (a) its execution and delivery by each of the parties named on the
signature pages hereof and (b) the effectiveness of the Common Security
Agreement in accordance with Section 14.15 thereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
PORT ARTHUR FINANCE CORP.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
CLARK REFINING HOLDINGS, INC.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
BLACKSTONE CAPITAL PARTNERS III
MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES III L.L.C.,
GENERAL PARTNER
By: /s/ Robert L. Friedman
------------------------------------
Name: Robert L. Friedman
Title: Member
BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES III L.L.C.,
GENERAL PARTNER
By: /s/ Robert L. Friedman
------------------------------------
Name: Robert L. Friedman
Title: Member
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES III L.L.C.,
GENERAL PARTNER
By: /s/ Robert L. Friedman
------------------------------------
Name: Robert L. Friedman
Title: Member
<PAGE>
BANKERS TRUST COMPANY,
as Collateral Trustee
By: /s/ James McDonough
------------------------------------
Name: James McDonough
Title: Vice President
By: /s/ William T. Jenkins
------------------------------------
Name: William T. Jenkins
Title: Assistant Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH, as
Administrative Agent for the Bank Senior Lenders
By: /s/ Cynthia Jo Powell
------------------------------------
Name: Cynthia Jo Powell
Title: Associate
By: /s/ Lydia Zaininger
------------------------------------
Name: Lydia Zaininger
Title: Vice President
WINTERTHUR INTERNATIONAL INSURANCE COMPANY
LIMITED,
as Administrative Agent for and on behalf of the
Oil Payment Insurers
By: /s/ Eileen McCusker
------------------------------------
Name: Eileen McCusker
Title: Property Underwriting Manager
<PAGE>
HSBC BANK USA,
as Capital Markets Trustee
By: /s/ James M. Foley
--------------------------------
Name: James M. Foley
Title: Assistant Vice President
<PAGE>
Exhibit 4.06
- --------------------------------------------------------------------------------
INTERCREDITOR AGREEMENT
among
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of the Bank Senior Lenders,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
for itself and as Administrative Agent for and on behalf of the Oil
Payment Insurers,
HSBC BANK USA,
as Capital Markets Trustee for the Capital Markets Senior Lenders,
and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
as Debt Service Reserve Insurer
Dated as of August 19, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions......................................................2
1.02 Interpretation...................................................2
1.03 Conflict.........................................................3
ARTICLE II
GENERAL INTERCREDITOR ARRANGEMENTS
2.01 Sharing of Information...........................................3
2.02 Notice of Non-Pro Rata Payments..................................3
2.03 General Consultation.............................................3
2.04 Voting Restrictions..............................................4
2.05 No Reliance......................................................4
2.06 Sharing of Non-Pro Rata Payments.................................5
2.07 Excluded Payments................................................5
2.08 Termination of Senior Debt Commitments...........................6
ARTICLE III
OIL PAYMENT INSURANCE ARRANGEMENTS
3.01 Covenants of the Oil Payment Insurers Administrative Agent.......6
3.02 Exercise of Voting Rights........................................6
3.03 Rights under Debt Service Reserve Insurance Guarantee............7
ARTICLE IV
DEBT SERVICE RESERVE INSURANCE ARRANGEMENTS
4.01 General Covenants of the Debt Service Reserve Insurer............7
4.02 Subordination....................................................7
ARTICLE V
MISCELLANEOUS
5.01 Termination......................................................8
5.02 GOVERNING LAW....................................................8
5.03 Waiver of Jury Trial.............................................8
5.04 Severability.....................................................8
5.05 Entire Agreement.................................................8
5.06 Notices..........................................................9
5.07 Benefits of Agreement............................................9
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<PAGE>
SECTION PAGE
----
5.08 Remedies.........................................................9
5.09 Execution in Counterparts.......................................10
5.10 Consent to Jurisdiction.........................................10
5.11 Amendments, Etc.................................................10
5.12 Effectiveness...................................................11
-ii-
<PAGE>
INTERCREDITOR AGREEMENT
This Agreement, dated as of August 19, 1999, is made among:
BANKERS TRUST COMPANY, a banking corporation incorporated under the
laws of the State of New York, acting through its New York Branch, as Collateral
Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH, a New York State licensed branch
of a German bank, as Administrative Agent for and on behalf of the Bank Senior
Lenders,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England and Wales, for itself and as
Administrative Agent for and on behalf of the Oil Payment Insurers,
HSBC BANK USA, a New York banking corporation and trust company, as
Capital Markets Trustee for the Capital Markets Senior Lenders; and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, as Debt Service Reserve Insurer.
WHEREAS:
A. The Bank Senior Lenders propose to loan the Borrower
Bank Senior Term Debt and make available to the Partnership the Secured
Working Capital Facility;
B. The Borrower proposes to issue Capital Markets Senior
Debt in favor of the Capital Markets Senior Lenders;
C. The Oil Payment Insurers propose to guarantee certain of the
Partnership's payment obligations to PMI under the Long-Term Oil Supply
Agreement;
D. The Collateral Trustee proposes to act on behalf of the
Secured Parties pursuant to the Security Documents and has authorized the
execution and delivery of this Agreement;
E. The Bank Senior Lenders Administrative Agent proposes to act
on behalf of the Bank Senior Lenders pursuant to the Bank Senior Loan Agreements
and has authorized the execution and delivery of this Agreement;
F. The Capital Markets Trustee proposes to act on behalf of the
Capital Markets Senior Lenders pursuant to the Indenture and has authorized the
execution and delivery of this Agreement;
<PAGE>
G. The Oil Payment Insurers Administrative Agent proposes to act
on behalf of the Oil Payment Insurers pursuant to the Reimbursement Agreement
and has authorized the execution and delivery of this Agreement; and
H. The Debt Service Reserve Insurer proposes to guarantee the
Borrower's obligation to pay Senior Debt Obligations when due pursuant to, and
in accordance with the terms of, the Debt Service Reserve Guarantee Arrangement
and has authorized the execution and delivery of this Agreement.
NOW, THEREFORE, to set forth the terms of their relationship and
respective rights and obligations under the Financing Documents, the parties
hereto now agree with and among each other as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions. Defined terms in this Agreement and the
Appendices to this Agreement, which may be identified by the capitalization of
the first letter of each principal word thereof, have the meanings assigned to
them in Appendix A to the Common Security Agreement, dated as of August 19,
1999, among Port Arthur Finance Corp., Port Arthur Coker Company L.P., Sabine
River Holding Corp., Neches River Holding Corp., Bankers Trust Company, as
Collateral Trustee for the Secured Parties, Deutsche Bank AG, New York Branch,
as Administrative Agent for and on behalf of the Bank Senior Lenders,
Wintherthur International Insurance Company Limited, for itself and as
Administrative Agent for and on behalf of the Oil Payment Insurers, HSBC Bank
USA, as Capital Markets Trustee for the Capital Markets Senior Lenders, and
Bankers Trust Company, as Depositary Bank, as the same may be amended or
supplemented in accordance with its terms and in effect from time to time (the
"Common Security Agreement").
1.02 Interpretation. In this Agreement, except to the extent that
the context otherwise requires:
(a) the table of contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;
(b) unless otherwise specified, references to Articles, Sections and
clauses are references to Articles, Sections, and clauses of this
Agreement;
(c) references to any document or agreement, including without
limitation this Agreement, shall be deemed to include references to such
document or agreement (together with all appendices, annexes and schedules
thereto) as amended, supplemented, replaced or restated from time to time
in accordance with its terms and (where applicable) subject to compliance
with the requirements set forth therein; and
(d) references to any party to this Agreement or any other document
or agreement shall include its successors and permitted assigns.
-2-
<PAGE>
1.03 Conflict. In the event of any conflict between this
Agreement and the Common Security Agreement, the Common Security
Agreement shall govern.
ARTICLE II
GENERAL INTERCREDITOR ARRANGEMENTS
2.01 Sharing of Information. Each Secured Party and each Applicable
Agent shall use reasonable efforts promptly to make available to all other
Secured Parties, Applicable Agents and the Collateral Trustee any material
information it receives in its capacity as a Secured Party or Applicable Agent,
as the case may be, regarding (a) the construction or operation of the Project,
the prospects for the timely achievement of Final Completion by the Guaranteed
Final Completion Date, or the financial condition or business of any of the
Borrower, the Partnership or the Partners, (b) the Borrower's and the
Partnership's ability to pay the Senior Debt Obligations when due, (c) the
security interests granted by or pursuant to the Common Security Agreement and
the other Security Documents, (d) the ability of any of the Borrower, the
Partnership or the Partners to comply with their obligations under each of the
Financing Documents, (e) the ability of any of the parties to the Project
Documents to comply with their obligations thereunder, (f) the occurrence of any
Event of Default or Potential Default or (g) any other matter regarding any of
the Borrower, the Partnership or the Partners or the Senior Debt that such
Secured Party, or Applicable Agent, as the case may be, in its reasonable
judgment, considers to be of common interest to the Secured Parties, provided
that (i) this Section 2.01 shall not require any Secured Party or Applicable
Agent to make available to the Collateral Trustee information that, (A) in such
Secured Party's reasonable judgment, is not of common interest to the other
Secured Parties, (B) that is subject to confidentiality restrictions that
prohibit such disclosure or (C) that such Secured Party or Applicable Agent
reasonably believes to have already been provided to the other Secured Parties,
Applicable Agents and the Collateral Trustee and (ii) no Secured Party or
Applicable Agent shall have any liability for any failure to make available to
any other Secured Party, Applicable Agent or the Collateral Trustee such
information or for any inaccuracy or incompleteness of any such information made
available by it in good faith.
2.02 Notice of Non-Pro Rata Payments. To the extent applicable,
each Secured Party shall notify each Applicable Agent and the Collateral Trustee
of any payment received in respect of Senior Debt Obligations or Oil Payment
Insurance Obligations in excess of its pro rata share of such obligations then
due under its respective Financing Document.
2.03 General Consultation. The Secured Parties agree that, without
affecting in any manner the rights of the Secured Parties and without improving
in any way the rights or defenses of any of the Borrower, the Partnership or the
Partners, to the extent practicable under the circumstances, they shall endeavor
to afford each other a reasonable opportunity to exchange views before taking
any action that could reasonably be expected to have a Material Adverse Effect
or significantly disadvantage certain Secured Parties in favor of other Secured
Parties.
-3-
<PAGE>
Subject to the voting provisions set forth in the Common Security
Agreement and the percentage of Secured Parties required to take action or make
decisions thereunder or under any other Financing Document, it is the intention
of each Secured Party that, in connection with any action or decision requiring
a determination by more than one Secured Party, all Secured Parties entitled
pursuant to the Common Security Agreement to vote thereon are to be afforded the
opportunity to express their views, and to vote, on the matter subject to such
determination.
Any Secured Party may, at any time following the occurrence and
during the continuance of an Event of Default, request that a meeting or
meetings of Secured Parties, at reasonable times and locations, and with
reasonable frequency, be convened, and upon such request having been given in
accordance with this Section 2.03, such meetings shall be convened as provided
in this Agreement. Such a request for a meeting shall be made in a written
notice given to the Collateral Trustee and each Applicable Agent in accordance
herewith. Each such notice shall state the date of such meeting (which shall be
not less than 15 nor more than 30 days after the date of such notice, unless
otherwise agreed by all Secured Parties) and a general outline of the issues to
be discussed at such meeting. Any Secured Party shall have the right to appoint
any other Person (including another Secured Party) to act as its representative
at any such meeting of Secured Parties. No Secured Party shall be obligated to
attend any such meetings.
2.04 Voting Restrictions. In each instance that a vote with respect
to any consent, waiver, approval, direction, amendment, supplement, other
modification or other matter is to be cast in accordance with the Common
Security Agreement or the Transfer Restrictions Agreement, no Secured Party that
is an Affiliate of any of the Borrower, the Partnership, the Partners, the
Shareholders or the Clark Entities (each, a "Non-Voting Lender") shall be
entitled to participate in such vote and Senior Debt and Senior Debt Commitments
held by a Non-Voting Lender shall not be considered outstanding for the purpose
of determining the percentages of outstanding principal amount of Senior Debt
and Senior Debt Commitments under the definitions of "Majority Lenders",
"Requisite Lenders", "Supermajority Lenders", "Majority Secured Parties",
"Requisite Secured Parties" and "Supermajority Secured Parties", provided that
in no event shall any amendment, modification or waiver of Section 2.06 or
Section 2.07 that is adverse to any Non-Voting Lender be made without the
written consent of such Non-Voting Lender.
2.05 No Reliance. Notwithstanding any other provision of the Common
Security Agreement, no Secured Party has relied or shall rely on any other
Secured Party, any Applicable Agent or the Collateral Trustee (a) to inquire
into or verify the accuracy or completeness of any information provided by any
of the Borrower, the Partnership or the Partners or made available by any
Secured Party to any other Secured Party on or prior to the date hereof, or
hereafter pursuant to Section 2.01 or (b) to review or evaluate the condition of
any of the Borrower, the Partnership, the Partners or the Project. Each Secured
Party acknowledges and agrees that it has made its own credit decision, and
shall take, or refrain from taking, any future decision or action, on the basis
of its own independent judgment, without reliance on information provided by or
expected from, or on views expressed by, any other Secured Party, any Applicable
Agent or the Collateral Trustee.
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<PAGE>
2.06 Sharing of Non-Pro Rata Payments. Each Secured Party agrees
that in the event any Secured Party shall obtain payment of any amounts due to
it on or in respect of Senior Debt Obligations or Oil Payment Insurance
Obligations from the Borrower, the Partnership or from any other Person, whether
through exercise of a right of set-off, banker's lien or counterclaim, or from
any realization (whether through attachment, foreclosure or otherwise) of assets
of the Borrower, the Partnership or either of the Partners, or otherwise, and
such payment is not in accordance with such Secured Party's pro rata share of
such obligations then due under its respective Financing Document, then, except
to the extent such payment is an Excluded Payment (as defined in Section 2.07),
such Secured Party shall promptly remit to the Collateral Trustee for
distribution to other Secured Parties the amount of such payment necessary to
ensure that each Secured Party shall have received only its pro rata share of
such obligations, provided that, if at such time redistribution of such payment
in such manner is inadvisable in the judgment of any Secured Party, then at the
request of such Secured Party, Secured Parties shall promptly consult with each
other to determine whether there is a preferable manner to make equitable
adjustments (including the purchase by such Secured Party of Senior Debt
Obligations or Oil Payment Insurance Obligations, as the case may be, held by
other Secured Parties) to permit all Secured Parties to share such payment (net
of expenses incurred by the recipient Secured Party in obtaining or preserving
such payment) pro rata, provided, further, that, if the Capital Markets Trustee
shall have acted negligently in distributing such non-pro rata payment, it shall
be liable to the other Secured Parties to the extent that the amounts so paid
are not remitted promptly to the Collateral Trustee. If any such redistributed
or shared payment is rescinded or must otherwise be restored by the Secured
Party which first obtained it, each other Secured Party that shares the benefit
of such payment shall return to such Secured Party its portion of the payment so
rescinded or required to be restored.
2.07 Excluded Payments. The following payments on or in respect of
Senior Debt Obligations or Oil Payment Insurance Obligations shall constitute
"Excluded Payments":
(a) any payment pursuant to a contract of guaranty, indemnity or
insurance applicable to Senior Debt Obligations or Oil Payment Insurance
Obligations, as the case may be, made by any Person other than any of the
Borrower, the Partnership and the Partners, the Shareholders, the Clark
Entities and any of their respective Affiliates;
(b) the pro rata share otherwise allocable under this Agreement to
any particular Secured Party of any payment received by another Secured
Party as a result of an action or proceeding commenced by such Secured
Party in a court to the extent that, after receipt of timely notice of the
commencement of such action or proceeding by the particular Secured Party,
such particular Secured Party does not (i) join such action or proceeding
or agree to share (pro rata in accordance with the outstanding Senior Debt
Obligations or Oil Payment Insurance Obligations held by it) the costs and
expenses of such action or proceeding or (ii) commence and diligently
prosecute a separate action or proceeding in any appropriate court to
collect the analogous obligations of the Borrower, the Partnership and the
Partners owing to such particular Secured Party; and
-5-
<PAGE>
(c) any payment or prepayment to one or more Secured Parties or
Senior Lender Groups pursuant to, and to the extent permitted under,
Article II of the Common Security Agreement that is not required to be a
Pro Rata Payment.
For the avoidance of doubt, notwithstanding any other provision of the Common
Security Agreement or any other Financing Document to the contrary, no Secured
Party shall have any obligation to share any payment made by any Person to such
Secured Party pursuant to a contract of participation or assignment or any other
arrangement by which a direct or indirect interest of such Secured Party under
the Financing Documents is transferred.
2.08 Termination of Senior Debt Commitments. In the event the
Senior Debt Commitment of a Secured Party is terminated in full prior to
disbursement of any Senior Loans by such Secured Party, such Secured Party shall
cease to be a party to the Common Security Agreement, the Security Documents and
the Transfer Restrictions Agreement.
ARTICLE III
OIL PAYMENT INSURANCE ARRANGEMENTS
3.01 Covenants of the Oil Payment Insurers Administrative Agent.
The Oil Payment Insurers Administrative Agent hereby covenants and agrees, for
and on behalf of the Oil Payment Insurers, for the benefit of the other parties
hereto that:
(a) it shall maintain the coverage provided under the Oil Payment
Insurance Policy in accordance with its terms, subject to suspension or
termination of such coverage in accordance with the Oil Payment Insurance Policy
and the Reimbursement Agreement; and
(b) it shall promptly notify each of the other Applicable Agents in the
event of (i) any failure by the Partnership to pay any premium or other amounts
payable under the Reimbursement Agreement or the Oil Payment Insurance Policy
when due, (ii) any claim made under Section 2.03 of the Reimbursement Agreement
and (iii) any suspension or termination of the Oil Payment Insurance Policy.
3.02 Exercise of Voting Rights. Each of the Bank Senior Lenders
Administrative Agent and the Capital Markets Trustee hereby acknowledge and
agree that the Oil Payment Insurers Administrative Agent shall exercise all
voting rights arising under the Financing Documents for and on behalf of the Oil
Payment Insurers as directed by the Oil Payment Insurers and, in the case of any
Oil Payment Insurers that are reinsurers with respect to all or part of the
insurance coverage provided by the Oil Payment Insurance Policy, in accordance
with the relevant reinsurance documentation.
3.03 Rights under Debt Service Reserve Insurance Guarantee. The
Senior Lenders hereby acknowledge and agree that each Oil Payment Insurer shall
have the right, at its sole discretion, to renounce any payment under the Debt
Service Insurance Guarantee to which it may be entitled, provided that no such
renunciation with respect to any Oil
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<PAGE>
Payment Reimbursement Obligation held by such Oil Payment Insurer shall operate
as a waiver with respect to any other Oil Payment Reimbursement Obligation or
any other rights such Oil Payment Insurer may have under the Debt Service
Reserve Insurance Guarantee.
ARTICLE IV
DEBT SERVICE RESERVE INSURANCE ARRANGEMENTS
4.01 General Covenants of the Debt Service Reserve Insurer. The
Debt Service Reserve Insurer hereby covenants and agrees for the benefit of the
other parties hereto that:
(a) it shall maintain the coverage provided under the Debt Service
Reserve Guarantee Arrangement in accordance with its terms, subject to
suspension or termination of such coverage in accordance with the Debt Service
Reserve Guarantee Arrangement; and
(b) it shall promptly notify each of the other Applicable Agents
in the event of (i) any failure by the Borrower to pay any premium or other
amounts payable under the Reimbursement Agreement or the Debt Service Reserve
Guarantee Arrangement when due and (ii) any suspension or termination of the
coverage provided under the Debt Service Reserve Guarantee Arrangement.
4.02 Subordination. (a) The Debt Service Reserve Insurer hereby
covenants and agrees that the liens and security interests created for the
benefit of the Secured Parties under the Common Security Agreement and the other
Financing Documents, to the extent they are created for the benefit of the Debt
Service Reserve Insurer, and the amounts owed to the Debt Service Reserve
Insurer now or hereafter secured thereby and all rights, remedies, terms and
covenants contained therein or in any of the other Financing Documents for the
benefit of the Debt Service Reserve Insurer shall be and at all times remain
subject and subordinate to the full payment of all of the Senior Debt
Obligations and all of the Oil Payment Reimbursement Obligations.
(b) The Debt Service Reserve Insurer hereby agrees that it shall
not be entitled to any proceeds from the sale or other disposition of any
Collateral or any other proceeds with respect to the Collateral, unless and
until all of the Senior Debt Obligations and all of the Oil Payment
Reimbursement Obligations have been paid in full. If at any time the Debt
Service Reserve Insurer receives any such proceeds and if at such time the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations shall not
have been paid in full, the Debt Service Reserve Insurer shall hold such
proceeds in trust for the benefit of the Collateral Trustee and shall promptly
forward such proceeds to the Collateral Trustee
(c) With respect to the Collateral, so long as any Senior Debt
Obligations and Oil Payment Reimbursement Obligations are outstanding, the
Collateral Trustee shall have the sole and exclusive right to carry out the
provisions of the Common Security Agreement and the other Financing Documents
for the benefit of the Secured Parties and to enforce all rights and privileges
accruing to the Secured Parties by reason of the Common
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<PAGE>
Security Agreement and the other Financing Documents, and to exercise all rights
and remedies of a secured lender under the applicable Uniform Commercial Code or
other applicable law in respect of the Collateral without the consent of the
Debt Service Reserve Insurer. Until all of the Senior Debt Obligations and all
of the Oil Payment Reimbursement Obligations are paid in full, the Debt Service
Reserve Insurer shall not exercise any legal or equitable rights or remedies
with respect to the Collateral, including without limitation the exercise of any
rights or remedies arising out of or in connection with the subordinated lien
granted to it under the Deed of Trust, Absolute Assignment of Rents, Security
Agreement and Financing Statement, dated as of August 19, 1999, by the
Partnership for the benefit of the Debt Service Reserve Insurer, without the
prior written consent of the Collateral Trustee. The Debt Service Reserve
Insurer hereby waives the right to object pursuant to Section 9-505 of the
applicable Uniform Commercial Codes as adopted.
ARTICLE X
MISCELLANEOUS
5.01 Termination. This Agreement shall terminate when all Senior
Debt Obligations and all Oil Payment Insurance Obligations have been paid in
full and all lending commitments have terminated or expired.
5.02 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.03 Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding directly or indirectly arising out of or relating to
this Agreement.
5.04 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
5.05 Entire Agreement. This Agreement constitutes the entire
agreement and understanding, and supersedes all prior agreements and
understandings (both written and oral), among the Collateral Trustee, the Bank
Senior Lenders Administrative Agent, the Capital Markets Trustee, the Oil
Payment Insurers Administrative Agent and the Debt Service Reserve Insurer
relating to the subject matter hereof.
5.06 Notices. (a) Any notice, claim, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given under this Agreement, any Senior Loan Agreement or the Reimbursement
Agreement will be deemed duly given when given or made in writing and (i)
personally delivered, (ii) sent by facsimile transmission (with written
confirmation or acknowledgment of receipt, whether written or oral) or (iii)
five days have elapsed after mailing by certified or registered mail, postage
pre-paid, return receipt requested, in each case addressed to a party at its
address or facsimile transmission number as indicated in Appendix P to the
Common Security Agreement or to
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<PAGE>
such other address or facsimile transmission number of which such party has
given notice. Notice of any address or facsimile number change shall be
effective only upon receipt. Notices and all written documents to be provided to
the Collateral Trustee under this Agreement shall be deemed received by the
Collateral Trustee only if addressed in accordance with the requirements of
Appendix P to the Common Security Agreement, including but not limited to the
addressee thereon.
(b) The Collateral Trustee shall promptly forward to each
Applicable Agent copies of any notice, claim, certificate, report instrument,
demand, request, direction, instruction, designation, waiver, receipt, consent
or other communication or document that it receives in connection with the
Transaction Documents, including without limitation any report received pursuant
to Article VIII to the Common Security Agreement, unless the Collateral Trustee
reasonably believes that such material has already been provided to such Person.
5.07 Benefits of Agreement. Nothing in this Agreement or any other
Financing Document, express or implied, shall give to any Person, other than the
parties hereto and their respective successors and permitted assigns, any
benefit or any legal or equitable right or remedy under this Agreement.
5.08 Remedies. (a) No remedy in this Agreement or any other
Financing Document conferred upon any of the parties hereto is intended to be
exclusive of any other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or under or any
other Financing Document or now or hereafter existing at law or in equity or by
statute or otherwise.
(b) No failure on the part of any of the parties hereto to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. None of the parties hereto
shall be responsible for the failure of any other Secured Party to perform its
obligations under this Agreement or any other Financing Document.
(c) In case any party hereto, or the Collateral Trustee on behalf
of any Secured Party, shall have proceeded to enforce any right, remedy or power
under this Agreement or any other Financing Document and the proceeding for the
enforcement thereof shall have been discontinued or abandoned for any reason or
shall have been determined adversely to such Secured Party, then and in every
such case the parties hereto shall, subject to any effect of or determination in
such proceeding, severally and respectively be restored to their former
positions and rights hereunder and under such other Financing Document and
thereafter all rights, remedies and powers of the parties hereto shall continue
as though no such proceeding had been taken.
5.09 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of
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<PAGE>
which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
5.10 Consent to Jurisdiction. (a) Subject to clause (c) of this
Section 5.10, each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement may be brought in
any Federal or State court located in the Borough of Manhattan, The City of New
York, and hereby irrevocably accepts and submits to the exclusive jurisdiction
of each such court, to the exclusion of all other courts, with respect to any
such action, suit or proceeding. Each party hereto hereby waives to the fullest
extent permitted by applicable laws any objection that it may now or hereafter
have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in any inconvenient forum.
(b) Each party hereto hereby irrevocably agrees that any and all
legal process may be served in any such action, suit or proceeding brought in
any Federal or State court located in the Borough of Manhattan, The City of New
York at the address of such party set forth in Appendix P to the Common Security
Agreement. Each party hereto agrees that service of process upon it at such
address made in the manner provided in Section 14.08 of the Common Security
Agreement, shall be deemed to be effective service of process upon it in any
such action, suit or proceeding.
(c) Each party hereto agrees that a final judgment against it in
any action, suit or proceeding taken in any Federal or State Court in the
Borough of Manhattan, The City of New York in accordance with clause (a) of this
Section 5.10 shall be conclusive and may be enforced in any jurisdiction by suit
on the judgment, a certified copy of which judgment shall be conclusive evidence
thereof, or by any other means provided by law.
5.11 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, no provision of this Agreement may be amended, modified,
supplemented or waived except by an agreement in writing signed by each party
hereto.
5.12 Effectiveness. This Agreement shall come into full force and
effect upon its execution and delivery by each of the parties named on the
signature pages hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed.
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By: /s/ James C. McDonough
---------------------------------
Name: James C. McDonough
Title: Vice President
By: /s/ William T. Jenkins
---------------------------------
Name: William T. Jenkins
Title: Assistant Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH, as
Administrative Agent for and on behalf of the Bank
Senior Lenders
By: /s/ Cynthia Jo Powell
---------------------------------
Name: Cynthia Jo Powell
Title: Associate
By: /s/ Lydia Zaininger
---------------------------------
Name: Lydia Zaininger
Title: Vice President
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<PAGE>
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED,
for itself and as Administrative Agent for
and on behalf of the Oil Payment Insurers
By: /s/ Eileen McCusker
---------------------------------
Name: Eileen McCusker
Title: Property Underwriting Manager
By: /s/ Malcolm Newman
---------------------------------
Name: Malcolm Newman
Title: Chief Financial Officer
HSBC BANK USA,
as Capital Markets Trustee for the
Capital Markets Senior Lenders
By: /s/ James M. Foley
---------------------------------
Name: James M. Foley
Title: Assistant Vice President
<PAGE>
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED,
as Debt Service Reserve Insurer
By: /s/ Eileen McCusker
---------------------------------
Name: Eileen McCusker
Title: Property Underwriting Manager
By: /s/ Malcolm Newman
---------------------------------
Name: Malcolm Newman
Title: Chief Financial Officer
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<PAGE>
Exhibit 5.01
[Letterhead of Simpson Thacher & Bartlett]
December 10, 1999
Port Arthur Finance Corp.
1801 S. Gulfway Drive
Office No. 36
Port Arthur, Texas 77640
Ladies and Gentlemen:
We have acted as counsel to Port Arthur Finance Corp., a Delaware
corporation (the "Company") and to Port Arthur Coker Company L.P., a Delaware
limited partnership, Sabine River Holding Corp., a Delaware corporation and
Neches River Holding Corp., a Delaware corporation (each individually, a
"Guarantor" and collectively, the "Guarantors"), in connection with the
Registration Statement on Form S-4 (the "Registration Statement") filed by the
Company and the Guarantors with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, relating to the
issuance by the Company of $255 million aggregate principal amount of its 12.50%
Senior Secured Notes due 2009 (the "Exchange Securities") and the issuance by
the Guarantors of guarantees (the "Exchange Guarantees"), with respect to the
Exchange Securities. The Exchange Securities and the Exchange Guarantees will
be issued under an indenture (the "Indenture") dated as of August 19, 1999,
among the Company, the Guarantors, HSBC Bank USA, as Capital Markets Trustee,
and Bankers Trust Company, as Collateral Trustee. The Exchange Securities will
be offered by the Company in exchange for $255 million aggregate principal
amount of its outstanding 12.50% Senior Secured Notes due 2009 (the
"Securities").
<PAGE>
We have examined the Registration Statement and the Indenture, which
has been filed with the Commission as an exhibit to the Registration Statement.
We also have examined the originals, or duplicates or certified or conformed
copies, of such records, agreements, instruments and other documents and have
made such other and further investigations as we have deemed relevant and
necessary in connection with the opinions expressed herein. As to questions of
fact material to this opinion, we have relied upon certificates of public
officials and of officers and representatives of the Company and the Guarantors.
In rendering the opinions set forth below, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as duplicates or certified
or conformed copies, and the authenticity of the originals of such latter
documents. We also have assumed that the Indenture is the valid and legally
binding obligation of the Capital Markets Trustee and the Collateral Trustee.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. When the Exchange Securities have been duly executed,
authenticated, issued and delivered in accordance with the provisions of
the Indenture upon the exchange, the Exchange Securities will constitute
valid and legally binding obligations of the Company, enforceable against
the Company in accordance with their terms.
2. When the Exchange Securities have been duly executed,
authenticated, issued and delivered in accordance with the provisions of
the Indenture upon the exchange and the Exchange Guarantees have been duly
issued, the Exchange
<PAGE>
Guarantees will constitute valid and legally binding obligations
of the Guarantors, enforceable against the Guarantors in accordance with
their terms.
Our opinions set forth above are subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York, the Federal law of the United States, the Delaware General Corporation
Law and the Delaware Revised Limited Partnership Act.
We hereby consent to the filing of this opinion letter as Exhibit 5.01
to the Registration Statement and to the use of our name under the caption
"Legal Matters" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
Exhibit 10.01
CAPITAL CONTRIBUTION AGREEMENT
------------------------------
CAPITAL CONTRIBUTION AGREEMENT (as amended, supplemented or modified
from time to time, this "Agreement"), dated as of August 19, 1999, among
BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P., a Delaware limited
partnership ("Blackstone Capital Partners"), BLACKSTONE OFFSHORE CAPITAL
PARTNERS III L.P., a Cayman Islands limited partnership ("Blackstone Offshore
Partners" and, together with Blackstone Capital Partners, being collectively
referred to herein as the "Fund"), BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III
L.P., a Delaware limited partnership ("Blackstone Family Partnership"), CLARK
REFINING HOLDINGS INC., a Delaware corporation ("Holdings"), SABINE RIVER
HOLDING CORP., a Delaware corporation (the "General Partner"), NECHES RIVER
HOLDING CORP., a Delaware corporation (the "Limited Partner"), PORT ARTHUR COKER
COMPANY L.P., a Delaware limited partnership (the "Partnership") and BANKERS
TRUST COMPANY, a New York banking corporation, as collateral trustee (the
"Collateral Trustee") for the Secured Parties (as defined in the Common Security
Agreement referred to below). All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such terms in the
Common Security Agreement referred to below.
W I T N E S S E T H:
-------------------
WHEREAS, the Partnership, Port Arthur Finance Corp., a Delaware
corporation (the "Borrower"), the General Partner, the Limited Partner, the
Collateral Trustee, the Agents, and the Depositary Bank are parties to a Common
Security Agreement, dated as of August 19, 1999 (as amended, modified or
supplemented from time to time, the "Common Security Agreement");
WHEREAS, each of Blackstone Capital Partners, Blackstone Offshore
Partners, Blackstone Family Partnership, Holdings, the General Partner, the
Limited Partner, the Partnership and the Borrower will obtain benefits as a
result of (i) the extensions of credit to the Borrower under the Senior Loan
Agreements and (ii) the coverage provided under the Oil Payment Insurance
Policy;
WHEREAS, it is a condition precedent to the entering into the Common
Security Agreement that each of the Fund, Blackstone Family Partnership,
Holdings, the General Partner, the Limited Partner and the Partnership shall
have executed and delivered this Agreement;
WHEREAS, each of Blackstone Capital Partners, Blackstone Offshore
Partners and Blackstone Family Partnership are willing to make certain capital
investments in Holdings through the purchase of additional shares in Holdings
(the "Shares") and are willing to execute
<PAGE>
2
and deliver this Agreement in order to permit the Secured Parties to be assured
that such capital investments will be made; and
WHEREAS, in order to induce (i) the Initial Senior Lenders to make the
extensions of Initial Senior Debt contemplated by the Common Security Agreement
and the Senior Loan Agreements and (ii) the Oil Payment Insurers to issue the
Oil Payment Insurance Policy and to satisfy the conditions precedent referred to
in the second recital, above, each of the Fund, Blackstone Family Partnership,
Holdings, the General Partner, the Limited Partner and the Partnership desires
to execute and deliver this Agreement.
NOW, THEREFORE, it is agreed:
1. Certain Defined Terms. As used herein, the following terms shall
---------------------
have the following meanings:
"Agents" shall mean Deutsche Bank AG, New York Branch, as
Administrative Agent for the Bank Senior Lenders, Winterthur International
Insurance Company Limited, as Administrative Agent for the Oil Payment Insurers,
and HSBC Bank USA, as Capital Markets Trustee for the Capital Markets Lenders.
"Agreement" shall have the meaning provided in the first paragraph of
this Agreement.
"Blackstone Capital Partners" shall have the meaning provided in the
first paragraph of this Agreement.
"Blackstone Family Partnership" shall have the meaning provided in the
first paragraph of this Agreement.
"Blackstone Offshore Partners" shall have the meaning provided in the
first paragraph of this Agreement.
"Capital Call Amount" shall mean, on any date of determination, an
amount of cash equal to $121,499,100, less any and all amounts previously funded
and actually received by the Partnership pursuant to Section 2(a), 2(b) or 2(d)
or by the Selling Lenders pursuant to Section 2(c) of this Agreement.
"Capital Call Acceleration Event" shall mean:
(i) the occurrence of an Insolvency Event with respect to any
of the Designated Capital Call Investors, Holdings, the General Partner,
the Limited Partner, the Partnership or the Borrower; or
<PAGE>
3
(ii) the taking of Enforcement Action as provided under the
Common Security Agreement pursuant to which the Senior Debt shall have been
declared to be immediately due and payable by reason of any Event of
Default.
"Capital Call Percentages" shall mean (i) with respect to Blackstone
Capital Partners, 79.7852%, (ii) with respect to Blackstone Offshore Partners,
14.2148% and (iii) Blackstone Family Partnership, 6.0000%, in each case as such
Capital Call Percentage may be reallocated among such partners at any time and
from time to time.
"Capital Markets Trustee" shall mean HSBC Bank USA, as Capital Markets
Trustee under the Common Security Agreement, or any successor thereto.
"Chattel Paper" shall have the meaning ascribed thereto in the Uniform
Commercial Code in effect in the State of New York on the date hereof.
"Collateral", for purposes of this Agreement only, shall mean,
collectively, this Agreement, all rights (including all contract rights and
rights to receive payments and capital contributions) under this Agreement and
all Proceeds (as defined in the Uniform Commercial Code in effect in the State
of New York on the date hereof) hereof and thereof.
"Collateral Trustee" shall have the meaning provided in the first
paragraph of this Agreement.
"Common Security Agreement" shall have the meaning provided in the
first recital of this Agreement.
"Depositary Bank" shall mean Bankers Trust Company, as Depositary
Bank under the Common Security Agreement, or any successor thereto.
"Designated Capital Call Investors" shall mean, collectively,
Blackstone Capital Partners, Blackstone Offshore Partners and Blackstone Family
Partnership.
"Equity Commitment Letter" shall mean the Equity Commitment Letter
dated June 28, 1999 from Holdings and Occidental Petroleum Corporation to the
General Partner.
"Fund" shall have the meaning provided in the first paragraph of this
Agreement.
"General Partner" shall have the meaning provided in the first
paragraph of this Agreement.
"Grantors" shall mean, collectively, all of the parties to this
Agreement (other than the Designated Capital Call Investors and the Collateral
Trustee).
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
<PAGE>
4
"Instrument" shall have the meaning ascribed thereto in the Uniform
Commercial Code in effect in the State of New York on the date hereof.
"Investment" shall mean a cash contribution not to exceed the Capital
Call Amount made (or deemed made) by a Designated Capital Call Investor after
the date hereof to the equity capital of Holdings.
"Limited Partner" shall have the meaning provided in the first
paragraph of this Agreement.
"Partnership" shall have the meaning provided in the first paragraph
of this Agreement.
"Selling Lenders" shall have the meaning provided in Section 2(c) of
this Agreement.
"Shares" shall have the meaning provided in the fourth recital of this
Agreement.
"Transaction Parties" shall mean, collectively, the parties to the
Common Security Agreement and the other Secured Parties.
2. (a) Subject to the satisfaction of the conditions described in
Section 12 of this Agreement, each Designated Capital Call Investor hereby
agrees with the Collateral Trustee for the benefit of the Secured Parties and
their respective successors, indorsees, transferees and assigns, to make
Investments (each, a "Capital Contribution") to the equity capital of Holdings
from time to time in an aggregate amount equal to such Designated Capital Call
Investor's Capital Call Percentage of the Capital Call Amount as of the date of
this Agreement, for further contribution by Holdings to the equity capital of
the General Partner, for further contribution of (i) one percent (1.00%) of such
Capital Contribution by the General Partner to the equity capital of the
Partnership and (ii) ninety-nine percent (99.00%) of such Capital Contribution
by the General Partner to the equity capital of the Limited Partner, for further
contribution by the Limited Partner to the equity capital of the Partnership.
Each such Capital Contribution shall be made by a deposit of funds into the Bank
Loan Drawdown and Equity Funding Account (x) on or before each date required by
the Partnership in order to obtain an advance of Senior Debt under the Bank
Senior Term Loan Agreement in such amount as may be requested by the Partnership
from time to time, in writing, at least 10 days in advance of the date on which
such Capital Contribution is required to be made or (y) on such earlier date
required pursuant to Section 2(b). Each of Holdings, the General Partner and the
Limited Partner agree, for the benefit of the Secured Parties and their
respective successors, indorsees, transferees and assigns, to make the further
Capital Contributions immediately upon receipt of the Investments as provided in
the first sentence of this Section 2(a).
(b) Subject to Section 2(c) of this Agreement, each of the Designated
Capital Call Investors hereby severally and not jointly agrees on an absolute,
irrevocable and unconditional basis that, within fifteen Business Days after the
occurrence of a Capital Call Acceleration Event,
<PAGE>
5
it will make a payment by deposit of cash into the Bank Loan Drawdown and Equity
Funding Account in an amount equal to its Capital Call Percentage of the Capital
Call Amount (determined as of the date of the occurrence of the Capital Call
Acceleration Event). All such payments shall be characterized as equity
investments as provided in Section 3(a) of this Agreement, except in the case of
payments made as loans pursuant to Section 2(d).
(c) To the extent the General Partner or the Limited Partner is
prohibited or excused by operation of law from contributing any amounts
corresponding to Capital Contributions by the Designated Capital Call Investors
to the equity capital of the Partnership as contemplated by Section 2(a) due to
any Insolvency Event relating to the Partnership or for any other reason
whatsoever, then, at the election of the Collateral Trustee (acting at the
direction of the Majority Lenders), the Designated Capital Call Investors'
respective Investments shall instead be promptly made by means of the purchase
by such Designated Capital Call Investors from each of the Bank Senior Lenders
and any of the Capital Markets Senior Lenders who request such purchase in
writing within 30 days of such Insolvency Event or any other event or
circumstance (collectively, the "Selling Lenders") of a subordinated
participation in such Selling Lenders' outstanding Senior Debt, allocated pro
rata among the Selling Lenders based on the aggregate amount of their respective
shares of Senior Debt outstanding and any undrawn Senior Debt Commitments at
such time. Such participations shall be evidenced by, and the payments required
by this Section 2(c) shall be subject to a subordinated participation agreement
in form and substance satisfactory to the Collateral Trustee (and which shall
conform to all of the subordination terms set forth in Appendix Q to the Common
Security Agreement) and reasonably satisfactory to the Designated Capital Call
Investors (it being expressly understood and agreed (and the subordinated
participation agreement shall provide) that no payment or distribution of any
kind or character, whether in cash, property, securities or otherwise, shall be
made under any circumstances whatsoever with respect to any such subordinated
participation except from funds that are on deposit in the Distribution Account)
and it being further expressly understood and agreed that completion of
documentation of such subordinated participation interest shall not be a
condition precedent to the Designated Capital Call Investors' obligation to make
payment therefor. Any payments made pursuant to this Section 2(c) shall be
deposited into the Bank Loan Drawdown and Equity Funding Account or such other
account or accounts as may be directed by the Selling Lenders.
(d) Each Designated Capital Call Investor hereby severally and not
jointly agrees on an unconditional and irrevocable basis that, to the extent
that, by reason of an Insolvency Event with respect to Holdings, the General
Partner or the Limited Partner, Capital Contributions required under this
Agreement are not contributed to the equity capital of the Partnership as
contemplated herein, then such Designated Capital Call Investor will make a
subordinated loan to the Partnership promptly upon demand by the Collateral
Trustee, on terms complying with all applicable provisions of the Common
Security Agreement, including without limitation all of the subordination terms
set forth in Appendix Q to the Common Security Agreement, in an amount equal to
its Capital Call Percentage of the Capital Call Amount not so contributed to the
capital of the Partnership.
<PAGE>
6
3. (a) All payments received by the Collateral Trustee pursuant to
Section 2(a) or (b) (other than loans to the Partnership pursuant to Section
2(d)) shall automatically be deemed (as of the date of receipt by the Collateral
Trustee of such respective payments) to be Investments by the respective
Designated Capital Call Investors in Holdings which have been further
contributed (as cash) by Holdings to the equity capital of General Partner, 1%
of which have been further contributed (as cash) by the General Partner to the
Partnership and 99% of which have been further contributed (as cash) by the
General Partner to the equity capital of the Limited Partner and further
contributed by the Limited Partner to the equity capital of the Partnership.
(b) All payments received by the Collateral Trustee pursuant to
Section 2(a) (b) or (d) shall be promptly deposited into the Bank Loan Drawdown
and Equity Funding Account.
(c) Each of the Designated Capital Call Investors, the General
Partner, the Limited Partner, Holdings and the Partnership hereby consents on an
absolute, irrevocable and unconditional basis to the application of the payments
received by the Collateral Trustee pursuant to Section 2(a) (b) or (d) in the
manner contemplated by this Section 3.
(d) As evidence of the contributions described herein, Holdings shall
from time to time, at the time of each such contribution, deliver to each
Designated Capital Call Investor certificates registered in such Designated
Capital Call Investor's name representing such Designated Capital Call
Investor's pro rata portion of the Shares to be issued in exchange for such
contribution, such number of Shares to be calculated by dividing the amount of
such contribution by $9.90. Concurrently with the execution and delivery hereof
and the making of the initial capital contributions under this Agreement,
General Partner shall deliver to Holdings certificates registered in Holdings'
name representing 6,046,364 shares of common stock of the General Partner.
(e) In order to provide adequate initial retained capital, each of the
General Partner and the Limited Partner may retain, from amounts otherwise to be
contributed to the Partnership under Section 2(a), an initial amount not to
exceed $25,000 for each of the General Partner and the Limited Partner.
4. All payments required to be made by any Designated Capital Call
Investor, the General Partner, the Limited Partner, Holdings and/or the
Partnership pursuant to this Agreement shall be made in full in Dollars and in
immediately available funds, free and clear of any and all taxes, levies,
imposts, assessments, deductions, withholdings or other similar charges imposed
by any taxing authority in any jurisdiction.
5. The obligations of each of the Designated Capital Call Investors
under this Agreement are independent of the obligations of the Partnership, the
Borrower or any other party, and a separate action or actions may brought and
prosecuted against any of the Designated Capital Call Investors whether or not
an action is brought against the Partnership or any other party and whether or
not the Partnership or any other party shall be joined in any such action or
actions. Each of the Designated Capital Call Investors, Holdings, each Partner
and the Partnership hereby waives, to the fullest extent permitted by law, the
benefit of any statute of
<PAGE>
7
limitations affecting its liability under this Agreement or the enforcement of
any provision hereof.
6. Each of the Designated Capital Call Investors, Holdings, the
General Partner, the Limited Partner and the Partnership hereby waives notice of
acceptance of this Agreement and notice of any liability to which it may apply,
and waives presentment, demand of payment, protest, notice of dishonor, or
nonpayment of any such liability, suit or taking of other action by Holdings,
General Partner, Limited Partner and/or the Partnership (in the case of the
Designated Capital Call Investors), the Agents, the Collateral Trustee or any
Secured Party against, and any other notice to any such person or any other
party liable thereon.
7. (a) As security for the prompt and complete payment and
performance when due, whether at the stated maturity, by acceleration, upon one
or more dates set for prepayment or otherwise of the Senior Debt Obligations and
Oil Payment Insurance Obligations, each of the Grantors hereby grants to the
Collateral Trustee, for the benefit of the Secured Parties, a first priority
security interest in the Collateral. Such security interests is granted as
security only and shall not subject any of the Agents, the Collateral Trustee or
the Secured Parties to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral. All
rights of the Collateral Trustee under this Agreement, the security interest and
all obligations of the Grantors under this Agreement shall be absolute,
irrevocable and unconditional.
(b) Each Grantor covenants and agrees with the Collateral Trustee,
for the benefit of the Secured Parties, from and after the date of this
Agreement until this Agreement and the security interests created hereby are
terminated pursuant to Section 17:
(i) If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note, other
Instrument or Chattel Paper, such promissory note, Instrument or Chattel
Paper shall be immediately delivered to the Collateral Trustee, duly
indorsed in a manner reasonably satisfactory to the Collateral Trustee, to
be held as Collateral pursuant to this Agreement.
(ii) Each Grantor shall cause the filing of Uniform Commercial
Code financing statements in each of the jurisdictions listed on Schedule I
hereto with respect to it. Each Grantor shall maintain the security
interests created by this Agreement as first priority perfected security
interests and shall defend such security interests against any and all
claims and demands of all persons whomsoever.
(iii) At any time and from time to time, upon the written
request of the Collateral Trustee, and at the sole expense of a Grantor,
such Grantor shall promptly and duly execute and deliver all such further
instruments and documents and take such further action as the Collateral
Trustee may reasonably request for the purpose of obtaining or preserving
the full benefits of this Section 7 and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under
<PAGE>
8
the Uniform Commercial Code in effect in any jurisdiction with respect to the
security interests created hereby.
(iv) No Grantor shall, except (x) upon prior written notice to
the Collateral Trustee and (y) if filings under the Uniform Commercial Code
or otherwise have been made which maintain in favor of the Collateral
Trustee a valid, legal and perfected security interest in the Collateral,
free and clear of any Liens,
(A) change the location of its chief executive office and
chief place of business from that specified on Schedule II hereto; or
(B) change its (1) corporate name or any trade name used
to identify it in its conduct of business or in the ownership of its
properties without prior written notice to each of the Agents and the
Collateral Trustee, (2) identity or (3) corporate or partnership
structure in any manner such that any financing statement filed in
favor of the Collateral Trustee in connection with this Agreement
would become seriously misleading.
(v) Each Grantor shall advise the Collateral Trustee promptly,
in reasonable detail, at its address set forth in Appendix P of the Common
Security Agreement or as set forth immediately below its signature below,
as the case may be, of:
(A) any Lien (other than the security interests created
hereby) on any material portion of the Collateral; and
(B) the occurrence of any other event which could
reasonably be expected to impair any of the security interests created
hereby or on the aggregate value of the Collateral.
(vi) Notwithstanding anything to the contrary provided herein,
the Collateral Trustee assumes no liabilities with respect to any claims
regarding each Grantor's ownership (or purported ownership) of, or rights
or obligations (or purported rights or obligations) arising from, the
Collateral or any use (or actual or alleged misuse), whether arising out of
any past, current or future event, circumstance, act or omission or
otherwise, or any claim, suit, loss, damage, expense or liability of any
kind or nature arising out of or in connection with the Collateral. All of
such liabilities shall, as between the Collateral Trustee and the Grantors,
be borne exclusively by the Grantors.
(vii) The Partnership agrees to pay all expenses of the
Collateral Trustee and to indemnify the Collateral Trustee with respect to
any and all losses, claims, damages, liabilities and related expenses in
respect of this Agreement or the Collateral in each case to the same extent
the Partnership is required to do so with respect to the Common Security
Agreement and the other Financing Documents pursuant to Section 14.10 of
the Common Security Agreement. Any amounts payable as provided in this
clause (vii) shall be additional Senior Debt Obligations secured hereby and
by the Security Documents.
<PAGE>
9
Without prejudice to the survival of any other agreements contained in this
Agreement, all indemnification and reimbursement obligations contained
herein shall survive the payment in full of all Senior Debt Obligations and
Oil Payment Reimbursement Obligations and the termination of this
Agreement.
(viii) A Grantor shall not (A) make or permit to be made any
assignment, pledge or hypothecation of the Collateral, and shall grant no
other security interest in such Collateral or (B) make or permit to be made
any transfer of such Collateral. Each Grantor shall remain at all times in
possession of its Collateral except for transfers to the Collateral Trustee
pursuant to the provisions of this Agreement.
(ix) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under this Agreement to observe and perform all
the conditions and obligations to be observed and performed by it under
this Agreement, all in accordance with and pursuant to the terms and
provisions of this Agreement. None of the Agents, the Collateral Trustee or
the Secured Parties shall have any obligation or liability under this
Agreement by reason of or arising out of this Agreement or the receipt by
any such Secured Party of any payment relating to this Agreement pursuant
hereto, nor shall any of the Agents, the Collateral Trustee or the Secured
Parties be obligated in any manner to perform any of the obligations of a
Grantor under or pursuant to this Agreement, to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party under this
Agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(x) Each Grantor waives and agrees not to assert any rights
or privileges it may acquire under Section 9-112 of the Uniform Commercial
Code as from time to time in effect in the State of New York.
8. Each of the Agents, the Collateral Trustee and the Secured Parties
(or any of them) may (except as shall be required by applicable statute and
cannot be waived) at any time and from time to time without the consent of, or
notice to, any of the Designated Capital Call Investors, the General Partner,
the Limited Partner, Holdings or the Partnership, in each case without incurring
responsibility to any such person, without impairing or releasing the
obligations of any such person under this Agreement, upon or without any terms
or conditions and in whole or in part:
(i) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, alter or increase any of
the Senior Debt Obligations or Oil Payment Reimbursement Obligations, any
security therefor, or any liability incurred directly or indirectly in
respect thereof;
(ii) take and hold security for the payment of the Senior
Debt Obligations or Oil Payment Reimbursement Obligations and sell,
exchange, release, impair, surrender,
<PAGE>
10
realize upon or otherwise deal with in any manner and in any order any
property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, the Senior Debt Obligations, Oil Payment Reimbursement
Obligations or any liabilities (including any of those under this
Agreement) incurred directly or indirectly in respect thereof or hereof,
and/or any offset there against;
(iii) exercise or refrain from exercising any rights against
the Partnership, any other Transaction Party or others or otherwise act or
refrain from acting;
(iv) settle or compromise any of the Senior Debt Obligations
or Oil Payment Reimbursement Obligations, any security therefor or any
liability (including any of those under this Agreement) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment
of all or any part thereof to the payment of any liability (whether due or
not) of the Partnership to creditors of the Partnership other than the
Secured Parties;
(v) release or substitute any one or more endorsers,
guarantors or other obligors;
(vi) consent to or waive any breach of, or any act, omission
or default under, any of the Financing Documents or any of the instruments
or agreements referred to therein, or otherwise amend, modify or supplement
any of the Financing Documents or any of such other instruments or
agreements;
(vii) act or fail to act in any manner referred to in this
Agreement which may deprive any of the Designated Capital Call Investors,
the General Partner, the Limited Partner or Holdings of any right to
subrogation against the Partnership to recover any payments made pursuant
to this Agreement;
(viii) pursue its rights and remedies under this Agreement
and/or under any guaranty of all or any part of the Senior Debt Obligations
or Oil Payment Reimbursement Obligations in whatever order, or
collectively, and the Agents, the Collateral Trustee and the Secured
Parties shall be entitled to the strict performance of each Designated
Capital Call Investor, the General Partner, the Limited Partner, Holdings
and the Partnership under this Agreement, notwithstanding any action taken
(or not taken) by any of the Agents, the Collateral Trustee or the Secured
Parties to enforce any of its rights or remedies against any Designated
Capital Call Investor, the General Partner, the Limited Partner, Holdings,
the Partnership or any other person, for all or any part of the Senior Debt
Obligations, Oil Payment Reimbursement Obligations or any payment received
under this Agreement or any other such guaranty; and/or
(ix) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of any Designated Capital Call Investor, the General Partner, the
Limited Partner, Holdings or the Partnership from its liabilities under
this Agreement.
<PAGE>
11
9. No invalidity, irregularity or unenforceability of all or any of
the Senior Debt Obligations or of any security therefor shall affect, impair or
be a defense to this Agreement, and the obligations of the Designated Capital
Call Investors, the General Partner, the Limited Partner, Holdings and the
Partnership under this Agreement shall be absolute, irrevocable and
unconditional notwithstanding the occurrence of any event or the existence of
any circumstance, including, without limitation, any Insolvency Event with
respect to any Designated Capital Call Investor, the General Partner, the
Limited Partner, the Borrower, Holdings or any of its Subsidiaries or any event
or circumstance which would constitute a legal or equitable discharge, except
payment in full in cash of all Senior Debt Obligations in accordance with the
Common Security Agreement.
10. Each of the Designated Capital Call Investors, the General
Partner, the Limited Partner, Holdings and the Partnership severally makes the
following representations, warranties and agreements (but only to the extent
applicable to itself and not jointly with such other parties):
(a) (i) Each of Blackstone Capital Partners, Blackstone Offshore
Partners, Blackstone Family Partnership and the Partnership is a duly
organized and validly existing limited partnership in good standing under
the laws of the State of Delaware (or, in the case of Blackstone Offshore
Partners, the Cayman Islands) and has the power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (ii) Holdings is a duly organized and
validly existing corporation in good standing under the laws of the State
of Delaware and has the power and authority to own its property and assets
and to transact the business in which it is engaged and presently proposes
to engage.
(b) Each of the Designated Capital Call Investors, the General
Partner, the Limited Partner, Holdings and the Partnership has, to the
extent applicable to it, the full power and authority to grant the security
interest in the Collateral pursuant hereto and to execute, deliver and
perform the terms and provisions of this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance by it
of this Agreement. Each of the Designated Capital Call Investors, the
General Partner, the Limited Partner, Holdings and the Partnership has duly
executed and delivered this Agreement, and this Agreement constitutes its
legal, valid and binding obligation enforceable against it in accordance
with its terms, except to the extent that the enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
(c) Neither the execution, delivery or performance by any of the
Designated Capital Call Investors, the General Partner, the Limited
Partner, Holdings or the Partnership of this Agreement, nor compliance by
it with the terms and provisions hereof, nor the consummation of the
transactions contemplated herein, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii)
will conflict with
<PAGE>
12
or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of such person pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other material agreement, contract or instrument to which it is a party or
by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of any of the organizational
documents of such person, in the case of sub-clause (ii), which could
reasonably be expected to (A) have a materially adverse effect on the
assets, business, operations, properties, liabilities, profits or condition
(financial or otherwise) of such person, (B) result in a material
impairment of the ability of such person to perform any of its material
obligations under this Agreement or (C) result in an impairment of the
validity or enforceability of the security interest created, or a material
impairment of the material rights, remedies or benefits available to the
Secured Parties or the Collateral Trustee, under this Agreement.
(d) Other than the filing of financing statements in appropriate form
in the jurisdictions specified on Schedule I hereto, no other order,
consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption or any other action by, any
Governmental Authority is or will be required to authorize, or is required
(i) in connection with the execution, delivery and performance of this
Agreement or (ii) to ensure the legality, validity, binding effect or
enforceability of this Agreement.
(e) This Agreement is effective to create in favor of the Collateral
Trustee, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral and, upon the filing of
financing statements in appropriate form in the jurisdictions specified on
Schedule I hereto, this Agreement will constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Grantors
in and to such Collateral and, subject to (S) 9-306 of the Uniform
Commercial Code, the Proceeds thereof, in each case prior and superior in
right to any other person, other than with respect to Permitted Liens.
(f) Each Grantor's chief executive office and chief place of business
is located at the location listed on Schedule II hereto.
(g) There are no actions, suits or proceedings pending or, to the
knowledge of any of the Designated Capital Call Investors, the General
Partner, the Limited Partner, Holdings or the Partnership, threatened (i)
with respect to this Agreement or (ii) that could reasonably be expected to
(A) materially and adversely affect the business, operations, property,
assets, liabilities or condition (financial or otherwise) of such person or
(B) have a material adverse effect on the rights or remedies of any of the
Agents, the Collateral Trustee or the Secured Parties hereunder or on the
ability of such person to perform its obligations to the Agents, the
Collateral Trustee or the Secured Parties hereunder.
<PAGE>
13
(h) Each of the Designated Capital Call Investors, the General
Partner, the Limited Partner, Holdings and the Partnership is in compliance
with all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property,
except to the extent that such noncompliances could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on
either (i) the business, operations, property, assets, liabilities or
condition (financial or otherwise) of such person or (ii) the rights or
remedies of any of the Agents, the Collateral Trustee or the Secured
Parties under this Agreement or on its ability to perform its obligations
under this Agreement.
(i) (i) Each of Blackstone Capital Partners and Blackstone Offshore
Partners (or, in each case, the general partner thereof) has, and will at
all times during the term of this Agreement have, the right to call cash
capital contributions from the respective partners of Blackstone Capital
Partners or Blackstone Offshore Partners, as the case may be, in amounts,
and at times, sufficient to fund in a timely manner all of the respective
obligations of Blackstone Capital Partners or Blackstone Offshore Partners,
as the case may be, under this Agreement and (ii) Blackstone Family
Partnership has, and will at all times during the term of this Agreement
have, access to sufficient assets to fund in a timely manner all of its
obligations under this Agreement.
(j) Each of the Designated Capital Call Investors is acquiring the
Shares for investment solely for its own account and not with a view to, or
for resale in connection with, the distribution or other disposition
thereof.
(k) Each of the Designated Capital Call Investors is an "accredited
investor" within the meaning of Rule 501 of Regulation D under the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, as the same may be amended from time to time.
(l) The financial situation of each of the Designated Capital Call
Investors is such that it can afford to bear the economic risk of holding
the Shares for an indefinite period of time, has adequate means for
providing for its current needs and contingencies, and can afford to suffer
a complete loss of its investment in the Shares.
(m) Each of the Designated Capital Call Investors has sufficient
knowledge and experience in financial and business matters are such that it
is capable of evaluating the merits and risks of the investment in the
Shares.
(n) Each of the Designated Capital Call Investors understands that
the Shares are a speculative investment which involves a high degree of
risk of loss, there are substantial restrictions on the transferability of
the Shares, and, on the date hereof and for an indefinite period following
the date hereof, there will be no public market for the Shares and,
accordingly, it may not be possible for such Designated Capital Call
Investor to liquidate its investment in case of emergency, if at all.
<PAGE>
14
(o) Each of the Designated Capital Call Investors understands and has
taken cognizance of all the risk factors related to the purchase of the
Shares, and, other than as set forth in this Agreement, no representations
or warranties have been made to such Designated Capital Call Investor or
its representatives concerning the Shares of Holdings or their prospects or
other matters.
(p) In making its decision to purchase the Shares hereby subscribed
for, each of the Designated Capital Call Investors has relied upon
independent investigations made by it and, to the extent believed by such
Designated Capital Call Investor to be appropriate, its representatives,
including its own professional, financial, tax and other advisors.
(q) Each of the Designated Capital Call Investors has received
information about Holdings and been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, Holdings
and its representatives concerning Holdings and the terms and conditions of
the purchase of the Shares and to obtain any additional information which
such Designated Capital Call Investor deems necessary.
(r) All information which each of the Designated Capital Call
Investors has provided to Holdings and its representatives concerning such
Designated Capital Call Investor and its financial position is complete and
correct in all material respects as of the date of this Agreement.
11. (a) Each of Blackstone Capital Partners and Blackstone Offshore
Partners (and, in each case, the general partner thereof) agrees to take all
reasonable action as may be necessary so that, at all times prior to the
satisfaction and release of all of the respective obligations of Blackstone
Capital Partners or Blackstone Offshore Partners, as the case may be, under this
Agreement pursuant to Section 17, Blackstone Capital Partners or Blackstone
Offshore Partners, as the case may be (and/or, in each case, the general partner
thereof) shall have the right to call cash capital contributions from the
respective partners of Blackstone Capital Partners or Blackstone Offshore
Partners, as the case may be, in amounts, and at times, sufficient to fund in a
timely manner all of the respective obligations of Blackstone Capital Partners
or Blackstone Offshore Partners, as the case may be, under this Agreement.
(b) Blackstone Family Partnership (and the general partner thereof)
agrees to take all action as may be necessary so that, at all times prior to the
satisfaction and release of all of its obligations under this Agreement pursuant
to Section 17, Blackstone Family Partnership shall have access to sufficient
assets to fund in a timely manner all of its obligations under this Agreement.
12. The obligations of each of the Designated Capital Call Investors
to make the Investments described in Section 2 are conditioned on:
(a) the entry into by Holdings and the General Partner of a
Stockholders' Agreement substantially in the form attached hereto as
Exhibit A;
<PAGE>
15
(b) the issuance to Blackstone Capital Partners and its affiliates of
warrants to purchase 2.43 million shares of Holdings' common stock, with
such warrants having an exercise price of $.01 per share, substantially in
the form attached hereto as Exhibit B;
(c) the issuance to Occidental Petroleum Corporation and its
affiliates of warrants to purchase 30,000 additional shares of the common
stock of the General Partner, which shares will be exchangeable for 270,000
shares of Holdings' Class F common stock, with such warrants having an
exercise price of $.09 per share, substantially in the form attached hereto
as Exhibit C;
(d) the issuance of the Project Bonds (as defined in the Equity
Commitment Letter);
(e) the entry into the definitive agreement for the Bank Financing
(as defined in the Equity Commitment Letter); and
(f) the purchase of all of the shares of the General Partner to be
purchased on the Project Closing Date (as defined in the Equity Commitment
Letter) as described in the Equity Commitment Letter.
13. No failure or delay on the part of the Collateral Trustee, any
Secured Party, any Designated Capital Call Investor, the General Partner, the
Limited Partner, Holdings, the Partnership or any other Transaction Party in
exercising any right, power or privilege under this Agreement and no course of
dealing between or among any of the Agents, the Collateral Trustee, the Secured
Parties, any Designated Capital Call Investor, the General Partner, the Limited
Partner, Holdings, the Partnership or any other Transaction Party shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights,
powers and remedies expressly provided in this Agreement are cumulative and not
exclusive of any rights, powers or remedies which the Agents, the Collateral
Trustee or any Secured Party would otherwise have. No notice to or demand on
any Designated Capital Call Investor, the General Partner, the Limited Partner,
Holdings or the Partnership in any case shall entitle such person to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agents, the Collateral Trustee or any Secured Party
to any other or further action in any circumstances without notice or demand.
14. This Agreement shall be binding upon each Designated Capital Call
Investor, the General Partner, the Limited Partner, Holdings and the
Partnership, and their respective successors and assigns (including, without
limitation, any executors or administrators) and shall inure to the benefit of
the Collateral Trustee and the Secured Parties and their respective successors
and assigns. Each of the Designated Capital Call Investors, the General
Partner, the Limited Partner, Holdings and the Partnership acknowledges and
agrees that this Agreement is made for the benefit of the Agents, the Collateral
Trustee and the Secured Parties and that each of the Agents, the Collateral
Trustee or the Secured Parties may enforce all of the obligations of the
Designated Capital Call Investors, the General Partner, the Limited Partner,
Holdings and the
<PAGE>
16
Partnership under this Agreement directly against them. Except as permitted in
the Transfer Restrictions Agreement, none of the Designated Capital Call
Investors, the General Partner, the Limited Partner, Holdings nor the
Partnership may assign any of its rights or obligations under this Agreement
without the prior written consent of Majority Lenders.
15. This Agreement is expressly made for the benefit of the Agents,
the Collateral Trustee, and the Secured Parties. Neither this Agreement nor any
provision hereof may be changed, modified, amended or waived except with the
prior written consent of each Designated Capital Call Investor, the General
Partner, the Limited Partner, Holdings, the Partnership and the Collateral
Trustee (acting at the direction of the Majority Lenders).
16. All notices and other communication under this Agreement shall be
made at the addresses, in the manner and with the effect provided in Section
14.08 of the Common Security Agreement, provided that, for this purpose, the
address of Blackstone Capital Partners, Blackstone Offshore Partners, Blackstone
Family Partnership shall be the address specified immediately below its
respective signature below.
17. (a) This Agreement and the security interests created hereby
shall terminate and be of no further force and effect (except to the extent any
party's obligations, if any, arising prior to such time under this Agreement
have not theretofore been fulfilled) upon the earliest of (i) the making of
Capital Contributions by the Designated Capital Call Investors in an aggregate
Capital Call Amount as contemplated in Section 2(a), (ii) the making of the
payments required pursuant to Section 2(c) in an amount equal to the Capital
Call Amount, (iii) so long as no Capital Call Acceleration Event has theretofore
occurred, January 1, 2002, and (iv) the date on which all Senior Debt
Obligations shall have been repaid in full in cash in accordance with the
requirements of the Common Security Agreement and the Senior Loan Agreements and
all commitments of the Bank Senior Lenders (as defined in the Common Security
Agreement) under the Bank Senior Loan Agreements (as defined in the Common
Security Agreement) shall have terminated.
(b) In connection with any termination pursuant to paragraph (a)
above, (i) the Partnership shall, on behalf of the Grantors, deliver to the
Collateral Trustee a certificate signed by a Responsible Officer of the
Partnership certifying that such termination is permitted pursuant to Section
17(a), and the Collateral Trustee shall be entitled (but not required) to
conclusively rely thereon and in any event shall not incur any liability to any
person in acting (or refraining from acting) in reliance thereon and (ii) the
Collateral Trustee shall execute and deliver to each Grantor, at the sole
expense of such Grantor or the Partnership, all Uniform Commercial Code
termination statements and similar documents that such Grantor shall reasonably
request to evidence such termination. Any execution and delivery of termination
statements or documents pursuant to this Section 17 shall be without recourse to
or warranty by the Collateral Trustee.
18. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH
DESIGNATED CAPITAL CALL INVESTOR, THE PARTNERSHIP, THE GENERAL PARTNER, THE
LIMITED PARTNER, HOLDINGS, THE AGENTS, THE COLLATERAL TRUSTEE AND THE SECURED
PARTIES HEREUNDER SHALL BE
<PAGE>
17
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT IN THE BOROUGH OF
MANHATTAN, THE CITY OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH PARTY HERETO HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER
SUCH PERSON, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY
SUCH COURT LACKS JURISDICTION OVER SUCH PERSON. EACH PARTY HERETO HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH PERSON, AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 14.08 OF
THE COMMON SECURITY AGREEMENT OR AS SET FORTH IMMEDIATELY BELOW ITS SIGNATURE
BELOW, AS THE CASE MAY BE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER HEREBY IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SERVICE OF PROCESS
WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE COLLATERAL AGENT OR ANY SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY DESIGNATED CAPITAL CALL INVESTOR, THE PARTNERSHIP, THE GENERAL PARTNER, THE
LIMITED PARTNER OR HOLDINGS IN ANY OTHER JURISDICTION.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (b) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH PARTY HERETO FURTHER IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE TO TRIAL BY JURY IN ANY COURT OR JURISDICTION, INCLUDING, WITHOUT
LIMITATION, THOSE REFERRED TO IN CLAUSE (b) ABOVE, IN RESPECT OF ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
18
19. The Partnership hereby agrees to pay all reasonable out-of-pocket
costs and expenses of the Collateral Trustee in connection with the
administration and enforcement of any amendment, waiver or consent relating to,
this Agreement (including, without limitation, in each case, the reasonable
fees and disbursements of counsel employed by the Collateral Trustee), in each
case within 10 Business Days after any request is made by the Collateral Trustee
for any such payment.
20. If any of the Designated Capital Call Investors, Holdings, the
General Partner, the Limited Partner or the Partnership shall default in the
payment of all or any portion of the Capital Call Amount or any other amount
becoming due under this Agreement, such person shall on demand from time to time
pay interest, to the extent permitted by law, directly to the Collateral Trustee
on such defaulted amount for the period beginning on the date of such default up
to (but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) equal to 2% per annum in excess of the
rate applicable to Bank Senior Term Debt from time to time. Notwithstanding
the foregoing, if on the date the Capital Call Amount (or any portion thereof)
shall have become due and payable under this Agreement the Designated Capital
Call Investors are prohibited or excused by operation of law from making
Investments in Holdings as contemplated by Section 2(c) due to any Insolvency
Event relating to Holdings, the General Partner, the Limited Partner or the
Partnership or for any other reason whatsoever, no interest under this Section
20 shall accrue on the Capital Call Amount (or such portion thereof) for the
period beginning on the date when the Capital Call Amount (or such portion
thereof) shall have become due and payable under this Agreement up to (but not
including) the earlier of: (a) the date on which such legal prohibition on the
ability of the Designated Capital Call Investors to make Investments shall, in
the reasonable opinion of the Collateral Trustee, have ceased to exist and (b)
the date on which the Collateral Trustee shall have exercised its election to
require the Designated Capital Call Investors to purchase from the Selling
Lenders subordinated participations in the Senior Debt in accordance with
Section 2(c).
21. The Collateral Trustee shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any person that the Collateral Trustee believed to be the proper person, and,
with respect to all legal matters pertaining to this Agreement and any other
Financing Document and its duties under this Agreement and thereunder, upon
advice of counsel selected by the Collateral Trustee.
22. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with each Designated Capital Call Investor,
the General Partner, the Limited Partner, Holdings, the Partnership and the
Collateral Trustee.
<PAGE>
19
23. Notwithstanding anything contained herein to the contrary, the
Collateral Trustee agrees that (a) in an action to collect any amounts due
under, or otherwise in respect of, this Agreement, no future, current or former
partner in any Designated Capital Call Investor in its capacity as such will be
personally liable for any amounts due or any other liability under this
Agreement, and no deficiency or personal judgment will be sought against any
such partner in its capacity as such for payment of any amount contemplated
herein and (b) no property or assets of any such future, current or former
partner in any Designated Capital Call Investor in its capacity as such shall be
sold, levied upon or otherwise used to satisfy any judgment rendered in
connection with any action brought with respect to this Agreement; provided,
however, that nothing contained in this Section 23 shall (i) affect, limit,
restrict or impair in any way whatsoever (A) the obligations and liability of
the Designated Capital Call Investors under this Agreement as parties hereto or
(B) the validity of the obligations evidenced by this Agreement, (ii) prevent
the taking of any action permitted by law against any of the Designated Capital
Call Investors, the General Partner, the Limited Partner, Holdings or the
Partnership (or, in each case, their respective assets or the proceeds thereof)
in respect of such obligations or (iii) in any way whatsoever affect or impair
the right of the Collateral Trustee or any Secured Party to take any action
permitted by law to realize upon any Collateral or any other collateral or
security which may secure such obligations of the Designated Capital Call
Investors or the General Partner, the Limited Partner, Holdings or the
Partnership.
* * *
<PAGE>
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CLARK REFINING HOLDINGS INC.
By: /s/ Maura J. Clark
-------------------------------
Name: Maura J. Clark
Title: EVP & CFO
PORT ARTHUR COKER COMPANY L.P.
By: Sabine River Holding Corp.
By: /s/ Maura J. Clark
--------------------------
Name: Maura J. Clark
Title: EVP & CFO
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
-------------------------------
Name: Maura J. Clark
Title: EVP & CFO:
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
-------------------------------
Name: Maura J. Clark
Title: EVP & CFO
<PAGE>
21
BLACKSTONE CAPITAL PARTNERS III
MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates
III L.L.C., its general partner
By: /s/ Robert L. Friedman
-------------------------------
Name: Robert L. Friedman
Title: Member
Address: 345 Park Ave.
New York, NY 10154
BLACKSTONE OFFSHORE CAPITAL
PARTNERS III L.P.
By: Blackstone Management Associates
III L.L.C., its general partner
By: /s/ Robert L. Friedman
-------------------------------
Name: Robert L. Friedman
Title: Member
Address: 345 Park Ave.
New York, NY 10154
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates
III L.L.C., its general partner
By: /s/ Robert L. Friedman
-------------------------------
Name: Robert L. Friedman
Title: Member
Address: 345 Park Ave.
New York, NY 10154
<PAGE>
22
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Collateral Trustee
By: /s/ James C. McDonough
-----------------------------------
Name: James C. McDonough
Title: Vice President
By: /s/ Willaim T. Jenkins
-----------------------------------
Name: William T. Jenkins
Title: Assistant Vice President
<PAGE>
SCHEDULE I
----------
LIST OF
JURISDICTIONS FOR UNIFORM COMMERCIAL CODE FILINGS
CLARK REFINING HOLDINGS INC.: NY, DE, TX and MO
PORT ARTHUR COKER
COMPANY L.P.: NY, DE and TX
SABINE RIVER HOLDING CORP.: NY, DE and TX
NECHES RIVER HOLDING CORP.: NY, DE and TX
<PAGE>
SCHEDULE II
-----------
LIST OF
CHIEF EXECUTIVE OFFICES AND CHIEF PLACES OF BUSINESS
CLARK REFINING HOLDINGS INC.: 8182 Maryland Avenue
St. Louis Missouri 63105
PORT ARTHUR COKER
COMPANY L.P.: 1801 A. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
SABINE RIVER HOLDING CORP.: 1801 A. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
NECHES RIVER HOLDING CORP.: 1801 A. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
<PAGE>
EXHIBIT A
FORM OF STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT
-----------------------
STOCKHOLDERS' AGREEMENT, dated as of August 4, 1999 (the "Agreement"),
---------
among SABINE RIVER HOLDING CORP., a Delaware corporation (the "Company"), CLARK
-------
REFINING HOLDINGS INC., a Delaware corporation ("Holdings ), and OCCIDENTAL
--------
PETROLEUM CORPORATION, a Delaware corporation ("Oxy").
---
WHEREAS, on the date hereof, the Company and Holdings are entering into a
Subscription Agreement, dated the date hereof, whereby Holdings will acquire
90,000 of the outstanding shares (the "Funded Holdings Shares") of common stock,
----------------------
par value $.01 per share, of the Company ("Common Stock");
------------
WHEREAS, on the date hereof, the Company and Oxy are entering into a
Subscription Agreement, dated the date hereof, whereby Oxy will acquire 10,000
of the outstanding shares (the "Funded Oxy Shares") of Common Stock;
-----------------
WHEREAS, on August 19, 1999, the Company and Holdings will enter into a
Capital Contribution Agreement, dated as of August 19, 1999 (the "Holdings
--------
Contribution Agreement"), whereby Holdings will acquire 6,046,364 of the
- ----------------------
outstanding shares (together with the Funded Holdings Shares, the "Holdings
--------
Shares") of Common Stock;
- ------
WHEREAS, on August 19, 1999, the Company and Oxy will enter into a Capital
Contribution Agreement, dated as of August 19, 1999 (the "Oxy Contribution
----------------
Agreement"; together with the Holdings Contribution Agreement, the "Contribution
- --------- ------------
Agreements"), whereby Oxy will acquire 671,818 of the outstanding shares
- ----------
(together with the Funded Oxy Shares, the "Oxy Shares") of Common Stock; and
----------
WHEREAS, pursuant to Section 12(c) of the Oxy Contribution Agreement, Oxy
will acquire warrants to purchase 30,000 additional shares of Common Stock (the
"Warrants"); and
--------
WHEREAS, pursuant to Section 12(a) of each of the Contribution Agreements,
Holdings and Oxy are obligated to enter into a Stockholders Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions as
hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE 24.
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
----------------------
following terms have the following meanings:
<PAGE>
26
"Accepting Party" has the meaning specified in Section 3.04(b).
---------------
"affiliate" of a specified Person means a Person who, directly or
---------
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified Person.
"Agreement" means this Stockholders' Agreement.
---------
"beneficial owner" or "beneficially own" has the meaning given such term in
---------------- ----------------
Rule 13d-3 under the Exchange Act as in effect on the date hereof, provided
--------
that beneficial ownership under Rule 13d-3(l)(i) shall be determined based on
whether a Person has a right to acquire beneficial ownership within 60 days
or thereafter.
"Board" means the Board of Directors of the Company.
-----
"Business Day" means any day that is not a Saturday, a Sunday or other day
------------
on which banks are required or authorized by law to be closed in the City of
New York.
"Capital Stock" means, with respect to any Person at any time, any and all
-------------
shares. interests, participation or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests
(whether general or limited) or equivalent ownership interests in or issued
by such Person and any and all warrants, options or other rights to purchase
or acquire any of the foregoing.
"Cash Equivalents" means (a) marketable direct obligations issued or
----------------
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof,
(b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having the highest rating obtainable from any of
Standard & Poor's Corporation, Moody's Investors Service, Inc. or Duff &
Phelps Credit Rating Co. or (c) commercial paper maturing not more than one
year from the date of issuance thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's
Corporation or Moody's Investors Service, Inc.
"Cause" has the meaning specified in Section 2.02(c).
-----
"Common Stock" means the Common Stock, par value $.01 per share, of the
------------
Company.
"Company" means Sabine River Holding Corp., a Delaware corporation.
-------
"Contribution Agreements" has the meaning specified in the fourth recital
-----------------------
hereof.
<PAGE>
27
"control" (including the terms "controlled by" and "under common control
------- ------------- --------------------
with"), with respect to the relationship between or among two or more
----
Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities,
as trustee or executor, by contract or otherwise.
"Director" means a member of the Board.
--------
"Encumbrance" means any security interest, lien, claim, pledge, limitation
-----------
on voting rights, charge or other encumbrance of any nature whatsoever.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Notice" has the meaning specified in Section 4.02(a).
---------------
"Exchange Ratio" has the meaning specified in Section 4.02(b).
--------------
"Exchange Shares" has the meaning specified in Section 4.02(a).
---------------
"Funded Holdings Shares" has the meaning specified in the first recital
----------------------
hereof.
"Funded Oxy Shares" has the meaning specified in the second recital hereof.
-----------------
"Governmental Entity" means any administrative, governmental or regulatory
-------------------
authority or body or any court or tribunal, domestic or foreign.
"Holdings" means Clark Refining Holdings Inc., a Delaware corporation.
--------
"Holdings Contribution Agreement" has the meaning specified in the third
-------------------------------
recital hereof.
"Holdings Shares" means the Shares owned from time to time by Holdings and
---------------
any Person to whom any of such shares are transferred from time to time.
"Holdings Stockholders' Agreement" means the Second Amended and Restated
--------------------------------
Stockholders' Agreement, dated November 3, 1997, between Clark USA, Inc. and
Occidental C.O.B. Partners.
"Initial Oxy Shares" has the meaning specified in Section 2.01.
------------------
"Laws" means any federal, state, local or foreign law, statute, ordinance,
----
rule, regulation, order, judgment or decree.
"Marketable Securities" means securities that are (a) (i) securities of or
---------------------
other interests in any Person that are traded on a national securities
exchange, reported on by NASDAQ or otherwise actively traded over-the-counter
or (ii) debt securities of a Person that has debt or
<PAGE>
28
equity securities that are so traded or so reported on and in which a
nationally recognized securities firm has agreed to make a market, and (b)
not subject to restrictions on transfer as a result of any applicable
contractual provisions or the provisions of the Securities Act or any other
applicable Law.
"Minimum Sale Price" has the meaning specified in Section 3.04(d).
------------------
"NASDAQ" means the National Association of Securities Dealers, Inc.
------
National Market System.
"Nominee" has the meaning specified in Section 2.03(a).
-------
"Notice of Acceptance" has the meaning specified in Section 3.04(b).
--------------------
"Offer" has the meaning specified in Section 3.04(a).
-----
"Offer Notice" has the meaning specified in Section 3.04(a).
------------
"Offer Notice Date" has the meaning specified in Section 3.04(b).
-----------------
"Offer Period" has the meaning specified in Section 3.04(b).
------------
"Offer Price" has the meaning specified in Section 3.04(a).
-----------
"Offered Shares" has the meaning specified in Section 3.04(a).
--------------
"Oxy" means Occidental Petroleum Corporation, a Delaware corporation.
---
"Oxy Contribution Agreement" has the meaning specified in the fourth
--------------------------
recital hereof.
"Oxy Director" has the meaning specified in Section 2.01.
------------
"Oxy Shares" means the Shares owned from time to time by Oxy and any Person
----------
to whom any of such shares are transferred from time to time.
"Parties" means the Company, Holdings and Oxy.
-------
"Permitted Designee" has the meaning specified in Section 3.04(b).
------------------
"Permitted Transferee" means (a) the Company or any Subsidiary of the
--------------------
Company, (b) Oxy, (c) Holdings, (d) any affiliate of Oxy; provided, however,
-------- -------
that any such affiliate shall cease to be a Permitted Transferee in the event
it shall cease to be an affiliate of Oxy or (e) any affiliate of Holdings;
provided, however, that any such affiliate shall cease to be a Permitted
-------- -------
Transferee in the event it shall cease to be an affiliate of Holdings.
<PAGE>
29
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Prospective Seller" has the meaning specified in Section 3.04(a).
------------------
"Prospective Transferee" has the meaning specified in Section 3.05(a).
----------------------
"Public Offering" means an underwritten public offering of equity
---------------
securities of the Company pursuant to a registration statement that has been
declared effective by the SEC under the Securities Act, in which such equity
securities are widely distributed and after which such equity securities are
traded on a national securities exchange or reported on by NASDAQ.
"Recapitalization" means any stock split, dividend or combination, or any
----------------
recapitalization, merger, consolidation, exchange or other similar
reorganization.
"Registrable Securities" has the meaning specified in Section 3.07 hereof.
----------------------
"Restricted Shares" means all Shares other than (a) Shares that have been
-----------------
registered on a registration statement pursuant to the Securities Act, (b)
Shares with respect to which a Sale has been made in reliance on and in
accordance with Rule 144 and (c) Shares with respect to which the holder
thereof shall have delivered to the Company either (i) an opinion, in form
and substance reasonably satisfactory to the Company, of counsel, who shall
be reasonably satisfactory to the Company, or (ii) a "no action" letter from
the staff of the SEC, to the effect that subsequent transfers of such Shares
may be effected without registration under the Securities Act or compliance
with Rule 144.
"Rule 144" means Rule 144 (or any successor provision) under the Securities
--------
Act.
"Rule 144 Transaction" means any Sale of Oxy Shares or Holdings Shares made
--------------------
in reliance upon Rule 144.
"Sale" means any sale, assignment, transfer, distribution or other
----
disposition of Shares or of a participation therein, whether voluntarily or
by operation of law.
"SEC" means the Securities and Exchange Commission, and any successor
---
commission agency having similar powers.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Share" means any share of Company Common Stock and any securities issued
-----
in respect thereof, or in substitution therefor, in connection with any
Recapitalization.
<PAGE>
30
"Stockholder" means each Person (other than the Company) who shall be a
-----------
party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 3.05, or
otherwise, so long as such Person shall beneficially own any Shares or any
options, warrants or similar rights to acquire Shares.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, joint venture, association or other
entity controlled by such Person directly or indirectly through one or more
intermediaries.
"Tagging Stockholder" has the meaning specified in Section 3.07 hereof.
-------------------
"Third Party" means, with respect to any Stockholder, any other Person
-----------
other than a Permitted Transferee.
"Trading Day" has the meaning specified in Section 3.04(g).
-----------
"Transferring Stockholder" has the meaning specified in Section 3.07
------------------------
hereof.
"Warrants" has the meaning specified in the fifth recital hereof.
--------
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.01. Composition of the Board. (a) So long as Oxy and any
------------------------
Permitted Transferee that acquires more than 50% of the Shares owned by Oxy on
August 19, 1999 (the "Initial Oxy Shares") own in the aggregate at least 20% of
------------------
the Initial Oxy Shares, Oxy or, at Oxy's election, any Permitted Transferee that
acquires more than 50% of the Initial Oxy Shares shall be entitled to designate
one Director for election to the Board (the "Oxy Director"). Each Stockholder
------------
shall vote all voting Shares owned or held of record by such Person at any
meeting of stockholders of the Company, or execute a written consent with
respect to all such Shares owned or held of record by it, in favor of the
election of the Oxy Director as a Director. In the event Oxy, and any Permitted
Transferee that acquires more than 50% of the Initial Oxy Shares shall at any
time not own in the aggregate at least 20% of the Initial Oxy Shares, Oxy and
such affiliates shall cause the Oxy Director to tender his or her written
resignation as a Director to the Secretary of the Company as soon as
practicable.
(b) The remainder of the Directors shall be designated by Holdings;
provided, however, that one Director so designated shall be (i) unaffiliated
- -------- -------
with both Oxy and its affiliates and Holdings and its affiliates and (ii)
subject to any consents as are required pursuant to any project financing
documents relating to the Port Arthur Coker Company L.P.
SECTION 2.02. Removal. (a) Upon the written request of Oxy, each
-------
Stockholder shall vote all of his, her or its voting Shares in favor of the
removal of the Oxy Director. Each
<PAGE>
31
Stockholder agrees that, if, at any time, he, she or it is then entitled to vote
for the removal of Directors, he, she or it will not vote any of his, her or its
voting Shares in favor of the removal of the Oxy Director unless such removal
shall be for Cause (as defined below) or Oxy shall have consented to or directed
such removal in writing.
(b) With respect to any Director designated by Holdings, upon the written
request of Holdings, each Stockholder shall vote all of his, her or its voting
Shares in favor of the removal of such Director. Each Stockholder agrees that,
if, at any time, he, she or it is then entitled to vote for the removal of
Directors, he, she or it will not vote any of his, her or its voting Shares in
favor of the removal of a Director designated by Holdings unless Holdings shall
have consented to or directed such removal in writing.
(c) Removal for "Cause" shall mean removal of a Director because of such
-----
Director's (a) willful and continued failure to substantially perform his or her
duties as a Director, (b) willful conduct which is significantly injurious to
the Company, momentarily or otherwise, (c) conviction for, or guilty plea to, a
felony or a crime involving moral turpitude or (d) abuse of illegal drugs or
other controlled substances or habitual intoxication.
SECTION 2.03. Vacancies. (a) If, as a result of death disability,
---------
retirement, resignation, removal (with or without Cause) or otherwise, there
shall exist or occur any vacancy on the Board due to the absence of a Director
who shall have been designated pursuant to Section 2.01(a), and the requirements
of Section 2.01(a) shall remain satisfied in all respects, (i) Oxy may
designate, in a writing executed by Oxy, another individual to fill such vacancy
and to serve as a Director (the "Nominee") and (ii) each Stockholder then
-------
entitled to vote for the election of Directors shall vote his, her or its voting
Shares at any meeting of stockholders of the Company, or execute a written
consent with respect to all such Shares, as the case may be, in favor of the
election of the Nominee as a Director.
(b) If, as a result of death, disability, retirement, resignation, removal
(with or without Cause) or otherwise, there shall exist or occur any vacancy on
the Board due to the absence of a Director who shall have been designated by
Holdings, (i) Holdings may designate, in a writing executed by Holdings, a
Nominee and (ii) each Stockholder then entitled to vote for the election of
Directors shall vote his, her or its voting Shares at any meeting of
stockholders of the Company, or execute a written consent with respect to all
such Shares, as the case may be, in favor of the election of such Nominee as a
Director.
ARTICLE III
TRANSFER OF SHARES
SECTION 3.01. General Restriction. No Stockholder shall, directly or
-------------------
indirectly, make or solicit any Sale of, or create, incur, assume or suffer to
exist any Encumbrance with respect to, any Share beneficially owned by such
Stockholder, except in compliance with the Securities Act and the rules and
regulations thereunder, this Agreement and any financing documents relating to
<PAGE>
32
the Port Arthur coker project including, without limitation, the Common Security
Agreement (as defined in the Contribution Agreements).
SECTION 3.02. Legends. (a) The Company shall affix to each certificate
-------
evidencing Shares issued to Stockholders a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT BETWEEN SABINE RIVER HOLDING CORP. (THE "COMPANY"),
CLARK REFINING HOLDINGS INC. AND OCCIDENTAL PETROLEUM CORPORATION, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT AND (A) PURSUANT TO A
REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS
THEREUNDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
STOCKHOLDERS' AGREEMENT."
(b) In the event that any Shares shall cease to be Restricted Shares, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares with a legend in substantially
the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT BETWEEN SABINE RIVER HOLDING CORP. (THE "COMPANY"),
CLARK REFINING HOLDINGS INC. AND OCCIDENTAL PETROLEUM CORPORATION, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT. THE HOLDER OF THIS CERTIFICATE,
BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT."
(c) In the event that any Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement as provided in Section
3.03(b), the Company shall, upon written
<PAGE>
33
request of the holder thereof, issue to such holder a new certificate evidencing
such Shares with a legend in substantially the following form:
"NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS THEREUNDER. "
(d) In the event that any Shares shall cease to be Restricted Shares and
shall cease to be subject to the restrictions on transfer set forth in this
Agreement as provided in Section 3.03(b), the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such Shares without the legend required by Section 3.02(a) endorsed thereon.
SECTION 3.03. Certain Restrictions on Transfer. (a) Each Stockholder
--------------------------------
agrees that it will not, directly or indirectly, make or solicit any Sale of, or
create, incur, assume or suffer exist any Encumbrance (other than a pledge or
hypothecation of Shares to one or more bona fide financial institutions and any
foreclosure thereof, in each case subject to Section 3.05) with respect to any
Share beneficially owned by such Stockholder other than (i) any Sale to a
Permitted Transferee, (ii) any Sale for cash, Cash Equivalents or Marketable
Securities to a Third Party that is made in compliance with the procedures, and
subject to the limitations, set forth in Section 3.04 (if applicable), (iii) any
Sale pursuant to a Public Offering or (iv) any Sale in a Rule 144 Transaction.
Notwithstanding the foregoing, except as otherwise expressly provided in this
Agreement, all Sales permitted by the foregoing clauses (i) and (ii) shall be
subject to, and shall not be made other than in compliance with, the provisions
of Sections 3.01, 3.02 and 3.05.
(b) The restrictions on transfer set forth in this Agreement shall cease to
apply (i) to any particular Shares at such time as such Shares are sold pursuant
to a Public Offering or a Rule 144 Transaction and (ii) upon the termination of
this Agreement.
SECTION 3.04. Right of First Refusal. (a) If any Stockholder other than
----------------------
Holdings receives from a Third Party dealing at arm's length a bona fide offer
to purchase for cash, Cash Equivalents or Marketable Securities (an "Offer") any
-----
of the Oxy Shares owned or held by such Stockholder, and such Stockholder
intends to sell such Oxy Shares to such Third Party, such Stockholder (for
purposes of this Section 3.04, the "Prospective Seller") shall provide Holdings
------------------
written notice of such Offer (an "Offer Notice"). The Offer Notice shall
------------
identify the Third Party making the Offer, the number and class of Oxy Shares
with respect to which the Prospective Seller has such an Offer (the "Offered
-------
Shares"), the price per Offered Share at which a sale is proposed to be made,
- ------
determined in accordance with Section 3.04(g) ("Offer Price"), the form of
-----------
<PAGE>
34
consideration in which the Offer Price is proposed to be paid, and all other
material terms and conditions of the Offer.
(b) The receipt of an Offer Notice by Holdings from a Prospective Seller
(the date of such receipt being referred to herein as the "Offer Notice Date")
-----------------
shall constitute an offer by such Prospective Seller to sell to Holdings and any
designee or designees of Holdings ("Permitted Designees") the Offered Shares at
-------------------
the Offer Price in cash. Such offer shall be irrevocable during the Offer
Period (as hereinafter defined). Holdings and any Permitted Designees shall
have the right to accept such offer as to any or all of the Offered Shares by
giving a written notice of acceptance (the "Notice of Acceptance") to the
--------------------
Prospective Seller prior to the expiration of the Offer Period (Holdings or any
Permitted Designees so accepting such offer, an "Accepting Party"); provided,
--------------- --------
however, that Holdings and any Permitted Designees shall provide a single Notice
- -------
of Acceptance to the Prospective Seller and such Notice of Acceptance must
accept the offer as to all of the Offered Shares on the same terms and
conditions as the Offer (other than as expressly set forth herein). If Holdings
or any Permitted Designee so accepts the Prospective Seller's offer, such Person
will purchase for cash from the Prospective Seller, and the Prospective Seller
will sell to such Accepting Party, such number of Offered Shares as to which
such Accepting Party shall have accepted the Prospective Seller's offer (which
must total, as to all Accepting Parties, all of the Offered Shares). The price
per Offered Share to be paid by such Accepting Party shall be the Offer Price.
The Notice of Acceptance shall specify (i) each Accepting Party's acceptance of
the Prospective Seller's offer and (ii) the number of Offered Shares to be
purchased by each Accepting Party. "Offer Period" means (i) in the event the
------------
Third Party making the Offer is engaged in the refining business, the twenty
Business Day period commencing on the date the Offer Notice is received by
Holdings, or (ii) in all other cases, the ten Business Day period commencing on
the date the Offer Notice is received by Holdings.
(c) The consummation of such purchases by and sales to the Accepting
Parties all take place on such date, not later than 90 days after receipt of the
Offer Notice by Holdings (or such longer period as may be specified in the Offer
Notice), as the Accepting Parties and the Prospective Seller shall select. Upon
the consummation of such purchase and sale, the Prospective Seller shall (i)
deliver to the Accepting Party certificates evidencing the Offered Shares
purchased and sold duly endorsed in blank or accompanied by written instruments
of transfer in form satisfactory to such Accepting Party duly executed by the
Prospective Seller, and (ii) assign all its rights under this Agreement with
respect to the Offered Shares purchased and sold pursuant to an instrument of
assignment reasonably satisfactory to such Accepting Party.
(d) In the event that (i) Holdings shall have received an Offer Notice from
a Prospective Seller but the Prospective Seller shall not have received from
Holdings and Permitted Designees a Notice of Acceptance with respect to all the
Offered Shares prior to the expiration of the Offer Period or (ii) an Accepting
Party shall have given a Notice of Acceptance to the Prospective Seller but such
Accepting Party shall have failed to consummate, other than as a result of the
fault of the Prospective Seller, a purchase of the Offered Shares with respect
to which such Notice of Acceptance was given within 90 days after receipt of the
Offer Notice by Holdings (or such longer period as may be specified in the Offer
Notice), such Prospective Seller shall have the right thereafter to make a sale
of the Offered Shares so long as all the Offered
<PAGE>
35
Shares that are sold by the Prospective Seller (which number of Offered Shares
shall be not less than the number of Offered Shares specified in such Offer
Notice) are sold for cash, Cash Equivalents or Marketable Securities (i) within
180 days after the date of receipt of such Offer Notice by Holdings, (ii) at an
amount not less than the Minimum Sale Price (as hereinafter defined) and (iii)
to the Third Party that made the Offer. "Minimum Sale Price" means (x) if the
------------------
Prospective Seller's right sell the Offered Shares results from the event
described in clause (i) of the preceding sentence, (A) an amount equal to 97
percent of the Offer Price set forth in the Offer Notice if such sale is
consummated within 30 days after the expiration of the Offer Period or (B) an
amount equal to 95 percent of the Offer Price set forth in the Offer Notice if
such sale is consummated thereafter, or (y) if the Prospective Seller's right to
sell the Offered Shares results from the event described in clause (ii) of the
preceding sentence, an amount equal to 90 percent of the Offer Price set forth
in the Offer Notice.
(e) In the event (i) that Holdings shall have received an Offer Notice from
a Prospective Seller, (ii) the Prospective Seller shall not have received a
Notice of Acceptance for all the Offered Shares prior to the expiration of the
Offer Period and (iii) such Prospective Seller shall not have sold the remaining
Offered Shares before the expiration of the 180-day period in accordance with
paragraph (d) above, then such Prospective Seller shall not give another Offer
Notice for a period of 120 days after the last day of such 180-day period.
(f) Anything in this Section 3.04 or in Section 3.03(a) to the contrary
notwithstanding, the provisions of this Section 3.04 shall not be applicable to
Sales of Capital Stock described in clauses (i), (iii) and (iv) of Section
3.03(a).
(g) For the purpose of determining the Offer Price with respect to an Offer
that contemplates the payment of consideration in the form of Cash Equivalents
or Marketable Securities, the value of such Cash Equivalents or Marketable
Securities shall be determined as forth in this Section 3.04(g). The value of
Cash Equivalents shall be the fair market value of such Cash Equivalents as of
the Offer Notice Date as determined by a nationally recognized investment
banking firm selected by Holdings and reasonably acceptable to the Prospective
Seller. The value of Marketable Securities shall be, if such securities are
listed or admitted to trading on a national securities exchange, the average of
the last sale prices for such securities during the twenty consecutive Trading
Days preceding the Offer Notice Date, reported in the principal consolidated
transaction reporting system for securities listed on principal national
securities exchange on which such securities are listed or admitted to trading
or, if such securities are not listed or admitted to trading on any national
securities exchange, the average during the twenty consecutive Trading Days
preceding the Offer Notice Date of the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or, if on any such date
such shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in such shares selected by a majority of the Directors. If no market maker is
making a market in such securities at such time, the fair value of such
securities on the Offer Notice shall be determined in good faith by a nationally
recognized investment banking firm selected by Holdings and reasonably
acceptable to the Prospective Seller (the fees and expenses of which shall be
paid one-half by Holdings and one-
<PAGE>
36
half by the Prospective Seller). If such securities are not publicly held or not
so listed or traded, the value of such securities shall mean the fair value of
such securities as of the Offer Notice Date as determined in good faith by a
nationally recognized investment banking firm selected by the Company and
reasonably acceptable to the Prospective Seller (the fees and expenses of which
be paid one-half by the Company and one-half by the Prospective Seller), whose
determination shall be conclusive for all purposes. The term "Trading Day" shall
-----------
mean, if securities are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business or, if such shares are not so listed or admitted, a
Business Day.
SECTION 3.05. Transferees to Execute Agreement. (a) Each Stockholder
--------------------------------
agrees that it will not, directly or indirectly, make any Sale of or create,
incur, assume or suffer to exist Encumbrance with respect to, any Shares
beneficially owned by such Stockholder unless, contemporaneously with or prior
to the consummation of any such Sale or the creation, incurrence, assumption or
existence of such Encumbrance, the Person to whom such is proposed to be made or
the Person in whose favor such Encumbrance is proposed to be created, incurred,
assumed or suffered to exist, in any case, (a "Prospective Transferee") executes
----------------------
and delivers to the Company its written agreement, in form and substance
reasonably satisfactory to the Company, whereby such Prospective Transferee (i)
confirms that, with respect to the Shares that are the subject of such Sale or
Encumbrance, it shall be deemed to be a Stockholder for purposes of this
Agreement and agrees to be bound by all the terms of this Agreement, and (ii)
represents and warrants that, upon the consummation of Sale or the creation,
incurrence, assumption or existence of such Encumbrance, such Agreement is a
legal, valid and binding obligation of such Prospective Transferee enforceable
against such Prospective Transferee in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Upon the execution and delivery by such Prospective Transferee of the agreement
referred to in the preceding sentence, such Prospective Transferee shall be
deemed a Stockholder for purposes of this Agreement and shall have the rights
and be subject to the obligations of a Stockholder under this Agreement, in each
case with respect to the Shares beneficially owned by such Prospective
Transferee or in respect of which such Encumbrance shall have been created,
incurred, assumed or suffered to exist.
(b) Anything in this Section 3.05 or in Section 3.03 to the contrary
notwithstanding, the provisions of this Section 3.05 will not be applicable to
any Sale of Shares pursuant to a Public Offering or a Rule 144 Transaction.
SECTION 3.06. Improper Sale or Encumbrance. Any attempt not in
----------------------------
compliance with Agreement to make any Sale of, or create, incur or assume any
Encumbrance with respect any Shares shall be null and void and of no force and
effect, the purported transferee will have no rights or privileges in or with
respect to the Company, and the Company shall give any effect in the Company's
stock records to such attempted Sale or Encumbrance.
<PAGE>
37
SECTION 3.07 Tag-Along Rights. i. So long as this Agreement shall
----------------
remain in effect and Holdings beneficially owns on a fully diluted basis an
aggregate number of shares of Common Stock not less than one-fourth (1/4) of the
shares of Common Stock owned by Holdings on August 19, 1999, with respect to any
proposed Transfer by Holdings (in such capacity, a "Transferring Stockholder")
------------------------
of Common Stock, other than a Transfer to any affiliate of Holdings or any
stockholder, partner or other equity owner of any such affiliate or Holdings or
(ii) pursuant to a Public Offering, the Transferring Stockholder shall have the
obligation, and Oxy and its Permitted Transferees shall have the right, to
require the proposed transferee to purchase from Oxy and its Permitted
Transferees (in such capacity, a "Tagging Stockholder") a number of the Oxy
-------------------
Shares and any additional Shares issued in connection with any Recapitalization
("Registrable Securities") up to the product (rounded up to the nearest whole
----------------------
number) of (i) the quotient determined by dividing (A) the aggregate number of
Registrable Securities owned by the Tagging Stockholder and sought by the
Tagging Stockholder sought to be included in the contemplated Transfer by (B)
the aggregate number of shares of Common Stock owned by the Transferring
Stockholder and the Tagging Stockholder to be included in the contemplated
Transfer, and (ii) the total number of shares of Common Stock proposed to be
directly or indirectly Transferred to the transferee in the contemplated
Transfer, and at the same price per share of Common Stock and upon the same
terms and conditions (including without limitation time of payment and form of
consideration) applicable to the Transferring Stockholder; provided that in
--------
order to be entitled to exercise its right to sell shares of Common Stock to the
proposed transferee pursuant to this Section 3.07, the Tagging Stockholder must
agree to make to the transferee the same representations, warranties, covenants,
indemnities and agreements that the Transferring Stockholder agrees to make in
connection with the proposed Transfer of the shares of Common Stock of the
Transferring Stockholder; and provided further, that all representations and
-------- -------
warranties shall be made by the Tagging Stockholder and the Transferring
Stockholder severally and not jointly and that the liability of the Transferring
Stockholder and the Tagging Stockholder (whether pursuant to a representation,
warranty, covenant, indemnification provision or agreement) for liabilities in
respect of the Company shall be evidenced in writings executed by them and the
transferee and shall be borne by each of them on a pro rata basis.
ii. The Transferring Stockholder shall give notice to the holders of the
Oxy Shares of each proposed Transfer giving rise to the rights of the Tagging
Stockholder set forth in the first sentence of Section 3.07(a) at least 15
business days prior to the proposed consummation of such Transfer, setting forth
the number of shares of Common Stock proposed to be so transferred, the name and
address of the proposed transferee, the proposed amount and form of
consideration and the other terms and conditions offered by the proposed
transferee, and a representation that the proposed transferee has been informed
of the tag-along rights provided for in this Section 3.07 and has agreed to
purchase shares of Common Stock in accordance with the terms hereof. The tag-
along rights provided by this Section 3.07 must be exercised by the Tagging
Stockholder within 5 business days following receipt of the notice required by
the preceding sentence, by delivery of a written notice to the Transferring
Stockholder indicating such Tagging Stockholder's desire to exercise its rights
and specifying the number of shares of Common Stock it desires to sell. The
Transferring Stockholder shall be entitled under this Section 3.07 to Transfer
to the proposed transferee the number of shares of Common Stock equal to the
<PAGE>
38
difference between the number referred to in clause (ii) of paragraph (a) above
and the aggregate number of shares of Common Stock set forth in the written
notice, if any, delivered by the Tagging Stockholder pursuant to the preceding
sentence (up to the maximum number of Registrable Securities beneficially owned
by such Tagging Stockholder required to be purchased by the proposed transferee
pursuant to the first sentence of Section 3.07(a)). If the proposed transferee
fails to purchase Registrable Securities from any Tagging Stockholder that has
properly exercised its tag-along rights under Section 3.07(a), then the
Transferring Stockholder shall not be permitted to make the proposed Transfer,
and any such attempted Transfer shall be void and of no effect, as provided in
Section 3.06 hereof.
iii. If the Tagging Stockholder exercises its rights under Section
3.07(a), the closing of the purchase of the Registrable Securities with respect
to which such rights have been exercised shall take place concurrently with the
closing of the sale of the Transferring Stockholder's Common Stock. At the
closing, the Tagging Stockholder shall deliver to the proposed transferee the
certificate or certificates representing the shares of Common Stock to be sold
pursuant to such sale by such Tagging Stockholder, duly endorsed for transfer,
against receipt of the purchase price thereof.
SECTION 3.08. Drag-Along Rights. So long as this Agreement shall remain
-----------------
in effect and Holdings beneficially owns on a fully diluted basis an aggregate
number of shares of Common Stock not less than one-fourth (1/4) of the Common
Stock owned by Holdings on August 19, 1999, if Holdings receives an offer from a
Third Party to purchase all, but not less than all, of the outstanding shares of
Common Stock owned by Holdings and such offer is accepted by Holdings, then the
holders of the Oxy Shares hereby agree that they will Transfer all Registrable
Securities beneficially owned by them to such Third Party upon the terms and
conditions of the offer (including without limitation time of payment and form
of consideration) applicable to Holdings, provided that the holders of the Oxy
--------
Shares must agree to make to the Third Party the same representations,
warranties, covenants, indemnities and agreements that Holdings agrees to make
in connection with the proposed Transfer; and provided further, that all
-------- -------
representations and warranties shall be made by the holders of the Oxy Shares
and Holdings severally and not jointly and that the liability of the holders of
the Oxy Shares and Holdings (whether pursuant to a representation, warranty,
covenant, indemnification provision or agreement) for liabilities in respect of
the Company shall be evidenced in writings executed by them and the Third Party
and shall be borne by each of them on a pro rata basis. At the closing of any
such Transfer, the holders of the Oxy Shares shall deliver to the Third Party
the certificate or certificates representing the shares of Common Stock to be
sold pursuant to such sale by such holder, duly endorsed for transfer, against
receipt of the purchase price thereof. The closing of the purchase of the
Common Stock with respect to which such rights have been exercised shall take
place concurrently with the closing of the sale of Holdings Common Stock.
ARTICLE IV
ADDITIONAL RIGHTS OF THE COMPANY
<PAGE>
39
SECTION 4.01 Right to Require Exchange. (a) If, at any time, the Board
-------------------------
determines, upon advice from its counsel, that it is no longer necessary for
Port Arthur Finance Corp. to be bankruptcy remote, the Company will so notify
the holders of the Oxy Shares. At any time after such notice, the holders of
the Oxy Shares may, at their election, and the Company may, by notice to the
holders of the Oxy Shares (the "Exchange Notice"), require the holders of the
---------------
Oxy Shares to, exchange (and such holders hereby agree to exchange), all of the
Oxy Shares as are then outstanding not fewer than thirty (30) nor more than
ninety (90) days after the date of the Exchange Notice for newly issued shares
of Class F Common Stock, par value $.01 per share, of Holdings (the "Exchange
--------
Shares") based on a valuation of the Oxy Shares at the Exchange Ratio (defined
- ------
below). The closing under this Section 4.01 shall take place at the offices of
the Company at 10:00 a.m. local time on a date not more than one hundred twenty
(120) days after the date the Exchange Notice is received by the holders of the
Oxy Shares as the Company shall specify by such notice, or at such other time
and place as the Company and the holders of a majority in interest of the Oxy
Shares may agree upon. At the closing, the holders of the Oxy Shares will
deliver to the Company, free and clear of all Liens and claims of third parties,
a certificate or certificates evidencing the Oxy Shares to be exchanged
(properly endorsed or accompanied by stock powers or assignments with
signature(s) guaranteed or similar appropriate documentation of authority to
transfer), and the Company will deliver to the holders of the Oxy Shares, free
and clear of all Liens and claims of third parties, a certificate or
certificates evidencing the Exchange Shares (properly endorsed or accompanied by
stock powers or assignments with signature(s) guaranteed or similar appropriate
documentation of authority to transfer).
(b) The exchange ratio shall be calculated to yield to the holders of the
Oxy Shares Exchange Shares that have a fair market value equivalent to the then
fair market value of the Oxy Shares being exchanged (the ratio in such exchange
being referred to as the "Exchange Ratio"). The procedure for determining the
--------------
relative values of the Oxy Shares, the Exchange Shares and the Exchange Ratio
will be as provided in this Section 4.01(b). Upon a request for an exchange,
Holdings will within 30 days propose an Exchange Ratio reflective of its
determination of relative values, based on the advice of an investment banking
or valuation firm. The holders of a majority in interest of the Oxy Shares will
have 20 days from the receipt of such proposed Exchange Ratio and valuations to
agree to such Exchange Ratio or negotiate with Holdings an alternative Exchange
Ratio. Absent such agreement, such holders will by the end of such 20 day
period propose an alternative Exchange Ratio based on their determination of
values, based on the advice of an investment banking or valuation firm. If
within seven days of the holders presenting such alternative Exchange Ratio and
values Holdings and such holders are not able to agree on the Exchange Ratio to
be used, they will jointly engage a third mutually agreed nationally recognized
investment banking or valuation firm whose mandate will be to select within 20
days one or the other of the two proposed Exchange Ratios, which will then be
the Exchange Ratio upon which the exchange will be consummated.
(c) The Exchange Shares (as well as the shares issuable upon exercise of
the Warrants) will constitute registrable shares entitled to the benefits of the
existing registration rights held by Oxy pursuant to the Holdings Stockholders'
Agreement.
<PAGE>
40
(d) Neither the Company nor Holdings shall avoid or seek to avoid the
observance or performance of any of the terms of this Section 4.01, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of any action as may be reasonably necessary or appropriate to protect
the rights of Oxy against impairment of Oxy's rights hereunder.
(e) Holdings shall at all times have authorized a sufficient number of
shares of Class F Common Stock, par value $.01 per share, of Holdings so that
Holdings will be able to deliver the Exchange Shares to Oxy in accordance with
the terms of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
SECTION 5.01. Representations and Warranties of Each Party. Each Party
--------------------------------------------
hereby makes the following representations and warranties to the other Parties:
(a) Organization and Qualification. Such entity is a corporation or a
------------------------------
general partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization.
(b) Authority. Such entity has all requisite corporate or partnership
---------
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such entity and the
consummation by it of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate or partnership action and
no other proceedings on the part of such entity are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by such entity
and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of such
entity, enforceable against such entity in accordance with its terms.
(c) No Conflict; Required Filings and Consents. (i) The execution of and
------------------------------------------
delivery of this Agreement by such entity do not, and the performance this
Agreement by such entity will not, (A) conflict with or violate the
Certificate of Incorporation, By-Laws or similar organizational documents
of such entity, (B) conflict with or violate any Laws applicable to such
entity or by which any of its properties or assets is bound or (C) result
in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
result in the creation of an Encumbrance on any of the properties or assets
of such entity pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which such entity is a party or by which such entity or any
of its properties is bound, except in any case for such
<PAGE>
41
conflicts, violations, breaches, defaults or other effects which would not
prevent or materially delay the performance by such entity of its
obligations hereunder.
(ii) The execution and delivery of this Agreement by such entity do
not, and the performance of this Agreement by such entity will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 6.01):
(a) If to the Company:
Sabine River Holding Corp.
Port Arthur Refinery
1801 South Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
Telecopy: (409) 985-1444
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
With copies to:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Richard A. Keffer
Telecopy: (314) 854-1455
(b) If to Oxy:
<PAGE>
42
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, California 90024
Telecopier No.: (310) 443-6812
Attention: Stephen I. Chazen
Executive Vice President, Corporate Development
With a copy to:
Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, California 90024
Telecopier No.: (310) 443-6333
Attention: General Counsel
(c) If to Holdings:
Clark Refining Holdings Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Telecopy: (314) 854-1455
Attention: Richard A. Keffer
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 455-2502
Attention: Wilson S. Neely
SECTION 6.02. Public Announcements. The Parties shall consult with each
--------------------
other before issuing any press release or otherwise making any public statements
with respect to this Agreement and, except as may be required by Law or any
listing agreement with any securities exchange, shall not issue any such press
release or make any such public statement without the consent of the other
parties.
SECTION 6.03. Headings. The descriptive headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 6.04. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
<PAGE>
43
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 6.05. Entire Agreement. This Agreement constitutes the entire
----------------
agreement among the Parties and supersedes all prior agreements and
undertakings, both written and oral, among the Parties, or any of them, with
respect to the subject matter hereof.
SECTION 6.06. Assignment. Except as otherwise provided herein, this
----------
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective successors and permitted assigns; provided, however, that
-------- -------
this Agreement shall not inure to the benefit of any Prospective Transferee
unless such Prospective Transferee shall have complied with the terms of Section
3.05. No Stockholder may assign any of its rights hereunder to any Person other
than a transferee that has complied with the requirements of Section 3.05 in all
respects.
SECTION 6.07. Parties in Interest. Nothing in this Agreement, express or
-------------------
implied, is intended to or shall confer upon any Person other than the Parties
and their respective successors and assigns any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 6.08. Amendment. (a) Any term of this Agreement may be amended and
---------
the observance of any such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Stockholders.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive any rights or
remedies provided by law.
SECTION 6.09. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in a New York state or federal court sitting in the City of New York,
and the Parties hereby irrevocably submit to the exclusive jurisdiction of such
courts in any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action proceeding.
SECTION 6.10. Counterparts. This Agreement may be executed (by original or
------------
telecopied signature) in one or more counterparts, and by the different Parties
in separate counterparts, each of which when so executed shall be deemed to be
an original but all of which taken together shall constitute one and the same
agreement.
<PAGE>
44
SECTION 6.11. Specific Performance. The Parties agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
SABINE RIVER HOLDING CORP.
By: _________________________________________
Name: Maura J. Clark
Title: Executive Vice President and Chief
Financial Officer
OCCIDENTAL PETROLEUM CORPORATION
By: _________________________________________
Name: Stephen I. Chazen
Title: Executive Vice President __
Corporate Development and Chief
Financial Officer
CLARK REFINING HOLDINGS INC.
By: _________________________________________
Name: Maura J. Clark
Title: Executive Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT B
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT OR LAWS AND THE
RULES AND REGULATIONS THEREUNDER. IN ADDITION, THIS WARRANT, AND THE WARRANT
SHARES TRANSFERABLE UPON THE EXERCISE HEREOF, ARE SUBJECT TO THE TERMS OF THE
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 3, 1997
BETWEEN CLARK USA, INC. AND OCCIDENTAL C.O.B. PARTNERS.
August 4, 1999
Warrant to Purchase 1,938,780.36 Shares
of Common Stock, $.01 par value,
of Clark Refining Holdings Inc., a Delaware corporation
-------------------------------------------------------
This certifies that Blackstone Capital Partners III Merchant Banking Fund
L.P., a Delaware limited partnership ("Blackstone"; and together with its
----------
successors and assigns (the "Holder")), is entitled to purchase from Clark
------
Refining Holdings Inc., a Delaware corporation ("Issuer"), an aggregate of
------
1,938,780.36 shares of Common Stock, $.01 par value (the "Common Stock"), of
------------
Issuer, at a per share price equal to U.S. $0.01 (as adjusted from time to time
as provided in Section 3 hereof, the "Exercise Price"), at any time or from time
--------------
to time after the date hereof.
As used in this Warrant, the term "Stockholders Agreement" means the Second
----------------------
Amended and Restated Stockholders Agreement dated as of November 3, 1997 between
Clark USA, Inc. and Occidental C.O.B. Partners.
Certain terms used in this Warrant are defined in Section 11 hereof.
SECTION 1. Exercise of Warrant.
-------------------
The rights represented by this Warrant may be exercised by the Holder
hereof, in whole or in part at any time or from time to time. Such exercise
shall be made by delivering to Issuer at its office at 8182 Maryland Avenue, St.
Louis, Missouri 63105 (or at such other office of Issuer as it may designate by
notice in writing to the Holder at its office at 345 Park Avenue, 31/st/ Floor,
New York, New York 10154) the following three items:
<PAGE>
(i) a written notice executed by the Holder (or its authorized
representative) electing to exercise all or any portion of this Warrant,
and if the Holder is exercising this Warrant in part, identifying the
number of Warrant Shares to be acquired, such notice to be substantially in
the form of the Notice of Exercise attached hereto,
(ii) this Warrant, and
(iii) payment to Issuer of the Exercise Price for each share being
purchased from it by delivery of cash, wire transfer or check.
Upon any exercise of this Warrant, if the Warrant Shares are to be transferred
to a Person other than the Holder (which transfer shall be subject in all
respects to the Stockholders Agreement), the Notice of Exercise shall also state
the name of the Person to whom the certificates for the Warrant Shares are to be
transferred, and if the number of Warrant Shares to be transferred does not
include all the Warrant Shares purchasable hereunder, it shall also state the
name of the Person (which Person must be Holder or an Affiliate thereof) to whom
a new Warrant for the unexercised portion of the rights hereunder is to be
delivered. In the event of any exercise of the rights represented by this
Warrant, Issuer shall deliver within a reasonable period of time, not exceeding
ten Business Days, after such exercise a certificate or certificates
representing the Warrant Shares to the Person entitled to receive the same, such
number of Warrant Shares to be transferred upon such exercise, and shall deliver
to the Person entitled to receive the same, within a reasonable time, not
exceeding ten Business Days, after the rights represented by this Warrant shall
have been so exercised, a new Warrant representing the number of Warrant Shares,
if any, with respect to which this Warrant shall not then have been exercised.
The Person in whose name any certificate for Warrant Shares is transferred upon
exercise of this Warrant shall for all purposes be deemed to have become the
Holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate. The Holder shall pay all expenses, transfer
taxes and other charges payable in connection with the preparation and delivery
of certificates for the Warrant Shares and new Warrants for any unexercised
portion.
SECTION 2. Covenants of Issuer. Issuer covenants and agrees that:
-------------------
(a) Notwithstanding any other provision hereof, if the exercise of any
portion of this Warrant is to be made in connection with a public offering of
the Securities of Issuer or sale of effective voting control of Issuer, the
exercise of any portion of this Warrant may, at the election of the Holder, be
conditioned upon the consummation of the public offering or sale in which case
such exercise shall not be deemed to be effective until the consummation of such
transaction.
(b) Issuer shall not avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be reasonably necessary or appropriate to protect the rights of the Holder
hereof against impairment of the Holder's rights hereunder.
47
<PAGE>
(c) Issuer or its Affiliates shall at all times have authorized a
sufficient number of shares of Common Stock so that Issuer or its Affiliates
will be able to deliver to the Holder the number of Warrant Shares obtainable
upon exercise of this Warrant.
SECTION 3. Adjustment of Number of Shares and Exercise Price. In order
-------------------------------------------------
to prevent dilution or avoidance of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 3, and the number of Warrant Shares obtainable upon exercise of
this Warrant shall be subject to adjustment from time to time as provided in
this Section 3.
(a) Subdivision or Combination of Common Stock. If Issuer at any time
------------------------------------------
subdivides (by any stock split, stock dividend or other distribution payable in
shares of Common Stock, recapitalization or otherwise) the outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately increased. If Issuer at any time combines (by reverse stock
split or otherwise) the outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of Warrant Shares obtainable
upon exercise of this Warrant shall be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
recapitalization (other than a subdivision or combination of Common Stock
described in Section 3(a) hereof), reorganization, reclassification,
consolidation, merger, sale of all or substantially all of Issuer's assets
(determined on a consolidated basis) to another Person or other transaction
which is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, cash, securities
or assets with respect to or in exchange for Common Stock is referred to herein
as an "Organic Change." In the event of any Organic Change, the Holder shall
--------------
thereafter have the right to acquire and receive in lieu of or addition to (as
the case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon the exercise of this Warrant, such shares of stock, cash,
securities or assets as such Holder would have received in connection with such
Organic Change if such Holder had exercised such Warrant immediately prior to
such Organic Change.
(c) Notices. Issuer shall:
-------
(i) promptly upon any adjustment of the Exercise Price, give written
notice thereof to the Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment;
(ii) give written notice to the Holder promptly in the event that
Issuer proposes to take any action or of the date on which Issuer closes its
books or takes a record (A) with respect to any dividend or distribution upon
the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation; and
48
<PAGE>
(iii) also give written notice to the Holder of the date on which
any Organic Change, dissolution or liquidation shall take place.
SECTION 4. Dividends; Purchase Rights.
--------------------------
(a) If Issuer declares or pays a dividend upon the Common Stock payable
(i) in cash out of earnings or earned surplus (determined in accordance with
generally accepted accounting principles, consistently applied) (a "Cash
----
Dividend") or (ii) otherwise than in cash out of earnings or earned surplus
- --------
(determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidating Dividend"), then Issuer shall pay to the Holder of this
--------------------
Warrant at the time of payment thereof the Liquidating Dividend or Cash
Dividend, as the case may be, which would have been paid to such Holder on the
Warrant Shares had this Warrant been fully exercised immediately prior to the
date on which a record is taken for such Liquidating Dividend or Cash Dividend,
as the case may be, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
(b) If at any time Issuer grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the "Purchase
--------
Rights"), then the Holder of this Warrant shall be entitled to acquire, upon the
- ------
terms applicable to such Purchase Rights, the aggregate number or amount of such
stock, warrants, securities or other property which such Holder could have
acquired if such Holder had held the Warrant Shares acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
SECTION 5. No Voting Rights. The Holder shall not be entitled to any
----------------
voting rights as a stockholder of Issuer by reason of the rights granted under
this Warrant until the Holder shall purchase shares of Common Stock hereunder.
SECTION 6. Exchange and Transfer of Warrant.
--------------------------------
(a) Exchange of Warrant. The Holder may exchange this Warrant for another
-------------------
Warrant or Warrants of like kind and tenor representing in the aggregate the
right to purchase the same number of Warrant Shares which could be purchased
pursuant to this Warrant. In order to effect such exchange, the Holder shall
deliver this Warrant to Issuer accompanied by a written request signed by the
Holder specifying the number and denominations of Warrants to be issued in such
exchange and the names in which such Warrants are to be issued. As soon as
reasonably practicable after receipt of such a request, Issuer shall execute and
deliver to the Holder the Warrant or Warrants to be issued in such exchange.
(b) Transfer of Warrant. This Warrant may be transferred by the Holder
-------------------
hereof by delivering this Warrant to Issuer accompanied by a properly completed
Assignment Form and an executed copy of an agreement to become a party to, and
be bound by, the Stockholders Agreement, duly executed by such transferee, and
any other documents reasonably requested by
49
<PAGE>
Issuer. As soon as reasonably practicable after receipt of such Assignment Form,
Issuer shall execute and deliver to the Holder a new Warrant or Warrants of like
kind and tenor representing in the aggregate the right to purchase the same
number of Warrant Shares which could be purchased pursuant to the Warrant being
transferred. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be delivered
to and shall remain with Issuer. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited and remain with Issuer in its discretion.
SECTION 7. Loss, Theft, Destruction of Warrant Certificates. Upon
------------------------------------------------
receipt of evidence satisfactory to Issuer of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security satisfactory
to Issuer (it being understood and agreed that if the Holder of such Warrant is
Blackstone or one of its Affiliates, then a written agreement of indemnity given
by such Person alone shall be satisfactory to Issuer and no further security
shall be required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, Issuer will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant Shares.
SECTION 8. Successors. All the provisions of this Warrant by or for the
----------
benefit of the Issuer or the Holder shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 9. Headings. The headings of sections of this Warrant have been
--------
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 10. Remedies; Amendment and Waiver.
------------------------------
(a) No failure or delay of any party in exercising any power or right
hereunder shall operate as a waiver thereof (except where a specific time period
for the exercise of such power or right is expressly set forth herein), nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on any party in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances.
The rights and remedies of the Holder or the Issuer are cumulative and not
exclusive of any rights or remedies which it would otherwise have.
(b) This Warrant may only be amended or modified by a written instrument
signed by the Holder and the Issuer. The provisions of this Warrant may be
waived only by a writing signed by the party to be charged with such waiver.
SECTION 11. Severability. Whenever possible, each provision of this
------------
Warrant will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any Applicable Law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not
50
<PAGE>
affect any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
SECTION 12. Definitions; Interpretation.
---------------------------
(a) Definitions. The following terms have meanings set forth below:
-----------
(i) "Affiliate" of a specified Person means a Person who, directly
---------
or indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with, such specified Person.
(ii) "Applicable Law" means, with respect to any Person, property,
--------------
transaction or event, all present or future applicable laws, statutes,
regulations, treaties, judgments and decrees and all applicable official
directives, rules, consents, approvals, authorizations, orders, guidelines
and policies of any Governmental Authority or Persons having authority over
or applicable to such Person or any of its assets or properties.
(iii) "Business Day" means any day that is not a Saturday, a Sunday
------------
or other day on which banks are required or authorized by law to be closed
in the City of New York.
(iv) "control" (including the terms "controlled by" and "under
------- ------------- -----
common control with"), with respect to the relationship between or among
-------------------
two or more Persons, means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise.
(v) "Convertible Securities" means any stock or other securities
----------------------
convertible into or exchangeable for Common Stock.
(vi) "Governmental Authority" means any administrative, governmental
----------------------
or regulatory authority or body or any court or tribunal, domestic or
foreign.
(vii) "Options" means any rights or options to subscribe for or to
-------
purchase Common Stock.
(viii) "Person" means an individual, partnership, corporation
------
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.
(ix) "Securities" means, with respect to any Person, such Person's
----------
capital stock or any options, warrants or other Securities which are
directly or indirectly convertible into, or exercisable or exchangeable
for, such Person's capital stock (whether or not such derivative Securities
are issued by Issuer).
51
<PAGE>
(x) "Warrant Shares" means the shares of Common Stock issued or
--------------
issuable upon exercise of this Warrant; provided, however, that if there is a
-------- -------
change such that the securities issuable upon exercise of this Warrant are
issued by an entity other than Issuer or there is a change in the class of
securities so issuable, then the term "Warrant Shares" shall mean the
securities issuable upon exercise of this Warrant.
(b) Terms Generally. The definitions contained in this Warrant shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation."
(c) Currency. Unless otherwise specified herein, all statements or
--------
references to dollar amounts or $ set forth herein shall refer to United States
Dollars.
SECTION 13. Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
INTERPRETATION AND VALIDITY OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14. Notices. All notices, demands and requests of any kind to be
-------
delivered to any party hereto in connection with this Warrant shall be in
writing, (a) delivered personally, (b) sent by internationally-recognized
overnight courier, (c) sent by first class, registered or certified mail, return
receipt requested or (d) by telecopy with confirmed receipt (with hard copy to
follow). Any notice, demand or request so delivered shall constitute valid
notice under this Warrant and shall be deemed to have been received (i) on the
day of actual delivery in the case of personal delivery, (ii) on the next
Business Day after the date when sent, in the case of delivery by
internationally-recognized overnight courier, (iii) on the fifth Business Day
after the date of deposit in the U.S. mail in the case of mailing or (iv) one
business day after being sent by telecopy with confirmed receipt (with hard copy
to follow). The mailing addresses of Issuer and Holder are set forth in Section
1 hereof. Any party hereto may, from time to time by notice in writing served
upon the other as aforesaid, designate a different mailing address or a
different Person to which all such notices, demands or requests thereafter are
to be addressed.
SECTION 15. Conflicting Agreements. Issuer shall not enter into any
----------------------
agreements or arrangements of any kind with any Person with respect to the
Warrant Shares containing terms inconsistent with the provisions of this
Warrant, including agreements or arrangements with respect to the acquisition or
disposition of securities of Issuer in a manner which is inconsistent with this
Warrant.
IN WITNESS WHEREOF, Issuer has caused this Warrant to be executed by its
duly authorized officers and this Warrant to be dated as of the date first set
forth above.
52
<PAGE>
CLARK REFINING HOLDINGS INC.
By: _______________________________
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
ACCEPTED:
BLACKSTONE CAPITAL PARTNERS III
MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates III,
L.L.C., its general partner
By: _______________________________________
Name:
Title:
53
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FORM OF EXERCISE
[To be signed upon exercise of Warrant]
To CLARK REFINING HOLDINGS INC., a Delaware corporation:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________ shares of Common Stock AND herewith tenders
payment of [identify amount of payment] in full payment of the purchase price
for such shares, and requests that such shares be transferred to, and the
certificates for such shares be issued in the name of, and be delivered to,
_________________, whose address is ___________________________.
Dated: ____________________ ______________________________________
(Signature)
(Address)
<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________, all of the rights represented by the within
Warrant to purchase ___ shares of the Common Stock to which the within Warrant
relates.
Dated: ____________________
_____________________________
(Signature)
(Address of Assignor)
Signed in the presence of:
Address of Assignee:
<PAGE>
EXHIBIT C
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT OR LAWS AND THE
RULES AND REGULATIONS THEREUNDER. IN ADDITION, THIS WARRANT, AND THE WARRANT
SHARES TRANSFERABLE UPON THE EXERCISE HEREOF, ARE SUBJECT TO THE TERMS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 4, 1999 AMONG SABINE RIVER HOLDING
CORP., CLARK REFINING HOLDINGS INC. AND OCCIDENTAL PETROLEUM CORPORATION.
August 4, 1999
Warrant to Purchase 30,000 Shares
of Common Stock, $.01 par value,
of Sabine River Holding Corp., a Delaware corporation
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This certifies that Occidental Petroleum Corporation, a Delaware
corporation ("Oxy"; and together with its successors and assigns (the
---
"Holder")), is entitled to purchase from Sabine River Holding Corp., a Delaware
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corporation ("Issuer"), an aggregate of 30,000 shares of Common Stock, $.01 par
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value (the "Common Stock"), of Issuer, at a per share price equal to U.S. $0.09
------------
(as adjusted from time to time as provided in Section 3 hereof, the "Exercise
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Price"), at any time or from time to time after the date hereof.
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As used in this Warrant, the term "Stockholders Agreement" means the
----------------------
Stockholders Agreement dated as of August 4, 1999 among Issuer, Holder and Clark
Refining Holdings Inc., a Delaware corporation ("Clark Holdings").
--------------
Certain terms used in this Warrant are defined in Section 11 hereof.
SECTION 1. Exercise of Warrant.
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The rights represented by this Warrant may be exercised by the Holder
hereof, in whole or in part at any time or from time to time. Such exercise
shall be made by delivering to Issuer at its office at 8182 Maryland Avenue, St.
Louis, Missouri 63105 (or at such other office
<PAGE>
of Issuer as it may designate by notice in writing to the Holder at its office
at 10889 Wilshire Boulevard, Los Angeles, California 90024) the following three
items:
(i) a written notice executed by the Holder (or its authorized
representative) electing to exercise all or any portion of this Warrant,
and if the Holder is exercising this Warrant in part, identifying the
number of Warrant Shares to be acquired, such notice to be substantially in
the form of the Notice of Exercise attached hereto,
(ii) this Warrant, and
(iii) payment to Issuer of the Exercise Price for each share
being purchased from it by delivery of cash, wire transfer or check.
Upon any exercise of this Warrant, if the Warrant Shares are to be transferred
to a Person other than the Holder (which transfer shall be subject in all
respects to the Stockholders Agreement), the Notice of Exercise shall also state
the name of the Person to whom the certificates for the Warrant Shares are to be
transferred, and if the number of Warrant Shares to be transferred does not
include all the Warrant Shares purchasable hereunder, it shall also state the
name of the Person (which Person must be Holder or an Affiliate thereof) to whom
a new Warrant for the unexercised portion of the rights hereunder is to be
delivered. In the event of any exercise of the rights represented by this
Warrant, Issuer shall deliver within a reasonable period of time, not exceeding
ten Business Days, after such exercise a certificate or certificates (with any
legends required by Section 3.2 of the Stockholders Agreement affixed thereto)
representing the Warrant Shares to the Person entitled to receive the same
(which Warrant Shares shall be subject, in all respects, to the Stockholders
Agreement), such number of Warrant Shares to be transferred upon such exercise,
and shall deliver to the Person entitled to receive the same, within a
reasonable time, not exceeding ten Business Days, after the rights represented
by this Warrant shall have been so exercised, a new Warrant representing the
number of Warrant Shares, if any, with respect to which this Warrant shall not
then have been exercised. The Person in whose name any certificate for Warrant
Shares is transferred upon exercise of this Warrant shall for all purposes be
deemed to have become the Holder of record of such shares on the date on which
this Warrant was surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such certificate. The Holder shall pay
all expenses, transfer taxes and other charges payable in connection with the
preparation and delivery of certificates for the Warrant Shares and new Warrants
for any unexercised portion.
SECTION 2. Covenants of Issuer.Issuer covenants and agrees that:
-------------------
(a) Notwithstanding any other provision hereof, if the exercise
of any portion of this Warrant is to be made in connection with a public
offering of the Securities of Issuer or sale of effective voting control of
Issuer, the exercise of any portion of this Warrant may, at the election of the
Holder, be conditioned upon the consummation of the public offering or sale in
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which case such exercise shall not be deemed to be effective until the
consummation of such transaction.
(b) Issuer shall not avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be reasonably necessary or appropriate to protect the rights of
the Holder hereof against impairment of the Holder's rights hereunder.
(c) Issuer or its Affiliates shall at all times have authorized a
sufficient number of shares of Common Stock so that Issuer or its Affiliates
will be able to deliver to the Holder the number of Warrant Shares obtainable
upon exercise of this Warrant.
SECTION 3. Adjustment of Number of Shares and Exercise Price. In
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order to prevent dilution or avoidance of the rights granted under this Warrant,
the Exercise Price shall be subject to adjustment from time to time as provided
in this Section 3, and the number of Warrant Shares obtainable upon exercise of
this Warrant shall be subject to adjustment from time to time as provided in
this Section 3.
(a) Subdivision or Combination of Common Stock. If Issuer at any
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time subdivides (by any stock split, stock dividend or other distribution
payable in shares of Common Stock, recapitalization or otherwise) the
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision shall be proportionately
reduced and the number of Warrant Shares obtainable upon exercise of this
Warrant shall be proportionately increased. If Issuer at any time combines (by
reverse stock split or otherwise) the outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
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Any recapitalization (other than a subdivision or combination of Common Stock
described in Section 3(a) hereof), reorganization, reclassification,
consolidation, merger, sale of all or substantially all of Issuer's assets
(determined on a consolidated basis) to another Person or other transaction
which is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, cash, securities
or assets with respect to or in exchange for Common Stock is referred to herein
as an "Organic Change." In the event of any Organic Change, the Holder shall
--------------
thereafter have the right to acquire and receive in lieu of or addition to (as
the case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon the exercise of this Warrant, such shares of stock, cash,
securities or assets as such Holder would have received in connection with such
Organic Change if such Holder had exercised such Warrant immediately prior to
such Organic Change.
(c) Notices. Issuer shall:
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(i) promptly upon any adjustment of the Exercise Price, give
written notice thereof to the Holder, setting forth in reasonable detail
and certifying the calculation of such adjustment;
(ii) give written notice to the Holder promptly in the event
that Issuer proposes to take any action or of the date on which Issuer
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights
to vote with respect to any Organic Change, dissolution or liquidation; and
(iii) also give written notice to the Holder of the date on
which any Organic Change, dissolution or liquidation shall take place.
SECTION 4. Dividends; Purchase Rights.
--------------------------
(a) If Issuer declares or pays a dividend upon the Common Stock
payable (i) in cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles, consistently applied) (a "Cash
----
Dividend") or (ii) otherwise than in cash out of earnings or earned surplus
- --------
(determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidating Dividend"), then Issuer shall pay to the Holder of this
--------------------
Warrant at the time of payment thereof the Liquidating Dividend or Cash
Dividend, as the case may be, which would have been paid to such Holder on the
Warrant Shares had this Warrant been fully exercised immediately prior to the
date on which a record is taken for such Liquidating Dividend or Cash Dividend,
as the case may be, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
(b) If at any time Issuer grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then the Holder of this Warrant shall be entitled to
---------------
acquire, upon the terms applicable to such Purchase Rights, the aggregate number
or amount of such stock, warrants, securities or other property which such
Holder could have acquired if such Holder had held the Warrant Shares acquirable
upon complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights.
SECTION 4. No Voting Rights. The Holder shall not be entitled to
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any voting rights as a stockholder of Issuer by reason of the rights granted
under this Warrant until the Holder shall purchase shares of Common Stock
hereunder.
SECTION 5. Exchange and Transfer of Warrant.
--------------------------------
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(a) Exchange of Warrant. The Holder may exchange this Warrant for
-------------------
another Warrant or Warrants of like kind and tenor representing in the aggregate
the right to purchase the same number of Warrant Shares which could be purchased
pursuant to this Warrant. In order to effect such exchange, the Holder shall
deliver this Warrant to Issuer accompanied by a written request signed by the
Holder specifying the number and denominations of Warrants to be issued in such
exchange and the names in which such Warrants are to be issued. As soon as
reasonably practicable after receipt of such a request, Issuer shall execute and
deliver to the Holder the Warrant or Warrants to be issued in such exchange.
(b) Transfer of Warrant. This Warrant may be transferred by the
-------------------
Holder hereof (but only with the prior written consent of Issuer if the
transferee is not an Affiliate of Holder) by delivering this Warrant to Issuer
accompanied by a properly completed Assignment Form and an executed copy of an
agreement to become a party to, and be bound by, the Stockholders Agreement,
duly executed by such transferee, and any other documents reasonably requested
by Issuer. As soon as reasonably practicable after receipt of such Assignment
Form, Issuer shall execute and deliver to the Holder a new Warrant or Warrants
of like kind and tenor representing in the aggregate the right to purchase the
same number of Warrant Shares which could be purchased pursuant to the Warrant
being transferred. In all cases of transfer by an attorney, the original power
of attorney, duly approved, or a copy thereof, duly certified, shall be
delivered to and shall remain with Issuer. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited and remain with Issuer in its discretion.
SECTION 6. Loss, Theft, Destruction of Warrant Certificates. Upon
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receipt of evidence satisfactory to Issuer of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security satisfactory
to Issuer (it being understood and agreed that if the Holder of such Warrant is
Oxy or one of its Affiliates, then a written agreement of indemnity given by
such Person alone shall be satisfactory to Issuer and no further security shall
be required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, Issuer will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant Shares.
SECTION 7. Successors. All the provisions of this Warrant by or for
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the benefit of the Issuer or the Holder shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 8. Headings. The headings of sections of this Warrant have
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been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 9. Remedies; Amendment and Waiver.
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(a) No failure or delay of any party in exercising any power or right
hereunder shall operate as a waiver thereof (except where a specific time period
for the exercise of such power or right is expressly set forth herein), nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on any party in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances.
The rights and remedies of the Holder or the Issuer are cumulative and not
exclusive of any rights or remedies which it would otherwise have.
(b) This Warrant may only be amended or modified by a written
instrument signed by the Holder and the Issuer. The provisions of this Warrant
may be waived only by a writing signed by the party to be charged with such
waiver.
SECTION 10. Severability. Whenever possible, each provision of this
------------
Warrant will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any Applicable Law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
SECTION 11. Definitions; Interpretation.
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(a) Definitions. The following terms have meanings set forth below:
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(i) "Affiliate" of a specified Person means a Person who,
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directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
(ii) "Applicable Law" means, with respect to any Person,
--------------
property, transaction or event, all present or future applicable laws,
statutes, regulations, treaties, judgments and decrees and all applicable
official directives, rules, consents, approvals, authorizations, orders,
guidelines and policies of any Governmental Authority or Persons having
authority over or applicable to such Person or any of its assets or
properties.
(iii) "Business Day" means any day that is not a Saturday, a
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Sunday or other day on which banks are required or authorized by law to be
closed in the City of New York.
(iv) "control" (including the terms "controlled by" and "under
------- ------------- -----
common control with"), with respect to the relationship between or among
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two or more Persons, means the
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possession, directly or indirectly or as trustee or executor, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor,
by contract or otherwise.
(v) "Convertible Securities" means any stock or other
----------------------
securities convertible into or exchangeable for Common Stock.
(vi) "Governmental Authority" means any administrative,
----------------------
governmental or regulatory authority or body or any court or tribunal,
domestic or foreign.
(vii) "Options" means any rights or options to subscribe for or
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to purchase Common Stock.
(viii) "Person" means an individual, partnership, corporation
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(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.
(ix) "Securities" means, with respect to any Person, such
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Person's capital stock or any options, warrants or other Securities which
are directly or indirectly convertible into, or exercisable or exchangeable
for, such Person's capital stock (whether or not such derivative Securities
are issued by Issuer).
(x) "Warrant Shares" means the shares of Common Stock issued or
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issuable upon exercise of this Warrant; provided, however, that if there is
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a change such that the securities issuable upon exercise of this Warrant
are issued by an entity other than Issuer or there is a change in the class
of securities so issuable, then the term "Warrant Shares" shall mean the
securities issuable upon exercise of this Warrant.
(b) Terms Generally. The definitions contained in this Warrant shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation."
(c) Currency. Unless otherwise specified herein, all statements or
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references to dollar amounts or $ set forth herein shall refer to United States
Dollars.
SECTION 12. Governing Law. ALL QUESTIONS CONCERNING THE
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CONSTRUCTION, INTERPRETATION AND VALIDITY OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER IN THE STATE OF NEW YORK
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OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 13. Notices. All notices, demands and requests of any kind
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to be delivered to any party hereto in connection with this Warrant shall be in
writing, (a) delivered personally, (b) sent by internationally-recognized
overnight courier, (c) sent by first class, registered or certified mail, return
receipt requested or (d) by telecopy with confirmed receipt (with hard copy to
follow). Any notice, demand or request so delivered shall constitute valid
notice under this Warrant and shall be deemed to have been received (i) on the
day of actual delivery in the case of personal delivery, (ii) on the next
Business Day after the date when sent, in the case of delivery by
internationally-recognized overnight courier, (iii) on the fifth Business Day
after the date of deposit in the U.S. mail in the case of mailing or (iv) one
business day after being sent by telecopy with confirmed receipt (with hard copy
to follow). The mailing addresses of Issuer and Holder are set forth in Section
1 hereof. Any party hereto may, from time to time by notice in writing served
upon the other as aforesaid, designate a different mailing address or a
different Person to which all such notices, demands or requests thereafter are
to be addressed.
SECTION 14. Conflicting Agreements. Issuer shall not enter into any
----------------------
agreements or arrangements of any kind with any Person with respect to the
Warrant Shares containing terms inconsistent with the provisions of this
Warrant, including agreements or arrangements with respect to the acquisition or
disposition of securities of Issuer in a manner which is inconsistent with this
Warrant.
IN WITNESS WHEREOF, Issuer has caused this Warrant to be executed by
its duly authorized officers and this Warrant to be dated as of the date first
set forth above.
SABINE RIVER HOLDING CORP.
By:______________________________________
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
ACCEPTED:
OCCIDENTAL PETROLEUM CORPORATION
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By: ____________________________________
Name: Stephen I. Chazen
Title: Executive Vice President -
Corporate Development and
Chief Financial Officer
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FORM OF EXERCISE
[To be signed upon exercise of Warrant]
To SABINE RIVER HOLDING CORP., a Delaware corporation:
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _________ shares of Common Stock AND herewith
tenders payment of [identify amount of payment] in full payment of the purchase
price for such shares, and requests that such shares be transferred to, and the
certificates for such shares be issued in the name of, and be delivered to,
_________________, whose address is ___________________________.
Dated: ____________________ ______________________________________
(Signature)
(Address)
<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________, all of the rights represented by the within
Warrant to purchase ___ shares of the Common Stock to which the within Warrant
relates.
Dated: ____________________
_____________________________
(Signature)
(Address of Assignor)
Signed in the presence of:
Address of Assignee:
<PAGE>
Exhibit 10.02
CAPITAL CONTRIBUTION AGREEMENT
------------------------------
CAPITAL CONTRIBUTION AGREEMENT (as amended, supplemented or modified
from time to time, this "Agreement"), dated as of August 19, 1999, among
OCCIDENTAL PETROLEUM CORPORATION, a Delaware corporation ("Oxy"), CLARK REFINING
HOLDINGS INC., a Delaware corporation ("Holdings"), SABINE RIVER HOLDING CORP.,
a Delaware corporation (the "General Partner"), NECHES RIVER HOLDING CORP., a
Delaware corporation (the "Limited Partner"), PORT ARTHUR COKER COMPANY L.P., a
Delaware limited partnership (the "Partnership") and BANKERS TRUST COMPANY, a
New York banking corporation, as collateral trustee (the "Collateral Trustee")
for the Secured Parties (as defined in the Common Security Agreement referred to
below). All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Common Security Agreement
referred to below.
W I T N E S S E T H:
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WHEREAS, the Partnership, Port Arthur Finance Corp., a Delaware
corporation (the "Borrower"), the General Partner, the Limited Partner, the
Collateral Trustee, the Agents, and the Depositary Bank are parties to a Common
Security Agreement, dated as of August 19, 1999 (as amended, modified or
supplemented from time to time, the "Common Security Agreement");
WHEREAS, each of Oxy, Holdings, the General Partner, the Limited
Partner, the Partnership and the Borrower will obtain benefits as a result of
(i) the extensions of credit to the Borrower under the Senior Loan Agreements
and (ii) the coverage provided under the Oil Payment Insurance Policy;
WHEREAS, pursuant to the Equity Commitment Letter, Oxy has agreed to
make certain capital investments in the General Partner through the purchase of
additional shares in the General Partner (the "Shares") and is willing to
execute and deliver this Agreement in order to permit the Secured Parties to be
assured that such capital investments will be made;
WHEREAS, it is a condition precedent to the entering into the Common
Security Agreement that each of the Oxy, Holdings, the General Partner, the
Limited Partner and the Partnership shall have executed and delivered this
Agreement; and
WHEREAS, in order to induce (i) the Initial Senior Lenders to make the
extensions of Initial Senior Debt contemplated by the Common Security Agreement
and the Senior Loan Agreements and (ii) the Oil Payment Insurers to issue the
Oil Payment Insurance Policy and to satisfy the conditions precedent referred to
in the second recital, above, each of
<PAGE>
2
Oxy, Holdings, the General Partner, the Limited Partner and the Partnership
desires to execute and deliver this Agreement.
NOW, THEREFORE, it is agreed:
1. Certain Defined Terms. As used herein, the following terms shall
---------------------
have the following meanings:
"Agents" shall mean Deutsche Bank AG, New York Branch, as
Administrative Agent for the Bank Senior Lenders, Winterthur International
Insurance Company Limited, as Administrative Agent for the Oil Payment Insurers,
and HSBC Bank USA, as Capital Markets Trustee for the Capital Markets Lenders.
"Agreement" shall have the meaning provided in the first paragraph of
this Agreement.
"Capital Call Amount" shall mean, on any date of determination, an
amount of cash equal to $13,499,900, less any and all amounts previously funded
and actually received by the Partnership pursuant to Section 2(a), 2(b) or 2(d)
or by the Selling Lenders pursuant to Section 2(c) of this Agreement.
"Capital Call Acceleration Event" shall mean:
(i) the occurrence of an Insolvency Event with respect to any
of Oxy, Holdings, the General Partner, the Limited Partner, the Partnership
or the Borrower; or
(ii) the taking of Enforcement Action as provided under the
Common Security Agreement pursuant to which the Senior Debt shall have been
declared to be immediately due and payable by reason of any Event of
Default.
"Capital Markets Trustee" shall mean HSBC Bank USA, as Capital Markets
Trustee under the Common Security Agreement, or any successor thereto.
"Chattel Paper" shall have the meaning ascribed thereto in the Uniform
Commercial Code in effect in the State of New York on the date hereof.
"Collateral", for purposes of this Agreement only, shall mean,
collectively, this Agreement, all rights (including all contract rights and
rights to receive payments and capital contributions) under this Agreement and
all Proceeds (as defined in the Uniform Commercial Code in effect in the State
of New York on the date hereof) hereof and thereof.
"Collateral Trustee" shall have the meaning provided in the first
paragraph of this Agreement.
<PAGE>
3
"Common Security Agreement" shall have the meaning provided in the
first recital of this Agreement.
"Depositary Bank" shall mean Bankers Trust Company, as Depositary
Bank under the Common Security Agreement, or any successor thereto.
"Equity Commitment Letter" shall mean the Equity Commitment Letter
dated June 28, 1999 from Holdings and Oxy to the General Partner.
"Fund" shall have the meaning provided in the first paragraph of this
Agreement.
"General Partner" shall have the meaning provided in the first
paragraph of this Agreement.
"Grantors" shall mean, collectively, all of the parties to this
Agreement (other than Oxy and the Collateral Trustee).
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Instrument" shall have the meaning ascribed thereto in the Uniform
Commercial Code in effect in the State of New York on the date hereof.
"Investment" shall mean a cash contribution not to exceed the Capital
Call Amount made (or deemed made) by Oxy after the date hereof to the equity
capital of the General Partner.
"Limited Partner" shall have the meaning provided in the first
paragraph of this Agreement.
"Partnership" shall have the meaning provided in the first paragraph
of this Agreement.
"Selling Lenders" shall have the meaning provided in Section 2(c) of
this Agreement.
"Shares" shall have the meaning provided in the fourth recital of this
Agreement.
"Transaction Parties" shall mean, collectively, the parties to the
Common Security Agreement and the other Secured Parties.
2. (a) Subject to the satisfaction of the conditions described in
Section 12 of this Agreement, Oxy hereby agrees with the Collateral Trustee for
the benefit of the Secured Parties and their respective successors, indorsees,
transferees and assigns, to make Investments (each, a "Capital Contribution") to
the equity capital of the General Partner from time to time in an
<PAGE>
4
aggregate amount equal to the Capital Call Amount as of the date of this
Agreement, for further contribution of (i) one percent (1.00%) of such Capital
Contribution by the General Partner to the equity capital of the Partnership and
(ii) ninety-nine percent (99.00%) of such Capital Contribution by the General
Partner to the equity capital of the Limited Partner, for further contribution
by the Limited Partner to the equity capital of the Partnership. Each such
Capital Contribution shall be made by a deposit of funds into the Bank Loan
Drawdown and Equity Funding Account (x) on or before each date required by the
Partnership in order to obtain an advance of Senior Debt under the Bank Senior
Term Loan Agreement in such amount as may be requested by the Partnership from
time to time, in writing, at least 10 days in advance of the date on which such
Capital Contribution is required to be made or (y) on such earlier date required
pursuant to Section 2(b). Each of Holdings, the General Partner and the Limited
Partner agree, for the benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, to make the further Capital
Contributions immediately upon receipt of the Investments as provided in the
first sentence of this Section 2(a).
(b) Subject to Section 2(c) of this Agreement, Oxy hereby agrees on
an absolute, irrevocable and unconditional basis that, within fifteen Business
Days after the occurrence of a Capital Call Acceleration Event, it will make a
payment by deposit of cash into the Bank Loan Drawdown and Equity Funding
Account in an amount equal to the Capital Call Amount (determined as of the date
of the occurrence of the Capital Call Acceleration Event). All such payments
shall be characterized as equity investments as provided in Section 3(a) of this
Agreement, except in the case of payments made as loans pursuant to Section
2(d).
(c) To the extent the General Partner or the Limited Partner is
prohibited or excused by operation of law from contributing any amounts
corresponding to Capital Contributions by Oxy to the equity capital of the
Partnership as contemplated by Section 2(a) due to any Insolvency Event relating
to the Partnership or for any other reason whatsoever, then, at the election of
the Collateral Trustee (acting at the direction of the Majority Lenders), Oxy's
Investments shall instead be promptly made by means of the purchase by Oxy from
each of the Bank Senior Lenders and any of the Capital Markets Senior Lenders
who request such purchase in writing within 30 days of such Insolvency Event or
any other event or circumstance (collectively, the "Selling Lenders") of a
subordinated participation in such Selling Lenders' outstanding Senior Debt,
allocated pro rata among the Selling Lenders based on the aggregate amount of
their respective shares of Senior Debt outstanding and any undrawn Senior Debt
Commitments at such time. Such participations shall be evidenced by, and the
payments required by this Section 2(c) shall be subject to a subordinated
participation agreement in form and substance satisfactory to the Collateral
Trustee (and which shall conform to all of the subordination terms set forth in
Appendix Q to the Common Security Agreement) and reasonably satisfactory to Oxy
(it being expressly understood and agreed (and the subordinated participation
agreement shall provide) that no payment or distribution of any kind or
character, whether in cash, property, securities or otherwise, shall be made
under any circumstances whatsoever with respect to any such subordinated
participation except from funds that are on deposit in the Distribution Account)
and it being further expressly understood and agreed that completion of
documentation of such subordinated participation interest shall not be a
condition precedent to Oxy's obligation to make payment therefor. Any payments
made pursuant to this Section 2(c)
<PAGE>
5
shall be deposited into the Bank Loan Drawdown and Equity Funding Account or
such other account or accounts as may be directed by the Selling Lenders.
(d) Oxy hereby agrees on an unconditional and irrevocable basis that,
to the extent that, by reason of an Insolvency Event with respect to Holdings,
the General Partner or the Limited Partner, Capital Contributions required under
this Agreement are not contributed to the equity capital of the Partnership as
contemplated herein, then Oxy will make a subordinated loan to the Partnership
promptly upon demand by the Collateral Trustee, on terms complying with all
applicable provisions of the Common Security Agreement, including without
limitation all of the subordination terms set forth in Appendix Q to the Common
Security Agreement, in an amount equal to the Capital Call Amount not so
contributed to the capital of the Partnership.
3. (a) All payments received by the Collateral Trustee pursuant to
Section 2(a) or (b) (other than loans to the Partnership pursuant to Section
2(d)) shall automatically be deemed (as of the date of receipt by the Collateral
Trustee of such respective payments) to be Investments by Oxy in the General
Partner, 1% of which have been further contributed (as cash) by the General
Partner to the Partnership and 99% of which have been further contributed (as
cash) by the General Partner to the equity capital of the Limited Partner and
further contributed by the Limited Partner to the equity capital of the
Partnership.
(b) All payments received by the Collateral Trustee pursuant to
Section 2(a) (b) or (d) shall be promptly deposited into the Bank Loan Drawdown
and Equity Funding Account.
(c) Each of Oxy, the General Partner, the Limited Partner, Holdings
and the Partnership hereby consents on an absolute, irrevocable and
unconditional basis to the application of the payments received by the
Collateral Trustee pursuant to Section 2(a) (b) or (d) in the manner
contemplated by this Section 3.
(d) Concurrently with the execution and delivery hereof and the
making of the initial capital contributions under this Agreement, General
Partner shall deliver to Oxy certificates registered in Oxy's name representing
671,818 shares of common stock of the General Partner.
(e) In order to provide adequate initial retained capital, each of
the General Partner and the Limited Partner may retain, from amounts otherwise
to be contributed to the Partnership under Section 2(a), an initial amount not
to exceed $25,000 for each of the General Partner and the Limited Partner.
4. All payments required to be made by Oxy, the General Partner, the
Limited Partner, Holdings and/or the Partnership pursuant to this Agreement
shall be made in full in Dollars and in immediately available funds, free and
clear of any and all taxes, levies, imposts, assessments, deductions,
withholdings or other similar charges imposed by any taxing authority in any
jurisdiction.
<PAGE>
6
5. The obligations of each of Oxy under this Agreement are
independent of the obligations of any Guarantor, the Partnership, the Borrower
or any other party, and a separate action or actions may brought and prosecuted
against Oxy whether or not an action is brought against any Guarantor, the
Partnership or any other party and whether or not any Guarantor, the Partnership
or any other party shall be joined in any such action or actions. Each of Oxy,
the General Partner, each Partner and the Partnership hereby waives, to the
fullest extent permitted by law, the benefit of any statute of limitations
affecting its liability under this Agreement or the enforcement of any provision
hereof.
6. Each of Oxy, Holdings, the General Partner, the Limited Partner
and the Partnership hereby waives notice of acceptance of this Agreement and
notice of any liability to which it may apply, and waives presentment, demand of
payment, protest, notice of dishonor, or nonpayment of any such liability, suit
or taking of other action by Holdings, General Partner, Limited Partner and/or
the Partnership (in the case of Oxy), the Agents, the Collateral Trustee or any
Secured Party against, and any other notice to any such person or any other
party liable thereon.
7. (a) As security for the prompt and complete payment and
performance when due, whether at the stated maturity, by acceleration, upon one
or more dates set for prepayment or otherwise of the Senior Debt Obligations and
Oil Payment Insurance Obligations, each of the Grantors hereby grants to the
Collateral Trustee, for the benefit of the Secured Parties, a first priority
security interest in the Collateral. Such security interests is granted as
security only and shall not subject any of the Agents, the Collateral Trustee or
the Secured Parties to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral. All
rights of the Collateral Trustee under this Agreement, the security interest and
all obligations of the Grantors under this Agreement shall be absolute,
irrevocable and unconditional.
(b) Each Grantor covenants and agrees with the Collateral Trustee,
for the benefit of the Secured Parties, from and after the date of this
Agreement until this Agreement and the security interests created hereby are
terminated pursuant to Section 17:
(i) If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note, other
Instrument or Chattel Paper, such promissory note, Instrument or Chattel
Paper shall be immediately delivered to the Collateral Trustee, duly
indorsed in a manner reasonably satisfactory to the Collateral Trustee, to
be held as Collateral pursuant to this Agreement.
(ii) Each Grantor shall cause the filing of Uniform Commercial
Code financing statements in each of the jurisdictions listed on Schedule I
hereto with respect to it. Each Grantor shall maintain the security
interests created by this Agreement as first priority perfected security
interests and shall defend such security interests against any and all
claims and demands of all persons whomsoever.
<PAGE>
7
(iii) At any time and from time to time, upon the written
request of the Collateral Trustee, and at the sole expense of a Grantor,
such Grantor shall promptly and duly execute and deliver all such further
instruments and documents and take such further action as the Collateral
Trustee may reasonably request for the purpose of obtaining or preserving
the full benefits of this Section 7 and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the security interests created hereby.
(iv) No Grantor shall, except (x) upon prior written notice to
the Collateral Trustee and (y) if filings under the Uniform Commercial Code
or otherwise have been made which maintain in favor of the Collateral
Trustee a valid, legal and perfected security interest in the Collateral,
free and clear of any Liens,
(A) change the location of its chief executive office and
chief place of business from that specified on Schedule II hereto; or
(B) change its (1) corporate name or any trade name used
to identify it in its conduct of business or in the ownership of its
properties without prior written notice to each of the Agents and the
Collateral Trustee, (2) identity or (3) corporate or partnership
structure in any manner such that any financing statement filed in
favor of the Collateral Trustee in connection with this Agreement
would become seriously misleading.
(v) Each Grantor shall advise the Collateral Trustee promptly,
in reasonable detail, at its address set forth in Appendix P of the Common
Security Agreement or as set forth immediately below its signature below,
as the case may be, of:
(A) any Lien (other than the security interests created
hereby) on any material portion of the Collateral; and
(B) the occurrence of any other event which could
reasonably be expected to impair any of the security interests created
hereby or on the aggregate value of the Collateral.
(vi) Notwithstanding anything to the contrary provided herein,
the Collateral Trustee assumes no liabilities with respect to any claims
regarding each Grantor's ownership (or purported ownership) of, or rights
or obligations (or purported rights or obligations) arising from, the
Collateral or any use (or actual or alleged misuse), whether arising out of
any past, current or future event, circumstance, act or omission or
otherwise, or any claim, suit, loss, damage, expense or liability of any
kind or nature arising out of or in connection with the Collateral. All of
such liabilities shall, as between the Collateral Trustee and the Grantors,
be borne exclusively by the Grantors.
<PAGE>
8
(vii) The Partnership agrees to pay all expenses of the
Collateral Trustee and to indemnify the Collateral Trustee with respect to
any and all losses, claims, damages, liabilities and related expenses in
respect of this Agreement or the Collateral in each case to the same extent
the Partnership is required to do so with respect to the Common Security
Agreement and the other Financing Documents pursuant to Section 14.10 of
the Common Security Agreement. Any amounts payable as provided in this
clause (vii) shall be additional Senior Debt Obligations secured hereby and
by the Security Documents. Without prejudice to the survival of any other
agreements contained in this Agreement, all indemnification and
reimbursement obligations contained herein shall survive the payment in
full of all Senior Debt Obligations and Oil Payment Reimbursement
Obligations and the termination of this Agreement.
(viii) A Grantor shall not (A) make or permit to be made any
assignment, pledge or hypothecation of the Collateral, and shall grant no
other security interest in such Collateral or (B) make or permit to be made
any transfer of such Collateral. Each Grantor shall remain at all times in
possession of its Collateral except for transfers to the Collateral Trustee
pursuant to the provisions of this Agreement.
(ix) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under this Agreement to observe and perform all
the conditions and obligations to be observed and performed by it under
this Agreement, all in accordance with and pursuant to the terms and
provisions of this Agreement. None of the Agents, the Collateral Trustee or
the Secured Parties shall have any obligation or liability under this
Agreement by reason of or arising out of this Agreement or the receipt by
any such Secured Party of any payment relating to this Agreement pursuant
hereto, nor shall any of the Agents, the Collateral Trustee or the Secured
Parties be obligated in any manner to perform any of the obligations of a
Grantor under or pursuant to this Agreement, to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party under this
Agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(x) Each Grantor waives and agrees not to assert any rights or
privileges it may acquire under Section 9-112 of the Uniform Commercial
Code as from time to time in effect in the State of New York.
8. Each of the Agents, the Collateral Trustee and the Secured
Parties (or any of them) may (except as shall be required by applicable statute
and cannot be waived) at any time and from time to time without the consent of,
or notice to, Oxy, the General Partner, the Limited Partner, Holdings or the
Partnership, in each case without incurring responsibility to any such person,
without impairing or releasing the obligations of any such person under this
Agreement, upon or without any terms or conditions and in whole or in part:
<PAGE>
9
(i) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, alter or increase any of
the Senior Debt Obligations or Oil Payment Reimbursement Obligations, any
security therefor, or any liability incurred directly or indirectly in
respect thereof;
(ii) take and hold security for the payment of the Senior Debt
Obligations or Oil Payment Reimbursement Obligations and sell, exchange,
release, impair, surrender, realize upon or otherwise deal with in any
manner and in any order any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, the Senior Debt Obligations,
Oil Payment Reimbursement Obligations or any liabilities (including any of
those under this Agreement) incurred directly or indirectly in respect
thereof or hereof, and/or any offset there against;
(iii) exercise or refrain from exercising any rights against the
Partnership, any other Transaction Party or others or otherwise act or
refrain from acting;
(iv) settle or compromise any of the Senior Debt Obligations or
Oil Payment Reimbursement Obligations, any security therefor or any
liability (including any of those under this Agreement) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment
of all or any part thereof to the payment of any liability (whether due or
not) of the Partnership to creditors of the Partnership other than the
Secured Parties;
(v) release or substitute any one or more endorsers,
guarantors or other obligors;
(vi) consent to or waive any breach of, or any act, omission or
default under, any of the Financing Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or supplement
any of the Financing Documents or any of such other instruments or
agreements;
(vii) act or fail to act in any manner referred to in this
Agreement which may deprive Oxy, the General Partner, the Limited Partner
or Holdings of any right to subrogation against the Partnership to recover
any payments made pursuant to this Agreement;
(viii) pursue its rights and remedies under this Agreement and/or
under any guaranty of all or any part of the Senior Debt Obligations or Oil
Payment Reimbursement Obligations in whatever order, or collectively, and
the Agents, the Collateral Trustee and the Secured Parties shall be
entitled to the strict performance of Oxy, the General Partner, the Limited
Partner, Holdings and the Partnership under this Agreement, notwithstanding
any action taken (or not taken) by any of the Agents, the Collateral
Trustee or the Secured Parties to enforce any of its rights or remedies
against Oxy, the General Partner, the Limited Partner, Holdings, the
Partnership or any other person, for all or any part of the
<PAGE>
10
Senior Debt Obligations, Oil Payment Reimbursement Obligations or any
payment received under this Agreement or any other such guaranty; and/or
(ix) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of Oxy, the General Partner, the Limited Partner, Holdings or the
Partnership from its liabilities under this Agreement.
9. No invalidity, irregularity or unenforceability of all or any of
the Senior Debt Obligations or of any security therefor shall affect, impair or
be a defense to this Agreement, and the obligations of Oxy, the General Partner,
the Limited Partner, Holdings and the Partnership under this Agreement shall be
absolute, irrevocable and unconditional notwithstanding the occurrence of any
event or the existence of any circumstance, including, without limitation, any
Insolvency Event with respect to Oxy, the General Partner, the Limited Partner,
the Borrower, Holdings or any of its Subsidiaries or any event or circumstance
which would constitute a legal or equitable discharge, except payment in full in
cash of all Senior Debt Obligations in accordance with the Common Security
Agreement.
10. Each of Oxy, the General Partner, the Limited Partner, Holdings
and the Partnership severally makes the following representations, warranties
and agreements (but only to the extent applicable to itself and not jointly with
such other parties):
(a) (i) Each of Oxy and the Partnership is a duly organized and
validly existing corporation and limited partnership, respectively, in good
standing under the laws of the State of Delaware and has the power and
authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (ii) Holdings is a
duly organized and validly existing corporation in good standing under the
laws of the State of Delaware and has the power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage.
(b) Each of Oxy, the General Partner, the Limited Partner, Holdings
and the Partnership has, to the extent applicable to it, the full power and
authority to grant the security interest in the Collateral pursuant hereto
and to execute, deliver and perform the terms and provisions of this
Agreement, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement. Each of Oxy, the General
Partner, the Limited Partner, Holdings and the Partnership has duly
executed and delivered this Agreement, and this Agreement constitutes its
legal, valid and binding obligation enforceable against it in accordance
with its terms, except to the extent that the enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
(c) Neither the execution, delivery or performance by Oxy, the General
Partner, the Limited Partner, Holdings or the Partnership of this
Agreement, nor compliance by it with the terms and provisions hereof, nor
the consummation of the transactions
<PAGE>
11
contemplated herein, (i) will contravene any provision of any applicable
law, statute, rule or regulation or any applicable order, writ, injunction
or decree of any court or governmental instrumentality, (ii) will conflict
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of such person pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other material agreement, contract or instrument to which it is a party or
by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of any of the organizational
documents of such person, in the case of sub-clause (ii), which could
reasonably be expected to (A) have a materially adverse effect on the
assets, business, operations, properties, liabilities, profits or condition
(financial or otherwise) of such person, (B) result in a material
impairment of the ability of such person to perform any of its material
obligations under this Agreement or (C) result in an impairment of the
validity or enforceability of the security interest created, or a material
impairment of the material rights, remedies or benefits available to the
Secured Parties or the Collateral Trustee, under this Agreement.
(d) Other than the filing of financing statements in appropriate form
in the jurisdictions specified on Schedule I hereto, no other order,
consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption or any other action by, any
Governmental Authority is or will be required to authorize, or is required
(i) in connection with the execution, delivery and performance of this
Agreement or (ii) to ensure the legality, validity, binding effect or
enforceability of this Agreement.
(e) This Agreement is effective to create in favor of the Collateral
Trustee, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral and, upon the filing of
financing statements in appropriate form in the jurisdictions specified on
Schedule I hereto, this Agreement will constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Grantors
in and to such Collateral and, subject to (S) 9-306 of the Uniform
Commercial Code, the Proceeds thereof, in each case prior and superior in
right to any other person, other than with respect to Permitted Liens.
(f) Each Grantor's chief executive office and chief place of business
is located at the location listed on Schedule II hereto.
(g) Except as disclosed in Oxy's annual report on Form 10-K for the
year ended December 31, 1998 and its quarterly report on Form 10-Q for the
quarter ended March 31, 1999, there are no actions, suits or proceedings
pending or, to the knowledge of Oxy, the General Partner, the Limited
Partner, Holdings or the Partnership, threatened (i) with respect to this
Agreement or (ii) that could reasonably be expected to (A) materially and
adversely affect the business, operations, property, assets, liabilities or
condition (financial or otherwise) of such person or (B) have a material
adverse effect on the rights or remedies of any of the Agents, the
Collateral Trustee or the Secured Parties hereunder
<PAGE>
12
or on the ability of such person to perform its obligations to the Agents,
the Collateral Trustee or the Secured Parties hereunder.
(h) Except as disclosed in Oxy's annual report on Form 10-K for the
year ended December 31, 1998 and its quarterly report on Form 10-Q for the
quarter ended March 31, 1999, each of Oxy, the General Partner, the Limited
Partner, Holdings and the Partnership is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except to the
extent that such noncompliances could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
either (i) the business, operations, property, assets, liabilities or
condition (financial or otherwise) of such person or (ii) the rights or
remedies of any of the Agents, the Collateral Trustee or the Secured
Parties under this Agreement or on its ability to perform its obligations
under this Agreement.
(i) Oxy has, and will at all times during the term of this Agreement
have, sufficient assets to fund in a timely manner all of its obligations
under this Agreement.
(j) Oxy is acquiring the Shares for investment solely for its own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof.
(k) Oxy is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, as the same may be amended from
time to time.
(l) Oxy's financial situation is such that it can afford to bear the
economic risk of holding the Shares for an indefinite period of time, has
adequate means for providing for its current needs and contingencies, and
can afford to suffer a complete loss of its investment in the Shares.
(m) Oxy has sufficient knowledge and experience in financial and
business matters are such that it is capable of evaluating the merits and
risks of the investment in the Shares.
(n) Oxy understands that the Shares are a speculative investment
which involves a high degree of risk of loss, there are substantial
restrictions on the transferability of the Shares, and, on the date hereof
and for an indefinite period following the date hereof, there will be no
public market for the Shares and, accordingly, it may not be possible for
Oxy to liquidate its investment in case of emergency, if at all.
(o) Oxy understands and has taken cognizance of all the risk factors
related to the purchase of the Shares, and, other than as set forth in this
Agreement, no representations or warranties have been made to Oxy or its
representatives concerning the Shares of the General Partner or their
prospects or other matters.
<PAGE>
13
(p) In making its decision to purchase the Shares hereby subscribed
for, Oxy has relied upon independent investigations made by it and, to the
extent believed by Oxy to be appropriate, its representatives, including
its own professional, financial, tax and other advisors.
(q) Oxy has received information about the General Partner and been
given the opportunity to examine all documents and to ask questions of, and
to receive answers from, the General Partner and its representatives
concerning the General Partner and the terms and conditions of the purchase
of the Shares and to obtain any additional information which Oxy deems
necessary.
(r) All information which Oxy has provided to the General Partner and
its representatives concerning Oxy and its financial position is complete
and correct in all material respects as of the date of this Agreement.
11. (a) Oxy agrees to take all reasonable action as may be necessary
so that, at all times prior to the satisfaction and release of all of the
obligations of Oxy under this Agreement pursuant to Section 17, Oxy shall have
access to sufficient assets to fund in a timely manner all of its obligations
under this Agreement.
12. The obligations of Oxy to make the Investments described in
Section 2 are conditioned on:
(a) the entry into by the General Partner and Oxy of a Stockholders'
Agreement substantially in the form attached hereto as Exhibit A;
(b) the issuance to Blackstone Capital Partners III Merchant Banking
Fund L.P. and its affiliates of warrants to purchase 2.43 million shares of
Holdings' common stock, with such warrants having an exercise price of $.01
per share, substantially in the form attached hereto as Exhibit B;
(c) the issuance to Oxy and its affiliates of warrants to purchase
30,000 additional shares of the common stock of the General Partner, which
shares will be exchangeable for 270,000 shares of Holdings' Class F common
stock, with such warrants having an exercise price of $.09 per share,
substantially in the form attached hereto as Exhibit C;
(d) the issuance of the Project Bonds (as defined in the Equity
Commitment Letter);
(e) the entry into the definitive agreement for the Bank Financing
(as defined in the Equity Commitment Letter); and
(f) the purchase of all of the shares of the General Partner to be
purchased on the Project Closing Date (as defined in the Equity Commitment
Letter) as described in the Equity Commitment Letter.
<PAGE>
14
13. No failure or delay on the part of the Collateral Trustee, any
Secured Party, Oxy, the General Partner, the Limited Partner, Holdings, the
Partnership or any other Transaction Party in exercising any right, power or
privilege under this Agreement and no course of dealing between or among any of
the Agents, the Collateral Trustee, the Secured Parties, Oxy, the General
Partner, the Limited Partner, Holdings, the Partnership or any other Transaction
Party shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights, powers and remedies expressly provided in this Agreement
are cumulative and not exclusive of any rights, powers or remedies which the
Agents, the Collateral Trustee or any Secured Party would otherwise have. No
notice to or demand on Oxy, the General Partner, the Limited Partner, Holdings
or the Partnership in any case shall entitle such person to any other further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Agents, the Collateral Trustee or any Secured Party to any other
or further action in any circumstances without notice or demand.
14. This Agreement shall be binding upon Oxy, the General Partner,
the Limited Partner, Holdings and the Partnership, and their respective
successors and assigns (including, without limitation, any executors or
administrators) and shall inure to the benefit of the Collateral Trustee and the
Secured Parties and their respective successors and assigns. Each of Oxy, the
General Partner, the Limited Partner, Holdings and the Partnership acknowledges
and agrees that this Agreement is made for the benefit of the Agents, the
Collateral Trustee and the Secured Parties and that each of the Agents, the
Collateral Trustee or the Secured Parties may enforce all of the obligations of
Oxy, the General Partner, the Limited Partner, Holdings and the Partnership
under this Agreement directly against them. Except as permitted in the Transfer
Restrictions Agreement, none of Oxy, the General Partner, the Limited Partner,
Holdings nor the Partnership may assign any of its rights or obligations under
this Agreement without the prior written consent of Majority Lenders.
15. This Agreement is expressly made for the benefit of the Agents,
the Collateral Trustee, and the Secured Parties. Neither this Agreement nor any
provision hereof may be changed, modified, amended or waived except with the
prior written consent of Oxy, the General Partner, the Limited Partner,
Holdings, the Partnership and the Collateral Trustee (acting at the direction of
the Majority Lenders).
16. All notices and other communication under this Agreement shall be
made at the addresses, in the manner and with the effect provided in Section
14.08 of the Common Security Agreement, provided that, for this purpose, the
address of Oxy shall be the address specified immediately below its respective
signature below.
17. (a) This Agreement and the security interests created hereby
shall terminate and be of no further force and effect (except to the extent any
party's obligations, if any, arising prior to such time under this Agreement
have not theretofore been fulfilled) upon the earliest of (i) the making of
Capital Contributions by Oxy in an aggregate Capital Call Amount as contemplated
in Section 2(a), (ii) the making of the payments required pursuant to Section
2(c) in an amount equal to the Capital Call Amount, (iii) so long as no Capital
Call Acceleration Event
<PAGE>
15
has theretofore occurred, January 1, 2002, and (iv) the date on which all Senior
Debt Obligations shall have been repaid in full in cash in accordance with the
requirements of the Common Security Agreement and the Senior Loan Agreements and
all commitments of the Bank Senior Lenders (as defined in the Common Security
Agreement) under the Bank Senior Loan Agreements (as defined in the Common
Security Agreement) shall have terminated.
(b) In connection with any termination pursuant to paragraph (a)
above, (i) the Partnership shall, on behalf of the Grantors, deliver to the
Collateral Trustee a certificate signed by a Responsible Officer of the
Partnership certifying that such termination is permitted pursuant to Section
17(a), and the Collateral Trustee shall be entitled (but not required) to
conclusively rely thereon and in any event shall not incur any liability to any
person in acting (or refraining from acting) in reliance thereon and (ii) the
Collateral Trustee shall execute and deliver to each Grantor, at the sole
expense of such Grantor or the Partnership, all Uniform Commercial Code
termination statements and similar documents that such Grantor shall reasonably
request to evidence such termination. Any execution and delivery of termination
statements or documents pursuant to this Section 17 shall be without recourse to
or warranty by the Collateral Trustee.
18. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF OXY, THE
PARTNERSHIP, THE GENERAL PARTNER, THE LIMITED PARTNER, HOLDINGS, THE AGENTS, THE
COLLATERAL TRUSTEE AND THE SECURED PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT IN THE BOROUGH OF
MANHATTAN, THE CITY OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH PARTY HERETO HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER
SUCH PERSON, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY
SUCH COURT LACKS JURISDICTION OVER SUCH PERSON. EACH PARTY HERETO HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH PERSON, AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 14.08 OF
THE COMMON SECURITY AGREEMENT OR AS SET FORTH IMMEDIATELY BELOW ITS SIGNATURE
BELOW, AS THE CASE MAY BE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER HEREBY IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SERVICE OF PROCESS
WAS IN ANY WAY INVALID OR
<PAGE>
16
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT OR
ANY SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST OXY, THE PARTNERSHIP,
THE GENERAL PARTNER, THE LIMITED PARTNER OR HOLDINGS IN ANY OTHER JURISDICTION.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (b) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH PARTY HERETO FURTHER IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE TO TRIAL BY JURY IN ANY COURT OR JURISDICTION, INCLUDING, WITHOUT
LIMITATION, THOSE REFERRED TO IN CLAUSE (b) ABOVE, IN RESPECT OF ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
19. The Partnership hereby agrees to pay all reasonable out-of-pocket
costs and expenses of the Collateral Trustee in connection with the
administration and enforcement of any amendment, waiver or consent relating to,
this Agreement (including, without limitation, in each case, the reasonable
fees and disbursements of counsel employed by the Collateral Trustee), in each
case within 10 Business Days after any request is made by the Collateral Trustee
for any such payment.
20. If any of Oxy, Holdings, the General Partner, the Limited Partner
or the Partnership shall default in the payment of all or any portion of the
Capital Call Amount or any other amount becoming due under this Agreement, such
person shall on demand from time to time pay interest, to the extent permitted
by law, directly to the Collateral Trustee on such defaulted amount for the
period beginning on the date of such default up to (but not including) the date
of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to 2% per annum in excess of the rate applicable to Bank Senior Term
Debt from time to time. Notwithstanding the foregoing, if on the date the
Capital Call Amount (or any portion thereof) shall have become due and payable
under this Agreement Oxy is prohibited or excused by operation of law from
making Investments in Holdings as contemplated by Section 2(c) due to any
Insolvency Event relating to Holdings, the General Partner, the Limited Partner
or the Partnership or for any other reason whatsoever, no interest under this
Section 20 shall accrue on the Capital Call Amount (or such portion thereof) for
the period beginning on the date when the Capital Call Amount (or such portion
thereof) shall have become due and payable under this Agreement up to (but not
including) the earlier of: (a) the date on which such legal prohibition on the
ability of Oxy to make Investments shall, in the reasonable opinion of the
Collateral Trustee, have ceased to exist and (b) the date on which the
Collateral Trustee shall have exercised its election to require Oxy
<PAGE>
17
to purchase from the Selling Lenders subordinated participations in the Senior
Debt in accordance with Section 2(c).
21. The Collateral Trustee shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any person that the Collateral Trustee believed to be the proper person, and,
with respect to all legal matters pertaining to this Agreement and any other
Financing Document and its duties under this Agreement and thereunder, upon
advice of counsel selected by the Collateral Trustee.
22. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with Oxy, the General Partner, the Limited
Partner, Holdings, the Partnership and the Collateral Trustee.
* * *
<PAGE>
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CLARK REFINING HOLDINGS INC.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: EVP & CFO
PORT ARTHUR COKER COMPANY L.P.
By: Sabine River Holding Corp.
By: /s/ Maura J. Clark
------------------------------
Name: Maura J. Clark
Title: EVP & CFO
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
---------------------------------
Name: Maura J. Clark
Title: EVP & CFO
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
---------------------------------
Name: Maura J. Clark
Title: EVP & CFO
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ Stephen I. Chazen
----------------------------------
Name: Stephen I. Chazen
Title: Executive Vice President
Address: 10889 Wilshire Boulevard
Los Angeles, CA 90024
<PAGE>
19
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Collateral Trustee
By: /s/ James C. McDonough
--------------------------------------------
Name: James C. McDonough
Title: Vice President
By: /s/ William T. Jenkins
--------------------------------------------
Name: William T. Jenkins
Title: Assistant Vice President
<PAGE>
SCHEDULE I
----------
LIST OF
JURISDICTIONS FOR UNIFORM COMMERCIAL CODE FILINGS
CLARK REFINING HOLDINGS INC.: NY, DE, TX and MO
PORT ARTHUR COKER
COMPANY L.P.: NY, DE and TX
SABINE RIVER HOLDING CORP.: NY, DE and TX
NECHES RIVER HOLDING CORP.: NY, DE and TX
<PAGE>
SCHEDULE II
-----------
LIST OF
CHIEF EXECUTIVE OFFICES AND CHIEF PLACES OF BUSINESS
CLARK REFINING HOLDINGS INC.: 8182 Maryland Avenue
St. Louis Missouri 63105
PORT ARTHUR COKER
COMPANY L.P.: 1801 A. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
SABINE RIVER HOLDING CORP.: 1801 A. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
NECHES RIVER HOLDING CORP.: 1801 A. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
<PAGE>
EXHIBIT A
FORM OF STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT
-----------------------
STOCKHOLDERS' AGREEMENT, dated as of August 4, 1999 (the "Agreement"),
---------
among SABINE RIVER HOLDING CORP., a Delaware corporation (the "Company"), CLARK
-------
REFINING HOLDINGS INC., a Delaware corporation ("Holdings"), and OCCIDENTAL
--------
PETROLEUM CORPORATION, a Delaware corporation ("Oxy").
---
WHEREAS, on the date hereof, the Company and Holdings are entering into a
Subscription Agreement, dated the date hereof, whereby Holdings will acquire
90,000 of the outstanding shares (the "Funded Holdings Shares") of common stock,
----------------------
par value $.01 per share, of the Company ("Common Stock");
------------
WHEREAS, on the date hereof, the Company and Oxy are entering into a
Subscription Agreement, dated the date hereof, whereby Oxy will acquire 10,000
of the outstanding shares (the "Funded Oxy Shares") of Common Stock;
-----------------
WHEREAS, on August 19, 1999, the Company and Holdings will enter into a
Capital Contribution Agreement, dated as of August 19, 1999 (the "Holdings
--------
Contribution Agreement"), whereby Holdings will acquire 6,046,364 of the
- ----------------------
outstanding shares (together with the Funded Holdings Shares, the "Holdings
--------
Shares") of Common Stock;
- ------
WHEREAS, on August 19, 1999, the Company and Oxy will enter into a Capital
Contribution Agreement, dated as of August 19, 1999 (the "Oxy Contribution
----------------
Agreement"; together with the Holdings Contribution Agreement, the "Contribution
- --------- ------------
Agreements"), whereby Oxy will acquire 671,818 of the outstanding shares
- ----------
(together with the Funded Oxy Shares, the "Oxy Shares") of Common Stock; and
----------
WHEREAS, pursuant to Section 12(c) of the Oxy Contribution Agreement, Oxy
will acquire warrants to purchase 30,000 additional shares of Common Stock (the
"Warrants"); and
--------
WHEREAS, pursuant to Section 12(a) of each of the Contribution Agreements,
Holdings and Oxy are obligated to enter into a Stockholders Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions as
hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE 23.
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
----------------------
following terms have the following meanings:
<PAGE>
23
"Accepting Party" has the meaning specified in Section 3.04(b).
---------------
"affiliate" of a specified Person means a Person who, directly or
---------
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified Person.
"Agreement" means this Stockholders' Agreement.
---------
"beneficial owner" or "beneficially own" has the meaning given such term in
---------------- ----------------
Rule 13d-3 under the Exchange Act as in effect on the date hereof, provided
--------
that beneficial ownership under Rule 13d-3(l)(i) shall be determined based on
whether a Person has a right to acquire beneficial ownership within 60 days
or thereafter.
"Board" means the Board of Directors of the Company.
-----
"Business Day" means any day that is not a Saturday, a Sunday or other day
------------
on which banks are required or authorized by law to be closed in the City of
New York.
"Capital Stock" means, with respect to any Person at any time, any and all
-------------
shares, interests, participation or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests
(whether general or limited) or equivalent ownership interests in or issued
by such Person and any and all warrants, options or other rights to purchase
or acquire any of the foregoing.
"Cash Equivalents" means (a) marketable direct obligations issued or
----------------
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof,
(b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having the highest rating obtainable from any of
Standard & Poor's Corporation, Moody's Investors Service, Inc. or Duff &
Phelps Credit Rating Co. or (c) commercial paper maturing not more than one
year from the date of issuance thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's
Corporation or Moody's Investors Service, Inc.
"Cause" has the meaning specified in Section 2.02(c).
-----
"Common Stock" means the Common Stock, par value $.01 per share, of the
------------
Company.
"Company" means Sabine River Holding Corp., a Delaware corporation.
-------
"Contribution Agreements" has the meaning specified in the fourth recital
-----------------------
hereof.
<PAGE>
24
"control" (including the terms "controlled by" and "under common control
------- ------------- --------------------
with"), with respect to the relationship between or among two or more
----
Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities,
as trustee or executor, by contract or otherwise.
"Director" means a member of the Board.
--------
"Encumbrance" means any security interest, lien, claim, pledge, limitation
-----------
on voting rights, charge or other encumbrance of any nature whatsoever.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Notice" has the meaning specified in Section 4.02(a).
---------------
"Exchange Ratio" has the meaning specified in Section 4.02(b).
--------------
"Exchange Shares" has the meaning specified in Section 4.02(a).
---------------
"Funded Holdings Shares" has the meaning specified in the first recital
----------------------
hereof.
"Funded Oxy Shares" has the meaning specified in the second recital hereof.
-----------------
"Governmental Entity" means any administrative, governmental or regulatory
-------------------
authority or body or any court or tribunal, domestic or foreign.
"Holdings" means Clark Refining Holdings Inc., a Delaware corporation.
--------
"Holdings Contribution Agreement" has the meaning specified in the third
-------------------------------
recital hereof.
"Holdings Shares" means the Shares owned from time to time by Holdings and
---------------
any Person to whom any of such shares are transferred from time to time.
"Holdings Stockholders' Agreement" means the Second Amended and Restated
--------------------------------
Stockholders' Agreement, dated November 3, 1997, between Clark USA, Inc. and
Occidental C.O.B. Partners.
"Initial Oxy Shares" has the meaning specified in Section 2.01.
------------------
"Laws" means any federal, state, local or foreign law, statute, ordinance,
----
rule, regulation, order, judgment or decree.
"Marketable Securities" means securities that are (a) (i) securities of or
---------------------
other interests in any Person that are traded on a national securities
exchange, reported on by NASDAQ or otherwise actively traded over-the-counter
or (ii) debt securities of a Person that has debt or
<PAGE>
25
equity securities that are so traded or so reported on and in which a
nationally recognized securities firm has agreed to make a market, and (b)
not subject to restrictions on transfer as a result of any applicable
contractual provisions or the provisions of the Securities Act or any other
applicable Law.
"Minimum Sale Price" has the meaning specified in Section 3.04(d).
------------------
"NASDAQ" means the National Association of Securities Dealers, Inc.
------
National Market System.
"Nominee" has the meaning specified in Section 2.03(a).
-------
"Notice of Acceptance" has the meaning specified in Section 3.04(b).
--------------------
"Offer" has the meaning specified in Section 3.04(a).
-----
"Offer Notice" has the meaning specified in Section 3.04(a).
------------
"Offer Notice Date" has the meaning specified in Section 3.04(b).
-----------------
"Offer Period" has the meaning specified in Section 3.04(b).
------------
"Offer Price" has the meaning specified in Section 3.04(a).
-----------
"Offered Shares" has the meaning specified in Section 3.04(a).
--------------
"Oxy" means Occidental Petroleum Corporation, a Delaware corporation.
---
"Oxy Contribution Agreement" has the meaning specified in the fourth
--------------------------
recital hereof.
"Oxy Director" has the meaning specified in Section 2.01.
------------
"Oxy Shares" means the Shares owned from time to time by Oxy and any Person
----------
to whom any of such shares are transferred from time to time.
"Parties" means the Company, Holdings and Oxy.
-------
"Permitted Designee" has the meaning specified in Section 3.04(b).
------------------
"Permitted Transferee" means (a) the Company or any Subsidiary of the
--------------------
Company, (b) Oxy, (c) Holdings, (d) any affiliate of Oxy; provided, however,
-------- -------
that any such affiliate shall cease to be a Permitted Transferee in the event
it shall cease to be an affiliate of Oxy or (e) any affiliate of Holdings;
provided, however, that any such affiliate shall cease to be a Permitted
-------- -------
Transferee in the event it shall cease to be an affiliate of Holdings.
<PAGE>
26
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Prospective Seller" has the meaning specified in Section 3.04(a).
------------------
"Prospective Transferee" has the meaning specified in Section 3.05(a).
----------------------
"Public Offering" means an underwritten public offering of equity
---------------
securities of the Company pursuant to a registration statement that has been
declared effective by the SEC under the Securities Act, in which such equity
securities are widely distributed and after which such equity securities are
traded on a national securities exchange or reported on by NASDAQ.
"Recapitalization" means any stock split, dividend or combination, or any
----------------
recapitalization, merger, consolidation, exchange or other similar
reorganization.
"Registrable Securities" has the meaning specified in Section 3.07 hereof.
----------------------
"Restricted Shares" means all Shares other than (a) Shares that have been
-----------------
registered on a registration statement pursuant to the Securities Act, (b)
Shares with respect to which a Sale has been made in reliance on and in
accordance with Rule 144 and (c) Shares with respect to which the holder
thereof shall have delivered to the Company either (i) an opinion, in form
and substance reasonably satisfactory to the Company, of counsel, who shall
be reasonably satisfactory to the Company, or (ii) a "no action" letter from
the staff of the SEC, to the effect that subsequent transfers of such Shares
may be effected without registration under the Securities Act or compliance
with Rule 144.
"Rule 144" means Rule 144 (or any successor provision) under the Securities
--------
Act.
"Rule 144 Transaction" means any Sale of Oxy Shares or Holdings Shares made
--------------------
in reliance upon Rule 144.
"Sale" means any sale, assignment, transfer, distribution or other
----
disposition of Shares or of a participation therein, whether voluntarily or
by operation of law.
"SEC" means the Securities and Exchange Commission, and any successor
---
commission agency having similar powers.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Share" means any share of Company Common Stock and any securities issued
-----
in respect thereof, or in substitution therefor, in connection with any
Recapitalization.
<PAGE>
27
"Stockholder" means each Person (other than the Company) who shall be a
-----------
party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 3.05, or
otherwise, so long as such Person shall beneficially own any Shares or any
options, warrants or similar rights to acquire Shares.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, joint venture, association or other
entity controlled by such Person directly or indirectly through one or more
intermediaries.
"Tagging Stockholder" has the meaning specified in Section 3.07 hereof.
-------------------
"Third Party" means, with respect to any Stockholder, any other Person
-----------
other than a Permitted Transferee.
"Trading Day" has the meaning specified in Section 3.04(g).
-----------
"Transferring Stockholder" has the meaning specified in Section 3.07
------------------------
hereof.
"Warrants" has the meaning specified in the fifth recital hereof.
--------
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.01. Composition of the Board. (a) So long as Oxy and any
------------------------
Permitted Transferee that acquires more than 50% of the Shares owned by Oxy on
August 19, 1999 (the "Initial Oxy Shares") own in the aggregate at least 20% of
------------------
the Initial Oxy Shares, Oxy or, at Oxy's election, any Permitted Transferee that
acquires more than 50% of the Initial Oxy Shares shall be entitled to designate
one Director for election to the Board (the "Oxy Director"). Each Stockholder
------------
shall vote all voting Shares owned or held of record by such Person at any
meeting of stockholders of the Company, or execute a written consent with
respect to all such Shares owned or held of record by it, in favor of the
election of the Oxy Director as a Director. In the event Oxy, and any Permitted
Transferee that acquires more than 50% of the Initial Oxy Shares shall at any
time not own in the aggregate at least 20% of the Initial Oxy Shares, Oxy and
such affiliates shall cause the Oxy Director to tender his or her written
resignation as a Director to the Secretary of the Company as soon as
practicable.
(b) The remainder of the Directors shall be designated by Holdings;
provided, however, that one Director so designated shall be (i) unaffiliated
- -------- -------
with both Oxy and its affiliates and Holdings and its affiliates and (ii)
subject to any consents as are required pursuant to any project financing
documents relating to the Port Arthur Coker Company L.P.
SECTION 2.02. Removal. (a) Upon the written request of Oxy, each
-------
Stockholder shall vote all of his, her or its voting Shares in favor of the
removal of the Oxy Director. Each
<PAGE>
28
Stockholder agrees that, if, at any time, he, she or it is then entitled to vote
for the removal of Directors, he, she or it will not vote any of his, her or its
voting Shares in favor of the removal of the Oxy Director unless such removal
shall be for Cause (as defined below) or Oxy shall have consented to or directed
such removal in writing.
(b) With respect to any Director designated by Holdings, upon the written
request of Holdings, each Stockholder shall vote all of his, her or its voting
Shares in favor of the removal of such Director. Each Stockholder agrees that,
if, at any time, he, she or it is then entitled to vote for the removal of
Directors, he, she or it will not vote any of his, her or its voting Shares in
favor of the removal of a Director designated by Holdings unless Holdings shall
have consented to or directed such removal in writing.
(c) Removal for "Cause" shall mean removal of a Director because of such
-----
Director's (a) willful and continued failure to substantially perform his or her
duties as a Director, (b) willful conduct which is significantly injurious to
the Company, momentarily or otherwise, (c) conviction for, or guilty plea to, a
felony or a crime involving moral turpitude or (d) abuse of illegal drugs or
other controlled substances or habitual intoxication.
SECTION 2.03. Vacancies. (a) If, as a result of death disability,
---------
retirement, resignation, removal (with or without Cause) or otherwise, there
shall exist or occur any vacancy on the Board due to the absence of a Director
who shall have been designated pursuant to Section 2.01(a), and the requirements
of Section 2.01(a) shall remain satisfied in all respects, (i) Oxy may
designate, in a writing executed by Oxy, another individual to fill such vacancy
and to serve as a Director (the "Nominee") and (ii) each Stockholder then
-------
entitled to vote for the election of Directors shall vote his, her or its voting
Shares at any meeting of stockholders of the Company, or execute a written
consent with respect to all such Shares, as the case may be, in favor of the
election of the Nominee as a Director.
(b) If, as a result of death, disability, retirement, resignation, removal
(with or without Cause) or otherwise, there shall exist or occur any vacancy on
the Board due to the absence of a Director who shall have been designated by
Holdings, (i) Holdings may designate, in a writing executed by Holdings, a
Nominee and (ii) each Stockholder then entitled to vote for the election of
Directors shall vote his, her or its voting Shares at any meeting of
stockholders of the Company, or execute a written consent with respect to all
such Shares, as the case may be, in favor of the election of such Nominee as a
Director.
ARTICLE III
TRANSFER OF SHARES
SECTION 3.01. General Restriction. No Stockholder shall, directly or
-------------------
indirectly, make or solicit any Sale of, or create, incur, assume or suffer to
exist any Encumbrance with respect to, any Share beneficially owned by such
Stockholder, except in compliance with the Securities Act and the rules and
regulations thereunder, this Agreement and any financing documents relating to
<PAGE>
29
the Port Arthur coker project including, without limitation, the Common Security
Agreement (as defined in the Contribution Agreements).
SECTION 3.02. Legends. (a) The Company shall affix to each certificate
-------
evidencing Shares issued to Stockholders a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT BETWEEN SABINE RIVER HOLDING CORP. (THE "COMPANY"),
CLARK REFINING HOLDINGS INC. AND OCCIDENTAL PETROLEUM CORPORATION, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT AND (A) PURSUANT TO A
REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS
THEREUNDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
STOCKHOLDERS' AGREEMENT."
(b) In the event that any Shares shall cease to be Restricted Shares, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares with a legend in substantially
the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT BETWEEN SABINE RIVER HOLDING CORP. (THE "COMPANY"),
CLARK REFINING HOLDINGS INC. AND OCCIDENTAL PETROLEUM CORPORATION, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT. THE HOLDER OF THIS CERTIFICATE,
BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT."
(c) In the event that any Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement as provided in Section
3.03(b), the Company shall, upon written
<PAGE>
30
request of the holder thereof, issue to such holder a new certificate evidencing
such Shares with a legend in substantially the following form:
"NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS THEREUNDER."
(d) In the event that any Shares shall cease to be Restricted Shares and
shall cease to be subject to the restrictions on transfer set forth in this
Agreement as provided in Section 3.03(b), the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such Shares without the legend required by Section 3.02(a) endorsed thereon.
SECTION 3.03. Certain Restrictions on Transfer. (a) Each Stockholder
--------------------------------
agrees that it will not, directly or indirectly, make or solicit any Sale of, or
create, incur, assume or suffer exist any Encumbrance (other than a pledge or
hypothecation of Shares to one or more bona fide financial institutions and any
foreclosure thereof, in each case subject to Section 3.05) with respect to any
Share beneficially owned by such Stockholder other than (i) any Sale to a
Permitted Transferee, (ii) any Sale for cash, Cash Equivalents or Marketable
Securities to a Third Party that is made in compliance with the procedures, and
subject to the limitations, set forth in Section 3.04 (if applicable), (iii) any
Sale pursuant to a Public Offering or (iv) any Sale in a Rule 144 Transaction.
Notwithstanding the foregoing, except as otherwise expressly provided in this
Agreement, all Sales permitted by the foregoing clauses (i) and (ii) shall be
subject to, and shall not be made other than in compliance with, the provisions
of Sections 3.01, 3.02 and 3.05.
(b) The restrictions on transfer set forth in this Agreement shall cease
to apply (i) to any particular Shares at such time as such Shares are sold
pursuant to a Public Offering or a Rule 144 Transaction and (ii) upon the
termination of this Agreement.
SECTION 3.04. Right of First Refusal. (a) If any Stockholder other than
----------------------
Holdings receives from a Third Party dealing at arm's length a bona fide offer
to purchase for cash, Cash Equivalents or Marketable Securities (an "Offer") any
-----
of the Oxy Shares owned or held by such Stockholder, and such Stockholder
intends to sell such Oxy Shares to such Third Party, such Stockholder (for
purposes of this Section 3.04, the "Prospective Seller") shall provide Holdings
------------------
written notice of such Offer (an "Offer Notice"). The Offer Notice shall
------------
identify the Third Party making the Offer, the number and class of Oxy Shares
with respect to which the Prospective Seller has such an Offer (the "Offered
-------
Shares"), the price per Offered Share at which a sale is proposed to be made,
- ------
determined in accordance with Section 3.04(g) ("Offer Price"), the form of
-----------
<PAGE>
31
consideration in which the Offer Price is proposed to be paid, and all other
material terms and conditions of the Offer.
(b) The receipt of an Offer Notice by Holdings from a Prospective Seller
(the date of such receipt being referred to herein as the "Offer Notice Date")
-----------------
shall constitute an offer by such Prospective Seller to sell to Holdings and any
designee or designees of Holdings ("Permitted Designees") the Offered Shares at
-------------------
the Offer Price in cash. Such offer shall be irrevocable during the Offer
Period (as hereinafter defined). Holdings and any Permitted Designees shall
have the right to accept such offer as to any or all of the Offered Shares by
giving a written notice of acceptance (the "Notice of Acceptance") to the
--------------------
Prospective Seller prior to the expiration of the Offer Period (Holdings or any
Permitted Designees so accepting such offer, an "Accepting Party"); provided,
--------------- --------
however, that Holdings and any Permitted Designees shall provide a single Notice
- -------
of Acceptance to the Prospective Seller and such Notice of Acceptance must
accept the offer as to all of the Offered Shares on the same terms and
conditions as the Offer (other than as expressly set forth herein). If Holdings
or any Permitted Designee so accepts the Prospective Seller's offer, such Person
will purchase for cash from the Prospective Seller, and the Prospective Seller
will sell to such Accepting Party, such number of Offered Shares as to which
such Accepting Party shall have accepted the Prospective Seller's offer (which
must total, as to all Accepting Parties, all of the Offered Shares). The price
per Offered Share to be paid by such Accepting Party shall be the Offer Price.
The Notice of Acceptance shall specify (i) each Accepting Party's acceptance of
the Prospective Seller's offer and (ii) the number of Offered Shares to be
purchased by each Accepting Party. "Offer Period" means (i) in the event the
------------
Third Party making the Offer is engaged in the refining business, the twenty
Business Day period commencing on the date the Offer Notice is received by
Holdings, or (ii) in all other cases, the ten Business Day period commencing on
the date the Offer Notice is received by Holdings.
(c) The consummation of such purchases by and sales to the Accepting
Parties all take place on such date, not later than 90 days after receipt of the
Offer Notice by Holdings (or such longer period as may be specified in the Offer
Notice), as the Accepting Parties and the Prospective Seller shall select. Upon
the consummation of such purchase and sale, the Prospective Seller shall (i)
deliver to the Accepting Party certificates evidencing the Offered Shares
purchased and sold duly endorsed in blank or accompanied by written instruments
of transfer in form satisfactory to such Accepting Party duly executed by the
Prospective Seller, and (ii) assign all its rights under this Agreement with
respect to the Offered Shares purchased and sold pursuant to an instrument of
assignment reasonably satisfactory to such Accepting Party.
(d) In the event that (i) Holdings shall have received an Offer Notice
from a Prospective Seller but the Prospective Seller shall not have received
from Holdings and Permitted Designees a Notice of Acceptance with respect to all
the Offered Shares prior to the expiration of the Offer Period or (ii) an
Accepting Party shall have given a Notice of Acceptance to the Prospective
Seller but such Accepting Party shall have failed to consummate, other than as a
result of the fault of the Prospective Seller, a purchase of the Offered Shares
with respect to which such Notice of Acceptance was given within 90 days after
receipt of the Offer Notice by Holdings (or such longer period as may be
specified in the Offer Notice), such Prospective Seller shall have the right
thereafter to make a sale of the Offered Shares so long as all the Offered
<PAGE>
32
Shares that are sold by the Prospective Seller (which number of Offered Shares
shall be not less than the number of Offered Shares specified in such Offer
Notice) are sold for cash, Cash Equivalents or Marketable Securities (i) within
180 days after the date of receipt of such Offer Notice by Holdings, (ii) at an
amount not less than the Minimum Sale Price (as hereinafter defined) and (iii)
to the Third Party that made the Offer. "Minimum Sale Price" means (x) if the
------------------
Prospective Seller's right sell the Offered Shares results from the event
described in clause (i) of the preceding sentence, (A) an amount equal to 97
percent of the Offer Price set forth in the Offer Notice if such sale is
consummated within 30 days after the expiration of the Offer Period or (B) an
amount equal to 95 percent of the Offer Price set forth in the Offer Notice if
such sale is consummated thereafter, or (y) if the Prospective Seller's right to
sell the Offered Shares results from the event described in clause (ii) of the
preceding sentence, an amount equal to 90 percent of the Offer Price set forth
in the Offer Notice.
(e) In the event (i) that Holdings shall have received an Offer Notice
from a Prospective Seller, (ii) the Prospective Seller shall not have received a
Notice of Acceptance for all the Offered Shares prior to the expiration of the
Offer Period and (iii) such Prospective Seller shall not have sold the remaining
Offered Shares before the expiration of the 180-day period in accordance with
paragraph (d) above, then such Prospective Seller shall not give another Offer
Notice for a period of 120 days after the last day of such 180-day period.
(f) Anything in this Section 3.04 or in Section 3.03(a) to the contrary
notwithstanding, the provisions of this Section 3.04 shall not be applicable to
Sales of Capital Stock described in clauses (i), (iii) and (iv) of Section
3.03(a).
(g) For the purpose of determining the Offer Price with respect to an
Offer that contemplates the payment of consideration in the form of Cash
Equivalents or Marketable Securities, the value of such Cash Equivalents or
Marketable Securities shall be determined as forth in this Section 3.04(g). The
value of Cash Equivalents shall be the fair market value of such Cash
Equivalents as of the Offer Notice Date as determined by a nationally recognized
investment banking firm selected by Holdings and reasonably acceptable to the
Prospective Seller. The value of Marketable Securities shall be, if such
securities are listed or admitted to trading on a national securities exchange,
the average of the last sale prices for such securities during the twenty
consecutive Trading Days preceding the Offer Notice Date, reported in the
principal consolidated transaction reporting system for securities listed on
principal national securities exchange on which such securities are listed or
admitted to trading or, if such securities are not listed or admitted to trading
on any national securities exchange, the average during the twenty consecutive
Trading Days preceding the Offer Notice Date of the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by NASDAQ or such other system then in use, or, if
on any such date such shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such shares selected by a majority of the
Directors. If no market maker is making a market in such securities at such
time, the fair value of such securities on the Offer Notice shall be determined
in good faith by a nationally recognized investment banking firm selected by
Holdings and reasonably acceptable to the Prospective Seller (the fees and
expenses of which shall be paid one-half by Holdings and one-
<PAGE>
33
half by the Prospective Seller). If such securities are not publicly held or not
so listed or traded, the value of such securities shall mean the fair value of
such securities as of the Offer Notice Date as determined in good faith by a
nationally recognized investment banking firm selected by the Company and
reasonably acceptable to the Prospective Seller (the fees and expenses of which
be paid one-half by the Company and one-half by the Prospective Seller), whose
determination shall be conclusive for all purposes. The term "Trading Day" shall
-----------
mean, if securities are listed or admitted to trading on any national securities
exchange, a day on which the principal national securities exchange on which
such shares are listed or admitted to trading is open for the transaction of
business or, if such shares are not so listed or admitted, a Business Day.
SECTION 3.05. Transferees to Execute Agreement. (a) Each Stockholder
--------------------------------
agrees that it will not, directly or indirectly, make any Sale of or create,
incur, assume or suffer to exist Encumbrance with respect to, any Shares
beneficially owned by such Stockholder unless, contemporaneously with or prior
to the consummation of any such Sale or the creation, incurrence, assumption or
existence of such Encumbrance, the Person to whom such is proposed to be made or
the Person in whose favor such Encumbrance is proposed to be created, incurred,
assumed or suffered to exist, in any case, (a "Prospective Transferee") executes
----------------------
and delivers to the Company its written agreement, in form and substance
reasonably satisfactory to the Company, whereby such Prospective Transferee (i)
confirms that, with respect to the Shares that are the subject of such Sale or
Encumbrance, it shall be deemed to be a Stockholder for purposes of this
Agreement and agrees to be bound by all the terms of this Agreement, and (ii)
represents and warrants that, upon the consummation of Sale or the creation,
incurrence, assumption or existence of such Encumbrance, such Agreement is a
legal, valid and binding obligation of such Prospective Transferee enforceable
against such Prospective Transferee in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Upon the execution and delivery by such Prospective Transferee of the agreement
referred to in the preceding sentence, such Prospective Transferee shall be
deemed a Stockholder for purposes of this Agreement and shall have the rights
and be subject to the obligations of a Stockholder under this Agreement, in each
case with respect to the Shares beneficially owned by such Prospective
Transferee or in respect of which such Encumbrance shall have been created,
incurred, assumed or suffered to exist.
(b) Anything in this Section 3.05 or in Section 3.03 to the contrary
notwithstanding, the provisions of this Section 3.05 will not be applicable to
any Sale of Shares pursuant to a Public Offering or a Rule 144 Transaction.
SECTION 3.06. Improper Sale or Encumbrance. Any attempt not in
----------------------------
compliance with Agreement to make any Sale of, or create, incur or assume any
Encumbrance with respect any Shares shall be null and void and of no force and
effect, the purported transferee will have no rights or privileges in or with
respect to the Company, and the Company shall give any effect in the Company's
stock records to such attempted Sale or Encumbrance.
<PAGE>
34
SECTION 3.07 Tag-Along Rights. i. So long as this Agreement shall
----------------
remain in effect and Holdings beneficially owns on a fully diluted basis an
aggregate number of shares of Common Stock not less than one-fourth (1/4) of the
shares of Common Stock owned by Holdings on August 19, 1999, with respect to any
proposed Transfer by Holdings (in such capacity, a "Transferring Stockholder")
------------------------
of Common Stock, other than a Transfer to any affiliate of Holdings or any
stockholder, partner or other equity owner of any such affiliate or Holdings or
(ii) pursuant to a Public Offering, the Transferring Stockholder shall have the
obligation, and Oxy and its Permitted Transferees shall have the right, to
require the proposed transferee to purchase from Oxy and its Permitted
Transferees (in such capacity, a "Tagging Stockholder") a number of the Oxy
-------------------
Shares and any additional Shares issued in connection with any Recapitalization
("Registrable Securities") up to the product (rounded up to the nearest whole
----------------------
number) of (i) the quotient determined by dividing (A) the aggregate number of
Registrable Securities owned by the Tagging Stockholder and sought by the
Tagging Stockholder sought to be included in the contemplated Transfer by (B)
the aggregate number of shares of Common Stock owned by the Transferring
Stockholder and the Tagging Stockholder to be included in the contemplated
Transfer, and (ii) the total number of shares of Common Stock proposed to be
directly or indirectly Transferred to the transferee in the contemplated
Transfer, and at the same price per share of Common Stock and upon the same
terms and conditions (including without limitation time of payment and form of
consideration) applicable to the Transferring Stockholder; provided that in
--------
order to be entitled to exercise its right to sell shares of Common Stock to the
proposed transferee pursuant to this Section 3.07, the Tagging Stockholder must
agree to make to the transferee the same representations, warranties, covenants,
indemnities and agreements that the Transferring Stockholder agrees to make in
connection with the proposed Transfer of the shares of Common Stock of the
Transferring Stockholder; and provided further, that all representations and
-------- -------
warranties shall be made by the Tagging Stockholder and the Transferring
Stockholder severally and not jointly and that the liability of the Transferring
Stockholder and the Tagging Stockholder (whether pursuant to a representation,
warranty, covenant, indemnification provision or agreement) for liabilities in
respect of the Company shall be evidenced in writings executed by them and the
transferee and shall be borne by each of them on a pro rata basis.
ii. The Transferring Stockholder shall give notice to the holders of the
Oxy Shares of each proposed Transfer giving rise to the rights of the Tagging
Stockholder set forth in the first sentence of Section 3.07(a) at least 15
business days prior to the proposed consummation of such Transfer, setting forth
the number of shares of Common Stock proposed to be so transferred, the name and
address of the proposed transferee, the proposed amount and form of
consideration and the other terms and conditions offered by the proposed
transferee, and a representation that the proposed transferee has been informed
of the tag-along rights provided for in this Section 3.07 and has agreed to
purchase shares of Common Stock in accordance with the terms hereof. The tag-
along rights provided by this Section 3.07 must be exercised by the Tagging
Stockholder within 5 business days following receipt of the notice required by
the preceding sentence, by delivery of a written notice to the Transferring
Stockholder indicating such Tagging Stockholder's desire to exercise its rights
and specifying the number of shares of Common Stock it desires to sell. The
Transferring Stockholder shall be entitled under this Section 3.07 to Transfer
to the proposed transferee the number of shares of Common Stock equal to the
<PAGE>
35
difference between the number referred to in clause (ii) of paragraph (a) above
and the aggregate number of shares of Common Stock set forth in the written
notice, if any, delivered by the Tagging Stockholder pursuant to the preceding
sentence (up to the maximum number of Registrable Securities beneficially owned
by such Tagging Stockholder required to be purchased by the proposed transferee
pursuant to the first sentence of Section 3.07(a)). If the proposed transferee
fails to purchase Registrable Securities from any Tagging Stockholder that has
properly exercised its tag-along rights under Section 3.07(a), then the
Transferring Stockholder shall not be permitted to make the proposed Transfer,
and any such attempted Transfer shall be void and of no effect, as provided in
Section 3.06 hereof.
iii. If the Tagging Stockholder exercises its rights under Section
3.07(a), the closing of the purchase of the Registrable Securities with respect
to which such rights have been exercised shall take place concurrently with the
closing of the sale of the Transferring Stockholder's Common Stock. At the
closing, the Tagging Stockholder shall deliver to the proposed transferee the
certificate or certificates representing the shares of Common Stock to be sold
pursuant to such sale by such Tagging Stockholder, duly endorsed for transfer,
against receipt of the purchase price thereof.
SECTION 3.08. Drag-Along Rights. So long as this Agreement shall remain
-----------------
in effect and Holdings beneficially owns on a fully diluted basis an aggregate
number of shares of Common Stock not less than one-fourth (1/4) of the Common
Stock owned by Holdings on August 19, 1999, if Holdings receives an offer from a
Third Party to purchase all, but not less than all, of the outstanding shares of
Common Stock owned by Holdings and such offer is accepted by Holdings, then the
holders of the Oxy Shares hereby agree that they will Transfer all Registrable
Securities beneficially owned by them to such Third Party upon the terms and
conditions of the offer (including without limitation time of payment and form
of consideration) applicable to Holdings, provided that the holders of the Oxy
--------
Shares must agree to make to the Third Party the same representations,
warranties, covenants, indemnities and agreements that Holdings agrees to make
in connection with the proposed Transfer; and provided further, that all
-------- -------
representations and warranties shall be made by the holders of the Oxy Shares
and Holdings severally and not jointly and that the liability of the holders of
the Oxy Shares and Holdings (whether pursuant to a representation, warranty,
covenant, indemnification provision or agreement) for liabilities in respect of
the Company shall be evidenced in writings executed by them and the Third Party
and shall be borne by each of them on a pro rata basis. At the closing of any
such Transfer, the holders of the Oxy Shares shall deliver to the Third Party
the certificate or certificates representing the shares of Common Stock to be
sold pursuant to such sale by such holder, duly endorsed for transfer, against
receipt of the purchase price thereof. The closing of the purchase of the
Common Stock with respect to which such rights have been exercised shall take
place concurrently with the closing of the sale of Holdings Common Stock.
ARTICLE IV
ADDITIONAL RIGHTS OF THE COMPANY
<PAGE>
36
SECTION 4.01 Right to Require Exchange. (a) If, at any time, the Board
-------------------------
determines, upon advice from its counsel, that it is no longer necessary for
Port Arthur Finance Corp. to be bankruptcy remote, the Company will so notify
the holders of the Oxy Shares. At any time after such notice, the holders of
the Oxy Shares may, at their election, and the Company may, by notice to the
holders of the Oxy Shares (the "Exchange Notice"), require the holders of the
---------------
Oxy Shares to, exchange (and such holders hereby agree to exchange), all of the
Oxy Shares as are then outstanding not fewer than thirty (30) nor more than
ninety (90) days after the date of the Exchange Notice for newly issued shares
of Class F Common Stock, par value $.01 per share, of Holdings (the "Exchange
--------
Shares") based on a valuation of the Oxy Shares at the Exchange Ratio (defined
- ------
below). The closing under this Section 4.01 shall take place at the offices of
the Company at 10:00 a.m. local time on a date not more than one hundred twenty
(120) days after the date the Exchange Notice is received by the holders of the
Oxy Shares as the Company shall specify by such notice, or at such other time
and place as the Company and the holders of a majority in interest of the Oxy
Shares may agree upon. At the closing, the holders of the Oxy Shares will
deliver to the Company, free and clear of all Liens and claims of third parties,
a certificate or certificates evidencing the Oxy Shares to be exchanged
(properly endorsed or accompanied by stock powers or assignments with
signature(s) guaranteed or similar appropriate documentation of authority to
transfer), and the Company will deliver to the holders of the Oxy Shares, free
and clear of all Liens and claims of third parties, a certificate or
certificates evidencing the Exchange Shares (properly endorsed or accompanied by
stock powers or assignments with signature(s) guaranteed or similar appropriate
documentation of authority to transfer).
(b) The exchange ratio shall be calculated to yield to the holders of the
Oxy Shares Exchange Shares that have a fair market value equivalent to the then
fair market value of the Oxy Shares being exchanged (the ratio in such exchange
being referred to as the "Exchange Ratio"). The procedure for determining the
--------------
relative values of the Oxy Shares, the Exchange Shares and the Exchange Ratio
will be as provided in this Section 4.01(b). Upon a request for an exchange,
Holdings will within 30 days propose an Exchange Ratio reflective of its
determination of relative values, based on the advice of an investment banking
or valuation firm. The holders of a majority in interest of the Oxy Shares will
have 20 days from the receipt of such proposed Exchange Ratio and valuations to
agree to such Exchange Ratio or negotiate with Holdings an alternative Exchange
Ratio. Absent such agreement, such holders will by the end of such 20 day
period propose an alternative Exchange Ratio based on their determination of
values, based on the advice of an investment banking or valuation firm. If
within seven days of the holders presenting such alternative Exchange Ratio and
values Holdings and such holders are not able to agree on the Exchange Ratio to
be used, they will jointly engage a third mutually agreed nationally recognized
investment banking or valuation firm whose mandate will be to select within 20
days one or the other of the two proposed Exchange Ratios, which will then be
the Exchange Ratio upon which the exchange will be consummated.
(c) The Exchange Shares (as well as the shares issuable upon exercise of
the Warrants) will constitute registrable shares entitled to the benefits of the
existing registration rights held by Oxy pursuant to the Holdings Stockholders'
Agreement.
<PAGE>
37
(d) Neither the Company nor Holdings shall avoid or seek to avoid the
observance or performance of any of the terms of this Section 4.01, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of any action as may be reasonably necessary or appropriate to protect
the rights of Oxy against impairment of Oxy's rights hereunder.
(e) Holdings shall at all times have authorized a sufficient number of
shares of Class F Common Stock, par value $.01 per share, of Holdings so that
Holdings will be able to deliver the Exchange Shares to Oxy in accordance with
the terms of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
SECTION 5.01. Representations and Warranties of Each Party. Each Party
--------------------------------------------
hereby makes the following representations and warranties to the other Parties:
(a) Organization and Qualification. Such entity is a corporation or a
------------------------------
general partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization.
(b) Authority. Such entity has all requisite corporate or partnership
---------
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by such entity and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate or partnership action and no
other proceedings on the part of such entity are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by such entity
and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of such
entity, enforceable against such entity in accordance with its terms.
(c) No Conflict; Required Filings and Consents. (i) The execution of and
------------------------------------------
delivery of this Agreement by such entity do not, and the performance this
Agreement by such entity will not, (A) conflict with or violate the
Certificate of Incorporation, By-Laws or similar organizational documents of
such entity, (B) conflict with or violate any Laws applicable to such entity
or by which any of its properties or assets is bound or (C) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of an Encumbrance on any of the properties or assets of such entity
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which such
entity is a party or by which such entity or any of its properties is bound,
except in any case for such
<PAGE>
38
conflicts, violations, breaches, defaults or other effects which would not
prevent or materially delay the performance by such entity of its obligations
hereunder.
(ii) The execution and delivery of this Agreement by such entity do not,
and the performance of this Agreement by such entity will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 6.01):
(a) If to the Company:
Sabine River Holding Corp.
Port Arthur Refinery
1801 South Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
Telecopy: (409) 985-1444
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
With copies to:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Richard A. Keffer
Telecopy: (314) 854-1455
(b) If to Oxy:
<PAGE>
39
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, California 90024
Telecopier No.: (310) 443-6812
Attention: Stephen I. Chazen
Executive Vice President, Corporate Development
With a copy to:
Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, California 90024
Telecopier No.: (310) 443-6333
Attention: General Counsel
(c) If to Holdings:
Clark Refining Holdings Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Telecopy: (314) 854-1455
Attention: Richard A. Keffer
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 455-2502
Attention: Wilson S. Neely
SECTION 6.02. Public Announcements. The Parties shall consult with each
--------------------
other before issuing any press release or otherwise making any public statements
with respect to this Agreement and, except as may be required by Law or any
listing agreement with any securities exchange, shall not issue any such press
release or make any such public statement without the consent of the other
parties.
SECTION 6.03. Headings. The descriptive headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 6.04. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
<PAGE>
40
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 6.05. Entire Agreement. This Agreement constitutes the entire
----------------
agreement among the Parties and supersedes all prior agreements and
undertakings, both written and oral, among the Parties, or any of them, with
respect to the subject matter hereof.
SECTION 6.06. Assignment. Except as otherwise provided herein, this
----------
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective successors and permitted assigns; provided, however, that
-------- -------
this Agreement shall not inure to the benefit of any Prospective Transferee
unless such Prospective Transferee shall have complied with the terms of Section
than a transferee that has complied with the requirements of Section 3.05 in all
respects.
SECTION 6.07. Parties in Interest. Nothing in this Agreement, express or
-------------------
implied, is intended to or shall confer upon any Person other than the Parties
and their respective successors and assigns any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 6.08. Amendment. (a) Any term of this Agreement may be amended
---------
and the observance of any such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Stockholders.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive any rights or
remedies provided by law.
SECTION 6.09. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York. All actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined in a New York state or federal court sitting in the City of New York,
and the Parties hereby irrevocably submit to the exclusive jurisdiction of such
courts in any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action proceeding.
SECTION 6.10. Counterparts. This Agreement may be executed (by original
------------
or telecopied signature) in one or more counterparts, and by the different
Parties in separate counterparts, each of which when so executed shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement.
<PAGE>
41
SECTION 6.11. Specific Performance. The Parties agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
SABINE RIVER HOLDING CORP.
By: __________________________________________
Name: Maura J. Clark
Title: Executive Vice President and Chief
Financial Officer
OCCIDENTAL PETROLEUM CORPORATION
By: __________________________________________
Name: Stephen I. Chazen
Title: Executive Vice President --
Corporate Development and Chief
Financial Officer
CLARK REFINING HOLDINGS INC.
By: __________________________________________
Name: Maura J. Clark
Title: Executive Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT B
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT OR LAWS AND THE
RULES AND REGULATIONS THEREUNDER. IN ADDITION, THIS WARRANT, AND THE WARRANT
SHARES TRANSFERABLE UPON THE EXERCISE HEREOF, ARE SUBJECT TO THE TERMS OF THE
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 3, 1997
BETWEEN CLARK USA, INC. AND OCCIDENTAL C.O.B. PARTNERS.
August 4, 1999
Warrant to Purchase 1,938,780.36 Shares
of Common Stock, $.01 par value,
of Clark Refining Holdings Inc., a Delaware corporation
-------------------------------------------------------
This certifies that Blackstone Capital Partners III Merchant Banking Fund
L.P., a Delaware limited partnership ("Blackstone"; and together with its
----------
successors and assigns (the "Holder")), is entitled to purchase from Clark
------
Refining Holdings Inc., a Delaware corporation ("Issuer"), an aggregate of
------
1,938,780.36 shares of Common Stock, $.01 par value (the "Common Stock"), of
------------
Issuer, at a per share price equal to U.S. $0.01 (as adjusted from time to time
as provided in Section 3 hereof, the "Exercise Price"), at any time or from time
--------------
to time after the date hereof.
As used in this Warrant, the term "Stockholders Agreement" means the Second
----------------------
Amended and Restated Stockholders Agreement dated as of November 3, 1997 between
Clark USA, Inc. and Occidental C.O.B. Partners.
Certain terms used in this Warrant are defined in Section 11 hereof.
SECTION 1. Exercise of Warrant.
-------------------
The rights represented by this Warrant may be exercised by the Holder
hereof, in whole or in part at any time or from time to time. Such exercise
shall be made by delivering to Issuer at its office at 8182 Maryland Avenue, St.
Louis, Missouri 63105 (or at such other office of Issuer as it may designate by
notice in writing to the Holder at its office at 345 Park Avenue, 31/st/ Floor,
New York, New York 10154) the following three items:
<PAGE>
(i) a written notice executed by the Holder (or its authorized
representative) electing to exercise all or any portion of this Warrant, and
if the Holder is exercising this Warrant in part, identifying the number of
Warrant Shares to be acquired, such notice to be substantially in the form of
the Notice of Exercise attached hereto,
(ii) this Warrant, and
(iiI) payment to Issuer of the Exercise Price for each share being
purchased from it by delivery of cash, wire transfer or check.
Upon any exercise of this Warrant, if the Warrant Shares are to be transferred
to a Person other than the Holder (which transfer shall be subject in all
respects to the Stockholders Agreement), the Notice of Exercise shall also state
the name of the Person to whom the certificates for the Warrant Shares are to be
transferred, and if the number of Warrant Shares to be transferred does not
include all the Warrant Shares purchasable hereunder, it shall also state the
name of the Person (which Person must be Holder or an Affiliate thereof) to whom
a new Warrant for the unexercised portion of the rights hereunder is to be
delivered. In the event of any exercise of the rights represented by this
Warrant, Issuer shall deliver within a reasonable period of time, not exceeding
ten Business Days, after such exercise a certificate or certificates
representing the Warrant Shares to the Person entitled to receive the same, such
number of Warrant Shares to be transferred upon such exercise, and shall deliver
to the Person entitled to receive the same, within a reasonable time, not
exceeding ten Business Days, after the rights represented by this Warrant shall
have been so exercised, a new Warrant representing the number of Warrant Shares,
if any, with respect to which this Warrant shall not then have been exercised.
The Person in whose name any certificate for Warrant Shares is transferred upon
exercise of this Warrant shall for all purposes be deemed to have become the
Holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate. The Holder shall pay all expenses, transfer
taxes and other charges payable in connection with the preparation and delivery
of certificates for the Warrant Shares and new Warrants for any unexercised
portion.
SECTION 2. Covenants of Issuer. Issuer covenants and agrees that:
-------------------
(a) Notwithstanding any other provision hereof, if the exercise of any
portion of this Warrant is to be made in connection with a public offering of
the Securities of Issuer or sale of effective voting control of Issuer, the
exercise of any portion of this Warrant may, at the election of the Holder, be
conditioned upon the consummation of the public offering or sale in which case
such exercise shall not be deemed to be effective until the consummation of such
transaction.
(b) Issuer shall not avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be reasonably necessary or appropriate to protect the rights of the Holder
hereof against impairment of the Holder's rights hereunder.
44
<PAGE>
(c) Issuer or its Affiliates shall at all times have authorized a
sufficient number of shares of Common Stock so that Issuer or its Affiliates
will be able to deliver to the Holder the number of Warrant Shares obtainable
upon exercise of this Warrant.
SECTION 3. Adjustment of Number of Shares and Exercise Price. In order
-------------------------------------------------
to prevent dilution or avoidance of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 3, and the number of Warrant Shares obtainable upon exercise of
this Warrant shall be subject to adjustment from time to time as provided in
this Section 3.
(a) Subdivision or Combination of Common Stock. If Issuer at any time
------------------------------------------
subdivides (by any stock split, stock dividend or other distribution payable in
shares of Common Stock, recapitalization or otherwise) the outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately increased. If Issuer at any time combines (by reverse stock
split or otherwise) the outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of Warrant Shares obtainable
upon exercise of this Warrant shall be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
recapitalization (other than a subdivision or combination of Common Stock
described in Section 3(a) hereof), reorganization, reclassification,
consolidation, merger, sale of all or substantially all of Issuer's assets
(determined on a consolidated basis) to another Person or other transaction
which is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, cash, securities
or assets with respect to or in exchange for Common Stock is referred to herein
as an "Organic Change." In the event of any Organic Change, the Holder shall
--------------
thereafter have the right to acquire and receive in lieu of or addition to (as
the case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon the exercise of this Warrant, such shares of stock, cash,
securities or assets as such Holder would have received in connection with such
Organic Change if such Holder had exercised such Warrant immediately prior to
such Organic Change.
(c) Notices. Issuer shall:
-------
(i) promptly upon any adjustment of the Exercise Price, give written
notice thereof to the Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment;
(ii) give written notice to the Holder promptly in the event that
Issuer proposes to take any action or of the date on which Issuer closes its
books or takes a record (A) with respect to any dividend or distribution upon
the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation; and
45
<PAGE>
(iii) also give written notice to the Holder of the date on which any
Organic Change, dissolution or liquidation shall take place.
SECTION 4. Dividends; Purchase Rights.
--------------------------
(a) If Issuer declares or pays a dividend upon the Common Stock payable
(i) in cash out of earnings or earned surplus (determined in accordance with
generally accepted accounting principles, consistently applied) (a "Cash
----
Dividend") or (ii) otherwise than in cash out of earnings or earned surplus
- --------
(determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidating Dividend"), then Issuer shall pay to the Holder of this
--------------------
Warrant at the time of payment thereof the Liquidating Dividend or Cash
Dividend, as the case may be, which would have been paid to such Holder on the
Warrant Shares had this Warrant been fully exercised immediately prior to the
date on which a record is taken for such Liquidating Dividend or Cash Dividend,
as the case may be, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
(b) If at any time Issuer grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the "Purchase
--------
Rights"), then the Holder of this Warrant shall be entitled to acquire, upon the
- ------
terms applicable to such Purchase Rights, the aggregate number or amount of such
stock, warrants, securities or other property which such Holder could have
acquired if such Holder had held the Warrant Shares acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
SECTION 5. No Voting Rights. The Holder shall not be entitled to any
----------------
voting rights as a stockholder of Issuer by reason of the rights granted under
this Warrant until the Holder shall purchase shares of Common Stock hereunder.
SECTION 6. Exchange and Transfer of Warrant.
--------------------------------
(a) Exchange of Warrant. The Holder may exchange this Warrant for another
-------------------
Warrant or Warrants of like kind and tenor representing in the aggregate the
right to purchase the same number of Warrant Shares which could be purchased
pursuant to this Warrant. In order to effect such exchange, the Holder shall
deliver this Warrant to Issuer accompanied by a written request signed by the
Holder specifying the number and denominations of Warrants to be issued in such
exchange and the names in which such Warrants are to be issued. As soon as
reasonably practicable after receipt of such a request, Issuer shall execute and
deliver to the Holder the Warrant or Warrants to be issued in such exchange.
(b) Transfer of Warrant. This Warrant may be transferred by the Holder
-------------------
hereof by delivering this Warrant to Issuer accompanied by a properly completed
Assignment Form and an executed copy of an agreement to become a party to, and
be bound by, the Stockholders Agreement, duly executed by such transferee, and
any other documents reasonably requested by
46
<PAGE>
Issuer. As soon as reasonably practicable after receipt of such Assignment Form,
Issuer shall execute and deliver to the Holder a new Warrant or Warrants of like
kind and tenor representing in the aggregate the right to purchase the same
number of Warrant Shares which could be purchased pursuant to the Warrant being
transferred. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be delivered
to and shall remain with Issuer. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited and remain with Issuer in its discretion.
SECTION 7. Loss, Theft, Destruction of Warrant Certificates. Upon
------------------------------------------------
receipt of evidence satisfactory to Issuer of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security satisfactory
to Issuer (it being understood and agreed that if the Holder of such Warrant is
Blackstone or one of its Affiliates, then a written agreement of indemnity given
by such Person alone shall be satisfactory to Issuer and no further security
shall be required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, Issuer will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant Shares.
SECTION 8. Successors. All the provisions of this Warrant by or for the
----------
benefit of the Issuer or the Holder shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 9. Headings. The headings of sections of this Warrant have been
--------
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 10. Remedies; Amendment and Waiver.
------------------------------
(a) No failure or delay of any party in exercising any power or right
hereunder shall operate as a waiver thereof (except where a specific time period
for the exercise of such power or right is expressly set forth herein), nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on any party in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances.
The rights and remedies of the Holder or the Issuer are cumulative and not
exclusive of any rights or remedies which it would otherwise have.
(b) This Warrant may only be amended or modified by a written instrument
signed by the Holder and the Issuer. The provisions of this Warrant may be
waived only by a writing signed by the party to be charged with such waiver.
SECTION 11. Severability. Whenever possible, each provision of this
------------
Warrant will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any Applicable Law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not
47
<PAGE>
affect any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
SECTION 12. Definitions; Interpretation.
---------------------------
(a) Definitions. The following terms have meanings set forth below:
-----------
(i) "Affiliate" of a specified Person means a Person who, directly
---------
or indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, such specified Person.
(ii) "Applicable Law" means, with respect to any Person, property,
--------------
transaction or event, all present or future applicable laws, statutes,
regulations, treaties, judgments and decrees and all applicable official
directives, rules, consents, approvals, authorizations, orders, guidelines
and policies of any Governmental Authority or Persons having authority over
or applicable to such Person or any of its assets or properties.
(iii) "Business Day" means any day that is not a Saturday, a Sunday
------------
or other day on which banks are required or authorized by law to be closed in
the City of New York.
(iv) "control" (including the terms "controlled by" and "under
------- ------------- -----
common control with"), with respect to the relationship between or among two
-------------------
or more Persons, means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities,
as trustee or executor, by contract or otherwise.
(v) "Convertible Securities" means any stock or other securities
----------------------
convertible into or exchangeable for Common Stock.
(vi) "Governmental Authority" means any administrative, governmental
----------------------
or regulatory authority or body or any court or tribunal, domestic or
foreign.
(vii) "Options" means any rights or options to subscribe for or to
-------
purchase Common Stock.
(viii) "Person" means an individual, partnership, corporation
------
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
(ix) "Securities" means, with respect to any Person, such Person's
----------
capital stock or any options, warrants or other Securities which are directly
or indirectly convertible into, or exercisable or exchangeable for, such
Person's capital stock (whether or not such derivative Securities are issued
by Issuer).
48
<PAGE>
(x) "Warrant Shares" means the shares of Common Stock issued or
--------------
issuable upon exercise of this Warrant; provided, however, that if there is a
-------- -------
change such that the securities issuable upon exercise of this Warrant are
issued by an entity other than Issuer or there is a change in the class of
securities so issuable, then the term "Warrant Shares" shall mean the
securities issuable upon exercise of this Warrant.
(b) Terms Generally. The definitions contained in this Warrant shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation."
(c) Currency. Unless otherwise specified herein, all statements or
--------
references to dollar amounts or $ set forth herein shall refer to United States
Dollars.
SECTION 13. Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
INTERPRETATION AND VALIDITY OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14. Notices. All notices, demands and requests of any kind to be
-------
delivered to any party hereto in connection with this Warrant shall be in
writing, (a) delivered personally, (b) sent by internationally-recognized
overnight courier, (c) sent by first class, registered or certified mail, return
receipt requested or (d) by telecopy with confirmed receipt (with hard copy to
follow). Any notice, demand or request so delivered shall constitute valid
notice under this Warrant and shall be deemed to have been received (i) on the
day of actual delivery in the case of personal delivery, (ii) on the next
Business Day after the date when sent, in the case of delivery by
internationally-recognized overnight courier, (iii) on the fifth Business Day
after the date of deposit in the U.S. mail in the case of mailing or (iv) one
business day after being sent by telecopy with confirmed receipt (with hard copy
to follow). The mailing addresses of Issuer and Holder are set forth in Section
1 hereof. Any party hereto may, from time to time by notice in writing served
upon the other as aforesaid, designate a different mailing address or a
different Person to which all such notices, demands or requests thereafter are
to be addressed.
SECTION 15. Conflicting Agreements. Issuer shall not enter into any
----------------------
agreements or arrangements of any kind with any Person with respect to the
Warrant Shares containing terms inconsistent with the provisions of this
Warrant, including agreements or arrangements with respect to the acquisition or
disposition of securities of Issuer in a manner which is inconsistent with this
Warrant.
IN WITNESS WHEREOF, Issuer has caused this Warrant to be executed by its
duly authorized officers and this Warrant to be dated as of the date first set
forth above.
49
<PAGE>
CLARK REFINING HOLDINGS INC.
By:
----------------------------------
Name: Maura J. Clark
Title: Executive Vice President
and Chief Financial Officer
ACCEPTED:
BLACKSTONE CAPITAL PARTNERS III
MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates III,
L.L.C., its general partner
By: _____________________________________
Name:
Title:
50
<PAGE>
FORM OF EXERCISE
[To be signed upon exercise of Warrant]
To CLARK REFINING HOLDINGS INC., a Delaware corporation:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________ shares of Common Stock AND herewith tenders
payment of [identify amount of payment] in full payment of the purchase price
for such shares, and requests that such shares be transferred to, and the
certificates for such shares be issued in the name of, and be delivered to,
_________________, whose address is ___________________________.
Dated: ____________________ ______________________________________
(Signature)
(Address)
<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________, all of the rights represented by the within
Warrant to purchase ___ shares of the Common Stock to which the within Warrant
relates.
Dated: ____________________
________________________________
(Signature)
(Address of Assignor)
Signed in the presence of:
Address of Assignee:
<PAGE>
EXHIBIT C
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT OR LAWS AND THE
RULES AND REGULATIONS THEREUNDER. IN ADDITION, THIS WARRANT, AND THE WARRANT
SHARES TRANSFERABLE UPON THE EXERCISE HEREOF, ARE SUBJECT TO THE TERMS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 4, 1999 AMONG SABINE RIVER HOLDING
CORP., CLARK REFINING HOLDINGS INC. AND OCCIDENTAL PETROLEUM CORPORATION.
August 4, 1999
Warrant to Purchase 30,000 Shares
of Common Stock, $.01 par value,
of Sabine River Holding Corp., a Delaware corporation
-----------------------------------------------------
This certifies that Occidental Petroleum Corporation, a Delaware
corporation ("Oxy"; and together with its successors and assigns (the
"Holder")), is entitled to purchase from Sabine River Holding Corp., a Delaware
------
corporation ("Issuer"), an aggregate of 30,000 shares of Common Stock, $.01 par
------
value (the "Common Stock"), of Issuer, at a per share price equal to U.S. $0.09
------------
(as adjusted from time to time as provided in Section 3 hereof, the "Exercise
--------
Price"), at any time or from time to time after the date hereof.
- -----
As used in this Warrant, the term "Stockholders Agreement" means the
----------------------
Stockholders Agreement dated as of August 4, 1999 among Issuer, Holder and Clark
Refining Holdings Inc., a Delaware corporation ("Clark Holdings").
--------------
Certain terms used in this Warrant are defined in Section 11 hereof.
SECTION 1. Exercise of Warrant.
-------------------
The rights represented by this Warrant may be exercised by the Holder
hereof, in whole or in part at any time or from time to time. Such exercise
shall be made by delivering to Issuer at its office at 8182 Maryland Avenue, St.
Louis, Missouri 63105 (or at such other office of Issuer as it may designate by
notice in writing to the Holder at its office at 10889 Wilshire Boulevard, Los
Angeles, California 90024) the following three items:
<PAGE>
(i) a written notice executed by the Holder (or its authorized
representative) electing to exercise all or any portion of this Warrant,
and if the Holder is exercising this Warrant in part, identifying the
number of Warrant Shares to be acquired, such notice to be substantially in
the form of the Notice of Exercise attached hereto,
(ii) this Warrant, and
(iii) payment to Issuer of the Exercise Price for each share being
purchased from it by delivery of cash, wire transfer or check.
Upon any exercise of this Warrant, if the Warrant Shares are to be transferred
to a Person other than the Holder (which transfer shall be subject in all
respects to the Stockholders Agreement), the Notice of Exercise shall also state
the name of the Person to whom the certificates for the Warrant Shares are to be
transferred, and if the number of Warrant Shares to be transferred does not
include all the Warrant Shares purchasable hereunder, it shall also state the
name of the Person (which Person must be Holder or an Affiliate thereof) to whom
a new Warrant for the unexercised portion of the rights hereunder is to be
delivered. In the event of any exercise of the rights represented by this
Warrant, Issuer shall deliver within a reasonable period of time, not exceeding
ten Business Days, after such exercise a certificate or certificates (with any
legends required by Section 3.2 of the Stockholders Agreement affixed thereto)
representing the Warrant Shares to the Person entitled to receive the same
(which Warrant Shares shall be subject, in all respects, to the Stockholders
Agreement), such number of Warrant Shares to be transferred upon such exercise,
and shall deliver to the Person entitled to receive the same, within a
reasonable time, not exceeding ten Business Days, after the rights represented
by this Warrant shall have been so exercised, a new Warrant representing the
number of Warrant Shares, if any, with respect to which this Warrant shall not
then have been exercised. The Person in whose name any certificate for Warrant
Shares is transferred upon exercise of this Warrant shall for all purposes be
deemed to have become the Holder of record of such shares on the date on which
this Warrant was surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such certificate. The Holder shall pay
all expenses, transfer taxes and other charges payable in connection with the
preparation and delivery of certificates for the Warrant Shares and new Warrants
for any unexercised portion.
SECTION 2. Covenants of Issuer. Issuer covenants and agrees that:
-------------------
(a) Notwithstanding any other provision hereof, if the exercise of
any portion of this Warrant is to be made in connection with a public offering
of the Securities of Issuer or sale of effective voting control of Issuer, the
exercise of any portion of this Warrant may, at the election of the Holder, be
conditioned upon the consummation of the public offering or sale in which case
such exercise shall not be deemed to be effective until the consummation of such
transaction.
54
<PAGE>
(b) Issuer shall not avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be reasonably necessary or appropriate to protect the rights of
the Holder hereof against impairment of the Holder's rights hereunder.
(c) Issuer or its Affiliates shall at all times have authorized a
sufficient number of shares of Common Stock so that Issuer or its Affiliates
will be able to deliver to the Holder the number of Warrant Shares obtainable
upon exercise of this Warrant.
SECTION 3. Adjustment of Number of Shares and Exercise Price. In
-------------------------------------------------
order to prevent dilution or avoidance of the rights granted under this Warrant,
the Exercise Price shall be subject to adjustment from time to time as provided
in this Section 3, and the number of Warrant Shares obtainable upon exercise of
this Warrant shall be subject to adjustment from time to time as provided in
this Section 3.
(a) Subdivision or Combination of Common Stock. If Issuer at any time
------------------------------------------
subdivides (by any stock split, stock dividend or other distribution payable in
shares of Common Stock, recapitalization or otherwise) the outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately increased. If Issuer at any time combines (by reverse stock
split or otherwise) the outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of Warrant Shares obtainable
upon exercise of this Warrant shall be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
Any recapitalization (other than a subdivision or combination of Common Stock
described in Section 3(a) hereof), reorganization, reclassification,
consolidation, merger, sale of all or substantially all of Issuer's assets
(determined on a consolidated basis) to another Person or other transaction
which is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, cash, securities
or assets with respect to or in exchange for Common Stock is referred to herein
as an "Organic Change." In the event of any Organic Change, the Holder shall
--------------
thereafter have the right to acquire and receive in lieu of or addition to (as
the case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon the exercise of this Warrant, such shares of stock, cash,
securities or assets as such Holder would have received in connection with such
Organic Change if such Holder had exercised such Warrant immediately prior to
such Organic Change.
(c) Notices. Issuer shall:
-------
55
<PAGE>
(i) promptly upon any adjustment of the Exercise Price, give
written notice thereof to the Holder, setting forth in reasonable detail
and certifying the calculation of such adjustment;
(ii) give written notice to the Holder promptly in the event
that Issuer proposes to take any action or of the date on which Issuer
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights
to vote with respect to any Organic Change, dissolution or liquidation; and
(iii) also give written notice to the Holder of the date on which
any Organic Change, dissolution or liquidation shall take place.
SECTION 4. Dividends; Purchase Rights.
--------------------------
(a) If Issuer declares or pays a dividend upon the Common Stock
payable (i) in cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles, consistently applied) (a "Cash
----
Dividend") or (ii) otherwise than in cash out of earnings or earned surplus
- --------
(determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidating Dividend"), then Issuer shall pay to the Holder of this
--------------------
Warrant at the time of payment thereof the Liquidating Dividend or Cash
Dividend, as the case may be, which would have been paid to such Holder on the
Warrant Shares had this Warrant been fully exercised immediately prior to the
date on which a record is taken for such Liquidating Dividend or Cash Dividend,
as the case may be, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
(b) If at any time Issuer grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then the Holder of this Warrant shall be entitled to
---------------
acquire, upon the terms applicable to such Purchase Rights, the aggregate number
or amount of such stock, warrants, securities or other property which such
Holder could have acquired if such Holder had held the Warrant Shares acquirable
upon complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights.
SECTION 5. No Voting Rights. The Holder shall not be entitled to any
----------------
voting rights as a stockholder of Issuer by reason of the rights granted under
this Warrant until the Holder shall purchase shares of Common Stock hereunder.
SECTION 6. Exchange and Transfer of Warrant.
--------------------------------
56
<PAGE>
(a) Exchange of Warrant. The Holder may exchange this Warrant for
-------------------
another Warrant or Warrants of like kind and tenor representing in the aggregate
the right to purchase the same number of Warrant Shares which could be purchased
pursuant to this Warrant. In order to effect such exchange, the Holder shall
deliver this Warrant to Issuer accompanied by a written request signed by the
Holder specifying the number and denominations of Warrants to be issued in such
exchange and the names in which such Warrants are to be issued. As soon as
reasonably practicable after receipt of such a request, Issuer shall execute and
deliver to the Holder the Warrant or Warrants to be issued in such exchange.
(b) Transfer of Warrant. This Warrant may be transferred by the
-------------------
Holder hereof (but only with the prior written consent of Issuer if the
transferee is not an Affiliate of Holder) by delivering this Warrant to Issuer
accompanied by a properly completed Assignment Form and an executed copy of an
agreement to become a party to, and be bound by, the Stockholders Agreement,
duly executed by such transferee, and any other documents reasonably requested
by Issuer. As soon as reasonably practicable after receipt of such Assignment
Form, Issuer shall execute and deliver to the Holder a new Warrant or Warrants
of like kind and tenor representing in the aggregate the right to purchase the
same number of Warrant Shares which could be purchased pursuant to the Warrant
being transferred. In all cases of transfer by an attorney, the original power
of attorney, duly approved, or a copy thereof, duly certified, shall be
delivered to and shall remain with Issuer. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited and remain with Issuer in its discretion.
SECTION 7. Loss, Theft, Destruction of Warrant Certificates. Upon
------------------------------------------------
receipt of evidence satisfactory to Issuer of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security satisfactory
to Issuer (it being understood and agreed that if the Holder of such Warrant is
Oxy or one of its Affiliates, then a written agreement of indemnity given by
such Person alone shall be satisfactory to Issuer and no further security shall
be required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, Issuer will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant Shares.
SECTION 8. Successors. All the provisions of this Warrant by or for
----------
the benefit of the Issuer or the Holder shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 9. Headings. The headings of sections of this Warrant have
--------
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 10. Remedies; Amendment and Waiver.
------------------------------
57
<PAGE>
(a) No failure or delay of any party in exercising any power or right
hereunder shall operate as a waiver thereof (except where a specific time period
for the exercise of such power or right is expressly set forth herein), nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on any party in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances.
The rights and remedies of the Holder or the Issuer are cumulative and not
exclusive of any rights or remedies which it would otherwise have.
(b) This Warrant may only be amended or modified by a written
instrument signed by the Holder and the Issuer. The provisions of this Warrant
may be waived only by a writing signed by the party to be charged with such
waiver.
SECTION 11. Severability. Whenever possible, each provision of this
------------
Warrant will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any Applicable Law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
SECTION 12. Definitions; Interpretation.
---------------------------
(a) Definitions. The following terms have meanings set forth below:
-----------
(i) "Affiliate" of a specified Person means a Person who,
---------
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
(ii) "Applicable Law" means, with respect to any Person,
--------------
property, transaction or event, all present or future applicable laws,
statutes, regulations, treaties, judgments and decrees and all applicable
official directives, rules, consents, approvals, authorizations, orders,
guidelines and policies of any Governmental Authority or Persons having
authority over or applicable to such Person or any of its assets or
properties.
(iii) "Business Day" means any day that is not a Saturday, a
------------
Sunday or other day on which banks are required or authorized by law to be
closed in the City of New York.
(iv) "control" (including the terms "controlled by" and "under
------- ------------- -----
common control with"), with respect to the relationship between or among
-------------------
two or more Persons, means the
58
<PAGE>
possession, directly or indirectly or as trustee or executor, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor,
by contract or otherwise.
(v) "Convertible Securities" means any stock or other
----------------------
securities convertible into or exchangeable for Common Stock.
(vi) "Governmental Authority" means any administrative,
----------------------
governmental or regulatory authority or body or any court or tribunal,
domestic or foreign.
(vii) "Options" means any rights or options to subscribe for or
-------
to purchase Common Stock.
(viii) "Person" means an individual, partnership, corporation
------
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.
(ix) "Securities" means, with respect to any Person, such
----------
Person's capital stock or any options, warrants or other Securities which
are directly or indirectly convertible into, or exercisable or exchangeable
for, such Person's capital stock (whether or not such derivative Securities
are issued by Issuer).
(x) "Warrant Shares" means the shares of Common Stock issued
--------------
or issuable upon exercise of this Warrant; provided, however, that if there
-------- -------
is a change such that the securities issuable upon exercise of this Warrant
are issued by an entity other than Issuer or there is a change in the class
of securities so issuable, then the term "Warrant Shares" shall mean the
securities issuable upon exercise of this Warrant.
(b) Terms Generally. The definitions contained in this Warrant shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation."
(c) Currency. Unless otherwise specified herein, all statements or
--------
references to dollar amounts or $ set forth herein shall refer to United States
Dollars.
SECTION 51. Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
INTERPRETATION AND VALIDITY OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE
OF NEW YORK
59
<PAGE>
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 13. Notices. All notices, demands and requests of any kind to
-------
be delivered to any party hereto in connection with this Warrant shall be in
writing, (a) delivered personally, (b) sent by internationally-recognized
overnight courier, (c) sent by first class, registered or certified mail, return
receipt requested or (d) by telecopy with confirmed receipt (with hard copy to
follow). Any notice, demand or request so delivered shall constitute valid
notice under this Warrant and shall be deemed to have been received (i) on the
day of actual delivery in the case of personal delivery, (ii) on the next
Business Day after the date when sent, in the case of delivery by
internationally-recognized overnight courier, (iii) on the fifth Business Day
after the date of deposit in the U.S. mail in the case of mailing or (iv) one
business day after being sent by telecopy with confirmed receipt (with hard copy
to follow). The mailing addresses of Issuer and Holder are set forth in Section
1 hereof. Any party hereto may, from time to time by notice in writing served
upon the other as aforesaid, designate a different mailing address or a
different Person to which all such notices, demands or requests thereafter are
to be addressed.
SECTION 14. Conflicting Agreements. Issuer shall not enter into any
----------------------
agreements or arrangements of any kind with any Person with respect to the
Warrant Shares containing terms inconsistent with the provisions of this
Warrant, including agreements or arrangements with respect to the acquisition or
disposition of securities of Issuer in a manner which is inconsistent with this
Warrant.
IN WITNESS WHEREOF, Issuer has caused this Warrant to be executed by
its duly authorized officers and this Warrant to be dated as of the date first
set forth above.
SABINE RIVER HOLDING CORP.
By:_________________________________________
Name: Maura J. Clark
Title: Executive Vice President and Chief
Financial Officer
ACCEPTED:
OCCIDENTAL PETROLEUM
CORPORATION
60
<PAGE>
By: _________________________________________
Name: Stephen I. Chazen
Title: Executive Vice President --
Corporate Development and Chief
Financial Officer
61
<PAGE>
FORM OF EXERCISE
[To be signed upon exercise of Warrant]
To SABINE RIVER HOLDING CORP., a Delaware corporation:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________ shares of Common Stock AND herewith tenders
payment of [identify amount of payment] in full payment of the purchase price
for such shares, and requests that such shares be transferred to, and the
certificates for such shares be issued in the name of, and be delivered to,
_________________, whose address is ___________________________.
Dated:____________________ ______________________________________
(Signature)
(Address)
<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________, all of the rights represented by the within
Warrant to purchase ___ shares of the Common Stock to which the within Warrant
relates.
Dated: ____________________
_________________________________________
(Signature)
(Address of Assignor)
Signed in the presence of:
Address of Assignee:
<PAGE>
Exhibit 10.03
EXECUTION COPY
================================================================================
BANK SENIOR LOAN AGREEMENT
among
PORT ARTHUR FINANCE CORP.,
as Borrower,
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.
as General Partner of the Partnership and Guarantor,
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership and Guarantor,
THE BANK SENIOR LENDERS PARTY HERETO,
and
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for the Bank Senior Lenders,
Dated as of August 19, 1999
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Defined Terms........................................................ 1
1.02 Interpretation....................................................... 2
1.03 Conflict............................................................. 2
1.04 Senior Notes......................................................... 2
ARTICLE II
LOANS, SENIOR NOTES AND PREPAYMENTS
2.01 Commitments.......................................................... 2
2.02 Procedure for Borrowings............................................. 4
2.03 Fees................................................................. 5
2.04 Lending Offices...................................................... 5
2.05 Several Obligations; Remedies Independent............................ 5
2.06 Senior Notes......................................................... 6
2.07 Optional Prepayments of Loans........................................ 7
2.08 Pro Rata Prepayments................................................. 7
2.09 Mandatory Prepayments................................................ 8
2.10 Change in Commitments................................................ 8
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
3.01 Repayment of Loans................................................... 9
3.02 Interest............................................................. 9
ARTICLE IV
PAYMENTS, PRO RATA TREATMENT, COMPUTATIONS, ETC.
4.01 Payments............................................................. 10
4.02 Pro Rata Treatment................................................... 11
4.03 Computations......................................................... 12
4.04 Certain Notices...................................................... 12
4.05 Non-Receipt of Funds by the Administrative Agent..................... 13
4.06 Right of Set-off..................................................... 14
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE V
YIELD PROTECTION, ETC.
5.01 Additional Costs..................................................... 14
5.02 Alternate Interest Rate.............................................. 16
5.03 Illegality........................................................... 16
5.04 Compensation......................................................... 17
5.05 Covered Taxes........................................................ 18
5.06 Replacement Bank Senior Lenders...................................... 19
ARTICLE VI
CONDITIONS PRECEDENT
6.01 Initial Bank Senior Loans............................................ 20
6.02 Subsequent Disbursements of the Tranche A Facility................... 20
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01 Representations and Warranties of the Borrower and the Guarantors.... 21
ARTICLE VIII
COVENANTS
8.01 Covenants of the Borrower and the Guarantors......................... 21
ARTICLE IX
EVENTS OF DEFAULT
9.01 Events of Default.................................................... 21
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE X
THE ADMINISTRATIVE AGENT
10.01 Appointment, Powers and Immunities................................... 21
10.02 Reliance by Administrative Agent..................................... 23
10.03 Defaults............................................................. 23
10.04 Indemnification...................................................... 23
10.05 Non-Reliance on Administrative Agent and Other Bank Senior Lenders... 24
10.06 Failure to Act....................................................... 24
10.07 Resignation or Removal of Administrative Agent....................... 24
10.08 Notices.............................................................. 25
ARTICLE XI
GUARANTEE
11.01 Guarantee of the Guarantors.......................................... 25
ARTICLE XII
MISCELLANEOUS
12.01 Waiver............................................................... 28
12.02 Notices.............................................................. 28
12.03 Expenses, Etc........................................................ 28
12.04 Amendments, Etc...................................................... 29
12.05 Successors and Assigns............................................... 30
12.06 Assignments and Participations....................................... 30
12.07 Survival............................................................. 32
12.08 Counterparts......................................................... 32
12.09 GOVERNING LAW........................................................ 33
12.10 WAIVER OF JURY TRIAL................................................. 33
12.11 Consent to Jurisdiction.............................................. 33
12.12 Severability......................................................... 33
</TABLE>
-iii-
<PAGE>
APPENDICES
APPENDIX A......................................................... Definitions
SCHEDULE I......................... Amortization Schedule of Tranche A Facility
SCHEDULE II........................ Amortization Schedule of Tranche B Facility
SCHEDULE III....................................................... Commitments
EXHIBIT I.................................................. Form of Senior Note
EXHIBIT II................................... Form of Assignment and Acceptance
-iv-
<PAGE>
BANK SENIOR LOAN AGREEMENT
This Agreement, dated as of August 19, 1999, is made among:
PORT ARTHUR FINANCE CORP., a company incorporated under the laws of
the State of Delaware, as Borrower (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under
the laws of the State of Delaware, as Partnership and Guarantor (the
"Partnership"),
SABINE RIVER HOLDING CORP., a company incorporated under the laws of
the State of Delaware, as General Partner of the Partnership and Guarantor (the
"General Partner"),
NECHES RIVER HOLDING CORP., a company incorporated under the laws of
the State of Delaware, as Limited Partner of the Partnership and Guarantor (the
"Limited Partner" and together with the Partnership and the General Partner, the
"Guarantors"),
EACH OF THE BANK SENIOR LENDERS PARTY HERETO, as identified on
Schedule III to this Agreement, as the same may be modified at any time or from
time to time pursuant to the terms of this Agreement (together, the "Bank Senior
Lenders") and
DEUTSCHE BANK AG, NEW YORK BRANCH, a New York State licensed branch of
a German bank, as Administrative Agent for the Bank Senior Lenders (the
"Administrative Agent").
WHEREAS, the Borrower desires that the Bank Senior Lenders provide
financing for the Coker Project, and the Bank Senior Lenders are willing to
provide such financing, subject to, and on the terms and conditions set forth
in, this Agreement and the other Financing Documents;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and undertakings contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Defined Terms. Except for terms defined in this Agreement or
Appendix A hereto, defined terms in this Agreement and the Exhibits hereto, that
may be identified by the capitalization of the first letter of each principal
word thereof, shall have the meanings assigned to them in the Common Security
Agreement (including Appendix A thereto).
<PAGE>
1.02 Interpretation. In this Agreement and in the Appendix and
Exhibits hereto, except to the extent that the context otherwise requires:
(a) the table of contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;
(b) unless otherwise specified, references to Articles, Sections,
clauses, the Appendix and Exhibits are references to Articles, Sections and
clauses of, and the Appendix and Exhibits to, this Agreement;
(c) references to any document or agreement, including without
limitation this Agreement, shall be deemed to include references to such
document or agreement (together with all appendices, annexes and schedules
thereto) as amended, supplemented, replaced or restated from time to time in
accordance with its terms and (where applicable) subject to compliance with the
requirements set forth therein; and
(d) references to any party to this Agreement or any other document
or agreement shall include such party's successors and permitted assigns.
1.03 Conflict. In the event of any conflict between this Agreement
and the Common Security Agreement, the Common Security Agreement shall govern.
1.04 Senior Notes. All references in this Agreement to "Senior Notes"
shall apply only to the extent that any particular Bank Senior Lender requests
that the Borrower and the Guarantors execute and deliver a Senior Note to
evidence their obligation to repay a particular Bank Senior Loan. If a Bank
Senior Lender does not request such a Senior Note for a particular Bank Senior
Loan, then those provisions dealing with "Senior Notes" in this Agreement will
be deemed not to apply for purposes of that particular Bank Senior Loan,
provided that such Bank Senior Lender shall retain the right to request Senior
Notes from time to time to evidence future Bank Senior Loans.
ARTICLE II
LOANS, SENIOR NOTES AND PREPAYMENTS
2.01 Commitments. (a) Subject to the terms and conditions contained
in this Agreement and the Common Security Agreement, each Bank Senior Lender
severally agrees to make senior loans (each, a "Bank Senior Loan" and
collectively, the "Bank Senior Loans") to the Borrower on the applicable
Disbursement Date or Disbursement Dates during the applicable Commitment Period
in an aggregate principal amount at any time outstanding not to exceed the
amount of such Bank Senior Lender's Commitment, provided that borrowings in
respect of the Tranche A Facility may be made at any time, and from time to
time, after the termination of all Commitments under the Tranche B Facility,
subject to the other terms and conditions set forth in this Agreement. The
Commitment of each Bank Senior Lender shall be reduced by the amount of such
Bank Senior
-2-
<PAGE>
Lender's Bank Senior Loans immediately after such Bank Senior Loans are made. If
any portion of any Commitment is not disbursed during the applicable Commitment
Period, the amount of such undrawn portion shall be automatically cancelled as
of the close of business in New York, New York on the last day of the applicable
Commitment Period.
(b) Prior to the Disbursement Date for the Tranche B Facility, upon
the securing of Commitments to lend Reallocation Senior Debt under the Tranche B
Facility in accordance with Section 2.12 of the Common Security Agreement, the
Arrangers, with the consent of the Borrower, which consent shall not be
unreasonably withheld, shall have the right to reallocate the Commitments so as
to (i) increase the aggregate Commitments with respect to the Tranche B Facility
by an amount equal to such Reallocation Senior Debt without affecting the amount
of the other existing Commitments under the Tranche B Facility and (ii) decrease
the Commitments of each of the Arrangers under the Tranche A Facility on a pro
rata basis in an aggregate amount equal to the amount of the Commitments to lend
such Reallocation Senior Debt.
(c) After the Disbursement Date for the Tranche B Facility, upon the
incurrence from time to time of Reallocation Senior Debt under the Tranche B
Facility in accordance with Section 2.12 of the Common Security Agreement, the
Arrangers, with the consent of the Borrower, which consent shall not be
unreasonably withheld, shall have the right to (i) increase the amount of
outstanding Bank Senior Loans under the Tranche B Facility by an amount equal to
such Reallocation Senior Debt without affecting the amounts outstanding under
existing Bank Senior Loans under the Tranche B Facility and (ii) decrease the
remaining Commitments, if any, of, and the disbursed and outstanding Bank Senior
Loans, if any, made by, each of the Arrangers under the Tranche A Facility on a
pro rata basis among the Arrangers in an aggregate amount equal to the amount of
such Reallocation Senior Debt being incurred. The changes described in this
clause (c) shall be effected as (i) the incurrence by the Borrower of
Reallocation Senior Debt under the Tranche B Facility and (ii) if any Senior
Debt shall be outstanding under the Tranche A Facility, the application by the
Borrower of that portion of the proceeds of such Reallocation Senior Debt that
bears a relation to the amount of such proceeds which is equal to (x) Senior
Debt outstanding under the Tranche A Facility divided by (y) the sum of Senior
Debt outstanding under the Tranche A Facility and remaining undrawn Commitments
under the Tranche A Facility to the prepayment in whole or in part of such
Senior Debt outstanding under the Tranche A Facility held by the Arrangers on a
pro rata basis, and the remaining Commitments of the Arrangers under the Tranche
A Facility shall be reduced by an amount equal to the amount of such
Reallocation Senior Debt incurred but not applied to the prepayment of Senior
Debt in accordance with the terms of this sentence.
(d) Prior to the initial Disbursement Date for the Tranche A
Facility, upon the securing of Commitments to lend Reallocation Senior Debt
under the Tranche A Facility in accordance with Section 2.12 of the Common
Security Agreement, the Arrangers, with the consent of the Borrower, which
consent shall not be unreasonably withheld, shall have the right to reallocate
the Commitments so as to decrease the Commitments of each of the Arrangers under
the Tranche A Facility on a pro rata basis in an aggregate amount equal to the
amount of the Commitments to lend such Reallocation Senior Debt being secured.
-3-
<PAGE>
(e) After the initial Disbursement Date for the Tranche A Facility,
upon the incurrence from time to time of Reallocation Senior Debt and, if a
portion of the Commitments to extend Senior Debt under the Tranche A Facility
remains, the securing of Commitments to extend Reallocation Senior Debt under
the Tranche A Facility in accordance with Section 2.12 of the Common Security
Agreement, the Arrangers, with the consent of the Borrower, which consent shall
not be unreasonably withheld, shall have the right to decrease the remaining
Commitments, if any, of, and the disbursed and outstanding Bank Senior Loans, if
any, made by, each of the Arrangers under the Tranche A Facility on a pro rata
basis among the Arrangers and between such Commitments and such outstanding Bank
Senior Loans in an aggregate amount equal to the amount of such Reallocation
Senior Debt being incurred or Commitments secured. The changes described in this
clause (e) shall be effected as (i) the incurrence by the Borrower of
Reallocation Senior Debt and, if a portion of the Commitments to extend Senior
Debt under the Tranche A Facility remains, the securing of Commitments to extend
Reallocation Senior Debt under the Tranche A Facility and (ii) the application
by the Borrower of the proceeds of such Reallocation Senior Debt to the
prepayment in whole or in part of such Senior Debt outstanding under the Tranche
A Facility held by the Arrangers on a pro rata basis and the reduction of the
Commitments of the Arrangers under the Tranche A Facility on a pro rata basis.
(f) Any prepayment made by the Borrower in accordance with this
Section 2.01 shall be made together with all accrued but unpaid interest on
amounts prepaid and all other amounts (including any amounts due pursuant to
Article V) then due from the Borrower under this Agreement. Any amount prepaid
in accordance with this Section 2.01 may not be reborrowed.
(g) Clauses (b)-(f) of this Section 2.01 shall apply only until each
Arranger's Commitment has been reduced to such Arranger's Hold Level. After the
reduction of each Arranger's Commitment to such Arranger's Hold Level, such
clauses shall apply only to the extent mutually agreed among the Arrangers and
the Borrower in their sole discretion.
2.02 Procedure for Borrowings. (a) The Borrower shall give the
Administrative Agent (who shall promptly notify the Bank Senior Lenders) notice
of each borrowing under this Agreement as provided in Section 4.04, such notice
to be substantially in the form of Appendix O to the Common Security Agreement.
Except as to a borrowing that utilizes the unborrowed Commitments in respect of
the Tranche A Facility in full, each borrowing under this Agreement shall be in
a minimum amount of $5,000,000 and, if greater, in an amount that is an integral
multiple of $1,000,000.
(b) Not later than 1:00 p.m., New York time, on the date specified
in the notice specified in paragraph (a) of this Section 2.02, each Bank Senior
Lender shall make available the aggregate amount of the Bank Senior Loan or Bank
Senior Loans to be made by it on such date (as determined in accordance with
clause (c) of Section 4.02) to the Administrative Agent, at the account
designated by the Administrative Agent and for such purpose maintained by the
Administrative Agent with Deutsche Bank AG, in immediately available funds. The
amount so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement and the Common
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Security Agreement, be made available to the Borrower by depositing such amount,
in immediately available funds, in the Bank Loan Drawdown and Equity Funding
Account.
2.03 Fees.
(a) Agent Fees. The Borrower shall pay to the Administrative Agent a
fee for the Administrative Agent's services as an Administrative Agent to be
provided pursuant to this Agreement and the other applicable Financing Documents
in an amount equal to $50,000 per annum. The Borrower shall pay such fee
annually in advance on each July 15, commencing on July 15, 2000. For the period
commencing on the Closing Date and ending on, but not including, July 15, 2000,
the Borrower shall pay a pro rata portion of such fee to the Administrative
Agent on the Closing Date.
(b) Commitment Fees. The Borrower shall pay to the Administrative
Agent for the account of each Bank Senior Lender a commitment fee on the daily
aggregate unused amount of such Bank Senior Lender's Commitment (i) with respect
to the Arrangers, for the period from and including July 14, 1999 and (ii) with
respect to any other Bank Senior Lender that shall become party to this
Agreement, for the period from the earlier of (A) the date such Bank Senior
Lender first extends a binding Commitment and (B) the date that such Bank Senior
Lender shall be deemed to be a party to this Agreement, in each case to but
excluding the Commitment Termination Date, at a rate per annum equal to 0.75%,
calculated in accordance with the provisions of Section 4.03. Accrued commitment
fees shall be payable quarterly in arrears on each January 15, April 15, July 15
and October 15, commencing on October 15, 1999, and on the Commitment
Termination Date.
2.04 Lending Offices. The Bank Senior Loans made by each Bank Senior
Lender shall be made and maintained at such Bank Senior Lender's Applicable
Lending Office.
2.05 Several Obligations; Remedies Independent. The failure of any
Bank Senior Lender to make any Bank Senior Loan to be made by it on the date
requested by the Borrower in the relevant notice of borrowing shall not relieve
any other Bank Senior Lender of its obligation to make its Bank Senior Loan on
such date, but neither any Bank Senior Lender nor the Administrative Agent shall
be responsible for the failure of any other Bank Senior Lender to make a Bank
Senior Loan under this Agreement, and no Bank Senior Lender shall have any
obligation to the Administrative Agent or any other Bank Senior Lender for the
failure by such Bank Senior Lender to make any Bank Senior Loan required to be
made by such Bank Senior Lender. The amounts payable by the Borrower at any time
under this Agreement and the Senior Notes to each Bank Senior Lender shall be a
separate and independent obligation of the Borrower to such Bank Senior Lender,
and each Bank Senior Lender shall be entitled, in accordance with and subject to
the terms of the Common Security Agreement, to protect and enforce its rights
arising out of this Agreement and the Senior Notes held by it, and, except as
otherwise provided in the Common Security Agreement, it shall not be necessary
for any other Bank Senior Lender or the Administrative Agent to consent to, or
be joined as an additional party in, any proceedings for such purposes.
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2.06 Senior Notes. (a) As additional evidence of the Borrower's
obligation to pay the principal of each Bank Senior Loan as provided in Section
3.01, the Borrower and the Guarantors shall execute and deliver to the
Collateral Trustee on behalf of each Bank Senior Lender, upon request by such
Bank Senior Lender, on or prior to each date on which any Bank Senior Loan is
made under this Agreement, a promissory note (each, a "Senior Note") issued by
the Borrower and guaranteed by each of the Guarantors, substantially in the form
set forth in Exhibit I hereto, and otherwise duly completed, payable to the
order of each such Bank Senior Lender and in a principal amount equal to the
amount of such Bank Senior Lender's Commitment. The Borrower's and each
Guarantor's signatures on each Senior Note shall be duly certified by a notary
public.
(b) Each Senior Note shall (i) be dated as of the date on which the
Bank Senior Loan to which it relates is made, (ii) represent the Borrower's
obligation to repay a principal amount equal to the amount of the relevant Bank
Senior Loans, (iii) be payable in consecutive installments on each Payment Date
and mature on the Final Maturity Date and (iv) bear interest for the period from
the date of disbursement to the Borrower until paid in full on the unpaid
principal amount thereof from time to time outstanding at the applicable
interest rate per annum provided in, and payable as specified in, Section 3.02.
Each Bank Senior Lender is authorized to record (A) the date and amount of the
relevant Bank Senior Loan and of each payment or prepayment of principal of the
Bank Senior Loans made by such Bank Senior Lender and (B) the Interest Period
and interest rate with respect thereto, on the schedules annexed to and
constituting a part of the Senior Note held by such Bank Senior Lender. It is
understood, however, that the failure by a Bank Senior Lender to make any such
recordation or the inaccuracy or incompleteness of any such recordation shall
not affect the obligations of the Borrower under this Agreement or such Senior
Note in respect of the Bank Senior Loans made by such Bank Senior Lender.
(c) The execution and delivery by the Borrower and the Guarantors of
the Senior Notes shall not affect in any way whatsoever the rights or
obligations of the Borrower or the Guarantors under this Agreement, the Common
Security Agreement or any other Financing Document, and the rights and claims of
each Bank Senior Lender under the Senior Notes held by it shall not replace or
supersede the rights and claims of such Bank Senior Lender under this Agreement,
the Common Security Agreement or the other Financing Documents, provided,
however, that payment of any part of the principal of any such Senior Note in
accordance with the terms and conditions of this Agreement and the Common
Security Agreement shall, to the extent that such payment if made hereunder
would discharge the Borrower's obligations hereunder and thereunder in respect
of the payment of the principal of the Bank Senior Loan evidenced by such Senior
Note, discharge such obligation pro tanto, and the payment of any principal of a
Bank Senior Loan in accordance with the terms of this Agreement shall discharge
the obligations of the Borrower and the Guarantors under the Senior Note
evidencing such Bank Senior Loan to the extent of such payment.
(d) Upon discharge of all obligations of the Borrower and the
Guarantors under and in accordance with this Agreement and the Common Security
Agreement, each Bank Senior Lender shall cancel and return to the Borrower the
Senior Note or Senior Notes delivered to such Bank Senior Lender by the Borrower
and the Guarantor.
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(e) Each Bank Senior Lender agrees that, notwithstanding any
provision of the Senior Note or Senior Notes held by it to the contrary, it
shall not demand payment of any amount under such Senior Note or Senior Notes
unless such amount is then due and payable (whether at stated maturity, by
acceleration or otherwise) by the Borrower or the Guarantors in accordance with
the terms of this Agreement and the Common Security Agreement.
2.07 Optional Prepayments of Loans. Subject to clause (d) of Section
4.02 and the terms and conditions of Article II of the Common Security
Agreement, the Borrower shall have the right to prepay the outstanding principal
amount of the Bank Senior Loans at any time or from time to time outstanding
under this Agreement, in whole or in part, without premium or penalty (but with
any prepayment compensation required by Section 5.04), on any Business Day,
provided, however, that: (a) the Borrower shall give the Administrative Agent
notice of any such prepayment as provided in Section 4.04, which notice shall
become irrevocable five Business Days prior to the date of such optional
prepayment, with a copy to the Collateral Trustee (and, upon the date specified
in any such notice of prepayment, the amount to be prepaid shall become due and
payable hereunder); (b) any prepayments of the Bank Senior Loans pursuant to
this Section 2.07 shall be applied as provided in clause (c) of Section 2.04 of
the Common Security Agreement; and (c) each partial prepayment of principal of
Bank Senior Loans shall be in an aggregate amount at least equal to $5,000,000
and, if greater, in an amount which is an integral multiple of $1,000,000. Any
prepayment made by the Borrower pursuant to this Section 2.07 or Section 2.08 or
2.09 shall be made together with all accrued but unpaid interest on amounts
prepaid and all other amounts (including any amounts due pursuant to Article V)
then due from the Borrower under this Agreement. Any amount prepaid pursuant to
this Section 2.07 may not be reborrowed.
2.08 Pro Rata Prepayments. Subject to the terms of the Common
Security Agreement, in the event that the Borrower shall make, or be (or be
notified that it is) required to make, or give notice that it will make, any
payment of any principal of any Capital Markets Senior Debt outstanding under
the Indenture prior to the originally scheduled maturity date thereof (other
than as provided in Section 2.07 of the Common Security Agreement), the Borrower
shall give prompt notice thereof to the Administrative Agent and shall
simultaneously with such payment (or, if not on a Payment Date, with the consent
of Majority Bank Lenders, on the next succeeding Payment Date), make a Pro Rata
Payment to each Bank Senior Lender in prepayment of the Bank Senior Loans in
accordance with Sections 2.04 and 2.06 of the Common Security Agreement. A Bank
Senior Lender may waive its right to receive any such prepayment without
prejudice to its right to receive any subsequent prepayment. Each prepayment of
Bank Senior Loans under this Section 2.08 shall be accompanied by the prepayment
compensation (if any) required pursuant to Section 5.04.
2.09 Mandatory Prepayments. (a) The Borrower shall make Mandatory
Prepayments pursuant to Section 2.05 of the Common Security Agreement, provided
that, with respect to the Tranche B Facility, Tranche B Lenders shall each have
the option to refuse its pro rata share of Excess Cash Flow Mandatory
Prepayments (the "Refusal Option") by notifying the Administrative Agent and the
Collateral Trustee in writing no later than five Business Days prior to
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the date of such proposed Mandatory Prepayment). If any Tranche B Lender does
exercise its Refusal Option, then all amounts to be so prepaid as Excess Cash
Flow Mandatory Prepayments to such Tranche B Lender shall be applied to Bank
Senior Loans outstanding under the Tranche A Facility. To the extent (i) that
any Tranche B Lender does not exercise its Refusal Option or (ii) that, in the
case of a Tranche B Lender having exercised its Refusal Option, there are
amounts to be prepaid as Excess Cash Flow Mandatory Prepayments still unpaid
after all Bank Senior Loans outstanding under the Tranche A Facility have been
paid in full, amounts to be prepaid as Excess Cash Flow Mandatory Prepayments
shall be applied to Bank Senior Loans outstanding under the Tranche B Facility
(A) in amounts equal to (x) 103% of the amount to be prepaid, in the case of
Excess Cash Flow Mandatory Prepayments made during the first year following the
Closing Date, (y) 102% of the amount to be prepaid, in the case of Excess Cash
Flow Mandatory Prepayments made during the second year following the Closing
Date and (z) 101% of the amount to be prepaid, in the case of Excess Cash Flow
Mandatory Prepayments made during the third year following the Closing Date and
(B) after the third year following the Closing Date, at par.
(b) In addition to the Refusal Option, any Bank Senior Lender may
waive its right to receive all or any part of any Mandatory Prepayment required
to be made pursuant to clause (a) of this Section 2.09 without prejudice to its
right to receive any subsequent Mandatory Prepayment. Each prepayment of Loans
under this Section 2.09 shall be accompanied by the prepayment compensation (if
any) required pursuant to Section 5.04. Any amount prepaid pursuant to this
Section 2.09 may not be reborrowed.
2.10 Change in Commitments. (a) The aggregate amount of the
Commitments shall be automatically reduced by any and all Bank Senior Loans made
under this Agreement and shall be automatically reduced to zero on the
Commitment Termination Date.
(b) Subject to clause (b) of Section 9.03 of the Common Security
Agreement, the Borrower shall have the right, at any time or from time to time,
to terminate or reduce the aggregate unused amount of the Commitments, provided
that (i) the Borrower shall give the Administrative Agent notice of each such
termination or reduction as provided in Section 4.04 and (ii) each partial
reduction shall be in an aggregate amount at least equal to $5,000,000 and, if
greater, in an amount that is an integral multiple of $1,000,000. Any portion of
a Commitment, once terminated or reduced, may not be reinstated.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
3.01 Repayment of Loans. (a) With respect to the Tranche A Facility,
the Borrower hereby promises to pay to the Administrative Agent for the account
of each Bank Senior Lender the principal amount of such Bank Senior Lender's
Bank Senior Loans made under the Tranche A Facility in 11 semi-annual
installments on each Payment Date, in the amounts and
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percentages as set forth in the amortization schedule attached hereto in
Schedule I, commencing on January 15, 2002.
(b) With respect to the Tranche B Facility, the Borrower hereby
promises to pay to the Administrative Agent for the account of each Bank Senior
Lender the principal amount of such Bank Senior Lender's Bank Senior Loan made
under the Tranche B Facility on the dates and in the amounts and percentages as
set forth in the amortization schedule attached hereto in Schedule II,
commencing on January 15, 2002.
3.02 Interest. (a) Subject to clause (b) of this Section 3.02, the
Borrower hereby promises to pay to the Administrative Agent for the account of
each Bank Senior Lender interest on the unpaid principal amount of each Bank
Senior Loan held by such Bank Senior Lender, for the period from and including
the date such Bank Senior Loan is made to but excluding the date such Bank
Senior Loan shall be paid in full, at an interest rate per annum in respect of
each Interest Period equal to LIBOR for such Bank Senior Loan for such Interest
Period plus the applicable Margin.
(b) Subject to clause (c) of this Section 3.02, in the event that
the Borrower incurs Reallocation Senior Debt on a date other than a Payment
Date or Tranche B Interest Payment Date, as the case may be:
(A) after the Disbursement Date for the Tranche B Facility, the
Borrower hereby promises to pay to the Administrative Agent for the
account of each Reallocation Bank Senior Lender interest on the unpaid
principal amount of each such Bank Senior Loan held by such
Reallocation Bank Senior Lender, for the period from and including the
date such Reallocation Bank Senior Loan is made to but excluding the
Tranche B Interest Payment Date immediately succeeding the
disbursement of such Bank Senior Loans, at an interest rate per annum
in respect of such period equal to the Base Rate, and after such
period at LIBOR plus the applicable Margin;
(B) after the initial Disbursement Date for the Tranche A
Facility, the Borrower hereby promises to pay to the Administrative
Agent for the account of each Reallocation Bank Senior Lender interest
on the unpaid principal amount of each such Bank Senior Loan held by
such Reallocation Bank Senior Lender, for the period from and
including the date such Reallocation Bank Senior Loan is made to but
excluding the next Payment Date, in the case of Bank Senior Loans
under the Tranche A Facility, or the Tranche B Interest Payment Date,
in the case of Bank Senior Loans under the Tranche A Facility, as the
case may be, immediately succeeding the disbursement of such Bank
Senior Loans, at an interest rate per annum in respect of such period
equal to the Base Rate, and after such period at LIBOR plus the
applicable Margin;
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(c) In connection with the incurrence by the Borrower of
Reallocation Senior Debt or the securing by the Borrower of Commitments to lend
Reallocation Senior Debt, or the assignment by the Arrangers of Commitments or
Bank Senior Loans prior to the date on which the Commitments of the Arrangers
have been reduced to their respective Hold Levels, the Arrangers shall have the
right, with the consent of the Borrower, such consent not to be unreasonably
withheld, to increase the Margin applicable to all Bank Senior Loans under the
Tranche A Facility or Tranche B Facility, as the case may be, or both. All Bank
Senior Loans outstanding or to be drawn down under the applicable tranche or
tranches shall, from and after the Payment Date on or immediately succeeding the
date of incurrence of such Reallocation Senior Debt, securing by the Borrower of
Commitments to lend Reallocation Senior Debt or the assignment by the Arrangers
of Commitments or Bank Senior Loans bear interest at a rate equal to LIBOR plus
the applicable Margin following such increase, subject to any further
adjustments pursuant to this clause (c); provided however, that the Margin shall
not be increased pursuant to this clause (c) without a Ratings Reaffirmation.
(d) The Borrower hereby agrees that, upon the occurrence and during
the continuation of any Event of Default under Article IX, the interest rate per
annum that the Borrower is obligated to pay in respect of each Interest Period
pursuant to paragraph (a) above shall be increased by the Post-Default Rate.
(e) Interest on each Bank Senior Loan shall accrue and be payable in
arrears (i)(A) with respect to the Tranche A Facility, on each Payment Date and
(B) with respect to the Tranche B Facility, on each Tranche B Interest Payment
Date, commencing in each case on January 15, 2000, (ii) upon the payment or any
prepayment of such Bank Senior Loan (but only on the amount paid or prepaid),
and (iii) upon maturity (whether on the Final Maturity Date, by acceleration or
otherwise). Promptly after the determination of any interest rate provided for
in this Agreement or any change therein, the Administrative Agent shall give
notice thereof to the Bank Senior Lenders and the Borrower.
ARTICLE IV
PAYMENTS, PRO RATA TREATMENT, COMPUTATIONS, ETC.
4.01 Payments. (a) Except to the extent otherwise provided in this
Agreement, all payments of principal, interest and other amounts to be made by
the Borrower under this Agreement and the Senior Notes (including without
limitation fees and indemnities) shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the
Administrative Agent at the account designated by the Administrative Agent
maintained by the Administrative Agent with Deutsche Bank AG, not later than
1:00 p.m., New York time, on the date on which such payment shall become due.
Any such payment made after such time on such due date shall be deemed to have
been made on the next succeeding Business Day.
(b) Each payment received by the Administrative Agent under this
Agreement or any Senior Note for account of any Bank Senior Lender shall be paid
by the Administrative Agent
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promptly to such Bank Senior Lender, in immediately available funds, for account
of such Bank Senior Lender's Applicable Lending Office for the Bank Senior Loan
or other obligation in respect of which such payment is made.
(c) If the due date of any payment under this Agreement or any
Senior Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension, provided
that, if such next succeeding Business Day falls in the following month, such
date shall be the Business Day immediately preceding such due date.
4.02 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement or the Common Security Agreement:
(a) each payment of commitment fees under clause (b) of Section 2.03
shall be made for the account of the Bank Senior Lenders so that each such
payment is a Pro Rata Payment;
(b) each reduction in the amount of the Commitments under Section
2.10 hereof shall be applied to the several Commitments of the Bank Senior
Lenders pro rata according to the amounts of their respective Commitments;
(c) notwithstanding anything to the contrary provided in this
Agreement, the Bank Senior Loans shall be disbursed by the Bank Senior Lenders
pro rata in accordance with the maximum respective principal amounts of each
Bank Senior Lender's Commitment;
(d) other than with respect to any payment or prepayment made
pursuant to Section 5.03, and except as provided in Section 2.08, each payment
or prepayment of principal of Bank Senior Loans by the Borrower shall be made
for the account of the Bank Senior Lenders so that each such payment or
prepayment is a Pro Rata Payment; and
(e) each payment of interest on Bank Senior Loans by the Borrower
under this Agreement shall be made for the account of the Bank Senior Lenders so
that each such payment is a Pro Rata Payment.
4.03 Computations. Interest on Bank Senior Loans and commitment fees
shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable.
4.04 Certain Notices. Except as otherwise provided in the Common
Security Agreement with respect to prepayments of Senior Debt required thereby,
notices by the Borrower to the Administrative Agent of borrowings, termination
or reduction of Commitments and Optional Prepayments of Bank Senior Loans shall
be irrevocable and shall be effective only if received by the Administrative
Agent not later than 10:00 a.m., New York time, on the number of Business Days
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prior to the date of the relevant borrowing, termination, reduction or
prepayment, as the case may be, specified below:
Type of Notice Required Prior Notice
-------------- ---------------------
Borrowing of Bank Senior 5 Business Days
Loans
Termination or Reduction of 10 Business Days
Commitments
Prepayments of Bank Senior 30 Business Days which shall
Loans become irrevocable 5 Business
Days prior to the date of such
Optional Prepayment
provided; that the certificate of the Independent Engineer to be attached to a
Notice of Borrowing may be delivered separately no later than one Business Day
prior to the date of such borrowing.
If received later than 10:00 a.m., New York time on such number of Business Days
prior to the relevant date, such notice shall be effective on the next
succeeding Business Day, unless the Borrower is notified by the Administrative
Agent that such notice shall be effective on the original Business Day.
Each such notice of borrowing or Optional Prepayment shall specify the
Bank Senior Loans to be borrowed or prepaid and the amount (subject to Section
2.02 and Section 2.07 hereof) of each Bank Senior Loan to be borrowed or prepaid
and the date of borrowing or Optional Prepayment (which shall be a Business
Day). Each such notice of termination or reduction shall specify the amount
(subject to Section 2.10) of the Commitments to be terminated or reduced. The
Administrative Agent shall promptly notify the Bank Senior Lenders of the
contents of each such notice (and in any event by the Business Day after the
Administrative Agent's receipt thereof).
4.05 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank Senior Lender or the
Borrower (the "Payor") prior to the date on which the Payor is to make payment
to the Administrative Agent of (in the case of a Bank Senior Lender) the
proceeds of a Bank Senior Loan to be made by such Bank Senior Lender under this
Agreement or (in the case of the Borrower) a payment to the Administrative Agent
for the account of one or more of the Bank Senior Lenders under this Agreement
(such payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, but shall not be required to, in
reliance upon such assumption, make the amount thereof available to the intended
recipient(s) on
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such date; and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date (the
"Advance Date") such amount was so made available by the Administrative Agent
until the date the Administrative Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day and, if such recipient(s) shall
fail promptly to make such payment, the Administrative Agent shall be entitled
to recover such amount, on demand, from the Payor, together with interest as
aforesaid, provided that, if neither the recipient(s) nor the Payor shall return
the Required Payment to the Administrative Agent within three Business Days of
such demand from the Administrative Agent, then, retroactively to the Advance
Date, the Payor and the recipient(s) shall each be obligated to pay interest on
the Required Payment as follows:
(a) if the Required Payment shall represent a payment to be made by
the Borrower to the Bank Senior Lenders, the Borrower and the recipient(s) shall
each be obligated, retroactively to the Advance Date, to pay interest in respect
of the Required Payment at the rate of interest provided in Section 3.02 (and,
in case the recipient(s) shall return the Required Payment to the Administrative
Agent, without limiting the obligation of the Borrower under Section 3.02 to pay
interest to such recipient(s) in respect of the Required Payment); and
(b) if the Required Payment shall represent proceeds of a Bank
Senior Loan to be made by the Bank Senior Lenders to the Borrower, the Payor and
the Borrower shall each be obligated, retroactively to the Advance Date, to pay
interest in respect of the Required Payment at the rate of interest provided for
such Required Payment in Section 3.02 (and, in case the Borrower shall return
the Required Payment to the Administrative Agent, without limiting any claim the
Borrower may have against the Payor in respect of the Required Payment).
In the event that the Payor and the recipient(s) both return the Required
Payment to the Administrative Agent together with interest thereon as required
by this Section 4.05, the Administrative Agent shall promptly pay to the
recipient(s) the Required Payment together with the interest paid by the
recipient(s) to the Administrative Agent.
The Administrative Agent shall promptly notify the Borrower of any receipt of
notice by the Administrative Agent from a Bank Senior Lender that the Bank
Senior Lender does not intend to make payment to the Administrative Agent of the
proceeds of a Bank Senior Loan.
4.06 Right of Set-off. The Borrower agrees that each Bank Senior
Lender shall be entitled, at its option but only with the prior written consent
of the Administrative Agent, to offset balances held by it for the account of
the Borrower at any of its offices against any obligations of the Borrower
(including principal and interest on any of the Bank Senior Loans) to such Bank
Senior Lender that are not paid when due.
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ARTICLE V
YIELD PROTECTION, ETC.
5.01 Additional Costs. (a) The Borrower shall pay directly to each
Bank Senior Lender from time to time such amounts as such Bank Senior Lender may
determine in good faith to be necessary to compensate such Bank Senior Lender
for any increase in costs attributable to its making or maintaining of any Bank
Senior Loans or its obligation to make any Bank Senior Loans under this
Agreement, or any reduction in any amount receivable by such Bank Senior Lender
under this Agreement in respect of any of such Bank Senior Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called collectively "Additional Costs"), in each case, from those costs
and amounts receivable existing on the date hereof, resulting from any
Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such
Bank Senior Lender under this Agreement or the Senior Note(s) held by it in
respect of any of such Bank Senior Loans (other than Excluded Taxes and
Covered Taxes as described in Section 5.05); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements, including without limitation any application of the
Regulation D requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Bank Senior
Lender (including, without limitation, any of such Bank Senior Loans or any
deposits referred to in the definition of "LIBOR" in Appendix A hereto), or
any commitment of such Bank Senior Lender (including without limitation the
Commitment or Commitments of such Bank Senior Lender under this Agreement);
or
(iii) imposes any other duty or charge in respect of this Agreement,
the Senior Note(s) held by it (or any of such extensions of credit or
liabilities), its Commitment or Commitments or any amounts payable to such
Bank Senior Lender under this Agreement or the Senior Note(s) held by it in
respect of any such Bank Senior Loans (other than Covered Taxes and
Excluded Taxes).
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01, the Borrower shall pay directly to each Bank Senior Lender from
time to time on request such amounts as such Bank Senior Lender may determine in
good faith to be necessary to compensate such Bank Senior Lender (or the bank
holding company of which such Bank Senior Lender is a subsidiary) for any
increase in costs that it determines are attributable to the maintenance by such
Bank Senior Lender (or any Applicable Lending Office or such bank holding
company), pursuant to any law or regulation or any interpretation, directive,
guideline or request (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) of or by any court or
governmental, monetary, fiscal or other authority (i) following any Regulatory
Change or (ii) implementing any risk-based capital guideline or other
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful), issued after the
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date hereof by any government or governmental or supervisory authority
implementing at the national level the Basle Accord, of capital in respect of
its Commitment or Bank Senior Loans (such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets or
equity of such Bank Senior Lender (or any Applicable Lending Office or such bank
holding company) to a level below that which such Bank Senior Lender (or any
Applicable Lending Office or such bank holding company) could have achieved but
for such law, regulation, interpretation, directive, guideline or request). For
purposes of this clause (b), "Basle Accord" shall mean the proposals for risk-
based capital framework described by the Basle Committee on Banking Regulations
and Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time, or any replacement thereof,
including without limitation any framework adopted pursuant to the proposal for
a new capital adequacy framework dated June 1999 and entitled "A New Capital
Adequacy Framework".
(c) Each Bank Senior Lender shall notify the Borrower of any event
occurring after the date of this Agreement entitling such Bank Senior Lender to
compensation under clauses (a) or (b) of this Section 5.01 as promptly as
practicable. Each Bank Senior Lender shall designate a different Applicable
Lending Office for the Bank Senior Loans of such Bank Senior Lender affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the opinion of such Bank Senior Lender, be
disadvantageous to such Bank Senior Lender. Each Bank Senior Lender will furnish
to the Borrower a certificate setting forth in reasonable detail the basis and
amount of each request by such Bank Senior Lender for compensation under clause
(a) or (b) of this Section 5.01. Determinations and allocations set forth in
such certificate by any Bank Senior Lender for purposes of this Section of the
effect of any Regulatory Change pursuant to clause (a) of this Section 5.01 or
of the effect of capital maintained pursuant to clause (b) of this Section 5.01,
on its costs or rate of return of maintaining Bank Senior Loans or its
obligation to make Bank Senior Loans, or on amounts receivable by it in respect
of Bank Senior Loans, and of the amounts required to compensate such Bank Senior
Lender under this Section 5.01, shall, absent manifest error, be conclusive.
5.02 Alternate Interest Rate. Anything to the contrary in this
Agreement notwithstanding, if, on or prior to the determination of LIBOR for any
Interest Period or Default Interest Period:
(a) the Administrative Agent determines, which determination shall
be conclusive absent manifest error, that quotations of interest rates for the
relevant deposits of the types referred to in the definition of "LIBOR" in
Appendix A hereto are not being provided in the relevant amounts or for the
relevant maturity for purposes of determining rates of interest as provided in
this Agreement; or
(b) Majority Bank Lenders notify the Administrative Agent that the
relevant rates of interest referred to in the definition of "LIBOR" in Appendix
A hereto upon the basis of which the rate of interest for such Interest Period
or Default Interest Period is to be determined would not
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adequately cover the cost to such Bank Senior Lenders of making or maintaining
Bank Senior Loans, or maintaining any other amount under this Agreement not paid
when due, for such Interest Period or Default Interest Period;
then the Administrative Agent shall notify the Borrower thereof, and, subject to
the following paragraph, the interest payable to the Bank Senior Lenders on Bank
Senior Loans, and such other amounts not paid when due, to which such Interest
Period or Default Interest Period, as the case may be, applies shall thereafter
be interest at a rate per annum equal to the Alternate Base Rate for each day
during such Interest Period or Default Interest Period, as the case may be, plus
the applicable Margin plus, during any Default Interest Period, 2% per annum.
The alternative interest rate procedure set forth in the immediately preceding
paragraph shall apply to each relevant period succeeding the first such period
to which they were applied unless and until the Administrative Agent notifies
the Borrower that the condition referred to in clause (a) of this Section 5.02
no longer exists or the Administrative Agent (at the request of Majority Bank
Lenders) notifies the Borrower that the condition referred to in clause (b) of
this Section 5.02 no longer exists, whereupon interest on Bank Senior Loans
shall again be determined in accordance with the provisions of Section 3.02,
effective commencing on the third Business Day after the date of such notice.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank Senior Lender or
its Applicable Lending Office to honor its obligation to make Bank Senior Loans
under this Agreement, then such Bank Senior Lender shall promptly notify the
Borrower thereof (with a copy to the Administrative Agent) and such Bank Senior
Lender's obligation to make Bank Senior Loans shall be suspended until such time
as such Bank Senior Lender may again make Bank Senior Loans. Notwithstanding any
other provision of this Agreement to the contrary, in the event that it becomes
unlawful for any Bank Senior Lender or its Applicable Lending Office to honor
its obligation to maintain Bank Senior Loans, then, at the election of such Bank
Senior Lender (by notice to the Administrative Agent, which shall promptly
notify the Borrower), the Borrower shall prepay such Bank Senior Lender's
outstanding Bank Senior Loans in full (or in the amount of the affected portion
thereof) together with accrued interest thereon and all other amounts payable to
such Bank Senior Lender under this Agreement (including without limitation
amounts payable under Section 5.04) to the Administrative Agent for the account
of such Bank Senior Lender, on the last day of the then current Interest Period
or Default Interest Period for such Bank Senior Loans (or on such earlier date
as shall be certified by the Bank Senior Lender as being the last permissible
date for such prepayment under the relevant law, rule, regulation, treaty or
directive). Each Bank Senior Lender shall designate a different Applicable
Lending Office for the portion of its Commitment or Bank Senior Loans affected
by the illegality granting such Bank Senior Lender a right to suspend its
Commitment or requiring repayment by the Borrower if such designation will avoid
the need for such suspension or required repayment, or reduce the amount of the
portion of the Commitment subject to suspension or the portion of the Bank
Senior Loans subject to repayment, as the case may be, provided that no Bank
Senior Lender shall be obligated so to designate a different Applicable Lending
Office if such Bank Senior Lender determines that such
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designation would be disadvantageous to such Bank Senior Lender compared to the
designation of its then current Applicable Lending Office.
5.04 Compensation. The Borrower shall pay to the Administrative Agent
for the account of each Bank Senior Lender, upon the request of such Bank Senior
Lender through the Administrative Agent, such amount or amounts as shall be
sufficient (in the opinion of such Bank Senior Lender) to compensate it for any
Loss that such Bank Senior Lender determines is attributable to:
(a) any payment or prepayment of a Bank Senior Loan made by such
Bank Senior Lender for any reason (including without limitation the acceleration
of the Bank Senior Loans pursuant to Section 10.04 of the Common Security
Agreement and optional prepayments made pursuant to Section 2.07 or in
accordance with clause (c) of Section 3.02) or the assignment of a Bank Senior
Loan made by such Bank Senior Lender prior to the date on which the Commitments
of the Arrangers have been reduced to their respective Hold Levels, in each case
on a date other than the last day of an Interest Period for such Bank Senior
Loan; or
(b) any failure by the Borrower for any reason (including without
limitation the failure of any of the conditions precedent specified in Article
VI of this Agreement or Article IX of the Common Security Agreement to be
satisfied) to borrow a Bank Senior Loan from such Bank Senior Lender on the date
for such borrowing specified in the relevant notice of borrowing given pursuant
to Section 2.02, other than any failure which results from such Bank Senior
Lender wrongfully suspending its obligation to make Bank Senior Loans or
wrongfully terminating its Commitment under this Agreement or the Common
Security Agreement.
Any such compensation shall include an amount equal to the excess, if any, of
(x) the amount of interest that otherwise would have accrued on the principal
amount so paid, prepaid, assigned or not borrowed for the period from the date
of such payment, prepayment, assignment or failure to borrow to the last day of
the then current Interest Period for such Bank Senior Loan (or, in the case of a
failure to borrow, the Interest Period for such Bank Senior Loan that would have
commenced on the date specified for such borrowing) at the applicable rate of
interest for such Bank Senior Loan provided in this Agreement (excluding,
however, the applicable Margin or Post-Default Rate included therein, if any)
over (y) the amount of interest (as determined by such Bank Senior Lender) that
otherwise would have accrued on such principal amount by placing such amount on
deposit for a comparable period with leading banks in the London interbank
market. A certificate of such Bank Senior Lender setting forth in reasonable
detail any amount or amounts that such Bank Senior Lender is entitled to receive
pursuant to this Section 5.04 and the manner in which such amounts shall have
been determined shall be delivered to the Borrower and shall be conclusive
absent manifest error.
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5.05 Covered Taxes. The Borrower agrees that, whether or not any Bank
Senior Loan is made under this Agreement:
(a) All payments of principal of and interest on the Bank Senior
Loans and all other amounts payable on, under or in respect of this Agreement,
the Bank Senior Loans, the Senior Notes, the Common Security Agreement or any
other Financing Document by the Borrower to the Administrative Agent or any Bank
Senior Lender, including without limitation amounts payable by the Borrower
under clause (b) of this Section 5.05 and under Section 12.03, shall be made
free and clear of, and without deduction or withholding for, any and all present
and future taxes, levies, imposts, tariffs, duties, assessments, deductions,
withholdings, fees, liabilities or other charges other than Excluded Taxes
(collectively, "Taxes") imposed, assessed, levied or collected by any
Governmental Authority, together with interest thereon and penalties with
respect thereto, if any, under or in respect of this Agreement, the Bank Senior
Loans, the Senior Notes or any other Financing Document, the execution,
registration, enforcement, notarization or other formalization of any thereof,
and any payments of principal, interest, charges, fees, commissions or other
amounts made on, under or in respect thereof ("Covered Taxes"), all of which
shall be paid by the Borrower, for its own account, prior to the date on which
penalties attach thereto.
(b) The Borrower shall indemnify and hold harmless the
Administrative Agent and each Bank Senior Lender against, and promptly reimburse
the Administrative Agent and each Bank Senior Lender on demand for, any Covered
Taxes paid by the Administrative Agent or any Bank Senior Lender and any Loss
that the Administrative Agent or any Bank Senior Lender may incur at any time
arising out of or in connection with any failure of the Borrower to make any
payment of Covered Taxes when due, other than any interest, penalties or legal
fees arising from the failure of the Borrower to pay such Covered Taxes due to
the gross negligence or willful misconduct of the Administrative Agent or such
Bank Senior Lender.
(c) In the event that the Borrower is required by Applicable Law to
deduct or withhold Covered Taxes from any amounts payable on, under or in
respect of this Agreement, the Bank Senior Loans, the Senior Notes or any other
Financing Document (including without limitation any amounts payable under
clause (b) of this Section 5.05 and Sections 2.07, 2.09, 3.01 and 3.02), the
Borrower shall pay the Administrative Agent and each Bank Senior Lender such
additional amount as may be required, after the deduction or withholding of any
Covered Taxes, to enable the Person entitled to such amount to receive from the
Borrower an amount equal to the full amount stated to be payable under this
Agreement, the Bank Senior Loans, the Senior Notes or any other Financing
Document.
(d) The Borrower shall furnish to the Administrative Agent original
or certified copies of tax receipts in respect of any withholding of Covered
Taxes required under this Section 5.05 within 30 days after the date of each
payment under this Agreement as to which such withholding is required, and the
Borrower shall promptly furnish to the Administrative Agent any other
information, documents and receipts that the Administrative Agent or any Bank
Senior Lender
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may from time to time require to establish to its satisfaction that full and
timely payment has been made of all Covered Taxes required to be paid under this
Section 5.05.
5.06 Replacement Bank Senior Lenders. Subject to Section 2.07 and
Section 2.10 of the Common Security Agreement, and provided that no Event of
Default shall have occurred and be Continuing under this Agreement or the Common
Security Agreement, the Borrower may, at any time, replace any Bank Senior
Lender that has requested compensation from the Borrower pursuant to Section
5.01 or whose obligation to make additional Bank Senior Loans has been suspended
or terminated pursuant to Section 5.03 or that has failed, and such failure has
continued for 10 Business Days, to make payment to the Administrative Agent of
the proceeds of a Bank Senior Loan to be made by such Bank Senior Lender under
this Agreement after satisfaction of all conditions precedent to such Bank
Senior Loan (any such Bank Senior Lender being herein called an "Affected Bank
Senior Lender"), by giving not less than 10 Business Days' prior written notice
to the Administrative Agent (which shall promptly notify such Affected Bank
Senior Lender and each other Bank Senior Lender), that it intends to replace
such Affected Bank Senior Lender with one or more banks (which may include any
other Bank Senior Lender) selected by the Borrower and acceptable to the
Administrative Agent, provided that, if the replacement Bank Senior Lender shall
request, with respect to such Bank Senior Loan, compensation pursuant to this
Article V, such compensation shall in the aggregate be lower than that of the
Affected Bank Senior Lender. The method (whether by assignment or otherwise) of,
and documentation for, such replacement shall be the execution and delivery of
an assignment agreement in writing, substantially in the form of Exhibit II
hereto.
Upon the effective date of any replacement pursuant to this Section
5.06 (and as a condition thereto), the Borrower shall pay to the Affected Bank
Senior Lender being replaced any amounts owing to such Affected Bank Senior
Lender under this Agreement (including without limitation principal, interest,
fees, commissions, compensation and additional amounts under this Article V, in
each case accrued to the effective date of such replacement, and any amounts
that would be payable under this Section 5.06 if all of such Affected Bank
Senior Lender's Bank Senior Loans were being prepaid in full on such date),
whereupon each replacement bank shall for all purposes of this Agreement become
a "Bank Senior Lender" having a Commitment in the amount of such Affected Bank
Senior Lender's Commitment assumed by it, holding Bank Senior Loans acquired by
it and party to, or entitled to the benefit of, the Financing Documents, and
such Commitment of the Affected Bank Senior Lender being replaced shall be
terminated upon such effective date and all of such Affected Bank Senior
Lender's rights and obligations under the Financing Documents shall terminate
(provided that the obligations of the Borrower under Sections 5.01, 5.03, 5.04,
5.05, 5.06 and 12.03 with respect to such Affected Bank Senior Lender, and the
obligations of such Affected Bank Senior Lender under Section 10.4 with respect
to the Administrative Agent, shall survive any such replacement).
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ARTICLE VI
CONDITIONS PRECEDENT
6.01 Initial Bank Senior Loans. The obligation of each Bank Senior
Lender to make its initial Bank Senior Loan under the Tranche A Facility and its
Bank Senior Loan under the Tranche B Facility under this Agreement shall be
subject to the satisfaction of each of the following conditions:
(a) Execution. This Agreement shall have been duly executed and
delivered by each of the parties hereto and each of the Senior Notes evidencing
the Initial Bank Senior Loans shall have been duly completed, executed and
delivered by each of the Borrower and the Guarantors to the relevant Bank Senior
Lender; and
(b) Satisfaction of Common Conditions Precedent. All the common
conditions precedent set forth in Section 9.01 of the Common Security Agreement
shall have been satisfied (or waived as provided in Section 14.13 of the Common
Security Agreement).
6.02 Subsequent Disbursements of the Tranche A Facility. The
obligation of each Bank Senior Lender to make any Bank Senior Loan under the
Tranche A Facility under this Agreement, including without limitation its
initial Bank Senior Loan, shall be subject to the satisfaction of the following
conditions:
(a) Satisfaction of Common Conditions Precedent. All the common
conditions precedent set forth in Section 9.02 of the Common Security Agreement
shall have been satisfied (or waived as provided in Section 14.13 of the Common
Security Agreement).
(b) Senior Notes. Such Bank Senior Lender or the Administrative
Agent on behalf of such Bank Senior Lender shall have received a duly completed
and executed Senior Note or Senior Notes evidencing such Bank Senior Loan or
Bank Senior Loans.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01 Representations and Warranties of the Borrower and the
Guarantors. Each of the Borrower and the Guarantors confirms the respective
representations and warranties made by it in Section 3.01 of the Common Security
Agreement, as if made as of the date of this Agreement, which representations
and warranties are incorporated herein by reference as if fully set forth in
this Agreement.
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ARTICLE VIII
COVENANTS
8.01 Covenants of the Borrower and the Guarantors. Each of the
Borrower and the Guarantors agrees that, so long as any Bank Senior Lender has
any Commitment under this Agreement or any amount payable under this Agreement
remains unpaid, it shall observe and perform each of the covenants applicable to
it set forth in Article IV of the Common Security Agreement, which covenants and
agreements are incorporated by reference in this Agreement as if fully set forth
herein, in accordance with their terms.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Events of Default. The occurrence of any Default or Event of
Default set forth in Article X of the Common Security Agreement shall constitute
a "Default" or "Event of Default", as the case may be, for all purposes of this
Agreement. If any Default or Event of Default shall occur and be Continuing,
then the Bank Senior Lenders shall have (in addition to any and all other
available remedies at law and in equity) each of the remedies set forth in
Article X of the Common Security Agreement.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.01 Appointment, Powers and Immunities. (a) Each Bank Senior Lender
hereby irrevocably appoints and authorizes Deutsche Bank AG, New York Branch, as
the Administrative Agent to act as its agent, with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the Common Security Agreement, together with such other powers as
are incidental thereto, and each Bank Senior Lender authorizes and instructs the
Administrative Agent to execute and deliver on its behalf each of the Common
Security Agreement, the Transfer Restrictions Agreement, the Intercreditor
Agreement, each Security Document and any other applicable Financing Document,
and agrees to be bound by the terms and conditions of each such agreement as if
it had executed and delivered such agreement for and in its own name. The
Administrative Agent hereby accepts such appointment upon the terms and
conditions set forth in this Article X.
(b) Each Bank Senior Lender hereby agrees and acknowledges that the
Administrative Agent shall act for and on behalf of the Bank Senior Lenders as a
Bank Senior Lender or Bank Senior Lender Group for purposes of each of the
Common Security Agreement, the Transfer Restrictions Agreement or any other
Financing Document, and each Bank Senior Lender hereby authorizes such action by
the Administrative Agent on its behalf in accordance with its appointment under
this Agreement. Notwithstanding the foregoing, the Administrative Agent shall,
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upon the request of any Bank Senior Lender, promptly deliver to such Bank Senior
Lender any request, notice or communication permitted to be given by any Bank
Senior Lender under or pursuant to the Common Security Agreement, the Transfer
Restrictions Agreement or any other Financing Document.
(c) The Administrative Agent (which term as used in this Article X
and Sections 10.04 and 12.03 shall include its Affiliates and their respective
officers, directors, employees and agents) shall not: (i) have any duties or
responsibilities (including without limitation any duties or responsibilities to
make any determinations with respect to the terms or provisions or any insurance
policy referred to in Article VII of the Common Security Agreement), except
those expressly set forth in this Agreement or the Common Security Agreement or,
by reason of this Agreement or the Common Security Agreement, be a trustee for
any Bank Senior Lender; (ii) be responsible to the Bank Senior Lenders for any
recitals, statements, representations or warranties contained in this Agreement
or the Common Security Agreement, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or the Common Security Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Senior Note,
the Common Security Agreement or any other document referred to or provided for
herein or therein, or for any failure by the Borrower or any other Person to
perform any of its obligations hereunder or thereunder; (iii) be required to
initiate or conduct any litigation or collection proceedings under this
Agreement or the Common Security Agreement; or (iv) be responsible for any
action taken or omitted to be taken by it under this Agreement or the Common
Security Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own negligence or willful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact, and
the Administrative Agent shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it without
negligence or willful misconduct. The Administrative Agent may deem and treat
the payee of any Senior Note as the holder thereof for all purposes hereof
unless and until a notice of the assignment or transfer thereof shall have been
filed with the Administrative Agent.
10.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including without limitation any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or the Common Security Agreement, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement in accordance with instructions given by Majority Bank
Lenders, and such instructions of Majority Bank Lenders and any action taken or
failure to act pursuant thereto shall be binding on all Bank Senior Lenders.
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10.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Default (other
than, subject to Section 4.05, the non-payment of principal of or interest on
Bank Senior Loans or of commitment fees) unless the Administrative Agent has
received notice from the Collateral Trustee, a Bank Senior Lender, the Borrower
or the Partnership specifying such Event of Default or Default and stating that
such notice is a "Notice of Default". In the event that the Administrative Agent
receives such a notice of the occurrence of any Event of Default or Default or
of any such non-payment, the Administrative Agent shall give prompt notice
thereof to each of the Bank Senior Lenders. The Administrative Agent shall
(subject to Section 10.06) take such action with respect to such Event of
Default, Default or non-payment as shall be directed by Majority Bank Lenders,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Event
of Default, Default or non-payment as it may deem advisable in the best interest
of the Bank Senior Lenders, except to the extent that this Agreement or the
Common Security Agreement expressly requires that such action be taken, or not
be taken, only with the consent or upon the authorization of Majority Bank
Lenders or all Bank Senior Lenders.
10.04 Indemnification. Each of the Bank Senior Lenders agrees to
indemnify and hold harmless the Administrative Agent (to the extent not
reimbursed under Section 12.03, but without limiting the obligations of the
Borrower under said Section 12.03), ratably in accordance with the aggregate
principal amount of the Bank Senior Loans held by such Bank Senior Lender (or,
if no Bank Senior Loans of such Bank Senior Lender are at the time outstanding,
ratably in accordance with its Commitment), for any and all Losses that may be
imposed on, incurred by, or asserted against (including without limitation by
any Bank Senior Lender) the Administrative Agent arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement,
the Common Security Agreement or any other documents contemplated by or referred
to herein or the transactions contemplated hereby or thereby (including without
limitation the costs and expenses that the Borrower is obligated to pay under
Section 12.03, but excluding, unless a Default has occurred and is Continuing,
normal administrative costs and expenses incident to the performance of the
Administrative Agent's agency duties hereunder) or the enforcement of any of the
terms hereof or thereof, provided, however, that no Bank Senior Lender shall be
liable for any of the foregoing to the extent they arise from the negligence or
willful misconduct of the Administrative Agent.
10.05 Non-Reliance on Administrative Agent and Other Bank Senior
Lenders. Each Bank Senior Lender agrees that it has, independently and without
reliance on the Administrative Agent or any other Bank Senior Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Coker Project, the Borrower, the Partnership, the General
Partner, the Limited Partner and their respective Affiliates and its own
decision to enter into this Agreement and the other Financing Documents and that
it will, independently and without reliance upon the Administrative Agent or any
other Bank Senior Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking, or refraining from taking, any action under this
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Agreement and the other Financing Documents. The Administrative Agent shall not
be required to keep itself informed as to the performance or observance by the
Borrower or the Guarantors of this Agreement or the other Financing Documents,
or to inspect the properties or books of the Borrower or the Guarantors. Except
for notices, reports and other documents and information expressly required to
be furnished to the Bank Senior Lenders by the Administrative Agent under this
Agreement or the other Financing Documents (as to which the Administrative Agent
only shall have the duty to forward what it has received), the Administrative
Agent shall not have any duty or responsibility to provide any Bank Senior
Lender with any credit or other information concerning the affairs, financial
condition or business of the Coker Project, the Borrower, the Partnership, the
General Partner, the Limited Partner or any of their Affiliates that may come
into its possession or that of any of its Affiliates.
10.06 Failure to Act. Except for action expressly required of the
Administrative Agent under this Agreement or the other Financing Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or thereunder unless it shall receive further
assurances to its reasonable satisfaction from the Bank Senior Lenders of their
indemnification obligations under Section 10.04 against any and all Losses that
may be incurred by the Administrative Agent by reason of taking or continuing to
take any such action.
10.07 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this Section 10.07, the Administrative Agent may resign at any time by notifying
the Bank Senior Lenders in writing. The Administrative Agent may be removed as
agent hereunder upon 30 days' written notice by an instrument in writing signed
by Majority Bank Lenders. Upon any such resignation or removal, Majority Bank
Lenders shall have the right to appoint a successor. If no successor shall have
been so appointed by Majority Bank Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Bank Senior Lenders, appoint a successor Administrative Agent which shall be a
bank with an office in New York, New York, or an Affiliate of any such bank.
Upon the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of Section 10.04
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.
10.08 Notices. The Administrative Agent agrees to furnish promptly to
each Bank Senior Lender a copy of each written communication (including without
limitation financial information and project reports) received by it from any of
the Borrower or the Guarantors or any of their Affiliates expressly relating to,
and any amendment or waiver of any of the provisions of, this Agreement or any
other Financing Document or the transactions contemplated hereby and
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thereby, or from any Bank Senior Lender pursuant to or in relation to this
Agreement or any other Financing Document. In addition, the Administrative Agent
agrees to advise promptly each Bank Senior Lender of any material action taken,
or any action proposed by the Bank Senior Lenders to be taken that is not taken,
by the Bank Senior Lenders at any meeting of Bank Senior Lenders.
ARTICLE XI
GUARANTEE
11.01 Guarantee of the Guarantors. (a) Each of the Guarantors hereby
unconditionally, and jointly and severally, guarantees to each Bank Senior
Lender and the Administrative Agent (i) the due and punctual payment of the
principal of, premium on (if any) and interest on each Bank Senior Loan when and
as the same shall become due and payable, whether at the maturity thereof, by
declaration of acceleration or otherwise, in accordance with the terms of this
Agreement and the Common Security Agreement and (ii) the performance by the
Borrower of each of its other obligations under this Agreement and the other
Financing Documents. In the case of the failure of the Borrower or any successor
thereto punctually to pay to each Bank Senior Lender or the Administrative Agent
and or any such principal or interest and any other amounts due under this
Agreement and the Common Security Agreement, each of the Guarantors hereby
agrees to cause any such payments to be made punctually when and as the same
shall become due and payable, whether at the maturity thereof, by declaration of
acceleration or otherwise, as if such payments were made by the Borrower. Each
of the Guarantors hereby agrees that its obligations hereunder shall be as if it
were a principal debtor and obligor and not merely a surety, and shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any
invalidity, irregularity or unenforceability of any Bank Senior Loan or any
provision of this Agreement or of the other Financing Documents, any failure to
enforce the provisions of any Bank Senior Loan or any provision of this
Agreement or of the other Financing Documents, any waiver, modification or
indulgence granted to the Borrower with respect thereto by any Bank Senior
Lender, the Collateral Trustee or the Administrative Agent, any recovery of any
judgment against the Borrower to enforce the same, any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of the terms of any
Bank Senior Loan, the Agreement or any other Financing Document or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor.
(b) Each of the Guarantors hereby expressly (i) waives (A)
promptness, diligence, presentment, demand of payment, filing of claims with a
court in the event of merger, bankruptcy or insolvency of the Borrower, any
right to require a proceeding first against the Borrower, the benefit of
discussion, protest, order and notice with respect to any Bank Senior Loan or
the Senior Debt evidenced thereby and all demands whatsoever and (B) any
requirement that a Bank Senior Lender exhaust any right to take any action
against the Borrower or any other Person prior to or contemporaneously with
proceeding to exercise any right against the Guarantors and (ii) covenants that
this guarantee will not be discharged with respect to any Bank Senior Loan
except by payment in full of the principal amount due thereunder and any
interest thereon.
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<PAGE>
(c) Each of the Guarantors acknowledges and agrees for the benefit
of the Administrative Agent on behalf of the Bank Senior Lenders and the Bank
Senior Lenders that the Administrative Agent and the Bank Senior Lenders may,
subject to the other provisions of this Agreement and the Common Security
Agreement, directly and simultaneously proceed against any or all of the
Guarantors for the enforcement of this guarantee and against the Borrower. The
obligations of the Guarantors under this guarantee are independent of the
obligations of the Borrower, and a separate action or actions may be brought and
prosecuted against any or all of the Guarantors, whether or not (i) any action
or proceeding is brought against the Borrower, (ii) the Borrower is joined in
any such action or proceeding against any or all of the Guarantors or (iii) the
Administrative Agent or the Bank Senior Lenders have taken any action to collect
or attempted to collect otherwise such obligations from the Borrower or any
other Person liable therefor.
(d) Each of the Guarantors hereby irrevocably agrees that (i) this
Guarantee will constitute the direct and unconditional obligation of each of the
Guarantors and, (ii) except as set forth in Sections 5.05 and 10.12 of the
Common Security Agreement and other than in the case of claims which may be
granted preferential treatment pursuant to applicable law, this guarantee shall
rank pari passu with any Senior Debt Obligations incurred pursuant to a Senior
Loan Agreement to which the Borrower or the Partnership is party, and any Oil
Payment Reimbursement Obligations incurred pursuant to the Oil Payment
Reimbursement Agreement, and in each case shall be senior to all Subordinated
Debt.
(e) Each of the Guarantors hereby agrees that this guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time,
payment or any partial payment of any obligations or interest thereon is
rescinded or must otherwise be restored by a Bank Senior Lender to the Borrower
upon the bankruptcy or insolvency of the Borrower or any of the Guarantors.
(f) Each of the Guarantors hereby agrees that it will pay, or
reimburse any Bank Senior Lender on demand for, all reasonable costs and
expenses (including fees and disbursements of counsel) incurred by such Bank
Senior Lender in connection with any rescission or restoration of this
guarantee, including any such costs and expenses incurred in defending against
any claim alleging that any payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
(g) Each of the Guarantors hereby agrees that, until such time as
all Bank Senior Loans, and all amounts payable under this Guarantee and the
other Financing Documents are paid in full, none of the Guarantors shall be
entitled to enforce any claim or other rights, whether presently or hereafter
acquired against the Borrower, that arise from the existence, payment,
performance or enforcement of any of the Guarantors' obligations under this
guarantee, including without limitation any right of subrogation, reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of any Bank Senior Lender of any Bank Senior Loan and the
Administrative Agent on behalf of such Bank Senior Lender against the Borrower
or any collateral that any such Bank Senior Lender or the Administrative Agent
on behalf of such Bank Senior Lender acquires under this Agreement or any other
Financing Document, whether or not such
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<PAGE>
claim, remedy or right arises in equity, or under contract, statute or common
law, including without limitation the right to take or receive from the
Borrower, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any of the Guarantors in violation of the
preceding sentence at any time prior to the payment in full of all Bank Senior
Loans and all other amounts payable under this guarantee, such amount shall be
deemed to have been paid to the respective Guarantor or Guarantors for the
benefit of, and held in trust for the benefit of, the Bank Senior Lenders and
the Administrative Agent on behalf of the Bank Senior Lenders, and shall
forthwith be paid to the Administrative Agent for the benefit of the Bank Senior
Lenders to be credited and applied upon such guaranteed obligations, whether
matured or unmatured, in accordance with the terms of this Agreement and the
Common Security Agreement.
(h) The Guarantors shall give prompt written notice to the
Administrative Agent of any fact known to any of the Guarantors that would
prohibit the making of any payment to the Administrative Agent in respect of
this guarantee.
(i) Notwithstanding anything in this Article XI to the contrary, the
guarantee under clause (a) of this Section 11.1 shall not apply to the extent
any obligation is guaranteed pursuant to (i) the guarantee attached to the
securities evidencing Capital Markets Senior Debt in accordance with Section 205
and Article 12 of the Indenture, (ii) the guarantee of Bank Senior Debt pursuant
to Article X of the Secured Working Capital Facility or (iii) the guarantee of
Senior Debt Obligations and Oil Payment Reimbursement Obligations pursuant to
Section 12.01 of the Common Security Agreement.
ARTICLE XII
MISCELLANEOUS
12.01 Waiver. Except as expressly provided in this Agreement, no
failure on the part of the Administrative Agent or any Bank Senior Lender to
exercise, no delay in exercising, and no course of dealing with respect to, any
right, power or privilege under this Agreement or any Senior Note shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under this Agreement or any Senior Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided in this Agreement are cumulative and not exclusive of any
remedies provided by law.
12.02 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
or made under this Agreement (including without limitation any modifications of,
or waivers or consents under, this Agreement) shall be given or made in writing
and shall be deemed duly given when (i) personally delivered, (ii) sent by
facsimile transmission (but only if, immediately after the transmission, the
sender's facsimile machine records in writing the correct answerback), or (iii)
five days have elapsed after mailing by certified or registered mail, postage
pre-paid, in each case addressed to a party at the address or
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<PAGE>
facsimile transmission number specified below such party's name on the signature
pages hereof or to such other address or facsimile transmission number of which
such party has given notice. Any notice to be given by or on behalf of the
Borrower or the Guarantors may be given by the Partnership acting alone; and any
notice to be given to the Borrower or the Guarantors shall be deemed duly given
to both the Borrower and the Guarantors if given to the Guarantors alone. Any
notice to be given by or on behalf of the Borrower or the Guarantors to the Bank
Senior Lenders may be sent to the Administrative Agent. Notice of address or
facsimile transmission number change shall be effective only upon receipt.
12.03 Expenses, Etc. Whether or not any of the transactions
contemplated by this Agreement are consummated, the Borrower agrees to reimburse
(or cause to be reimbursed) the Administrative Agent and each Bank Senior Lender
on demand for all out-of-pocket costs and expenses of each of the Bank Senior
Lenders, and the Administrative Agent (including without limitation all
commissions, charges, costs and expenses, if any, for the conversion of
currencies, fees and expenses of legal counsel, consultants and advisors and
travel-related costs and expenses) made, paid, suffered or incurred in
connection with (a) the preparation, negotiation, execution and delivery,
syndication (both before and after the Closing Date) and, where appropriate,
authentication, registration and recordation of this Agreement, the other
Financing Documents and any other documents and instruments related hereto or
thereto (including legal opinions), (b) any amendment or modification to, or the
protection or preservation of any right or claim under, or consent or waiver in
connection with, this Agreement or any other Financing Document, any such other
document or instrument related hereto or thereto or any Collateral, (c) the
authentication, registration, translation, syndication and recordation (where
appropriate) and the delivery of the evidences of indebtedness relating to the
Bank Senior Loans and the disbursements thereof and (d) the syndication,
administration and enforcement (including with respect to a workout) of this
Agreement, the other Financing Documents and any other documents and instruments
referred to herein or therein.
The Borrower hereby agrees to indemnify the Administrative Agent and
each Bank Senior Lender and their respective directors, officers, employees,
agents and Affiliates from, and hold each of them harmless against, any and all
claims or Losses incurred by it arising out of or by reason of any investigation
or litigation or other proceedings (including without limitation any threatened
investigation or litigation or other proceedings) relating to, arising out of or
resulting from the Bank Senior Loans or any actual or proposed use by the
Borrower or the Partnership of the proceeds of the Bank Senior Loans, including
without limitation the fees and disbursements of counsel incurred in connection
with any such investigation or litigation or other proceedings. Without limiting
the generality of the foregoing, the Borrower shall indemnify the Administrative
Agent and each Bank Senior Lender and their respective directors, officers,
employees, agents and Affiliates from, and hold each of them harmless against,
any claims or Losses, including without limitation those described in the
preceding sentence relating to any Environmental Law including without
limitation those arising as a result of the past, present or future operations
of the Partnership or any of its Affiliates (or any predecessor in interest to
the Partnership or any of its Affiliates) or the environmental contamination of
any site or facility owned, operated or leased at any time by the Partnership or
any of its Affiliates (or any such predecessor in interest), any Release or
threatened
-28-
<PAGE>
Release of any Hazardous Substance by the Partnership or any of its Affiliates
(or any such predecessor in interest) at or from any such site or facility, or
any claim or Loss relating to any Environmental Law in connection with the Coker
Project including without limitation any such claim or Loss, arising as a result
of operations, environmental contamination or any Release or threatened Release
that shall occur during any period when the Administrative Agent or any Bank
Senior Lender shall be in possession of any such site or facility following the
exercise by the Administrative Agent or any Bank Senior Lender of any of its
rights and remedies under this Agreement or any of the Security Documents, that
is related to the operations, compliance, environmental contamination or any
Release or threatened Release occurring prior to such period or relates to
conditions previously in existence, or of practices employed by the Partnership
or any of its Affiliates, at such site or facility and the Borrower waives any
rights it may have under any Environmental Law relating to this indemnity or the
Administrative Agent or any Bank Senior Lender.
12.04 Amendments, Etc. Except as otherwise expressly provided in this
Agreement and Section 14.13 of the Common Security Agreement, any provision of
this Agreement may be amended, modified or supplemented only by an instrument in
writing signed by each of the parties hereto, and any provision of this
Agreement may be waived by Majority Bank Lenders or by the Administrative Agent
acting with the consent of Majority Bank Lenders, provided, however, that: (a)
no amendment, modification, supplement or waiver shall, unless by an instrument
signed by all of the Bank Senior Lenders, (i) increase, or extend the term of
the Commitments, or extend the time or waive any requirement for the reduction
or termination of the Commitments, (ii) extend the date fixed for the payment of
principal of, or interest on, any Bank Senior Loan or any commitment fee under
this Agreement or the Senior Notes, (iii) reduce the amount of any such payment
of principal, (iv) reduce the rate at which interest is payable thereon or any
commitment fee is payable under this Agreement or any of the Senior Notes, (v)
alter the rights or obligations of the Borrower to prepay Bank Senior Loans,
(vi) alter the terms of this Section 12.04 or 4.02, (vii) modify the definition
of the term "Majority Bank Lenders" or modify in any other manner the number or
percentage of the Bank Senior Lenders required to make any determinations or
waive any rights under this Agreement or to modify any provision hereof, (viii)
waive any of the conditions precedent set forth in Article VI, (ix) subject any
Bank Senior Lender to any additional obligations, (x) subject to the express
provisions of the Common Security Agreement, relinquish or diminish any security
or support for the Borrower's obligations under this Agreement, or (xi) release
the Collateral Trustee from the irrevocable instructions granted to it pursuant
to the Common Security Agreement, and (b) any modification or supplement of
Article X, insofar as it relates to the Administrative Agent, shall require the
consent of the Administrative Agent.
12.05 Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns.
12.06 Assignments and Participations. (a) The Borrower may not assign
any of its rights or obligations under this Agreement or any of the Senior Notes
without the prior written consent of all Bank Senior Lenders and the
Administrative Agent.
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<PAGE>
(b) Each Bank Senior Lender may assign all or a portion of its
Commitments and related Bank Senior Loans and Senior Notes (or, if the
Commitments have been terminated, its Bank Senior Loans and Senior Notes) to any
other entity, provided that any assignment to an entity other than an Affiliated
Lender of such Working Capital Lender shall require the consent of the
Administrative Agent (such consent not to be unreasonably withheld), and
provided, further, that no such assignment shall result in an assignor or
assignee (in each case, together with its Affiliated Lenders) who holds any
Commitments or Bank Senior Loans holding an aggregate amount of Commitments and
Bank Senior Loans that is greater than zero but less than $5,000,000 (or such
lower amount as may be approved by the Administrative Agent). Upon execution and
delivery by the assignee to the Lead Arranger and the Administrative Agent of an
instrument in writing, substantially in the form of Exhibit II hereto, pursuant
to which such assignee agrees to become a "Bank Senior Lender" for purposes of
this Agreement (if not already a Bank Senior Lender), (i) Schedule III shall be
deemed amended to reflect the Bank Senior Lender's Commitments after giving
effect to such assignment, (ii) upon the surrender of the relevant Senior Notes
by the assigning Bank Senior Lender (or against customary indemnification
arrangements) new Senior Notes will be issued, at the Borrower's expense, to
such new Bank Senior Lender and to the assigning Bank Senior Lender in
conformity with Section 2.06, (iii) the assignee shall have, to the extent of
such assignment, all the obligations, rights and benefits of a Bank Senior
Lender under this Agreement, holding the Commitment and Bank Senior Loans (or
portions thereof) assigned to it (in addition to the Commitment and Bank Senior
Loans, if any, theretofore held by such assignee), and under the Common Security
Agreement, any of the Senior Notes assigned to it and any other Financing
Document to which the Bank Senior Lenders are party, and (iv) the assigning Bank
Senior Lender shall, to the extent of such assignment, be released from the
Commitment (or portion thereof) so assigned. Upon each such assignment (except
any such assignment to an Affiliated Lender of the assigning Bank Senior
Lender), the assigning Bank Senior Lender shall pay the Administrative Agent an
assignment fee of $3,500.
(c) A Bank Senior Lender may sell or agree to sell to one or more
other Persons (each, a "Participant") a participation in all or any part of any
Bank Senior Loans, Senior Notes and Commitments held by it, or in its
Commitment, provided that (i) such Bank Senior Lender shall remain a "Bank
Senior Lender" for all purposes hereunder (and may not transfer or assign any
part of its Commitments except in accordance with clause (b) of Section 12.06)
and the Participant shall not constitute a "Bank Senior Lender" hereunder and
(ii) no Bank Senior Lender shall transfer, assign or grant any participation
under which the Participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Financing Document other than an amendment
or waiver referred to under clauses (i) through (iv), (x) or (xi) of clause (a)
in Section 12.04. In the case of any such participation, the Participant shall
not have any rights under this Agreement or any of the other Financing Documents
(the Participant's rights against the such Bank Senior Lender in respect of such
participation to be those set forth in the agreement executed by such Bank
Senior Lender and such Participant in connection with such participation) and
all amounts payable by the Borrower hereunder shall be determined as if such
Bank Senior Lender had not sold such participation.
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<PAGE>
(d) A Bank Senior Lender may furnish any information concerning the
Borrower or any of the Guarantors in the possession of such Bank Senior Lender
from time to time to assignees and Participants and their investment advisors
(including prospective assignees and Participants), provided that such assignees
and Participants and prospective assignees and Participants and their investment
advisors shall first execute and deliver to the Borrower or the applicable
Guarantor an agreement in writing to become subject to the provisions contained
in Section 14.12 of the Common Security Agreement.
(e) Nothing in this Agreement shall prevent or prohibit any Bank
Senior Lender from pledging its Bank Senior Loans and Notes hereunder to a
Federal Reserve Bank in support of borrowings made by such Bank Senior Lender
from such Federal Reserve Bank and, with the consent of the Administrative
Agent, which consent shall not be unreasonably withheld, any Bank Senior Lender
which is a fund may pledge all or any portion of its Bank Senior Loans and Notes
to its trustee in support of its obligations to its trustee. No pledge pursuant
to this clause (e) shall release the transferor Bank Senior Lender from any of
its obligations hereunder.
(f) Notwithstanding anything to the contrary contained herein, any
Bank Senior Lender (a "Granting Bank Senior Lender") may grant to a special
purpose funding vehicle (an "SPC"), identified as such in writing from time to
time by the Granting Bank Senior Lender to the Administrative Agent and the
Borrower, the option to provide the Borrower all or any part of any Bank Senior
Loan that such Granting Bank Senior Lender would otherwise be obligated to make
to the Borrower pursuant to this Agreement, provided that (i) nothing herein
shall constitute a commitment by any SPC to make any Bank Senior Loan, and (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Bank Senior Loan, the Granting Bank Senior Lender shall be
obligated to make such Bank Senior Loan pursuant to the terms hereof. The making
of a Bank Senior Loan by an SPC hereunder shall utilize the Commitment of the
Granting Bank Senior Lender to the same extent, and as if, such Bank Senior Loan
were made by such Granting Bank Senior Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Bank Senior Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other serious indebtedness of any SPC, it will
not, in its capacity as a party hereto or to any other Financing Document,
institute against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this clause (f), any SPC
may (x) with notice to, but without the prior written consent of, the Borrower
and the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Bank Senior Loans to the
Granting Bank Senior Lender or to any financial institutions (such institutions
consented to by the Administrative Agent) providing liquidity or credit support
to or for the account of such SPC to support the funding or maintenance of Bank
Senior Loans and (y) disclose on a confidential basis any non-public information
relating to its Bank Senior Loans to any rating agency, commercial paper dealer
or provider or any surety, guarantee or credit
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<PAGE>
or liquidity enhancement to such SPC. This clause (f) may not be amended without
the written consent of each SPC holding an interest in any Commitment or any
Bank Senior Loan.
12.07 Survival. The obligations of the Borrower under Article V and
Sections 12.03 and 12.11 and the obligations of the Bank Senior Lenders under
Section 10.04 shall survive the repayment of the Bank Senior Loans and the
termination of the Commitments. This Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Borrower's obligations under this Agreement, or any part thereof, is, pursuant
to Applicable Law, rescinded or reduced in amount, or must otherwise be restored
or returned by the Administrative Agent or any Bank Senior Lender. In the event
that any payment or any part thereof is so rescinded, reduced, restored or
returned, such obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, restored or returned.
12.08 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.09 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE PARTNERSHIP, THE
ADMINISTRATIVE AGENT AND THE BANK SENIOR LENDERS HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SENIOR NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.11 Consent to Jurisdiction. The Borrower and each of the Guarantors
confirm their consent and submission to jurisdiction, and their appointment of
CT Corporation System as agent for service of process, pursuant to clause (b) of
Section 14.12 of the Common Security Agreement, which Section is incorporated by
reference as it relates to the Borrower and the Guarantors as if fully set forth
in this Agreement.
12.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
PORT ARTHUR FINANCE CORP.,
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR COKER COMPANY L.P.,
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
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<PAGE>
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for the Bank Senior
Lenders
By: /s/ Cynthia Jo Powell
------------------------------------
Name: Cynthia Jo Powell
Title: Associate
By: /s/ Lydia Zaininger
------------------------------------
Name: Lydia Zaininger
Title: Vice President
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<PAGE>
Bank Senior Lenders
-------------------
Commitment
US$106,775,000 Credit Suisse First Boston
US$95,675,000 in respect of
Tranche A Facility
US$11,100,000 in respect of
Tranche B Facility
By: /s/ Jonathan Yellen
------------------------------------
Name: Jonathan Yellen
Title: Vice President
By: /s/ Emeka Ngwube
------------------------------------
Name: Emeka Ngwube
Title: Associate
Lending Office:
Addresses for Notices:
Attention:
Telephone:
Telecopier:
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<PAGE>
Bank Senior Lenders
-------------------
Commitment
US$84,475,000 Deutsche Bank AG, New York Branch
US$75,575,000 in respect of and or Cayman Islands Branch
Tranche A Facility
US$8,900,000 in respect of
Tranche B Facility
By: /s/ Cynthia Jo Powell
------------------------------------
Name: Cynthia Jo Powell
Title: Associate
By: /s/ Lydia Zaininger
------------------------------------
Name: Lydia Zaininger
Title: Vice President
Lending Office:
Addresses for Notices:
Attention:
Telephone:
Telecopier:
-36-
<PAGE>
Bank Senior Lenders
-------------------
Commitment
US$48,750,000 Goldman Sachs Credit Partners L.P.
US$33,750,000 in respect of
Tranche A Facility
US$15,000,000 in respect of
Tranche B Facility
By: /s/ Ed Forst
------------------------------------
Name: Ed Forst
Title: Managing Director
Lending Office:
Addresses for Notices:
Attention:
Telephone:
Telecopier:
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<PAGE>
Bank Senior Lenders
-------------------
Commitment
US$35,000,000 General Electric Capital Corporation
US$0 in respect
of Tranche A Facility
US$35,000,000 in respect
of Tranche B Facility
By: /s/ William J. Tamme
------------------------------------
Name: William J. Tamme
Title: Manager, Operations
Lending Office: 120 Long Ridge Road
Stamford, CT 06927
Addresses for Notices: 120 Long Ridge Road
Stamford, CT 06927
Attention: Don Peterson,
Manager of Portfolio
Administration
Telephone: 203-357-4580
Telecopier: 203-357-4890
<PAGE>
Bank Senior Lenders
-------------------
Commitment
US$20,000,000 Fuji Bank Ltd.
US$20,000,000 in respect
of Tranche A Facility
US$0 in respect of Tranche B
Facility
By: /s/ Yasuji Ikawa
------------------------------------
Name: Yasuji Ikawa
Title: EVP & GM
Lending Office: The Fuji Bank, Limited --
New York Branch
Addresses for Notices: Two World Trade
Center, 79th Floor
New York, NY 10048
Attention: Tina Catapano
Telephone: (212) 898-2099
Telecopier: (212) 488-8216
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Bank Senior Lenders
-------------------
Commitment
US$10,000,000 Citibank, N.A.
US$0 in respect of Tranche A
Facility
US$10,000,000 in respect of
Tranche B Facility
By: /s/ Ann B. Lane
------------------------------------
Name: Ann B. Lane
Title: Managing Director
Lending Office: Citibank, N.A.
Addresses for Notices: 2 Penn's Way
Suite 200
New Castle, DE 19720
Attention: Rebecca Kettle
Telephone: (302) 894-6038
Telecopier: (302) 894-6120
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Bank Senior Lenders
-------------------
Commitment
US$20,000,000 Heller Financial, Inc
US$0 in respect of Tranche A
Facility
US$20,000,000 in respect of
Tranche B Facility
By: /s/ Michael J. Hammond
------------------------------------
Name: Michael J. Hammond
Title: Vice President
Lending Office: 500 West Monroe St.
Chicago, IL 60661
Addresses for Notices:
Attention: Betsy Jacobson Young
Telephone: (312) 441-7233
Telecopier: (312) 441-7367
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<PAGE>
Appendix A
to Bank Senior Loan Agreement
DEFINITIONS
In this Appendix, the Bank Senior Loan Agreement and the Exhibits thereto
and in any other document that references this Appendix, the following terms
shall have the meanings assigned below (the singular includes the plural and
vice versa) (unless otherwise specified, section references in this Appendix are
to sections of the Bank Senior Loan Agreement):
"Additional Costs" shall have the meaning specified in clause (a) of
Section 5.01.
"Advance Date" shall have the meaning specified in Section 4.05.
"Affected Bank Senior Lender" shall have the meaning specified in Section
5.06.
"Affiliated Leaders" means, for any Bank Senior Lender, any of its
Affiliate and, in the case of a Bank Senior Lender that is a fund that
invests in loans, any other funds that invest in loans and are managed or
advised by the same investment advisor.
"Agreement" shall mean this Bank Senior Loan Agreement (including the
Appendix and Exhibits thereto).
"Alternate Base Rate" shall mean, for any day, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1.0%) is equal to the
Federal Funds Rate in effect on such day plus .050%.
"applicable Commitment Period" shall mean the period from and including the
Closing Date until the Commitment Termination Date during which Commitments
shall be available.
"Applicable Law" shall mean, with respect to any Person or the Coker
Project, any and all laws, statutes, regulations, rules, orders, injunctions,
decrees, writs and judgments applicable to such Person or the Coker Project.
"Applicable Lending Office" shall mean, for each Bank Senior Lender, the
"Lending Office(s)" of such Bank Senior Lender (or of an Affiliate of such
Bank Senior Lender) designated on the signature pages of this Agreement or
such other office(s), branch(es) or subsidiary(ies) of such Bank Senior
Lender (or of an Affiliate of such Bank Senior Lender) as such Bank Senior
Lender may from time to time specify to the Administrative Agent and the
Borrower as the office(s), branch(es) or subsidiary(ies) by which its Bank
Senior Loans are to be made and maintained, provided that, if any Bank Senior
Lender at any time so designates
A-1
<PAGE>
more than one "Lending Office", the "Applicable Lending Office" for such Bank
Senior Lender with respect to any specific Bank Senior Loan (or portion
thereof) held by such Bank Senior Lender shall be the "Lending Office"
designated on the books of such Bank Senior Lender as the Lending Office for
such Bank Senior Loan (or portion thereof).
"Arrangers" shall mean, collectively, Credit Suisse First Boston,
Deutsche Bank AG, New York Branch and Goldman Sachs Credit Partners L.P.
"Bank Senior Loan" shall have the meaning specified in Section 2.01.
"Base Rate" shall mean the greater of (i) the sum of the Prime Rate plus
400 basis points and (ii) the sum of the Federal Funds Rate plus 450 basis
points.
"Commitments" shall mean, for each Bank Senior Lender, the aggregate
obligation of such Bank Senior Lender to make Bank Senior Loans to the
Borrower, in an aggregate principal amount not to exceed the amount set forth
opposite the name of such Bank Senior Lender on Schedule III hereof (as the
same may be amended at any time or from time to time pursuant to the terms of
this Agreement), up to an aggregate principal amount for all Bank Senior
Lenders at any one time outstanding equal to $325 million (comprised as of
the date hereof of $225 million under the Tranche A Facility and $100 million
under the Tranche B Facility) (as the same may be modified amended to the
terms of this Agreement. Schedule III shall be automatically amended to the
extent Commitments are modified pursuant to this Agreement.
"Commitment Termination Date" shall mean, in the case of the Tranche B
Facility, October 15, 1999 and, in the case of the Tranche A Facility, the
date on which Substantial Reliability occurs, provided, however, that
Reallocation Senior Debt under the Tranche B Facility may also be incurred at
any time and from time to time after October 15, 1999 in accordance with
Section 2.01.
"Common Security Agreement" shall mean the Common Security Agreement, dated
as of August 19, 1999, among Port Arthur Finance Corp., Port Arthur Coker
Company L.P., Sabine River Holding Corp., Neches River Holding Corp.,
Winterthur International Insurance Company Limited, as Oil Payment Insurers
Administrative Agent, Bankers Trust Company, as Collateral Trustee for the
Secured Parties, Deutsche Bank AG, New York Branch, as Bank Senior Lenders
Administrative Agent, HSBC Bank USA as Capital Markets Trustee for the
Capital Markets Senior Lenders, and Bankers Trust Company, as Depositary
Bank, as the same may be amended or supplemented in accordance with its terms
and in effect from time to time.
"Covered Taxes" shall have the meaning specified in Section 5.05 hereof.
"Default" shall have the meaning specified in Section 9.01 hereof.
A-2
<PAGE>
"Default Interest Period" shall mean each successive period (not in excess
of six months) while the Borrower is in default with respect to any amount
payable by it under this Agreement, as the Administrative Agent shall choose
(with the consent of Majority Bank Lenders), the first such period to
commence as of the date on which such amount becomes due and each succeeding
such period to commence immediately upon the expiry of the immediately
preceding such period, provided that, in the absence of or pending such
consent of Majority Bank Lenders, each Default Interest Period shall have a
duration of one week.
"Disbursement Date" shall mean, (i) in the case of the Tranche A Facility,
each date on which a disbursement of any Bank Senior Loan under the Tranche A
Facility shall be made and (ii) in the case of the Tranche B Facility, the
date on which all of the Bank Senior Loans under the Tranche B Facility shall
be made in a single disbursement in accordance with Section 2.01.
"Event of Default" shall have the meaning specified in Section 9.01 hereof.
"Excess Cash Flow Mandatory Prepayments" shall mean Mandatory Prepayments
out of 75% of Excess Cash Flow pursuant to clause (b) of Section 2.05 of the
Common Security Agreement.
"Excluded Taxes" shall mean all present and future taxes, levies, imposts,
duties, deductions, withholdings, fees, liabilities and similar charges
imposed on or measured by the overall net income of any Bank Senior Lender
(or any office, branch or subsidiary of such Bank Senior Lender) or any
franchise taxes, taxes on doing business or taxes measured by capital or net
worth imposed on any Bank Senior Lender (or any office, branch or subsidiary
of such Bank Senior Lender), in each case imposed by the United States of
America, any State or locality, or any political subdivision or taxing
authority thereof or therein, or taxes on or measured by the overall net
income of any office, branch or subsidiary of a Bank Senior Lender or any
franchise taxes, taxes imposed on doing business or taxes measured by capital
or net worth imposed on any office, branch or subsidiary of such Bank Senior
Lender, in each case imposed by any foreign country or locality, or any
political subdivision or taxing authority thereof or therein in which such
Bank Senior Lender's principal office or Applicable Lending Office is
located.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that, (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day and (ii) if such rate is not
so published for any Business Day, the Federal Funds Rate for such Business
Day shall be the average rate charged to the Applicable Lending Office of the
Administrative Agent on such Business Day on such transactions as determined
by the Administrative Agent.
A-3
<PAGE>
"Final Maturity" shall mean (i) with respect to the Tranche A Facility,
January 15, 2007 and (ii) with respect to the Tranche B Facility, July 15,
2007.
"Granting Bank Senior Lender" shall have the meaning set forth in clause
(f) of Section 12.06.
"Guarantors" shall mean the Partnership, the General Partner and the
Limited Partner.
"Hold Level" shall mean, in the case of the Lead Arranger, $75,000,000, in
the case of Deutsche Bank AG, New York Branch, $60,000,000, and in the case
of Goldman Sachs Credit Partners L.P., $40,000,000.
"Interest Period" shall mean, with respect to any Bank Senior Loan, the
period commencing on (and including) the date such Bank Senior Loan is made
or the last day of the next preceding Interest Period for such Bank Senior
Loan, as the case may be, and ending on (but excluding) the next succeeding
Payment Date in the case of Bank Senior Loans made under the Tranche A
Facility or the next succeeding Tranche B Interest Payment Date in the case
of Bank Senior Loans made under the Tranche B Facility, provided, however,
that (i) if a Payment Date or a Tranche B Interest Payment Date, as the case
may be, is not a Business Day, the relevant date for purposes of this
definition shall be the immediately succeeding Business Day, and (ii) subject
to (i), any Interest Period that would otherwise end after the Final Maturity
Date shall end on the Final Maturity Date.
"Lead Arranger" shall mean Credit Suisse First Boston.
"LIBOR" shall mean, with respect to any Bank Senior Loan or any other
amount payable under this Agreement that is not paid when due, for the
Interest Period or Default Interest Period therefor, the interest rate per
annum for deposits in Dollars, if any, for a period equal to (or if there is
no equal, then most comparable to) such Interest Period or Default Interest
Period which appears on the page designated Page 3750 on the Telerate Service
(or such other page as may replace that page on that service for the purpose
of displaying the British Bankers Association Interest Settlement Rate) at or
about 11:00 a.m., London time, on the date two Eurodollar Business Days
before and for value on the first day of such Interest Period or Default
Interest Period. If such a rate does not appear on the page designated Page
3750 on the Telerate Service (or such other page) as may replace that page on
that service for the purpose of displaying the British Bankers Association
Interest Settlement Rate for any relevant Interest Period or Default Interest
Period, LIBOR for each Bank Senior Loan or other amount outstanding during
such Interest Period or Default Interest Period shall mean the interest rate
per annum determined by the Administrative Agent to be equal to the
arithmetic mean (rounded upward, if necessary, to the nearest fifth decimal
place) of the rates per annum for Dollar deposits for a period equal to (or,
if there is no equal, then most comparable to) such Interest Period or
Default Interest Period which appear on the Reuters Screen LIBO Page at or
about 11:00 a.m., London time, on the date two Eurodollar Business Days prior
to the first day of such Interest Period or Default Interest
A-4
<PAGE>
Period, provided that, if no such rate appears on the Reuters Screen LIBO
Page for any relevant Interest Period or Default Interest Period, LIBOR for
each Bank Senior Loan or other amount outstanding during such Interest Period
or Default Interest Period (a) shall mean the interest rate per annum
determined by the Administrative Agent to be equal to the average (rounded
upwards to the nearest fifth decimal place, if such average is not such a
decimal) of the interest rates per annum (as provided by the Reference Banks
to the Administrative Agent) at which deposits in Dollars are offered by the
principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at or about 11:00 a.m., London time (or
as soon thereafter as practicable), on the date two Eurodollar Business Days
before the first day of such Interest Period or Default Interest Period in
immediately available funds in an amount substantially equal to the aggregate
principal amount of the Bank Senior Loans or other amounts to be outstanding
during such Interest Period or Default Interest Period and for a period equal
to (or if there is no equal, then most comparable to) such Interest Period or
Default Interest Period; and (b) shall be determined by the Administrative
Agent pursuant to clause (a) above (i) on the basis of applicable rates
furnished to and received by the Administrative Agent from the Reference
Banks two Eurodollar Business Days before the first day of such Interest
Period or Default Interest Period, subject, however, to the provisions of
Section 5.02, or (ii) if any of the Reference Banks shall be unable or
otherwise fails to provide a rate for the purposes of determining LIBOR as
hereinabove provided, on the basis of the rate or rates quoted by the
remaining Reference Banks, provided, however, that, if fewer than two such
Reference Banks shall quote such a rate, LIBOR shall be determined in
accordance with Section 5.02.
"Loss" shall mean any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, including without
limitation interest and legal fees, or disbursements of any kind or nature
whatsoever.
"Margin" shall mean (i) with respect to the Tranche A Facility, 475 basis
points and (ii) with respect to the Tranche B Facility, 525 basis points, in
each case as increased from time to time in accordance with clause (b) or (c)
of Section 3.02.
"Negotiation Period" shall have the meaning specified in clause (x) of
Section 5.02.
"Notice of Default" shall have the meaning specified in Section 10.03.
"Participant" shall have the meaning specified in clause (c) of
Section 12.06.
"Payor" shall have the meaning specified in Section 4.05.
"Post-Default Rate" shall mean, in respect of any principal of any Bank
Senior Loan or any other amount payable under this Agreement (including
interest on a Bank Senior Loan) which is not paid when due, a rate per annum
equal to the sum of 2% plus the applicable Margin.
A-5
<PAGE>
"Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at
its principal office in The City of New York, New York.
"Reallocation Bank Senior Loan" shall mean any Bank Senior Loan pursuant to
which Reallocation Senior Debt is incurred by the Borrower.
"Reallocation Bank Senior Lender" shall mean any commercial financial
institution (other than a Shareholder or Affiliate of a Shareholder) that has
provided Reallocation Senior Debt or have entered into commitments to provide
Reallocation Senior Debt.
"Reallocation Senior Debt" shall mean any Bank Senior Debt extended by any
Person after the date hereof and prior to the reduction of each Arranger's
Commitments to $25,000,000.
"Reference Bank" shall mean Deutsche Bank AG (or its respective Applicable
Lending Offices, as the case may be) or such substitute banks designated as
such by the Administrative Agent from time to time to provide the quotations
required for the determination of LIBOR, and being the principal London
offices of each of such banks.
"Refusal Option" shall have the meaning set forth in clause (a) of
Section 2.09.
"Regulation A" and "Regulation D" shall mean, respectively, Regulation A
and Regulation D of the Board of Governors of the Federal Reserve System (or
any successor thereof), as the same may be amended, modified or supplemented
from time to time.
"Regulatory Change" shall mean, with respect to any Bank Senior Lender or
the Administrative Agent, any change occurring after the date of this
Agreement in any (or the adoption or making after such date of any new) law,
regulation, interpretation, directive, guideline or request (whether or not
having the force of law) applicable to such Bank Senior Lender or the
Administrative Agent of or by any court or governmental, monetary, fiscal or
other authority charged with the interpretation or administration thereof.
"Required Payment" shall have the meaning specified in Section 4.05.
"Reuters Screen LIBO Page" shall mean the display page so designated on the
Reuter Monitor Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying London interbank offered
rates for Dollar deposits).
"Senior Notes" shall have the meaning specified in Section 2.06.
"SPC" shall have the meaning set forth in clause (f) of Section 12.06.
"Substitute Basis" shall have the meaning specified in clause (x) of
Section 5.02.
A-6
<PAGE>
"Taxes" shall have the meaning specified in Section 5.05.
"Tranche A Facility" shall mean the Bank Senior Lenders' seven and one-half
year construction and term loan commitment in an aggregate amount of
$225 million.
"Tranche B Facility" shall mean the Bank Senior Lenders' eight year
construction and term loan commitment in an aggregate amount of $100 million.
"Tranche B Interest Payment Dates" shall mean January 15, April 15, July 15
and October 15 commencing July 15, 2000.
"Tranche A Lender" shall mean a Bank Senior Lender who has made and
currently has outstanding a Bank Senior Loan or Bank Senior Loans under the
Tranche A Facility.
"Tranche B Lender" shall mean a Bank Senior Lender who has made and
currently has outstanding a Bank Senior Loan or Bank Senior Loans under the
Tranche B Facility.
A-7
<PAGE>
SCHEDULE I
to Bank Senior Loan Agreement
AMORTIZATION SCHEDULE
FOR TRANCHE A FACILITY
Date % $ (millions)
----------------------------------------------------------------
15-Jan-02 5.3% 11.9
15-Jul-02 7.7% 17.4
15-Jan-03 7.7% 17.4
15-Jul-03 6.8% 15.3
15-Jan-04 6.8% 15.3
15-Jul-04 11.8% 26.5
15-Jan-05 12.3% 27.6
15-Jul-05 11.8% 26.5
15-Jan-06 11.8% 26.5
15-Jul-06 9.0% 20.3
15-Jan-07 9.0% 20.3
-----------------------------------------
Total 100% 225.0
=============
I-1
<PAGE>
SCHEDULE II
to Bank Senior Loan Agreement
AMORTIZATION SCHEDULE
FOR TRANCHE B FACILITY
Date % $ (millions)
----------------------------------------------------------------
15-Jan-02 0.5% 0.5
15-Jul-02 0.5% 0.5
15-Jan-03 0.5% 0.5
15-Jul-03 0.5% 0.5
15-Jan-04 0.5% 0.5
15-Jul-04 0.5% 0.5
15-Jan-05 0.5% 0.5
15-Jul-05 0.5% 0.5
15-Jan-06 0.5% 0.5
15-Jul-06 0.5% 0.5
15-Jan-07 0.5% 0.5
15-Jul-07 94.5% 94.5
-----------------------------------------
Total 100% 100.0
=============
II-1
<PAGE>
SCHEDULE III
to Bank Senior Loan Agreement
COMMITMENTS
<TABLE>
<S> <C>
Credit Suisse First Boston US$106,775,000
US$95,675,000 in respect of Tranche A Facility
US$11,100,000 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
Deutsche Bank AG, New York Branch US$84,475,000
US$75,575,000 in respect of Tranche A Facility
US$ 8,900,000 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
Goldman Sachs Credit Partners L.P. US$48,750,000
US$33,750,000 in respect of Tranche A Facility
US$15,000,000 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
General Electric Capital Corporation US$35,000,000
US$0 in respect of Tranche A Facility
US$35,000,000 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
Fuji Bank Ltd. US$20,000,000
US$20,000,000 in respect of Tranche A Facility
US$0 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
</TABLE>
III-1
<PAGE>
<TABLE>
<S> <C>
Citibank, N.A. US$10,000,000
US$0 in respect of Tranche A Facility
US$10,000,000 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
Heller Financial, Inc. US$20,000,000
US$0 in respect of Tranche A Facility
US$20,000,000 in respect of Tranche B Facility
- -------------------------------------------------------------------------------------------
</TABLE>
III-2
<PAGE>
EXHIBIT I
to Bank Senior Loan Agreement
Form of Senior Note
SENIOR NOTE
New York, New York
U.S. Dollars _________ __________, 1999
FOR VALUE RECEIVED, PORT ARTHUR FINANCE CORP., a corporation organized
under the laws of the State of Delaware (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under the laws
of the State of Delaware (the "Partnership"), SABINE RIVER HOLDING CORP., a
corporation organized under the laws of the State of Delaware (the "General
Partner"), and NECHES RIVER HOLDING CORP., a corporation organized under the
laws of the State of Delaware (the "Limited Partner" and, together with the
Partnership and the General Partner, the "Guarantors"), hereby unconditionally
and jointly and severally promise to pay to the order of ____________ (the "Bank
Senior Lender") at the principal office of __________________________ located at
________________, _____________, _________, in lawful money of the United States
and in immediately available funds, the principal amount of (a) _______________
U.S. Dollars ($ ________) or, if less, (b) the aggregate unpaid principal amount
of all Bank Senior Loans made by the Bank Senior Lender to the Borrower pursuant
to Section 2.01 of the Bank Senior Loan Agreement, dated as of August 19, 1999
(as amended, modified or supplemented from time to time, the "Bank Senior Loan
Agreement"), among the Borrower, the Guarantors, the Bank Senior Lenders from
time to time parties thereto and Deutsche Bank AG, New York Branch, as
Administrative Agent for and on behalf of the Bank Senior Lenders. The Borrower
and the Guarantors also promise to pay interest on the unpaid principal amount
of each Bank Senior Loan from the date of such Bank Senior Loan until such Loan
is paid in full, in like money at such office at the rate or rates per annum and
on the date or dates specified in the Bank Senior Loan Agreement.
The holder of this Senior Note is authorized to endorse on the schedule
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Bank
Senior Loan under the Tranche A Facility and the Tranche B Facility made
pursuant to Section 2.01 of the Bank Senior Loan Agreement, the date and amount
of each payment or prepayment of principal thereof and the length of each
Interest Period with respect thereto, which endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed, provided that
any failure by the holder of this Senior Note to make such an endorsement or any
error in such endorsement shall in no manner affect the validity or
enforceability of the obligation of the Borrower and the Guarantors to make
payments of principal and interest in accordance with the terms of this Senior
Note and the Bank Senior Loan Agreement.
E-I-1
<PAGE>
All parties hereto, whether as makers, endorsers or otherwise, severally
waive diligence, presentment, demand, protest and notice of any kind whatsoever.
The failure or forbearance by the holder to exercise any of its rights under
this Senior Note in any particular instance shall in no event constitute a
waiver thereof.
This Senior Note is one of the Senior Notes referred to in, and is entitled
to the benefits of, the Bank Senior Loan Agreement, which, among other things,
contains provisions for the acceleration of the maturity of the Bank Senior
Loans upon the happening of certain events, for Optional Pre-payment of the
principal of the Bank Senior Loans prior to the applicable Final Maturity Date
of each tranche thereof and for the amendment or waiver of certain provisions of
the Bank Senior Loan Agreement or this Senior Note, all upon the terms and
conditions therein specified. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Bank Senior Loan
Agreement.
Upon the taking of an Enforcement Action (as defined in the Common Security
Agreement referred to in the Bank Senior Loan Agreement) the principal of, and
interest on, this Senior Note may be declared to be forthwith due and payable in
the manner, upon the conditions and with the effect provided in the Bank Senior
Loan Agreement and in the Common Security Agreement.
This Senior Note may be prepaid with respect to each tranche as provided in
the Bank Senior Loan Agreement and the Common Security Agreement.
The Borrower and the Guarantors agree to pay, exclusively in lawful money
of the United States of America, costs of collection and attorneys' fees in case
default occurs in the payment of this Senior Note.
THIS SENIOR NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Senior Note is not negotiable and interests herein may be assigned
only upon the terms and conditions specified in the Bank Senior Loan Agreement.
E-I-2
<PAGE>
IN WITNESS WHEREOF, this Senior Note has been duly executed by the
undersigned as of the date first written above.
PORT ARTHUR FINANCE CORP.
By: ________________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: ________________________________
Name:
Title:
SABINE RIVER HOLDING CORP.
By: ________________________________
Name:
Title:
NECHES RIVER HOLDING CORP.
By: ________________________________
Name:
Title:
E-I-3
<PAGE>
SENIOR LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Amount of Bank Amount of Bank Amount of Amount of Amount of Amount of
Senior Loans Senior Loan Principal Repaid Principal Repaid Unpaid Principal Unpaid Principal Notation
Date Made Under Made Under Interest Toward Toward Balance of Balance of Made By
Tranche A Tranche B Period Tranche A Tranche B Tranche A Tranche B
Facility Facility Facility Facility Facility Facility
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-I-4
<PAGE>
EXHIBIT II
to Bank Senior Loan Agreement
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bank Senior Loan Agreement, dated as of August 19,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Bank Senior Loan Agreement"), among PORT ARTHUR FINANCE CORP., a corporation
organized under the laws of the State of Delaware (the "Borrower"), PORT ARTHUR
COKER COMPANY L.P., a limited partnership organized under the laws of Delaware
(the "Partnership"), SABINE RIVER HOLDING CORP., a corporation organized under
the laws of the State of Delaware (the "General Partner"), and NECHES RIVER
HOLDING CORP., a corporation organized under the laws of the State of Delaware
(the "Limited Partner" and, together with the Partnership and the General
Partner, the "Guarantors") (together, the "Borrowers"), the Bank Senior Lenders
from time to time party thereto (the "Bank Senior Lenders") and Deutsche Bank
AG, New York Bank, as Administrative Agent for the Bank Senior Lenders. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed thereto in the Bank Senior Loan Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and the
Assignee identified on Schedule I hereto (the "Assignee") hereby agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule I hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Bank Senior Loan Agreement with respect to those Bank Senior Loans contained
in the Bank Senior Loan Agreement as are set forth on Schedule I hereto
(individually, an "Assigned Loan"; collectively, the "Assigned Loans"), in a
principal amount for each Assigned Loan as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statement, warranties or representations made
in or in connection with any Financing Document, or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Financing Document or any other instrument or document furnished pursuant
thereto, other than that the Assignor has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and clear
of any such adverse claim; (b) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrowers or
any other obligor or the performance or observance by the Borrowers or any other
obligor of any of their respective obligations under any Financing Document or
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches any Senior Notes held by it evidencing the Assigned Loans and (i)
requests that the Administrative Agent exchange
E-II-1
<PAGE>
the attached Senior Notes for new Senior Notes payable to the Assignee and (ii)
if the Assignor has retained any interest in the Assigned Loan, requests that
the Administrative Agent exchange the attached Senior Notes for new Senior Notes
payable to the Assignor and the Assignee, in each case in amounts which reflect
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
a copy of the Financing Documents together with copies of the financial
statements or other information delivered pursuant to clause (d) of Section
12.06 of the Bank Senior Loan Agreement referred to therein and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank Senior Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Financing
Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to take such
action as agent (in its capacity as Administrative Agent under the Bank Senior
Loan Agreement) on its behalf and to exercise such powers and discretion under
the Financing Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Financing Documents and will
perform in accordance with its terms all the obligations which by the terms of
the Financing Documents are required to be performed by it as a Bank Senior
Lender.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be earlier than five
Business Days after the date of such acceptance and recording by the
Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts that have accrued prior to the Effective Date and to
the Assignee for amounts which have accrued on and subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Bank Senior Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Bank Senior Lender
thereunder and under such other agreements and shall be bound by the provisions
thereof and (b) the Assignor shall, to the extent provided in this Agreement and
E-II-2
<PAGE>
Acceptance, relinquish its rights and be released from its obligations under the
Bank Senior Loan Agreement and such other agreements.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
E-II-3
<PAGE>
Schedule I
to Assignment and Acceptance
Name of Assignor:_______________________________________
Name of Assignee:_______________________________________
Effective Date of Assignment:___________________________
Commitment Commitment
Principal Amount Principal Amount Percentage Percentage
Assigned of Assigned of Assigned of Assigned of
Tranche A Facility Tranche B Facility Tranche A Facility Tranche B Facility
------------------ ------------------ ------------------ ------------------
$_________________ $_________________ __________________% __________________%
$_________________ $_________________ __________________% __________________%
[Name of Assignee] [Name of Assignor]
By:___________________________________ By:_____________________________________
Name: Name:
Title: Title:
E-II-4
<PAGE>
Consented to:
- ------------
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of
the Bank Senior Lenders
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:_____________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By:_____________________________
Name:
Title:
E-II-5
<PAGE>
Exhibit 10.04
EXECUTION COPY
================================================================================
SECURED WORKING CAPITAL FACILITY
among
PORT ARTHUR FINANCE CORP.,
as Borrower,
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.,
as General Partner of the Partnership and Guarantor,
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership and Guarantor,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of the Working Capital Lenders,
and
THE WORKING CAPITAL LENDERS PARTY HERETO
Dated as of August 19, 1999
================================================================================
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I
DEFINITIONS
1.01 Terms Not Otherwise Defined.......................................... 1
1.02 Certain Defined Terms................................................ 2
ARTICLE II
LOANS
2.01 Loans
2.02 Minimum Borrowing Amounts, etc...................................... 8
2.03 Notice of Borrowing................................................. 8
2.04 Disbursement of Funds............................................... 9
2.05 Notes............................................................... 9
2.06 Conversions......................................................... 10
2.07 Pro Rata Borrowings................................................. 11
2.08 Interest............................................................ 12
2.09 Interest Periods.................................................... 12
2.10 Increased Costs; Illegality; etc.................................... 13
2.11 Compensation; Breakage.............................................. 14
2.12 Change of Lending Office............................................ 17
2.13 Replacement of Working Capital Lenders.............................. 17
2.14 Optional Prepayments of Loans....................................... 18
2.15 Pro Rata Prepayments................................................ 19
2.16 Mandatory Prepayments............................................... 20
ARTICLE III
LETTERS OF CREDIT
3.01 Letters of Credit................................................... 20
3.02 Letter of Credit Requests........................................... 22
3.03 Letter of Credit Participations..................................... 23
3.04 Agreement to Repay Letter of Credit Drawings........................ 25
3.05 Increased Costs..................................................... 26
3.06 Indemnification..................................................... 27
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE IV
FEES; COMMITMENTS
4.01 Fees................................................................ 28
4.02 Voluntary Termination or Reduction of Commitments................... 28
4.03 Termination of Commitments.......................................... 29
ARTICLE V
PAYMENTS
5.01 Method and Place of Payment......................................... 29
5.02 Pro Rata Treatment.................................................. 29
5.03 Right of Set-off.................................................... 30
ARTICLE VI
CONDITIONS PRECEDENT
6.01 Conditions Precedent for Loans....................................... 31
6.02 Conditions Precedent for Letters of Credit........................... 31
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01 Representations and Warranties of the Borrower and the Guarantors.... 32
ARTICLE VIII
COVENANTS
8.01 Covenants of the Borrower and the Guarantors......................... 32
ARTICLE IX
EVENTS OF DEFAULT
9.01 Events of Default.................................................... 32
ARTICLE X
GUARANTEE
10.01 Guarantee of the Guarantors..................................... 33
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE XI
THE ADMINISTRATIVE AGENT
11.01 Incorporation by Reference 35
ARTICLE XII
MISCELLANEOUS
12.01 Waiver............................................................... 36
12.02 Notices.............................................................. 36
12.03 Expenses, Etc........................................................ 36
12.04 Amendments, Etc...................................................... 38
12.05 Successors and Assigns............................................... 38
12.06 Assignments and Participation........................................ 38
12.07 Survival............................................................. 40
12.08 Counterparts......................................................... 40
12.09 GOVERNING LAW........................................................ 40
12.10 WAIVER OF JURY TRIAL................................................. 40
12.11 Consent to Jurisdiction.............................................. 41
12.12 Severability......................................................... 41
12.13 Register............................................................. 41
APPENDICES
EXHIBIT I........................................................ Form of Note
EXHIBIT II................................... Form of Assignment and Acceptance
EXHIBIT III........................................ Form of Notice of Borrowing
</TABLE>
-iii-
<PAGE>
SECURED WORKING CAPITAL FACILITY
This Agreement, dated as of August 19, 1999, is made among:
PORT ARTHUR FINANCE CORP., a company incorporated under the laws of
the State of Delaware, as Borrower (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under
the laws of the State of Delaware, as Partnership and Guarantor (the
"Partnership"),
SABINE RIVER HOLDING CORP., a company incorporated under the laws of
the State of Delaware, as General Partner of the Partnership and Guarantor (the
"General Partner"),
NECHES RIVER HOLDING CORP., a company incorporated under the laws of
the State of Delaware, as Limited Partner of the Partnership and Guarantor (the
"Limited Partner" and together with the Partnership and the General Partner, the
"Guarantors"),
EACH OF THE WORKING CAPITAL LENDERS PARTY HERETO, as identified on the
signature pages of this Agreement or that, pursuant to Section 2.13 or 12.06,
shall become a Working Capital Lender under this Agreement (collectively, the
"Working Capital Lenders"), and
DEUTSCHE BANK AG, NEW YORK BRANCH, a New York State licensed branch of
a German bank, as Administrative Agent for and on behalf of the Working Capital
Lenders (the "Administrative Agent").
WHEREAS, the Borrower desires that the Working Capital Lenders provide
working capital for the Coker Project, and the Working Capital Lenders are
willing to provide such working capital, subject to, and on the terms and
conditions set forth in, this Agreement and the other Financing Documents;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and undertakings contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Terms Not Otherwise Defined. Capitalized terms used and not
otherwise defined in this Agreement have the meanings specified in the Common
Security Agreement (including Appendix A thereto).
<PAGE>
1.02 Certain Defined Terms. The following terms have the following
meanings:
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to the Common Security Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to alt directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person.
"Affiliated Lenders" means, for any Working Capital Lender, any of its
Affiliates and, in the case of a Working Capital Lender that is a fund that
invests in loans, any other funds that invest in loans and are managed or
advised by the same investment advisor.
"Agreement" shall mean this Secured Working Capital Facility, as the
same may be from time to time modified, amended or supplemented from time to
time.
"Applicable Margin" shall mean a percentage equal to (a) in the case
of Base Rate Loans, 3.75% and (b) in the case of Eurodollar Loans, 4.75%, in
each of cases (a) and (b), as such Applicable Margin may be increased from time
to time pursuant to Section 2.08(c).
"Arrangers" shall have the meaning set forth in the Bank Senior Loan
Agreement.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit II hereto
(appropriately completed).
"Available Amount" of each Letter of Credit shall mean the maximum
amount available to be drawn thereunder (regardless of whether any conditions
for drawing could then be met).
"Base Rate" at any time shall mean the higher of (x) the rate which is
1/2 of 1% in excess of the Federal Funds Rate and (y) the Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 2.08(a).
"Borrowing" shall mean the borrowing of one Type of Loans of one
Tranche by the Borrower from all the Working Capital Lenders who have
Commitments to make
-2-
<PAGE>
Loans of such Tranche on the date of borrowing (or resulting from a conversion
or conversions on such date) having, in the case of Eurodollar Loans, the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section 2.10
shall be considered part of the related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York or London interbank Eurodollar market.
"Commitment Fee" shall have the meaning provided in Section 4.01(a).
"Commitments" means any Trade Commitments and any Compensating L/C
Commitments.
"Compensating Letter of Credit" shall have the meaning specified in
Section 3.01(a).
"Compensating L/C Loans" shall have the meaning specified in Section
2.01(a).
"Compensating L/C Commitment" shall mean, with respect to each Working
Capital Lender, the amount set forth opposite such Working Capital Lender's name
in Part A of Schedule I directly below the column entitled "Compensating L/C
Commitment", as the same may be reduced from time to time pursuant to this
Agreement.
"Effective Date" shall mean the date of this Agreement.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in clause (b) of Section 2.08.
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the rate per annum determined by the Administrative
Agent, at approximately 11:00 A.M. (London time) on the date which is two
Business Days prior to the beginning of the relevant Interest Period (as
specified in the applicable Notice of Borrowing or Notice of Conversion) by
reference to the British Bankers Association Interest Settlement Rates for
deposits in U.S. Dollars (as set forth by any service which has been nominated
by the British Bankers Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period
(provided that, to the extent that an interest rate is not ascertainable
pursuant to the foregoing provision of
-3-
<PAGE>
this definition, the "Eurodollar Rate" shall be the interest rate per annum,
determined by the Administrative Agent to be the average of the rates per annum
at which deposits in U.S. Dollars are offered for such relevant Interest Period
to major banks in the London interbank market in London, England by the
Administrative Agent at approximately 11:00 A.M. (London time) on the date which
is two Business Days prior to the beginning of such Interest Period) divided
(and rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including without limitation any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Excluded Taxes" shall have the meaning set forth in the Bank Senior
Loan Agreement.
"Facility Expiry Date" means January 15, 2007.
"Facing Fee" shall have the meaning provided in clause (c) of Section
4.01.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 4.01.
"Hold Level" shall have the meaning set forth in the Bank Senior Loan
Agreement as in effect on the date hereof.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period", with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 2.09.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Working Capital Lender to make available its portion of any
Borrowing or (ii) a Working
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<PAGE>
Capital Lender having notified the Administrative Agent and/or the Borrower that
it does not intend to comply with its obligations under Section 2.01, 3.01 or
3.03 of this Agreement.
"Letter of Credit" means any Trade Letter of Credit and any
Compensating Letter of Credit.
"Letter of Credit Fees" shall have the meaning provided in clause (b)
of Section 4.01.
"Letter of Credit Issuer" shall mean Deutsche Bank and any other
Working Capital Lender which, at the request of the Borrower and with the
consent of the Administrative Agent, agrees in such other Working Capital
Lender's sole discretion to become a Letter of Credit Issuer for purposes of
issuing Letters of Credit pursuant to Article III. The sole Letter of Credit
Issuer on the Effective Date shall be Deutsche Bank.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Available Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
3.02(a).
"Loans" shall mean the Trade Loans and the Compensating L/C Loans.
"Majority Trade Lenders" means, at any time, Working Capital Lenders
holding at least 50% of the aggregate of (a) the outstanding principal amount of
Trade Loans outstanding, (b) the aggregate Letter of Credit Outstandings (and
participations therein) in respect of Trade Letters of Credit and (c) the
aggregate amount of outstanding Trade Commitments.
"Majority Compensating L/C Lenders" means, at any time, Working
Capital Lenders holding at least 50% of the aggregate of (a) the outstanding
principal amount of Compensating L/C Loans outstanding, (b) the aggregate Letter
of Credit Outstandings (and participations therein) in respect of Compensating
Letters of Credit and (c) the aggregate amount of outstanding Compensating L/C
Commitments.
"Maturity Date" shall mean January 15, 2007.
"Minimum Borrowing Amount" shall mean $1,000,000.
"Note" shall have the meaning set forth in clause (a) of Section 2.05.
"Notice of Borrowing" shall have the meaning provided in clause (a) of
Section 2.03.
-5-
<PAGE>
"Notice of Conversion" shall have the meaning provided in Section
2.06.
"Notice Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006
or such other office as the Administrative Agent may designate to the Borrower
and the Working Capital Lenders from time to time.
"Oil Payment Letter of Credit" shall have the meaning set forth in
Section 3.01(a).
"Participant" shall have the meaning provided in clause (a) of Section
3.03.
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006
or such other office as the Administrative Agent may designate to the Borrower
and the Working Capital Lenders from time to time.
"Percentage" of any Working Capital Lender means (a) in respect of
Trade Commitments (or Loans made or Trade Letters of Credit issued thereunder),
a fraction (expressed as a percentage) the numerator of which is the Trade
Commitment of such Working Capital Lender at such time and the denominator of
which is the aggregate amount of Trade Commitments of all Working Capital
Lenders at such time, (b) in respect of Compensating L/C Commitments (or
Compensating Letters of Credit issued thereunder), a fraction (expressed as a
percentage) the numerator of which is the Compensating L/C Commitment of such
Working Capital Lender at such time and the denominator of which is the
aggregate amount of Compensating L/C Commitments of all Working Capital Lenders
at such time. Notwithstanding the foregoing, if the Percentage of any Working
Capital Lender is to be determined after the termination of either all Trade
Commitments or all Compensating L/C Commitments, then the Percentages of the
Working Capital Lenders shall be determined immediately prior (and without
giving effect) to such termination.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof
"Prime Lending Rate" shall mean the rate which Deutsche Bank A.G., New
York Branch, announces from time to time as its prime lending or other similar
rate, the Prime Lending Rate to change when and as such prime lending or other
similar rate changes. The Prime Lending Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
Deutsche Bank may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
"Register" shall have the meaning provided in Section 12.13.
-6-
<PAGE>
"Replaced Lender" shall have the meaning provided in Section 2.13.
"Replacement Lender" shall have the meaning provided in Section 2.13.
"Required Working Capital Lenders" means (a) in respect of Trade Loans
or Trade Letters of Credit, Majority Trade Lenders and (b) in respect of
Compensating L/C Loans or Compensating Letters of Credit, Majority Compensating
L/C Lenders.
"Responsible Officer" shall mean, with respect to (i) the delivery of
Notices of Borrowing, Notices of Conversion, Letter of Credit Requests and
similar notices, the chief operating officer, any treasurer or other financial
officer of the Borrower, (ii) delivery of financial information and officer's
certificates pursuant to this Agreement, the chief operating officer, any
treasurer or other financial officer of the Borrower and (iii) any other matter
in connection with this Agreement or any other Credit Document, any officer (or
a person or persons so designated by any two officers) of the Borrower, in each
case to the extent reasonably acceptable to the Administrative Agent.
"Trade Commitment" shall mean, with respect to each Working Capital
Lender, the amount set forth opposite such Working Capital Lender's name in Part
A of Schedule I directly below the column entitled "Trade Commitment", as the
same may be reduced from time to time pursuant to the Agreement.
"Trade Letter of Credit" shall have the meaning set forth in Section
3.01(a).
"Trade Loans" shall have the meaning set forth in Section 2.01(a).
"Tranche" shall mean (a) all the Trade Loans or (b) all the
compensating L/C Loans.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
"Unpaid Drawing" shall have the meaning provided in Section 3.04(a).
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
"Working Capital Lender" shall mean each financial institution listed
on Schedule I (as amended from time to time) as a "Working Capital Lenders", as
well as any Person which becomes a Working Capital Lender hereunder pursuant to
Section 12.06(b) or Section 2.13.
-7-
<PAGE>
ARTICLE II
LOANS
2.01 Loans. (a) On the terms and subject to the conditions set forth
in this Agreement, each Working Capital Lender hereby severally agrees to make,
at any time during the period from and including the Effective Date and prior to
the termination of the applicable Commitments
(i) loans and advances ("Trade Loans") to the Borrower to be used by
the Borrower to finance or refinance purchases of non-Maya crude oil, for
the Borrower's general corporate purposes or to reimburse any Letter of
Credit Issuer for any drawing on any Trade Letter of Credit, in an
aggregate principal amount not to exceed, for any Working Capital Lender at
any time, that aggregate principal amount which, together with (A) the
aggregate outstanding principal amount of Trade Loans held by such Working
Capital Lender and (B) the aggregate amount of such Working Capital
Lender's Participations in Letter of Credit Outstandings in respect of
Trade Letters of Credit (exclusive of Unpaid Drawings which are being
repaid with the proceeds of such Loans simultaneously with the incurrence
of such Loans), equals the Trade Commitment, if any, of such Working
Capital Lender at such time; and
(ii) loans and advances ("Compensating L/C Loans") to the Borrower to
be used by the Borrower to reimburse any Letter of Credit Issuer for any
drawing on a Compensating Letter of Credit, in an aggregate principal
amount not to exceed, for any Working Capital Lender at any time, that
aggregate principal amount which, together with (A) the aggregate
outstanding principal amount of Compensating L/C Commitments held by such
Working Capital Lender and (B) the aggregate amount of such Working Capital
Lender's Participations in Letter of Credit Outstandings in respect of
Compensating Letters of Credit (exclusive of Unpaid Drawings which are
being repaid with the proceeds of such Loans simultaneously with the
incurrence of such Loans), equals the Compensating L/C Commitments, if any,
of such Working Capital Lender at such time.
(b) Each Loan (i) shall be denominated in U.S. Dollars, (ii) may, at
the option of the Borrower, be incurred and maintained as, or converted into,
Base Rate Loans or Eurodollar Loans, provided that all Loans made as part of the
same Borrowing shall, unless otherwise specifically provided herein, consist of
Loans of the same Type, and (iii) may be repaid and reborrowed in accordance
with the provisions of this Agreement.
2.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
of each Borrowing of Loans shall not be less than the Minimum Borrowing Amount.
More than one Borrowing may be incurred on any day, provided that at no time
shall there be outstanding more than ten Borrowings of Eurodollar Loans.
-8-
<PAGE>
2.03 Notice of Borrowing. (a) Whenever the Borrower desires to make a
Borrowing under this Agreement, a Responsible Officer of the Borrower shall give
the Administrative Agent at its Notice Office, prior to 12:00 noon (New York
time), at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Eurodollar Loans, and at
least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Base Rate Loans to be made under this
Agreement. Each such notice (each, a "Notice of Borrowing") shall, except as
otherwise expressly provided in Section 2.10, be irrevocable, and, in the case
of each written notice and each confirmation of telephonic notice, shall be in
the form of Exhibit III hereto, appropriately completed to specify: (i) the
aggregate principal amount of Loans to be made pursuant to such Borrowing, (ii)
the date of such Borrowing (which shall be a Business Day), (iii) whether the
Borrowing shall consist of Trade Loans or Compensating L/C Loans and (iv)
whether the respective Borrowing shall consist of Base Rate Loans or, to the
extent permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall promptly give each Working Capital Lender written notice (or telephonic
notice promptly confirmed in writing) of each proposed Borrowing, of such
Working Capital Lender's proportionate share thereof, if any, and of the other
matters required by the immediately preceding sentence to be specified in the
Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent in good faith to be from a Responsible Officer of the
Borrower. In each such case, the Administrative Agent's record of the terms of
such telephonic notice shall be conclusive evidence of the contents of such
notice, absent manifest error.
2.04 Disbursement of Funds. (a) Not later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Working Capital
Lender will make available its pro rata share (determined in accordance with
Section 2.07), if any, of each Borrowing requested to be made on such date in
the manner provided below. All amounts shall be made available to the
Administrative Agent in U.S. Dollars and in immediately available funds at the
Payment Office and the Administrative Agent promptly will make available to the
Borrower by depositing to its account at the Payment Office the aggregate of the
amounts so made available. Unless the Administrative Agent shall have been
notified by any Working Capital Lender prior to the date of Borrowing that such
Working Capital Lender does not intend to make available to the Administrative
Agent its portion of a Borrowing to be made on such date, the Administrative
Agent may assume that such Working Capital Lender has made such amount available
to the Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, may (in its sole discretion and without
any obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made
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<PAGE>
available to the Administrative Agent by such Working Capital Lender and the
Administrative Agent has made available the same to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Working Capital Lender. If such Working Capital Lender does not
pay such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover on demand from
such Working Capital Lender or the Borrower, as the case may be, interest on
such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Working
Capital Lender, the overnight Federal Funds Rate or (y) if paid by the Borrower,
the then applicable rate of interest, calculated in accordance with Section
2.08.
(b) Nothing in this Agreement shall be deemed to relieve any Working
Capital Lender from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Working Capital
Lender as a result of any default by such Working Capital Lender hereunder.
2.05 Notes. (a) The Borrower's obligation to pay the principal of,
and interest on, all the Loans of each Tranche made to the Borrower by each
Working Capital Lender shall be set forth on the Register maintained by the
Administrative Agent pursuant to Section 12.13 and, subject to the provisions of
clause (d) of this Section 2.05, shall be evidenced by a promissory note
substantially in the form of Exhibit I with blanks appropriately completed in
conformity herewith (each, a "Note" and, collectively, the "Notes").
(b) The Note issued to each Working Capital Lender in respect of each
Tranche shall (i) be executed by the Borrower and each Guarantor, (ii) be
payable to such Working Capital Lender or its registered assigns and be dated
the date of issuance thereof, (iii) be in a stated principal amount equal to the
Trade Commitment or Compensating L/C Commitment, as the case may be, of such
Working Capital Lender and be payable in the principal amount of the outstanding
Loans of such Tranche evidenced thereby, (iv) mature on the Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 2.08 in respect
of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to prepayment as provided in Sections 2.14 and 2.16 and
(vii) be entitled to the benefits of this Agreement and the other Financing
Documents.
(c) Each Working Capital Lender will note on its internal records the
amount of each Loan made by it to the Borrower and each payment in respect
thereof and will, prior to any transfer of any of its Notes, endorse on the
schedule annexed thereto the outstanding principal amount of Loans evidenced
thereby. Failure to make any such notation
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or any error in such notation shall not affect the Borrower's obligations in
respect of such Loans.
(d) Notwithstanding anything to the contrary contained in this
Section 2.05 or elsewhere in this Agreement, Notes shall only be delivered to
Working Capital Lenders which at any time specifically request the delivery of
such Notes. No failure of any Working Capital Lender to request or obtain a Note
evidencing its Loans to the Borrower shall affect or in any manner impair the
obligations of the Borrower to pay the Loans (and all related obligations) which
would otherwise be evidenced thereby in accordance with the requirements of this
Agreement, and shall not in any way affect the security therefor provided by the
Financing Documents. Any Working Capital Lender which does not have a Note
evidencing its outstanding Loans shall in no event be required to make the
notations otherwise described in clause (c) of this Section 2.05. At any time
when any Working Capital Lender requests the delivery of a Note to evidence any
of its Loans, the Borrower shall promptly execute and deliver to the respective
Working Capital Lender the requested Note or Notes in the appropriate amount or
amounts to evidence such Loans.
2.06 Conversions. The Borrower shall have the option to convert on
any Business Day occurring on or after the Effective Date all or a portion at
least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of Loans of any Tranche made pursuant to one or more Borrowings
of one or more Types of Loans into a Borrowing or Borrowings of another Type of
Loan of the same Tranche, provided that (i) except as otherwise provided in
clause (b) of Section 2.10 or unless the Borrower pays all breakage costs and
other amounts owing to each Working Capital Lender pursuant to Section 2.11
concurrently with any such conversion, Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an Interest Period applicable to the
Loans being converted, and no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount, (ii) Base
Rate Loans may not be converted into Eurodollar Loans if a Default, Event of
Default or Potential Default has occurred and is continuing on the date of the
conversion, unless the holders of more than 50% of the aggregate outstanding
principal amount of such Base Rate Loans (or the Administrative Agent on their
behalf) have notified the Borrower that such an election at such time would not
be disadvantageous to such holders and (iii) Borrowings of Eurodollar Loans
resulting from this Section 2.06 shall be limited in number as provided in
Section 2.02. Each such conversion shall be effected by the Borrower by giving
the Administrative Agent at its Notice Office, prior to 12:00 noon (New York
time), at least three Business Days' (or one Business Day's in the case of a
conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each, a "Notice of Conversion") specifying the
Loans to be so converted, the Borrowing pursuant to which the Loans were made
and the Tranche of such Borrowing and, if to be converted into a Borrowing of
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Working Capital Lender prompt notice of any
such proposed conversion affecting any of its Loans. Upon any
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such conversion, the proceeds thereof will be deemed to be applied directly on
the day of such conversion to prepay the outstanding principal amount of the
Loans being converted.
2.07 Pro Rata Borrowings. All Borrowings of Loans of any Tranche
under this Agreement (including Mandatory Borrowings) shall be incurred by the
Borrower from the Working Capital Lenders pro rata on the basis of their
Percentages in the Commitments applicable to such Tranche. It is understood that
no Working Capital Lender shall be responsible for any default by any other
Working Capital Lender of its obligation to make Loans under this Agreement, and
that each Working Capital Lender shall be obligated to make the Loans to be made
by it hereunder, regardless of the failure of any other Working Capital Lender
to fulfill its commitments hereunder.
2.08 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan made to it from the date of
the Borrowing thereof until the earlier of (i) the maturity (whether by
acceleration or otherwise) of such Base Rate Loan and (ii) the conversion of
such Base Rate Loan to a Eurodollar Loan pursuant to Section 2.06, at a rate per
annum which shall at all times be the relevant Applicable Margin plus the Base
Rate, each as in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan made to it from the date of the
Borrowing thereof until the earlier of (i) the maturity (whether by acceleration
or otherwise) of such Eurodollar Loan and (ii) the conversion of such Eurodollar
Loan to a Base Rate Loan pursuant to Section 2.06, 2.09 or clause (b) of Section
2.10, as applicable, at a rate per annum which shall at all times be the
relevant Applicable Margin plus the Eurodollar Rate for such Interest Period,
each as in effect from time to time.
(c) With the consent of the Borrower (such consent not to be
unreasonably withheld), the Arrangers may increase the Applicable Margin for
either Tranche or in connection with the Letter of Credit Fee in connection with
any assignment by the Arrangers of Commitments, Loans and/or participations in
Letter of Credit Outstandings in respect of such Tranche in accordance with
Section 12.06(b) to the extent that after giving effect to such assignment, the
aggregate amount of (x) all Commitments, Loans and participations in Letters of
Credit Outstandings under this Facility and (y) all Commitments (as defined in
the Bank Senior Loan Agreement) and Bank Senior Loans under the Bank Senior Loan
Agreement held by any Arranger exceeds its Hold Level. Any such increase in the
Applicable Margin in respect of outstanding Loans shall be effective on the date
of such assignment, in the case of an assignment of a Commitment, a
participation or Base Rate Loan, or at the commencement of the next succeeding
Interest Period, in the case of an assignment of a Eurodollar Loan.
(d) To the extent permitted by law, overdue principal and overdue
interest in respect of each Loan shall, in each case, bear interest at a rate
per annum equal to the greater
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of (i) the rate which is 2% in excess of the rate borne by such Loan immediately
prior to the respective payment default and (ii) the rate which is 2% in excess
of the rate otherwise applicable to Base Rate Loans from time to time. Interest
which accrues under this clause (c) shall be payable on demand.
(e) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable
quarterly in arrears on each January 15, April 15, July 15 and October 15; at
maturity (whether by acceleration or otherwise); and, after such maturity, on
demand.
(f) Interest on Loans under this Agreement and commitment fees shall
be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable.
(g) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for the respective Interest Period or
Interest Periods and shall promptly notify the Borrower and the Working Capital
Lenders thereof. Each such determination shall, absent manifest error, be final
and conclusive and binding on all parties hereto.
2.09 Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans (in the case of any subsequent Interest Period),
the Borrower shall have the right to elect by giving the Administrative Agent
written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower be a three or six month period. Notwithstanding
anything to the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period applicable thereto
expires;
(iii) if any Interest Period for any Borrowing of Eurodollar Loans
begins on a day for which there is no numerically corresponding day in the
calendar month
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at the end of such Interest Period, such Interest Period shall end on the
last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that, if any Interest Period for any
Borrowing of Eurodollar Loans would otherwise expire on a day which is not
a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(v) no Interest Period for a Borrowing of Eurodollar Loans shall be
selected which would extend beyond the Maturity Date; and
(vi) no Interest Period may be elected at any time when a Default, an
Event of Default or a Potential Default has occurred and is continuing,
unless the holders of more than 50% of the aggregate principal amount of
the affected Eurodollar Loans (or the Administrative Agent on their behalf)
have notified the Borrower that such an election at such time would not be
disadvantageous to the Working Capital Lenders.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, the Borrower shall be deemed to
have elected to convert such Borrowing into a Borrowing of Base Rate Loans
effective as of the expiration date of such current Interest Period.
2.1 Increased Costs; Illegality; etc. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clause (ii) or (iii) below, any Working Capital Lender, shall have determined in
good faith (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any Interest Determination Date, that, by reason of any
changes arising after the Effective Date affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate;
(ii) at any time, that such Working Capital Lender shall incur
increased costs or reductions in the amounts received or receivable under
this Agreement with respect to any Eurodollar Loans because of (A) any
change since the Effective Date in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the force of
law), or in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, guideline,
order or request (other than, in each case, any such change with
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respect to taxes or any similar charges), such as, for example, a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate or (B) other circumstances affecting such Working
Capital Lender, the interbank Eurodollar market or the position of such
Working Capital Lender in such market (other than circumstances relating to
taxes or any similar charges); or
(iii) at any time after the Effective Date, that the making or
continuance of any Eurodollar Loan has become unlawful by compliance by
such Working Capital Lender with any law, governmental rule, regulation,
guideline or order (or would conflict with any governmental rule,
regulation, guideline, request or order not having the force of law but
with which such Working Capital Lender customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Effective
Date which materially and adversely affects the interbank Eurodollar
market;
then, in any such event, such Working Capital Lender (or in the case of clause
(i) above, the Administrative Agent) shall promptly give notice (by telephone
confirmed in writing) to the Borrower and (except in the case of clause (i)) to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Working Capital Lenders).
Thereafter, (w) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Administrative Agent notifies the
Borrower and the Working Capital Lenders that the circumstances giving rise to
such notice by the Administrative Agent no longer exist, and any Notice of
Borrowing or Notice of Conversion given by the Borrower with respect to
Eurodollar Loans which have not yet been incurred (including by way of
conversion) shall be deemed rescinded by the Borrower, (x) in the case of clause
(ii) above, the Borrower agrees to pay to such Working Capital Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Working Capital Lender in its sole discretion shall determine) as shall be
required to compensate such Working Capital Lender for such increased costs or
reductions in amounts received or receivable hereunder (a written notice as to
the additional amounts owed to such Working Capital Lender, showing in
reasonable detail the basis for the calculation thereof, prepared in good faith
and submitted to the Borrower by such Working Capital Lender shall, absent
manifest error, be final and conclusive and binding upon all parties hereto,
although the failure to give any such notice shall not release or diminish any
of the Borrower's obligations to pay additional amounts pursuant to this Section
2.10 upon the subsequent receipt of such notice) and (y) in the case of clause
(iii) above, the Borrower shall take one of the actions specified in clause (b)
of this Section 2.10 as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in clause (a)(ii) or (iii) of this Section 2.10, the
Borrower may (and in the case of
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a Eurodollar Loan affected pursuant to clause (a)(iii) of this Section 2.10, the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel such Borrowing by giving the Administrative
Agent telephonic notice (confirmed promptly in writing) thereof on the same date
that the Borrower was notified by a Working Capital Lender pursuant to clause
(a)(ii) or (iii) of this Section 2.10), or (ii) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' notice to the
Administrative Agent, require the affected Working Capital Lender to convert
each such Eurodollar Loan into a Base Rate Loan (which conversion, in the case
of the circumstance described in clause (a)(iii) of this Section 2.10, shall
occur no later than the last day of the Interest Period then applicable to such
Eurodollar Loan or such earlier day as shall be required by applicable law),
provided that if more than one Working Capital Lender is affected at any time,
then all affected Working Capital Lenders must be treated the same pursuant to
clause (b) of this Section 2.10.
(c) If any Working Capital Lender shall have determined that after the
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Working Capital Lender or any
corporation controlling such Working Capital Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Working Capital Lender's or such
other corporation's capital or assets as a consequence of such Working Capital
Lender's Trade Commitment or its obligations hereunder to the Borrower to a
level below that which such Working Capital Lender or such other corporation
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Working Capital Lender's or such other
corporation's policies with respect to capital adequacy), then from time to
time, upon written demand by such Working Capital Lender (with a copy to the
Administrative Agent), accompanied by the notice referred to in the last
sentence of this clause (c), the Borrower agrees to pay to such Working Capital
Lender such additional amount or amounts as will compensate such Working Capital
Lender or such other corporation for such reduction in the rate of return to
such Working Capital Lender or such other corporation. Each Working Capital
Lender, upon determining in good faith that any additional amounts will be
payable pursuant to this clause (c), will give prompt written notice thereof to
the Borrower (a copy of which shall be sent by such Working Capital Lender to
the Administrative Agent), which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts, although the failure to
give any such notice shall not release or diminish the Borrower's obligation to
pay additional amounts pursuant to this clause (c) upon the subsequent receipt
of such notice. In determining any additional amounts owing under this clause
(c), each Working Capital Lender will act reasonably and in good faith and will
use averaging and attribution methods which are reasonable, provided that such
Working Capital
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Lender's reasonable good faith determination of compensation owing under this
clause (c) shall, absent manifest error, be final and conclusive and binding on
all the parties hereto.
2.11 Compensation; Breakage. The Borrower agrees to compensate each
Working Capital Lender upon its written request (which request shall set forth
in reasonable detail the basis for requesting such compensation) for all
reasonable losses, expenses and liabilities (including without limitation any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Working Capital Lender to fund its
Eurodollar Loans but excluding any loss of anticipated profits) which such
Working Capital Lender may sustain: (i) if for any reason (other than a default
by such Working Capital Lender or the Administrative Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion given by the Borrower
(whether or not rescinded by the Borrower or deemed rescinded pursuant to clause
(a) of Section 2.10); (ii) if any repayment (including any prepayment made
pursuant to Section 2.14 or 2.16 or as a result of an acceleration of the Loans
pursuant to Section 10.04 of the Common Security Agreement or as a result of the
replacement of a Working Capital Lender pursuant to Section 2.13) or conversion
of any Eurodollar Loans occurs on a date which is not the last day of an
Interest Period applicable thereto; (iii) if any prepayment of any Eurodollar
Loans is not made on any date specified in a notice of prepayment given by the
Borrower; (iv) as a consequence of (x) any other default by the Borrower to
repay its Eurodollar Loans as and when required by the terms of this Agreement
or (y) an election made by the Borrower pursuant to clause (b) of Section 2.10.
Each Working Capital Lender's calculation of the amount of compensation owing
pursuant to this Section 2.11 shall be made in good faith or (v) solely in the
case of Working Capital Lenders that are Arrangers, in connection with any
assignment of Eurodollar Loans on a day other than the last day of an Interest
Period, to the extent that after giving effect to such assignment, the aggregate
amount of (x) all Commitments. Loans, and participations in Letter of Credit
Outstandings under this Facility and (y) all Commitments (as defined in the Bank
Senior Loan Agreement) and Bank Senior Loans under the Bank Senior Loan
Agreement held by such Arranger exceeds its Hold Level. A Working Capital
Lender's basis for requesting compensation pursuant to this Section 2.11 and a
Working Capital Lender's calculation of the amount thereof made in accordance
with the requirements of this Section 2.11, shall, absent manifest error, be
final and conclusive and binding on all parties hereto.
2.12 Change of Lending Office. (a) Each Working Capital Lender may at
any time or from time to time designate, by written notice to the Administrative
Agent to the extent not already reflected on its signature page, one or more
lending offices (which, for this purpose, may include Affiliates of the
respective Working Capital Lender) for the various Loans made, and Letters of
Credit participated in, by such Working Capital Lender, provided that, for
designations made after the Effective Date, to the extent such designation shall
result in increased costs under Section 2.10, 3.05 or 5.04 in excess of those
which would be charged in the absence of the designation of a different lending
office (including a different
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Affiliate of the respective Working Capital Lender), then the Borrower shall not
be obligated to pay such excess increased costs (although the Borrower, in
accordance with and pursuant to the other provisions of this Agreement, shall be
obligated to pay the costs which would apply in the absence of such designation
and any subsequent increased costs of the type described above resulting from
changes after the date of the respective designation). Each lending office and
Affiliate of any Working Capital Lender designated as provided above shall, for
all purposes of this Agreement, be treated in the same manner as the respective
Working Capital Lender (and shall be entitled to all indemnities and similar
provisions in respect of its acting as such hereunder).
(b) Each Working Capital Lender agrees that, upon the occurrence of
any event giving rise to the operation of clauses (a)(ii) or (a)(iii) of Section
2.10, clause (c) of 2.10, 3.05 or 5.04 with respect to such Working Capital
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Working Capital Lender) to designate
another lending office for any Loans or Letters of Credit affected by such
event, provided that such designation is made on such terms that such Working
Capital Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequences of the event giving
rise to the operation of any such section. Nothing in this Section 2.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Working Capital Lender provided in Section 2.10, 3.05 or 5.04 (although each
such Working Capital Lender shall nevertheless have an obligation to change its
applicable lending office subject to the terms set forth in the immediately
preceding sentence).
2.13 Replacement of Working Capital Lenders. Subject to Section 2.07
and Section 2.10 of the Common Security Agreement, so long as no Default, Event
of Default or Potential Default has occurred and is continuing, the Borrower
may, upon the occurrence of any event giving rise to the operation of clauses
(a)(ii) or (a)(iii) of Section 2.10, clause (c) of Section 2.10, Section 3.05 or
Section 5.04 with respect to any Working Capital Lender which results in such
Working Capital Lender charging to the Borrower increased costs in a material
amount in excess of those being generally charged by the other Working Capital
Lenders, the Borrower shall have the right to replace such Working Capital
Lender (the "Replaced Lender") with one or more commercial banks reasonably
acceptable to the Administrative Agent (a "Replacement Lender"), provided that:
(i) at the time of any replacement pursuant to this Section 2.13,
the Replacement Lender shall enter into one or more Assignment and
Assumption Agreements pursuant to clause (b) of Section 12.06 (and with all
fees payable pursuant to clause (b) of Section 12.06 to be paid by the
Replacement Lender) pursuant to which the Replacement Lender shall acquire
all of the outstanding Loans, Commitments and Participations in Letter of
Credit Outstandings of the Replaced Lender and, in connection therewith,
shall pay to the Replaced Lender in respect thereof an amount equal to the
sum of (A) an amount equal to the principal of, and
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all accrued interest on, all outstanding Loans of the Replaced Lender, (B)
an amount equal to all Unpaid Drawings (unless there are no Unpaid
Drawings) that have been funded by (and not reimbursed to) such Replaced
Lender, together with all then unpaid interest with respect thereto at such
time and (C) an amount equal to all accrued, but theretofore unpaid, fees
owing to the Replaced Lender pursuant to Section 4.01; and
(ii) all obligations of the Borrower then owing to the Replaced
Lender (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid, but including all amounts, if any, owing under Section 2.11
shall be paid in full to such Replaced Lender concurrently with such
replacement; and
upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, recordation of the
assignment on the Register by the Administrative Agent pursuant to Section 12.13
and, if so requested by the Replacement Lender, delivery to the Replacement
Lender of the appropriate Note or Notes executed by the Borrower, (x) the
Replacement Lender shall become a Working Capital Lender for all purposes of
this Agreement and the Replaced Lender shall cease to constitute a Working
Capital Lender hereunder, except with respect to the Borrower's obligation
pursuant to Section 12.03, which shall survive as to such Replaced Lender and
(y) the Percentages of the Working Capital Lenders shall be automatically
adjusted at such time to give effect to such replacement.
2.14 Optional Prepayments of Loans. Subject to Section 4.02 and the
terms and conditions of Article II of the Common Security Agreement, the
Borrower shall have the right to prepay the outstanding principal amount of any
Loans at any time or from time to time outstanding under this Agreement, in
whole or in part, without premium or penalty (but with the prepayment
compensation, if any, required by Section 2.11), on any Business Day, provided,
however, that:
(a) the Borrower shall give the Administrative Agent written notice
(or telephonic notice promptly confirmed in writing) of its intent to prepay
such Loans, the amount of Loans of each Tranche to be prepaid, the Types of
Loans to be prepaid and, in the case of Eurodollar Loans, the specific Borrowing
pursuant to which such Loans were made, which notice (i) shall be given by the
Borrower prior to 12:00 noon (New York time) (A) at least one Business Day prior
to the date of such prepayment in the case of Base Rate Loans and (y) at least
three Business Days prior to the date of such prepayment in the case of
Eurodollar Loans and (ii) shall promptly be transmitted by the Administrative
Agent to each of the Working Capital Lenders;
(b) any prepayments of Loans pursuant to this Section 2.14 shall be
applied as provided in clause (c) of Section 2.04 of the Common Security
Agreement; and
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(c) each partial prepayment of principal of Loans of any Tranche
shall be in an aggregate amount at least equal to (i) in the case of Eurodollar
Loans, $1,000,000 and, if greater, in an amount which is an integral multiple of
$100,000 and (ii) in the case of Base Rate Loans, $500,000 and, if greater, in
an amount which is an integral multiple of $100,000, provided that no partial
prepayment of Eurodollar Loans pursuant to any Borrowing shall reduce the
aggregate principal amount of the Eurodollar Loans outstanding pursuant to such
Borrowing below the Minimum Borrowing Amount.
2.15 Pro Rata Prepayments. Subject to the terms of the Common
Security Agreement, in the event that the Borrower shall make, or be (or be
notified that it is) required to make, or give notice that it will make, any
payment of any principal of any Capital Markets Senior Debt outstanding under
the Indenture prior to the originally scheduled maturity date thereof (other
than as provided in Section 2.07 of the Common Security Agreement), the Borrower
shall give prompt notice thereof to the Administrative Agent and shall
simultaneously with such payment (or, if not on a Payment Date, with the consent
of Majority Trade Lenders and Majority Compensating L/C Lenders, as applicable,
on the next succeeding Payment Date), make a prepayment of Loans in accordance
with Sections 2.04 and 2.06 of the Common Security Agreement. A Working Capital
Lender may waive its right to receive any such prepayment without prejudice to
its right to receive any subsequent prepayment. Each prepayment of Loans under
this Section 2.15 shall be accompanied by the prepayment compensation, if any,
required pursuant to Section 2.11.
2.16 Mandatory Prepayments. The Borrower shall make Mandatory
Prepayments pursuant to Section 2.05 of the Common Security Agreement. Any
Working Capital Lender may waive its right to receive all or any part of any
Mandatory Prepayment required to be made pursuant to the Common Security
Agreement without prejudice to its right to receive any subsequent Mandatory
Prepayment. Each prepayment of Loans under this Section 2.16 shall be
accompanied by the prepayment compensation, if any, required pursuant to Section
2.11.
ARTICLE III
LETTERS OF CREDIT
3.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth in this Agreement, the Borrower may request a Letter of
Credit Issuer at any time and from time to time after the Effective Date and
prior to the tenth Business Day (or the 30th day in the case of Trade Letters of
Credit) preceding the Maturity Date to issue on a sight basis, (i) for the
account of the Borrower and for the benefit of any holder (or any trustee, agent
or other similar representative for any such holders) of Oil Payment
Reimbursement Obligations, irrevocable sight trade letters of credit each such
in a form customarily used by such Letter of Credit Issuer or in such other form
as has been approved by such Letter of Credit Issuer (each, an "Oil Payment
Letter of Credit") in support of such Oil Payment
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Reimbursement Obligations, (ii) for the account of the Borrower and for its
general corporate purposes, irrevocable sight trade letters of credit (each, a
"General Trade Letter of Credit" and, together with the Oil Payment Letters of
Credit, "Trade Letters of Credit") in a form customarily used by such Letter of
Credit Issuer or in such other form as has been approved by such Letter of
Credit Issuer and (iii) for the account of the Borrower and for the benefit of
PMI for the purpose of providing a "Compensating Letter of Credit" (as such term
is defined in the Long-Term Oil Supply Agreement), an irrevocable sight standby
letter of credit in a form customarily used by such Letter of Credit Issuer or
in such other form as has been approved by such Letter of Credit Issuer.
(b) Subject to and upon the terms and conditions set forth herein,
each Letter of Credit Issuer hereby agrees that it will, at any time and from
time to time after the Effective Date and prior to the tenth Business Day (or
the 30th day in the case of Trade Letters of Credit) preceding the Maturity
Date, following its receipt of the respective Letter of Credit Request, issue
for the account of the Borrower the requested Letters of Credit. Notwithstanding
the foregoing, no Letter of Credit Issuer shall be under any obligation to issue
any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer is not otherwise compensated) not in effect on the
Effective Date, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Letter of Credit Issuer as of the
Effective Date and which such Letter of Credit Issuer in good faith deems
material to it; or
(ii) such Letter of Credit Issuer shall have received written notice
from the Borrower or the Required Working Capital Lenders prior to the
issuance of such Letter of Credit of the type described in clause (c)(v) of
this Section 3.01 or the last sentence of clause (b) of Section 3.02.
(c) Notwithstanding the foregoing, (i) (A) no Trade Letter of Credit
shall be issued if any Working Capital Lender's pro rata share of the Available
Amount under such Trade Letter of Credit, together with (x) such Working Capital
Lender's pro rata share of all Letter of Credit Outstandings in respect of other
Trade Letters of Credit and (y) the aggregate outstanding principal amount of
Trade Loans held by such Working Capital Lender, equals or exceeds the Trade
Commitment of such Working Capital Lenders at such
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time, and (B) no Compensating Letter of Credit shall be issued if any Working
Capital Lender's pro rata share of the Available Amount under such Compensating
Letter of Credit, together with (x) such Working Capital Lender's pro rata share
of the Available Amount under all other Compensating Letters of Credit and (y)
the aggregate outstanding principal amount of Compensating L/C Loans held by
such Working Capital Lender, equals or exceeds the Compensating L/C Commitment
of such Working Capital Lender at such time; (ii) (A) no Oil Payment Letter of
Credit shall have a term exceeding 120 days or an expiry date occurring later
than the tenth Business Day preceding the Maturity Date, (B) no Compensating
Letter of Credit shall have a term exceeding one year (except that any such
Compensating Letter of Credit may be extendible for successive periods of up to
one year) or an expiry day occurring later than 30 days prior to the Maturity
Date; (iii) each Letter of Credit shall be denominated in Dollars; (iv) the
Stated Amount of each Letter of Credit shall not be less than $100,000 or such
lesser amount as is acceptable to the respective Letter of Credit Issuer; and
(v) no Letter of Credit Issuer will issue any Letter of Credit after it has
received written notice from the Borrower, the Administrative Agent or the
Required Working Capital Lenders stating that a Default or an Event of Default
exists until such time as such Letter of Credit Issuer shall have received a
written notice of (x) rescission of such notice from the party or parties
originally delivering the same or (y) a waiver of such Default or Event of
Default by the Required Working Capital Lenders under this Agreement.
(d) Notwithstanding the foregoing, in the event a Lender Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless the respective Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
all defaulting Working Capital Lenders, including by cash collateralizing such
Working Capital Lenders' Percentage of the Letter of Credit Outstandings, as the
case may be.
3.02 Letter of Credit Requests. (a) Whenever the Borrower desires
that a Letter of Credit be issued, the Borrower shall give the Administrative
Agent and the respective Letter of Credit Issuer written notice thereof (a
"Letter of Credit Request") prior to 12:00 noon (New York time), via courier
delivery or facsimile transmission, at least three Business Days (or such
shorter period as may be acceptable to the respective Letter of Credit Issuer)
or, in the case of Oil Payment Letters of Credit, one Business Day prior to the
proposed date of issuance (which shall be a Business Day). Each Letter of
Credit Request shall include any other documents as such Letter of Credit Issuer
customarily requires in connection therewith.
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Borrower that the conditions precedent
referred to in Section 6.02 have been satisfied and that such Letter of Credit
may be issued in accordance with, and it will not violate the requirements of
clause (c) of Section 3.01. Unless the respective Letter of Credit Issuer has
received notice from the Borrower, the Administrative
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Agent or the Required Working Capital Lenders before it issues a Letter of
Credit that one or more of the conditions precedent referred to in Section 6.02
are not then satisfied or that the issuance of such Letter of Credit would
violate clause (c) of Section 3.01, then such Letter of Credit Issuer may issue
the requested Letter of Credit for the account of the Borrower in accordance
with such Letter of Credit Issuer's usual and customary practice.
3.03 Letter of Credit Participations. (a) Immediately upon the
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each other Working
Capital Lender, and each such Working Capital Lender (each, a "Participant")
shall be deemed irrevocably and unconditionally to have purchased and received
from such Letter of Credit Issuer, without recourse or warranty, an undivided
interest and participation, to the extent of such Participant's Percentage, if
any, in such Letter of Credit, each drawing made thereunder and the obligations
of the Borrower under this Agreement with respect thereto (although Letter of
Credit Fees shall be payable directly to the Administrative Agent for the
account of the Working Capital Lenders as provided in clause (b) of Section
4.01, the Participants shall have no right to receive any portion of any Facing
Fees with respect to such Letters of Credit) and any security therefor or
guaranty pertaining thereto. Upon any change in the Commitments or the
Percentages of the Working Capital Lenders in accordance with this Agreement, it
is hereby agreed that, with respect to all outstanding Letters of Credit and
Unpaid Drawings with respect thereto, there shall be an automatic adjustment to
the participations pursuant to this Section 3.03 to reflect such change.
(b) In determining whether to pay under any Letter of Credit, no
Letter of Credit Issuer shall have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Letter of Credit Issuer under or in
connection with any Letter of Credit issued by it if taken or omitted in the
absence of gross negligence or willful misconduct as determined by a court of
competent jurisdiction, shall not create for such Letter of Credit Issuer any
resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Letter of Credit Issuer pursuant to clause
(a) of Section 3.04, such Letter of Credit Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each such Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such Participant's Percentage of such payment in
Dollars and in same day funds. If the Administrative Agent so notifies any
Participant required to fund a payment under a Letter of Credit prior to 11:00
A.M. (New York time) on any Business Day, such Participant shall make available
to the Administrative Agent at the Payment Office for the account of the
respective Letter of Credit Issuer such Participant's Percentage of the amount
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of such payment on such Business Day in same day funds (and, to the extent such
notice is given after 11:00 A.M. (New York time) on any Business Day, such
Participant shall make such payment on the immediately following Business Day).
If and to the extent such Participant shall not have so made its Percentage of
the amount of such payment available to the Administrative Agent for the account
of the respective Letter of Credit Issuer, such Participant agrees to pay to the
Administrative Agent for the account of such Letter of Credit Issuer, forthwith
on demand such amount, together with interest thereon, for each day from such
date until the date such amount is paid to the Administrative Agent for the
account of the Letter of Credit Issuer at the overnight Federal Funds Rate. The
failure of any Participant to make available to the Administrative Agent for the
account of the respective Letter of Credit Issuer its Percentage of any payment
under any Letter of Credit issued by it shall not relieve any other Participant
of its obligation hereunder to make available to the Administrative Agent for
the account of such Letter of Credit Issuer its Percentage of any payment under
any such Letter of Credit on the date required, as specified above, but no
participant shall be responsible for the failure of any other Participant to
make available to the Administrative Agent for the account of such Letter of
Credit Issuer such other Participant's Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to clause (c) of this Section 3.03, such Letter of Credit Issuer shall,
subject to the terms of the Common Security Agreement, pay to the Administrative
Agent and the Administrative Agent shall promptly pay to each Participant which
has paid its Percentage thereof, in U.S. Dollars and in same day funds, an
amount equal to such Percentage of the principal amount thereof and interest
thereon accruing after the purchase of the respective participations.
(e) Each Letter of Credit Issuer shall, promptly after each issuance
of, or amendment or modification to, a Letter of Credit issued by it, give the
Administrative Agent and the Borrower written notice of such issuance, amendment
or modification, together with a copy thereof. Upon receipt of any such written
notice from the Letter of Credit Issuer, the Administrative Agent shall promptly
notify each Participant. Upon request from a Participant, the Administrative
Agent will furnish to such Participant copies of each Letter of Credit issued
and amendments or modifications, if any.
(f) Each Letter of Credit Issuer (other than Deutsche Bank) shall
deliver to the Administrative Agent, promptly on the first Business Day of each
week, by facsimile transmission, the aggregate daily Available Amount available
to be drawn under the outstanding Trade Letters of Credit issued by such Letter
of Credit Issuer for the previous week. The Administrative Agent shall, within
10 days after the last Business Day of each calendar month, deliver to each
Participant a report setting forth for such preceding calendar month the
aggregate daily Available Amount available to be drawn under all outstanding
Trade Letters of Credit during such calendar month.
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(g) The obligations of the Participants to make payments to the
Administrative Agent for the account of the respective Letter of Credit Issuer
with respect to Letters of Credit issued by it shall be irrevocable and not
subject to counterclaim, set-off or other defense or any other qualification or
exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Financing Documents;
(ii) the existence of any claim, right of set-off, defense or other
right which the Borrower or any of its Affiliates may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Letter of Credit Issuer, any Working
Capital Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transaction between
the Borrower or any of its Affiliates and the beneficiary named in any such
Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Financing Documents; or
(v) the occurrence of any Default or Event of Default.
3.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the respective Letter of Credit Issuer, by making
payment (whether from the proceeds of Loans or otherwise) to the Administrative
Agent in Dollars and in immediately available funds at the Payment Office, for
any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued by it (each such amount so paid or disbursed until
reimbursed, an "Unpaid Drawing") immediately after, and in any event on the date
of, such payment or disbursement, with interest on the amount so paid or
disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior to
2:00 P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but not including the date such Letter
of Credit Issuer is reimbursed therefor at a rate per annum which shall be the
Applicable Margin for Loans maintained as Base Rate Loans as in effect from time
to time (plus an additional 2% per annum if not reimbursed by the third Business
Day after the date of such payment or disbursement), such interest also to be
payable on demand. Each Letter of Credit Issuer shall provide the
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Borrower prompt notice of any payment or disbursement made by it under any
Letter of Credit issued by it, provided that (i) the notices referred to above
shall not be required to be given if a Default or an Event of Default under
clause (f) of Section 10.01 of the Common Security Agreement shall have occurred
and be continuing (in which case the Unpaid Drawings shall be due and payable
immediately without presentment, demand, protest or notice of any kind (all of
which are hereby waived by the Borrower) and (ii) the failure of, or delay in,
giving any such notice shall not release or diminish the obligations of the
Borrower under this clause or under any other section of this Agreement.
(b) The Borrower's obligation under this Section 3.04 to reimburse
the respective Letter of Credit Issuer with respect to drawings on Letters of
Credit (including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any right of
set-off, counterclaim or defense to payment which the Borrower or any of its
Affiliates may have or have had against any beneficiary named in any Letter of
Credit, the Letter of Credit Issuer, the Administrative Agent, any Working
Capital Lender or other Person, including without limitation any defense based
upon the failure of any drawing under a Letter of Credit issued by it to conform
to the terms of the Letter of Credit, any nonapplication or misapplication by
the beneficiary of the proceeds of such drawing, provided, however, that the
Borrower shall not be obligated to reimburse such Letter of Credit Issuer for
any wrongful payment made by such Letter of Credit Issuer under a Letter of
Credit issued by it as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Letter of Credit Issuer as
determined by a court of competent jurisdiction, provided, further, that any
reimbursement made by the Borrower shall be without prejudice to any claim it
may have against such Letter of Credit Issuer as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Letter
of Credit Issuer.
3.05 Increased Costs. If after the Effective Date, any Letter of
Credit Issuer or any Participant determines that the adoption or effectiveness
of any applicable law, rule or regulation, order, guideline or request or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof; or compliance by any Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency shall
either (a) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by such Letter
of Credit Issuer or such Participant's participation therein, or (b) impose on
any Letter of Credit Issuer or any Participant any other conditions directly or
indirectly affecting this Agreement, any Letter of Credit or such Participant's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Participant of issuing, maintaining
or participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Participant
hereunder or reduce the rate of return on its capital (other than any increased
costs or reduction in the amount received or
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receivable resulting from the imposition of or a change in the rate of taxes or
any similar charges) with respect to Letters of Credit, then, upon written
demand to the Borrower by such Letter of Credit Issuer or such Participant (a
copy of which notice shall be sent by such Letter of Credit Issuer or such
Participant to the Administrative Agent), accompanied by the certificate
described in the last sentence of this Section 3.05, the Borrower agrees to pay
to such Letter of Credit Issuer or such Participant such additional amount or
amounts as will compensate such Letter of Credit Issuer or such Participant for
such increased cost or reduction. Any Letter of Credit Issuer or any
Participant, upon determining that any additional amounts will be payable
pursuant to this Section 3.05, will give prompt written notice thereof to the
Borrower, which notice shall include a certificate submitted to the Borrower by
such Letter of Credit Issuer or such Participant, as the case may be (a copy of
which certificate shall be sent by such Letter of Credit Issuer or such
Participant to the Administrative Agent), setting forth in reasonable detail the
basis for the determination of such additional amount or amounts necessary to
compensate such Letter of Credit Issuer or such Participant as aforesaid and
such certificate, if delivered in good faith, shall be final and conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish the Borrower's obligations to
pay additional amounts pursuant to this Section 3.05 upon subsequent receipt of
such certificate.
3.06 Indemnification. The Working Capital Lenders agree to indemnify
the Letter of Credit Issuers in their capacity as such, ratably according to
their respective Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever which may at any
time (including without limitation at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Letter of Credit
Issuers in any way relating to or arising out of this Agreement or any other
Financing Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Letter of Credit Issuers under or in connection with any of the
foregoing, but only to the extent that any of the foregoing is not paid by the
Borrower or any of its Affiliates, provided that no Working Capital Lender shall
be liable to the Letter of Credit Issuers for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting primarily from the gross negligence
or willful misconduct of the Letter of Credit Issuers. If any indemnity
furnished to the Letter of Credit Issuers for any purpose shall, in the opinion
of the Letter of Credit Issuers be insufficient or become impaired, the Letter
of Credit Issuers may call for additional indemnity and cease, or not commence,
to do the acts indemnified against until such additional indemnity is furnished.
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ARTICLE IV
FEES; COMMITMENTS
4.01 Fees. (a) The Borrower shall pay to the Administrative Agent for
distribution to each Working Capital Lender, a commitment fee (the "Commitment
Fee") for the period from the Effective Date to but excluding the Facility
Expiry Date, computed at a rate for each day equal to .50% per annum on the
aggregate daily average unutilized Commitment of such Working Capital Lender.
Accrued Commitment Fees shall be due and payable quarterly in arrears on each
January 15, April 15, July 15 and October 15, provided that accrued Commitment
Fees in respect of Trade Commitments or Compensating L/C Commitments shall also
be payable in arrears upon the termination of all Trade Commitments or
Compensating L/C Commitments, as the case may be, pursuant to Sections 4.02 or
4.03.
(b) The Borrower shall pay to the Administrative Agent for pro rata
distribution to each Working Capital Lender (based on its Percentage) a fee in
respect of each Letter of Credit (the "Letter of Credit Fee") computed at a rate
per annum equal to the Applicable Margin for Loans maintained as Eurodollar
Loans then in effect (as such Applicable Margin may be increased pursuant to
Section 2.08(c)) on the daily Available Amount of such Letter of Credit. Accrued
Letter of Credit Fees shall be due and payable in arrears on each January 15,
April 15, July 15 and October 15 and on the Maturity Date.
(c) The Borrower shall pay to each Letter of Credit Issuer a fee in
respect of each Letter of Credit issued by such Letter of Credit Issuer (the
"Facing Fee") computed at the rate of .15% per annum on the daily Available
Amount of such Letter of Credit. Accrued Facing Fees shall be due and payable in
arrears on each January 15, April 15, July 15 and October 15 and on the Maturity
Date.
(d) The Borrower shall pay directly to each Letter of Credit Issuer
upon each issuance of, payment under, or amendment of, a Letter of Credit issued
by such Letter of Credit Issuer such amount as shall at the time of such
issuance, payment or amendment be the administrative charge which such Letter of
Credit Issuer is generally charging for issuances of, payments under or
amendments of, letters of credit issued by it.
4.02 Voluntary Termination or Reduction of Commitments. Upon at least
three Business Days' prior notice to the Administrative Agent at its Notice
Office (which notice the Administrative Agent shall promptly transmit to each of
the Working Capital Lenders), the Borrower shall have the right, without premium
or penalty, to terminate or partially reduce the Trade Commitment or the
Compensating L/C Commitment, in each case (a) in integral multiples of
$1,000,000 in the case of partial reductions and (b) pro rata based on the
Working Capital Lenders' respective Percentages of such Commitment.
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4.03 Termination of Commitments. All Oil Payment Support Commitments
shall terminate upon the earlier of (a) the Facility Expiry Date or (b) after
the taking of any Enforcement Action pursuant to Section 10.05 of the Common
Security Agreement, the delivery to the Borrower of a written notice of
termination signed by or on behalf of Majority Trade Lenders. All Compensating
L/C Commitments shall terminate upon the earlier of (a) the Facility Expiry Date
or (b) after the taking of any Enforcement Action pursuant to Section 10.05 of
the Common Security Agreement, the delivery to the Borrower of a written notice
of termination signed by or on behalf of Majority Compensating L/C Lenders.
ARTICLE V
PAYMENTS
5.01 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the ratable account of the Working Capital Lenders
entitled thereto not later than 12:00 noon (New York time) on the date when due
and shall be made in Dollars in immediately available funds, without deduction,
set-off or counterclaim, at the appropriate Payment Office of the Administrative
Agent in respect of any obligation of the Borrower under this Agreement. Any
payments under this Agreement or under any Note which are made later than 12:00
noon (New York time) on any Business Day shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.
5.02 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement or the Common Security Agreement:
(a) each payment of Commitment Fees, Letter of Credit Fees or Facing
Fees under Section 4.01 shall be made for the account of the Working Capital
Lenders and/or the Letter of Credit Issuers, as applicable, so that each such
payment is a Pro Rata Payment;
(b) other than with respect to any payment or prepayment made
pursuant to Section 2.13, each payment or prepayment of principal of Loans by
the Borrower shall be made for the account of the Working Capital Lenders so
that each such payment or prepayment is a Pro Rata Payment; and
(c) each payment of interest on Loans by the Borrower under this
Agreement shall be made for the account of the Working Capital Lenders so that
each such payment is a Pro Rata Payment.
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5.03 Right of Set-off. The Borrower agrees that each Working Capital
Lender shall be entitled, at its option but only with the prior written consent
of the Administrative Agent, to offset balances held by it for the account of
the Borrower at any of its offices against any obligations of the Borrower
(including principal and interest on any of the Loans) to such Working Capital
Lender that are not paid when due.
5.04 Covered Taxes. The Borrower agrees that, whether or not any
Letter of Credit is issued or Loan is made under this Agreement:
(a) All payments of principal and interest on the Loans (or any
Unpaid Drawings) and all other amounts payable on, under or in respect of this
Agreement or any other Financing Document by the Borrower to the Administrative
Agent, any Letter of Credit Issuer or any Working Capital Lender including
without limitation amounts payable by the Borrower under clause (b) of this
Section 5.04 and under Sections 2.08, 2.10, 2.11, 2.14, 2.16, 3.04, 3.05, 3.06
and 4.01, shall be made free and clear of, and without deduction or withholding
for, any and all present and future taxes, levies, imposts, tariffs, duties,
assessments, deductions, withholdings, fees, liabilities or other charges other
than Excluded Taxes (collectively, "Taxes") imposed, assessed, levied or
collected by any Governmental Authority, together with interest thereon and
penalties with respect thereto, if any, under or in respect of this Agreement,
any Notes, any Letters of Credit, Loans, or any other Financing Document, the
execution, registration, enforcement, notarization or other formalization of any
thereof, and any payments of principal, interest, charges, fees, commissions or
other amounts made on, under or in respect thereof ("Covered Taxes"), all of
which shall be paid by the Borrower, for its own account, prior to the date on
which penalties attach thereto.
(b) The Borrower shall indemnify and hold harmless the
Administrative Agent, each Letter of Credit Issuer, and each Working Capital
Lender against, and promptly reimburse the Administrative Agent, each Letter of
Credit Issuer, and each Bank Senior Lender on demand for, an Covered Taxes paid
by the Administrative Agent, any Letter of Credit Issuer or any Working Capital
Lender and any Loss that the Administrative Agent, any Letter of Credit Issuer
or any Working Capital Lender may incur at any time arising out of or in
connection with any failure of the Borrower to make any payment of Covered Taxes
when due, other than any interest, penalties or legal fees arising from the
failure of the Borrower to pay such Covered Taxes due to the gross negligence or
willful misconduct of the Administrative Agent, such Letter of Credit Issuer or
such Working Capital Lender.
(c) In the event that the Borrower is required by Applicable Law to
deduct or withhold Covered Taxes from any amounts payable on, under or in
respect of this Agreement, the Notes, the Letters of Credit, or any other
Financing Document (including without limitation any amounts payable under
clause (b) of this Section 5.05 and Sections 2.08, 2.10, 2.11, 2.14, 2.16, 3.04,
3.05, 3.06 and 4.01, the Borrower shall pay the Administrative Agent, each
Letter of Credit Issuer and each Working Capital Lender such additional amount
as may be required, after the deduction or withholding of any Covered
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Taxes, to enable the Person entitled to such amount to receive from the Borrower
an amount equal to the full amount stated to be payable under this Agreement,
the Notes, the Letters of Credit, Loans, or any other Financing Documents.
(d) The Borrower shall furnish to the Administrative Agent original
or certified copies of tax receipts in respect of any withholding of Covered
Taxes required under this Section 5.04 within 30 days after the date of each
payment under this Agreement as to which such withholding is required, and the
Borrower shall promptly furnish to the Administrative Agent any other
information, documents and receipts that the Administrative Agent, any Letter of
Credit Issuer or any Working Capital Lender may from time to time require to
establish to its satisfaction that full and timely payment has been made of all
Covered Taxes required to be paid under this Section 5.04.
ARTICLE VI
CONDITIONS PRECEDENT
6.01 Conditions Precedent for Loans. The several obligations of each
Working Capital Lender to make Loans (or to convert any Base Rate Loan into a
Eurodollar Rate Loan) under this Agreement shall be subject to each of the
following conditions precedent:
(a) Satisfaction of Common Conditions Precedent. All the common
conditions precedent set forth in Section 9.02 (other than clause (f) of
such Section 9.02) of the Common Security Agreement shall have been
satisfied (or waived as provided in Section 14.13 of the Common Security
Agreement).
(b) Notes. If requested pursuant to Section 2.05, such Working
Capital Lender or the Administrative Agent on behalf of such Working
Capital Lender shall have received a duly completed and executed Note or
Notes evidencing such Loan.
6.02 Conditions Precedent for Letters of Credit. The several
obligations of each Working Capital Lender to issue Letters of Credit under this
Agreement shall be subject to each of the following conditions precedent:
(a) Notice of Issuance of Letter of Credit. On or before the date of
issuance of such Letter of Credit, the applicable Letter of Credit Issuer
and the Administrative Agent shall have received one Letter of Credit
Request from the Borrower in accordance with Section 3.02, together with
all other information specified in Article III and such other documents or
information as the applicable Letter of Credit Issuer and the
Administrative Agent may require in connection with the issuance of such
Letter of Credit.
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(b) Satisfaction of Other Conditions. On the date of issuance of
such Letter of Credit, each of the conditions precedent set forth in
clauses (a), (c)(i), (d), (e) and (g) of Section 9.02 of the Common
Security Agreement shall be satisfied to the same extent as if the issuance
of such Letter of Credit were the making of a Loan and the date of Issuance
of such Letter of Credit were a Borrowing Date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01 Representations and Warranties of the Borrower and the
Guarantors. Each of the Borrower and the Guarantors confirms each of the
representations and warranties made by it in Section 3.01 of the Common Security
Agreement, as if made as of the date of this Agreement, which representations
and warranties are incorporated herein by reference as if fully set forth in
this Agreement.
ARTICLE VII
COVENANTS
8.01 Covenants of the Borrower and the Guarantors. Each of the
Borrower and the Guarantors agrees that, so long as any Working Capital Lender
has any Commitment under this Agreement or any amount payable under this
Agreement remains unpaid, it shall observe and perform each of the covenants
applicable to it set forth in Article IV of the Common Security Agreement, which
covenants and agreements are incorporated by reference in this Agreement as if
fully set forth herein, in accordance with their terms.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Events of Default. The occurrence of any Default or Event of
Default set forth in Article X of the Common Security Agreement shall constitute
a "Default" or "Event of Default", as the case may be, for all purposes of this
Agreement. If any Default or Event of Default shall occur and be continuing,
then the Working Capital Lenders shall have (in addition to any and all other
available remedies at law and in equity) each of the remedies set forth in
Article X of the Common Security Agreement.
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ARTICLE X
GUARANTEE
10.01 Guarantee of the Guarantors. (a) Each of the Guarantors hereby
unconditionally and jointly and severally guarantees to each Working Capital
Lender and the Administrative Agent (i) the due and punctual payment of the
principal of, premium on (if any) and interest on each Loan and Unpaid Drawing
when and as the same shall become due and payable, whether at the maturity
thereof, by declaration of acceleration or otherwise, in accordance with the
terms of this Agreement and the Common Security Agreement and (ii) the
performance by the Borrower of each of its other obligations under this
Agreement and the other Financing Documents. In the case of the failure of the
Borrower or any successor thereto punctually to pay to each Working Capital
Lender or the Administrative Agent any such principal or interest and any other
amounts due under this Agreement and the Common Security Agreement, each of the
Guarantors hereby agree to cause any such payments to be made punctually when
and as the same shall become due and payable, whether at the maturity thereof,
by declaration of acceleration or otherwise, as if such payments were made by
the Borrower. Each of the Guarantors hereby agrees that its obligations
hereunder shall be as if it were a principal debtor and obligor and not merely a
surety, and shall be absolute and unconditional, irrespective of, and shall be
unaffected by, any invalidity, irregularity or unenforceability of any Loan or
Letter of Credit or any provision of this Agreement or of the other Loan
Documents, any failure to enforce the provisions of any Loan or Letter of Credit
or any provision of this Agreement or of the other Loan Documents, any waiver,
modification or indulgence granted to the Borrower with respect thereto by any
Working Capital Lender, the Collateral Trustee or the Administrative Agent, any
recovery of any judgment against the Borrower to enforce the same, any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of the terms of any Loan or Letter of Credit, the Agreement or any other Loan
Document or any other circumstances which may otherwise constitute a legal or
equitable discharge of a surety or guarantor.
(b) Each of the Guarantors hereby expressly (i) waives (A)
promptness, diligence, presentment, demand of payment, filing of claims with a
court in the event of merger, bankruptcy or insolvency of the Borrower, any
right to require a proceeding first against the Borrower, the benefit of
discussion, protest, order and notice with respect to any Loan or Letter of
Credit or the Senior Debt or Oil Payment Reimbursement Obligations evidenced
thereby and all demands whatsoever and (B) any requirement that a Working
Capital Lender exhaust any right to take any action against the Borrower or any
other Person prior to or contemporaneously with proceeding to exercise any right
against the Guarantors and (ii) covenants that this guarantee will not be
discharged with respect to any Loan or Letter of Credit or the Senior Debt or
Oil Payment Reimbursement Obligation evidenced thereby except by payment in full
of the principal amount due thereunder and any interest thereon.
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(c) Each of the Guarantors acknowledges and agrees for the benefit
of the Administrative Agent on behalf of the Working Capital Lenders and the
Working Capital Lenders that the Administrative Agent and the Working Capital
Lenders may, subject to the other provisions of this Agreement and the Common
Security Agreement, directly and simultaneously proceed against any or all of
the Guarantors for the enforcement of this guarantee and against the Borrower.
The obligations of the Guarantors under this guarantee are independent of the
obligations of the Borrower, and a separate action or actions may be brought and
prosecuted against any or all of the Guarantors, whether or not (i) any action
or proceeding is brought against the Borrower, (ii) the Borrower is joined in
any such action or proceeding against any or all of the Guarantors or (iii) the
Administrative Agent or the Working Capital Lenders have taken any action to
collect or attempted to collect otherwise such obligations from the Borrower or
any other Person liable therefor.
(d) Each of the Guarantors hereby irrevocably agrees that (i) this
Guarantee will constitute the direct and unconditional obligation of each of the
Guarantors and, (ii) this guarantee shall rank pari passu with all other
unsubordinated obligations of the Guarantors.
(e) Each of the Guarantors hereby agrees that this guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time,
payment or any partial payment of any obligations or interest thereon is
rescinded or must otherwise be restored by a Working Capital Lender to the
Borrower upon the bankruptcy or insolvency of the Borrower or any of the
Guarantors.
(f) Each of the Guarantors hereby agrees that it will pay, or
reimburse any Working Capital Lender on demand for, all reasonable costs and
expenses (including fees and disbursements of counsel) incurred by such Working
Capital Lender in connection with any rescission or restoration of this
guarantee, including any such costs and expenses incurred in defending against
any claim alleging that any payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
(g) Each of the Guarantors hereby agrees that, until such time as
all Loans, all amounts due under the Letter of Credit and all amounts payable
under this Guarantee and the other Loan Documents are paid in full, none of the
Guarantors shall be entitled to enforce any claim or other rights, whether
presently or hereafter acquired against the Borrower, that arise from the
existence, payment, performance or enforcement of any of the Guarantors'
obligations under this guarantee, including without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of any Working Capital Lender of any
Loan or Letter of Credit and the Administrative Agent on behalf of such Working
Capital Lender against the Borrower or any collateral that any such Working
Capital Lender or the Administrative Agent on behalf of such Working Capital
Lender acquires under this Agreement or any other Loan Document, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
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common law, including without limitation the right to take or receive from the
Borrower, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any of the Guarantors in violation of the
preceding sentence at any time prior to the payment in full of all Loans, Unpaid
Drawings and the Senior Debt or Oil Payment Reimbursement Obligations evidenced
thereby and all other amounts payable under this guarantee, such amount shall be
deemed to have been paid to the respective Guarantor or Guarantors for the
benefit of, and held in trust for the benefit of, the Working Capital Lenders
and the Administrative Agent on behalf of the Working Capital Lenders, and shall
forthwith be paid to the Administrative Agent for the benefit of the Working
Capital Lenders to be credited and applied upon such guaranteed obligations,
whether matured or unmatured, in accordance with the terms of this Agreement and
the Common Security Agreement.
(h) The Guarantors shall give prompt written notice to the
Administrative Agent of any fact known to any of the Guarantors that would
prohibit the making of any payment to the Administrative Agent in respect of
this guarantee.
(i) Notwithstanding anything in this Article X to the contrary, the
guarantee under clause (a) of this Section 10.1 shall not apply to the extent
any obligation is guaranteed pursuant to (i) the guarantee attached to the
securities evidencing Capital Markets Senior Debt in accordance with Section 205
and Article 12 of the Indenture, (ii) the guarantee of Bank Senior Debt pursuant
to Article XI of the Bank Senior Loan Agreement or (iii) the guarantee of Senior
Debt Obligations and Oil Payment Reimbursement Obligations pursuant to Section
12.01 of the Common Security Agreement.
ARTICLE XI
THE ADMINISTRATIVE AGENT
11.01 Incorporation by Reference. Each Working Capital Lender hereby
irrevocably appoints and authorizes Deutsche Bank AG, New York Branch as the
Administrative Agent to act as its agent, with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and the
Common Security Agreement, together with such other powers as are incidental
thereto, and each Working Capital Lender authorizes and instructs the
Administrative Agent to execute and deliver on its behalf each of the Common
Security Agreement, the Transfer Restrictions Agreement, the Intercreditor
Agreement, each Security Document and any other applicable Financing Document,
and agrees to be bound by the terms and conditions of each such agreement as if
it had executed and delivered such agreement for and in its own name. The
Administrative Agent hereby accepts such appointment upon the terms and
conditions set forth in this Article XII. The terms and provision of Article
XII of the Bank Senior Loan Agreement are incorporated herein, mutatis
mutandis, as if fully set forth in this Agreement.
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ARTICLE XII
MISCELLANEOUS
12.01 Waiver. Except as expressly provided in this Agreement, no
failure on the part of the Administrative Agent, any Letter of Credit Issuer or
any Working Capital Lender to exercise, no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement or any Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law.
12.02 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
or made under this Agreement (including without limitation any modifications of,
or waivers or consents under, this Agreement) shall be given or made in writing
(which may include e-mail or other electronic communication) and shall be deemed
duly given when (i) personally delivered, (ii) sent by facsimile transmission
(but only if, immediately after the transmission, the sender's facsimile machine
records in writing the correct answerback), or (iii) five days have elapsed
after mailing by certified or registered mail, postage pre-paid, in each case
addressed to a party at the address or facsimile transmission number specified
below such party's name on the signature pages hereof or to such other address
or facsimile transmission number of which such party has given notice. Any
notice to be given by or on behalf of the Borrower or the Guarantors may be
given by the Partnership acting alone; and any notice to be given to the
Borrower or the Guarantors shall be deemed duly given to both the Borrower and
the Guarantors if given to the Guarantors alone. Any notice to be given by or
on behalf of the Borrower or the Guarantors to the Working Capital Lenders may
be sent to the Administrative Agent. Notice of address or facsimile
transmission number change shall be effective only upon receipt.
12.03 Expenses, Etc. Whether or not any of the transactions
contemplated by this Agreement are consummated, the Borrower agrees to reimburse
(or cause to be reimbursed) the Administrative Agent, each Letter of Credit
Issuer and each Working Capital Lender on demand for all out-of-pocket costs and
expenses of each of the Working Capital Lenders, Letter of Credit Issuers and
the Administrative Agent (including without limitation all commissions, charges,
costs and expenses, if any, for the conversion of currencies, fees and expenses
of legal counsel, consultants and advisors and travel-related costs and
expenses) made, paid, suffered or incurred in connection with (a) the
preparation, negotiation, execution and delivery, syndication (both before and
after the Closing Date) and, where appropriate, authentication, registration and
recordation of this Agreement, the other Financing Documents and any other
documents and instruments related hereto or thereto (including legal opinions),
(b) any amendment or modification to, or the protection or preservation of any
right or claim under, or consent or waiver in connection with, this
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Agreement or any other Financing Document, any such other document or instrument
related hereto or thereto or any Collateral, (c) the authentication,
registration, translation, syndication and recordation (where appropriate) and
the delivery of the evidences of indebtedness relating to the Loan, the Letter
of Credit and the disbursements thereof and (d) the syndication, administration
and enforcement (including with respect to a workout) of this Agreement, the
other Financing Documents and any other documents and instruments referred to
herein or therein.
The Borrower hereby agrees to indemnify the Administrative Agent, each
Letter of Credit Issuer and each Working Capital Lender and their respective
directors, officers, employees, agents and Affiliates from, and hold each of
them harmless against, any and all claims or Losses incurred by it arising out
of or by reason of any investigation or litigation or other proceedings
(including without limitation any threatened investigation or litigation or
other proceedings) relating to, arising out of or resulting from this Agreement,
the Loans or Letter of Credit or any actual or proposed use by the Borrower or
the Partnership of the proceeds of the Loans or Letter of Credit, including
without limitation the fees and disbursements of counsel incurred in connection
with any such investigation or litigation or other proceedings. Without limiting
the generality of the foregoing, the Borrower shall indemnify the Administrative
Agent, each Letter of Credit Issuer and each Working Capital Lender and their
respective directors, officers, employees, agents and Affiliates from, and hold
each of them harmless against, any claims or Losses, including without
limitation those described in the preceding sentence relating to any
Environmental Law including without limitation those arising as a result of the
past, present or future operations of the Partnership or any of its Affiliates
(or any predecessor in interest to the Partnership or any of its Affiliates) or
the environmental contamination of any site or facility owned, operated or
leased at any time by the Partnership or any of its Affiliates (or any such
predecessor in interest), any Release or threatened Release of any Hazardous
Substance by the Partnership or any of its Affiliates (or any such predecessor
in interest) at or from any such site or facility, or any claim or Loss relating
to any Environmental Law in connection with the Coker Project including without
limitation any such claim or Loss, arising as a result of operations,
environmental contamination or any Release or threatened Release that shall
occur during any period when the Administrative Agent, any Letter of Credit
Issuer or any Working Capital Lender shall be in possession of any such site or
facility following the exercise by the Administrative Agent , any Letter of
Credit Issuer or any Working Capital Lender of any of its rights and remedies
under this Agreement or any of the Security Documents, that is related to the
operations, compliance, environmental contamination or any Release or threatened
Release occurring prior to such period or relates to conditions previously in
existence, or of practices employed by the Partnership or any of its Affiliates,
at such site or facility and the Borrower waives any rights it may have under
any Environmental Law relating to this indemnity or the Administrative Agent,
any Letter of Credit Issuer or any Working Capital Lender.
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12.04 Amendments, Etc. Except as otherwise expressly provided in this
Agreement and Section 14.13 of the Common Security Agreement, any provision of
this Agreement may be amended, modified or supplemented only by an instrument in
writing signed by each of the parties hereto, and any provision of this
Agreement may be waived by Majority Trade Lenders and Majority Compensating L/C
Lenders or by the Administrative Agent acting with the consent of Majority Trade
Lenders and Majority Compensating L/C Lenders, provided, however, that: (a) no
amendment, modification, supplement or waiver shall, unless by an instrument
signed by all of the Working Capital Lenders of any Tranche (i) increase, or
extend the term of the Commitments, any Loan, Note or Letter of Credit relating
to such Tranche, or extend the time or waive any requirement for the reduction
or termination of any Commitments, (ii) extend the date fixed for the payment of
principal of, or interest on, any Loan of such Tranche or any related commitment
fee under this Agreement or any related Notes, (iii) reduce the amount of any
such payment of principal in respect of the Loans of such Tranche, (iv) reduce
the rate at which interest is payable on the Loans of any Tranche or any related
commitment fee is payable under this Agreement or any related Notes, (v) alter
the rights or obligations of the Borrower to prepay Loans, (vi) alter the terms
of this Section 12.04, (vii) modify the definition of the term "Majority Trade
Lenders" or "Majority Compensating L/C Lenders" or modify in any other manner
the number or percentage of the Working Capital Lenders required to make any
determinations or waive any rights under this Agreement or to modify any
provision hereof, (viii) waive any of the conditions precedent set forth in
Article VI as applied to such Tranche, (ix) subject any Working Capital Lender
to any additional obligations in respect of its Loans of such Tranche, (x)
subject to the express provisions of the Common Security Agreement, relinquish
or diminish any security or support for the Borrower's obligations under this
Agreement, or (xi) release the Collateral Trustee from the irrevocable
instructions granted to it pursuant to the Common Security Agreement, and (b)
any modification or supplement of this Agreement, insofar as it relates to the
Administrative Agent or any Letter of Credit Issuer, shall require the consent
of the Administrative Agent or such Letter of Credit Issuer, as the case may be.
12.05 Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns.
12.06 Assignments and Participation. (a) The Borrower may not assign
any of its rights or obligations under this Agreement or any of the Senior Notes
without the prior written consent of all Working Capital Lenders and the
Administrative Agent.
(b) Each Working Capital Lender may assign all or any portion of its
Commitments and related Loans or participations in Letters of Credit
Outstandings (or, if the Commitments in respect of any Tranche have been
terminated, its Loans and participations in Letters of Credit Outstandings) to
any other entity, provided that any assignment to an entity that is not an
Affiliated Lender of such Working Capital Lender shall require the written
consent of (x) the Administrative Agent, (y) any Letter of Credit Issuer that
has
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issued an outstanding Letter of Credit and (z) solely in the case of an
assignment by an Arranger, after giving affect to which such Arranger would hold
Commitments, Loans and participations in Letter of Credit Outstandings in an
aggregate amount less than US$5,000,000 (and only so long as no Default, Event
of Default or Prospective Default has occurred and is continuing), the Borrower
(in each of cases (x), (y) and (z), such consent not to be unreasonably
withheld) and provided, further, that no such assignment shall result in an
assignor or assignee (in each case, together with its Affiliated Lenders) who
holds Commitment Loans or participations in Letter of Credit Outstandings
holding an aggregate amount of Commitments, Loans and participations in Letter
of Credit Outstandings less than $5,000,000 (or such lower amount as may be
approved by the Administrative Agent). Upon execution and delivery by the
assignee to the Administrative Agent of an instrument in writing, substantially
in the form of Exhibit II hereto, pursuant to which such assignee agrees to
become a "Working Capital Lender" for purposes of this Agreement (to the extent
not already a Working Capital Lender), (i) the Register shall be deemed modified
to reflect the Working Capital Lenders' Commitments after giving effect to such
assignment, (ii) upon the surrender of the relevant Notes by the assigning
Working Capital Lender (or against customary indemnification arrangements) new
Notes will be issued, at the Borrower's expense, to such new Working Capital
Lender and to the assigning Working Capital Lender in conformity with Section
2.05, (iii) the assignee shall have, to the extent of such assignment, all the
obligations, rights and benefits of a Working Capital Lender under this
Agreement and any other Financing Document, holding the Commitments, Loans and
participations in Letter of Credit Outstandings assigned to it (in addition to
the Commitment, Loans and participations in Letter of Credit Outstandings
theretofore held by such assignee), and (iv) the assigning Working Capital
Lender shall, to the extent of such assignment, be released from its obligations
hereunder. Upon each such assignment (except any such assignment to an
Affiliated Lender of the assigning Working Capital Lender), the assigning
Working Capital Lender shall pay the Administrative Agent an assignment fee of
$3,500.
(c) A Working Capital Lender may transfer, assign or grant one or
more other Persons (each, a "Loan Participant") a participation in all or any
part of its rights hereunder, provided that (i) such Working Capital Lender
shall remain a "Working Capital Lender" for all purposes hereunder (and may not
transfer or assign any part of its Commitments except in accordance with Section
12.06(b)) and the Loan Participant shall not constitute a "Working Capital
Lender" hereunder and (ii) no Working Capital Lender shall transfer, assign or
grant any participation under which the Loan Participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Financing
Document other than an amendment or waiver referred to under clauses (i) through
(iv), (x) or (xi) of Section 12.04(a). In the case of any such participation,
the Loan Participant shall not have any rights under this Agreement or any of
the other Financing Documents (the Loan Participant's rights against the such
Working Capital Lender in respect of such participation to be those set forth in
the agreement executed by such Working Capital Lender and such Loan Participant
in connection with such participation) and all amounts payable by the
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Borrower hereunder shall be determined as if such Working Capital Lender had not
sold such participation.
(d) A Working Capital Lender may furnish any information concerning
the Borrower or any of the Guarantors in the possession of such Working Capital
Lender from time to time to assignees and Participants and their investment
advisors (including prospective assignees and any of Participants), provided
that such assignees and Participants and prospective assignees and Participants
and their investment advisors shall first execute and deliver to the Borrower or
the applicable Guarantor an agreement in writing to become subject to the
provisions contained in Section 14.12 of the Common Security Agreement.
(e) Nothing in this Agreement shall prevent or prohibit any Working
Capital Lender from pledging its Loans, participations in Letters of Credit and
Notes hereunder to a Federal Reserve Bank in support of borrowings made by such
Working Capital Lender from such Federal Reserve Bank and, with the consent of
the Administrative Agent, any Working Capital Lender which is a fund may pledge
all or any portion of its Loans, participations in Letters of Credit and Notes
to its trustee in support of its obligations to its trustee. No pledge pursuant
to this clause (e) shall release the transferor Working Capital Lender from any
of its obligations hereunder.
12.07 Survival. The obligations of the Borrower under Sections 2.10,
2.11, 3.05, 5.04, 12.03, 12.11 and 12.13 and the obligations of the Working
Capital Lenders to indemnify the Administrative Agent, as incorporated by
reference in Article XI, and the Letter of Credit Issuers, as set forth in
Section 3.06, shall survive the repayment of the Loans and any amount due in
connection with the Letters of Credit and the termination of the Commitments.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Borrower's obligations under
this Agreement, or any part thereof, is, pursuant to Applicable Law, rescinded
or reduced in amount, or must otherwise be restored or returned by the
Administrative Agent or any Working Capital Lender. In the event that any
payment or any part thereof is so rescinded, reduced, restored or returned, such
obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, restored or returned.
12.08 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.09 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE PARTNERSHIP, THE
ADMINISTRATIVE AGENT AND THE WORKING
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CAPITAL LENDERS HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE SENIOR NOTES OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
12.11 Consent to Jurisdiction. The Borrower and each of the Guarantors
confirm their consent and submission to jurisdiction, and their appointment of
CT Corporation System as agent for service of process, pursuant to clause (b) of
Section 14.12 of the Common Security Agreement, which section is incorporated by
reference as it relates to the Borrower and the Guarantors as if fully set forth
in this Agreement.
12.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.13 Register. The Borrower hereby designates the Administrative
Agent to serve as such Borrower's agent, solely for purposes of this Section
12.13, to maintain a register (the "Register") on which it will record the Loan
Commitments from time to time of each of the Working Capital Lenders, the Loans
made by each of the Working Capital Lenders and each repayment in respect of the
principal amount of the Loans of each Working Capital Lender. Failure to make
any such recordation, or any error in such recordation shall not affect the
Borrower's obligations in respect of such Loans. With respect to any Working
Capital Lender, the transfer of any Loan Commitment of such Working Capital
Lender and the rights to the principal of, and interest on, any Loan shall not
be effective until such transfer is recorded on the Register maintained by the
Administrative Agent with respect to ownership of such Loan Commitment and Loans
and prior to such recordation all amounts owing to the transferor with respect
to such Loan Commitment and Loans shall remain owing to the transferor. The
registration of assignment of transfer of all or part of any Loan Commitment and
Loans shall be recorded by the Administrative Agent on the Register only upon
the acceptance by the Administrative Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to clause (b) of Section 12.06.
Coincident with the delivery of such an Assignment and Assumption Agreement to
the Administrative Agent for acceptance and registration of assignment or
transfer of all or part of a Loan Commitment or Loan, or as soon thereafter as
practicable, the assigning or transferor Bank Senior Lender shall surrender the
Note evidencing such Loan Commitment or Loan, and thereupon one or more new
Notes in the same aggregate principal amount shall be issued to the assigning or
transferor Working Capital Lender or the new Working Capital Lender. The
Borrower jointly and severally agrees to indemnify the Administrative Agent from
and against any and all losses, claim, damages and liabilities of whatsoever
nature which may be
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imposed on, asserted against or incurred by the Administrative Agent in
performing its duties under this Section 12.13.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PORT ARTHUR FINANCE CORP.,
as Borrower
By: /s/ Maura J. Clark
-----------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: /s/ Maura J. Clark
-----------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.,
as General Partner
By: /s/ Maura J. Clark
-----------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
-43-
<PAGE>
NECHES RIVER HOLDING CORP.,
as Limited Partner
By: /s/ Maura J. Clark
-----------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
DEUTSCHE BANK AG, NEW YORK BRANCH
AND OR CAYMAN ISLANDS BRANCH
as Administrative Agent for and on behalf
of the Working Capital Lenders
By: /s/ Lydia Zaininger
-----------------------------------
Name: Lydia Zaininger
Title: Vice President
By: /s/ Cynthia Jo Powell
-----------------------------------
Name: Cynthia Jo Powell
Title: Associate
-44-
<PAGE>
Working Capital Lenders
-----------------------
Trade Compensating
Commitment L/C Commitment
US$13,125,000 US$15,000,000 Deutsche Bank AG, New York Branch
AND OR CAYMAN ISLANDS BRANCH
By: /s/ Lydia Zaininger
-----------------------------------
Name: Lydia Zaininger
Title: Vice President
By: /s/ Cynthia Jo Powell
-----------------------------------
Name: Cynthia Jo Powell
Title: Associate
Lending Office:
Deutsche Bank AG
Addresses for Notices:
31 West 52/nd/ Street, 14/th/ Floor
New York, NY 10019
Attention: Virag Patel
Telephone: 212-469-8348
Telecopier: 212-469-8501
Addresses for Notices:
130 Liberty Street, 34/th/ Floor
New York, NY 10006
Attention: Marcus M. Takington
Telephone: 212-250-7684
Telecopier: 212-250-8693
-45-
<PAGE>
Working Capital Lenders
-----------------------
Trade Compensating
Commitment L/C Commitment
US$16,625,000 US$19,000,000 Credit Suisse First Boston
By: /s/ Jonathan Yellen
-----------------------------------
Name: Jonathan Yellen
Title: Vice President
By: /s/ Emeka Ngwube
-----------------------------------
Name: Emeka Ngwube
Title: Associate
Lending Office:
Credit Suisse First Boston
Addresses for Notices:
Eleven Madison Avenue, 20/th/ Floor
Project Finance -- Portfolio
Management
New York, NY 10010
Attention: Andrew Leon
Larcy Naval
Telephone: 212-325-9126; 212-325-9143
Telecopier: 212-325-8321
-46-
<PAGE>
Trade Compensating
Commitment L/C Commitment
US$5,250,000 US$6,000,000 Goldman Sachs Credit Partners L.P.
By: /s/ Ed Forst
-----------------------------------
Name: Ed Forst
Title: Managing Director
Lending Office:
Goldman Sachs Credit Partners L.P.
Addresses for Notices:
85 Broad Street, 27/th/ Floor
New York, NY 10004
Attention: Kathy King
Telephone: 212-902-4425
Telecopier: 212-346-2608
-47-
<PAGE>
EXHIBIT I
to Secured Working Capital Facility
Form of Senior Note
SENIOR NOTE
New York, New York
U.S. Dollars _________ __________, 1999
FOR VALUE RECEIVED, PORT ARTHUR FINANCE CORP., a corporation organized
under the laws of the State of Delaware (the "Borrower"), PORT ARTHUR COKER
COMPANY L.P., a limited partnership organized under the laws of the State of
Delaware (the "Partnership"), SABINE RIVER HOLDING CORP., a corporation
organized under the laws of the State of Delaware (the "General Partner"), and
NECHES RIVER HOLDING CORP., a corporation organized under the laws of the State
of Delaware (the "Limited Partner" and, together with the Partnership and the
General Partner, the "Guarantors"), hereby unconditionally and jointly and
severally promise to pay to the order of ____________ (the "Working Capital
Lender") at the principal office of __________________________ located at
________________, _____________, _________, in lawful money of the United States
and in immediately available funds, the principal amount of (a) _______________
U.S. Dollars ($ ________) or, if less, (b) the aggregate unpaid principal amount
of all [Trade Loans][Compensating L/C Loans] made by the Working Capital Lender
to the Borrower pursuant to the Secured Working Capital Facility, dated as of
August 19, 1999 (as amended, modified or supplemented from time to time, the
"Agreement"), among the Borrower, the Guarantors, the Working Capital Lenders
from time to time parties thereto and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Working Capital Lenders. The Borrower and the
Guarantors also promise to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such Loan is paid in full, in like money
at such office at the rate or rates per annum and on the date or dates specified
in the Agreement.
The holder of this Senior Note is authorized to endorse on the schedule
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Loan made
pursuant to the Agreement, the date and amount of each payment or prepayment of
principal thereof and the length of each Interest Period with respect thereto,
which endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed, provided that any failure by the holder of this Senior
Note to make such an endorsement or any error in such endorsement shall in no
manner affect the validity or enforceability of the obligation of the Borrower
and the Guarantors to make payments of principal and interest in accordance with
the terms of this Senior Note and the Agreement.
I-1
<PAGE>
All parties hereto, whether as makers, endorsers or otherwise, severally
waive diligence, presentment, demand, protest and notice of any kind whatsoever.
The failure or forbearance by the holder to exercise any of its rights under
this Senior Note in any particular instance shall in no event constitute a
waiver thereof.
This Senior Note is one of the Notes referred to in, and is entitled to the
benefits of, the Agreement, which, among other things, contains provisions for
the acceleration of the maturity of the [Trade Loans][Compensating L/C Loans]
upon the happening of certain events, for Optional Prepayment of the principal
of the [Trade Loans][Compensating L/C Loans] prior to the Maturity Date and for
the amendment or waiver of certain provisions of the Agreement or this Senior
Note, all upon the terms and conditions therein specified. Capitalized terms
used and not otherwise defined herein shall have the meanings ascribed thereto
in the Agreement.
Upon the taking of an Enforcement Action (as defined in the Common Security
Agreement referred to in the Agreement) the principal of, and interest on, this
Senior Note may be declared to be forthwith due and payable in the manner, upon
the conditions and with the effect provided in the Agreement and in the Common
Security Agreement.
This Senior Note may be prepaid as provided in the Agreement and the Common
Security Agreement.
The Borrower and the Guarantors agree to pay, exclusively in lawful money
of the United States of America, costs of collection and attorneys' fees in case
default occurs in the payment of this Senior Note.
THIS SENIOR NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Senior Note is not negotiable and interests herein may be assigned
only upon the terms and conditions specified in the Agreement.
I-2
<PAGE>
IN WITNESS WHEREOF, this Senior Note has been duly executed by the
undersigned as of the date first written above.
PORT ARTHUR FINANCE CORP.
By:_______________________________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By:_______________________________________________
Name:
Title:
SABINE RIVER HOLDING CORP.
By:_______________________________________________
Name:
Title:
NECHES RIVER HOLDING CORP.
By:_______________________________________________
Name:
Title:
I-3
<PAGE>
[TRADE LOANS][COMPENSATING L/C LOANS] AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Amount of Amount of
Loans Made Principal Unpaid
Date Under Secured Interest Repaid Toward Principal Notation
Working Period Such Loan Balance of Made By
Capital Facility Such Loan
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
I-4
<PAGE>
EXHIBIT II
to Secured Woking Capital Facility
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Secured Working Capital Facility, dated as of
August 19, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Working Capital Agreement"), among PORT ARTHUR FINANCE CORP., a
corporation organized under the laws of the State of Delaware (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under the laws
of Delaware (the "Partnership"), SABINE RIVER HOLDING CORP., a corporation
organized under the laws of the State of Delaware (the "General Partner"), and
NECHES RIVER HOLDING CORP., a corporation organized under the laws of the State
of Delaware (the "Limited Partner" and, together with the Partnership and the
General Partner, the "Guarantors") (together, the "Borrowers"), the Working
Capital Lenders from time to time party thereto (the "Working Capital Lenders")
and Deutsche Bank AG, New York Branch, as Administrative Agent for the Working
Capital Lenders. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed thereto in the Secured Working Capital
Facility.
The Assignor identified on Schedule I hereto (the "Assignor") and the
Assignee identified on Schedule I hereto (the "Assignee") hereby agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule I hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Secured Working Capital Facility with respect to those Loans (individually,
an Assigned Loan"; collectively, the Assigned Loans") and Letters of Credit as
are set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statement, warranties or representations made
in or in connection with any Financing Document, or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Financing Document or any other instrument or document furnished pursuant
thereto, other than that the Assignor has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and clear
of any such adverse claim; (b) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or any
other obligor or the performance or observance by the Borrowers or any other
obligor of any of their respective obligations under any Financing Document or
any
II-1
<PAGE>
other instrument or document furnished pursuant hereto or thereto; and (c)
attaches any Senior Notes held by it evidencing Assigned Loans and (i) requests
that the Administrative Agent exchange the attached Senior Notes for new Senior
Notes payable to the Assignee and (ii) if the Assignor has retained any interest
in any Assigned Loan, requests that the Administrative Agent exchange the
attached Senior Notes for new Senior Notes payable to the Assignor and the
Assignee, in each case in amounts which reflect the assignment being made hereby
(and after giving effect to any other assignments which have become effective on
the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
a copy of the Financing Documents together with copies of such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Administrative Agent
or any other Working Capital Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Financing Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Administrative Agent to take such action as agent (in its
capacity as Administrative Agent under the Secured Working Capital Facility) on
its behalf and to exercise such powers and discretion under the Financing
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it will
be bound by the provisions of the Financing Documents and will perform in
accordance with its terms all the obligations which by the terms of the
Financing Documents are required to be performed by it as a Working Capital
Lender.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be earlier than five
Business Days after the date of such acceptance and recording by the
Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts that have accrued prior to the Effective Date and to
the Assignee for amounts which have accrued subsequent to the Effective Date.
The Assignor and the Assignee shall make all appropriate adjustments in payments
by the Administrative Agent for
II-2
<PAGE>
periods prior to the Effective Date or with respect to the making of this
assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Secured Working Capital Facility and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Working Capital
Lender thereunder and under such other agreements and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Agreement and Acceptance, relinquish its rights and be released from its
obligations under the Bank Senior Loan Agreement and such other agreements.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
II-3
<PAGE>
Schedule I
to Assignment and Acceptance
Name of Assignor:________________________________
Name of Assignee:________________________________
Effective Date of Assignment:____________________
[specify Loans and Letters of Credit being assigned]
[Name of Assignee] [Name of Assignor]
By:___________________________ By:___________________________
Name: Name:
Title: Title:
Consented to:
------------
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of
the Working Capital Lenders
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
Received:
---------
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
II-4
<PAGE>
CREDIT SUISSE FIRST BOSTON
By:___________________________
Name:
Title:
PORT ARTHUR FINANCE CORP.
By:____________________________
Name:
Title:
II-5
<PAGE>
EXHIBIT III
FORM OF
NOTICE OF BORROWING
[To follow]
III-1
<PAGE>
Exhibit 10.05
EXECUTION COPY
================================================================================
REIMBURSEMENT AGREEMENT
among
PORT ARTHUR FINANCE CORP.,
as Borrower,
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.,
as General Partner of the Partnership and Guarantor,
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership and Guarantor,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
as Primary Insurer,
and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
as Administrative Agent for and on the behalf of the Oil Payment Insurers,
Dated as of August 19, 1999
================================================================================
<PAGE>
Table of Contents
Section Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Defined Terms........................................................ 2
1.02 Interpretation....................................................... 2
1.03 Conflict............................................................. 3
ARTICLE II
OIL PAYMENT REIMBURSEMENT OBLIGATIONS
2.01 Reimbursement by Partnership......................................... 3
2.02 Interest............................................................. 3
2.03 Notice of Payment of a Claim by the Primary Insurer.................. 4
2.04 Oil Payment Note..................................................... 4
2.05 Mandatory Prepayments................................................ 5
2.06 Insufficient Payments................................................ 5
2.07 Other Payments....................................................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Incorporation by Reference........................................... 6
ARTICLE IV
COVENANTS
4.01 Incorporation by Reference........................................... 6
4.02 Defenses............................................................. 6
ARTICLE V
GUARANTY INSURANCE POLICY
5.01 Issuance of Guaranty Insurance Policy................................ 7
5.02 Coverage Period and Renewal.......................................... 7
5.03 Coverage Start Date.................................................. 7
5.04 Premium Payments..................................................... 8
5.05 Suspension and Termination........................................... 8
-i-
<PAGE>
Section Page
ARTICLE VI
DEBT SERVICE RESERVE INSURANCE GUARANTEE
6.01 Repayment of Principal and Payment of Interest....................... 9
ARTICLE VII
CONDITIONS PRECEDENT
7.01 Obligations of the Primary Insurer................................... 10
ARTICLE VIII
GUARANTEE OF OIL PAYMENT REIMBURSEMENT OBLIGATIONS
8.01 Guarantee of the Partners............................................ 10
ARTICLE IX
GUARANTEE OF DEBT SERVICE RESERVE
INSURANCE GUARANTEE OBLIGATIONS
9.01 Guarantee of the DSRIG Guarantors.................................... 11
ARTICLE X
MISCELLANEOUS
10.01 Notices.............................................................. 12
10.02 Assignments and Participation........................................ 13
10.03 Termination.......................................................... 13
10.04 Counterparts......................................................... 14
10.05 GOVERNING LAW........................................................ 14
10.06 WAIVER OF JURY TRIAL................................................. 14
10.07 Consent to Jurisdiction.............................................. 14
10.08 Severability......................................................... 15
10.09 Waiver............................................................... 15
10.10 Expenses, etc........................................................ 15
10.11 Amendments, etc...................................................... 16
10.12 Successors and Assigns............................................... 16
10.13 Survival............................................................. 17
10.14 Covered Taxes........................................................ 17
10.15 Payments............................................................. 18
10.16 No Direct Right Against Reinsurer.................................... 18
-ii-
<PAGE>
APPENDICES
APPENDIX A..........................................................Definitions
EXHIBIT I..............................................Form of Oil Payment Note
EXHIBIT II.................................................Reimbursement Notice
EXHIBIT III...........................................Guaranty Insurance Policy
-iii-
<PAGE>
REIMBURSEMENT AGREEMENT
This Agreement, dated as of August 19, 1999, is made among:
PORT ARTHUR FINANCE CORP., a corporation organized under the laws of
the State of Delaware, as Borrower (the "Borrower"),
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized under
the laws of the State of Delaware, as Partnership and Guarantor (the
"Partnership"),
SABINE RIVER HOLDING CORP., a corporation organized under the laws of
the State of Delaware (the "General Partner"),
NECHES RIVER HOLDING CORP., a corporation organized under the laws of
the State of Delaware (the "Limited Partner" and together with the General
Partner, the "Partners"),
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, as Primary Insurer (the "Primary
Insurer"), and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, as Administrative Agent for and on
behalf of the Oil Payment Insurers (the "Administrative Agent").
WHEREAS, the Partnership desires that the Oil Payment Insurers provide
financial guarantee insurance coverage with respect to the Partnership's payment
obligations to P.M.I. Comercio Internacional, S.A. de C.V. ("PMI") under the
Long-Term Oil Supply Agreement;
WHEREAS, the Primary Insurer is willing to issue a Guaranty Insurance
Policy (the "Guaranty Insurance Policy") to provide the financial guarantee
insurance coverage referred to in the preceding recital;
WHEREAS, as a condition to its issuing the Guaranty Insurance Policy,
the Primary Insurer requires the Partners to guarantee the Oil Payment
Reimbursement Obligations and related payment obligations of the Partnership;
WHEREAS, the Primary Insurer has entered into separate reinsurance
arrangements with several reinsurers (the "Reinsurers" and together with the
Primary Insurer, the "Oil Payment Insurers") to reinsure the financial guarantee
insurance coverage provided under the Guaranty Insurance Policy;
<PAGE>
WHEREAS, each of the Reinsurers, pursuant to its reinsurance
arrangement, has appointed Winterthur International Insurance Company Limited to
act as Administrative Agent on its behalf with respect to the Guaranty Insurance
Policy;
WHEREAS, the Borrower desires that the Oil Payment Insurers provide
financial guarantee insurance coverage with respect to the Borrower's funding
obligations in respect of the Debt Service Reserve Account, in accordance with
the terms and provisions of the Common Security Agreement;
WHEREAS, the Primary Insurer is willing to issue a Debt Service
Reserve Insurance Guarantee (the "Debt Service Reserve Insurance Guarantee") to
provide the financial guarantee insurance coverage referred to in the preceding
recital;
WHEREAS, as a condition to its issuing the Debt Service Reserve
Insurance Guarantee, the Primary Insurer requires the Partnership and the
Partner to guarantee the reimbursement obligations and related obligations of
the Borrower in respect thereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and undertakings contained herein, in the Guaranty Insurance Policy
and in the Debt Service Reserve Insurance Guarantee, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Defined Terms. Except for terms defined in this Agreement,
the Appendix or the Exhibits hereto, defined terms in this Agreement and the
Appendix and Exhibits hereto, which may be identified by the capitalization of
the first letter of each principal word thereof, shall have the meanings
assigned to them in the Common Security Agreement (including Appendix A
thereto).
1.02 Interpretation. In this Agreement and in the Appendix and
Exhibits hereto, except to the extent that the context otherwise requires:
(a) the table of contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;
(b) unless otherwise specified, references to Articles, Sections,
clauses, the Appendix and Exhibits are references to Articles, Sections and
clauses of, and the Appendix and Exhibits to, this Agreement;
(c) references to any document or agreement, including without
limitation this Agreement, shall be deemed to include references to such
document or agreement (together with all
-2-
<PAGE>
appendices, annexes and schedules thereto) as amended, supplemented, replaced or
restated from time to time in accordance with its terms and (where applicable)
subject to compliance with the requirements set forth therein; and
(d) references to any party to this Agreement or any other document or
agreement shall include such party's successors and permitted assigns.
1.03 Conflict. In the event of any conflict between this
Agreement and the Common Security Agreement, the Common Security Agreement shall
govern.
ARTICLE II
OIL PAYMENT REIMBURSEMENT OBLIGATIONS
2.01 Reimbursement by Partnership. (a) Notwithstanding any other
provision of this Agreement or the Guaranty Insurance Policy to the contrary,
the Partnership shall unconditionally reimburse the Primary Insurer in
accordance with clause (b) of this Section 2.01 in an amount equal to the
aggregate principal amount of any and all Oil Payments made by the Primary
Insurer in respect of a Claim by PMI under the Guaranty Insurance Policy (each
such obligation, an "Oil Payment Reimbursement Obligation").
(b) (i) Any and each Oil Payment made by the Primary Insurer in
respect of a Claim by PMI under the Guaranty Insurance Policy shall result
in a corresponding Oil Payment Reimbursement Obligation of the Partnership
in a principal amount equal to the amount of such Oil Payment.
(ii) The Partnership shall repay in full each Oil Payment
Reimbursement Obligation to the Primary Insurer on or prior to the date six
months after the incurrence of such obligation in accordance with subclause
(i) above, provided that any Oil Payment Reimbursement Obligation shall
become immediately due and payable if and to the extent funds are available
for paying Oil Payment Reimbursement Obligations at any time a withdrawal
of funds from Accounts is made in accordance with Section 5.05 or 5.06 of
the Common Security Agreement.
2.02 Interest. The Partnership shall pay interest to the Primary
Insurer on each Oil Payment Reimbursement Obligation at any time outstanding for
the period from and including the date such Oil Payment Reimbursement Obligation
is incurred in accordance with clause (b)(i) of Section 2.01 up to but excluding
the date such Oil Payment Reimbursement Obligation is repaid in full (the
"Interest Period"), at an interest rate per annum equal to 7-Day LIBOR (or such
other interest rate basis as may be agreed between the parties at the time),
plus the Applicable Margin, plus 2%.
-3-
<PAGE>
2.03 Notice of Payment of a Claim by the Primary Insurer.
Promptly after the making of an Oil Payment to PMI under the Guaranty Insurance
Policy, the Primary Insurer shall deliver a notice to the Partnership,
substantially in the form of Exhibit II (a "Reimbursement Notice"), provided
that a corresponding Oil Payment Reimbursement Obligation shall be incurred by
the Partnership in accordance with clause (b)(i) of Section 2.01 irrespective of
whether and when a Reimbursement Notice is delivered by the Primary Insurer to
the Partnership.
2.04 Oil Payment Note. (a) As additional evidence of the
Partnership's obligation to repay the principal amount of each Oil Payment in
accordance with Section 2.01, the Partnership shall execute and deliver to the
Administrative Agent on behalf of each Oil Payment Insurer, on the date hereof,
a promissory note (the "Oil Payment Note"), substantially in the form set forth
in Exhibit I hereto, and otherwise duly completed, payable to the order of the
Primary Insurer and in a principal amount equal to $150,000,000. The
Partnership's signature on the Oil Payment Note shall be duly certified by a
notary public.
(b) The Oil Payment Note shall (i) represent the Partnership's
obligation to repay a principal amount equal to the amount of the relevant Oil
Payments, (ii) be payable in full as set forth in clause (b)(ii) of Section 2.01
and (iii) bear interest for the relevant Interest Period on the unpaid principal
amount thereof from time to time outstanding at the applicable interest rate per
annum provided in, and payable as specified in, Section 2.02. The Primary
Insurer is hereby authorized to record (x) the date and amount of the relevant
Oil Payment and of each repayment in respect of principal of such Oil Payment
and (y) the Interest Period and interest rate with respect thereto, on the
schedules annexed to and constituting a part of the Oil Payment Note. It is
understood, however, that any failure by the Primary Insurer to make, or any
inaccuracy or incompleteness of, any such recordation shall not affect the
obligations of the Partnership under this Agreement or the Oil Payment Note.
(c) The execution and delivery by the Partnership of the Oil Payment
Note shall not affect in any way whatsoever the rights or obligations of the
Partnership under this Agreement or any other Financing Document, and the rights
and claims of the Primary Insurer under the Oil Payment Note shall not replace
or supersede the rights and claims of the Primary Insurer under this Agreement
or the other Financing Documents, provided, however, that any repayment in
respect of principal of the Oil Payment Note in accordance with the terms and
conditions of this Agreement and the Common Security Agreement shall, to the
extent that such payment if made hereunder would discharge the Partnership's
obligations hereunder and thereunder, discharge such obligation pro tanto, and
any repayment in respect of principal of any Oil Payment in accordance with the
terms of this Agreement shall discharge the obligations of the Partnership under
the Oil Payment Note to the extent of such repayment.
(d) The Partnership shall deliver to the Administrative Agent an
irrevocable power of attorney in form and substance acceptable to the
Administrative Agent and the Primary Insurer authorizing the Administrative
Agent to execute a replacement Oil Payment Note on behalf of the Partnership
whenever requested to do so by the Primary Insurer, at which time the
Administrative
-4-
<PAGE>
Agent shall also (and shall also be authorized by such power of attorney to)
conform the principal amount of the Oil Payment Note to the then outstanding
principal amount of the Oil Payment or Oil Payments evidenced thereby, taking
into account any repayment, Optional Prepayment or Mandatory Prepayment made by
the Partnership.
(e) Upon discharge of all obligations of the Partnership under and in
accordance with this Agreement and the Common Security Agreement, the
Administrative Agent shall cancel and return to the Partnership the Oil Payment
Note delivered to the Administrative Agent by the Partnership.
(f) The Primary Insurer agrees that, notwithstanding any provision of
the Oil Payment Note to the contrary, it shall not demand payment of any amount
evidenced by the Oil Payment Note unless such amount is then due and payable
(whether at stated maturity, by acceleration or otherwise) by the Partnership in
accordance with the terms of this Agreement or the Common Security Agreement.
2.05 Mandatory Prepayments. The Partnership shall make Mandatory
Prepayments in respect of any principal amount of Oil Payment Reimbursement
Obligations at any time or from time to time outstanding under this Agreement
pursuant to Section 2.05 of the Common Security Agreement. The Primary Insurer
may waive its right to receive all or any part of any Mandatory Prepayment
without prejudice to its right to receive any subsequent Mandatory Prepayment.
2.06 Insufficient Payments. If at any time at which any Oil
Payment Reimbursement Obligations are payable by the Partnership to the Primary
Insurer and the Primary Insurer receives insufficient funds from the Partnership
to pay in full all Oil Payment Reimbursement Obligations payable at such time
pursuant to this Agreement, the funds so received by the Primary Insurer shall
be applied to the payment of amounts owing by the Partnership as the Primary
Insurer may determine from time to time and in any order of priority, provided
that, so long as no Oil Payment has been accelerated, such funds shall be
applied in a manner that is consistent with the following order of priority:
first, to pay outstanding fees, costs, expenses, reimbursements and
indemnities then due and payable to the Collateral Trustee or the
Administrative Agent;
second, to pay interest (other than overdue interest), fees, expenses,
indemnities and breakage costs then due and payable to the Primary Insurer;
third, to pay overdue interest then due and payable to the Primary
Insurer;
fourth, to pay overdue principal to the Primary Insurer; and
fifth, to pay principal (other than overdue principal) then due and
payable to the Primary Insurer.
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2.07 Other Payments. The Partnership shall cause (a) any Loss
proceeds in respect of any casualty to Project Property, to the extent they
relate to any shipment of Maya for which the Oil Payment Insurer has made, or is
obligated to make, an Oil Payment to PMI and (b) any refund from PMI in respect
of any Oil Payment made by the Oil Payment Insurer to be paid directly to the
Oil Payment Insurer. If and to the extent that such Loss Proceeds or refund are
received by the Oil Payment Insurer, the corresponding Reimbursement Obligation
and obligation of the Partnership under the Oil Payment Note shall be discharged
for all purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Incorporation by Reference. The Partnership hereby confirms
for the benefit of the Oil Payment Insurers and for the benefit of the Primary
Insurer, in its capacity as issuer of the Debt Service Reserve Insurance
Guarantee, each of the representations and warranties made by it in Section 3.01
of the Common Security Agreement, as if made as of the date of this Agreement
and for the benefit of the Oil Payment Insurers, which representations and
warranties are incorporated herein by reference as if fully set forth in this
Agreement.
ARTICLE IV
COVENANTS
4.01 Incorporation by Reference. The Partnership hereby agrees
for the benefit of the Oil Payment Insurers that, so long as the Guaranty
Insurance Policy is in effect or any amount payable under this Agreement remains
unpaid, it shall observe and perform each of the covenants applicable to it set
forth in Article IV of the Common Security Agreement, which covenants and
agreements are incorporated by reference in this Agreement as if fully set forth
herein, in accordance with their terms.
4.02 Defenses. (a) The Partnership agrees that it shall exercise,
to the full extent permitted by law, including without limitation by means of
judicial or arbitral proceedings, any and all Defenses.
(b) If the Partnership does not pay any invoice issued by PMI under
the Long-Term Oil Supply Agreement when due because the Partnership reasonably
believes it has a Defense to making such payment, the Partnership shall promptly
notify the Primary Insurer of such Defense (a "Defense Notice").
(c) Irrespective of any Defense Notice given to the Primary Insurer
pursuant to clause (b) of this Section 4.02, if the Primary Insurer makes any
Oil Payment in respect of all or a part of the amount invoiced by PMI to which
such Defense Notice relates, a corresponding Oil Payment
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Reimbursement Obligation shall be incurred and be payable by the Partnership in
accordance with Section 2.01.
ARTICLE V
GUARANTY INSURANCE POLICY
5.01 Issuance of Guaranty Insurance Policy. Concurrently with the
execution of this Agreement, the Primary Insurer is issuing the Guaranty
Insurance Policy in the form attached hereto as Exhibit III.
5.02 Coverage Period and Renewal. (a) Unless earlier terminated
in accordance with Section 5.05, and subject to the other terms and conditions
set forth in this Agreement and in the Guaranty Insurance Policy, the Guaranty
Insurance Policy will remain in effect for up to 10.5 consecutive one-year
periods (each, an "Annual Policy Period"), each beginning on the date hereof or
an anniversary thereof and ending on the calendar day immediately preceding the
first anniversary of such date (except for the last such period, which will end
on the calendar day immediately preceding the date that is six months after the
immediately preceding anniversary of the date hereof), provided that upon the
expiration of any Annual Policy Period, the Guaranty Insurance Policy shall be
automatically extended for another Annual Policy Period only if the Insurer has
received from the Partnership the Premium for such additional Annual Policy
Period.
(b) The coverage provided by the Guaranty Insurance Policy in respect
of Insured Obligations will terminate upon the earlier of (i) 10.5 years after
the date of this Agreement and (ii) the date on which all Senior Debt
Obligations have been repaid in full (such earlier date, the "Coverage End
Date").
(c) Notwithstanding anything in clause (a) or (b) of this Section 5.02
to the contrary, unless earlier terminated in accordance with Section 5.05, the
coverage provided by the Guaranty Insurance Policy in respect of Insured
Obligations shall be limited to any Shipments for which the Agreed Laydays (as
defined in the Long-Term Oil Supply Agreement) commence after the Coverage Start
Date.
5.03 Coverage Start Date. (a) In order to activate the initial
US$15 million coverage provided by the Guaranty Insurance Policy in respect of
Insured Obligations, the Partnership must: (i) give to the Primary Insurer at
least 10 days' prior written notice (the "Partial Coverage Start Notice") of the
date on which it wishes such coverage to commence (the "Coverage Start Date"),
accompanied by a certificate of a Responsible Officer of the Partnership,
certified by the Independent Engineer, to the effect that Completion can
reasonably be expected to be achieved within 15 days from the proposed Coverage
Start Date; and (ii) pay any Adjustment Amount required in connection with the
Coverage Start Date.
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(b) In order to increase the initial US$15 million coverage under the
Guaranty Insurance Policy to US$ 150 million, the Partnership must give to the
Primary Insurer written notice (the "Full Coverage Start Notice"), certified by
the Independent Engineer, to the effect that Completion has been achieved. Such
increase in coverage will take effect at 12:00 noon (New York time) on the date
that is five days after the Full Coverage Start Notice has been given in
accordance with the foregoing sentence (the "Full Coverage Start Date").
5.04 Premium Payments. (a) The Partnership shall pay to the
Primary Insurer the premium for each Annual Policy Period (the "Premium") and
any adjustment amount required as a result of the occurrence of the Coverage
Start Date or the Full Coverage Start Date during any Annual Policy Period
(each, an "Adjustment Amount"). The Premium for any Annual Policy Period is due
30 calendar days prior to the expiration of the immediately preceding Annual
Policy Period (or, in the case of the first Annual Policy Period, on or prior to
the date hereof). Any Adjustment Amount is due and payable for receipt by the
Insurer ten calendar days prior to the Coverage Start Date or the Full Coverage
Start Date, as the case may be.
(b) The Premium shall be: (i) with respect to the period from and
including the date hereof to but excluding the Coverage Start Date, 50 bps. per
annum based on a Limit of Liability of $150,000,000 (or, in the case of and
following any extension of the Outside Coverage Start Date beyond October 1,
2001, 150 bps. per annum based on a Limit of Liability of $150,000,000); and
(ii) with respect to the period from and including the Coverage Start Date to
and including the Coverage End Date, 150 bps. per annum, based upon the
applicable Limit of Liability on the date the Premium is due.
5.05 Suspension and Termination. (a) Upon the occurrence of any
of the following events, the Primary Insurer may in its sole discretion suspend
the coverage provided by the Guaranty Insurance Policy in accordance with the
terms thereof:
(i) If (A) any Premium or Adjustment Amount is not paid in full when due
and (B) such Default is not cured within the 10 Business Days
immediately following the due date, then the coverage may be suspended
for the relevant year until such Premium or Adjustment Amount, as the
case may be, has been paid in full;
(ii) If Senior Lenders have notified the Administrative Agent, pursuant to
clause (c) of Section 10.04 of the Common Security Agreement, that the
second payment priority with respect to Oil Payment Reimbursement
Obligations shall terminate, then the coverage will be suspended for
the duration of the Default on which such notice is based.
(b) Upon the occurrence of any of the following events, the Primary
Insurer may in its sole discretion terminate the coverage provided by the
Guaranty Insurance Policy in accordance with the terms thereof:
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(i) Any Event of Default of a type specified in clause (a) or (e)
of Section 10.01 of the Common Security Agreement shall have occurred
and shall have Continued for at least six months;
(ii) Any Event of Default of a type specified in clause (f) or (l) of
Section 10.01 of the Common Security Agreement shall have occurred and
be Continuing;
(iii) Senior Lenders shall have taken Enforcement Action under the Common
Security Agreement in respect of any other Event of Default;
(iv) The coverage provided by the Guaranty Insurance Policy in respect of
Insured Obligations shall have been suspended for at least 30
consecutive days (or, if applicable, 30 consecutive days following the
expiration of any cure period); or
(v) The Partnership shall have failed to give the Coverage Start Notice by
the Outside Coverage Start Date.
ARTICLE VI
DEBT SERVICE RESERVE INSURANCE GUARANTEE
6.01 Repayment of Principal and Payment of Interest.
Notwithstanding any other provision of this Agreement or the Debt Service
Reserve Insurance Guarantee to the contrary, any and all principal amounts paid
by the Primary Insurer to the Collateral Trustee under the Debt Service Reserve
Insurance Guarantee shall be repaid, and any interest accrued on such principal
amount in accordance with the terms of the Debt Service Reserve Insurance
Guarantee shall be paid, to the Primary Insurer on the terms and subject to the
conditions set forth in the Common Security Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 Obligations of the Primary Insurer. The obligations of the
Primary Insurer under the Guaranty Insurance Policy, the Debt Service Reserve
Insurance Guarantee and this Agreement shall be subject to the satisfaction of
each of the following conditions:
(a) Execution. This Agreement shall have been duly executed and
delivered by each of the parties hereto; and
(b) Satisfaction of Common Conditions Precedent. All the common
conditions precedent set forth in Sections 9.01 and 9.02 of the Common
Security Agreement shall have been satisfied (or waived as provided in
Section 1 4.13 of the Common Security Agreement).
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(c) Oil Payment Notes. The Administrative Agent on behalf of the
Primary Insurer shall have received a duly completed and executed Oil
Payment Note.
ARTICLE VIII
GUARANTEE OF OIL PAYMENT REIMBURSEMENT OBLIGATIONS
8.01 Guarantee of the Partners (a) The Partners hereby jointly and
severally guarantee the performance by the Partnership of all the Partnership's
obligations under this Agreement and the Oil Payment Note, including without
limitation the Oil Payment Reimbursement Obligations. Such guarantee shall be
unconditional, irrevocable and absolute, irrespective of (i) any Insolvency
Event with respect to the Partners or the Primary Insurer and (ii) any event or
circumstance that might constitute a legal or equitable discharge or defense to
such guarantee.
(b) In case of the failure of the Partnership to fulfill any of its
obligations under this Agreement or the Oil Payment Note, the Partners agree to
fulfill such obligations when and as the same shall become due and as if such
obligations were being fulfilled by the Partnership. The Partners waive notice
of acceptance of this guarantee and notice of any liability to which it may
apply and waive diligence, presentment, demand of payment, protest, notice of
dishonor and all other notices whatsoever, filing of claims with a court in the
event of an Insolvency Event with respect to the Partnership or the Primary
Insurer, and any requirement that the Primary Insurer or the Administrative
Agent exhaust any right, power or remedy or proceed first against the
Partnership or any other Person, and agree that this guarantee shall remain in
full force and effect and will not be discharged, except by fulfilling all such
obligations. The Partners shall remain liable if any such obligation is only
fulfilled temporarily (and if the Partners' obligations under this Agreement
have terminated in accordance with this Agreement, such obligations shall be
reinstated to the extent necessary). The Partners agree that they will pay, or
reimburse the Primary Insurer and the Administrative Agent on demand for, all
costs and expenses (including without limitation fees and disbursements of
counsel) incurred by the Primary Insurer or the Administrative Agent, as the
case may be, in connection with any rescission or restoration of this guarantee,
including any such costs and expenses incurred in defending against any claim
alleging that any payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law. The Partners
unconditionally agree not to exercise any right of subrogation or reimbursement
arising from payments made under this guarantee.
ARTICLE IX
GUARANTEE OF DEBT SERVICE RESERVE
INSURANCE GUARANTEE OBLIGATIONS
9.01 Guarantee of the DSRIG Guarantors. (a) The DSRIG Guarantors
hereby jointly and severally guarantee the performance by the Borrower of all
the Borrower's obligations
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under the Debt Service Reserve Insurance Guarantee and this Agreement. Such
guarantee shall be unconditional, irrevocable and absolute, irrespective of (i)
any Insolvency Event with respect to any of the DSRIG Guarantors or the Primary
Insurer and (ii) any event or circumstance that might constitute a legal or
equitable discharge or defense to such guarantee.
(b) In case of the failure of the Borrower to fulfill any of its
obligations under the Debt Service Reserve Insurance Guarantee or this
Agreement, the DSRIG Guarantors agree to fulfill such obligations when and as
the same shall become due and as if such obligations were being fulfilled by the
Borrower. The DSRIG Guarantors waive notice of acceptance of this guarantee and
notice of any liability to which it may apply and waive diligence, presentment,
demand of payment, protest, notice of dishonor and all other notices whatsoever,
filing of claims with a court in the event of an Insolvency Event with respect
to any of the DSRIG Guarantors or the Primary Insurer, and any requirement that
the Primary Insurer or the Administrative Agent exhaust any right, power or
remedy or proceed first against the Borrower or any other Person, and agree that
this guarantee shall remain in full force and effect and will not be discharged,
except by fulfilling all such obligations. The DSRIG Guarantors shall remain
liable if any such obligation is only fulfilled temporarily (and if the DSRIG
Guarantors' obligations under this Agreement have terminated in accordance with
this Agreement, such obligations shall be reinstated to the extent necessary).
The DSRIG Guarantors agree that they will pay, or reimburse the Primary Insurer
and the Administrative Agent on demand for, all costs and expenses (including
without limitation fees and disbursements of counsel) incurred by the Primary
Insurer or the Administrative Agent, as the case may be, in connection with any
rescission or restoration of this guarantee, including any such costs and
expenses incurred in defending against any claim alleging that any payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law. The DSRIG Guarantors unconditionally
agree not to exercise any right of subrogation or reimbursement arising from
payments made under this guarantee.
ARTICLE X
MISCELLANEOUS
10.01 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
or made under this Agreement (including without limitation any modifications of,
or waivers or consents under, this Agreement) shall be given or made in writing
and shall be deemed duly given when (i) personally delivered, (ii) sent by
facsimile transmission (but only if, immediately after the transmission, the
sender's facsimile machine records in writing the correct answerback), or (iii)
five days have elapsed after mailing by certified or registered mail, postage
pre-paid, in each case addressed to a party at the address or facsimile
transmission number specified below such party's name on the signature pages
hereof or to such other address or facsimile transmission number of which such
party has given notice. Notice of address or facsimile transmission number
change shall be effective only upon receipt. All notices, requests, demands,
consents, designations, directions, instructions, certificates, reports and
other communications under, in connection with, or with respect to, this
Agreement shall be sent to the
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Partnership, the Borrower, the Primary Insurer or the Administrative Agent as
the case may be, at its address set forth below:
If to the Partnership:
---------------------
Port Arthur Coker Company L.P.
1801 S. Gulfway Drive, Office No. 36
Port Arthur, TX 77640
Attention: Legal Department
Telephone: (314) 854-9696
Facsimile: (314) 854-1455
If to the Borrower:
------------------
Port Arthur Finance Corp.
1801 S. Gulfway Drive, Office N. 36
Port Arthur, TX 77640
Attention: Legal Department
Telephone: (314) 854-9696
Facsimile: (314) 854-1455
If to the Primary Insurer or the Administrative Agent:
-----------------------------------------------------
Winterthur International Insurance Company Limited
34 Leadenhall Street
London, EC3A, 1AX
England
Attention: Eileen McCusker
Telephone: 011-44-171-369-1432
Facsimile: 011-44-171-979-3537
or such other address, telephone number or facsimile number as the relevant
party may designate to the other parties from time to time.
10.02 Assignments and Participation. (a) The Partnership may not
assign any of its rights or obligations under this Agreement, any of the Oil
Payment Notes or the Debt Service Reserve Insurance Guarantee without the prior
written consent of the Administrative Agent, and the Primary Insurer may not
assign any of its rights under this Agreement, the Oil Payment Notes or the Debt
Service Reserve Insurance Guarantee, either in whole or in part.
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(b) The Primary Insurer may sell or agree to sell to one or more other
Persons a participation in all or any part of its rights under this Agreement,
the Oil Payment Notes or the Debt Service Reserve Insurance Guarantee, provided
that no purchaser of a participation (a "Participant") shall have any rights or
benefits under this Agreement, any Oil Payment Note, the Debt Service Reserve
Insurance Guarantee or any other Financing Document. All amounts payable by the
Partnership to the Primary Insurer under (i) Article II in respect of Oil
Payment Reimbursement Obligations or (ii) Article VI in respect of payment
obligations relating to the Debt Service Reserve Insurance Guarantee shall be
determined as if the Primary Insurer had not sold or agreed to sell any
participation in such obligations.
(c) The Primary Insurer may furnish any information concerning the
Partnership or the Borrower in its possession from time to time to any
Participants (including prospective assignees and Participants), provided that
such assignees and Participants and prospective assignees and Participants shall
first execute and deliver to the Partnership or the Borrower, as the case may
be, an agreement in writing to be bound by customary confidentiality
obligations.
10.03 Termination. This Agreement shall remain in effect until the
later of (a) the termination of the Guaranty Insurance Policy in accordance with
its terms and (b) the payment in full by the Partnership of any and all amounts
payable by it under this Agreement, the Guaranty Insurance Policy or the Debt
Service Reserve Insurance Guarantee.
10.04 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
10.05 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
10.06 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
SENIOR NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.07 Consent to Jurisdiction. (a) Subject to clause (c) of this
Section 10.08, each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement, the Oil Payment
Notes or the Oil Payment Reimbursement Obligations may be brought in any Federal
or state court located in the Borough of Manhattan, The City of New York, and
hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such court, to the exclusion of all other courts, with respect to any such
action, suit or proceeding. Each party hereto hereby waives to the fullest
extent permitted by
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applicable laws any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions, suits or proceedings, brought in any
such court and hereby further waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought therein has been
brought in an inconvenient forum.
(b) Each of the Borrower, the Partnership and the Partners hereby
irrevocably appoints CT Corporation System, with offices at the date hereof at
1633 Broadway, New York, New York 10019, as its authorized agent on which any
and all legal process may be served in any such action, suit or proceeding
brought in any Federal or State court located in the Borough of Manhattan, The
City of New York. Each of the Borrower, the Partnership and the Partners agrees
that service of process in respect of it upon its respective agent, together
with written notice of such service given to it in the manner provided in
Section 10.01, shall be deemed to be effective service of process upon it in any
such action, suit or proceeding. Each of the Borrower, the Partnership and the
Partners agrees that the failure of its respective agent to give notice to it of
any such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. If for any
reason the Borrower's, the Partnership's or the Partners' agent shall cease to
be available to act as such, or if any party hereto that was located in New York
ceases to be so located, such party agrees to designate a new agent in the
Borough of Manhattan, The City of New York, on the terms and for the purposes of
this clause (b).
(c) Notwithstanding the provision of clause (a) of this Section 10.07,
nothing herein shall be deemed to limit the ability of either of the Primary
Insurer or the Administrative Agent to serve any such legal process in any other
manner permitted by applicable law or to obtain jurisdiction over the Borrower,
the Partnership and the Partners or bring actions, suits or proceedings against
any such parties in such other jurisdiction, including without limitation in any
Federal or state court located in the State of Texas, and in such manner, as may
be permitted by applicable law.
(d) Each party hereto agrees that a final judgment against it in any
action, suit or proceeding taken in any Federal or State Court in the Borough of
Manhattan, The City of New York in accordance with clause (a) of this Section
10.07 or, in the case of the Partnership or the Borrower, in any other court in
accordance with clause (c) of this Section 10.07, shall be conclusive and may be
enforced in any jurisdiction by suit on the judgment, a certified copy of which
judgment shall be conclusive evidence thereof, or by any other means provided by
law.
10.08 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.09 Waiver. Except as expressly provided in this Agreement, no
failure on the part of the Primary Insurer or the Administrative Agent to
exercise, no delay in exercising, and no course of dealing with respect to, any
right, power or privilege under this Agreement or any Oil
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Payment Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement or any Oil
Payment Note preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law.
10.10 Expenses, etc. Whether or not any of the transactions
contemplated by this Agreement are consummated, each of the Partnership and the
Borrower, jointly and severally, agrees to reimburse (or cause to be reimbursed)
the Primary Insurer and the Administrative Agent on demand for all out-of-pocket
costs and expenses of each (including without limitation all commissions,
charges, costs and expenses, if any, for the conversion of currencies, fees and
expenses of legal counsel, consultants and advisors and travel-related costs and
expenses) made, paid, suffered or incurred in connection with (a) the
preparation, negotiation, execution and delivery, syndication (both before and
after the Closing Date) and, where appropriate, authentication, registration and
recordation of this Agreement, the other Financing Documents and any other
documents and instruments related hereto or thereto (including legal opinions),
(b) any amendment or modification to, or the protection or preservation of any
right or claim under, or consent or waiver in connection with, this Agreement or
any other Financing Document, any such other document or instrument related
hereto or thereto or any Collateral, (c) the authentication, registration,
translation, syndication and recordation (where appropriate) and the delivery of
the evidences of indebtedness relating to the Oil Payments and the disbursements
thereof and (d) the syndication or reinsurance (prior to or after the date
hereof), administration and enforcement (including with respect to a workout) of
this Agreement, the other Financing Documents and any other documents and
instruments referred to herein or therein.
Each of the Partnership and the Borrower hereby jointly and severally
agrees to indemnify the Primary Insurer and the Administrative Agent and their
respective directors, officers, employees, agents and Affiliates from, and hold
each of them harmless against, any and all claims or Losses incurred by it
arising out of or by reason of any investigation or litigation or other
proceedings (including without limitation any threatened investigation or
litigation or other proceedings) relating to, arising out of or resulting from
the Guaranty Insurance Policy or the Debt Service Reserve Insurance Guarantee,
including without limitation the fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings.
Without limiting the generality of the foregoing, each of the Partnership and
the Borrower shall jointly and severally indemnify the Administrative Agent and
the Primary Insurer and their respective directors, officers, employees, agents
and Affiliates from, and hold each of them harmless against, any claims or
Losses, including without limitation those described in the preceding sentence
relating to any Environmental Law including without limitation those arising as
a result of the past, present or future operations of the Partnership, the
Borrower or any of their Affiliates (or any predecessor in interest to the
Partnership or any of its Affiliates) or the environmental contamination of any
site or facility owned, operated or leased at any time by the Partnership or any
of its Affiliates (or any such predecessor in interest), any Release or
threatened Release of any Hazardous Substance by the Partnership or any of its
Affiliates (or any such predecessor in interest) at or from any such site or
facility, or any claim or Loss relating to any Environmental Law in connection
with the Coker Project including without
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limitation any such claim or Loss, arising as a result of operations,
environmental contamination or any Release or threatened Release that shall
occur during any period when the Administrative Agent or the Primary Insurer
shall be in possession of any such site or facility following the exercise by
the Primary Insurer or the Administrative Agent of any of its rights and
remedies under this Agreement or any of the Security Documents, that is related
to the operations, compliance, environmental contamination or any Release or
threatened Release occurring prior to such period or relates to conditions
previously in existence, or of practices employed by the Partnership or any of
its Affiliates, at such site or facility and the Partnership waives any rights
it may have under any Environmental Law relating to this indemnity or the
Primary Insurer or the Administrative Agent.
10.11 Amendments, etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended, modified or
supplemented only by an instrument in writing signed by each of the parties
hereto, and any provision of this Agreement may be waived by the Primary Insurer
or by the Administrative Agent, as applicable.
10.12 Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
10.13 Survival. The obligations of the Partnership and the
Borrower under Sections 10.07 and 10.10 shall survive the termination of this
Agreement in accordance with Section 10.03. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Partnership's or the Borrower's obligations under this
Agreement, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by the
Administrative Agent or the Oil Payment Insurer. In the event that any payment
or any part thereof is so rescinded, reduced, restored or returned, such
obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, restored or returned.
10.14 Covered Taxes. The Partnership agrees that, whether or not
funds are paid under the Guaranty Insurance Policy or the Debt Service Reserve
Insurance Guarantee:
(a) All payments of principal of and interest on the Oil Payment
Reimbursement Payments and all other amounts payable on, under or in
respect of this Agreement, the Oil Payment Note, the Guaranty Insurance
Policy or the Debt Service Reserve Insurance Guarantee by the Partnership
or the Borrower, as the case may be, to the Administrative Agent or the
Primary Insurer, including without limitation amounts payable by the
Partnership or the Borrower under clause (b) of this Section 10.14 and
under Section 10.10, shall be made free and clear of, and without deduction
or withholding for, any and all present and future Taxes imposed, assessed,
levied or collected by any Governmental Authority, under or in respect of
this Agreement, the Oil Payment Note, the Guaranty Insurance Policy or the
Debt Service Reserve Insurance Guarantee, the execution, registration,
enforcement, notarization or other formalization of any thereof, and any
payments of principal, interest, charges, fees, commissions or other
amounts made on, under or in respect thereof ("Covered Taxes"), all of
which shall be paid by the Borrower, for its own account, prior to the date
on
-16-
<PAGE>
which penalties attach thereto. In addition, the Partnership and Borrower
will pay any and all excise taxes related to payments under this Agreement,
the Oil Payment Note or the Debt Service Reserve Insurance Guarantee.
(b) The Partnership shall indemnify and hold harmless the
Administrative Agent and the Primary Insurer against, and promptly
reimburse the Administrative Agent and the Primary Insurer on demand for,
any Covered Taxes paid by the Administrative Agent or the Primary Insurer
and any Loss that the Administrative Agent or the Primary Insurer may incur
at any time arising out of or in connection with any failure of the
Partnership to make any payment of Covered Taxes when due, other than any
interest, penalties or legal fees arising from the failure of the Borrower
to pay such Covered Taxes due to the gross negligence or willful misconduct
of the Administrative Agent or the Primary Insurer.
(c) In the event that the Partnership is required by applicable law
to deduct or withhold Covered Taxes from any amounts payable on, under or
in respect of this Agreement, the Oil Payment Note (including without
limitation any amounts payable under clause (b) of this Section 10.14), the
Guaranty Insurance Policy or the Debt Service Reserve Insurance Guarantee,
the Partnership shall pay the Administrative Agent and the Primary Insurer
such additional amount as may be required, after the deduction or
withholding of any Covered Taxes, to enable the Person entitled to such
amount to receive from the Partnership or the Borrower an amount equal to
the full amount stated to be payable under this Agreement, the Oil Payment
Note or the Debt Service Reserve Insurance Guarantee.
(d) The Partnership shall furnish to the Administrative Agent original
or certified copies of tax receipts in respect of any withholding of
Covered Taxes required under this Section 10.14 within 30 days after the
date of each payment under this Agreement as to which such withholding is
required, and the Partnership shall promptly furnish to the Administrative
Agent any other information, documents and receipts that the Administrative
Agent or the Primary Insurer may from time to time require to establish to
its satisfaction that full and timely payment has been made of all Covered
Taxes required to be paid under this Section 10.14.
10.15 Payments. Any and all payments to be made by the Partnership
or the Borrower under this Agreement or the Debt Service Reserve Insurance
Guarantee to the Primary Insurer or the Administrative Agent shall be made by
wire transfer, in immediately available funds in Dollars, to account no. 8546509
(sort code 18-50-08, swift code CITI GB 2L) maintained by Winterthur
International Insurance Company Limited with Citibank, N.A., Citibank House, 336
Strand, London WC2R 1HB, England, or to such other account as may be specified
from time to time by the Primary Insurer or the Administrative Agent, as the
case may be.
10.16 No Direct Right Against Reinsurer. Each of the Partnership
and the Borrower hereby acknowledges and agrees that it shall have no direct
right or recourse against any of the reinsurers that may from time to time
reinsure all or part of the insurance coverage provided by the
-17-
<PAGE>
Guaranty Insurance Policy or the Debt Service Reserve Insurance Guarantee, and
that such reinsurers' rights as Secured Parties under the Financing Documents do
not expand the role and function of such reinsurers beyond their role and
function as reinsurers.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: /s/ Maura J. Clark
----------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.
By: /s/ Maura J. Clark
----------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
NECHES RIVER HOLDING CORP.
By: /s/ Maura J. Clark
----------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR FINANCE CORP.
By: /s/ Maura J. Clark
----------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
-19-
<PAGE>
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED,
as Primary Insurer
By: /s/ Eileen McCusuck
----------------------------------------
Name: Eileen McCusuck
Title: Property Underwriting Manager
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED,
as Administrative Agent for and on behalf of
the Oil Payment Insurers
By: /s/ Eileen McCusker
----------------------------------------
Name: Eileen McCusker
Title: Property Underwriting Manager
<PAGE>
Appendix A
to Reimbursement Agreement
DEFINITIONS
In this Appendix, the Reimbursement Agreement and the Exhibits thereto and
in any other document that references this Appendix, the following terms shall
have the meanings assigned below (the singular includes the plural and vice
versa) (unless otherwise specified, section references in this Appendix are to
sections of the Reimbursement Agreement):
"Adjustment Amount" has the meaning specified in clause (a) of Section
5.04.
"Administrative Agent" means Winterthur International Insurance Company
Limited, in its capacity as Administrative Agent for the Oil Payment Insurers.
"Agreement" means this Reimbursement Agreement (including the Appendix and
Exhibits thereto), as the same may be amended or supplemented in accordance
with its terms and in effect from time to time.
"Annual Policy Period" has the meaning set forth in clause (a) of Section
5.02.
"Applicable Margin" means 475 basis points.
"Bank Senior Loan Agreement" means the Bank Senior Loan Agreement, dated as
of the date hereof, among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., the Bank Senior
Lenders party thereto and Deutsche Bank AG, New York Branch, as Bank Lenders
Administrative Agent, as the same may be amended or supplemented in accordance
with its terms and in effect from time to time.
"Borrower" means Port Arthur Finance Corp.
"Claim" has the meaning specified in the Guaranty Insurance Policy.
"Common Security Agreement" means the Common Security Agreement, dated as
of the date hereof, among Port Arthur Finance Corp., Port Arthur Coker Company
L.P., Sabine River Holding Corp., Neches River Holding Corp., Winterthur
International Insurance Company Limited, as Oil Payment Insurers
Administrative Agent, Bankers Trust Company, as Collateral Trustee, Deutsche
Bank AG, New York Branch, as Bank Senior Lenders Administrative Agent, HSBC
Bank USA, as Capital Markets Trustee, and Bankers Trust Company, as Depositary
Bank, as the same may be amended or supplemented in accordance with its terms
and in effect from time to time.
A-1
<PAGE>
"Completion", for purposes of this Agreement only, means that (a)
Mechanical Completion has been achieved and (b) construction of the Utility
Assets (as defined in the Hydrogen Supply Agreement) has been completed in
accordance with Section 1.2 of the Hydrogen Supply Agreement.
"Coverage End Date" has the meaning specified in clause (b) of Section
5.02.
"Coverage Start Date" has the meaning specified in clause (a) of Section
5.03.
"Covered Taxes" has the meaning specified in clause (a) of Section 10.14.
"Debt Service Reserve Insurance Guarantee" means the Debt Service Reserve
Insurance Guarantee, Policy No. GB 00002141 OT 99A, dated as of the date
hereof, issued by the Primary Insurer for the benefit of the Collateral
Trustee.
"Debt Service Reserve Payments" means all funds disbursed by the Primary
Insurer under the Debt Service Reserve Insurance Guarantee.
"Defense" means any and all defenses that may be available to the
Partnership under or in connection with the Long-Term Oil Supply Agreement,
including without limitation any defenses resulting from, or in connection
with, the Maya delivered under the Long-Term Oil Supply Agreement not
satisfying the characteristics set forth in Annex 3 thereto.
"Defense Notice" has the meaning set forth in clause (b) of Section 4.02.
"Demand for Payment" has the meaning set forth in the Guaranty Insurance
Policy.
"DSRIG Guarantors" means the Partnership and the Partners.
"Full Coverage Start Date" has the meaning specified in clause (b) of
Section 5.0 3.
"Full Coverage Start Notice" has the meaning specified in clause (b) of
Section 5.03.
"General Partner" means Sabine River Holding Corp.
"Guaranty Insurance Policy" means the Guaranty Insurance Policy, Policy No.
GB 00002140 OT 99A, dated as of the date hereof, issued by the Primary Insurer
for the benefit of PMI.
"Hydrogen Supply Agreement" means the Hydrogen Supply Agreement, dated
August 1, 1999, between the Hydrogen Supplier and the Partnership.
"Insured Obligation" has the meaning specified in the Guaranty Insurance
Policy.
A-2
<PAGE>
"Interest Period" has the meaning set forth in Section 2.02.
"LIBOR" shall mean, with respect to any Oil Payment Reimbursement
Obligation or any other amount payable under this Agreement that is not paid
when due, for the Interest Period therefor, the interest rate per annum for
deposits in Dollars, if any, for a period equal to (or if there is no equal,
then most comparable to) such Interest Period which appears on the page
designated Page 3750 on the Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying the British
Bankers Association Interest Settlement Rate) at or about 11:00 a.m., London
time, on the date two Eurodollar Business Days before and for value on the
first day of such Interest Period or Default Interest Period. If such a rate
does not appear on the page designated Page 3750 on the Telerate Service (or
such other page) as may replace that page on that service for the purpose of
displaying the British Bankers Association Interest Settlement Rate for any
relevant Interest Period, LIBOR for each Oil Payment Reimbursement Obligation
or other amount outstanding during such Interest Period shall mean the
interest rate per annum determined by the Administrative Agent to be equal to
the arithmetic mean (rounded upward, if necessary, to the nearest fifth
decimal place) of the rates per annum for Dollar deposits for a period equal
to (or, if there is no equal, then most comparable to) such Interest Period
which appear on the Reuters Screen LIBO Page at or about 11:00 a.m., London
time, on the date two Eurodollar Business Days prior to the first day of such
Interest Period, provided that, if no such rate appears on the Reuters Screen
LIBO Page for any relevant Interest Period or Default Interest Period, LIBOR
for each Bank Senior Loan or other amount outstanding during such Interest
Period (a) shall mean the interest rate per annum determined by the
Administrative Agent to be equal to the average (rounded upwards to the
nearest fifth decimal place, if such average is not such a decimal) of the
interest rates per annum (as provided by the Reference Banks to the
Administrative Agent) at which deposits in Dollars are offered by the
principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at or about 11:00 a.m., London time (or
as soon thereafter as practicable), on the date two Eurodollar Business Days
before the first day of such Interest Period in immediately available funds in
an amount substantially equal to the aggregate principal amount of the Bank
Senior Loans or other amounts to be outstanding during such Interest Period
and for a period equal to (or if there is no equal, then most comparable to)
such Interest Period; and (b) shall be determined by the Administrative Agent
pursuant to clause (a) above (i) on the basis of applicable rates furnished to
and received by the Administrative Agent from the Reference Banks two
Eurodollar Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 5.02, or (ii) if any of the
Reference Banks shall be unable or otherwise fails to provide a rate for the
purposes of determining LIBOR as hereinabove provided, on the basis of the
rate or rates quoted by the remaining Reference Banks.
"Limit of Liability" has the meaning specified in the Guaranty Insurance
Policy.
"Limited Partnership" means Neches River Holding Corp.
A-3
<PAGE>
"Loss" shall mean any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, including without
limitation interest and legal fees, or disbursements of any kind or nature
whatsoever.
"Maya" has the meaning specified in the Long-Term Oil Supply Agreement.
"Oil Payment" means any and all amounts paid by the Primary Insurer to PMI
on behalf of the Partnership under the Guaranty Insurance Policy.
"Oil Payment Insurers" means the Primary Insurer and the several
Reinsurers.
"Oil Payment Note" has the meaning set forth in clause (a) of Section 2.04.
"Oil Payment Reimbursement Obligation" has the meaning set forth in clause
(a) of Section 2.01.
"Outside Coverage Start Date" means March 1, 2001 (or October 1, 2001, if
all of the conditions for an extension to such date set forth in clause (n) of
Section 10.01 of the Common Security Agreement have been satisfied, provided
that, at the Partnership's request, such date may be further extended to a
date no later than March 1, 2002 if Majority Secured Parties so agree.
"Partial Coverage Start Notice" has the meaning specified in Section
5.03(a).
"Participant" has the meaning specified in clause (b) of Section 10.02.
"PMI" means P.M.I. Comercio Internacional, S.A. de C.V., in its capacity as
beneficiary under the Guaranty Insurance Policy.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Port Arthur Coker Company L.P.
"Premium" has the meaning specified in clause (a) of Section 5.04.
"Primary Insurer" means Winterthur International Insurance Company Limited,
in its capacity as Insurer under the Guaranty Insurance Policy.
"Reference Banks" means Citibank, N.A., P.O. Box 78, 336 Strand, London
WC2R 2HB, England, and Barclays Bank Plc, 54 Lombard Street, London, EC3P 3AH,
England, or such substitute banks designated as such by the Administrative
Agent from time to time to provide the quotations required for the
determination of LIBOR, and being the principal London offices of each such
banks.
A-4
<PAGE>
"Reimbursement Notice" has the meaning set forth in Section 2.03.
"Reinsurers" means the several reinsurers that may from time to time
provide reinsurance with respect to the Guaranty Insurance Policy and the Debt
Service Reserve Insurance Guarantee.
"Shipment" has the meaning specified in the Guaranty Insurance Policy.
"Taxes" has the meaning specified in clause (a) of Section 10.15.
"Termination Notice" means a notice delivered under the Guaranty Insurance
Policy, substantially in the form of Exhibit C thereto.
A-5
<PAGE>
EXHIBIT I
to Reimbursement Agreement
Form of Oil Payment Note
OIL PAYMENT NOTE
New York, New York
U.S. Dollars $150,000,000 __________, 1999
FOR VALUE RECEIVED, PORT ARTHUR COKER COMPANY L.P., a limited partnership
organized under the laws of the State of Delaware (the "Partnership"), SABINE
RIVER HOLDING CORP., a corporation organized under the laws of the State of
Delaware (the "General Partner"), and NECHES RIVER HOLDING CORP., a corporation
organized under the laws of the State of Delaware (the "Limited Partner" and,
together with the General Partner, the "Partners"), hereby unconditionally
promise, in accordance with the Reimbursement Agreement, dated as of August 19,
1999 (as amended, modified or supplemented from time to time, the "Reimbursement
Agreement"), among the Partnership, Port Arthur Coker Company L.P., the
Partners, Winterthur International Insurance Company, as Primary Insurer (the
"Primary Insurer"), and Winterthur International Insurance Company Limited, as
Administrative Agent for and on behalf of the Oil Payment Insurers, to pay to
the order of the Primary Insurer at the principal office of
__________________________ located at ________________, _____________,
_________, in lawful money of the United States and in immediately available
funds, the principal amount of (a) one hundred-fifty million U.S. Dollars
($150,000,000) or, if less, (b) the aggregate unpaid principal amount of all Oil
Payments made by the Oil Payment Insurer to PMI pursuant to Article I of the
Guaranty Insurance Policy, dated as of August 19, 1999 (as amended, modified or
supplemented from time to time, the ("Guaranty Insurance Policy"), issued by the
Primary Insurer to PMI. The Partnership and the Partners also promise to pay
interest on the unpaid principal amount of each Oil Payment from the date such
Oil Payment is made until such Oil Payment is paid in full, in like money at
such office at the rate or rates per annum and on the date or dates specified in
the Reimbursement Agreement.
The holder of this Oil Payment Note is authorized to endorse on the
schedule annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date and amount of
each Oil Payment made pursuant to Article I of the Guaranty Insurance Policy,
the date and amount of each payment or prepayment of principal thereof and the
length of each Interest Period with respect thereto, which endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed,
provided that any failure by the holder of this Oil Payment Note to make such an
endorsement or any error in such endorsement shall in no manner affect the
validity or enforceability of the obligations of the Partnership and the
Partners to make payments of principal and interest in accordance with the terms
of this Oil Payment Note and the Reimbursement Agreement.
I-1
<PAGE>
All parties hereto, whether as makers, endorsers or otherwise, severally
waive diligence, presentment, demand, protest and notice of any kind whatsoever.
The failure or forbearance by the holder to exercise any of its rights under
this Oil Payment Note in any particular instance shall in no event constitute a
waiver thereof.
This Oil Payment Note is one of the Oil Payment Notes referred to in, and
is entitled to the benefits of, the Reimbursement Agreement, which, among other
things, contains provisions for the acceleration of the maturity of the Oil
Payments upon the happening of certain events, for Mandatory Prepayments of the
principal of the Oil Payments and for the amendment or waiver of certain
provisions of the Reimbursement Agreement or this Oil Payment Note, all upon the
terms and conditions therein specified. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Reimbursement
Agreement.
Upon the taking of an Enforcement Action (as defined in the Common Security
Agreement referred to in the Reimbursement Agreement) the principal of, and
interest on, this Oil Payment Note may be declared to be forthwith due and
payable in the manner, upon the conditions and with the effect provided in the
Reimbursement Agreement and in the Common Security Agreement.
This Oil Payment Note may be prepaid as provided in the Reimbursement
Agreement and the Common Security Agreement.
The Partnership agrees to pay, exclusively in lawful money of the United
States of America, costs of collection and attorneys' fees in case default
occurs in the payment of this Oil Payment Note.
THIS OIL PAYMENT NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Oil Payment Note is not negotiable and interests herein may be
assigned only upon the terms and conditions specified in the Reimbursement
Agreement.
I-2
<PAGE>
IN WITNESS WHEREOF, this Oil Payment Note has been duly executed by the
undersigned as of the date first written above.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
GENERAL PARTNER
By: _________________________________
Name:
Title:
SABINE RIVER HOLDING CORP.
By: _________________________________
Name:
Title:
NECHES RIVER HOLDING CORP.
By: _________________________________
Name:
Title:
I-3
<PAGE>
<TABLE>
<CAPTION>
OIL PAYMENTS AND PRINCIPAL PAYMENTS
- ------------------------------------------------------------------------------------------------------------------------
Amount of Oil Interest Amount of Principal Amount of Unpaid Notation
Date Payments Made Period Repaid or Prepaid Principal Balance Made By
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
I-4
<PAGE>
Exhibit II
to Reimbursement Agreement
REIMBURSEMENT NOTICE
Port Arthur Coker Company L.P.
1801 S. Gulfway Drive, Office No. 36
Port Arthur, TX 77640
Attention: Legal Department
The undersigned, Winterthur International Insurance Company Limited, as
Administrative Agent for and on behalf of the Oil Payment Insurers, hereby
certifies to Port Arthur Coker Company L.P. (the "Partnership"), with reference
to that certain Reimbursement Agreement, dated as of August 19, 1999 (the
"Agreement"), among the Partnership, Winterthur International Insurance Company
Limited, as Primary Insurer (the "Insurer"), and the undersigned, as follows:
1. The undersigned has made an Oil Payment to PMI in an amount of US$______
(the "Payment").
2. Annexed hereto are copies of (a) the Demand for Payment (the "Demand for
Payment") by PMI based upon which the Payment was made, (b) the bill[s] of
lading and invoice[s] [and the statement of PMI issued pursuant to Article 8.1
of the Long-Term Oil Supply Agreement] with respect to the Shipments to which
the Demand for Payment relates and (c) a certificate of an officer of PMI
confirming the accuracy and authenticity of the Demand for Payment and the
accompanying documents.
We request that you satisfy the Oil Payment Reimbursement Obligation
corresponding to the Payment by transferring the principal amount thereof, and
any interest payable thereon in accordance with the terms of the Reimbursement
Agreement, to [specify account details].
II-1
<PAGE>
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to such terms in, or by reference in, the Agreement.
WINTERTHUR INTERNATIONAL
INSURANCE COMPANY LIMITED
By: _________________________
Name:
Title:
By: _________________________
Name:
Title:
II-2
<PAGE>
Exhibit 10.06
CONTRACT
FOR
ENGINEERING, PROCUREMENT
AND CONSTRUCTION SERVICES
BETWEEN
PORT ARTHUR COKER COMPANY L.P.
("OWNER")
AND
FOSTER WHEELER USA CORPORATION
("CONTRACTOR")
dated as of July 12, 1999
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1
DEFINITIONS............................................................2
SECTION 2
SCOPE OF WORK AND RESPONSIBILITIES....................................14
2.1 Contractor's Expertise..........................................14
2.2 Scope of Work...................................................14
2.3 Intent of Contract..............................................15
2.4 Engineering.....................................................15
2.5 Procurement.....................................................16
2.6 Construction....................................................17
2.7 Review of Contract Documents....................................17
2.8 Existing Structures.............................................17
2.9 Examination of Project Site.....................................17
2.10 Taxes...........................................................19
2.11 Permits.........................................................20
2.12 Labor, Material and Equipment...................................20
2.13 Contractors and Owner's Representatives.........................21
2.14 Construction Schedule and Monthly Report........................22
2.15 Payment Schedule................................................22
2.16 Preparation of Technical Information............................22
2.17 Hazardous Waste.................................................23
2.18 Removal of Debris...............................................24
2.19 Removal of Equipment............................................24
2.20 Cutting, Patching and Damage....................................24
2.21 Right of Inspection.............................................24
2.22 Patent and Copyright Fees.......................................25
2.23 Installation of Coker Complex Equipment.........................25
2.24 Temporary Facilities, Lighting and Firefighting Equipment.......25
2.25 Delivery of Materials and Equipment.............................26
2.26 Safety..........................................................26
2.27 Security........................................................27
2.28 Testing and Inspection..........................................27
2.29 Copies of Drawings and Specifications...........................27
2.30 Substitutions...................................................28
2.31 Equipment and Data..............................................28
2.32 References to Certain Sources...................................28
2.33 No Prototype Equipment..........................................28
2.34 Operating Manuals...............................................29
2.35 Maintenance and Instruction Manuals; Mechanical Catalogs........29
2.36 Training........................................................29
2.37 Liens and Other Encumbrances....................................30
2.38 Spare Parts.....................................................30
2.39 Labor Relations.................................................31
2.40 Local Hiring Efforts............................................31
<PAGE>
Page
----
2.41 Further Assurances..............................................32
2.42 Listing of Defects and Deficiencies.............................32
2.43 Operations and Maintenance......................................32
2.44 Contractor's Duty to Independent Engineer.......................32
2.45 Certificate of Contractor; Consent to Assignment................32
2.46 Intellectual Property Licenses..................................32
SECTION 3
SUBCONTRACTORS........................................................33
3.1 Subcontractors..................................................33
3.2 Contractor's Liability..........................................34
3.3 Terms in Subcontracts...........................................34
3.4 Assignability of Subcontracts to Owner..........................34
3.5 Removal of Subcontractor's Personnel............................34
3.6 Subcontractor Warranties........................................35
3.7 Subcontractor Insurance.........................................35
3.8 No Privity with Subcontractors..................................35
3.9 Review and Approval not Relief of Contractor Liability..........35
SECTION 4
CONTRACT AMOUNT AND PAYMENT...........................................36
4.1 Fixed Price Contract Amount.....................................36
4.2 Coordination with Interim Reimbursable Contract.................36
4.3 Submission of Applications for Payment..........................36
4.4 Payments........................................................36
4.5 Letter of Credit................................................38
4.6 Review by Owner and Independent Engineer Prior to Payment.......42
4.7 Final Completion and Payment....................................42
4.8 Payments to Subcontractors......................................44
4.9 Payments Subject to Release of Liens............................44
4.10 Right to Audit..................................................45
4.11 No Payment in Event of Material Breach..........................45
SECTION 5
COMPLETION AND ACCEPTANCE OF COKER PROJECT............................45
5.1 Mechanical Completion...........................................45
5.2 Commissioning and Start-up......................................49
5.3 Performance Tests...............................................49
5.4 Guaranteed Performance Dates....................................51
5.5 Owner Control of Coker Project..................................51
5.6 Reliability and Capacity Buydown Payments.......................51
5.7 Final Completion................................................52
SECTION 6
REBATE AND BONUS PAYMENTS.............................................54
6.1 Late Payments...................................................54
6.2 Reliability and Capacity Buydown Payments.......................55
<PAGE>
Page
----
6.3 Rebate Payments Reasonable......................................56
6.4 Offset of Rebate Payments.......................................57
6.5 Invalidity of Rebates...........................................57
SECTION 7
LIABILITY.............................................................57
7.1 Limitation of Liability.........................................57
7.2 Offsite and Revamp Work; Integration............................58
7.3 Waiver of Consequential Damages.................................60
7.4 Application of Limitations......................................60
7.5 Other Owners....................................................60
SECTION 8
WARRANTIES............................................................60
8.1 Warranties and Guarantees.......................................60
8.2 Application of Warranties.......................................61
8.3 Standards for Warranty Work.....................................61
8.4 Root Cause Clearance............................................62
8.5 Limitation of Warranties........................................62
SECTION 9
INSURANCE AND INDEMNIFICATION.........................................62
9.1 Insurance Requirements..........................................62
9.2 General Indemnification.........................................62
9.3 Application of Indemnity........................................65
9.4 Survival........................................................65
SECTION 10
CONTROL OF THE WORK...................................................65
10.1 Control of the Work.............................................65
10.2 Owner's Right to Do Work........................................66
10.3 Interrelation of Documents: Errors..............................66
10.4 Cooperation.....................................................66
10.5 Dependence on Work of Owner or Others...........................66
10.6 Inspector's Authority...........................................67
10.7 Labor Disputes..................................................67
SECTION 11
CLAIMS AND DISPUTES...................................................68
11.1 Procedures for Claims and Disputes..............................68
11.2 Executive-Level Submission......................................69
11.3 Arbitration/Judicial Forum......................................69
11.4 Pending Resolution of Disputes and Claims.......................70
11.5 Resolution of Claims............................................70
11.6 Force Majeure...................................................70
11.7 Owner-Caused Delay..............................................71
11.8 Application of Relief...........................................72
<PAGE>
Page
----
11.9 Non-Performing Party............................................73
11.10 Owner's Excuse for Non-Performance..............................73
11.11 Contractor Not Excused..........................................74
11.12 No Excuse for Payment of Money..................................74
SECTION 12
CHANGES IN WORK.......................................................74
12.1 Owner-Initiated Changes in Work.................................74
12.2 Contractor-Requested Change Orders..............................74
12.3 Change Orders for Claims........................................75
12.4 Change Orders...................................................75
12.5 Deletions from Work.............................................76
12.6 Change in Law; Project Documents................................76
12.7 Change Order Dispute Resolution.................................77
SECTION 13
INSPECTION AND REJECTION OF GOODS,TITLE AND INSURABLE INTEREST........77
13.1 Uniform Commercial Code -- Applicability........................77
13.2 Title...........................................................78
13.3 Insurable Interest in Goods.....................................78
13.4 Risk of Loss....................................................79
SECTION 14
TERMINATION OR SUSPENSION OF CONTRACT.................................79
14.1 Owner's Right to Terminate and Other Remedies...................79
14.2 Contractor Abandonment of Contract..............................83
14.3 Termination for Owner's Convenience.............................83
14.4 Owner's Right to Suspend Work...................................83
14.6 Termination Payment.............................................84
14.7 Surviving Obligations...........................................85
SECTION 15
REPRESENTATIONS AND WARRANTIES........................................85
15.1 Representations and Warranties of Contractor....................85
15.2 Representations and Warranties of Owner.........................86
SECTION 16
MISCELLANEOUS CLAUSES.................................................87
16.1 Notice..........................................................87
16.3 Attorneys' Fees -- Prevailing Party.............................89
16.4 Successors and Assigns..........................................89
16.5 Assignment......................................................89
16.6 Relationship of the Parties.....................................90
16.7 Waiver..........................................................90
16.9 Records and Communications......................................92
16.10 Ownership of Turnkey Specifications.............................92
<PAGE>
Page
----
16.11 Interest......................................................92
16.12 Financing Parties Requirements................................92
16.13 Owner Review, Comment and Approval............................93
16.14 Discretion....................................................93
16.15 Time is of the Essence........................................93
16.16 Conditions Precedent to Effective Date; Notice to Proceed.....93
16.17 Headings......................................................95
16.18 Counterparts..................................................95
16.20 Non-Recourse..................................................95
16.21 Merger of Contractor or EPC Guarantor.........................95
<PAGE>
SCHEDULES
1.3 Environmental Permits
1.4 Existing Environmental Conditions and Liabilities
1.5 Pre-Commissioning and Commissioning Activities
1.7 Turnkey Specifications
2.4.2 Consumables
2.6 Owner Construction Services
2.11(a) Owner-Obtained Permits
2.11(b) Contractor-Obtained Permits
2.13.2 Organizational Chart
2.14 Construction Schedule
2.15 Payment Schedule
2.46 Third Party Technology Licenses
5.3 Performance Test Standards
7.2 Offsite and Revamp Work
9.1 Required Insurance
16.9 Record Keeping Procedures
EXHIBITS
A Form of Application for Payment
B Form of Guarantee
C Form of Retention Letter of Credit
D Form of Monthly Report
E Form of Final Contractor Lien Waiver and Release
F Form of Final Subcontractor Lien Waiver and Release
G Form of Contractor Partial Lien Waiver and Release
H Form of Subcontractor Partial Lien Waiver and Release
I Form of Change Order
J Form of Subcontractor Assignment and Consent Agreement
K Form of Contractor Assignment and Consent Agreement
L Form of Notice to Proceed
<PAGE>
CONTRACT FOR ENGINEERING, PROCUREMENT
AND CONSTRUCTION SERVICES
THIS CONTRACT FOR ENGINEERING, PROCUREMENT AND CONSTRUCTION SERVICES, dated
as of July 12, 1999 between Port Arthur Coker Company L.P., a Delaware limited
partnership ("Owner"), and Foster Wheeler USA Corporation, a Delaware
corporation ("Contractor").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Owner desires to construct and own a delayed coking unit and
certain related refinery equipment (the "Coker Complex"), to be located at Clark
-------------
R&M's existing refinery in Port Arthur, Jefferson County, Texas, upon land
leased by Owner, which Coker Complex is intended to be designed and constructed
to meet and comply with the provisions of this Contract, technical requirements
established by the Project Documents, the Financing Documents and all Applicable
Laws and Applicable Permits;
WHEREAS, the Coker Complex is to be constructed on a "fast-track" basis
and, in order to meet the intended construction schedule, the Contractor has
previously agreed, pursuant to the Engineering, Procurement and Construction
Agreement dated as of March 24, 1998 between Clark R&M and Contractor (as it may
be amended from time to time, the "Interim Reimbursable Contract") to commence
design, procurement and construction of the Heavy Oil Processing Facility;
WHEREAS, pursuant to the Bill of Sale, Clark R&M is selling Owner all work
in progress, including design materials, performed by Contractor to date under
the Interim Reimbursable Contract and related to the Coker Complex;
WHEREAS, Owner and Contractor wish to complete construction of the Coker
Complex on a lump sum fixed price basis;
WHEREAS, Contractor, itself or through Contractor's Subcontractors, desires
to provide and Owner desires to obtain a complete operating Coker Complex,
including design, engineering, procurement, construction, installation, support
and oversight of training and start-up, testing and related services for the
Coker Project, all of which shall be provided on a lump sum fixed price turnkey
basis in accordance with the terms and conditions herein specified;
WHEREAS, Owner is financing a substantial portion of the Contract Amount
from third-party senior secured lenders, who will be relying on the Contractor's
undertaking under this Contract and who will be assigned, by way of security,
all of Owner's rights hereunder;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth in this Contract, Owner and Contractor hereby agree as follows:
<PAGE>
2
SECTION 1
DEFINITIONS
As used in this Contract, the following items shall have the following
meanings:
Acceptable L/C Issuer shall mean (i) any bank or trust company organized
---------------------
under the laws of the United States of America or any state thereof or under the
laws of Canada, Japan or any country that is a member of the European Economic
Community, which has capital, surplus and undivided profits of at least
$500,000,000 in the aggregate and has outstanding unsecured indebtedness which
is rated (on the date of the issuance of the Letter of Credit) A or better by
S&P and A2 or better by Moody's (or an equivalent rating by another nationally
recognized credit rating agency of similar standing if neither of such
corporations is in the business of rating unsecured bank indebtedness), or (ii)
any other bank or trust company, bonding company or insurance company acceptable
to Owner and the Financing Parties in their sole discretion.
Affiliate shall mean as to any Person, any other Person that, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
Ancillary Equipment shall mean the crude unit, vacuum tower and certain
-------------------
other Clark R&M-owned equipment located at Refinery, as more particularly
described in the Ancillary Equipment Site Lease.
Ancillary Equipment Site Lease shall mean the real property lease
------------------------------
agreement, to be entered into between Clark R&M and Owner, with respect to the
Ancillary Equipment.
Applicable Laws shall mean all laws, treaties, ordinances, judgments,
---------------
decrees, injunctions, writs, orders and stipulations of any court, arbitrator or
governmental agency or authority and statutes, rules, regulations, orders and
interpretations thereof of any federal, state, county, municipal, regional,
environmental or other governmental body, instrumentality, agency, authority,
court or other body having jurisdiction over the Coker Project, performance of
the Work or other services to be performed hereunder and construction of the
Coker Complex.
Applicable Permits shall mean any valid waiver, exemption, variance,
------------------
franchise, permit, authorization, license or similar order of or from any
federal, state, county, municipal, regional, environmental or other governmental
body, instrumentality, agency, authority, court or other body having
jurisdiction over the Coker Project, performance of the Work or other services
to be performed hereunder and construction of the Coker Complex.
<PAGE>
3
Application for Payment shall mean the Contractor's official request for
-----------------------
payments pursuant to Section 4.3 hereof substantially in the form of Exhibit A.
As-Built Drawings shall mean the Piping and Instrument Diagrams, Plot
-----------------
Plans, Electrical Single Line Diagrams and Underground Drawings, as more
particularly defined and identified in the Turnkey Specifications.
Beneficiary shall have the meaning set forth in Section 4.5.1 hereof.
-----------
Bills of Sale shall mean one or more bills of sale to be issued by Clark
-------------
R&M to Owner for that portion of the Work performed to date pursuant to the
Interim Reimbursable Contract.
Bonus Amount shall mean for any day an amount equal to one-seventh (1/7)
------------
of (i) with respect to any day during September 2000, $900,000 or (ii) with
respect to any day during October 2000, $600,000.
Business Day shall mean any day other than Saturday, Sunday or a legal
------------
holiday in the United States of America.
Buydown Payment Limit shall mean seventy five million dollars
---------------------
($75,000,000.00).
Capacity Test shall have the meaning given such term in the Performance
-------------
Test Standards.
Change in Law shall mean (a) the enactment, adoption, promulgation or
-------------
modification of any Applicable Laws after the Effective Date; (b) an order of
the applicable governmental agency or judicial tribunal after the Effective Date
with respect to any Applicable Laws or Applicable Permits; or (c) the imposition
of any conditions or requirements after the Effective Date on or with respect to
the issuance, maintenance or renewal of any Applicable Permits which, in the
case of any of (a), (b) or (c), are more burdensome on Contractor or Owner than
the conditions or requirements of Applicable Laws or Applicable Permits in
effect on the Effective Date, or, in the case of Applicable Permits, more
burdensome than the conditions or requirements committed to in applications for
Applicable Permits where an official permit has not been issued prior to the
Effective Date but an application with respect thereto has been filed with the
approval of Owner and Contractor. Notwithstanding the foregoing, no Change in
Law shall be deemed to have occurred as a result of (i) the enactment, adoption,
promulgation or modification of any Applicable Law prior to the Effective Date
that did not become effective as law until after the Effective Date, or (ii) any
enactment, adoption, promulgation or modification of a federal administrative or
regulatory rule, procedure or standard occurring after the Effective Date that
was formally and publicly proposed by the responsible governmental authority and
published in the Federal Register prior to the Effective Date, if the Contractor
knew prior to the Effective Date that such enactment, adoption, promulgation or
modification was then being proposed and was reasonably likely to take effect;
provided that if such final rule, procedure or
<PAGE>
4
standard is more burdensome on Contractor or Owner than the rule, procedure or
standard as proposed prior to the Effective Date, then the change from such
proposed rule, regulation or standard to such final rule, regulation or standard
may be deemed a Change in Law.
Change in Work shall mean any addition to, deletion from, suspension of or
--------------
other modification, within the scope of the Work, to the quality, function or
intent of the Coker Project as delineated in this Contract, including any such
addition, deletion, suspension or other modification which requires a change in
one or more of the Project Variables, but excluding any such addition,
deletion, suspension or other modification that (a) arises in the ordinary
course of development of the design of the Coker Complex or the ordinary course
of procurement or construction thereof or (b) results from Defects or
Deficiencies.
Change Order shall mean a written order to Contractor issued pursuant to
------------
Section 12 hereof and in the form attached hereto as Exhibit I authorizing a
Change in Work and, if appropriate, an adjustment in one or more of the Project
Variables.
Clark R&M shall mean Clark Refining & Marketing, Inc., a Delaware
---------
corporation.
Coker shall mean the delayed coking unit described in the Turnkey
-----
Specifications.
Coker Completion Notice shall have the meaning given such term in Section
-----------------------
5.1.5(b) hereof.
Coker Complex shall mean the Coker, the hydrocracker unit, sulfur recovery
-------------
unit, the amine/sour water unit, and all other equipment and installations
described in the Turnkey Specifications, to be located in Jefferson County,
Texas, including all components thereof and related facilities located on the
Project Site or within the Refinery, taken as an integrated whole, all of which
constitute the Coker Complex.
Coker Complex Ground Lease shall mean the ground lease and easement
--------------------------
agreement with respect to the Project Site to be entered into between Owner and
Clark R&M.
Coker Project shall mean the Coker Complex, the Project Site, the Work and
-------------
all other work, equipment, labor, design and other services and materials to be
performed by Contractor under this Contract.
Commissioning shall mean those activities associated with operation of
-------------
items of equipment or facilities in preparation for actual Start-up of the Coker
Complex, as such activities are more particularly described under the heading
"Commissioning" on Schedule 1.5 hereto.
Confidential Party shall have the meaning given such term in Section 16.8
------------------
hereof.
<PAGE>
5
Construction Manager shall mean the person designated by Contractor's
--------------------
Representative to represent Contractor on the Project Site and whose
responsibilities are more fully described in Section 2.13 hereof.
Construction Schedule shall mean the schedule specifying dates for
---------------------
completion of the principal elements of the Work as further described in Section
2.14 hereof and attached hereto as Schedule 2.14, as such Schedule may be
modified from time to time as permitted herein.
Contract shall mean this Contract for Engineering, Procurement and
--------
Construction Services, the Schedules attached hereto, and all approved and duly
executed Change Orders, including all approved and duly executed written
amendments, modifications, and supplements thereto.
Contract Amount shall have the meaning set forth in Section 4.1 hereof.
---------------
Contractor shall mean Foster Wheeler USA Corporation, a New York
----------
corporation, and its successors and permitted assigns.
Contractor Parties shall mean Contractor, its Affiliate and subsidiary
------------------
companies, and the respective partners, directors, officers, employees and
agents of the foregoing.
Contractor's Representative shall mean a qualified person, designated by
---------------------------
Contractor at the time of the execution of this Contract, to act as Contractor's
authorized representative for all purposes relating to this Contract.
Cost Factor shall mean for any date one-seventh (1/7) of (i) with respect
-----------
to any day from and including January 1, 2001 through and including January 31,
2001, $100,000, (ii) with respect to any day from and including February 1, 2001
through and including March 31, 2001, $1,146,250, (iii) with respect to any day
from and including April 1, 2001 through and including June 30, 2001,
$1,842,500, (iv) with respect to any day from and including July 1, 2001 through
and including September 30, 2001, $1,595,000 and (v) with respect to any day
after October 1, 2001, $2,750,000.
Critical Path shall mean the longest scheduled path leading to the shortest
-------------
time for achieving Final Completion.
Damages shall mean all claims, demands, causes of action, suits, damages,
-------
liabilities, fines, penalties, assessments, environmental responsibility costs
or injunctive obligations, judgments, losses and expenses (including without
limitation expenses, costs or attorney's fees incurred for any Person's primary
defense or for enforcement of its indemnification rights)
day shall mean a calendar day, unless otherwise specifically defined.
---
<PAGE>
6
Defects and Deficiencies or Defective shall mean without limitation and in
------- ------------ ---------
Owner's reasonable judgment: (a) when used with respect to the performance of
labor or service items of Work, such items that are not provided in a
workmanlike manner or in accordance with the Standards; (b) when used with
respect to structures, materials and equipment items of Work, such items that
are not (i) new (except for used equipment (x) expressly specified as used in
the Turnkey Specifications or (y) otherwise agreed in writing by Owner) and of
good quality or free from improper workmanship and defects in accordance with
the Standards and standards of good procurement, manufacturing and construction
standards, or (ii) free from errors or omissions in design or engineering
services in light of the Standards and generally accepted standards applicable
to the design and engineering of oil refineries of similar type, size and
design; and (c) in general, (i) Work that does not conform to the requirements
of this Contract or the Project Documents, (ii) Work that is not free from
excessive corrosion or erosion, except as otherwise provided in this Contract or
(iii) any design, engineering, Start-up activities, materials, equipment, tools,
supplies, installation or training which in Owner's reasonable judgment (1) does
not conform to the Standards and/or is of improper or inferior workmanship
and/or (2) either would materially and adversely affect the ability of the Coker
Complex to meet the Guaranteed Values on a consistent and reliable basis or
would materially and adversely affect the continuous operation of the Coker
Complex. Defects and Deficiencies shall be deemed to exist when actually
discovered or when they should have been apparent to a party in the Contractor's
position after reasonable inspection and/or testing.
Disclosed Site Information shall have the meaning set forth in Section
--------------------------
2.9.2 hereof.
Early Completion Bonus shall have the meaning set forth in Section 6.1.2
----------------------
hereof.
Effective Date shall mean the first date on which all the conditions
--------------
specified in Section 16.16 have been satisfied.
Emissions and Effluent Test shall have the meaning set forth in the
---------------------------
Performance Test Standards.
Environmental Permits shall mean the Applicable Permits listed on Schedule
---------------------
1.3 hereto.
EPC Guarantor shall mean Foster Wheeler Corporation, a New York
-------------
corporation.
Event of Force Majeure shall have the meaning set forth in Section 11.6
----------------------
hereof.
Exemption Certificates shall have the meaning set forth in Section
----------------------
2.10.1(b) hereof.
Final Completion shall mean the completion of all Work under this Contract
----------------
and achievement of the Final Completion criteria set forth in Section 5.7
hereof.
<PAGE>
7
Final Completion Certificate shall mean the certificate issued by Owner to
----------------------------
Contractor pursuant to Section 5.7.2 hereof confirming the achievement of Final
Completion.
Financing Documents shall mean the construction and/or term loans, bonds or
-------------------
other similar arrangements (including any sale/leaseback transaction) entered
into between Owner and Financing Parties evidencing or securing the financing of
the Coker Complex.
Financing Parties shall mean senior lenders or senior secured parties that
-----------------
may at any time participate in a financing or refinancing of the Coker Project,
and any trustee or agent acting on their behalf. For purposes of this Contract,
"Financing Parties" shall mean any Persons identified as such to the Contractor
by Owner, as to which the Contractor shall not have received a joint notice from
Owner and such Person or Persons stating that such Person or Persons shall no
longer be considered Financing Parties for purposes of this Contract.
Guarantee shall mean the guarantee to be provided by the EPC Guarantor to
---------
Owner substantially in the form of Exhibit B hereto.
Guaranteed Capacity shall mean the design capacity and efficiency of each
-------------------
item of the Coker Complex described as such in item 9 of the "General Test
Parameters" on Schedule 5.3 hereto.
Guaranteed Emissions and Effluent Limits shall mean the standards for the
----------------------------------------
emission of all gaseous, liquid, and solid pollutants as set forth as such on
Schedule 5.3 hereto.
Guaranteed Final Completion Date shall mean December 1, 2001, as such date
--------------------------------
may be changed pursuant to Sections 11 and 12 of this Contract.
Guaranteed Mechanical Completion Date shall mean January 1, 2001, as
-------------------------------------
such date may be changed pursuant to Sections 11 and 12 of this Contract.
Guaranteed Performance Dates shall mean collectively, the Guaranteed
----------------------------
Mechanical Completion Date and Guaranteed Final Completion Date.
Guaranteed Reliability shall mean the Reliability of the Coker Complex
----------------------
described as such on Schedule 5.3 hereto.
Guaranteed Values shall mean Guaranteed Capacity, Guaranteed Emissions and
-----------------
Effluent Limits, and Guaranteed Reliability, all as further described in this
Contract.
Hazardous Waste shall mean "hazardous wastes" or "hazardous substances" as
---------------
those terms are defined in the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901-6987, as amended, and applicable regulations thereunder, and in
any other Applicable Laws, and "hazardous waste" as such term is defined under
Texas Health and Safety Code (S) 361.003(12).
<PAGE>
8
Heavy Oil Processing Facility shall mean, collectively, the Coker Complex
-----------------------------
and all equipment and processing units leased by Owner from Clark R&M pursuant
to the Ancillary Equipment Site Lease.
Indemnified Party shall have the meaning given such term in Section 9.2.5
-----------------
hereof.
Indemnifying Party shall have the meaning set forth in Section 9.2.5
------------------
hereof.
Independent Engineer shall mean the engineering firm or, in the case there
--------------------
shall be more than one such firm, each of the engineering firms, retained by the
Financing Parties to report on progress in the performance of the Work and to
review the Performance Tests, Applications for Payment, acceptance of Mechanical
Completion and Final Completion and other matters as specified in this Contract.
Inspector shall mean a qualified person designated as an authorized
---------
representative of Owner or Independent Engineer assigned to make all necessary
inspections of the Work, or of the labor, materials and equipment furnished or
being furnished by Contractor at the Project Site and the other sites where the
Contractor or any Subcontractor is prosecuting the Work, subject to appropriate
safety, security and confidentiality requirements.
Interim Reimbursable Contract shall have the meaning given such term in the
-----------------------------
recitals hereto.
Known Conditions shall mean Hazardous Waste existing on the Project Site
----------------
and known to Owner as of the Effective Date and the existing liabilities related
thereto as more fully described on Schedule 1.4 hereto.
Late Payments shall mean those payments made by Contractor to Owner
-------------
pursuant to Section 6.1 hereof for failure to achieve (a) Mechanical Completion
by the Guaranteed Mechanical Completion Date or (b) 100% of Guaranteed
Reliability by the Guaranteed Mechanical Completion Date.
Late Payment Limit shall mean seventy million dollars ($70,000,000.00).
------------------
Latent Defect shall mean a Defect or Deficiency which arose or first
-------------
existed at or prior to the period ending one (1) year after Final Completion but
which would not have been revealed by a reasonable inspection carried out at the
end of such period.
L/C Drawing shall have the meaning set forth in Section 4.5.1 hereof.
-----------
Letter of Credit shall mean an irrevocable letter of credit substantially
----------------
in the form of Exhibit C hereto, as required pursuant to Section 4.5 hereof.
Liabilities shall have the meaning given in Section 9.2.
-----------
<PAGE>
9
Maintenance and Instruction Manuals shall mean the manuals prepared
-----------------------------------
pursuant to Section 2.35(a) hereof containing procedures and specifications for
maintenance of the Coker Complex.
Major Portion of the Work shall mean a segregated portion of the Work with
-------------
a value of five hundred thousand dollars ($500,000) or more.
Mechanical Catalogs shall mean the catalogs prepared pursuant to Section
-------------------
2.35(b) hereof containing detailed procedures and specifications for the Coker
Complex.
Mechanically Complete shall mean (a) with respect to any Process Unit, the
---------------------
completion of construction, erection and assembly thereof to a degree sufficient
to conduct the Pre-Commissioning Testing applicable thereto in accordance with
Section 5.1.2 hereof and (b) with respect to the Coker Complex, the achievement
of the Mechanical Completion criteria set forth in Section 5.1 hereof.
Mechanical Completion Certificate shall mean the certificate issued by
---------------------------------
Owner to Contractor pursuant to Section 5.1.1 hereof confirming the achievement
of Mechanical Completion.
Monthly Report shall have the meaning set forth in Section 2.14 hereof.
--------------
Moody's shall mean Moody's Investors Service, Inc.
-------
Notice of Final Completion shall have the meaning set forth in Section
--------------------------
5.7.1 hereof.
Notice of Mechanical Completion shall have the meaning set forth in Section
-------------------------------
5.1.4 hereof.
Offsite and Revamp Work shall mean the various modifications, repairs and
-----------------------
upgrades of Clark R&M-owned equipment at the Refinery to be performed pursuant
to the Ancillary Equipment Site Lease in accordance with the specifications set
forth in Schedule 7.2 hereto.
Operating Manuals shall mean the manuals to be prepared pursuant to Section
-----------------
2.34 hereof containing detailed procedures and specifications for the operation
of the Coker Complex.
Operating Revenue shall mean for any day the difference between (a) all
-----------------
cash revenues received by the Owner and attributable to such day, less (b) any
----
cash expense or expenditure incurred by the Owner attributable to such day
including, without duplication, (i) the purchase price of Owner's crude oil
processed through the Heavy Oil Processing Facility on such day, (ii) the
purchase price of feedstocks processed through the Heavy Oil Processing Facility
on such day, (iii) an amount determined by the Owner equal to the distribution
required to be paid
<PAGE>
10
by the Owner to its constituent partners in order for such partners to pay
income taxes on income attributable to Owner's revenues for such day, (iv) all
lease and operating fees incurred by the Owner and attributable to such day, and
(v) all direct and indirect, variable and fixed cash operating expenses incurred
by Owner on such day (including salaries, overtime charges, reasonable and
customary bonuses and employee benefits).
Other Party shall have the meaning given in Section 9.2(b) hereof.
-----------
Owner shall mean Port Arthur Coker Company L.P., a Delaware limited
-----
partnership, and its successors and assigns.
Owner-Caused Delay shall have the meaning set forth in Section 11.7 hereof.
------------------
Owner Group shall have the meaning set forth in Section 11.7 hereof.
-----------
Owner Parties shall mean Owner, its partners, Affiliate and subsidiary
-------------
companies, and the respective partners, directors, officers, employees and
agents of the foregoing.
Owner's Representative shall mean a qualified person, designated by Owner
----------------------
at the time of execution of this Contract, to act as Owner's representative with
the authority as set forth in (and as limited by) Section 2.13.3 hereof.
Payment Schedule shall mean the schedule specifying dates for payment
----------------
hereunder as further described in Section 2.15 hereof and attached hereto as
Schedule 2.15, as such Schedule may be modified from time to time pursuant to
valid Change Orders.
Performance Tests shall mean those tests of the Coker Complex performance
-----------------
described in Section 5.3 hereof and the Performance Test Standards, including
the Capacity Test, the Reliability Test and the Emissions and Effluent Test.
Performance Test Standards shall mean the schedule of procedures and
--------------------------
standards set forth in Schedule 5.3 hereto.
Person means an individual, partnership, corporation, limited liability
------
company, limited liability partnership, trust, unincorporated organization,
association, joint venture or a government or agency or political subdivision
thereof.
Pre-Commissioning Testing shall mean the final mechanical integrity tests
-------------------------
and other activities to be performed during pre-commissioning of the Coker
Complex but prior to the introduction of hydrocarbons to the respective Process
Units, as more particularly described under the heading "Pre-Commissioning" on
Schedule 1.5.
Process Unit means each discrete physical unit of the Coker Complex.
------------
<PAGE>
11
Project Documents shall mean, collectively, (i) this Contract, (ii) the
-----------------
Maya Crude Oil Sale Agreement, dated as of March 10, 1998, between Owner and
P.M.I. Comercio Internacional, S.A. DE C.V., (iii) the services and supply
agreement to be entered into between Owner and Clark R&M, (iv) the product
purchase agreement to be entered into between Owner and Clark R&M, (v) the Coker
Complex Ground Lease, (vi) the Ancillary Equipment Site Lease, (vii) the Bills
of Sale and (viii) the hydrogen supply agreement to be entered into between
Owner and Air Products and Chemicals, Inc.
Project Products shall mean the expected saleable output of the Coker
----------------
Complex described as such on Schedule 5.3 hereto.
Project Site shall mean all those parcels of land in Jefferson County,
------------
Texas, to be owned or leased by Owner, or with respect to which Owner otherwise
has rights, on which the Coker Complex will be located, as more particularly
described in the Turnkey Specifications.
Project Variables shall mean the Contract Amount, the Construction
-----------------
Schedule, the Payment Schedule, the Guaranteed Values and the Guaranteed
Performance Dates.
Proprietary Business and Technical Information shall have the meaning given
----------------------------------------------
such term in Section 16.8 hereof.
Provisional Mechanical Completion Certificate shall have the meaning given
---------------------------------------------
such term in Section 5.1.5(a) hereof.
Punch List shall have the meaning set forth in Section 5.1.3 hereof.
----------
Rebate Amount shall mean for any day the amount, if positive, equal to the
-------------
sum of (i) the Cost Factor for such day and (ii) the Throughput Factor for such
day.
Refinery shall mean the existing oil refinery owned by Clark R&M located in
--------
Port Arthur, Texas.
Reliability shall mean the capability of the Coker Complex to generate the
-----------
"Daily Net Margin" as such term is more fully described on Schedule 5.3 hereto.
Reliability and Capacity Test Buydown Date shall mean the earlier of (i)
------------------------------------------
the Guaranteed Final Completion Date, (ii) the date Contractor chooses to make
Reliability and Capacity Buydown Payments pursuant to Section 6.2 hereof,
provided that the Reliability Test performed most recently prior to such date
- --------
has demonstrated achievement of Substantial Reliability, and (iii) the date, in
the reasonable judgment of Owner, that Contractor ceases active and diligent
efforts to achieve Guaranteed Reliability.
Reliability and Capacity Buydown Payments shall have the meaning set forth
-----------------------------------------
in Section 6.2 hereof.
<PAGE>
12
Reliability Test shall have the meaning given such term in the Performance
----------------
Test Standards.
Reviewers shall have the meaning given in Section 2.21 hereof.
---------
S&P shall mean Standard & Poor's Rating Group, a division of McGraw Hill.
---
Scheduled Payments shall have the meaning set forth in Section 4.4 hereof.
------------------
Site Work Commencement Date shall mean August 24, 1998.
---------------------------
Standards shall mean, in addition to any other standards set forth in this
---------
Contract (including the Turnkey Specifications), the technical requirements of
the Project Documents, generally accepted standards of professional care, skill,
diligence and competence applicable to engineering and construction and project
management practices, good refinery and petrochemical industry practices for oil
refineries of similar size, type and design, manufacturer's specifications and
warranty requirements and all Applicable Laws and Applicable Permits.
Start-up shall mean the introduction of hydrocarbons and processing of test
--------
runs at the Coker Complex and such other activities to be performed by Owner
pursuant to the Start-up Protocol.
Start-up Protocol shall mean the specifications for start-up of the Coker
-----------------
Complex to be developed in accordance with Section 5.2.1 hereof.
Subcontractor shall mean a contractor, vendor or Supplier having a direct
-------------
or indirect contract with Contractor or with any other Subcontractor for the
performance of part of the Work.
Subcontractor Assignment and Consent Agreement shall mean a Subcontractor
----------------------------------------------
Assignment and Consent Agreement delivered pursuant to Section 3.4 hereof and
substantially in the form of Exhibit J hereto.
Substantial Reliability shall mean Contractor has successfully concluded a
-----------------------
Reliability Test demonstrating achievement of a "Daily Net Margin" of $859,200
on the basis more particularly described in item 11 of Schedule 5.3 during the
Reliability Test used to determine Reliability and Capacity Buydown Payments
pursuant to Section 6.2 hereof.
Supplier shall mean a manufacturer, fabricator, supplier, distributor,
--------
materialman or vendor having a direct or indirect contract with Contractor or
with any Subcontractor for the performance of part of the Work.
Target Mechanical Completion Date shall mean the later of (i) November 1,
---------------------------------
2000 and (ii) the date that is sixty days prior to the Guaranteed Mechanical
Completion Date.
<PAGE>
13
Taxes shall mean sales and compensating use taxes imposed by the United
-----
States Government, the State of Texas and other states and by municipalities and
counties within the State of Texas and other states.
Technical Documentation shall mean the documentation identified under the
-----------------------
heading "Technical Documentation" in the Turnkey Specifications.
Technical Information shall mean all design calculations, design drawings,
---------------------
purchase specifications, detailed drawings, material lists, shop drawings,
documents, samples, vendor documents and other product and technical data
related to the Work.
Termination Payment shall have the meaning set forth in Section 14.6
-------------------
hereof.
Throughput Factor shall mean for any day from and including July 1, 2001,
-----------------
an amount equal to (a) twelve dollars ($12.00) multiplied by, (b) the difference
-------------
of (i) seventy six thousand three hundred (76,300) minus, (ii) each actual
-----
barrel of Coker throughput processed by the Coker Complex on such day; provided,
--------
however, that if such amount is negative, the Throughput Factor for such day
- -------
shall equal zero. For any day prior to July 1, 2001, the Throughput Factor
shall be deemed to equal zero.
Turnkey Specifications shall mean the Turnkey Specifications, attached
----------------------
hereto as Schedule 1.7, setting forth the material elements of the technical
specifications of the Work, together with the supplemental and supporting
details included in the project correspondence files as described in the
"Coordination Procedure" appended to Exhibit 16.9.
Underground and In Ground Facilities shall mean all pipelines, conduits,
------------------------------------
ducts, cables, wires, manholes, vaults, water lines, tanks, tunnels or such
other facilities or attachments, and any encasements containing such facilities
which have been installed underground to furnish any of the following services
or materials: electricity, gases, steam, liquid petroleum products, telephone or
other communications, cable television, sewage and drainage control, traffic or
other control systems or water.
Warranties shall mean the warranties and guarantees to be provided to Owner
----------
pursuant to this Contract, including but not limited to those set forth in
Sections 3.6 and 8.1 hereof.
Warranty Period shall mean the following periods as they may be extended
---------------
pursuant to Section 8.1: (a) with respect to engineering and design errors and
omissions and Defects and Deficiencies in the structure and foundations of the
Coker Complex, a period of one (1) year after Final Completion; (b) with respect
to a Latent Defect, a period ending on the earlier of (i) one (1) year from the
date that Owner discovers such Latent Defect and (ii) two (2) years after Final
Completion and (c) with respect to all other Work, a period of one (1) year
after Final Completion.
<PAGE>
14
Work shall mean all phases of this Contract, including engineering and
----
design, procurement, causing to manufacture, construction and erection,
installation, connection and integration into the Refinery, support of Owner's
training program, oversight of Commissioning and start-up (including
calibration, inspection and start-up operation), testing and start-up and
testing operation with respect to the Coker Complex to be performed by
Contractor pursuant to this Contract. Work includes (i) all or partial portions
of the Coker Project, including labor, materials, equipment, services, and any
other items to be used by Contractor or its Subcontractors in the prosecution of
this Contract, wherever the same are being engineered, designed, procured,
caused to be manufactured, delivered, constructed, installed, trained, erected,
tested, commissioned, started up or operated during start-up and testing and
whether the same are on or are not on the Project Site; and (ii) all related
items which would be required of a turnkey contractor of projects of comparable
size and design which are necessary for the Coker Complex to (x) operate in
accordance with all Applicable Laws and Applicable Permits, and (y) produce each
of the Project Products in the amounts required pursuant to this Contract while
operating in compliance with the Guaranteed Values, as more particularly
described in the Turnkey Specifications. Contractor shall be responsible for
providing any and all additional items and services which are not expressly
included by the terms of this Contract and which are reasonably required for
construction, Start-up and operation of the Coker Complex.
Work Commencement Date shall mean April 1, 1998.
----------------------
SECTION 2
SCOPE OF WORK AND RESPONSIBILITIES
2.1 Contractor's Expertise. Contractor represents that it has the
----------------------
requisite knowledge, know-how, skill and experience to perform the Work. It is
expressly agreed and understood that Owner is relying upon the Contractor's
expertise to perform the Work efficiently and to complete the Work by the
Guaranteed Performance Dates.
2.2 Scope of Work. Contractor shall perform all of the Work in
-------------
accordance with the Turnkey Specifications and deliver the Coker Complex to
Owner on a lump sum fixed price turnkey basis for the Contract Amount in
accordance with this Contract. Contractor shall perform and furnish or cause to
be performed and furnished the Work, and shall provide Owner with the Coker
Complex such that:
(a) All components shall be new (except for used equipment (x)
expressly specified as used in the Turnkey Specifications, or (y) otherwise
agreed in writing by Owner) and of good quality when installed; shall meet the
generally accepted standard of quality applicable to the design and
engineering of refinery installations of similar size, type and design; shall
be designed and manufactured in accordance with recognized refinery and
petrochemical industry standards for such components and in accordance with
the Standards; and shall be free from Defects and Deficiencies, including
Latent Defects, in design, materials and workmanship or otherwise;
<PAGE>
15
(b) All Work shall be performed and installed in accordance with the
Standards and in accordance with workmanlike and good engineering practices;
(c) The Coker Complex shall be designed and built to comply with the
Turnkey Specifications and, upon Final Completion, shall be capable of being
operated (i) at the Guaranteed Values as required by the Performance Test
Standards; (ii) in compliance with all Applicable Laws and Applicable Permits
in effect at Final Completion; (iii) in accordance with the Standards; and
(iv) free from Defects and Deficiencies, including Latent Defects, in design,
materials and workmanship or otherwise; and
(d) All efforts required under this Contract not expressly set forth
as Owner's responsibility are the responsibility of Contractor.
Except as provided in Section 7.1 hereof, nothing contained in this
Contract shall be construed to limit Contractor's obligations to achieve all of
the Guaranteed Values by the Guaranteed Performance Dates.
2.3 Intent of Contract. It is the intent of this Contract for
------------------
Contractor to complete the Work and place the Coker Complex into full operation
in conjunction with the Heavy Oil Processing Facility within the time
limitations specified herein. It is further intended that, except as provided
herein, Contractor shall furnish all labor, materials, equipment, tools,
transportation and supplies required to complete the Work in accordance with
this Contract. It is agreed and acknowledged that it is Owner's intent to rely
on Contractor's judgment and expertise to ensure a complete and operable Coker
Complex in accordance with this Contract.
2.4 Engineering. Contractor shall provide all engineering and design
-----------
services necessary for the completion of the Coker Project in conformity with
this Contract, the Standards and generally accepted engineering and design
standards in the refinery and petrochemical industry, including but not limited
(a) to the engineering and design services necessary to describe and detail the
Coker Project, (b) the provision of criteria for the detailed design by
suppliers of equipment, materials and systems for the incorporation into the
Coker Project, (c) the integration of the Coker Complex into the Refinery
(including, without limitation, into the Ancillary Equipment) in accordance with
the Turnkey Specifications, and (d) the preparation of, inter alia, drawings,
plans, documents, bills of material, schedules and estimates. Contractor shall
coordinate its performance of such services with the engineering efforts of all
Subcontractors, Owner, transportation requirements, procurement activities
related to the Work and all federal, state and local authorities or agencies.
Contractor shall be fully responsible for and shall be fully knowledgeable about
all engineering and design, irrespective of whether Contractor or third parties
such as Subcontractors may furnish such services. Contractor shall ensure that
all engineering requiring certification under any Applicable Law or Applicable
Permit be certified by professional engineers licensed and properly qualified to
perform such engineering services in all appropriate jurisdictions.
<PAGE>
16
2.4.1 Status Reports. Contractor shall prepare and submit to
--------------
Owner, the Independent Engineer and the Financing Parties with each monthly
Application for Payment, or as otherwise agreed between Contractor, Owner and
Financing Parties, a written progress report in a form acceptable to Owner and
the Financing Parties, which report shall include (i) a description of the
status of supplies, Subcontractors' activities, engineering and construction
progress, permits and an evaluation of problem areas, (ii) a description of
construction status, (iii) a description of the status of Change Orders, (iv) a
description of the current Application for Payment, (v) the portion of the
Contract Amount distributed to Contractor to date (not including the current
Application for Payment), (vi) the estimated dollar amount of expected
Applications for Payment in each of (A) the succeeding thirty (30) days, (B) the
succeeding sixty (60) days and (C) the succeeding ninety (90) days, (vii) a
description of the status of material and equipment deliveries and scheduled
deliveries, (viii) copies of all accident reports submitted pursuant to any
Applicable Law or Applicable Permits in such month, (ix) status of Critical Path
method schedules for procurement milestones, construction milestones, Start-up
and testing and (x) a certification by Contractor's Representative or an officer
of Contractor whose primary responsibilities include the Coker Project that the
information provided pursuant to the foregoing clauses (i) through (ix) is true,
correct and complete to the best of such Contractor's Representative's or
officer's knowledge.
2.4.2 Consumables. Except as specified in Section 2.12 hereof,
-----------
initial fills of all lubricants and other chemicals and all other consumable
materials necessary for the Commissioning, Performance Testing and operation of
the Coker Complex shall be provided in accordance with Schedule 2.4.2 hereto.
Owner shall not be obligated to supply the materials for which it is responsible
prior to the date which is the later of (i) the date specified for delivery
thereof in the Construction Schedule and (ii) the date that is ten (10) weeks
after notice has been delivered by Contractor specifying the estimated
quantities requested of such materials (unless such quantity is specifically set
forth in this Contract).
2.5 Procurement. Contractor shall procure and pay for in
-----------
Contractor's name as an independent contractor and not as agent for Owner,
unless Owner determines for sales tax or other reasons that items should be
procured by Contractor while acting as agent for Owner, all Contractor and
Subcontractor labor, materials, equipment, supplies, manufacturing and related
services (whether on or off the Project Site) for construction of and
incorporation into the Coker Project which are required or appropriate for
completion of the Coker Project in accordance with this Contract. All such
material and equipment shall be new and meet a generally accepted standard of
quality applicable to the design and engineering of refinery installations of a
similar size, type and design, free from improper workmanship or Defects and
Deficiencies (including Latent Defects) and warranted and guaranteed (which
warranties and guarantees shall be assignable to Owner and the Financing
Parties) in accordance with Section 3.6 hereof. Neither Contractor nor its
Subcontractors shall take or omit to take any direct or indirect action which
could release, void, impair or waive any warranties or guarantees on equipment,
materials, or services procured with respect to this Coker Project; provided,
--------
however, that to the extent theContractor reasonably deems necessary to avoid
- -------
delays, Contractor may take or omit to take action that would void Subcontractor
warranties on equipment having a value not to exceed $50,000 per item or
$250,000 in the aggregate, provided that Contractor promptly informs Owner
--------
<PAGE>
17
of such action or omission and provided, further, that no such action or
--------- -------
omission shall relieve Contractor from its warranties hereunder. To support
Start-up and Performance Testing of the Coker Complex, Owner shall make
available, as required for normal Coker Complex operation, permanent Coker
Complex testing and laboratory equipment, tools, machinery and vehicles
(including trucks, mobile cranes, loaders, forklifts and other rolling stock),
which equipment shall be operated by Owner's personnel.
2.6 Construction. Except as provided in Schedule 2.6 hereto,
------------
Contractor shall provide all construction, erection and installation services
necessary for the completion of the Work in conformance with this Contract
including but not limited to all labor, supplies, materials, equipment, tools,
transportation and anything else required to perform the Work in accordance with
this Contract (including adherence to the Standards).
2.7 Review of Contract Documents. Contractor has examined in
----------------------------
detail and carefully studied and compared the documents making up this Contract
with each other and with any other information furnished by Owner and Clark R&M
and has promptly reported to Owner any material errors, inconsistencies or
omissions discovered. Contractor shall not prosecute any portions of the Work
knowing it involves a recognized error, inconsistency or omission in the
documents making up this Contract without written instructions to do so from
Owner. If for any reason Contractor violates this Section 2.7, Contractor shall,
in addition to any other remedies of Owner, assume responsibility for such
performance and, in such case, shall be deemed to have waived any claims for an
adjustment in any of the Project Variables which results directly from any such
error, inconsistency or omission.
2.8 Existing Structures. All existing structures encountered
-------------------
within the established lines and boundaries of the Project Site shall be removed
by Contractor, unless such existing structures are otherwise specified to be
relocated, adjusted up or down, salvaged, abandoned in place, reused in the Work
or allowed to remain in place. The cost of removing or adjusting such existing
structures is included in the Contract Amount.
2.9 Examination of Project Site. Prior to the date hereof,
---------------------------
Contractor has been performing portions of the Work at the Project Site pursuant
to the Interim Reimbursable Contract. Contractor has examined the Project Site
and all of its surroundings, has compared its findings with the drawings and
specifications, and has familiarized and satisfied itself that the nature of the
accommodations available for the Coker Complex, materials and equipment, all
means of communication, entry to and departure from the Project Site,
construction of buildings, and all other matters necessary for prosecuting and
maintaining the Work are sufficient for performance of Contractor's obligations
under this Contract and has taken them into account prior to bidding and
undertaking the Work. Contractor has made independent inquiries (deemed by
Contractor to be sufficient for purposes of assessing the risks attendant to
offering a fixed price) as to the availability and supply of materials,
services, labor and other items necessary for the prosecution of the Work, and
has satisfied itself that the nature, extent and practicability of each is
sufficient for performance of Contractor's obligations under this Contract. The
failure of Contractor to fully familiarize itself with the above conditions will
not relieve it from
<PAGE>
18
responsibility to properly perform the Work pursuant to this Contract, nor give
Contractor any right to request a Change Order or claim an Event of Force
Majeure with respect thereto.
2.9.1 Field Measurements and Conditions. Contractor has taken
---------------------------------
accurate field measurements, has verified field conditions and has carefully
compared such field measurements and conditions and other information known to
Contractor with this Contract.
2.9.2 Subsurface Conditions. Owner and Clark R&M have provided to
---------------------
Contractor certain test boring, geotechnical survey, engineering and
environmental information (including, without limitation, information with
respect to Known Conditions) for the Project Site and Clark R&M and Owner have
provided Contractor with access to (and, to the extent requested by Contractor,
copies of) their respective records with respect to the history of the Project
Site (such information, collectively, the "Disclosed Site Information") for
--------------------------
reference purposes only, and Contractor has procured supplemental information
for the Coker Complex location on the Project Site that has been selected by
Owner. Contractor agrees that the Project Site is satisfactory and suitable for
performance of the Work in accordance with the Contractor's current proposal for
the location of the Coker Complex on the Project Site for the Contract Amount.
Owner has made and shall make no express or implied warranty to Contractor as to
the accuracy and completeness of any information supplied by Owner or Clark R&M
and Owner shall not be liable to Contractor for any information provided by
Owner or Clark R&M with respect to the Project Site. Contractor, therefore,
expressly assumes the risk of any subsurface conditions that may affect the
Coker Project and the performance of the Work on the Project Site. Except as
specifically provided in Section 11.6 hereof, Contractor shall not be entitled
to a Change Order with respect to subsurface conditions or for any other
conditions on or under the Project Site, including, without limitation, those
conditions described under Sections 2.9.3, 2.9.4 and 2.9.6.
2.9.3 Underground and In Ground Facilities. Owner has provided
------------------------------------
certain information and data to Contractor with respect to existing Underground
and In Ground Facilities at or contiguous to the Project Site, which information
it believes to be accurate. However (a) Owner shall not be responsible for the
accuracy or completeness of such information or data, (b) Contractor shall have
responsibility for reviewing all such information and data, for locating all
Underground and In Ground Facilities, for assisting Owner in coordination of the
Work with the owners of, or other parties with rights to, such Underground and
In Ground Facilities during construction, for the safety and protection thereof
as provided for in this Contract and for repairing any damage thereto caused by
Contractor or its Subcontractors, the cost of all of which shall be at the
expense of Contractor, and (c) any delay or increased costs resulting from the
existence of such Underground and In Ground Facilities shall not give Contractor
a right to request a Change Order or claim an Event of Force Majeure.
2.9.4 Adjoining Installations. Contractor shall do all things
-----------------------
necessary or expedient to protect any and all adjacent, parallel, converging and
intersecting pipes, electric lines and poles, telephone lines and poles,
highways, waterways, railroads, sewer lines, drainage ditches, culverts and any
and all property from damage as a result of its performance of the Work.
Contractor shall bear all liability for and shall at its expense repair, rebuild
or replace any
<PAGE>
19
property damaged or destroyed in the course of its performance of the Work,
provided, however, Owner hereby releases Contractor from any and all
- -------- -------
liability for any property damaged or destroyed at those portions of the Project
Site not in the possession and control of Contractor.
2.9.5 Reference Points. Owner and Clark R&M have provided
----------------
engineering surveys to establish reference points for construction which in
Contractor's judgment are necessary to enable Contractor to proceed with the
Work. Contractor shall be responsible for laying out the Work, shall protect and
preserve the established reference points and shall make no changes or
relocations unless, in Contractor's judgment, such changes or relocations are
necessary. Contractor shall promptly report to Owner whenever any reference
point is lost or destroyed or requires relocation because of necessary changes
in grades or locations, and shall be responsible for the accurate replacement or
relocation of such reference points by professionally qualified personnel.
2.9.6 Historical and Archeological Sites. Contractor shall use all
----------------------------------
reasonable efforts to protect and not to damage any archeological or historical
sites on or adjacent to the Project Site.
2.10 Taxes.
------
2.10.1 Sales and Use Taxes.
-------------------
(a) Contractor shall be responsible for payment of any Sales and
Use Tax to the Texas Comptroller of Public Accounts or other state or local
taxation authorities on taxable items that will be consumed during construction
of the Coker Complex.
(b) Owner agrees that it, and not Contractor, shall be responsible
for payment of any Sales and Use Tax to the Texas Comptroller of Public Accounts
or other state or local taxation authorities on (i) the separately stated price
for materials incorporated into the Work and for remodeling/modification
services and (ii) on taxable items conveyed pursuant to the Bills of Sale.
(c) Contractor will provide reasonable cooperation with any audit
by the Texas Comptroller of Public Accounts or other state or local
taxation authorities in connection with the Work.
2.10.2 Other Taxes. Contractor, however, is solely responsible for
-----------
the payment of its own income taxes, payroll taxes, unemployment taxes, and any
employee related taxes, any of which are related to the Work. Contractor hereby
indemnifies and forever holds harmless Owner, the partners that comprise Owner,
the Financing Parties, each of their affiliates, and each of their officers,
directors, stockholders, partners, agents, employees, and their respective
successors and assigns, from and against all such Contractor or Contractor
employee related taxes, fines, interest, penalties and expenses (including
reasonable attorneys' fees).
<PAGE>
27
2.10.3 Separated Contract. It is the intent of the parties for this to
------------------
be a separated contract according to 34 Tex. Ann. Code Sec. 3.291(a)(b). All
invoices issued to Owner hereunder or under any Subcontract shall separately
state charges for all materials incorporated into the Work from charges for
skill and labor. The Contractor and Subcontractors shall be considered retailers
of all materials incorporated into the Work and shall issue resale certificates
to vendors in lieu of sales and use taxes on such materials. Contractor will
require all subcontracts to be separated contracts according to 34 Tex. Ann.
Code Sec. 3.291(a)(b). All Subcontractors will be required to issue resale
certificates for materials incorporated into the Work. The Contractor shall be
obligated to provide the Owner with any and all assistance and documentation to
properly administrate tax issues, including without limitation, providing to
Owner any information regarding quantities, descriptions and cost of materials
incorporated into the Work, allocation of labor for various portions of the Work
and such other information that the Owner may deem necessary in connection with
tax matters, all in sufficient detail and in such a format as the Owner may
reasonably request. Contractor will provide Owner on a monthly basis a report of
Contractor's payments to Subcontractors for the purchase or lease of tangible
personal property that will either be installed into or consumed during
construction of the Coker Complex or used by Owner in its operations. In each
such report, Contractor shall designate the items that are taxable and those
that are tax-exempt, and the amounts of purchase payments made in each category,
applying in good faith the guidelines for such designation set forth in the
Owner's direct pay permit number or sales and use tax exemption certificates. A
direct pay certificate will be issued by Owner to Contractor in lieu of sales
and use tax on the separately stated contract price for materials incorporated
into the Work.
2.11 Permits. Owner shall obtain all Applicable Permits listed in Schedule
-------
2.11(a) hereto in accordance with the schedules set forth therein and shall
supply a copy of each such Applicable Permit to Contractor. Contractor shall
obtain, at its own expense, all Applicable Permits listed in Schedule 2.11(b)
hereto in accordance with the schedules set forth therein and all other
Applicable Permits necessary for the ordinary conduct of its business related to
the Work as contemplated by this Contract. Contractor shall comply with
Applicable Permits bearing on the prosecution of the Work. Any Applicable
Permits not specified in this Section 2.11 or otherwise in this Contract shall
be obtained in accordance with the intent of this Section 2.11. If Contractor
determines that performance of any portion of the Work is, or will be when
performed, at variance with any Applicable Permit, Contractor shall promptly
notify Owner in writing and, as it regards the Work, shall correct such
variance. If such variance occurs due to a Change in Law and Contractor has
notified Owner pursuant to this Section 2.11, then such variance shall be
treated as a Change in Law. If Contractor performs any of the Work knowing it to
be at variance with any Applicable Permit without such notice to Owner,
Contractor shall assume full responsibility for the prosecution of such Work and
will be deemed to have waived any claim against Owner with respect to such
variance.
2.12 Labor, Material and Equipment. (a) Except as otherwise provided in
-----------------------------
this Contract, Contractor shall purchase, expedite, inspect and pay for all
labor, materials, equipment, services, tools, machinery, heat, temporary heat,
transportation and other facilities and services necessary for the proper
prosecution and completion of the Work, whether of a temporary or
<PAGE>
21
permanent nature and whether or not incorporated or to be incorporated in the
Work in accordance with this Contract.
(b) Owner shall provide water and temporary utilities, at such times
and in such quantities as required for Contractor's prosecution and
completion of the Work; provided that the Contractor shall use reasonable
efforts to conserve its use of such materials.
2.13 Contractors and Owner's Representatives.
-------------------------------------
2.13.1 Contractor's Representative. It is Contractor's
---------------------------
responsibility to employ a skillful and competent Contractor's Representative
and competent assistants, including a Construction Manager. Contractor's
Representative will act as Contractor's authorized representative and may make
decisions which shall be binding on Contractor. Except for notices required to
be sent in accordance with Section 16 hereof, any directions or communications
given by Owner to Contractor's Representative and/or the Construction Manager
shall be deemed as having been given to Contractor. Owner's approval of a
Contractor's Representative shall not be deemed to be a waiver of any rights
which Owner may have under this Contract if the Contractor fails to perform any
Work in accordance with the requirements of this Contract. Owner has the right
initially and during prosecution of the Work to require Contractor to remove any
Contractor's Representative and all key personnel involved in the Work (or his
or their replacements) for reasonable grounds. Except for notices required to be
sent in accordance with Section 16 hereof, Contractor's Representative will be
authorized to receive instructions and communications from Owner. Contractor's
Representative may not be replaced or withdrawn from the Coker Project by
Contractor without consent of Owner. Except for notices required to be sent in
accordance with Section 16 hereof, all written communications by Owner to
Contractor will be made to the attention of Contractor's Representative.
2.13.2 Construction Manager; Key Positions. (a) Contractor's
-----------------------------------
Representative shall nominate for Owner's approval a Construction Manager to
represent Contractor at the Project Site who shall have the necessary authority
in the management, organization, coordination and supervision of the Work on the
Project Site in accordance with this Contract; provided, however, that such
authority shall not include making or approving any change in the Project
Variables. Owner's approval of a Construction Manager shall not be deemed a
waiver of any rights which Owner may have under this Contract if the Contractor
fails to perform any Work in accordance with the requirements of this Contract.
The Construction Manager may not be replaced or withdrawn from the Coker Project
without the consent of Owner. Owner has the right initially or during
prosecution of the Work to require Contractor to remove any Construction Manager
(or his replacement) for reasonable grounds.
(b) Contractor has prepared and furnished to Owner the
organizational chart, attached hereto as Schedule 2.13.2, defining all key
positions and job responsibilities for the Coker Project. Contractor shall
update such chart throughout the Coker Project as required by changes in
staffing.
<PAGE>
22
2.13.3 Owner's Representative. Owner shall appoint an Owner's
----------------------
Representative who will act as Owner's authorized representative and may make
decisions which shall be binding on Owner, provided, however, that the Owner's
Representative shall not be authorized to make or approve any change in the
Project Variables or otherwise to amend this Contract, or to waive any of
Owner's rights or Contractor's obligations hereunder. Except for notices
required to be sent in accordance with Section 16 hereof, any directions or
communications given by Contractor to Owner's Representative shall be deemed as
having been given to Owner and all written communications by Contractor to Owner
will be made to the attention of Owner's Representative.
2.14 Construction Schedule and Monthly Report. Contractor has
----------------------------------------
prepared and furnished to Owner the Construction Schedule for the Work from the
Work Commencement Date to Final Completion, indicating (i) portions of the Work
completed as of the Effective Date, (ii) dates for starting and completing
various stages of the Work, the (iii) Critical Path of the Work, and (iv)
restraints and sequencing of the Work. Contractor acknowledges that the
Construction Schedule has been prepared in a manner consistent with the
requirements of Contractor under this Contract. Contractor shall prepare and
deliver to Owner monthly reports, substantially in the form of Exhibit D,
regarding the Construction Schedule (the "Monthly Report") with the monthly
Application for Payment, including without limitation the estimated monthly
percent complete and updates as to the status of all significant events and
milestones relating to the Work to show Work completed as a basis for comparison
with the Construction Schedule. Contractor shall explain in writing any
discrepancies between the latest Monthly Report and the Construction Schedule or
the immediately preceding monthly update, as the case may be. Submission of
acceptable Monthly Reports is a precondition for Scheduled Payments in addition
to the requirements in connection with the Applications for Payments. The
submission of any Monthly Report shall not in any way relieve Contractor of any
of its duties and responsibilities under this Contract, nor cause any delay or
extension in the Guaranteed Performance Dates.
2.15 Payment Schedule. The Payment Schedule establishes the
----------------
maximum portion of the Contract Amount which shall be due and payable each
month.
2.16 Preparation of Technical Information. Contractor has the
------------------------------------
responsibility for reviewing, preparing, approving and submitting to Owner for
review and comment the Technical Information required under this Contract
promptly and in such a sequence to avoid any delay to the Work. Shop drawings
and documents may contain drawings, diagrams and other data prepared for the
Work by Contractor or Subcontractors, all for the purpose of illustrating some
portion of the Work. Product data may contain illustrations, standard
schedules, performance charts, instructions, brochures, diagrams and other
information furnished by Contractor to illustrate the characteristics of
materials or equipment for some portion of the Work.
Owner's review and comment of any portion of the Work or the individual
assigned by Contractor to perform any portion of the Work shall not mean that
Owner has control over the Work, Owner has assumed any responsibility or
liability for the performance of the
<PAGE>
23
Work, or that Owner has waived any of Contractor's obligations under this
Contract. Contractor is not relieved of responsibility for deviations from
requirements of this Contract by Owner's review and comment of Technical
Information, unless Contractor has specifically, in writing, informed Owner of
such deviation and its ramifications at the time the submittal has been made.
Owner shall be entitled to rely upon the accuracy and completeness of any
calculations and certifications made by professionals hired by Contractor who
are engaged by Contractor to certify performance criteria of the materials,
systems or equipment. Subject to the foregoing limitations, Owner shall have the
same right to review and comment on Technical Information created by
Subcontractors and made available by Contractor to Owner. Contractor expressly
assumes all risks of the Coker Project design and achieving the Guaranteed
Values by the Guaranteed Performance Dates.
2.17 Hazardous Waste. If, during the course of performing the
---------------
Work, Contractor becomes aware of any Hazardous Waste (other than the Known
Conditions) on or under the Project Site, whether or not created, released or
brought on by Contractor, Contractor shall report such condition to Owner in
writing immediately and before disturbing (or further disturbing) the Hazardous
Waste. Contractor shall not be liable for nor required to remove any Hazardous
Waste (including, without limitation, Known Conditions) on or under the Project
Site as of the Effective Date or created or brought on the Project Site by Owner
thereafter, and, as between Owner and Contractor, Owner (and any indemnitor
under any indemnity benefitting Owner) shall have sole liability for and
responsibility to clean up, remove and dispose of any such Hazardous Waste. Any
disruption in the scheduled completion of the Coker Project caused by (i) the
discovery of such Hazardous Waste (other than Known Conditions) or (ii) Owner's
clean-up, removal and disposal of such Hazardous Waste shall be deemed to be an
Owner-Caused Delay. Contractor shall be solely liable for any Hazardous Waste
brought on or created on the Project Site by Contractor or any Subcontractors
and shall perform all cleanup, removal and disposition services with respect
thereto. Prior to the performance by Contractor of any clean-up, removal and
disposition services for which Contractor is liable pursuant to this Section
2.17, Contractor shall formulate a plan for performance of such services and
submit such plan to Owner for review and comment. Contractor shall revise the
plan to reflect all reasonable comments of Owner and shall perform the clean-up,
removal and disposal services in accordance with such plan. Neither Owner's
review or comment nor Contractor's acceptance of Owner's comments shall mean
that Owner has control over the clean-up, removal and disposal services or
subject Owner to any liability with respect to such services or the Hazardous
Waste with respect to which such services are to be performed. Contractor shall
conduct such clean-up, removal and disposal at its own cost. In any event,
Contractor shall use its best efforts to conduct such clean-up, removal and
disposal so as to cause minimum disruption to the scheduled completion of the
Coker Complex, and any such disruption shall be at Contractor's risk. Contractor
shall comply with Applicable Laws and Applicable Permits (including the
obtaining of necessary licenses and permits) with respect to all Hazardous Waste
at all times and in all events. The Work in the affected areas shall resume by
written direction of Owner, provided such continuation of the Work shall not
violate any Applicable Laws or Applicable Permits. Contractor shall dispose of
any Hazardous Waste only by lawful means at properly permitted sites.
<PAGE>
24
2.18 Removal of Debris. Subject to Section 2.17 hereof, Contractor
-----------------
has the duty to remove and lawfully dispose of all discarded material, debris,
rubbish and waste resulting from the Work at the Project Site or contiguous
thereto at reasonable intervals. Except as expressly provided in the Turnkey
Specifications or as Owner may subsequently agree in writing, no material
removed from site may be disposed of on property owned, leased or otherwise
occupied by Owner. Upon Contractor's refusal or neglect to keep the premises
clear of debris, which refusal or neglect continues for fifteen (15) days after
written notice thereof to Contractor, Owner shall have the right to have such
work performed with the cost of same charged to Contractor and deducted from any
monies which have or may become due under this Contract.
2.19 Removal of Equipment. Prior to Final Completion, Contractor
--------------------
shall remove from the Project Site all equipment, materials, temporary
structures constructed by Contractor or other items of any nature required for
execution or completion of the Work, but excluding equipment, materials,
appliances or other items intended to form or forming part of the Work. Prior to
disposition of such items, Contractor will make a written offer to sell items to
Owner which Contractor desires to sell. Contractor shall leave the Project Site
in good order and in a reasonably neat and presentable condition. Any surplus
items will become property of Owner if not removed by Contractor within thirty
(30) days after Final Completion (or such later date contemplated in any
completion and demobilization procedure mutually agreed by Owner and
Contractor). All costs to dispose of any such items not removed by Contractor
within the thirty (30) days following Final Completion (or such later date
contemplated in any completion and demobilization procedure mutually agreed by
Owner and Contractor) and which Owner does not wish to keep shall be for the
account of Contractor.
2.20 Cutting, Patching and Damage. Contractor shall not damage or
----------------------------
injure any portion of the Work, or any fully or partially completed construction
of the Work by Owner or any Subcontractor by cutting, patching or otherwise
altering such construction or by excavation, except as permitted by this
Contract or with written consent from Owner.
2.21 Right of Inspection. Owner, Independent Engineer, the
-------------------
Financing Parties or their duly appointed representatives, including any
inspectors employed by Owner or the Independent Engineer pursuant to Section
10.6 hereof (collectively "Reviewers"), shall at all reasonable times upon
reasonable prior written notice have access to the various sites where the
Contractor or Subcontractors are prosecuting the engineering, design,
procurement, testing or manufacture of the Work. For these purposes, reasonable
access shall be given during normal business hours to Contractor's, and its
Subcontractors', plant, storage and deposit areas, facilities and offices,
sources of materials, equipment being assembled, already assembled or in
operation, equipment being performance tested or tested to Contractor's
specifications and to any other places or areas occupied by Contractor or its
Subcontractors in connection with the Work. Notwithstanding anything herein to
the contrary, any Reviewers' right of access to Contractor's and its,
Subcontractors' premises shall be subject to the reasonable confidentiality,
safety and security requirements of same and further subject to Reviewers' non-
interference with the Work and other work being performed thereon. Contractor
shall provide reasonable temporary office space and services for the Reviewers.
<PAGE>
25
2.22 Patent and Copyright Fees. Contractor shall be responsible for
-------------------------
payment of all royalties and license fees for any patent, trademark and/or
copyrights involved in the Work. The cost of such royalties and license fees
are included in the Contract Amount.
2.23 Installation of Coker Complex Equipment. Contractor represents
---------------------------------------
that it has determined that all plant and equipment to be procured or supplied
by it can be installed in the available space and that there will be adequate
access to admit all such plant and equipment to its position and for maintenance
and testing.
2.23.1 Use of Project Site. Owner represents that Owner has the
-------------------
full unrestricted right to occupy the Project Site during the performance of the
Work contemplated by this Contract, and that Owner shall have obtained all
necessary easements and rights-of-way to, from and through the Project Site,
including subsurface rights, to enable Contractor to perform the Work, subject
to any restrictions of Applicable Laws and Applicable Permits and any third-
party rights-of-way, easements or other similar rights that will not adversely
affect Contractor's prosecution of the Work. Owner grants to Contractor after
the Effective Date, the use of the Project Site for the purpose of performing
the Work, and Contractor will be in control of said Project Site pursuant to the
terms hereof; provided, however, that Owner, the Independent Engineer and the
Reviewers shall have free access to said Project Site, subject to compliance
with Contractor's reasonable procedures concerning safety and security. The
procurement of the Project Site and necessary easements and rights of way, and
the payment of associated real property taxes therefor, shall be the
responsibility of Owner. Contractor and Owner acknowledge that (i) prior to the
Effective Date, Contractor was validly granted access to the Project Site
pursuant to the Interim Reimbursable Contract and has been performing work under
such contract at the Project Site the Site Work Commencement Date and (ii) on
the Effective Date Owner, pursuant to the Coker Complex Lease Agreement,
succeeded to Clark R&M's right to occupy the Project Site and to grant
Contractor the various rights of access described above.
2.23.2 Storage. Specific and appropriate storage area or areas
-------
within the Project Site for Contractor's own use shall be selected by Contractor
from time to time with Owner's approval (such approval not to be unreasonably
withheld). Contractor shall confine its storage of materials and equipment to
such sites.
2.24 Temporary Facilities, Lighting and Firefighting Equipment.
---------------------------------------------------------
Contractor shall make provisions, at its own cost, for all temporary facilities
Contractor deems necessary for the construction of the Coker Complex and the
installation of the equipment, including arrangements for the supply of
telephone, office equipment, sanitary toilet facilities, sewage waste,
compressed air and other services for the Work and shall provide and maintain
all pipes, cables and services required for its operation. Contractor shall
provide and maintain on or near the Project Site office accommodations for
itself and its staff; provided, however, that Owner shall provide Contractor
with reasonable quantities of potable and non-potable water and electricity.
Contractor shall also install and maintain, at its own cost and expense, a
system of lighting to provide a reasonable degree of illumination over the area
of its Work during performance of the Work. Furthermore, Contractor shall at
all times have at the Project Site reliable and workable temporary firefighting
equipment customary for a construction site of the
<PAGE>
26
type and size of the Project Site pursuant to this Contract, Applicable Laws,
Applicable Permits and insurance. Contractor shall remove any of the aforesaid
temporary installations pursuant to Sections 2.18 and 2.19 hereof.
2.25 Delivery of Materials and Equipment. Contractor shall prepare
-----------------------------------
or cause to be prepared all materials and equipment for shipment in such a
manner as to reasonably protect them from damage in transit or during any
storage period.
2.25.1 Markings. Except to the extent required under any
--------
intellectual property license or similar agreement, Contractor shall not fix or
cast its nameplate on or in any item of plant or equipment unless approved in
writing by Owner. Diagrams showing all such markings shall be supplied to Owner.
2.25.2 Unloading; Complying Deliveries. Contractor shall promptly
-------------------------------
notify Owner in writing of any damage to equipment discovered during unloading,
uncrating, storage or assembly. Such notice to Owner shall not relieve
Contractor from any liability with respect to such equipment or any of
Contractor's obligations under this Contract.
2.26 Safety. Contractor shall be solely responsible for
------
initiating, maintaining, and supervising all safety precautions and programs in
connection with performance of this Contract. Contractor shall give notices and
comply with Applicable Laws and Applicable Permits and the provisions of the
Turnkey Specifications bearing on safety of persons or property or protection
against injury, damages or loss. Contractor will provide a written report to
Owner describing fully all incidents affecting safety on the Project Site and
will also furnish to Owner copies of all OSHA and worker's compensation reports.
2.26.1 Safety Precautions. Contractor shall erect and properly
------------------
maintain, at all times and as required by the condition and progress of the
Work, all necessary safeguards for the protection of workmen and the public,
including environmental compliance personnel, and shall post necessary danger
sign warnings against hazards created by such features of construction. At all
times Contractor shall cause all Subcontractors working on the Coker Project to
comply with all safety precautions and requirements described in this Section
2.26. Contractor shall appoint a qualified safety officer to carry out such
safety provisions described in this Section 2.26. The safety officer's name
shall be reported to Owner and shall be available by phone during non-working
hours.
2.26.2 Dangerous Materials. When use or storage of explosives,
-------------------
radioactive or other dangerous materials or equipment or unusual methods are
necessary for the prosecution of the Work, Contractor shall exercise the utmost
care and carry on such activities under supervision of its properly qualified
personnel.
2.26.3 Emergencies. In the event of any emergency endangering life
-----------
or property, Contractor shall take such action as may be reasonable and
necessary to prevent, avoid or mitigate injury, damage or loss and shall, as
soon as possible, report any such incidents, including Contractor's response
thereto, to Owner. Whenever, in the reasonable opinion of
<PAGE>
27
Owner, Contractor has failed to take sufficient precautions for the safety of
the public or the protection of the Work or of structures or property on or
adjacent to the Project Site, creating, in the reasonable opinion of Owner, an
emergency requiring immediate action, then Owner may cause such sufficient
precautions to be taken or provide such protection. The taking or provision of
any such precautions or protection by Owner or its agents or representatives
shall be for the account of Contractor and Contractor shall reimburse Owner for
the reasonable cost thereof. In no event may the taking of such action by Owner
or Owner's decision not to take action give rise to an Owner-Caused Delay.
Contractor has no right for adjustment to Project Variables due to such
emergency except to the extent permitted under Section 11 hereof.
2.27 Security. Contractor shall perform the security services as
--------
specified in the Turnkey Specifications.
2.28 Testing and Inspection. Contractor shall carry out all tests
----------------------
and inspections required pursuant to the Performance Test Standards, the
Standards and the Turnkey Specifications. Such tests shall be done at the
Project Site or at any other site as may be deemed necessary in accordance with
this Contract. The cost of such tests shall be borne by Contractor as part of
the Contract Amount. If tests have to be repeated through no fault of Owner,
Contractor will pay the cost of repeating such tests to the extent of
Contractor's fault. Any claim for special or additional tests required by Owner
may be made pursuant to Section 11 hereof unless the test results substantiate
the existence of any Defects and Deficiencies. For each test or inspection
performed pursuant to this Section 2.28, Contractor will deliver to Owner and
Independent Engineer, within the time periods specified for such test or
inspection in this Contract (including the Performance Test Standards), or if no
time period is specified, upon request within thirty (30) days after the
completion thereof, three (3) copies of Contractor's records of all such tests
and inspections.
2.28.1 Inspection of Tests. Except for Performance Tests,
-------------------
Owner and Independent Engineer shall be notified at least ten (10) days prior to
the performance of any, tests and inspections specified in the Turnkey
Specifications and those Owner requests prior to their occurrence. Owner and
Independent Engineer shall be permitted to witness and shall have access to
Contractors and Subcontractors' inspections or tests. If the representatives of
Owner and Independent Engineer do not attend the tests at the mutually agreed
times, Owner shall nevertheless be bound by the results of such tests and the
costs of any repeated tests shall be borne by Owner.
2.29 Copies of Drawings and Specifications. The Contractor shall
-------------------------------------
maintain at the Project Site, for access by Owner and Independent Engineer, one
record copy of the Turnkey Specifications and Change Orders, in good order and
appropriately marked to record current changes and selections made during the
prosecution of the Work. Contractor shall also maintain at such location
approved Subcontractor drawings, product data and samples and other Technical
Information as Contractor deems appropriate and as Owner may reasonably request.
<PAGE>
28
2.30 Substitutions.
-------------
2.30.1 Changes in Materials. Before and during manufacture and
--------------------
procurement, Contractor shall use its best efforts to avoid changes of materials
which would have an adverse impact upon the completion of the Work in accordance
with this Contract.
2.30.2 Materials and Equipment. Except for materials or equipment
-----------------------
to be supplied by Subcontractors listed in Schedule 3.1 hereto or for Major
Portions of the Work, whenever materials or equipment are specified or described
in this Contract (including the Turnkey Specifications) by using the name of a
proprietary item or the name of a particular supplier, the naming of the item is
intended to establish the type, function and quality required, and substitute
materials or equipment may nonetheless be used, provided that such materials or
equipment are equivalent or equal to that named. If Contractor wishes to furnish
or use a substitute item of material or equipment, Contractor shall first
certify that the proposed substitute will perform at least as well the functions
and achieve the results called for by this Contract, will be similar or of equal
substance to that specified and be suited for the same use as that specified.
Owner may require Contractor to furnish, at Contractor's expense, additional
data about the proposed substitute as required to evaluate the substitution. For
Major Portions of the Work, Contractor shall first receive prior written
approval of Owner and Independent Engineer for a substitution, which consent
shall not be unreasonably withheld provided such substitution is demonstrated to
Owner's reasonable satisfaction to be of at least equal reliability, quality and
useful life and no delay can reasonably be expected to result from such
substitution.
2.30.3 Review and Acceptance. Owner will be allowed a reasonable
---------------------
time within which to evaluate each proposed substitute.
2.31 Equipment and Data. Contractor shall furnish all drawings,
------------------
specifications, specific design data, preliminary arrangements and outline
drawings of the equipment and all other information as required in accordance
with this Contract in sufficient detail to indicate that the equipment and
fabricated materials to be supplied under this Contract comply with the Turnkey
Specifications.
2.32 References to Certain Sources. Reference to standard
-----------------------------
specifications, manuals or codes of any technical society, organization or
association or to the laws or regulations of any governmental authority, whether
such reference be specific or by implication, by this Contract, shall mean the
latest standard specification, manual, code, laws or regulations in effect at
the time of the Effective Date, except as may be otherwise specifically stated.
2.33 No Prototype Equipment. Unless approved by Owner and the
----------------------
Independent Engineer, Contractor shall not use prototype equipment (as defined
below) in the performance of the Work. Prototype equipment shall mean equipment
which is at that stage in the evolutionary developmental process where the
functionality, environmental suitability, reliability, maintainability, and
other operational characteristics of the equipment have not been substantiated
by prior commercial operational experience.
<PAGE>
29
2.34 Operating Manuals. Contractor shall prepare initial
-----------------
operational guidelines for the Coker Complex and deliver such guidelines to
Owner at least one (1) year prior to the Guaranteed Mechanical Completion Date.
Owner shall prepare initial drafts of the Operating Manuals and Contractor shall
cooperate with Owner by providing all available Technical Information to Owner
when requested by Owner in writing. At least six (6) months prior to the
Guaranteed Mechanical Completion Date, Owner shall provide Contractor's
Representative and the Independent Engineer with initial drafts of the Operating
Manuals for the Coker Complex. Contractor shall review and revise the Operating
Manuals to ensure that such manuals (i) are prepared in accordance with the
Turnkey Specifications and in sufficient detail to accurately represent the
Coker Complex as constructed and set forth recommended procedures for operation
and (ii) are available, with up to date drawings, specifications and design
sheets (but not final As-Built Drawings), for the training as set forth in
Section 2.36. One set of final Operating Manuals shall be provided to each of
Owner and Independent Engineer by Contractor at least sixty (60) days prior to
Mechanical Completion of the Coker Complex and shall be a condition of
Mechanical Completion. All Technical Documentation (other than any minor items
to be subsequently provided) shall be delivered to Owner within thirty (30) days
after achievement of Final Completion. Owner shall not be required to deliver
the Final Completion Certificate until all such Technical Documentation has been
so delivered (and Final Completion shall not be deemed to have occurred earlier
than the date that is thirty (30) days prior to the date of delivery of such
Technical Documentation (other than any minor items to be subsequently
provided)). Any minor items omitted from such Technical Documentation shall be
delivered by Contractor within 90 days after Final Completion.
2.35 Maintenance and Instruction Manuals; Mechanical Catalogs.
--------------------------------------------------------
(a) At least two (2) months prior to Mechanical Completion of the Coker Complex,
Contractor shall provide Owner with Maintenance and Instruction Manuals in at
least 10 sets for the Coker Complex. Contractor shall ensure that such
Maintenance and Inspection Manuals (i) are prepared in accordance with the
Turnkey Specifications and in sufficient detail to accurately represent the
Coker Complex as constructed and set forth procedures for inspection and
maintenance and (ii) are available, with up to date drawings, specifications and
design sheets (but not As-Built Drawings), for the training set forth in Section
2.36. Delivery of final Maintenance and Instruction Manuals shall be a condition
of Mechanical Completion.
(b) Within ninety (90) days after Mechanical Completion of the Coker
Complex, Contractor shall provide Owner with Mechanical Catalogs in at least ten
(10) sets indicating the final technical specifications of the Coker Complex
shall be provided by Contractor. The Mechanical Catalogs shall include As-Built
Drawings of the plot plan, piping and instrumentation diagrams, electrical one-
line drawings, underground electrical lines and piping, each as more
particularly described in the Turnkey Specifications, and such other data as is
mutually agreed by Owner and Contract. Delivery of final Mechanical Catalogs
shall be a condition of Final Completion.
2.36 Training. As more fully described in the Turnkey
--------
Specifications starting at least ninety (90) days prior to the commencement of
Start-up activities of the Coker Complex and continuing until Final Completion,
Contractor shall oversee the development of and provide
<PAGE>
30
support for Owner's execution of a practical and participatory training program
at the Project Site with respect to the Coker Complex for an adequate number of
employees designated by Owner, which personnel shall be experienced in oil
refinery operation appropriate to their respective job descriptions. Manuals
shall be furnished to such personnel by Owner, which manuals shall be updated
promptly to reflect revisions and modifications. Owner shall be responsible for
making training facilities available for such training.
2.37 Liens and Other Encumbrances. In consideration of the mutual
----------------------------
undertakings herein and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, Contractor: expressly covenants and
agrees to (i) protect and keep free the Coker Project and any and all interests
and estates therein, and all improvements and materials now or hereafter placed
thereon under the terms of this Contract, from any and all claims, liens,
charges or encumbrances of the nature of mechanics, labor or materialmen's liens
or otherwise, arising out of or in connection with performance by any
Subcontractor, including services or furnishing of any materials hereunder, and,
to promptly have any such lien released by bond or otherwise; (ii) give notice
of this Section 2.37 (x) to each Subcontractor engaged as of the Effective Date,
within thirty (30) days of the Effective Date, and (y) to any Subcontractor
engaged after the Effective Date, at the time such Subcontractor is engaged by
the Contractor; and (iii) make any and all filings reasonably requested by
Owner, in order that Owner may take advantage of the Texas mechanics lien waiver
procedures contained in Chapter 53 of the Texas Property Code with respect to
mechanics' liens of any Subcontractor. If any laborers', materialmen's,
mechanics', or other similar lien or claim thereof is filed by any
Subcontractor, Contractor shall cause such lien to be satisfied or otherwise
discharged, or shall file a bond in form and substance satisfactory to Owner in
lieu thereof within ten (10) days. If any such lien is filed or otherwise
imposed, and Contractor does not cause such lien to be released and discharged
forthwith, or file a bond in lieu thereof, then, without limiting Owner's other
available remedies, Owner shall have the right but not the obligation to pay all
sums necessary to obtain such release and discharge or otherwise cause the lien
to be removed or bonded to Owner's satisfaction from funds retained from any
payment then due or thereafter to become due to Contractor. Owner expressly
reserves the right to post or place upon the Property notices of non-
responsibility or to do any other act required by law or any amendment thereto,
or substitute therefor, to exempt Owner and the Property from any liability to
third parties by reason of any work or improvements to be performed or furnished
hereunder; but failure by owner to do so shall not release or discharge
Contractor of any of its obligations hereunder.
2.38 Spare Parts. (a) From time to time during construction of
-----------
the Cok Complex, Contractor shall provide Owner a list of recommended Coker
Complex spare parts with applicable pricing (which shall not include any charge
for the procurement of such Coker Complex spare parts by Contractor and which
price shall not exceed the price for such Coker Complex spare parts which would
have been paid by Contractor had Contractor procured such Coker Complex spare
parts for itself and not as Owner's agent). Within 30 days of receipt of any
such list, Owner shall inform Contractor of which spare parts on such list are
to be procured by Owner and which are to be procured by Contractor. In addition
to any additional recommended spare parts, each such list shall contain an
updated record of prior recommended Coker Complex spare parts and related
procurement responsibilities of Owner and Contractor, as the case may be.
<PAGE>
31
Contractor shall provide a final such list to Owner and the Independent
Engineer not less than thirty (30) days prior to the date Contractor, as Owner's
agent, must order any or all of the recommended Coker Complex spare parts to
assure delivery to the Project Site by the Guaranteed Mechanical Completion
date or, if earlier, the date of actual Mechanical Completion of the Coker
Complex. The final list, and any modifications thereto, shall be subject to the
approval of Owner and the Independent Engineer.
(b) Contractor shall procure all spare parts directed by Owner, provided,
--------
however, that (i) should the aggregate cost of all such spare parts (a) exceed
- -------
six million dollars ($6,000,000.00), Owner and Contractor agree that a Change
Order shall be issued which increases the Contract Amount by the amount that the
aggregate cost of all such spare parts procured by Contractor exceeds six
million dollars ($6,000,000.00) or (b) be less than six million dollars
($6,000,000.00), Owner and Contractor agree that a Change Order will be issued
that decreases the Contract Amount by the amount that the aggregate costs of all
such spare parts procured by Contractor is less than six million dollars
($6,000,000.00).
(c) Contractor shall ensure that all spare parts to be delivered by
Contractor to the Project Site are delivered prior to the Guaranteed Mechanical
Completion Date or, if earlier, the date of Mechanical Completion of the Coker
Complex.
(d) Any Coker Complex spare parts utilized during Start-up shall be
replaced by Owner at its own cost. Notwithstanding the foregoing, to the extent
Contractor is able to so obtain such Coker Complex spare parts at no additional
cost as part of the original equipment package, it shall provide such Coker
Complex spare parts to Owner without cost (and without any charge for the
procurement of such spare parts by Contractor).
2.39 Labor Relations. To the extent Contractor directly employs union
---------------
labor, Contractor shall procure one or more agreements from the appropriate
trade union(s) reasonably satisfactory to Owner covering any union personnel
employed in connection with the Coker Project at the earliest possible date and
shall keep such agreements in effect at all times while such personnel are so
employed. Contractor will ensure that each Subcontractor that directly employs
union labor for performance of any portion of the Work shall have appropriate
agreements with the applicable trade union(s). Any such trade union agreements
of Contractor or any Subcontractor shall deal only with the construction of the
Coker Project and not with its operation and maintenance. Contractor shall be
responsible for all labor relations matters relating to the Coker Project and
shall at all times use its best efforts to maintain harmony among the unions (if
any) and other personnel employed in connection with the Coker Project.
Contractor shall at all times use its best efforts and judgment as an
experienced contractor to adopt and implement policies and practices designed to
avoid work stoppages, slowdowns, disputes and strikes.
2.40 Local Hiring Efforts. Owner has made a strong commitment to local
--------------------
hire as to both labor and subcontractors. Contractor agrees to make a good
faith effort to hire qualified local Subcontractors and to find qualified
supervisory workers and skilled and unskilled tradesmen from Jefferson County,
Texas for hire during the construction phases of this Contract.
<PAGE>
32
Contractor will provide Owner with access to all records of Contractor necessary
to demonstrate to the appropriate local officials compliance with this Section
2.40.
2.41 Further Assurances. Contractor shall execute and deliver all further
------------------
instruments and documents, and take all further action, including but not
limited to assisting Owner in filing a notice of completion with the appropriate
state and local lien recording offices, that may be necessary or that Owner may
reasonably request in order to enable Contractor to complete performance of the
Work or to effectuate the purposes or intent of this Contract.
2.42 Listing of Defects and Deficiencies. Throughout Contractor's
-----------------------------------
performance of the Work, Owner may provide written notice to Contractor setting
forth any Defects and Deficiencies which Owner may believe exist at that time.
The issuance of any such notice shall not be deemed a waiver of any Defects and
Deficiencies not set forth in such notice. Not later than fourteen (14) days
thereafter, Contractor shall provide a schedule and description of the process
Contractor intends to undertake in order to remedy any such Defects and
Deficiencies.
2.43 Operations and Maintenance. Permanent Coker Complex operations and
--------------------------
maintenance plans, including operations and maintenance procedures, the
maintenance of spare parts lists, development of a safety program for operations
and maintenance, and overall administration for the operation of the Coker
Complex after Final Completion shall be Owner's responsibility. During Coker
Complex training, Commissioning, Start-up, Performance Testing and operation,
subject to Contractor's obligations pursuant to Section 10.1 hereof, Owner shall
be responsible for providing operating and maintenance personnel.
2.44 Contractor's Duty to Independent Engineer. Contractor agrees that
-----------------------------------------
the function of the Independent Engineer, as technical advisor to the Financing
Parties, is crucial to the success of the Coker Project and that the Independent
Engineer has a continuous need for information. It shall be the duty of the
Contractor to fulfill promptly the Independent Engineer's requests for data,
information, and opportunities to witness or observe the on-going performance of
the Work to the extent such requests are reasonably consistent with progress of
the Coker Project and provided that such data and information are available to
the Contractor.
2.45 Certificate of Contractor; Consent to Assignment. Contractor, on or
------------------------------------------------
after the Effective Date and within seven (7) days of Owner's request, shall
provide Owner and the Financing Parties with (a) a certificate confirming the
Contractor's ability to complete the Work and (b) an assignment and consent
agreement with the Financing Parties or a trustee or other representative
thereof substantially in the form of Exhibit K hereto.
2.46 Intellectual Property Licenses.
------------------------------
2.46.1 Use of Data. Contractor hereby grants to Owner a perpetual,
-----------
irrevocable, nonexclusive, license to use (without further compensation other
than as part of the Contract Price), in connection with the ownership,
operation, maintenance, repair or alteration (by Owner, its successors and
assigns and any third party contractor) of the Coker Complex, all drawings,
specifications and Technical Information, schedules, plans, drawings and other
<PAGE>
33
documents produced by Contractor and its Subcontractors relating to this
Contract; provided, however, that such license is subject to the terms of the
-------- -------
third-party technology licensing agreements listed on Schedule 2.46.
2.46.2 Other Necessary Licenses. Contractor further agrees to grant
------------------------
and hereby grants to Owner a perpetual, irrevocable, nonexclusive, royalty-free
license under all patents and intellectual property now or hereafter controlled
by Contractor to the extent necessary for the ownership, operation, maintenance,
repair or alteration (by Owner, its successors and assigns and any third party
contractor) of the Coker Complex, or any component thereof, designed, specified
or constructed by Contractor under this Contract.
No later than the Mechanical Completion of each Process Unit of the
Coker Complex, Contractor shall grant or cause to be granted to Owner such other
licences of patent and intellectual property rights held by any Person as may be
required for the ownership, operation, maintenance, repair or alteration of such
Process Unit. Such licenses shall be in such form as shall be reasonably
acceptable to Owner and shall be perpetual, irrevocable, non-exclusive and
royalty free to Owner and its successors and assigns as owners or operators of
the Coker Complex.
2.46.3 Improvements, Inventions and Innovations. All rights in any
----------------------------------------
improvements, inventions, and innovations made by Owner or its Affiliates shall
vest in Owner or such Affiliates, and Owner and its Affiliates shall have the
right to exploit such improvements, inventions, and innovations. All rights in
any improvements, inventions and innovations made by Contractor shall vest in
Contractor, and Contractor and its Affiliates shall have the right to exploit
such improvements, inventions and innovations; provided, however, that Owner and
the partners that comprise Owner and their respective Affiliates shall be
granted a non-exclusive license for use (without further compensation other than
as part of the Contract Price) in any expansion of the Coker Complex by Owner
(or the parties that comprise Owner or its Affiliates) at the Refinery of any
such improvement, invention or innovation made by Contractor (but not by any
Subcontractor) in the course of performing the Work and in which Contractor
asserts any ownership or proprietary interest; provided, however, that such
-------- -------
license is subject to the terms of the third-party technology licensing
agreements listed on Schedule 2.46.
SECTION 3
SUBCONTRACTORS
3.1 Subcontractors. Contractor shall select Subcontractors in connection
--------------
with the performance of the Work such that all equipment, materials, machinery,
supplies and labor obtain the Standards, reliability and performance
requirements set forth in this Contract. Without the written consent of Owner,
Contractor shall not subcontract any portion of the Work to any Subcontractor
that has not been approved by Owner. Contractor may from time to time submit to
Owner in writing the names and addresses of Subcontractors that Contractor seeks
to have approved by Owner. Owner, within ten (10) days after Owner's receipt in
writing of such names
<PAGE>
34
and addresses, shall reply to Contractor in writing to state whether the
additional Subcontractors are rejected or approved. If Owner does not respond to
any such request within such ten (10) day period, such additional Subcontractors
shall be deemed acceptable to Owner. If Owner rejects any such proposed
Subcontractor, the reasonable grounds for rejection will be stated and
Contractor shall not contract with the rejected Subcontractor for any portion of
the Work. In that event, Contractor shall promptly propose other Subcontractors,
if required, for Owner's approval. Acceptance by Owner of a Subcontractor does
not: (a) give rise to any claim by Contractor against Owner if Subcontractor
breaches its subcontract or contract with Contractor; (b) give rise to any claim
by Subcontractor against Owner; (c) create any contractual obligation by Owner
to Subcontractor; (d) give rise to a waiver by Owner or the Independent Engineer
to reject any Defects and Deficiencies or Defective Work; or (e) in any way
release Contractor from being the single point of responsibility to Owner for
the Work to be performed under this Contract.
3.2 Contractor's Liability. Contractor shall remain responsible for all
----------------------
of its obligations under this Contract, including the Work, regardless of
whether a subcontract or supply agreement is made or whether Contractor relies
upon any Subcontractor to any extent. Contractor's use of Subcontractors for
any of the Work hereunder shall in no way increase Contractor's rights or
diminish Contractor's liabilities with respect to Owner and this Contract, and
in all events Contractor's rights and liabilities hereunder with respect to
Owner and this Contract shall be as though Contractor had itself performed such
Work.
3.3 Terms in Subcontracts. No subcontract or supply agreement shall
---------------------
contain terms that conflict with the applicable terms and conditions of this
Contract to an extent that would impair Contractor's performance hereunder.
Upon request to Contractor by Owner, Contractor will submit to Owner any
Subcontractor agreement (without any price information) within two (2) weeks of
the request.
3.4 Assignability of Subcontracts to Owner. In every agreement entered
--------------------------------------
into after the Effective Date with a Subcontractor for a Major Portion of the
Work, Contractor shall obtain a provision stating that (a) in the event that
Contractor is terminated for cause, convenience, abandonment of Contract or
otherwise, each Subcontractor will continue its portion of the Work as may be
requested at the option of Owner, (b) such agreement permits assignment thereof
to Owner at the option of Owner and to the Financing Parties for security
purposes at the option of Owner, in either instance under all the same terms and
conditions as originally specified in the Subcontractor's agreement with
Contractor, and (c) that Owner is the intended third party beneficiary of such
agreement and that such third-party beneficiary rights may be assigned by Owner
to the Financing Parties for security purposes. In this regard, Contractor
shall also cause each Subcontractor of a Major Portion of the Work to execute a
Subcontractor Assignment and Consent Agreement.
3.5 Removal of Subcontractor's Personnel. Owner shall have the right at
------------------------------------
any time to require removal of a Subcontractor's personnel from the Coker
Project upon reasonable grounds.
<PAGE>
35
3.6 Subcontractor Warranties. Contractor shall, for the protection of
------------------------
Owner and Financing Parties, obtain from all Subcontractors, as appropriate,
guarantees and warranties on all machinery, equipment, services, materials,
supplies and other items used and installed hereunder, and such guarantees and
warranties shall not be amended, modified or discharged without the prior
written consent of Owner. Such guarantees and warranties shall cover a period
of no less than twelve months from Mechanical Completion or eighteen months
after delivery, whichever occurs first. Contractor shall enforce such
guarantees and warranties to the fullest extent on behalf of Owner. Upon the
expiration of any of Contractor warranties pursuant to this Contract, or upon
the termination of this Contract, Contractor shall assign and make available to
Owner and Financing Parties all of Contractor's rights under all such
Subcontractor guarantees and warranties and shall deliver to Owner and Financing
Parties copies of all contracts providing for such guarantees and warranties.
After the assignment of rights pursuant to the preceding sentence, Owner shall
be entitled to receive all proceeds (including damages and rebates) paid by any
Subcontractor pursuant to any Subcontractor guarantee or warranty; provided,
--------
that to the extent Contractor has corrected the Defect or Deficiency covered by
such warranty, Owner shall rebate to Contractor any proceeds of such warranty
resulting from such Defect or Deficiency. The provisions of this Section 3.6 in
no way reduce Contractor's obligations or Owner's rights as stated elsewhere in
this Contract including, without limitation, Contractor's warranty and guarantee
obligations set forth in Section 8.1 hereof.
3.7 Subcontractor Insurance. Contractor shall require all Subcontractors
-----------------------
retained under agreements executed after the date hereof to obtain, maintain and
keep in force during the time they are engaged in performing services hereunder
adequate insurance coverage described under the heading "Required Subcontractor
Insurance" on Schedule 9.1 hereto (provided that the maintenance of any such
Subcontractor insurance shall not relieve Contractor of its other obligations
pursuant to Section 9.1 hereof). Subcontractors shall be required to evidence
these insurance coverages with certificates of insurance prior to accessing the
Project Site and Contractor shall, upon Owner's request, furnish Owner with such
certificates. All Subcontractors of Major Portions of the Work shall be of
bondable financial condition.
3.8 No Privity with Subcontractors. Owner shall not be deemed by virtue
------------------------------
of this Contract to have any contractual obligation to or relationship with any
Subcontractor, except to the extent such Subcontractor has executed a
Subcontractor Assignment and Consent Agreement.
3.9 Review and Approval not Relief of Contractor Liability. The review,
------------------------------------------------------
approval and consent by Owner as to Schedule 3.1 shall not relieve Contractor of
any of its duties, liabilities or obligations under this Contract. Any
inspection, review or approval by Owner permitted under this Contract of any
portion of the Work, by Contractor or any Subcontractor, shall not relieve
Contractor of any duties, liabilities or obligations under this Contract.
<PAGE>
36
SECTION 4
CONTRACT AMOUNT AND PAYMENT
4.1 Fixed Price Contract Amount. As full consideration to Contractor for
---------------------------
the full and complete performance of the Work (including, to the extent
described in Section 4.2 below, work previously performed under the Interim
Reimbursable Contract) and all costs incurred in connection therewith, Owner
shall pay (subject to all the terms and conditions of this Contract), and
Contractor shall accept, the lump sum fixed price of FIVE HUNDRED FORTY-FOUR
MILLION TWO HUNDRED EIGHT THOUSAND DOLLARS ($544,208,000.00) (as such amount may
be adjusted pursuant to the provisions of this Contract, the "Contract Amount"),
---------------
plus such other amounts as may be due under this Contract.
The Contract Amount shall be subject to increases and decreases pursuant to
valid Change Orders made in accordance with this Contract. The Contract Amount
shall not be increased except in accordance with this Contract.
4.2 Coordination with Interim Reimbursable Contract. Owner and Contractor
-----------------------------------------------
acknowledge that the Contract Amount includes the price of work performed under
the Interim Reimbursable Contract for which payment had been made in the amount
of $90,889,947.44 through May 31, 1999. Any payments made under the Interim
Reimbursable Contract subsequent to such date with respect to items included in
the Work shall be credited against the Contract Amount.
4.3 Submission of Applications for Payment. On or before the fifteenth
--------------------------------------
(15th) day of each calendar month, Contractor shall submit an Application for
Payment to Owner (one (1) original and two (2) copies for Owner) and one (1)
copy of such Application for Payment to the Independent Engineer describing (a)
the extent of completion of the Work for the prior calendar month and (b) any
value added by Work completed in the prior calendar month with respect to which
Contractor is ahead of the Payment Schedule and requesting credit pursuant to
Section 4.4.2(c). Each Application for payment shall be accompanied by such
supporting documentation as is required by Section 4.4 hereof. Contractor
warrants that title to all work, materials and equipment covered by any
Application for Payment will pass to Owner no later than the time of payment,
free and clear of all liens, charges, security interests and encumbrances.
4.4 Payments. The Contract Amount shall be paid by Owner to Contractor in
--------
installments (the "Scheduled Payments"), in accordance with completion of the
Work in accordance with the Payment Schedule. The making of each Scheduled
Payment is subject to review and approval of each Application for Payment by
Owner and the Independent Engineer as set forth in Section 4.6 and to the terms
and conditions set forth in this Section 4.4.
4.4.1 Conditions to Scheduled Payments. Subject to the other terms of
--------------------------------
this Section 4, Owner shall within thirty (30) days after the receipt of each
Application for Payment make or cause to be made to Contractor, subject to this
Section 4.4, the Scheduled Payment (and other amounts as may be due hereunder)
by wire transfer of immediately available
<PAGE>
37
funds to a bank and account specified in writing by Contractor in accordance
with Section 16.1, hereof; provided that:
(a) Owner shall not be obligated to make payment hereunder if a
current Monthly Report acceptable to Owner and the Independent Engineer has
not been received;
(b) Owner shall not be obligated to make any payment that Owner is
entitled to withhold pursuant to this Section 4.4.1 or Section 4.4.2,
Section 4.4.3 or Section 4.6.1 hereof;
(c) Owner shall not be obligated to make any payment hereunder unless
Contractor has supplied Owner with the lien waivers and certifications
required pursuant to Section 4.9 hereof; and
(d) if this Contract is terminated before the final payment is made
pursuant to Section 4.7 hereof, Owner shall not be obligated to make
further payments except in accordance with provisions contained in this
Contract which set forth payments due Contractor in the event of
termination.
4.4.2 Owner's Right to Withhold Scheduled Payments. Owner may
--------------------------------------------
withhold all or a portion of the amount of any Schedule Payment if, in the
reasonable judgment of Owner in consultation with the Independent Engineer, the
Contractor has not completed any item of Work described in the Application for
Payment related to such Scheduled Payment in accordance with the Turnkey
Specifications and the other requirements of this Contract. The amount so
withheld shall be determined by Owner in its reasonable judgment and in
consultation with the Independent Engineer, based on the amount to be paid
Contractor for the portion of the Work not so completed, and Owner shall pay
Contractor the remaining undisputed portion of such Application for Payment,
provided that:
(a) In the event Contractor disputes Owner's determination as to
whether any amount should have been withheld or the amount properly
withheld, or as to any determination made by Owner pursuant to clause (c)
hereof, Contractor shall have the burden of proof to show that Owner's
judgment was not reasonable;
(b) No interest shall accrue or be due to Contractor upon any payment
withheld by Owner pursuant to this Section 4.4.2 or as a result of the non-
fulfillment of the conditions in Section 4.4.1 hereof or as a result of any
determination by Owner pursuant to Section 4.4.1 hereof (unless in any such
instance Owner's judgment as to whether such amount should have been
withheld was not reasonable);
(c) Owner shall, pursuant to the terms hereof, give appropriate
credit, to be determined by Owner in its reasonable judgment in
consultation with the Independent Engineer, for any value added by Work
with respect to which Contractor is ahead of the Payment Schedule;
<PAGE>
38
(d) In no event shall any payment made be in excess of the sum of the
Application for Payment and any amounts due to Contractor pursuant to
Section 4.4.2(e) hereof; and
(e) Any amount so withheld under this Section 4.4.2 shall be paid to
Contractor on the date of the Scheduled Payment next following the
completion of the Work with respect to which such amount was withheld.
4.4.3 Set-Off. Owner may deduct and set off (including by
-------
application of any amounts drawn under the Letter of Credit held by Owner),
against any part of the balance due or to become due to Contractor under this
Contract any amounts due from Contractor to Owner under or in connection with
this Contract.
4.5 Letter of Credit . On the Effective Date, Contractor shall deliver to
----------------
Owner a Letter of Credit in the form attached hereto as Exhibit C as security
for the performance by Contractor of its obligations hereunder. The Letter of
Credit shall have a term of at least one (1) year, to be renewed as necessary
until canceled pursuant to Section 4.5.4 hereof, and shall be provided (and
amended and extended as necessary to comply with the terms of this Contract) at
no cost to Owner. As more fully set forth in the Letter of Credit, the initial
amount of such Letter of Credit shall be $9,088,995.00, and thereafter the
amount available for drawings under the Letter of Credit (together with the
aggregate amount of any cash deposits by Contractor or amounts held back by
Owner from payments hereunder pursuant to Section 4.5.2) shall at all times
equal ten percent (10%) of the amounts paid by Owner to Contractor pursuant to
Section 4.4 hereof less any amounts previously drawn under the Letter of Credit
pursuant to Section 4.5.1 hereof except for amounts drawn pursuant to Section
4.5.1(ii) or 4.5.1(iii) hereof that are not applied for payment or performance
failure by reason of the existence of the conditions described in Section
4.5.1(i) or 4.5.1(iv) and amounts reimbursed to the Contractor pursuant to
Section 4.5.7 hereof . The initial Letter of Credit and any and all replacement
Letters of Credit hereunder shall be issued by an Acceptable L/C Issuer.
Notwithstanding the reference to "Letter of Credit" herein in the singular
number, Contractor may fulfill its obligations hereunder with more than one
Letter of Credit, provided that the aggregate amount of such Letters of Credit
(together with cash deposits and amounts withheld pursuant to Section 4.5.2(a))
at all times equals the amount required hereunder and each such Letter of Credit
otherwise complies with the requirements hereof.
4.5.1 L/C Drawings. As used herein, the term "Beneficiary" refers to
-------------
Owner or any assignee or transferee of the Letter of Credit pursuant to Section
4.5.5 hereof. Beneficiary may draw funds or otherwise submit a claim for
payment under the Letter of Credit (a "L/C Drawing") only upon the occurrence
of any of the following conditions precedent:
(i) (A) an Event of Default under Section 14.1 hereof has occurred,
(B) Contractor has been notified by Owner in writing of such Event of
Default in accordance with the provisions of Section 14.1 hereof, (C)
Contractor has failed to cure such Event of Default within the cure periods
provided in such section, and (D) the amount being drawn is in Owner's
reasonable judgment equal to or less than the amount
<PAGE>
39
required to cure such Event of Default (or, if this Contract has been
terminated pursuant to Section 14.1 hereof, the amount in Owner's
reasonable judgment equal to or less than the damages due Owner pursuant to
this Contract as a result of such termination); or
(ii) Final Completion has not occurred under this Contract on or
before the date which is thirty (30) days prior to the expiration date set
forth in the Letter of Credit and Contractor has not caused such Letter of
Credit to be extended or substituted on the same terms as the expiring
Letter of Credit; or
(iii) the rating of the outstanding unsecured indebtedness of the
bank, trust company or other entity that issued the Letter of Credit has
fallen below a rating of A, as determined by S&P or a rating of A2, as
determined by Moody's; or
(iv) (A) Owner has allowed Final Completion to occur pursuant to
Section 5.7(d) hereof despite Contractors failure to complete all the items
on the Punch List, (B) Contractor has subsequently failed to complete such
Punch List items by the date agreed upon by the parties pursuant to such
Section 5.7(d) and (C) the amount being drawn is in Owner's reasonable
judgment equal to or less than the amount required to complete such Punch
List items.
Multiple drawings under the Letter of Credit shall be permitted. In no event
shall any L/C Drawing when added to all previous L/C Drawings exceed in the
aggregate, as of any date, ten percent (10%) of the sums actually paid as of any
such date by Owner to Contractor under Section 4.4 of this Contract.
4.5.2 Substitution of Cash or Cash Holdback; Proceeds. (a) Contractor
-----------------------------------------------
shall have the right, at any time and from time to time, to perform its
obligation to maintain Letters of Credit in effect hereunder by (i) depositing
cash with Owner pursuant to a cash collateral agreement in form acceptable to
Owner and the Financing Parties or (ii) requesting that Owner withhold amounts
from sums otherwise payable to Contractor hereunder; provided, that the amount
available for draw under the Letter of Credit, together with such cash deposits
and withheld amounts shall, in the aggregate, at all times equal the amount of
the Letter of Credit required pursuant to Section 4.5 and Section 4.5.3 hereof.
Any cash deposit may be applied by Owner in payment of amounts due by Contractor
hereunder only if (A) an Event of Default under Section 14.1 hereof has
occurred, (B) Contractor has been notified by Owner in writing of such Event of
Default in accordance with the provisions of Section 14.1 hereof, (C) Contractor
has failed to cure such Event of Default within the cure periods provided in
such section, and (D) the amount being drawn is in Owner's reasonable judgment
equal to or less than the amount required to cure such Event of Default (or, if
this Contract has been terminated pursuant to Section 14.1 hereof, the amount in
Owner's reasonable judgment equal to or less than the damages due Owner pursuant
to this Contract as a result of such termination).
(b) If Beneficiary draws funds under the Letter of Credit by reason of the
existence of the conditions described in Section 4.5.1(i) or Section 4.5.1(iv)
hereof or applies cash deposits as provided in Section 4.5.2(a) hereof, then the
proceeds of such draw or
<PAGE>
40
application of cash shall constitute payment by Contractor to Owner of amounts
due under this Contract for the applicable payment or performance failure, but
only to the extent of such draw. If Beneficiary draws funds under the Letter of
Credit by reason of the existence of the conditions described in Section
4.5.1(ii) or Section 4.5.1(iii) hereof or if Contractor provides Beneficiary
with cash security (or requests Owner to withhold sums otherwise due and payable
to Contractor hereunder) as provided in Section 4.5.2(a) in an amount equal to
the amount of the Letter of Credit as provided herein, then the proceeds of such
draw or cash security, as the case may be, shall be held by Beneficiary (in such
accounts as maybe required under the Financing Documents) as security for the
payment and performance by Contractor of its obligations owed to Owner under
this Contract and any sum so withheld shall not be payable to Contractor, and
(unless such cash security or sum withheld shall have been replaced with a
replacement Letter of Credit as provided below or the aggregate amount of the
Letters of Credit remaining undrawn together with the amount of unapplied cash
deposits and amounts withheld pursuant to Section 4.5.2(a) shall equal the
required Letter of Credit amount after payment of any pending Application for
Payment) Owner shall thereafter be entitled to withhold ten percent (10%) of
amounts due Contractor hereunder; provided that such amounts shall be disbursed
--------
to Contractor upon the earliest to occur of the following: (i) Contractor's
extension or substitution of the Letter of Credit on the same terms as the
Letter of Credit being extended or replaced, (ii) Final Completion as evidenced
by actual delivery of the Final Completion Certificate to Contractor pursuant to
Section 5.7.2 hereof, or (iii) termination of this Contract and performance of
all obligations and payment of all amounts remaining due by Contractor following
such termination; provided that until such disbursement to Contractor, if
Beneficiary would be entitled to draw funds under the Letter of Credit by reason
of the existence of the conditions described in Section 4.5.1(i) or Section
4.5.1(iv) hereof, then the proceeds held by Owner and any sums withheld by Owner
pursuant to this Section 4.5.2 shall constitute payment by Contractor to Owner
of amounts due under this Contract for the applicable payment or performance
failure, but only to the extent of the amount Owner would be entitled to draw or
withhold and Contractor's obligations to pay Owner will be discharged only to
the extent of the amount actually drawn or withheld; and provided, further that
-------- -------
any draw by the Beneficiary under the Letter of Credit by reason of the
existence of the conditions described in Section 4.5.1(ii) or 4.5.1(iii) hereof
shall not in any way relieve the Contractor of its obligations to deliver a
Letter of Credit to Owner in the amount required by the first paragraph of this
Section 4.5.
4.5.3 Adjustment. In the event the Payment Schedule or Contract Amount
----------
is adjusted as provided by this Contract, Contractor shall deliver to the issuer
of the Letter of Credit an increase certificate or a reduction certificate to
increase or reduce, as appropriate, the amount available for draw under the
Letter of Credit; provided, however, that Contractor shall not be obligated to
deliver any such certificate more often than monthly. If an increase certificate
is not effective because it would cause the available credit to exceed the
maximum credit under the Letter of Credit, Contractor shall immediately cause
such maximum credit to be increased such that the available credit is not less
than an amount equal to the remainder of (i) ten percent (10%) of the payments
actually paid by Owner to Contractor under Section 4.4 of this Contract less
----
(ii) any amounts previously drawn under the Letter of Credit pursuant to Section
4.5.1 hereof except for amounts drawn pursuant to Section 4.5.1(ii) or
<PAGE>
41
4.5.1(iii) hereof that are not applied for payment or performance failure by
reason of the existence of the conditions described in Section 4.5.1(i) or
4.5.1(iv).
4.5.4 Cancellation. Beneficiary shall deliver the Letter of Credit to
------------
the issuer thereof for cancellation (and shall release any cash deposits and pay
any amounts withheld pursuant to Section 4.5.1) within ten (10) days following
the earlier of (i) termination of this Contract and performance of all
obligations and payment of any amounts remaining due by Contractor following
such termination, (ii) Final Completion as evidenced by actual delivery of the
Final Completion Certificate to Contractor pursuant to Section 5.7.2 hereof
(provided that the Letter of Credit shall not be canceled upon Final Completion
if the parties agree to extend the Letter of Credit beyond Final Completion
pursuant to the provisions of Section 5.7(d) hereof) or (iii) deposit with the
Beneficiary of cash in an amount equal to the full amount of the Letter of
Credit at the time of such deposit. Beneficiary may not make a L/C Drawing
after the Letter of Credit is required to be canceled pursuant to this Section
4.5.4.
4.5.5 Transfer; Assignment. Owner may assign or transfer the Letter of
--------------------
Credit and any cash deposits or amounts withheld under this Section 4.5 only to
the Financing Parties or to any successor in interest to Owner. Such permitted
assignment or transfer shall be effective without the consent or approval of the
Contractor only upon such assignees's or the transferee's written agreement,
made for Contractor's benefit, to be bound by and to observe the terms of this
Contract applicable to such Letter of Credit, including without limitation the
L/C Drawing restrictions set forth herein.
4.5.6 Improper or Excessive L/C Drawings. Beneficiary shall deliver to
----------------------------------
Contractor copies of L/C Drawing certificates under the Letter of Credit as soon
as practicable after delivery of the same to the issuer thereof. If Beneficiary
makes any L/C Drawing not in compliance with Sections 4.5.1 through 4.5.4 hereof
or makes a L/C Drawing in an amount not in compliance with Sections 4.5.1
through 4.5.4 hereof, Beneficiary shall immediately pay to Contractor the amount
of the improper L/C Drawing, provided that, unless the Letter of Credit is
subject to cancellation pursuant to Section 4.5.4 hereof, Contractor
simultaneously provides for an increase in the amount available to be drawn
under the Letter of Credit in the amount of such improper L/C Drawing so
returned by Beneficiary.
4.5.7 Use of Proceeds of Letter of Credit. If, after a permitted L/C
-----------------------------------
Drawing under Section 4.5.1(i) or 4.5.1(iv) in a permitted amount and
application of the proceeds of such L/C Drawing by Beneficiary to effect the
cure of the failure by Contractor to perform its obligations under this
Contract, the amount of such L/C Drawing exceeds the amount due Owner from
Contractor under the terms of this Contract for the failure giving rise to such
L/C Drawing, then, upon written notice from the Contractor, Beneficiary shall
pay the excess amount to Contractor, provided that, unless the Letter of Credit
is subject to cancellation pursuant to Section 4.5.4 hereof, Contractor
simultaneously provides for an increase in the amount available to be drawn
under the Letter of Credit in the amount of such excess proceeds so returned by
Beneficiary. Beneficiary shall provide to Contractor documentation, in form
reasonably satisfactory to Contractor, evidencing the amount of the proceeds of
any L/C Drawing used by Beneficiary to cure such failure by Contractor or
retained by Beneficiary in fulfillment of
<PAGE>
42
Contractor's obligations to Owner. This Section 4.5.7 shall not be construed to
require Beneficiary to return to Contractor any Late Payments or Reliability and
Capacity Buydown Payments due to Owner.
4.6 Review by Owner and Independent Engineer Prior to Payment. Owner
---------------------------------------------------------
and Independent Engineer shall review each Application for Payment and
accompanying documentation to determine (in addition to any other determination
to be made pursuant to this Contract) whether (i) the Work has progressed to the
point indicated on the Construction Schedule; (ii) the Work has been performed
in accordance with this Contract; (iii) all required documentation and
submittals have been received and are acceptable; and (iv) Contractor is
entitled to payment of the amount requested. Except for disputed portions of any
Application for Payment as provided for pursuant to this Section 4, Owner shall,
subject to the approval of the Independent Engineer and Contractor's
satisfaction of all conditions of this Section 4, make payment to Contractor
within thirty (30) days after receipt by Owner of such Application for Payment.
4.6.1 Withholding of Payment. Based on Owner's own evaluation or on
----------------------
the recommendation of the Independent Engineer, Owner may withhold payment, in
whole or in part, to the extent reasonably necessary, to protect Owner as a
result of: any existence or continuance of an Event of Default by Contractor
pursuant to Section 14.1; a mistake as to the actual progress of the Work done;
failure of Contractor to make payments to Subcontractors corresponding to
amounts paid to Contractor by Owner hereunder; third-party claims or liens filed
with respect to the Work which have not been secured in accordance with the
provisions of Section 2.37(i) hereof; any Defects and Deficiencies or Defective
Work not corrected; completed Work which has been damaged requiring correction
or replacement; failure by Contractor to provide releases or partial releases of
liens as required by Section 4.9 hereof; any other material breach of this
Contract; or the filing of a voluntary or involuntary petition in bankruptcy. If
Owner is unable to approve (or is aware that the Independent Engineer intends
not to approve) payment in the amount of an Application for Payment, it shall
notify Contractor as soon as possible but no later than fourteen (14) days of
its receipt of said application. Owner has the right, for the reasons enumerated
above, to reject in whole or in part an Application for Payment or rescind
approval, in whole or in part, for a payment previously issued, because of
subsequently discovered evidence or observations, and to set off against amounts
requested in any current Application for Payment the amount of any such
rescinded payment.
4.6.2 Payment Not Approval. Owner's payment of an Application of
--------------------
Payment will not be a representation by any party that it has made an exhaustive
or continuous inspection to check the quality or quantity of the Work, or
reviewed design or manufacturing or construction means, methods, techniques,
sequences or procedures, or reviewed copies of requisitions received from
Subcontractors, or examined to ascertain the manner in which Contractor has used
prior payments of money on account of the Contract Amount.
4.7 Final Completion and Payment . Within thirty (30) days after Final
----------------------------
Completion and satisfaction of the conditions contained in Sections 4.7.1 and
4.9 hereof, Beneficiary shall pay Contractor all monies held as security
pursuant to Section 4.5.2 hereof
<PAGE>
43
(except if the parties agree to extend the Letter of Credit beyond Final
Completion pursuant to the provisions of Section 5.7(d) hereof) and any other
monies that are owed by Owner to Contractor. The payment by Owner of the final
Application for Payment does not constitute a waiver by Owner of Contractor's
warranties as specified in this Contract.
4.7.1 Final Payment Conditions. Final payment pursuant to Section 4.7
------------------------
hereof (including any remaining amounts held as security pursuant to Section
4.5.2 hereof) shall not become due until Contractor achieves Final Completion
and Owner issues a Final Completion Certificate pursuant to Section 5.7.2
hereof, and Contractor submits to Owner: (a) an affidavit that payrolls, bills
for materials and equipment and other indebtedness connected with the Work for
which Owner might be deemed responsible or Owner's property might be encumbered
or liens have been paid or otherwise satisfied, except as otherwise described in
the affidavit described in subsection (g) below; (b) consent of the surety, if
any, to final payment if required by such surety (provided, that the withholding
of such consent by any such surety shall not prevent payment of any amount as to
which such surety's consent is not required); (c) data establishing payment
discharge or satisfaction of all of Contractor's obligations to Subcontractors
incurred in performance of the Work, except as otherwise described in the
affidavit described in subsection (g) below, (d) a written statement by
Contractor to Owner stating that the warranties provided to Owner by Contractor
pursuant to this Contract are in full force and effect and will remain in full
force and effect for their applicable time periods; (e) written releases from
Contractor of all claims against Owner and its property, directors, officers,
employees, agents, representatives, successors and assigns under or in
connection with this Contract, substantially the form attached hereto as Exhibit
E; (f) waivers and releases of mechanics' and materialmen's liens, substantially
in the form attached hereto as Exhibit F from each Subcontractor or such other
documents necessary to assure an effective release of mechanics' or
materialmen's liens with respect to any and all liens asserted against the Coker
Project by all of Contractor's Subcontractors, except as otherwise described in
the affidavit described in subsection (g) below; (g) an affidavit that describes
(i) any exceptions to the affidavit described in subsection (a) above, as well
as the amount of any indebtedness described in such subsection that has not been
paid or satisfied and the reasons the same has not been paid or satisfied, (ii)
any omissions from the data described in subsection (c) above, as well as the
amount of any obligations described in such subsection that have not been paid
or satisfied and the reasons the same have not been paid or satisfied and (iii)
any omissions from the waivers and releases described in subsection (f) above,
as well as the amounts due or paid Subcontractors for which such liens and
releases have not been received and the reasons such liens and releases have not
been received; and (h) a surety bond or letter of credit, issued by a surety or
bank, and otherwise in form and substance, acceptable to Owner and the Financing
Parties, fully securing the total, without duplication, of the amounts, if any,
which in no event shall exceed in the aggregate (including amounts covered by
Section 4.9.1 hereof) one million five hundred thousand dollars ($1,500,000),
set forth in the affidavit described in subsection (g) above, along with an
agreement, in form and substance satisfactory to Owner and the Financing
Parties, to indemnify Owner and the Financing Parties for any and all costs and
expenses accruing to Owner and/or the Financing Parties as a result of the
matters set forth in the affidavit described in subsection (g) above.
<PAGE>
44
4.7.2 Acceptance of Final Payment. Except as otherwise expressly
---------------------------
provided in this Section 4.7.2, it is expressly stated and agreed to by
Contractor and Owner that the acceptance of the final payment by the Contractor
for Contract or Change Order Work shall be a waiver by Contractor of all claims
for Work performed under this Contract. Acceptance of such payment by
Contractor shall represent Contractor's complete satisfaction with final
compensation for all claims and Work performed under this Contract (other than
claims of fraud or criminal conduct, any claims alleging that any drawing under
the Letter of Credit occurring after acceptance of the final payment is improper
or excessive and any claims surviving Final Completion or termination of this
Contract pursuant to Section 9.4 hereof). The final payment will be judged
accepted once deposited in Contractor's bank account in response to Contractor's
Application for Payment. In no event shall Owner have any liability to
Contractor in any such event for special, indirect, incidental or consequential
damages, and, except as otherwise provided in this Section 4.7.2, in no event
shall Owner have any liability for any other damages, notwithstanding the actual
amount of damages that Contractor may have sustained. Nothing in this Section
4.7.2 is intended to abrogate any provision of this Contract which, by its
express terms, survives final payment or termination hereof.
4.8 Payments to Subcontractors. Contractor shall promptly pay each
--------------------------
Subcontractor, upon receipt of payment from Owner for Work, the amount to which
each Subcontractor is entitled, based on each Subcontractor's portion of such
Work. Contractor shall, by appropriate agreement in each Subcontractor's
agreement, require such Subcontractor to make payments to sub-Subcontractors and
materialmen in a similar manner. However, Owner shall not have any duty or
obligation to insure the payment of money to a Subcontractor. Subcontractors
and third parties shall not be deemed third-party beneficiaries of Owner's
obligations to pay Contractor.
4.9 Payments Subject to Release of Liens. With each Application for
------------------------------------
Payment by Contractor, Contractor shall provide to Owner and the Financing
Parties (i) a lien waiver or release of lien in the form of the Contractor
Partial Lien Waiver and Release set forth in Exhibit G attached hereto, (ii) (x)
from any Subcontractor to whom a payment of $5,000,000 or more is included in
such Application for Payment, a lien waiver or release of lien in the form of
Subcontractor Partial Lien Waiver and Release set forth in Exhibit H attached
hereto and/or a bill of sale or paid invoice warranting cost and full payment of
such Subcontractor's Work and (y) from any Subcontractor to whom final payment
is for all of such Subcontractor's Work is included in such Application for
Payment, a lien waiver or release of lien in the form of Subcontractor Lien
Waiver and Release set forth in Exhibit F attached hereto and/or a bill of sale
or paid invoice warranting cost and full payment of such Subcontractor's Work,
(iii) such other documentation sufficient to establish that the Coker Project
and the Project Site and any and all improvements, materials and equipment
placed, erected or installed thereon are free from any and all claims, liens,
encumbrances, security interests, mechanics' liens, suppliers, labor or
materialmen's liens or otherwise arising out of or in connection with the
performance by Contractor or any Subcontractor of the Work to be performed
hereunder; (iv) certification by an officer of Contractor to the effect that
there are no expected or known claims, liens, security interests or encumbrances
in the nature of mechanics' or materialmen's liens or claims arising out of or
in connection with the performance by Contractor or any Subcontractor of the
Work to be
<PAGE>
45
performed under this Contract to the date of the certification; and (v)
certification by an officer of Contractor to the effect that all due and payable
bills have been or will be paid from the proceeds of payments received from
Owner. If in Owner's reasonable judgment the forms attached hereto as Exhibit F,
Exhibit G and Exhibit H are no longer effective under Texas law, then Owner may
provide substitute forms to be used in place of such forms (subject to
Contractor's approval, not to be unreasonably withheld or delayed) that are
effective under Texas law.
4.9.1 De Minimis Subcontractors. Notwithstanding the provisions of
-------------------------
Section 4.9 hereof, Contractor shall be excused from providing the documentation
set forth in clauses (ii), (iii) and (iv) of Section 4.9 hereof with respect to
the work of any Subcontractor providing goods or services having a cost of fifty
thousand dollars ($50,000) or less during the term of this Contract, but only to
the extent that the aggregate cost of all Work for which Contractor has not
provided such lien waivers or releases of liens does not exceed (i) one hundred
thousand dollars ($100,000) with respect to any monthly Application for Payment
or (ii) one million dollars ($1,000,000) during the term of this Contract.
4.9.2 Removal of Liens. Prior to payment on any Application for
----------------
Payment, any existing claims, liens, security interests or encumbrances
(including, without limitation, any claims, liens, security interests or
encumbrances resulting from Contractor's excused provision of documentation
pursuant to Section 4.9.1 hereof) shall be satisfied or otherwise discharged or
secured pursuant to Section 2.37 hereto.
4.10 Right to Audit . For any of the Work performed on a cost reimbursable
--------------
basis, Contractor agrees to maintain adequate books and records concerning this
Contract and make such books and records available for inspection and audit by
Owner and/or its agents or representatives during the term of this Contract and
for three (3) years thereafter. Any overpayment by Owner to Contractor shall be
deemed to be a mistake of fact and promptly repaid to Owner.
4.11 No Payment in Event of Material Breach . Notwithstanding any other
--------------------------------------
provision to the contrary contained herein, Owner shall have no obligation to
make any payment in addition to amounts previously paid to Contractor at any
time Contractor is in material breach of this Contract.
SECTION 5
COMPLETION AND ACCEPTANCE OF COKER PROJECT
5.1 Mechanical Completion. (a) Mechanical Completion of the Coker Complex
---------------------
shall be achieved hereunder if and only if the following have occurred:
(i) each Process Unit comprising the Coker Complex is Mechanically Complete
and has passed the applicable Pre-Commissioning Test for such Process Unit as
described in Section 5.1.2 hereof (subject to the qualification set forth in
clause (b) of this Section 5.1);
<PAGE>
46
(ii) Contractor has completed performance of all the Work except (x)
Punch List items and (y) items of Work related to Contractor's obligations
after Mechanical Completion of the Coker Complex;
(iii) Contractor, Owner and Independent Engineer have agreed to a Punch
List pursuant to Section 5.1.3;
(iv) Contractor, Owner and Independent Engineer have agreed to the
Start-up Protocol pursuant to Section 5.2.1;
(v) the Coker Complex can be operated safely and meets all
requirements in the Turnkey Specifications as necessary to commence
Commissioning and Start-up activities;
(vi) Contractor has delivered to Owner and Independent Engineer a
Notice of Mechanical Completion, pursuant to Section 5.1.1 hereof, which
notice has been subsequently approved by Owner and Independent Engineer
pursuant to Section 5.1.2; and
(vii) Owner has received the final Operating Manuals and the final
Maintenance and Instruction Manuals.
(b) Notwithstanding clause (a) of this Section 5.1, for purposes of
this Contract the actual date of Mechanical Completion shall be determined in
accordance with Section 5.1.5(d) hereof.
5.1.1 Notice of Expected Mechanical Completion Date. Contractor
---------------------------------------------
shall provide Owner and Independent Engineer with at least forty (40) days'
prior written notice of the expected date of that the Coker Complex will be
Mechanically Complete (which notice may be contained in the Contractor's Monthly
Reports to Owner) and shall promptly inform Owner of changes in such expected
date.
5.1.2 Mechanical Completion of each Process Unit. (a) Upon
------------------------------------------
completion of erection of each Process Unit and all Work related thereto, except
Punch List items and upon completion of precommissioning Work related to such
Process Unit as specified in Schedule 1.5, and provided that all of the above
excepted items are mutually agreed to by Contractor, Owner and the Independent
Engineer and do not prevent commissioning activities or cause unnecessary
operational problems or present safety hazards, Contractor shall give Owner and
the Independent Engineer written notice that the Process Unit is Mechanically
Complete. As soon as reasonably possible but in no event later than ten (10)
days after such notice, Owner and the Independent Engineer shall inspect such
Process Unit and shall either (a) notify Contractor that such Process Unit is
ready for commencement of Pre-Commissioning Testing or (b) notify Contractor
that Owner or Independent Engineer believe that Defects and Deficiencies exist
with respect to such Process Unit, in which case Owner or Independent Engineer
shall notify Contractor in reasonable detail of the nature of such Defects and
Deficiencies within a reasonable time after such notice. Upon completion of
correction or repair of every item about which
<PAGE>
47
Owner or the Independent Engineer has notified Contractor, Contractor shall give
Owner and the Independent Engineer written notice of such completion, correction
or repair, and within ten (10) days after the date of said notice, Owner shall
(a) notify Contractor that such Process Unit is ready for Pre-Commissioning
Testing or (b) notify Contractor that Owner or Independent Engineer believes
that Defects and Deficiencies still exist with respect to such Process Unit.
Such notification procedure shall be repeated until Owner notifies Contractor
that such Process Unit is ready for Pre-Commissioning Testing. When a Process
Unit or connected group of Process Units (as more particularly described on
Schedule 1.7) are ready for Pre-Commissioning Testing, the Contractor shall
conduct, in the presence of such Inspectors as Owner and the Independent
Engineer shall deem appropriate, Pre-Commissioning Testing for such Process Unit
or Process Units.
5.1.3 Punch List. In determining whether Mechanical Completion
----------
has occurred it is expected that the parties, including the Independent
Engineer, will identify items of uncompleted Work and inconsequential Defects
and Deficiencies. If, in the reasonable judgment of Owner and the Independent
Engineer, such uncompleted Work or Defects or Deficiencies will not adversely
affect the safety, reliability or operation of such Process Unit or the Coker
Complex as a whole, they may be deemed "Punch List items", and need not be
corrected as a condition precedent to Mechanical Completion. All identified
Punch List items shall be listed on a punch list (the "Punch List") prepared by
Contractor for approval of Owner and the Independent Engineer (which approval
shall not be reasonably withheld). Additional Punch List items may be added to
the Punch List by Owner or the Independent Engineer, after consultation with the
Contractor, from time to time prior to Final Completion (including, without
limitation, as contemplated by the second paragraph of Section 5.3 hereof).
5.1.4 Notice and Report of Mechanical Completion. (a) When
------------------------------------------
Contractor believes that it has satisfied the provisions of Section 5.1 hereof,
it shall deliver to Owner, with a copy for Owner's transmittal to the
Independent Engineer, a notice thereof (the "Notice of Mechanical Completion").
The Notice of Mechanical Completion shall contain a report of results of the
Pre-Commissioning Testing and the proposed Punch List.
(b) Notwithstanding clause (a) of this Section 5.1.4, Contractor may
deliver the Notice of Mechanical Completion prior to Mechanical Completion of
the Coker, provided that (i) all other provisions of Section 5.1(a) have been
--------
satisfied and (ii) Contractor delivers Owner and the Independent Engineer an
additional notice when Contractor believes that the Coker is Mechanically
Complete (the "Coker Completion Notice").
5.1.5 Achievement of Mechanical Completion. (a) Owner and the
------------------------------------
Independent Engineer shall within ten (10) days following receipt of the Notice
of Mechanical Completion, inspect the Coker Complex and all Work hereunder and,
subject to the written approval of the Independent Engineer, Owner shall either
(i) deliver to Contractor a certificate certifying that the requirements under
Section 5.1(a) hereof have been satisfied ("Mechanical Completion Certificate"),
(ii) deliver to Contractor a certificate that all requirements of Section
5.1(a), other than Mechanical Completion of the Coker, have been satisfied
("Provisional Mechanical Completion Certificate"), or (iii) if reasonable cause
exists for doing so, notify
<PAGE>
48
Contractor in writing that Mechanical Completion has not been achieved, stating
in detail the reasons therefor.
(b) In the event that Mechanical Completion has not been achieved and
Owner has not issued a Provisional Completion Certificate, Contractor shall
promptly take such corrective action or perform such additional Work as will
achieve Mechanical Completion and shall issue to Owner and the Independent
Engineer another Notice of Mechanical Completion pursuant to Section 5.1.4(a)
hereof. Such procedure shall be repeated as necessary until Mechanical
Completion has been achieved or a Provisional Completion Certificate has been
issued.
(c) In the event Owner issues a Provisional Mechanical Completion
Certificate, Owner and the Independent Engineer shall within ten (10) days
following receipt of the Coker Completion Notice, inspect the Coker Complex and
all Work related thereto and, subject to the written approval of the Independent
Engineer, Owner shall either (a) deliver to Contractor a Mechanical Completion
Certificate, or (b) if reasonable cause exists for doing so, notify Contractor
in writing that Mechanical Completion of the Coker has not been achieved,
stating in detail the reasons therefor. In the event that Mechanical Completion
of the Coker has not been achieved and Owner has not issued a Mechanical
Completion Certificate, Contractor shall promptly take such corrective action or
perform such additional Work as will achieve Mechanical Completion of the Coker
and shall issue to Owner and the Independent Engineer another Notice of Coker
Completion pursuant to Section 5.1.4(b) hereof. Such procedure shall be
repeated as necessary until Mechanical Completion has been achieved.
(d) For all purposes of this Contract, Mechanical Completion shall be
deemed to have been achieved:
(i) on the date on which all the requirements under Section 5.1(a)
hereof shall be completed, or
(ii) on the date of the Provisional Mechanical Completion Certificate
if (x) all the requirements under Section 5.1(a) hereof shall have been
completed other than Mechanical Completion of the Coker and (y) Mechanical
Completion of the Coker is achieved within fourteen (14) days following the
date of the Provisional Mechanical Completion Certificate, or
(iii) on the date that is fourteen (14) days prior to the date that
Mechanical Completion of the Coker was achieved if (x) all the requirements
under Section 5.1(a) hereof shall have been completed other than Mechanical
Completion of the Coker and (y) Mechanical Completion of the Coker is
achieved more than fourteen (14) days following the date of the Provisional
Mechanical Completion Certificate.
5.2 Commissioning and Start-up. After the Coker Complex is
Mechanically Complete, Owner shall, with the oversight and cooperation of the
Contractor and the Independent Engineer, commence Commissioning and Start-up of
the Coker Complex. Contractor shall be
<PAGE>
49
responsible for monitoring Commissioning and Start-up in order to determine
whether such activities are conducted in accordance with this Contract, the
Start-up Protocol, the Standards, good operating practices and in conformance
with the requirements of the Turnkey Specifications and shall provide immediate
oral notice to Owner's Representative and the Independent Engineer, confirmed in
writing within five (5) days, if any part of Commissioning or Start-up is not
conducted in accordance with such requirements. Contractor shall not have any
defense to its liabilities hereunder based on improper procedures or any other
occurrences or conditions whatsoever during Commissioning unless notice is
timely given as required in the preceding sentence. In addition, Contractor
shall have the right to request that Owner, and Owner agrees to, stop any
Commissioning or Start-up activities that Contractor reasonably believes will
adversely affect the operation of the Coker Complex or achievement of the
Guaranteed Values. Owner's failure to comply with such requests or to follow the
Start-up Protocol shall entitle Contractor to a claim of Owner-Caused Delay,
provided, however, that any delay failure to abide by the Start-up Protocol by
- -------- -------
the Contractor shall not entitle the Contractor to any claims for Owner-Caused
Delay.
5.2.1 Start-up Protocol. Ninety (90) days prior to Mechanical
-----------------
Completion, Owner shall deliver an initial draft of the Start-up Protocol to
Contractor and the Independent Engineer for review. Contractor and Owner shall
cooperate to ensure the development of a final Start-up Protocol no later than
Mechanical Completion of the Coker Complex.
5.3 Performance Tests. Once the Coker Complex is properly connected
-----------------
and integrated with the Refinery, is Mechanically Complete, has successfully
completed Commissioning and Start-up in accordance with Section 5.2, has
achieved stable operations as described on Schedule 5.3 and is sufficiently
complete so that the Coker Project and all Coker Project systems are capable of
safe and continuous operation in accordance with this Contract (including the
Turnkey Specifications), the Standards, the Performance Test Standards, good
operating, testing, and oil refining industry practices, accepted ASME and API
standards, any additional requirements of the Project Documents, the Operating
Manuals, the Maintenance and Instruction Manuals, and manufacturers'
specifications and warranty requirements, as any of the foregoing may be
applicable to the Performance Tests, and provided that only inconsequential
Defects and Deficiencies exist as to the Work that has been completed,
Contractor may begin performance of the Performance Tests. Prior to commencing
the Performance Tests, the Contractor may make such adjustments and
modifications to the Coker Complex (which shall not be inconsistent with the
Turnkey Specifications) as it deems necessary for achievement of the Guaranteed
Values. Each Performance Test must be conducted in accordance with the
Performance Test Standards. Any Performance Test may be re-performed at any time
prior to the Reliability and Capacity Test Buydown Date, provided that (i)
--------
Contractor has provided Owner and the Independent Engineer notice of such
additional Performance Test in accordance with the Performance Test Standards
and (ii) any such Performance Test is conducted in accordance with te
Performance Test Standards.
A Performance Test shall be deemed acceptable hereunder if and only if the
Guaranteed Emission and Effluent Limits are not exceeded during such test, if
all other
<PAGE>
50
requirements of a Performance Test are met and if only inconsequential Defects
and Deficiencies exist as to Work that has been completed or substantially
completed (such items shall become Punch List items pursuant to Section 5.1.3).
The Coker Project will be operated throughout each Performance Test for the
applicable number of hours and in its normal mode of operation, consisting of
the operation of the Coker Project as a whole, including the operation of each
Coker Project system concurrently with each other Coker Project system, in
accordance with the Performance Test Standards, with all systems operating
without over-stressing or over-pressure with normal staffing.
Contractor shall give Owner and Independent Engineer at least thirty
(30) days' prior written notice of the date on which Contractor intends to
commence the Performance Tests, and shall promptly inform Owner of changes in
such expected date. Contractor shall also give Owner and the Independent
Engineer prior notice of individual Performance Tests as required by the
Performance Test Standards. Contractor shall not attempt to perform any
Performance Test if Owner gives notice to Contractor of any aspect of the Coker
Project which has not been completed by Contractor, the completion of which is
required for the safe operation of all or any part of the Coker Project during
the Performance Test in accordance with the Performance Test Standards.
Owner shall provide the required feedstreams for operation of the Coker
Complex. Owner shall designate and make available qualified and authorized
representatives to observe the Performance Tests and to monitor the taking of
measurements to determine the level of achievement of the Guaranteed Values, all
in accordance with the Performance Test Standards.
Representatives of major component Subcontractors, the Independent
Engineer and any other parties that Owner and Contractor may reasonably
determine should be present shall monitor each Performance Test to assure that
warranties of equipment are not adversely affected.
5.3.1 Capacity Test. For a Performance Test to be a Capacity
-------------
Test, such test shall be conducted in accordance with the Performance Test
Standards for a Capacity Test, to demonstrate whether during a continuous
uninterrupted seventy-two (72) hour period the Guaranteed Capacity has been
achieved by the Coker Complex (as further specified in the Performance Test
Standards) while not exceeding the Guaranteed Emissions and Effluent Limits.
5.3.2 Reliability Test. For a Performance Test to be a
----------------
Reliability Test, such test shall be conducted in accordance with the
Performance Test Standards for a Reliability Test, to demonstrate that the
Guaranteed Reliability has been achieved by the Coker Complex during a period of
sixty (60) continuous days (as further specified in the Performance Test
Standards) while not exceeding the Guaranteed Emissions and Effluent Limits.
5.3.3 Disposition of Output. At all times when Contractor desires
---------------------
to conduct Start-up, testing or Performance Tests, or other operations of the
Project or Project systems in furtherance of Performance Tests or repair and
maintenance, Owner shall, at no
<PAGE>
51
expense to Contractor, and in support of the Construction Schedule, arrange for
the disposition of the Coker Complex's output of Project Products in such manner
as Owner shall determine. At all times any revenues obtained from the Coker
Project, whether through the sale of Project Products or otherwise, shall be the
property of Owner.
5.4 Guaranteed Performance Dates. Contractor shall complete the
----------------------------
Work and achieve completion dates in accordance with the dates listed below:
5.4.1 Mechanical Completion. Contractor shall cause Mechanical
---------------------
Completion to occur no later than the Guaranteed Mechanical Completion Date.
5.4.2 Final Completion. Contractor shall cause Final Completion
----------------
to occur no later than the Guaranteed Final Completion Date.
5.5 Owner Control of Coker Project . Owner shall take possession and
------------------------------
control of the Coker Complex when it is Mechanically Complete, subject to
Contractor's continuing risk of loss as provided in Section 13.4 and
Contractor's other liabilities and obligations herein.
5.5.1 Partial Occupancy. Owner may, but has no obligation to,
-----------------
take possession or control of any completed or partially completed portion of
the Work when any such portion is Mechanically Complete; provided, that such
possession or control is consented to by insurers and authorized by public
authorities, if needed, having jurisdiction over the Work. Such partial
possession or control shall not alter the parties obligations and rights herein
including, without limitation, rights and obligations with respect to completion
of the Coker Complex, liquidated damages, payments, security, maintenance, heat,
utilities, damage to the Work, insurance and commencement of the warranties
provided pursuant to this Contract.
5.6 Reliability and Capacity Buydown Payments. If the Reliability
-----------------------------------------
Test performed most recently prior to the Reliability and Capacity Test Buydown
Date (or such earlier Reliability Test, as permitted pursuant to the Performance
Test Standards) or the Capacity Test performed most recently prior to the
Reliability and Capacity Test Buydown Date (or such earlier Capacity Test, as
permitted pursuant to the Performance Test Standards) does not achieve the
Guaranteed Reliability and Guaranteed Capacity, Reliability and Capacity Buydown
Payments shall be made pursuant to Section 6.2 hereof, subject to the
limitations of liability in Section 7 hereof.
5.7 Final Completion. Final Completion of the Coker Project shall be
----------------
achieved hereunder if and only if all of the following have occurred:
(a) Mechanical Completion has been achieved;
(b) Either (i) a Reliability Test has demonstrated that 100% of the
Guaranteed Reliability has been achieved and Guaranteed Capacity has been
achieved or (ii) the Contractor has achieved Substantial Reliability and
paid all Reliability and Capacity Buydown Payments pursuant to Section 6.2
hereof;
<PAGE>
52
(c) The Contractor has paid all Late Payments pursuant to Section 6.1.1
hereof;
(d) All Punch List items have been completed in accordance with this
Contract, unless Owner, with the approval of the Independent Engineer, has
temporarily waived completion of any Punch List item, in which case Final
Completion shall be deemed to have been achieved only after Contractor has
reaffirmed in writing its obligation to complete any Punch List item so
waived by Owner by a date certain agreed upon in writing between Contractor
and Owner, with the approval of the Independent Engineer. If Owner so
temporarily waives the completion of any Punch List item, Owner shall be
entitled to retain the Letter of Credit (provided that the amount available
for a L/C Drawing shall be reduced to an amount equal to two (2) times the
value of such item on the Punch List) and shall be entitled, in addition to
exercising any other remedies available to it at law or in equity, to draw
upon such Letter of Credit in accordance with the provisions of Section 4.5
hereof, in the event such Punch List item is not completed by Contractor by
the agreed upon date;
(e) Contractor has provided Owner with an affidavit certifying
Contractor's waiver of all claims already filed and all claims, demands and
requests for payment not already noticed to Owner in writing and pending
substantially the form attached hereto as Exhibit E;
(f) Owner has received from Contractor (A) any waivers of liens
relating to the Work which were not previously delivered by Contractor
under this Contract (provided that Contractor shall have the right to
submit a bond or bonds, reasonably satisfactory to Owner, in the amount of
any claims that could give rise to such liens if Contractor, despite its
best efforts, has been unable to obtain a waiver thereof) and (B) a final
certificate of Contractor that all requested waivers of all liens by
Contractor, Subcontractors and vendors relating to the Work have been
obtained by Contractor (or, where permitted hereunder, that bonds have been
obtained in lieu thereof) and delivered to Owner;
(g) Contractor has assigned or provided Owner with all Warranties to
the extent Contractor is obligated to do so pursuant to this Contract,
including but not limited to those set forth in Sections 3.6 and 8 hereof;
(h) Contractor has delivered to Owner a Notice of Final Completion
which notice has been subsequently approved by Owner pursuant to Section
5.7.2 hereof;
(i) Owner has received from Contractor all permits, licenses, and
approvals required to be obtained by Contractor pursuant to Section 2.11
hereof;
(j) Owner has received all Technical Information, test data, and other
technical information required hereunder (other than such data and
information that is required to be delivered within thirty (30) days after
Final Completion pursuant to Sections 2.34 and 5.7.2 hereof);
<PAGE>
53
(k) Owner has received all operations, maintenance, and spare parts
manuals and instruction books necessary to operate the Facility in a safe,
efficient and effective manner and a plan for warranty administration that
is satisfactory to Owner, including, without limitation, the Mechanical
Catalogs;
(l) All Start-up spare parts and special tools purchased by Contractor
as provided herein have been delivered to Owner;
(m) All Contractor's and Subcontractors' personnel, supplies,
equipment, waste materials, rubbish and temporary facilities have been
removed from the Project Site, except as mutually agreed by the parties;
(n) Owner has received from Contractor all final drawings and
specifications with respect to the Coker Complex in accordance with Section
2.29; and
(o) Contractor has performed all other provisions of and delivered all
items required by this Contract in a manner reasonably satisfactory to
Owner.
5.7.1 Notice and Report of Final Completion. When Contractor believes
-------------------------------------
that it has satisfied the provisions of Section 5.7 hereof, it shall deliver to
Owner and the Independent Engineer a written notice thereof (the "Notice of
Final Completion"). The Notice of Final Completion shall contain a report with
sufficient detail to enable Owner and Independent Engineer to determine the
achievement by Contractor of all Work to be performed under this Contract,
including the Punch List items, and such other information that Owner or the
Independent Engineer may require to determine whether Final Completion has been
achieved.
5.7.2 Achievement of Final Completion. Owner shall, within thirty (30)
-------------------------------
days following receipt of the Notice of Final Completion, inspect all Work,
review the report submitted by Contractor and subject to the written approval of
the Independent Engineer either (a) deliver to Contractor a Final Completion
Certificate stating that Section 5.7 hereof has been satisfied, or (b) if
reasonable cause exists for doing so, notify Contractor in writing that Final
Completion has not been achieved, stating in detail the reasons therefor.
Notwithstanding the foregoing, Owner shall not be obligated to deliver to
Contractor a Final Completion Certificate unless and until Contractor shall have
delivered to Owner the Technical Documentation as required by Section 2.34
hereof. In the event that Final Completion has not been achieved, Contractor
shall promptly take such action or perform such additional Work as will achieve
Final Completion and shall issue to Owner and the Independent Engineer another
Notice of Final Completion pursuant to Section 5.7.1 hereof. Such procedure
shall be repeated as necessary until Final Completion is achieved. The issuance
of the Final Completion Certificate does not relieve Contractor of any liability
with respect to the Warranties. For all purposes under this Contract, Final
Completion shall be deemed to have been achieved on the date on which the
requirements under Section 5.7 hereof were completed and the Final Completion
Certificate shall be issued by Owner to Contractor dated as of such date.
<PAGE>
54
5.7.3 Final Completion Deadline. Contractor shall achieve Final
-------------------------
Completion by the Guaranteed Final Completion Date. If Final Completion is not
achieved by such date, in addition to any other remedies Owner may have
hereunder Owner may complete the Punch List items and draw upon the Letter of
Credit in accordance with the provisions of Section 4.5 hereof in an amount
equal to Owner's actual reasonable direct cost of performing such work
SECTION 6
REBATE AND BONUS PAYMENTS
6.1 Late Payments. (a) Subject to Section 7.1 hereof, for each day
-------------
Contractor fails to achieve Mechanical Completion by the Guaranteed Mechanical
Completion Date, Contractor hereby agrees to pay to Owner, as part of the
consideration for awarding this Contract, Late Payments equal to the Rebate
Amount for each such day from the Guaranteed Mechanical Completion Date until
the Guaranteed Final Completion Date; provided, that there shall be credited
against the Rebate Amount for each day, at the time and in the manner provided
in Section 6.1.1, an amount equal to the Operating Revenues for such day.
(b) Subject to Section 7.1 hereof and without
duplication of payments made under clause (a) of this Section 6.1, for each day
Contractor fails to achieve 100% of Guaranteed Reliability after the Guaranteed
Mechanical Completion Date, Contractor hereby agrees to pay to Owner, as part of
the consideration for awarding this Contract, Late Payments equal to the Rebate
Amount for each such day from the Guaranteed Mechanical Completion Date until
the Guaranteed Final Completion Date.
6.1.1 Payment of Late Payments. Owner has the right to invoice
------------------------
Contractor for Late Payments once every thirty (30) days. Upon Contractor's
receipt from Owner of an invoice for Late Payments, Contractor, within thirty
(30) days of the receipt of said invoice, will pay Owner the amount of the Late
Payments due to Owner; provided, however, that with respect to the first such
-------- -------
invoice, Contractor shall pay Owner such amounts within five (5) days of receipt
of such invoice. Each such invoice shall reflect a credit equal to the Operating
Revenue for each day for which a Rebate Amount has previously been paid by
Contractor and not previously credited against a prior Rebate Amount and, to the
extent based on Owner's preliminary information regarding volumes and prices for
the period covered by such invoice Owner determines in good faith that the
aggregate Operating Revenue conservatively estimated for such period will exceed
the aggregate Rebate Amount for such period, such invoice will reflect a
provisional credit for such conservatively estimated Operating Revenue subject
to adjustment in subsequent invoices for actual Operating Revenue for such
period. If any aggregate amount of Operating Revenue remains uncredited with
respect to days for which Rebate Amounts have been paid at such time as
Contractor has achieved Mechanical Completion, such remaining aggregate amount
may be included in Contractor's next Application for Payment and shall be paid
to Contractor in cash within 30 days of approval of such Application for
Payment.
<PAGE>
55
6.1.2 Bonus to Contractor for Early Completion. Subject to Section 7.1
----------------------------------------
and the restrictions set forth in the next succeeding sentence, for each day
that Contractor achieves Mechanical Completion prior to the Target Mechanical
Completion Date, Contractor shall be entitled to receive a bonus payment equal
to the Bonus Amount for each such day (the sum of all such Bonus Amounts, the
"Early Completion Bonus"); provided that in no event shall the amount of the
Early Completion Bonus exceed six million dollars ($6,000,000.00). Contractor's
entitlement to an Early Completion Bonus shall be subject to the following
restrictions: (i) no Early Completion Bonus shall be paid to Contractor with
respect to any period by which the Target Mechanical Completion Date is extended
because of one or more Events of Force Majeure, except to the extent Owner, in
its reasonable discretion, agrees to bonus provisions as part of any Change
Order which may be issued as a result of such Events of Force Majeure; provided,
however, that if Contractor achieves Mechanical Completion before the date on
which the Target Mechanical Completion Date would have occurred without taking
into account any extensions due to Events of Force Majeure, Contractor shall be
entitled to an Early Completion Bonus based on the number of days by which the
date of achievement of Mechanical Completion preceded the date on which the
Target Mechanical Completion Date would have occurred without taking into
account any such extensions due to Events of Force Majeure; and (ii)
notwithstanding the provisions of the foregoing clause (i), Contractor shall not
be entitled to any Early Completion Bonus in the event Contractor incurs any
obligation under this Contract to pay Reliability and Capacity Buydown Payments
or Late Payments or in the event Contractor otherwise fails to meet its
obligations under this Contract to achieve Substantial Reliability or Final
Completion. The Early Completion Bonus shall be payable by Owner to Contractor
as follows: (x) up to $3,000,000 shall be payable within thirty (30) days
following Final Completion and (y) the remainder, if any, of the Early
Completion Bonus shall be payable in three (3) equal installments (without
interest) on the first, second and third anniversaries of the date of Final
Completion, respectively.
6.2 Reliability and Capacity Buydown Payments. If the Coker Complex
-----------------------------------------
fails to achieve the Guaranteed Reliability referred to in Sections 6.2.1 hereof
during the Reliability Test used to determine Reliability and Capacity Buydown
Payments as described in the next succeeding sentence or if the Coker Complex
fails to achieve the Guaranteed Capacity referred to in Section 6.2.2 hereof
during the Capacity Test used to determine Reliability and Capacity Buydown
Payments as described in the second succeeding sentence, Contractor shall pay
Owner as rebates and not as penalties the amounts calculated in accordance with
the terms set forth in Section 6.2.1 and Section 6.2.2 hereof (the "Reliability
and Capacity Buydown Payments"). The Reliability Test used to determine any
Reliability and Capacity Buydown Payments shall be such test performed most
recently (subject to the qualifications contained in the Performance Test
Standards) prior to the Reliability and Capacity Test Buydown Date which was
conducted in accordance with the provisions of Section 5 hereof. The Capacity
Test used to determine any Reliability and Capacity Buydown Payments shall be
such test performed most recently (subject to the qualifications contained in
the Performance Test Standards) prior to the Reliability and Capacity Test
Buydown Date which was conducted in accordance with the provisions of Section 5
hereof.
<PAGE>
55
6.2.1 Guaranteed Reliability. Contractor guarantees to Owner
----------------------
that, for the duration of the Reliability Test used to determine Reliability and
Capacity Buydown Payments, the Reliability over the period of the Reliability
Test will be greater than or equal to the Guaranteed Reliability. If the
Reliability is less than the Guaranteed Reliability, then Contractor shall pay
Owner as part of the consideration for awarding this Contract a Reliability and
Capacity Buydown Payment calculated according to the formula set forth on Table
IV-2 of Schedule 5.3. Contractor shall not be entitled to any bonus payment for
a Reliability greater than the Guaranteed Reliability.
6.2.2 Guaranteed Capacity. Contractor guarantees to Owner that,
-------------------
for the duration of the Reliability Test used to determine Reliability and
Capacity Buydown Payments, the performance over the period of the Capacity Test
will be greater than or equal to the Guaranteed Capacity. If the performance is
less than the Guaranteed Capacity, then Contractor shall pay Owner as part of
the consideration for awarding this Contract a Reliability and Capacity Buydown
Payment calculated according to the formula set forth on Annex 5.3.1. to
Schedule 5.3. Contractor shall not be entitled to any bonus payment for
performance greater than the Guaranteed Capacity.
6.2.3 Payments of Reliability and Capacity Buydown Payments.
-----------------------------------------------------
Contractor shall pay to Owner all Reliability and Capacity Buydown Payments
required under this Section 6.2 on the Reliability and Capacity Test Buydown
Date.
6.3 Rebate Payments Reasonable. Owner and Contractor hereby
--------------------------
acknowledge and agree that the terms, conditions and amounts fixed pursuant to
Sections 6.1 and 6.2 hereof for Late Payments and Reliability and Capacity
Buydown Payments are reasonable, considering the actual reduction in the value
of the Coker Complex that the parties anticipate Owner may sustain by reason of
Contractor's failure (i) to achieve Mechanical Completion by the Guaranteed
Mechanical Completion Date, (ii) to achieve the Guaranteed Reliability by the
Guaranteed Mechanical Completion Date or (iii) to achieve the Guaranteed
Reliability by the Reliability and Capacity Buydown Date, each as applicable.
The amounts of these rebates are agreed upon and fixed hereunder by the parties
because of the difficulty of ascertaining on the date hereof the exact amount of
such reduction in value that will actually be sustained by Owner in the event of
any such failure by Contractor, and the parties hereby agree that the rebate
amounts specified herein shall be applicable regardless of the amount of such
reduction in value actually sustained by Owner.
6.4 Offset of Rebate Payments. Owner, as an option in its sole
-------------------------
discretion, may deduct, retain out of or pay to itself from any moneys which may
be due to Contractor, or to become due to Contractor, including but not limited
to amounts available to be drawn under the Letter of Credit, early completion
bonus, or otherwise, the amount of any rebates hereunder, and in the event the
amount due Contractor hereunder shall be less than the amount of Late Payments
or Reliability and Capacity Buydown Payments payable to Owner, Contractor shall
be liable to pay the difference upon demand by Owner.
<PAGE>
57
6.5 Invalidity of Rebates. If this Section 6 is declared to be
---------------------
unenforceable or invalid, in whole or in part for any reason, then Contractor
agrees to be liable for any actual damages suffered by Owner for which rebate
payments would have been payable, subject (in the case that Substantial
Reliability has been achieved) to the limitations of liability provided in
Section 7 hereof.
7 SECTION
LIABILITY
7.1 Limitation of Liability.
-----------------------
7.1.1 Liability for Reliability and Capacity Buydown Payments and
-----------------------------------------------------------
Late Payments. Subject in all respects to the limitations set forth in Section
- -------------
7.1.2 hereof,
(a) Contractor's liability for failure to achieve Mechanical
Completion by the Guaranteed Mechanical Completion Date or to achieve the
Guaranteed Reliability by the Guaranteed Mechanical Completion Date shall
be limited solely to the payment of Late Payments; and
(b) Contractor's liability for (i) failure to achieve the
Guaranteed Capacity during the Capacity Test, (ii) failure to achieve the
Guaranteed Reliability during the Reliability Test, (iii) failure to
achieve the Guaranteed Emissions and Effluent Limits or (iv) failure to
achieve any of the Guaranteed Values by the relevant Guaranteed Performance
Date shall be limited solely to the payment of Reliability and Capacity
Buydown Payments.
Contractor's liability to Owner by reason of (i) Late Payments paid as a result
of the events specified in the foregoing clause (a) is cumulatively limited to
the Late Payment Limit, and (ii) Reliability and Capacity Buydown Payments paid
as a result of the events specified in the foregoing clause (b) is cumulatively
limited to the "Buydown Payment Limit; provided that the limitations set forth
in this Section 7.1.1 shall not apply until the Contractor has successfully
achieved Substantial Reliability. Notwithstanding the foregoing, the following
shall not be included for purposes of determining whether the Late Payment Limit
or the Buydown Payment Limit limitation on Contractor's liability pursuant to
this Section 7.1.1 has been reached: any damages or other amounts covered by any
insurance required to be obtained by Contractor or Owner hereunder. Also
notwithstanding the foregoing, if Contractor's failure to achieve Substantial
Reliability and/or Final Completion results from Contractor's failure to
complete the Work sufficiently to allow the Performance Tests to be completed,
then Contractor's liability with respect to such failure shall not be limited by
either the Late Payment Limit or the Buydown Payment Limit set forth in this
Section 7.1.1.
7.1.2 Exceptions to Limitation of Liability. The provisions of Section
-------------------------------------
7.1.1 hereof shall in no event be construed to limit any obligations or
liability of Contractor under this Contract (other than as expressly described
in Section 7.1.1 hereof), including without limitation: (a) Contractor's
obligation to complete the Work as required under this Contract; (b)
<PAGE>
58
Contractor's liability for damages resulting from any Event of Default or breach
by Contractor of its other obligations under this Contract (including without
limitation any breach or Event of Default arising as a result of Contractor's
failure to perform the Work as required hereunder); (c) Contractor's warranty
obligations under Sections 3.6 or 8 hereof; (d) Contractor's indemnification
obligations; (e) Contractor's obligation to achieve Mechanical Completion by the
Guaranteed Mechanical Completion Date; (f) subject to Section 7.1.3 hereof,
Contractor's obligation to achieve Final Completion by the Guaranteed Final
Completion Date; provided, however, that Contractor's total liability for
-------- -------
damages arising under this Contract (individually or in the aggregate, but
excluding damages arising out of Contractor's indemnification obligations
hereunder) shall be limited to one hundred percent (100%) of the Contract
Amount. Notwithstanding the foregoing, any damages or other amounts covered by
any insurance required to be obtained by Contractor or Owner hereunder shall not
----- ---
be included for purposes of determining whether the one hundred percent (100%)
limitation on Contractor's liability pursuant to this Section 7.1.2 has been
reached.
7.1.3 Payment of Reliability and Capacity Buydown Payments to
-------------------------------------------------------
Achieve Final Completion. The parties acknowledge that pursuant to Section
- ------------------------
5.7(b) hereof, Contractor may achieve Final Completion on the Reliability and
Capacity Test Buydown Date notwithstanding Contractor's failure to achieve the
Guaranteed Reliability in any Reliability Test; provided that, Contractor (i)
pays all Reliability and Capacity Buydown Payments incurred as a result of any
such failure and (ii) fulfills all of the other requirements for achievement of
Final Completion as set forth in Section 5.7 hereof, as applicable.
7.2 Offsite and Revamp Work; Integration.
------------------------------------
7.2.1 Offsite and Revamp Work and Integration by Contractor. Contractor
-----------------------------------------------------
agrees that the Work includes, and Contractor shall bear the risk of,
successfully integrating the Coker Complex with the remainder of the Refinery to
the extent such Refinery is modified or improved by the Offsite and Revamp Work
performed by Contractor under the Interim Reimbursable Contract, complying with
the Turnkey Specifications; provided, however, that without limiting the
allocation of risk and the obligation of Contractor contained in this Section
7.2.1, nothing contained in this Contract shall be deemed a warranty by the
Contractor of any portion of the Refinery other than the Coker Complex. In the
event of any defect or deficiency in the Offsite and Revamp Work performed by
Contractor under the Interim Reimbursable Contract, Contractor's obligation is
to perform all required corrective engineering services at Contractor's sole
cost and expense, and Clark R&M is responsible for the costs of any replacement,
repair, modification, demolition or reconstruction of such Offsite and Revamp
Work.
7.2.2 Offsite and Revamp Work and Integration by Clark R&M and Owner.
--------------------------------------------------------------
Each of Owner and Clark R&M shall be and remain responsible for the performance
and the Completion Schedule of all work on units, equipment items, and systems
which Clark R & M has performed directly or indirectly, and shall bear the risk
of successfully integrating the remainder of the Refinery with Coker Complex, in
each case to the extent such work on units, equipment items, or systems is
performed by Clark R&M or Owner, as the case may be,
<PAGE>
59
complying with the Turnkey Specifications, and including any units, equipment
items or systems which were not worked on, or otherwise remain unmodified;
provided that Contractor shall be solely responsible for, and bear the entire
risk of integration with respect to, any Work performed by Contractor under this
Contract or under the Interim Reimbursable Contract. Additionally, each of Clark
R&M and Owner shall be responsible for the completeness and accuracy of any
information supplied to Contractor by Clark R&M or Owner, as the case may be,
related to the existing Refinery operations, units, equipment and data.
7.2.3 Overall Schedule and Completion Schedule. Contractor shall
----------------------------------------
identify and notify Owner of (a) the overall schedule for Offsite and Revamp
Work to be performed by Contractor to accomplish the integration and (b) the
Completion Schedule for units, equipment items, and systems in the remainder of
the Refinery for which work is to be performed by Clark R&M , as required for
the integration of the remainder of the Refinery with the Coker Complex.
7.2.4 Limitation on Contractor's Defenses. Contractor's obligation to
-----------------------------------
achieve Mechanical Completion by the Guaranteed Mechanical Completion Date,
Final Completion by the Guaranteed Final Completion Date, and each of the
Guaranteed Values is in no way subject to or conditioned upon completion of the
Offsite and Revamp Work performed by the Contractor under the Interim
Reimbursable Contract, nor shall any failure of the Offsite and Revamp Work
performed by the Contractor under the Interim Reimbursable Contract to meet the
specifications set forth on Schedule 7.2 provide Contractor a defense to, or
excuse the Contractor from, the payment of Late Payments or Reliability and
Capacity Buydown Payments, so long as (a) the Contractor has been engaged by
Clark R&M to perform the Offsite and Revamp Work and any corrections thereto
pursuant to the Interim Reimbursable Contract (which provides for
reimbursements to the Contractor, for performance of the Offsite and Revamp Work
and for any correction required thereunder to said Offsite and Revamp Work), and
Contractor has been permitted to conduct such Offsite and Revamp Work thereunder
at the times contemplated thereunder as Contractor shall deem reasonable and
prudent to complete such Offsite and Revamp Work, provided that Owner consents
to the performance of such Offsite and Revamp Work (which consent is not to be
unreasonably withheld) and (b) Clark R&M completes such other Offsite and Revamp
Work in a timely manner in accordance with the Completion Schedule specified by
Contractor to Owner and Clark R &M under clause (b) of Section 7.2.3 above
(which other Offsite and Revamp Work is not to be performed by Contractor or
Contractor's Subcontractors) and in accordance with the requirements as set
forth in the specifications in Schedule 7.2 and the Turnkey Specifications
applicable to any such process, utility and offsite units and stream interfaces
and to any process streams or utilities supplied to the Coker Complex by Owner
or Clark R&M, or received from the Coker Complex by Owner or Clark R&M.
7.3 Waiver of Consequential Damages. Except (i) for Contractor's
-------------------------------
obligation to make Late Payments and Reliability and Capacity Buydown Payments
and (ii) for the obligation of either party to pay incidental damages to the
extent expressly described in Section 2.17 or Section 9 hereof, Owner and
Contractor waive any rights as against each other for special, indirect,
incidental and consequential damages as suffered by either of them including,
without limitation, lost profits or revenues, and each party hereby releases the
other party from
<PAGE>
60
any such liability. Owner's waiver of certain rights as against
the Contractor as set forth in this Section 7.3 shall also constitute a waiver
of such rights as against Subcontractors.
7.4 Application of Limitations. The releases, limitations of
--------------------------
liability, limitations of remedy and benefits of the indemnities expressed in
this Contract shall apply regardless of whether the liability, remedy or subject
of indemnity arises out of contract, tort (including negligence), strict
liability or otherwise, and shall extend to the affiliated companies or
entities, shareholders, directors, officers, employees and agents of the party
to the benefit of which such provisions operate, and in the case of Owner, to
all entities comprising Owner, their respective Affiliates, and the
shareholders, directors, officers, employees and agents of any of the foregoing.
Notwithstanding the foregoing, the releases, limitations of liability,
limitations of remedy and benefits of the indemnities expressed in this Contract
shall not apply to matters unrelated to this Contract or outside the scope of
Work to be performed hereunder, or to other agreements between or among the
parties hereto or any agreements between or among any of the companies that
comprise them or the Affiliates, entities, shareholders, directors, officers,
employees or agents of any of them.
7.5 Other Owners. Owner agrees that it will use reasonable efforts to
------------
obtain from the Financing Parties their express written agreement to be bound by
the releases, limitations of liability and limitations of remedy expressed in
this Contract, such that the aggregate of Contractor's liability to Owner and
the Financing Parties shall not exceed the limits of liability of Contractor to
Owner set forth in this Contract.
8 SECTION
WARRANTIES
8.1 Warranties and Guarantees. Contractor warrants and guarantees to
-------------------------
Owner its design and that all equipment, materials and other items furnished
under this Contract shall be new and meet a generally accepted standard of
quality applicable to the design and engineering of oil refinery installations
of similar size, type and design, free from improper workmanship and Defects and
Deficiencies and shall conform to the Standards. Contractor agrees during the
Warranty Period to correct promptly without additional compensation any Work
performed hereunder at any time and from time to time which is Defective or
otherwise not in conformance with the Standards. If any machinery, equipment,
materials or supplies are replaced during the Warranty Period, then the Warranty
Period for such machinery, equipment, materials or supplies shall be deemed
extended until one (1) year after date of replacement. Contractor shall bear all
costs and expenses (including without limitation labor costs) associated with
correcting any warranted Work, including without limitation all necessary
disassembly (including without limitation disassembly as required to gain access
to the Work subject to the warranty), transportation, reassembly, re-testing,
reworking, repair and replacement of such Work as well as all Work incident
thereto. Contractor also warrants and guarantees that when complete, the Coker
Project shall be free of all Defects and Deficiencies caused by errors and
omissions in engineering and design or otherwise. During the Warranty Period,
Contractor shall at its own expense correct any such errors and omissions and
resulting Defects and Deficiencies in the
<PAGE>
61
Coker Project as soon as reasonably possible after receipt of notice from Owner
specifying such Defects and Deficiencies. If any such errors or omissions or
resulting Defects and Deficiencies are corrected during the last year of the
original Warranty Period relating thereto, the warranty for such corrected work
shall be deemed extended until one (1) year after correction. The foregoing
warranty and guarantee is included in the Contract Amount.
8.2 Application of Warranties. During the applicable Warranty
-------------------------
Periods, if the Work is Defective or becomes Defective and Defects and
Deficiencies do not arise out of any wrongful acts or omissions of Owner (except
for actions of Owner prior to Final Completion for which Contractor retains
responsibility pursuant to Section 10.1) or contractors of Owner, an Event of
Force Majeure, improper operation or maintenance, misuse, abuse by third parties
or other circumstances beyond Contractor's reasonable control, and provided that
Owner gives Contractor notice of the Defects and Deficiencies either (i) during
the applicable Warranty Period or (ii) with respect to any Defects and
Deficiencies with respect to which the Warranty Period is one (1) year, provided
Owner demonstrates that such Defects and Deficiencies were discovered during the
final forty-five (45) days of such Warranty Period, on or before the forty-fifth
(45th) day following the end of such Warranty Period, then Contractor will
promptly cure the Defects and Deficiencies. If Contractor does not commence to
cure the Defect and Deficiency (which commencement may include, without
limitation, the ordering of the materials or equipment necessary to effect such
cure) promptly but in any event within thirty (30) days after receipt of written
notice from Owner, Owner may take remedial steps to cure the Defects and
Deficiencies and Contractor will be liable to Owner for the actual, direct cost
of Owner's remedial action. Owner, at Owner's option, may charge such cost
against any monies owed to Contractor.
8.3 Standards for Warranty Work. All work performed pursuant to
---------------------------
Warranties shall be performed subject to the same terms and conditions under
this Contract as the original Work (or Outside Contractor Work, as applicable)
with respect to which such warranty work is being performed.
8.4 Root Cause Clearance. If a particular Work item pursuant to the
--------------------
Contractor's warranties above is repaired, replaced or renewed one time and
becomes Defective again during the applicable warranty period, then Contractor
agrees that it will undertake a technical analysis of the problem and clear the
"root cause" problem.
8.5 Limitation of Warranties. THE FOREGOING EXPRESS WARRANTIES ARE
------------------------
EXCLUSIVE AND ALL OTHER WARRANTIES (OTHER THAN WARRANTIES OF TITLE), INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.
<PAGE>
62
SECTION 9
INSURANCE AND INDEMNIFICATION
9.1 Insurance Requirements. Each party hereto shall provide and
----------------------
maintain in force the applicable insurance coverages as are set forth in
Schedule 9.1; provided, that Contractor need not have such insurance in place
prior to the date that the conditions in Section 16.16(b) are fulfilled (or such
earlier date to which the parties hereto mutually agree). The cost of all
insurance to be maintained by Contractor is included in the Contract Amount.
9.1.1 Waiver of Claims. If and to the extent any loss or damage is
----------------
covered by the insurance described on Schedule 9.1, Contractor and Owner hereby
waive (in addition to any waivers related to loss of or damage to the Coker
Project set forth in Section 13.5 hereof) claims for recovery from the other for
such loss or damage to the extent of the proceeds actually recovered under such
insurance and applicable to such loss or damage.
9.2 General Indemnification. (a) Contractor, to the maximum extent
-----------------------
permitted by law, agrees to and shall defend, protect, indemnify and hold
harmless the Owner Parties from and against any Damages which may be incurred by
or assessed against any Owner Party on account of:
(i) any personal injury, disease or death of any person(s), damage to
or loss of any property caused by, arising prior to Mechanical Completion
and out of or in any way connected with the performance of the Work,
including without limitation Damages caused by or attributable to (A) the
sole negligence of Contractor, its Subcontractors, invitees or suppliers
(including without limitation the respective employees or agents of the
foregoing; (B) the concurrent or contributory negligence of any Owner
Party, Contractor, its Subcontractors, invitees or suppliers, or third
parties (including without limitation the respective employees or agents of
the foregoing); or (C) where liability with or without fault is strictly
imposed upon Contractor, either solely, jointly or concurrently, by
operation of law; or (D) where liability with or without fault is strictly
imposed upon any Owner Party, jointly or concurrently, by operation of law;
or
(ii) any breach of any representation, warranty or covenant of
Contractor contained herein, including without limitation, Damages incurred
by any Owner Party due to Contractor's failure to fully comply with the
insurance requirements set forth in Schedule 9.1.
It is the express intention of the parties to the Contract that the
indemnity obligations of Contractor are without regard to whether the
negligence, gross negligence, fault or strict liability of an Owner Party is a
concurrent or contributory factor of the occurrence or occurrences in question,
and such indemnity obligations of Contractor are intended to protect the Owner
Parties against the consequences of their own joint, concurrent or contributory
negligence, gross negligence, fault or strict liability. Owner expressly
reserves the right to participate in its defense with counsel of its own
choosing. Contractor's indemnity obligations shall survive the expiration,
termination or nonrenewal of the Contract.
<PAGE>
63
Contractor's indemnity obligations shall not limit and shall not be
limited by the insurance coverages (including without limitation Owner's
additional insured status) set forth in Schedule 9.1.
(b) Owner and Contractor, to the maximum extent permitted by law,
agree to and shall defend, protect, indemnify and hold harmless the Contractor
Parties (in the case of Owner) and the Owner Parties (in the case of the
Contractor) (collectively, the "Other Parties") from and against any Damages
which may be incurred by or assessed against any Other Party on account of any
personal injury, disease or death of any person(s), damage to or loss of any
property caused by, arising after Mechanical Completion and out of or in any way
connected with or incident to the performance of this Contract.
9.2.1 Indemnification for Violation of Laws. (a) Contractor shall
-------------------------------------
defend, protect, indemnify and hold harmless the Owner Parties from and against
Damages arising prior to Mechanical Completion and out of, resulting from or
otherwise connected with any failure by Contractor to comply with or violation
of Contractor of any Federal, State, County or municipal laws, rules,
regulations, orders or ordinances, including without limitation, all Federal,
State and local environmental, health and safety laws, rules and regulations,
which may otherwise be applicable to or imposed in connection with the
performance of the Work, without regard to whether Contractor may be negligent
in the performance of the Work, without regard to whether Contractor's actions
may have resulted in strict liability imposed by operation of law, and
regardless of the concurrent or contributory negligence of any Owner Party.
Contractor shall further protect, defend, indemnify and hold harmless the Owner
Parties from and against any Damages arising out of or resulting from
Contractor's failure to comply with applicable health and safety procedures of
Owner.
(b) Owner and Contractor each shall defend, protect, indemnify and
hold harmless the Other Parties from and against Damages arising after
Mechanical Completion and out of, resulting from or otherwise connected with any
failure by such party to comply with or violation of such party of any Federal,
State, County or municipal laws, rules, regulations, orders or ordinances,
including without limitation, all Federal, State and local environmental, health
and safety laws, rules and regulations, which may otherwise be applicable to or
imposed in connection with the performance of the Work except to the extent that
such failure or violation is caused by the fault or negligence of the Other
Party.
9.2.2 Indemnification for Intellectual Property. Contractor shall
-----------------------------------------
defend, protect, indemnify and hold harmless the Owner Parties against claimed
or actual infringement or contributory infringement of any patent, or
infringement of any copyright or trademark, or public disclosure of any trade
secret or proprietary information owned by or otherwise licensed to Owner
(including without limitation expenses, costs or attorney's fees incurred for
any Owner Party's primary defense of or enforcement of its indemnification
rights), arising out of or in connection with the performance of this Contract
prior to Mechanical Completion or the use of the materials or equipment
furnished by Contractor for or in connection with the Work.
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64
9.2.3 Indemnification for Hazardous Waste. (a) Owner shall indemnify,
-----------------------------------
defend, and save harmless Contractor from and against any and all Liabilities to
the extent arising out of or in connection with any Hazardous Waste on or under
the Project Site on or prior to the Site Work Commencement Date, or brought or
created on such site by Owner after such date except with respect to and to the
extent that Contractor is in violation of the terms of Section 2.17 hereof
regarding such Hazardous Waste.
(b) Contractor shall indemnify, defend and save harmless Owner from
and against any and all Liabilities to the extent arising out of or in
connection with any Hazardous Waste brought or created on the Project Site by
Contractor after the Site Work Commencement Date.
9.2.4 Indemnification for Liens and Other Encumbrances. Contractor
------------------------------------------------
shall defend, protect, indemnify and hold harmless the Owner Parties against all
liens, claims and demands (including without limitation expenses, costs or
attorney's fees incurred for any Owner Party's primary defense of or enforcement
of its indemnification rights) which arise in connection with the Work or
materials supplied by Contractor and, upon request by Owner, Contractor shall
furnish Owner with any affidavits, receipts, waivers, releases, statements or
other evidence that Owner may request to satisfy itself that all such claims,
liens or demands have been paid and discharged.
9.2.5 Indemnification Procedure. Promptly after the receipt by any
-------------------------
Owner Party or Contractor Party (the "Indemnified Party") of any claim or notice
of the commencement of any action, administrative or legal proceeding to which
the indemnity obligations of Contractor or Owner, as the case may be (the
"Indemnifying Party"), under this Contract may apply, the Indemnified Party
shall notify the Indemnifying Party of that fact. The Indemnifying Party shall
assume on behalf of the Indemnified Party and conduct with due diligence and in
good faith the defense thereof with counsel reasonably satisfactory to the
Indemnified Party; provided, that the Indemnified Party shall have the right to
be represented therein by advisory counsel of its own selection and at its own
expense; and provided further that the defendants in any such action include
both the Indemnifying Party and the Indemnified Party. If the Indemnified Party
shall have reasonably concluded that there may be legal defenses available to it
which are different from or additional to, or inconsistent with, those available
to the Indemnifying Party, the Indemnified Party shall have the right to select
separate counsel to participate in the defense of such action on its own behalf
at the Indemnifying Party's expense. In the event the Indemnifying Party fails
to defend any claim, suit, proceeding, action or investigation as to which an
indemnity might be provided herein, then the Indemnified Party may, at the
Indemnifying Party's expense, contest or settle such matter without the
Indemnifying Party's consent. All costs, payments, losses, damages and expenses
incurred in connection with such contest, payment or settlement shall be to the
Indemnifying Party's account and, in the event Contractor is the Indemnifying
Party, may be deducted with interest from any amounts due to the Contractor. The
Indemnifying Party shall not settle any such action or claim without consent of
the Indemnified Party.
<PAGE>
65
9.3 Application of Indemnity. Whenever this Contract calls for
------------------------
Indemnifying Party to indemnify the Indemnified Party, said indemnification(s)
pursuant to this Contract shall fully apply to the Indemnified Party, its
partners and any partners comprising the Indemnified Party, and the Financing
Parties (if Owner is the Indemnified Party) and each of their subsidiaries and
Affiliates, and the directors, shareholders, officers, partners, employees and
representatives of each of them, and their respective successors and assigns.
The Indemnifying Party's aforesaid indemnity is for the benefit of said parties
and shall not inure to the benefit of any other party.
9.4 Survival. The provisions of this Section 9 shall survive Final
--------
Completion and the termination of this Contract.
SECTION 10
CONTROL OF THE WORK
10.1 Control of the Work. Contractor shall turn control of the Coker
-------------------
Project over to Owner when the Coker Complex is Mechanically Complete; provided,
however, that until Final Completion, Contractor shall have the right to
exercise such supervision and control as shall be necessary to permit
performance of Contractor's obligations hereunder, it being an express condition
of this Contract that (i) no act or omission by Owner shall relieve Contractor
of any such obligations and (ii) Contractor retains responsibility for
coordination of Owner-conducted activity and any other responsibility therefore
provided for in this Contract; provided, that Owner shall cooperate with
Contractor with respect to Contractor's coordination of such activity.
10.1.1 Supervision and Construction Procedures. Contractor shall
---------------------------------------
direct the prosecution of the Work. It is Contractor's responsibility to control
the performance, means, methods, techniques, sequences and procedures for the
Work, and coordinate all portions of the Work under this Contract.
10.1.2 Owner Not Responsible. Owner will not be responsible for
---------------------
Contractor's means, methods, techniques, sequences or procedures of any of the
Work, or the safety precautions and programs incident thereto, and Owner will
not be responsible for Contractor's failure to perform or furnish the Work in
accordance with this Contract except to the extent such failure results from
responsibilities or negligence of Owner under this Contract or of third parties
under the control of Owner or for whom Owner is responsible.
10.1.3 Contractor Not Relieved. Contractor shall not be relieved
-----------------------
of its obligations to perform the Work in accordance with this Contract by
permitted activities or by duties of Owner in the administration of this
Contract.
10.1.4 Responsibility for Subcontractors. Contractor shall be
---------------------------------
responsible for all acts and omissions of the Subcontractors performing or
furnishing any of the Work, just as Contractor is responsible for Contractor's
own acts and omissions.
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66
10.1.5 Contractor's Inspections. Contractor shall be responsible
------------------------
for inspection of portions of the Work already performed under this Contract to
determine that such portions are in proper condition to be subject to subsequent
Work.
10.2 Owner's Right to Do Work. Owner has the right to perform work
------------------------
relating to the Coker Project with Owner's own work forces, and such work shall
be performed to minimize any interference with or interruptions in Contractor's
Work. Contractor will coordinate the sequence of such work and Owner will
cooperate therewith.
10.3 Interrelation of Documents: Errors. This Contract, Contractor
----------------------------------
drawings or specifications, and Technical Information and all reference
standards cited are essential parts of this Contract requirements. A requirement
occurring in one is as binding as though occurring in all. They are intended to
be complementary and to describe and provide for complete Work. In the event
Contractor discovers any apparent error or discrepancy of a material nature, it
shall promptly notify Owner and the Independent Engineer for Owner's
interpretation. Failure of Contractor to so notify Owner of errors or
discrepancy will constitute a waiver of any claim arising therefrom. No
conflict between the terms of such documents shall operate to relieve Contractor
from any obligation contained in any such document.
10.4 Cooperation. Contractor shall cooperate with Owner, the
-----------
Independent Engineer, and Reviewers, and with other third-party inspectors,
including environmental inspectors, provided such cooperation does not interfere
with Contractor's performance of the Work.
10.5 Dependence on Work of Owner or Others. If part of Contractor's
-------------------------------------
Work depends upon construction operations by Owner or a separate contractor,
Contractor shall, prior to prosecution of that portion of the Work, promptly
report to Owner any discrepancies or Defects and Deficiencies that Contractor
discovers in such other construction that would render it unsuitable for such
proper performance of the Work. Failure of Contractor to report such discoveries
to Owner shall constitute a waiver of any claim against Owner arising therefrom.
10.6 Inspector's Authority. Inspectors employed by Owner or the
---------------------
Independent Engineer shall be authorized to inspect all Work done and all
materials furnished; provided, that such inspections shall not interfere with or
interrupt the performance of the Work and are subject to proprietary and safety
restrictions. Such inspection may extend to any or all parts of the Work and to
the design, preparation, fabrication or manufacture of the equipment and
materials to be used. Inspectors are not authorized to revoke, alter or waive
any provision of this Contract. Inspectors are not authorized to issue
instructions contrary to this Contract or to act as foremen for Contractor.
Inspectors employed by Owner or the Independent Engineer are authorized to
notify Contractor or its representatives of any failure of the Work or equipment
or materials to conform to the requirements of this Contract.
10.6.1 Access to Owner and Independent Engineer. Each portion of
----------------------------------------
the Work shall be subject to inspection by Owner and the Independent Engineer at
any stage of the Work. Owner shall be allowed reasonable access to all parts of
the Work subject to proprietary
<PAGE>
67
and safety restrictions and shall be furnished with such information and
assistance by Contractor as is required to make a complete and detailed
inspection; provided, that neither Owner nor the Independent Engineer shall
interfere with the Work.
10.6.2 Uncovering Of Work. If Owner or Independent Engineer
------------------
requests upon reasonable notice and for good cause, Contractor, at any time
before Final Completion, shall remove or uncover portions of the finished Work.
After examination, Contractor shall restore said portions of the Work to the
standard required by this Contract. Should the Work so exposed or examined not
be in compliance with this Contract, the expense of uncovering and replacing the
covering, or making good on the parts removed will be at Contractor's expense.
If such uncovering and subsequent inspection shall reveal that the Work complies
with this Contract, a Change Order under Section 12 hereof shall be issued by
Owner to Contractor.
10.7 Labor Disputes. Whenever Contractor has knowledge that any
--------------
actual or potential labor dispute is materially delaying or threatening to
materially delay its performance on the Coker Project, Contractor shall promptly
give written notice thereof, including all relevant information with respect
thereto, to Owner and the Independent Engineer. Contractor agrees to use
reasonable efforts to insert the substance of this clause in any Subcontractor
agreement and shall obtain such clause, if practicable, in such agreements
regarding Major Portions of the Work.
SECTION 11
CLAIMS AND DISPUTES
11.1 Procedures for Claims and Disputes. Except as otherwise
----------------------------------
specifically provided herein, any claims by Contractor against Owner that arise
out of, effect, or relate to this Contract, including without limitation the
Project Variables, must be filed by giving Owner thirty (30) days written notice
with a detailed description and breakdown of the claim attaching all necessary
documentation to substantiate the claim. In any notice based upon an Event of
Force Majeure or Owner-Caused Delay, such documentation must include an updated
Critical Path method chart (or other if agreed by Owner) identical in format to
that supplied with the monthly report. The updated chart will show the effects
of the Event of Force Majeure or Owner-Caused Delay on the Critical Path of the
Work. Such notice is for the purposes of (a) affording an opportunity to Owner
to cancel promptly such order, direction or requirement; (b) affording an
opportunity to Owner to keep an accurate record of the materials, labor and
other items involved; and (c) affording an opportunity to Owner to take such
action as it may deem advisable in light of the Contractor's claims.
Accordingly, the failure of the Contractor within such thirty (30) days to serve
notice shall be deemed to be a conclusive and binding waiver by the Contractor
of all claims or damages by reason thereof.
Such written notice, in order for it to be valid under this Contract,
must specifically state that it constitutes a notice of claim and describe, as
fully as practical at the time, (1) all reasonably available details, if any,
concerning the claim, (2) the expected impact of the claim on the prosecution of
the Work and its Critical Path, and (3) the expected effect, if any, on
<PAGE>
68
Project Variables. Such notice will be updated continually by a method mutually
agreed to at the time so as to keep all parties updated as to items (1) through
(3) above until the claim is resolved.
Owner shall review the claim and take one of the following actions
within sixty (60) days of receipt of proper notice of claim from Contractor:
(a) Request additional information or supporting data;
(b) Reject the claim or dispute in whole or in part, stating the
reasons for the rejection;
(c) Approve the claim or dispute;
(d) Request a meeting; or
(e) Suggest a compromise.
If the claim is rejected by Owner, or the claim is not resolved within
one hundred twenty (120) days from receipt thereof, then Contractor and Owner
agree to first endeavor to settle the dispute in an amicable manner by
executive-level submission pursuant to Section 11.2 hereof before having
recourse to arbitration or a judicial forum pursuant to Section 11.3 and 16.2
hereof.
In any notice of claim based on any Event of Force Majeure or Owner-
Caused Delay, Contractor shall state what delay if any will be required and
shall certify to Owner as a condition for an adjustment to Project Variables:
(a) That the Event of Force Majeure or Owner-Caused Delay has affected
(or may affect) Contractor's Critical Path and will or may delay the
achievement of Mechanical Completion past the Guaranteed Mechanical
Completion Date or Final Completion beyond the Guaranteed Final Completion
Date;
(b) That Contractor did not cause the Event of Force Majeure or Owner-
Caused Delay;
(c) That the Event of Force Majeure or Owner-Caused Delay could not
have been reasonably prevented or the effects thereof could not have
reasonably been mitigated in accordance with generally accepted industry
standards; an d
(d) That Contractor has used its best efforts to remedy its inability
to perform because of the Event of Force Majeure or Owner-Caused Delay.
<PAGE>
69
11.2 Executive-Level Submission.
--------------------------
(a) All controversies and disputes and any claims which are not
resolved in accordance with Section 11.1 hereof shall be referred to a
meeting between the Contractor's Representative and the Owner's
Representative.
(b) If the matter is not resolved at the meeting referred to in
clause (a) above or any adjournment thereof, either party may, after the
date of such meeting or adjourned meeting, request that the matter be
presented to the management of the Contractor and Owner for resolution. If
either Party makes such a request, management representatives of Owner and
the Contractor shall meet within ten (10) business days following such
request.
(c) If the matter is not resolved within twenty (20) business
days after the meeting held pursuant to the provisions of clause (b) above,
either party is then free to initiate proceedings with respect to the
matter in an arbitration or in a judicial forum pursuant to Section 11.3
and 16.2 hereof.
11.3 Arbitration/Judicial Forum. If any controversy, dispute or claim
--------------------------
between Contractor and Owner is not resolved in accordance with Sections 11.1 or
11.2 hereof then:
(a) Any matter(s) involving aggregate claims for three million
dollars ($3,000,000) or less shall be decided by arbitration in accordance
with the Construction Industry Arbitration Rules of the American
Arbitration Association then obtaining unless the parties mutually agree
otherwise; provided, that the parties shall be entitled to such discovery
as may be determined by the arbitration panel. The arbitration shall be
held in Houston, Texas and any arbitration demand must be filed with the
American Arbitration Association office in, or located closest to Houston,
Texas.
(b) Any matter(s) involving aggregate claims in excess of three
million dollars ($3,000,000) shall be resolved in a judicial forum in
accordance with Section 16.2 hereof.
11.4 Pending Resolution of Disputes and Claims. Pending final
-----------------------------------------
resolution of any claim or dispute, pursuant to any of Sections 11.1, 11.2, or
11.3 hereof and subject to the provisions of 12.4.4 and 12.7 hereof, Contractor
will proceed diligently with the prosecution and performance of the Work under
this Contract, including the Work involved in the claim or any other disputed
Work, provided, that Owner has paid Contractor all undisputed amounts that are
due and payable under this Contract without derogating from any rights of set-
off or to draw under the Letter of Credit that Owner may have under this
Contract.
11.5 Resolution of Claims. Upon reaching a final resolution pursuant
--------------------
to Sections 11.1 through 11.3 above, if necessary such resolution shall be
effected by the issuance of a Change Order. Resolution of claims under Sections
11.1 through 11.4, above shall be final and binding. Contractor shall not
request, or be entitled to further relief of such claims.
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70
11.6 Force Majeure. Either party may file a claim for excusable
-------------
failure or delay with respect to any obligation under this Contract, except any
obligation to make payments when due. Excusable delay will be allowed if and to
the extent that any of the following Events of Force Majeure are beyond the
reasonable control of the affected person and such affected person has been
unable to overcome the consequences of such Event of Force Majeure by the
exercise of reasonable commercial efforts, which may include the expenditure of
funds, and has given the other party notice within ten (10) days of its
knowledge of the act or event giving rise to such Event of Force Majeure:
(a) Acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, blight, famine, flood, hurricane, or
other extraordinary weather conditions more severe than those experienced
at any time in the last thirty (30) years for the geographic area of the
Coker Project for which weather data is recorded;
(b) Acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the power of eminent domain, police power, condemnation or
other taking by or on behalf of any public, quasi-public or private entity;
(c) (i) The order, judgment or other act of any federal, state or
local court, administrative agency, governmental body or authority; (ii)
with respect to Contractor, the suspension, termination, interruption,
denial or failure of or delay in renewal or issuance of any Applicable
Permit required by this Contract to be obtained by Owner; or (iii) a Change
in Law; provided that no such order, judgment, act, event or change is the
result of the wrongful or negligent action or inaction of or breach of this
Contract by the party relying thereon and provided, further that neither
the contesting in good faith of any such order, judgment, act, event or
change nor the reasonable failure to so contest shall, in and of itself, be
construed as a wrongful or negligent action or inaction of such party;
(d) Strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the employees
of Contractor, or the employees of a Subcontractor; or
(e) A partial or entire delay or failure of utilities.
Events or Force Majeure include the failure of a Subcontractor to furnish labor,
services, materials, or equipment in accordance with its contractual
obligations, provided such failure is itself due to an Event of Force Majeure
(as defined herein).
Notwithstanding the foregoing, Contractor shall not be entitled to
relief under this Section 11.6 to the extent any event otherwise constituting an
Event of Force Majeure results from the negligence or fault of Contractor or any
Subcontractor, and Owner shall not be entitled to relief under this Section 11.6
to the extent any event otherwise constituting an Event of Force Majeure results
from the negligence or fault of Owner.
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71
11.7 Owner-Caused Delay. "Owner-Caused Delay" shall mean (i) a
------------------
suspension of the Work pursuant to Section 14.4 hereof, (ii) a change,
materially adversely affecting Contractor, of any Project Document or Financing
Document, or (iii) except to the extent resulting from Contractor's or any
Subcontractor's fault, negligence or failure to perform under this Contract in
accordance with its terms, any interruption or delay of, or other adverse effect
on, the Work hereunder, during which Contractor is and continues to be willing
and able to perform, due to an act or omission by any of the Owner Group (other
than any such act or omission in accordance with Contractor's or a
Subcontractor's instruction), a failure of any of the Owner Group to perform its
obligations under this Contract in a timely fashion or an error, omission,
change or defect in its performance of such obligations, provided that
--------
Contractor has given Owner and the Independent Engineer notice of the act or
omission giving rise to such claim of Owner-Caused Delay within ten (10) days of
first learning of such act or omission. As used in this Section 11.7, the "Owner
Group" means any of Owner, Independent Engineer and any Financing Party, or any
of their agents, employees, contractors or subcontractors (other than Contractor
and its Subcontractors). If, in the opinion of Contractor, Contractor is
entitled to a claim hereunder, such claim shall be submitted by Contractor to
Owner in accordance with Section 11.1 hereof and shall be resolved in accordance
with and pursuant to the procedures set forth in Sections 11.1 through 11.5
hereof.
Contractor and Owner waive their respective rights, if any, to rely on
Sections 2-614 or 2-615 of the New York Uniform Commercial Code as an excuse for
non-performance.
11.8 Application of Relief. An Event of Force Majeure under Section
---------------------
11.6 and Owner-Caused Delay under Section 11.7 hereof will, in addition to any
excuse provided under such Sections, be compensated for exclusively with a
Change Order as provided by Section 12.3 hereof which Change Order shall provide
only for (a) an increase in the Contract Amount determined in accordance with
Section 12.4.4 hereof, but only in the event Contractor incurs additional
out-of-pocket costs as a result of the occurrence of one or more Events of Force
Majeure or Owner-Caused Delay and provided that Contractor shall not be
compensated (pursuant to a change in Contract Amount or otherwise) for the
amount, not to exceed two hundred fifty thousand dollars ($250,000), of
Contractors' standby costs (which costs include Contractor's daily standby costs
for manual labor and non-manual labor (including show-up time) and rental
equipment) incurred as a result of the first fifteen (15) days affected by all
such claims of relief due to Events of Force Majeure, and/or (b) subject to
Section 11.8.3 hereof an extension of the Guaranteed Performance Dates, and/or a
change in the Construction Schedule and/or the Payment Schedule and/or (c) a
change in the Guaranteed Values (except as set forth in Section 11.8.1 hereof);
provided, that in the event such mitigation may be achieved by more than one
combination of the foregoing Project Variables, Owner shall have the right to
determine which combination of changes in such Project Variables shall be
utilized in achieving such mitigation. The parties hereto acknowledge that Owner
intends to authorize a change in the Guaranteed Values hereunder only as a last
resort and only if no other combination of changes in the Project Variables
provides such mitigation. Contractor shall use its best efforts to cooperate
with Owner in this regard.
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71
11.8.1 Limited Relief With Respect to Guaranteed Emissions and
-------------------------------------------------------
Effluent Limits. Notwithstanding the foregoing provisions of Section 11.8
- ---------------
hereof, Contractor shall not be entitled to any relief with respect to its
obligation to achieve the Guaranteed Emissions and Effluent Limits except to the
extent (i) Contractor's entitlement to relief results from Owner-Caused Delay or
(ii) Owner obtains relief with respect to the matter giving rise to Contractor's
inability to achieve the Guaranteed Emissions and Effluent Limits, and Owner, in
turn, is reasonably able to grant such relief to Contractor (and Owner agrees to
use reasonable efforts to obtain such relief) or (iii) Contractor's inability to
achieve the Guaranteed Emissions and Effluent Limits results from a Change Order
initiated by Owner (and as to which Contractor advised Owner in writing prior to
commencing the Work authorized by such Change Order that the likely effect of
such Change Order would be to cause the Contractor to be unable to achieve the
Guaranteed Emissions and Effluent Limits).
11.8.2 Contractor's Claim for Delay for Failure to Review and
------------------------------------------------------
Comment. If Owner fails to review and comment, or delays in its review and
- -------
comment, Contractor shall not be entitled to claim that it was delayed unless
Contractor (i) notifies Owner in writing of the required time for such review
and comment when requesting the same and (ii) provides written notice of such
delay within ten (10) days after such delay occurs.
11.8.3 Extension of Time. The delay or non-performance by
-----------------
Contractor of the Work, including non-achievement of Mechanical Completion by
the Guaranteed Mechanical Completion Date, or the non-achievement of Final
Completion by the Guaranteed Final Completion Date or the achievement of any of
the Guaranteed Performance Dates shall not in any way be excused except by an
Event of Force Majeure or an Owner-Caused Delay and then only if the cause of
the claimed delay or non-performance was beyond Contractor's reasonable control.
No claim for any extension of time shall be issued unless the Event of Force
Majeure or Owner-Caused Delay giving rise to the claim for extension shall have
adversely affected Contractor's Critical Path and any extension so granted shall
be of no longer duration than is necessary to mitigate such adverse effect.
Contractor shall not be entitled to receive a separate extension of
time for each of several causes of delay operating concurrently, but, if at all,
only for the actual period of delay in completion of the Work irrespective of
the number of causes contributing to produce such delay; provided, however,
-------- -------
that no claim by Owner of concurrent causes of delay shall be effective unless
Owner shall have given Contractor written notice of such claim within thirty
(30) days after Owner knows that such causes are continuing concurrently. If one
of several causes of delay operating concurrently results from any act, fault or
omission of the Contractor or of its Subcontractors, and would of itself,
irrespective of the concurrent causes, have delayed the Work, no extension of
time will be allowed for the period of delay resulting from such act, fault or
omission; provided, however, that no claim by Owner that one of several causes
-------
of delay operating concurrently resulted from any act, fault or omission of
Contractor or of its Subcontractors shall be effective unless Owner shall have
given Contractor written notice of such claim within thirty (30) days after
Owner knows of such act, fault or omission. No liability of Contractor which
arose before the occurrence of the Event of Force Majeure or Owner-Caused Delay
shall be excused as a result of the occurrence of the Event of Force Majeure or
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73
Owner-Caused Delay except to the extent affected by such subsequent Event of
Force Majeure or Owner-Caused Delay. Contractor's cause for delay must arise
after the execution of this Contract.
11.9 Non-Performing Party. The excuse of performance shall be of no
--------------------
greater scope and of no longer duration than is reasonably required because of
an Event of Force Majeure or Owner-Caused Delay and only permissible if the non-
performing party has been necessarily delayed. The non-performing party shall
exercise all reasonable efforts to mitigate or limit damages to the other party.
The non-performing party shall use its best efforts to continue to perform its
obligations hereunder and to correct or cure the event or condition excusing
performance.
11.10 Owner's Excuse for Non-Performance. The non-performance by
----------------------------------
Owner of its obligations in this Contract shall not be excused except by reason
of an Event of Force Majeure. The allowable excuses for non-performance by Owner
can only be an excuse if Owner, within thirty (30) days after the initial
occurrence of the event relied upon for non-performance, notifies Contractor in
writing, describing the event and its effects on Owner and the suspension of
performance is of a duration no longer than is required by the event. If Owner
fails to notify Contractor, then Owner waives any right to claim excuse for non-
performance. Furthermore, an excuse for non-performance by Owner shall not be
valid if (a) the event causing the excuse could have been reasonably prevented
by Owner or the effects thereof could have been reasonably mitigated in
accordance with generally accepted industry standards, or (b) if Owner has
failed to use its efforts to remedy its inability to perform because of the
event.
11.11 Contractor Not Excused. In no event shall an Event of Force
----------------------
Majeure excuse Contractor from achieving Final Completion by the date that is
one hundred and eighty (180) days after the Guaranteed Final Completion Date;
provided that Contractor's excused delay for any single Event of Force Majeure
shall not exceed ninety (90) days.
11.12 No Excuse for Payment of Money. Notwithstanding the
------------------------------
foregoing, the occurrence of an Event of Force Majeure shall not constitute an
excuse to either party's obligations hereunder for the payment of monies to the
other party, except to the extent the occurrence thereof results in an
adjustment of the amount or time for performance of such obligations as a result
of an adjustment to the Project Variables; provided that in no event shall this
Section 11.12 limit Owner's right pursuant to Section 4.4.2 hereof to withhold
payment with respect to any Work not yet performed.
SECTION 12
CHANGES IN WORK
12.1 Owner-Initiated Changes in Work. (a) Owner shall be and is
-------------------------------
hereby authorized at any time by written order designated as a Change Order to
make any Change in Work including ordering additions within the general scope of
the Work, or deletions or revisions in the Work, including, but not limited to,
changes in the specifications (including drawings and designs).
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74
(b) Said additions, deletions or revisions shall not, in any way,
invalidate this Contract and Contractor agrees to accept payment for such
changes and changes to other Project Variables according to the procedures
outlined herein and as if the altered work had been part of the original
Contract. Contractor shall promptly proceed with all such orders upon the
receipt thereof.
12.2 Contractor-Requested Change Orders. Except as permitted in
----------------------------------
Sections 12.1, 12.3 or 12.4, Contractor shall not seek any Change Orders which
(a) adversely affect the completion of the Coker Project in accordance with this
Contract, (b) to Owner's detriment (i) change any of the Project Variables or
(ii) modify the Guaranteed Values, (c) adversely affect Contractor's ability to
meet the Guaranteed Values on the Guaranteed Performance Dates, or (d)
materially deviate from the plans, drawings and specifications included in this
Contract. Also, no Change Order shall be issued, no increase of the Contract
Amount and no adjustment to the Guaranteed Performance Dates, the Construction
Schedule or the Guaranteed Values shall be made in connection with any
correction of errors, omissions, Defects and Deficiencies or improper or
Defective Work on the part of the Contractor or any Subcontractors in the
performance of the Work. Owner may in its sole discretion approve or reject any
Contractor-initiated Change Order.
12.3 Change Orders for Claims. Any relief as to which Contractor or
------------------------
Owner may be entitled pursuant to Section 11 hereof shall be reflected in a
Change Order as set forth in this Section 12.
12.4 Change Orders.
-------------
12.4.1 Compliance with Contract. Changes in the Work shall be
------------------------
performed within the applicable provisions of this Contract. Upon receipt of a
Change Order, Contractor shall proceed expeditiously unless otherwise provided
for in the Change Order. Contractor shall perform no extra or changed Work
unless specifically authorized by Owner.
12.4.2 Initiation. Either party may request a Change Order. For
----------
Owner-initiated changes, Owner may require a proposal from Contractor to
complete the changed Work prior to authorizing any change to this Contract.
Within fourteen (14) days of receipt of such request for a proposal, Contractor
shall provide a written proposal to Owner, and subject to Section 12.4.6(a), the
Independent Engineer, setting forth any anticipated adjustments to the Project
Variables and the Construction Schedule that such Change Order may require. If a
Change Order is requested by Contractor, the request must include a description
of the change in Work, its effect on the Project Variables, the effect on the
Construction Schedule and any other information necessary for Owner to evaluate
making the change. Costs associated with the requested change shall be broken
down in detail in a manner acceptable to Owner and submitted in the request
contemplated by this Section 12.4.2. Costs incurred by Contractor with respect
to Owner-initiated Change Orders (except for Change Orders resulting from Events
of Force Majeure or Owner-Caused Delays) in preparing the proposal described in
the second sentence of this Section 12.4.2 and in preparing the request
described in the third sentence hereof shall be borne solely by Owner; provided,
however, that Contractor shall have previously notified Owner
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75
in writing of the estimated costs of preparing such request and Owner shall have
authorized Contractor to proceed with such preparation, and provided that
Owner's reimbursement obligation shall not exceed Contractor's estimate without
Owner's prior written approval of such additional expense. All costs in
preparing Contractor-requested Change Orders and Change Orders resulting from
Events of Force Majeure or Owner-Caused Delay shall be borne exclusively by
Contractor.
12.4.3 Notification of Change Order. Contractor shall immediately
----------------------------
advise Owner in writing of any request by Owner that it believes constitutes a
Change Order and will not perform such work until properly authorized by Owner
and the Independent Engineer.
12.4.4 Valuation and Payment of Change Orders. Unless Contractor and
--------------------------------------
Owner otherwise agree, each Change Order that increases the Contract Amount
shall be priced on a basis consistent with the pricing methodology in the
estimate dated March 23, 1999 (the "Definitive Estimate") that formed the basis
of the Contract Amount. If Owner and Contractor cannot agree on the price of
any such Change Order, such dispute shall be settled pursuant to the procedures
set forth in Sections 11.1 through 11.3 hereof.
12.4.5 Form of Change Order. The content of a written Change Order
--------------------
shall recite the alteration of the Work and the amount of adjustments to the
Project Variables, if any, and schedule for payment thereof. In order for any
Change Order under this Section 12 to be valid, it must be in the form of
Exhibit I, be complete and be approved by Owner and, subject to Section
12.4.6(a), the Independent Engineer, such approval to be evidenced by Owner's
signature thereon. Owner and Contractor shall approve and sign any Change Order
that provides an adjustment to the Project Variables to which Contractor is
entitled pursuant to Section 11 hereof. No adjustment to the Project Variables
shall be effective unless included in a Change Order complying with the
requirements of this Section 12.4.5 or in an amendment complying with the
requirements of Section 16.19 hereof.
12.4.5.1 Decrease in Costs. If work is deleted from the Work,
-----------------
Owner, the Independent Engineer and Contractor will attempt to agree on a lump
sum deduction from the Contract Amount which shall be based upon the pricing
methodology in the Definitive Estimate, less Contractor's actual costs incurred,
if any, in deleting such Work. In the event the parties are unable to agree upon
a lump-sum reduction in the Contract Amount, such dispute shall be settled
pursuant to the procedures set forth in Sections 11.1 through 11.3 hereof.
12.4.6 Conditions for Change Orders. (a) Any Change Order in excess of
----------------------------
five hundred thousand dollars ($500,000) or Change Orders in the aggregate in
excess of five million dollars ($5,000,000) shall be subject to the prior
approval of the Independent Engineer.
(b) Contractor shall only be entitled to an increase in the Contract Amount
or an extension of the Guaranteed Performance Dates with respect to any Work
performed that is not required by this Contract if such Work is included in one
of the following:
(i) a formal written amendment to this Contract; or
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(ii) a Change Order.
12.5 Deletions from Work. Owner may, in Owner's best interest (but subject
-------------------
to the prior approval of the Independent Engineer), delete from the Work any
item by Change Order. Any deletion of an item shall not invalidate any Contract
provision or other requirement (except to the extent that such deletion requires
an appropriate change to the Project Variables), and Contractor will complete
the Work not so deleted under this Contract. Such deletions from the Work may
include Owner purchases of plant, materials and equipment which Contractor is
otherwise obligated to purchase hereunder.
12.6 Change in Law; Project Documents. Owner represents that there have
--------------------------------
been no amendments or modifications to the Project Documents since the execution
thereof. In the event any change in Applicable Laws, Applicable Permits or the
technical requirements of the Project Documents on or after the Effective Date
entitles Contractor to a Change Order pursuant to this Section 12, Contractor's
obligation to perform the Work in compliance with such Applicable Laws,
Applicable Permits or the technical requirements of the Project Documents shall
be subject to Owner's execution of such Change Order.
12.7 Change Order Dispute Resolution. Contractor shall timely and
-------------------------------
reasonably respond to and accept Change Orders which change Project Variables.
If Owner and Contractor do not agree as to the adjustment in Project Variables
or any other aspect of the Change Order, Contractor shall follow the procedures
for determination of the dispute in accordance with Sections 11.1 through 11.3
hereof. Such procedures shall be a pre-condition of any claim for executive
level submission or subsequent arbitration or lawsuit. Notwithstanding any
pending resolution of any dispute regarding the effect of a Change Order on the
Project Variables, Contractor must, if requested by Owner, proceed with the
performance of the Change order approved and signed by Owner. Notwithstanding
the foregoing provisions of this Section 12.7, the amounts due Contractor in the
event of such a dispute shall be determined in accordance with the provisions of
Section 12.4.4 hereof, and any disputes as to the adjustment to the Contract
Amount resulting from any Change Order (other than pursuant to Section 12.4.5.1
hereof) shall be resolved in accordance with the provisions of Section 12.4.4
hereof.
SECTION 13
INSPECTION AND REJECTION OF GOODS,
TITLE AND INSURABLE INTEREST
13.1 Uniform Commercial Code Applicability. Contractor and Owner agree
-------------------------------------
that this Contract (including the expression provision of this Section 13.1)
shall serve to modify, alter and amend various rights of Contractor (Seller) and
Owner (Buyer) with regard to the provisions of this Contract that pertain to the
supply of personal property subject to governance by the Uniform Commercial Code
of the State of New York. Contractor and Owner further agree that to the extent
any section of this Contract is contrary to, or amendatory to, or serves to
diminish, alter or otherwise modify, the rights and obligations of the parties
under the Uniform Commercial Code, this Contract shall be deemed to control.
<PAGE>
77
13.1.1 Contract Supersedes. The Contractor agrees that the provisions of
-------------------
this Contract shall supersede and replace any and all limitations, time periods
and dates for the commencement of performance, including but not limited to
Owner's duties, if any, to inspect for non-conformance or Defects and
Deficiencies, but only on the part of Owner, to the extent the same are contrary
to the limitations, time periods or performances as set forth in the Uniform
Commercial Code of the State of New York.
13.1.2 No Unconscionability. Contractor agrees that the provisions of this
--------------------
Section 13 are not unconscionable as contemplated by the Uniform Commercial Code
of the State of New York and Contractor waives any and all claims of
unconscionability with respect thereto by the execution of this Contract.
13.1.3 Inspection and Rejection of Goods. Contractor and Owner acknowledge
---------------------------------
that Owner's obligation, if any, of inspection and right (subject to
Contractor's express rights to cure hereunder) to reject non-conforming goods
commences upon the Effective Date and ends upon the earlier to occur of Final
Completion or the start of the applicable Warranty Period. Contractor agrees
that these rejection periods are reasonable as contemplated by Section 2-602 of
the Uniform Commercial Code, and any rejections within such period shall be
conclusively deemed timely.
13.2 Title. Title to personal property shall pass in the following manner:
-----
title to all items of Contractor's drawings, specifications and Technical
Information, schedules, plans, drawings and other documents produced by
Contractor and its Subcontractors relating to this Contract, and all Work,
materials and equipment performed or supplied under this Contract will pass to
Owner upon Owner's full payment to Contractor for such items; provided, that the
intellectual property rights to such information and data in said drawings and
media shall remain vested in Contractor, subject to the non-exclusive license
granted to Owner pursuant to Section 2.46 for use (without further compensation
other than as part of the Contract Amount) in connection with the Coker Complex.
Such title shall pass to Owner free and clear of all liens, claims, security
interest or encumbrances of Contractor, its Subcontractors, or any other third
party. Contractor warrants and guarantees that title to all Work, materials and
equipment shall pass to Owner at the time of payment to the Contractor free and
clear of all claims, liens, security interests or encumbrances.
Passage of title under the terms of this Contract shall be absolute and
without reservation or limitation regardless of the location of the property, be
it in the hands of Subcontractors, Contractor, third parties or actually
delivered to the Project Site. Contractor shall, upon demand, provide to Owner
any appropriate documentation evidencing the passage of title to Owner.
Passage of title, as set forth in this Section 13.2, is intended to fully
and completely convey to Owner title on all personal and real property of any
nature or kind, other than the intellectual property rights to such information
and data in drawings and media that remain vested in Contractor and are subject
to the non-exclusive license granted to Owner pursuant to Section 2.46 for use
(without further compensation other as part of the Contract
<PAGE>
78
Amount) in connection with the Coker Complex. However, it is the specific
agreement of Contractor and Owner that passage of title as set forth in this
Section 13.2 shall in no way serve to alter, modify, limit or condition the risk
of loss, insurable interest in goods or rights of inspection or rejection as set
forth herein.
13.3 Insurable Interest in Goods. Owner shall acquire an insurable interest
---------------------------
in items of Work and goods coincidentally with the passage of title, as set
forth above. However, passage of title and subsequent acquisition of an
insurable interest in goods by Owner shall in no manner serve to modify, limit,
diminish, waive or condition Contractor's duty to insure as set forth in Section
9.1 hereof.
13.4 Risk of Loss. Contractor specifically agrees that, except as otherwise
------------
expressly contained in this Contract to the contrary, risk of physical loss in
the items of Work shall remain with Contractor until the date when Contractor
receives the Final Completion Certificate from Owner. Until such time,
Contractor shall, at its sole expense, remedy, repair and replace all physical
damage, loss or injury to such property; provided that any actual proceeds of
the builder's risk insurance described in item 9.2.7 i) of Schedule 9.1 hereto
payable with respect to such physical damage, loss or injury, are paid to
Contractor as necessary to achieve such remedy, repair or replacement. Upon
Contractor's receipt of the Final Completion Certificate, risk of loss shall
transfer to Owner.
13.4.1 Risk of Loss After Final Completion. As it is the intent of the
-----------------------------------
parties to rely upon the proceeds of Owner's operating property insurance with
respect to any loss or damage occurring after Contractor's receipt of the Final
Completion Certificate, Contractor's liability for any loss or damage covered by
such insurance occurring after Contractor's receipt of the Final Completion
Certificate shall be limited to the deductible under such insurance and only to
the extent such loss or damage is caused by the fault or negligence of
Contractor or its Subcontractors; provided, however, that should Owner's insurer
-----------------
not permit Owner to waive its subrogation rights in the event of such loss or
damage, Contractor shall be liable for the full extent of such loss or damage
caused by its fault or negligence.
SECTION 14
TERMINATION OR SUSPENSION OF CONTRACT
14.1 Owner's Right to Terminate and Other Remedies. The occurrence of any
---------------------------------------------
of the following shall constitute an Event of Default by Contractor:
(a) Contractor or EPC Guarantor becomes insolvent (by not meeting its debts
as they mature), files a voluntary petition in bankruptcy or has an involuntary
petition in bankruptcy filed against it that is not dismissed within sixty (60)
days of such involuntary filing; or
(b) Contractor or EPC Guarantor commences any proceeding for relief from
creditors in any court under any state insolvency statutes; or
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79
(c) Contractor fails to make payment to Subcontractors (except for
legitimate disputes) in accordance with respective agreements between Contractor
and Subcontractors; or
(d) Contractor persistently or materially disregards or violates Applicable
Laws or Applicable Permits; or
(e) Contractor persistently allows Defects and Deficiencies to exist; or
(f) Contractor fails to fulfill its obligations with respect to the
satisfaction, discharge or bonding of liens as set forth in Section 2.37 hereof;
or
(g) Contractor abandons or ceases for a period in excess of thirty (30)
days its performance of the Work (except as a result of a casualty which is
covered by insurance or as to which other provisions reasonably acceptable to
Owner and the Financing Parties is being diligently pursued) or fails to perform
additional Work as directed by Owner; or
(h) Contractor assigns or subcontracts Work other than as provided for in
this Contract; or
(i) Contractor fails to comply with any Change Order; or
(j) Contractor fails to perform this Contract and thereby prejudices in any
way (including, without limitation, any action Contractor may take on the
Project Site) Owner's efforts to obtain financing for the Coker Project; or
(k) Contractor fails to pay to Owner any amount due to Owner by the date
required for such payment; or
(l) Contractor fails to extend, renew or replace the Letter of Credit when
and as required pursuant to Section 4.5 hereof; or
(m) Contractor otherwise breaches any material provision of this Contract;
or
(n) the Guarantee is no longer in full force or effect; or
(o) Contractor fails to achieve Mechanical Completion of the Coker Complex
by the date (the "Mechanical Completion Default Date") that is sixty (60) days
----------------------------------
after the Guaranteed Mechanical Completion Date; provided, that if prior to the
--------
Mechanical Completion Default Date Contractor has provided a plan for achieving
Mechanical Completion prior to the date that is 90 days after the Mechanical
Completion Default Date and such plan has been approved by the Independent
Engineer and the Financing Parties as required under the Financing Documents,
Contractor shall not have committed an Event of Default hereunder so long as
Contractor is diligently pursuing such plan, pays
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all sums due hereunder when due and achieves Mechanical Completion of the
Coker Complex on or before the date specified in such plan; or
(p) Contractor fails to achieve Substantial Reliability by the date
that is ninety (90) days prior to the Guaranteed Final Completion Date or
by such later date (in no event later than September 30, 2001) that is
specified in a plan for achieving Mechanical Completion approved pursuant
to clause (p) above; or
(r) Contractor fails to achieve Final Completion by the Guaranteed
Final Completion Date.
If any of the Events of Default exist, Owner may, without prejudice to
any other rights or remedies of Owner in this Contract or at law or in equity,
take either or both of the following actions: (x) terminate this Contract upon
written notice to Contractor, or (y) draw upon the Letter of Credit in the
manner specified in Section 4.5.1 hereof; provided, however, that Owner shall
have first provided to Contractor the following periods of notice and
opportunity to cure: (a) in the case of an Event of Default specified in the
foregoing clause (l), Owner shall have provided forty five (45) days' prior
written notice, and Contractor or EPC Guarantor, as the case may be, shall have
failed to remedy such breach entirely by the end of such forty five (45) day
period; (b) in the case of an Event of Default specified in the foregoing
clauses (a), (b), (m), (n), (o), (p) or (q), no notice or opportunity to cure
shall be required from Owner; and (c) in the case of any other Event of Default
by Contractor, Owner shall have provided forty five (45) days' prior written
notice, and Contractor shall have failed (i) to commence to cure (which
commencement may include, without limitation, the ordering of the materials or
equipment necessary to affect such cure) the default within ten (10) days, and
(ii) to diligently pursue such cure and remedy the breach entirely by the end of
such forty five (45) day notice period.
In the event Owner elects to terminate this Contract, Owner may,
without prejudice to any other rights or remedies of Owner in this Contract or
of law or in equity, do one (1) or more of the following:
(A) Take possession of all engineering and design data, procurement
data, manufacturing data, construction and erection data, start-up and
testing data, materials, and equipment that will become part of the Coker
Complex, or the Work, whether any of the same are in a partial state of
completion or completed condition, and title to said items vests in Owner
(if not already vested by the provisions of this Contract); provided, that
the intellectual property rights to such information and data in said
drawings and media shall remain vested in Contractor, subject to the
non-exclusive license granted to Owner pursuant to Section 2.46 for use
(without further compensation other than as part of the Contract Amount) in
connection with the Coker Complex.
(B) Take possession of the Project Site for all purposes, including
taking possession of engineering and design data, procurement data,
manufacturing data, construction and erection data, and testing data;
materials, equipment, supplies, and inventory that will become part of the
Coker Complex; work in process; tools ordinarily
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81
consumed in the performance of the Work; and any buildings or construction
which have been partially completed or fully completed, with the right to
enter any other sites where Contractor or any Subcontractor is prosecuting
the Work for the purpose of taking possession of the engineering and design
data, procurement data, manufacturing data, construction and erection data,
testing data, any such materials and equipment and tools, whether partially
completed or fully completed, all as subject to applicable safety and
confidentiality requirements;
(C) Take temporary possession and control of Contractor's construction
equipment, machinery, and (to the extent Owner is not entitled to
permanently possess such items pursuant to the foregoing clauses (A) and
(B)), Contractor's materials, supplies, inventory and tools at the Project
Site which in Owner's opinion are necessary to finish the Work, subject to
paying Contractor a reasonable rental rate. Owner will return the
construction equipment and machinery and such materials, supplies,
inventory and tools to Contractor when the Work is completed in the same
condition as when Owner took them over, normal wear and tear excepted;
(D) Have Contractor assemble and marshal at the Project Site, at
Owner's direction, items such as, but not limited to, supplies, inventory,
work in process, engineering and design data, procurement data,
manufacturing data, construction and erection data, testing data,
materials, equipment and tools, Technical Information, all as specifically
prepared for the Coker Project;
(E) To the extent that such contracts allow assignment, direct that
Contractor assign its direct Subcontractor contracts to Owner without any
change of subcontract price or conditions therein; and
(F) Take over and finish the Work by whatever reasonable method Owner
may deem expedient.
Upon such notification of termination, Contractor shall immediately
discontinue all of the Work (unless the notice directs otherwise), and, as more
fully set forth in (A) through (E) above, deliver to Owner copies of all data,
drawings, specifications, reports, estimates, summaries, and such other
information as more fully set forth in (A) through (E) above, and materials as
may have been accumulated by Contractor in performing the Work, whether
completed or in process. Furthermore, Contractor shall assign, assemble and
deliver to Owner all purchase orders and Subcontractor's agreements requested by
Owner.
When Owner terminates this Contract for one of the reasons stated in
this Section 14.1, Contractor shall not be entitled to receive further payment,
if any, until the Work is finished, except as provided in this Section 14.1.
Owner may withhold payments, if any, to Contractor for the purposes of offset
until such time as the exact amount of damages due Owner from Contractor is
determined.
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82
Upon termination of this Contract, Owner shall be entitled to the
costs in connection with finishing the Work, and if such costs exceed the unpaid
balance of the Contract Amount, Contractor shall be liable to pay the difference
to Owner. The amount to be paid by Contractor to Owner shall survive termination
of this Contract and is subject to the limitations of liability in this
Contract.
Notwithstanding the above, a termination of this Contract shall not
relieve Contractor from liability to Owner for damages sustained by Owner by
virtue of any breach of Contract. Owner may withhold payments to Contractor for
the purposes of offset until such time as the exact amount of damages due Owner
from the Contractor is determined.
14.1.1 Wrongful Termination. If, after termination pursuant to
--------------------
Section 14.1 hereof, it is determined for any reason that Contractor was not in
default, the rights and obligations of the parties shall be the same as if the
termination has happened as a termination for Owner's convenience pursuant to
14.3 hereof. Therefore, Contractor only may be entitled to the costs specified
in 14.3 hereof.
14.2 Contractor Abandonment of Contract. If Contractor abandons this
----------------------------------
Contract, Owner has all rights in law and equity, including action for breach of
Contract for the cost of finishing the Work, including reasonable attorneys'
fees.
14.3 Termination for Owner's Convenience. Owner may terminate this
-----------------------------------
Contract for convenience upon written notice thereof to Contractor at any time.
If Owner terminates this Contract for convenience, Contractor is entitled as its
exclusive remedy to be paid by Owner the Termination Payment calculated in
accordance with Section 14.6 hereof. Owner at its option, and solely at its own
expense, may also take such actions as set forth in Section 14.1(A) through (G).
14.4 Owner's Right to Suspend Work. Owner may at any time order
-----------------------------
Contractor, in writing, to suspend all or any part of the Work for such period
of time as Owner may determine to be appropriate for its convenience. Any claim
for a change in Project Variables caused by Owner's suspension of the Work
pursuant to this Section 14.4 shall be processed in accordance with Section 11
hereof (including without limitation the time requirements for notice by
Contractor). No adjustment shall be made to the extent that performance is, was
or would have been suspended, delayed or interrupted for any other cause due to
Contractor's fault or if the suspension had no effect on Contractor's Critical
Path, provided however, that no claim of Owner pursuant to the foregoing shall
-------- -------
be made unless (i) in the case of claims of Owner that performance would have
been suspended, delayed or interrupted for any other cause due to Contractor's
fault, Owner gives Contractor notice of any such claim not later than twenty-one
(21) days after the commencement of such suspension, and (ii) in the case of
other claims of Owner under this sentence, Owner gives Contractor notice of any
such claim not later than twenty-one (21) days after Owner knows of such cause
due to Contractor's fault or that the suspension had no effect on Contractor's
Critical Path.
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14.5 Contractor's Right to Terminate. The failure of Owner to pay to
-------------------------------
Contractor any amount due to Contractor by the date required for such payment
shall constitute an Owner default.
If an Owner default exists, Contractor after having given Owner and
Financing Parties ninety (90) days prior written notice may terminate this
Contract upon Owner's and/or the Financing Parties' subsequent failure to cure
such default within such ninety (90) day period. Notwithstanding the foregoing,
if Owner is in default, Contractor shall have the right, on thirty (30) days'
prior written notice to Owner and the Financing Parties, to suspend performance
of its obligations hereunder until the delinquent payment is made or Contractor
terminates this Contract pursuant to the preceding sentence. Upon termination of
this Contract by Contractor pursuant to this Section 14.5, Contractor is
entitled as its exclusive remedy to be paid by Owner the Termination Payment
calculated in accordance with Section 14.6 hereof. Nothing herein contained
shall permit Contractor to terminate this Contract if the Financing Parties have
cured any failure of Owner to make payment within the cure period. Subject to
payment by Owner to Contractor of the Termination Payment calculated in
accordance with Section 14.6 hereof, Owner at its option, and solely at its own
expense, may also take such action as set forth in Section 14.1(A) through (F).
14.5.1 Contractor's Unjustified Termination. If Contractor
------------------------------------
terminates this Contract unjustifiably, then Owner shall have all of the rights
and remedies, as applicable, permitted under Section 14.1 hereof.
14.6 Termination Payment. Upon termination of this Contract by
-------------------
Contractor pursuant to Section 14.5 hereof or by Owner pursuant to Section 14.3
hereof, Owner shall be obligated to pay to Contractor the following:
(a) Contractor's actual costs, accrued in accordance with generally
accepted accounting practices, reasonably incurred in connection with
performance by Contractor of the services and other Work hereunder
(provided that no reimbursement shall be made for costs incurred by
Contractor for work outside the scope of Work set forth in Section 2.2
hereof for which no Change Order is due) as of the date of termination less
any amounts previously paid by Owner provided that in no event shall the
amount due pursuant to this clause (a) exceed the sum of (i) the Contract
Amount as amended by any Change Orders pursuant to Article 12 hereof and
(ii) any amounts due Contractor on a reimbursable cost basis pursuant to
Section 12.4.4 hereof; and
(b) the following costs, to the extent actually and directly incurred
by Contractor and not duplicative of any amounts compensated pursuant to
clause (a) above: Contractors reasonable costs incurred in demobilization;
any cancellation costs incurred by Contractor in terminating contracts with
Subcontractors; and Contractor's costs incurred in withdrawing from the
Project Site and dismantling the construction lay-down site; provided that
(i) Contractor shall cease all Work promptly upon termination of this
Contract and (ii) Contractor shall use reasonable efforts to mitigate all
liability, damages, costs and expenses described in this clause (b),
including, without limitation, by
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84
canceling (to the extent cancelable) all contracts (including purchase
orders) with Subcontractors and other vendors and third-parties, in which
case, Owner's liability to reimburse Contractor for costs incurred in
connection with such cancellation shall be limited to any cancellation or
other early termination penalties actually paid by Contractor in canceling
such contracts; and
(c) the amount of any improper or excessive L/C Drawing by Beneficiary
under the Letter of Credit.
As a condition to Contractor's entitlement to the foregoing amount, Contractor
shall have supplied to Owner the waivers, releases, statements and other
instruments described in clauses (a) through (e) and clauses (f) through (i) of
Section 4.7.1 hereof and Contractor shall have fulfilled its obligations set
forth in the fifth sentence of Section 3.6 hereof.
Within sixty (60) days of Owner's receipt of Contractor's invoice
setting forth the amounts determined pursuant to the foregoing clauses (a), (b)
and (c), Owner shall, pay to the contractor an amount equal to the amount so
determined (the "Termination Payment"). Owner in its sole discretion may elect
to cause an audit of Contractor's costs by an independent certified accounting
firm of national reputation selected by Owner and acceptable to Contractor. In
conducting such audit, Owner and such accounting firm may retain and rely upon
such consultants as either shall determine necessary or appropriate, provided
that any consulting engineer retained by Owner and such accounting firm shall be
a consulting engineer generally not in direct competition with Contractor. In
the event Owner disputes any portion of the amount set forth in Contractor's
invoice, Owner shall pay all amounts that are not in dispute, and such dispute
shall be resolved in accordance with the provisions of Section 11 hereof. In any
such dispute-resolution proceeding, Contractor shall have the burden of showing
that the findings of Owner's independent audit, if any, are incorrect. Any
underpayment or overpayment made by Owner shall accrue interest at the rate set
forth in Section 16.12 hereof from the date such payment was due until the date
such payment is made. Except as specifically provided in Section 4.7.2 hereof,
payment of the Termination Payment shall be the sole and exclusive liability of
Owner, and the sole and exclusive remedy of Contractor, with respect to
termination of this Contract pursuant to Section 14.3 and Section 14.5 hereof.
In no event shall Owner have any liability to Contractor in any such event for
special, indirect, incidental or consequential damages, including, without
limitation, for lost or anticipated profits, and, except as provided in Section
4.7.2 hereof, in no event shall owner have any liability for any other damages,
notwithstanding the actual amount of damages Contractor may have sustained.
14.7 Surviving Obligations. Termination of this Contract (a) shall
---------------------
not relieve either party of its obligations with respect to the confidentiality
of the other party's information as set forth in this Contract, (b) shall not
relieve either party of any obligation which expressly or by implication
survives termination hereof, and (c) except as otherwise provided in any
provision of this Contract expressly limiting the liability of either party,
shall not relieve either party of any obligations or liabilities for loss or
damage to the other party arising out of or caused by acts or omissions of such
party prior to the effectiveness of such termination or arising out of its
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obligations as to portions of the Work already performed or of obligations
assumed by Contractor prior to the date of termination.
SECTION 15
REPRESENTATIONS AND WARRANTIES
15.1 Representations and Warranties of Contractor. Contractor hereby
--------------------------------------------
represents and warrants to Owner as follows:
15.1.1 Due Organization of Contractor. Contractor is a
------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own and operate its business and properties and to carry on its
business as such business is now being conducted and is duly qualified to do
business in the State of Texas and in any other jurisdiction in which the
transaction of its business makes such qualification necessary.
15.1.2 Due Authorization of Contractor; Binding Obligation.
---------------------------------------------------
Contractor has full corporate power and authority to execute and deliver this
Contract and to perform its obligations hereunder, and the execution, delivery
and performance of this Contract by Contractor have been duly authorized by all
necessary corporate action on the part of Contractor; this Contract has been
duly executed and delivered by Contractor and is the valid and binding
obligation of Contractor enforceable in accordance with its terms, except as
enforcement thereof may be limited by or with respect to the following: (i)
applicable insolvency, moratorium, bankruptcy and other similar laws of general
application relating to or affecting the rights and remedies of creditors; (ii)
application of equitable principles; (iii) certain waivers contained in this
Contract that may be unenforceable in whole or in part, the inclusion of which
terms does not affect the validity of this Contract; and (iv) provided the
remedy of specific enforcement or of injunctive relief is subject to the
discretion of the court before which any proceedings therefore may be brought.
15.1.3 Non-Contravention. The execution, delivery and performance
-----------------
of this Contract by Contractor and the consummation of the transactions
contemplated hereby do not and will not contravene the certificate of
incorporation or by-laws of Contractor and do not and will not conflict with or
result in a breach of or default under any indenture, mortgage, lease,
agreement, instrument, judgment, decree, order or ruling to which Contractor is
a party or by which it or any of its properties is bound or affected.
15.1.4 Regulatory Approvals. All governmental or other
--------------------
authorizations, approvals, orders or consents required in connection with the
execution, delivery and performance of this Contract by Contractor have been
obtained or will be obtained in due course.
15.1.5 Non-Infringement. Contractor represents and warrants that
----------------
it has conducted a best efforts search concerning patent and other intellectual
property matters arising out of the performance of the Work (except with respect
to intellectual property licensed from
<PAGE>
86
third parties), and that such search has not disclosed any potential claims or
suits arising out of performance of the Work or this Contract.
15.2 Representations and Warranties of Owner. Owner hereby
---------------------------------------
represents and warrants to Contractor as follows:
15.2.1 Due Organization of Owner. Owner is a limited
-------------------------
partnership validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own and operate its
business and properties and to carry on its business as such business is now
being conducted and is duly qualified to do business in the State of Texas and
in any other jurisdiction in which the transaction of its business makes such
qualification necessary.
15.2.2 Due Authorization of Owner; Binding Obligation. Owner
----------------------------------------------
has full power and authority to execute and deliver this Contract and to perform
its obligations hereunder, and the execution, delivery and performance of this
Contract by Owner have been duly authorized by all necessary legal action on the
part of Owner; this Contract has been duly executed and delivered by Owner and
is the valid and binding obligation of Owner enforceable in accordance with its
terms, except as enforcement thereof may be limited by or with respect to the
following: (i) applicable insolvency, moratorium, bankruptcy and other similar
laws of general application relating to or affecting the rights and remedies of
creditors; (ii) application of equitable principles; (iii) certain waivers
contained in this Contract that may be unenforceable in whole or in part, the
inclusion of which terms does not affect the validity of this Contract; and (v)
provided the remedy of specific enforcement or of injunctive relief is subject
to the discretion of the court before which any proceeding therefore may be
brought.
15.2.3 Non-Contravention. The execution, delivery and
-----------------
performance of this Contract by Owner and the consummation of the transactions
contemplated hereby do not and will not contravene the partnership agreement of
Owner and do not and will not conflict with or result in a breach of or default
under any indenture, mortgage, lease, agreement, instrument, judgment, decree,
order or ruling to which Owner is a party or by which it or any of its
properties is bound or affected.
SECTION 16
MISCELLANEOUS CLAUSES
16.1 Notice. Any notice, request, consent, waiver or other
------
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Owner, copies to each of the following:
Port Arthur Coker Company L.P.
Port Arthur Refinery
<PAGE>
87
1801 S. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
with a copy to:
Richard A. Keffer
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
If to Contractor, copies to each of the following:
M. T. Autrey
Foster Wheeler USA Corporation
2020 Dairy Ashford
Houston, Texas 77077
John Blythe
Foster Wheeler USA Corporation
Perryville Corporate Park
Clinton, New Jersey 08809-4000
If to the Independent Engineer:
Ken Noack
Purvin & Gertz, Inc.
600 Travis, Suite 2150
Houston, Texas 77002-2970
Written notice given pursuant to this Section 16.1 shall be delivered to
recipients authorized by Owner, Contractor and Independent Engineer, as the case
may be, in writing and when so delivered shall be deemed to have been fully
served and delivered.
16.2 Choice of Law; Forum. This Contract and the rights and duties
--------------------
of the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York, except with respect to
mechanics' liens and similar matters that are required to be governed by the law
of the State of Texas.
<PAGE>
88
16.2.1 Submission to Jurisdiction. Each of the parties hereto
--------------------------
submits to the jurisdiction of the courts of the State of New York and the
courts of the United States of America located in the State of New York over any
suit, action or proceeding with respect to this Agreement or the transactions
contemplated hereby.
16.2.2. Exclusive Forum Selection. Any suit, action of
-------------------------
proceeding with respect to this Contract or the transactions contemplated hereby
may be brought only in the courts of the State of New York or the courts of the
United States of America, in each case located in the Borough of Manhattan, City
of New York, State of New York. Each of the parties hereto waives any objection
that it may have to the venue of such suit, action or proceeding in any such
court or that such suit, action or proceeding in such court was brought in an
inconvenient court and agrees not to plead or claim the same.
16.2.3. Appointment of Agent for Service of Process. Owner
-------------------------------------------
irrevocably appoints CT Corporation, at 1633 Broadway, New York, New York 10019,
and Contractor irrevocably appoints United States Corporation Company, 80 State
Street, Albany New York 12207-2543 as their respective authorized agents in the
State of New York upon which process may be served in any suit, action or
proceeding with respect to this Agreement or the transactions contemplated
hereby, and each party hereto agrees that service of process upon its aforesaid
agent, and written notice of said service to such party by the person serving
the same to the address provided in Section 16.1, shall be deemed in every
respect effective service of process upon such party in any such suit or
proceeding. Each party hereto further agrees to take any and all action as may
be necessary to maintain such designation and appointment of such agent in full
force and effect so long as this Contract is in effect.
16.2.4. Waiver of Trial by Jury. Owner and Contractor hereby
-----------------------
irrevocably and unconditionally waive trial by jury in any legal action or
proceeding relating to the Contract or and for any counterclaim therein.
16.3 Attorneys' Fees -- Prevailing Party. The attorneys' fees and
-----------------------------------
other related costs of the prevailing party in any action, proceeding or lawsuit
arising out of or relating to this Contract shall be paid by the non-prevailing
party in such action, proceeding or lawsuit upon demand of such prevailing
party.
16.4 Successors and Assigns. This Contract shall bind and inure to
----------------------
the benefit of the parties of this Contract, their successors and permitted
assigns.
16.5 Assignment. Except as provided herein, neither this Contract
----------
nor any portion thereof shall be assigned by Contractor without the prior
written consent of Owner and the Financing Parties. Owner may without consent of
Contractor assign or collaterally assign its interest and obligations hereunder
to the Financing Parties for security purposes. The Contractor hereby expressly
authorizes the Financing Parties to exercise the rights of Owner under this
Contract following realization of their security interest in this Contract. The
foregoing rights and obligations are in addition to those set forth in Section
16.4.
<PAGE>
89
16.6 Relationship of the Parties. Nothing in this Contract shall be
---------------------------
deemed to constitute either party a partner, agent or legal representative of
the other party, or to create any fiduciary relationship between the parties.
Contractor is and shall remain an independent contractor in the performance of
this Contract, maintaining complete control of its personnel, workers,
Subcontractors and operations required for performance of the Work. This
Contract shall not be construed to create any relationship, contractual or
otherwise, between Owner or the Independent Engineer and any Subcontractor.
Furthermore, this Contract shall not be construed to create any relationship,
contractual or otherwise, between the Independent Engineer and Contractor.
16.6.1 Owner and Clark R&M. Contractor acknowledges that Owner
-------------------
and Clark R&M are separate and distinct legal entities and that neither may act
as agent for the other. Accordingly, Contractor agrees (i) to conduct its
relationship with Owner independently from any relationship it has with Clark
R&M; (ii) to keep all items of Contractor's drawings, specifications and
Technical Information, schedules, plans, drawings and other documents produced
by Contractor and its Subcontractors relating to this Contract and all Work,
materials and equipment performed or supplied under this Contract separately
identified from any similar items related to work being performed by Contractor
for Clark R&M or otherwise belonging to Clark R&M, (iii) to identify the Project
Site and the Coker Complex as belonging to "Port Arthur Coker Company L.P." and
(iv) to refrain from identifying Clark R&M as the owner of the Coker Complex or
party to this Contract in any public or private document or statement,
including, without limitation, in any subsequent press releases, annual reports,
financial reports, advertisements or other media presentations of Contractor.
16.7 Waiver. Unless otherwise specifically provided by the terms of
------
this Contract, no delay or failure to exercise a right resulting from any breach
of this Contract shall impair such right or shall be construed to be a waiver
thereof, but such right may be exercised from time to time as may be deemed
expedient. If any representation, warranty or covenant contained in this
Contract is breached by either party and thereafter waived by the other party,
such waiver shall be limited to the particular breach so waived and not be
deemed to waive any other breach under this Contract.
16.8 Confidentiality. The term "Proprietary Business and Technical
---------------
Information" means all information, data and material supplied to or received by
a party (the "Receiving Party") from the other party (the "Disclosing Party")
which is identified in writing as "confidential," "restricted," "proprietary" or
the like. The Receiving Party shall not publish or otherwise disclose
Proprietary Business and Technical Information to any third party without the
prior written consent of the Disclosing Party, nor use Proprietary Business and
Technical Information for any purpose other than in connection with the
negotiation of this Contract and performance of the Work hereunder. The
Receiving Party shall hold Proprietary Business and Technical Information in
confidence and shall deal with such Proprietary Business and Technical
Information with a degree of care not less than that used for dealing with its
own secret, proprietary information. Notwithstanding the foregoing, nothing
herein shall limit the disclosure of such Proprietary Business and Technical
Information which: (a) is legally in the possession of the Receiving Party or
its employees prior to receipt thereof from the Disclosing Party; or (b)
<PAGE>
90
enters the public domain through no fault of the Receiving Party or its
employees; or (c) is disclosed to the Receiving Party without restrictions or
breach of any duty of confidentiality by a third party who has the right to make
such disclosure; or (d) is required to be disclosed in connection with any
governmental proceedings (which requirement may be demonstrated either by a
governmental order or by an opinion of counsel); or (e) is disclosed in the
ordinary course of business to the Receiving Party's or a Confidential Party's
officers, directors, shareholders, direct and indirect providers of equity
capital, employees, agents, representatives, legal counsel, accountants,
investment bankers, or commercial bankers; or (f) is disclosed to investment or
commercial bankers, underwriters, placement agents or other parties, including
without limitation the Financing Parties, engaged in connection with a
securities offering or other financing by either party or any Affiliate thereof,
including without limitation the financing contemplated by the Financing
Documents, in any offering memorandum or prospectus or similar document in
connection with any such offering of securities, and to any securities analyst
involved in research with respect to securities of such party or Affiliate of
such party; or (g) is disclosed to any credit rating agency from whom a rating
is sought with respect to any debt or equity securities of either party or any
present or future Affiliate thereof, or (h) is disclosed to any Affiliate or
professional consultant (other than those described in clause (a) above) of the
Receiving Party or to any other Person that the Receiving Party has a legitimate
business reason to disclose such information; provided that any such Person has
--------
executed a confidentiality agreement with the Disclosing Party that is
reasonably satisfactory to such Disclosing Party (any such Person, a
"Confidential Party"). Upon written request by the Disclosing Party, Receiving
Party shall either return to the Disclosing Party all Proprietary Business and
Technical Information (including without limitation data, memoranda, drawings,
other writings, recordings and material created therefrom, and all copies
thereof) received by Receiving Party or destroy the same, and in either event
shall make no further use of such Proprietary Business and Technical
Information. No rights or obligations other than those expressly stated shall be
implied from this Section 16.8. In particular, no license is hereby granted,
directly or indirectly, under any patent, know-how or other Proprietary Business
and Technical Information now held by, or which may be obtained by, or which is
or may be licensable by the Disclosing Party. The provisions of this Section
16.8 shall survive the termination of this Contract and shall remain in effect
until April 1, 2008. Notwithstanding any of the foregoing the terms and
conditions of this Section 16.8 shall remain in effect with regard to any
confidentiality obligations contained in the Project Documents for the term of
such confidentiality obligations or for the term of the effectiveness of this
Section 16.8, whichever is greater.
16.8.1 Public Statements. Neither Contractor nor its
-----------------
Subcontractors shall issue any public statement (or any private statement unless
required in the performance of the Work), except as stated below, relating to or
in any way disclosing any aspect of the Coker Project, including the scope,
extent or value of the Coker Project. Express written consent of Owner is
required prior to the invitation of or permission to any reporter or journalist
to enter upon the Coker Project. Contractor agrees not to use for publicity
purposes, any photographs, drawings and/or materials describing the Coker
Complex or Coker Project without obtaining the prior written consent of Owner,
which consent shall not be unreasonably withheld or delayed. This Section 16.8
is not intended to exclude the provision of necessary information to
<PAGE>
91
prospective Subcontractors and Contractor's personnel. All other such public
disclosures require the written consent of Owner.
16.9 Records and Communications. Contractor and Owner shall follow
--------------------------
the procedures for keeping and distributing orderly and complete records of the
Work and its progress as described in Schedule 16.9. These procedures shall be
followed throughout the course of the Work unless Owner and Contractor mutually
agree in advance in writing to revise the procedure.
16.10 Ownership of Turnkey Specifications. Neither Contractor, any
-----------------------------------
Subcontractor, or other Person or organization performing or furnishing the
Work, whether or not under a direct or indirect contract with Owner, shall have
or acquire any title to or ownership rights in any of the Turnkey
Specifications, or the remainder of this Contract (or copies of any thereof);
and, subject to the second paragraph of Section 16.13 hereof and Contractor's
retention of intellectual property rights to such information and data in the
Turnkey Specifications to the extent provided in the third paragraph of Section
13.2, no such party shall reuse any thereof on extensions of the Coker Project
or any other project without written consent of Owner. The Turnkey
Specifications and the remainder of this Contract (and copies thereof), are
owned by and title resides in Owner, unless otherwise agreed between Owner and
any third party. Notwithstanding anything contained hereunder to the contrary,
Owner shall not acquire any patent, copyright or trade secret rights as a result
of this Contract, except pursuant to licenses and other approvals provided in
the performance of the Work and except to the extent that a non-exclusive
license of any of Contractor's patent, copyright or trade secret rights is
required to perform Work.
16.11 Interest. Either party who fails to pay the payments or
--------
damages when due, including, but not limited to, Late Payments and Reliability
and Capacity Buydown Payments, shall be liable for interest on the unpaid amount
from the day the amount was due at a rate equal to the lesser of the prime rate
of interest charged by the Chase Manhattan Bank, plus two percent (2%) and the
highest applicable rate permitted by law.
16.12 Financing Parties Requirements. Contractor acknowledges that
------------------------------
Owner represents that attainment of financing for construction of the Coker
Complex may be subject to conditions that are customary and appropriate for the
Financing Parties. Therefore, Contractor agrees to execute promptly any
reasonable amendment to or modification or assignment of this Contract required
by such Financing Parties (including, without limitation, any pertinent
industrial development authority or other similar governmental agency issuing
bonds for financing of the Coker Project) or other entities providing financing
for the Work in order to obtain such financing. In the event that any such
amendment or modification materially increases Contractor's risk or costs
hereunder, Owner and Contractor will negotiate in good faith to adjust the
Contract Amount, and to equitably adjust such other provisions of this Contract,
if any, which may be affected thereby, to the extent necessary to reflect such
increased risk or cost. Amendments or modifications not materially increasing
Contractor's risks or costs shall be made without charge by Contractor.
Contractor shall be responsible for and pay all taxes and costs as a
<PAGE>
92
result of Contractor's or its Subcontractors' failure to promptly comply with
the Financing Parties' request for any such modification or amendment.
16.13 Owner Review, Comment and Approval. To the extent that various
----------------------------------
provisions of this Contract provide for Owner's review, comment, inspection,
evaluation, recommendation or approval, Owner may at its option do so in
conjunction and/or consultation with the Independent Engineer. To the extent
that this Contract requires Contractor to submit, furnish, provide or deliver to
Owner any report, notice, Application for Payment, Change Order request or other
items, Owner may at its option and upon written notice to Contractor designate
Engineer to receive such items as Owner's agent therefor. To the extent that
various provisions of this Contract provide that Owner may order, direct or make
requests with respect to performance of the Work or is provided access to the
Project Site or any other site, Owner may at its option and upon written notice
to Contractor authorize the Engineer to act as Owner's agent therefor. Upon
receipt of such notice, Contractor shall be entitled to rely upon such
authorization until a superseding written notice from Owner is received by
Contractor.
Owner acknowledges that parts of the Turnkey Specifications are
comprised of specifications prepared by Contractor and that contractor
contributed significantly to many other portions thereof. Owner also
acknowledges that, during the normal design, evolution and development process,
portions of the Turnkey Specifications may appear in design and procurement
prepared by Contractor in its normal course of business; provided, however that
Owner shall have no liability for any third-party claims infringement or the
like with respect to such portions or use and Contractor shall hold Owner
harmless from any such third-party claims.
16.14 Discretion. Notwithstanding anything contained herein to the
----------
contrary, to the extent that various provisions of this Contract call for an
exercise of discretion in making decisions or granting approvals or consents,
the parties shall be required to exercise such discretion, decision or approvals
in accordance with accepted industry practices.
16.15 Time is of the Essence. With respect to the condition of the
----------------------
performance of each and every term and condition of this Contract by Contractor,
it is agreed that time is of the essence. Notwithstanding the foregoing,
Contractor shall not be deemed in breach or default under this Section 16.15
solely for a delay in the Construction Schedule that does not otherwise
constitute a breach under Section 14.1(g) hereof, or solely for failure to
achieve Mechanical Completion by the Guaranteed Mechanical Completion Date so
long as Final Completion occurs on or prior to the Guaranteed Final Completion
Date and if and to the extent (but only if and to the extent) Contractor has
fully satisfied and discharged its obligations under Section 6.1 hereof to pay
Late Payments to Owner. Nothing in this Section 16.15 shall modify the parties'
rights and obligations set forth in Section 7.1 hereof.
16.16 Conditions Precedent to Effective Date; Notice to Proceed. (a)
---------------------------------------------------------
The effectiveness of this Contract is subject to the satisfaction of the
following conditions precedent prior to or on the Effective Date:
(i) the execution and delivery of this Contract by all parties
hereto;
<PAGE>
93
(ii) the execution and delivery to Owner of the Guarantee;
(iii) the delivery of legal opinions from counsel to the Contractor
and the EPC Guarantor, in form satisfactory to Owner and the Financing
Parties, with respect to the authorization, due execution and
enforceability of this Contract and the Guarantee;
(iv) the delivery to Owner of satisfactory evidence that the
insurance required by Section 9.1 hereof to be obtained by Contractor will
be in at the time required effect;
(v) the delivery to Contractor of satisfactory evidence that the
insurance required by Section 9.1 hereof to be obtained by Owner is in
effect;
(vi) notification by Owner to Contractor that the Applicable
Permits specified in Schedule 2.11(a) as required before the date hereof
have been obtained;
(vii) notification by Contractor to Owner that the Applicable
Permits specified in Schedule 2.11(b) as required before the date hereof
have been obtained;
(viii) delivery of the Project Site and grant of access thereto by
Owner to Contractor;
(ix) Clark R&M shall have provided a release to Contractor with
respect to any and all liability for any property damaged or destroyed in
those portions of the Refinery not in the possession and control of
Contractor; and
(x) the delivery to Owner of the Letter of Credit required under
Section 4.5 hereof.
(b) Notwithstanding the occurrence of the Effective Date,
Contractor shall not commence the Work (which shall in the interim be continued
by Contractor under the Interim Reimbursable Contract) hereunder and Owner shall
have no obligation with respect hereto, until such time as:
(i) the Project Documents other than this Contract have been
executed and delivered by all parties thereto and copies thereof have been
provided to Contractor;
(ii) the financing pursuant to the Financing Documents shall have
closed and sufficient funds shall be available (subject to simultaneous
compliance with closing conditions at such closing) for the acquisition by
Owner of the work in progress under the Interim Reimbursable Contract from
Clark R&M; and
(iii) Owner shall have delivered a Notice to Proceed to Contractor
in substantially the form of Exhibit L.
<PAGE>
94
16.17 Headings. Captions and headings in this Contract are for
--------
reference only and do not constitute a part of the substance of this Contract.
16.18 Counterparts. This Contract may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original.
16.19 Entire Agreement. This Contract constitutes the entire
----------------
agreement between Contractor and Owner and supersedes all prior discussions,
negotiations, options, letters of intent, agreements and understandings, both
oral and written, between the parties hereto with respect to the subject matter
hereof, all of which are merged into this Contract. This Contract may not be
amended, supplemented or discharged, or in any way modified, absent the
execution and delivery by the parties hereto of a writing intended for such
purpose.
16.20 Non-Recourse. No past, present or future limited partner in or
------------
of Owner, no parent or other Affiliate of any company comprising Owner, and no
officer, employee, servant, executive, director, agent or authorized
representative of any of them (each, an "Operative") shall be personally liable
by virtue of the direct or indirect ownership interest of such Operative in
Owner for payments due under this Contract or for the performance of any
obligation, or breach of any representation or warranty made by Owner
thereunder. The sole recourse of Contractor for satisfaction of the obligations
of Owner under this Contract shall be against Owner and Owner's assets and not
against any Operative or any assets or property of any such Operative. In the
event that a default occurs in connection with such obligations, no action shall
be brought against any such Operative by virtue of its direct or indirect
ownership interest in Owner. The foregoing provisions of this Section 16.20
shall not in any way limit or restrict any right or remedy of Contractor with
respect to, and the Operatives shall remain fully liable for, any fraud
perpetuated by such Operatives.
16.21 Merger of Contractor or EPC Guarantor. (a) Unless Owner and
-------------------------------------
the Financing Parties shall otherwise consent in writing, Contractor shall not
consolidate with or merge with or into any other Person or sell, convey or
transfer, or lease all or substantially all of its assets to any Person, whether
in a single transaction or a series of transactions, unless the Person formed by
such consolidation, the Person into which the Contractor is merged or the Person
which acquires by conveyance, transfer or lease substantially all the assets of
the Contractor (the "Surviving Contractor") shall (i) execute and deliver an
--------------------
agreement in form and substance satisfactory to Owner and the Financing Parties
containing an assumption by the Surviving Contractor of the due and punctual
performance and observance of each agreement and condition of this Contract and
(ii) deliver to Owner and the Financing Parties an opinion of counsel reasonably
satisfactory to Owner and the Financing Parties, stating that the agreement
referenced in clause (a)(i) of this Section 16.22 is the legal, valid and
binding obligation of the Surviving Contractor, enforceable in accordance with
its terms and as to such other matters as Owner or the Financing Parties shall
reasonably request; provided that if the Contractor is the Surviving Contractor
--------
it shall not be required to comply with this clause (ii).
(b) Unless Owner and the Financing Parties shall otherwise consent
in writing, the EPC Guarantor shall not consolidate with or merge with or into
any other Person or sell,
<PAGE>
95
convey or transfer, or lease all or substantially all of its assets to any
Person, whether in a single transaction or a series of transactions, unless the
Person formed by such consolidation, the Person into which the EPC Guarantor is
merged or the Person which acquires by conveyance, transfer or lease
substantially all the assets of the EPC Guarantor (the "Surviving EPC
-------------
Guarantor") shall (i) execute and deliver an agreement in form and substance
- ---------
satisfactory to Owner and the Financing Parties containing an assumption by the
Survivor EPC Guarantor of the due and punctual performance and observance of
each agreement and condition of the Guarantee and (ii) deliver to Owner and the
Financing Parties an opinion of counsel reasonably satisfactory to Owner and the
Financing Parties, stating that the agreement referenced in clause (b)(i) of
this Section 16.22 is the legal, valid and binding obligation of the Survivor
EPC Guarantor, enforceable in accordance with its terms and as to such other
matters as Owner or the Financing Parties shall reasonably request; provided
that if the EPC Guarantor is the Surviving EPC Guarantor it shall not be
required to comply with this clause (ii).
CONTRACTOR AND OWNER HAVE READ THE CONTRACT AND AGREE TO BE BOUND BY ALL THE
TERMS AND CONDITIONS THEREOF.
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound, have caused this Contract to be signed by their respective officers
thereunto duly authorized as of the day and year first set forth above.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
General Partner
By: /s/ Maura J. Clark
--------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
FOSTER WHEELER USA CORPORATION
By: /s/ J.C. Blythe
--------------------------------------
Name: J. C. Blythe
Title: Chief Executive Officer
<PAGE>
CONTRACT SCHEDULE 1.4
EXISTING ENVIRONMENTAL CONDITIONS AND LIABILITIES
<PAGE>
Clark Refining and Marketing B & V Project 37882.118
Remediation Cost Estimate B & V File C.3
April 28, 1999
Clark Refining and Marketing, Inc.
1301 South Gulfway Drive
Port Arthur, TX 71641
Subject: Tier 1 Remediation Cost Estimate
for HOUP Expansion Areas
Attention Mr. Steve Clegg
Gentlemen:
Black & Veatch has evaluated the costs associated with remediation of the
proposed refinery expansion at the Clark Refining & Marketing, Inc. (Clark) Post
Arthur refinery. The expansion areas evaluated are shown on Figures 1 and 2.
The selected remedial approach consists of in situ stabilization of the soil
above the groundwater cable without a cap. This approach assumes that the
expansion areas will be covered by new construction or asphalt to cap the
stabilized areas. The following presents our understanding regarding the
estimate and provides the basis for the estimate.
It is understood that the additions will involve the construction of a new Coker
Unit, Hydrocracker, Sulfur Recovery Unit, power substation, and Hydrogen Unit.
The additions will be constructed at locations where Chevron is currently
responsible for the environmental conditions and any associated remediation that
may be required. To assess the potential financial impacts that may be incurred,
costs to remediate the locations where the additions are planned have been
estimated and are presented herein.
Remediation of the groundwater has not been evaluated, because a previous report
entitled Remediation Cost Estimates For Designated Areas Within the Chevron Port
Arthur Refinery that was prepared by Black & Veatch in November 1994 for Clark
indicates that groundwater remediation will not be performed for individual
areas of the refinery, but will be performed for the refinery as a whole. The
remedial option for the groundwater consisted of free phase hydrocarbon recovery
and containing the groundwater on the refinery. As a result, this estimate only
includes remediation of soil located above the groundwater table.
Background Information
The estimates for remediation were prepared using the data generated at each
location during the Due Diligence Investigations performed for Clark by Black &
Veatch. During the Due Diligence Investigations, surface and subsurface soil,
groundwater and sediment samples were collected. The data was imported into the
EnviroEdge database from where it was retrieved to evaluate the environmental
conditions at the expansion areas and the need for any remediation. The
<PAGE>
subsurface soil samples submitted for chemical analysis were collected in the
upper 15 feet and the most contaminated sample from each location was submitted.
The subsurface conditions at the site consist of fill overlying alluvial
deposits. The fill consists of cohesive soils mixed with shell fragments and
construction debris. The fill thickness is variable across the refinery, with a
maximum observed thickness of 15 feet. The shallow alluvial deposit consists of
clays ranging in thickness from 15 to 30 feet, with discontinuous lenses of
silts and sands. At an average depth of 30 feet below the ground surface the
Beaumont clay is present. The Beaumont clay has a lower permeability than the
overlying deposits.
Groundwater is first encountered in the fill material and the shallow alluvial
deposits. The yield of groundwater from the fill is variable due to the nature
of the material. The yield of groundwater from the alluvial deposits is
dependent on the presence of silt and sand lenses present at a given location.
Where there is predominantly clay, the shallow alluvial deposit has a low yield.
The Beaumont formation, located below the shallow alluvial deposit, has a low
permeability and tends to impede the downward flow of groundwater.
Environmental Status
The data generated during the Due Diligence Investigations for each area where
expansion is planned was retrieved using the EnviroEdge database. Since
groundwater will be addressed as an overall refinery issue, the groundwater data
was not reviewed. The soil analytical results for Area 1 organics and inorganics
are presented in Tables 1 and 2, and the results for Area 2 are presented in
Tables 3 and 4.
The proposed Texas Natural Resources Conservation Commission (TNRCC) Risk
Reduction Program Rule was used to evaluate the significance of the compounds
detected in the soil. Since in situ stabilization is being used, Standard B,
which requires post-response action, applies. The concentrations of the
compounds detected in the soil were compared to the commercial/industrial Tier 1
protective concentration levels (PCL) for a 30 acre source area. The following
Tier 1 PCBs were used:
o Levels for direct exposure of humans to the soil [ILLEGIBLE]
o Levels that are protective of the groundwater [ILLEGIBLE]
o Levels that are protective of the air, [ILLEGIBLE]
Much of the groundwater at the Port Arthur Refinery has total dissolved solids
(TDS) concentrations greater than 10,000 mg/l; therefore, the PCLs for
protection of groundwater are based on Class 3 groundwater, which is defined as
having a TDS concentration greater than 10,000 mg/l or producing groundwater at
a rate of less than 150 gallons per day from a 4 inch well. The critical PCL is
the lowest of the three PCLs considered. The critical PCL is compared to the
detections to evaluate the need for remediation. The Tier 1 PCLs are provided in
Tables 1 through 4.
Tier 1 PCLs were not available for all the organic compounds detected in the
soil during the Due Diligence Investigations or the analyses required differ.
Most notably different is total petroleum hydrocarbons. The proposed rules
establish PCLs for the ranges of the aliphatic and aromatic hydrocarbon
fractions, i.e., aliphatic C\\12\\ C\\6\\ Data for the Due Diligence
Investigations provided total TPH rather than the break down for the various
hydrocarbon fractions.
<PAGE>
Page 3
Clark Refining and Marketing B & V Project 37882.118
Remediation Cost Estimate April 28, 1999
Where Tier 1 PCLs are not available, the concentrations of the organic compounds
are compared to the current TNRCC Risk Reduction Standard No. 2 (RRS2), GWP-Ind
Media Specific Concentrations (MSC) provided in 30 TAC 335 for total dissolved
solids (TDS) concentrations in the groundwater greater than 10,000 mg/l. The
GWP-Ind MSC concentrations used are presented in Tables 1 and 3. The GWP-Ind MSC
concentrations are specifically for industrial settings.
Direct comparison of the organic results with Tier 1 PCLs or GWP-Ind MSCs is
possible because the organics detected are not typically found in natural
environments; therefore, any detected concentration represents a compound that
was introduced into the environment. In Tables 1 and 3, organic concentration
exceedances of the Tier 1 TCLs or GWP-Ind MSCs are highlighted. The primary
organic exceedances are polynuclear aromatic hydrocarbons and total petroleum
hydrocarbons. The depths where these samples were collected are also indicated
on the tables.
The inorganic results are shown on Table 2 and 4 along with the Tier 1 PCL
concentrations. Exceedances of the Tier 1 PCLs are highlighted. Review of the
data shows that lead is the only inorganic that exceeds the Tier 1 PCLs. The
concentrations of lead detected that exceed the Tier 1 PCLs also exceed
background concentrations identified by Chevron.
Soil Remedial Action Costs
For in situ stabilization of the soil without a cap, it is assumed that in 40
years when the expansion areas are remediated, they will again be covered by new
construction or asphalt that will act as a cap for the stabilized areas. No
costs for the new construction or asphalt have been included in the cost
presented herein for in situ stabilization. If portions of the expansion areas
are not covered by new construction or asphalt then the cost of providing a cap
for those portions should be added to the costs presented herein.
Based on the due diligence data, if remediation is in fact ultimately required
pursuant to the TNRCC PCLs and MSCs provided in Tables 1 through 4, only a small
portion of Area 1 will require remediation, while approximately one third of
Area 2 will require remediation
The following assumptions were used to develop the cost estimate:
o Remediation will take place after the units at these locations have been
taken out of service and all demolition of the units has been completed.
o Remediation will only be performed within the expansion areas.
o The life of the units planned for construction in the expansion is 40
years.
o The price breakdown for the cost estimate as based on 1999 dollars. Cost
projections to year 2039 assume 4 percent inflation per year.
o The depth to groundwater was estimated using data from the Due Diligence
Investigations and varied from 0.7 to 3 feet.
o For post-response action, it is assumed that the point of compliance for
groundwater monitoring will be at the property boundary of the overall
refinery, which is already being monitored, rather than at the perimeter
of Areas 1 and 2. Therefore, costs for groundwater monitoring are not
included. Additionally, since the areas are assumed to be covered by new
units and/or asphalt, no cost for maintenance of a cap are included.
<PAGE>
Page 4
Clark Refining and Marketing B & V Project 37882.118
Remediation Cost Estimate April 28, 1999
Using the above assumptions, the estimated capital cost for in situ
stabilization without a cap is $1.64 million. The cost breakdown for in situ
stabilization is provided in Table 5.
Unknown factors that could possibly reduce the remediation costs include the
following.
o Future regulators continuing with the trend of less stringent
remediation actions in the future.
o Performance of a site specific risk assessment that allows higher
PCLs; thereby, reducing the amount of soil requiring remediation.
o New technology that would reduce remediation costs.
Any of these factors, plus numerous unforeseen others, could occur in the next
forty years, increasing or decreasing the estimated remediation cost.
If you have any questions or require additional information please contact Ed
Meyer at (913) 455-6579 or me at (713) 260-0440.
Very truly yours,
BLACK & VEATCH Corporation
Michael J. Ulekowski, P.E.
Regional Director
Industrial Environmental Services
Enclosures
cc: Ed Meyer
<PAGE>
Table 5
Remediation Costs
in Situ Stabilization Without a Cap
Proposed Tier 1 Standards
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Item Quantity Units Unit Cost Subtotals
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Costs
Cement stabilization or soil above gro 48,731.30 cu yd $27.00 $1,315,746.10
Monitoring wells 9 each $1,900.00 $17,100.00
- -----------------------------------------------------------------------------------------------
Subtotal Capital Costs $1,332,845.10
Engineering and Permitting (7%) $93,299.16
---------------
Subtotal $1,426,144.26
Contingencies (15%) $213,921.64
---------------
Total Capital Costs - 1999 Dollars $1,640,065.90
Total Capital Costs - 2039 Dollars $7,873,956.36
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[CLARK LOGO]
From The Legal Department Of
CLARK REFINING & MARKETING, INC.
8182 Maryland Avenue
St. Louis, Missouri 63105
Phone (314) 854-9696
Fax (314) 854-1455
- --------------------------------------------------------------------------------
FAX COVER SHEET
DATE: June 14, 1999
TO: Jean Archambault FAX: 908-730-4149
(Foster Wheeler)
FROM: Rich Keffer
RE: Environmental Disclosures Schedule
Number of pages including cover sheet: 6
----
Message
- --------------------------------------------------------------------------------
Attached is a copy of the current form of the report.
If you have questions regarding this form, or the description of environmental
conditions, please call.
/s/ Rich Keffer
RAK:ra
Enclosure
- --------------------------------------------------------------------------------
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH
IT IS ADDRESSED AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND
EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this message is
not the intended recipient or the employee or the agent responsible for
delivering the message to the intended recipient you are hereby notified that
any dissemination, distribution or copying of this communication is strictly
prohibited. If you have received this communication in error, please notify us
immediately (collect) and return the original message to us at the above address
via the U.S. Postal Service. Thank you.
- --------------------------------------------------------------------------------
<PAGE>
CONTRACT SCHEDULE 1.5
PLANT COMPLETION STANDARD
The Plant Completion Standard for the Port Arthur Heavy Oil Upgrade Project is
presented on the pages that follow.
<PAGE>
CLARK REFINING & MARKETING, INC. [LOGO] FOSTER WHEELER USA CORPORATION
Port Arthur, Texas FWSWO Contract No: 13-00-1610
JOB SPECIFICATION
4610-05A1
PLANT COMPLETION
The subject job specification is issued herewith. Please discard any previous
issue of this specification. For convenience, the nature the revision is briefly
noted under remarks.
Note: New Issue |_|
Revised Sheets Only Attached |_|
Entire Specification Reissued |X|
================================================================================
Revision Number Log
- --------------------------------------------------------------------------------
Rev Date By Pages Approval Remarks
================================================================================
A 5/21/98 MRE Comment Issue
- --------------------------------------------------------------------------------
1 10/21/98 MRE All Issue for Construction
- --------------------------------------------------------------------------------
2 6/14/99 MRE All To Incorporate Clark Comments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
additions are typed in bold.
revisions are marked with a line outside the margin.
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 1
USA CORPORATION REV 2
DATE June 14, 1999
TABLE OF CONTENTS
I. SCOPE 2
II. REFERENCES 2
III. DEFINITIONS 2
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 1
USA CORPORATION REV 2
DATE June 14, 1999
I. SCOPE
This specification is intended to define the transfer of responsibility
from Foster Wheeler to the Owner for the care, custody and control of
various units, systems or facilities of a plant. A tabulation of the
specific work performance responsibilities required to place process
equipment or systems into operation is presented.
II. REFERENCES
A API Publication 700, Second Edition, September, 1980. The content of
this specification is derived from API 700. The major difference is
that it defines the responsibilities by indicating which items
Foster Wheeler expects to undertake versus those which the Owner is
expected to complete.
B. ISA Recommended Practice 7.1
III. DEFINITIONS
This section presents definitions which, along with the General and
Specific Procedures given in Sections IV. and V., serve to clarify the
basic principles associated with the transfer of responsibility from
Foster Wheeler to the Owner at commissioning time.
A. Pre-commissioning: Pre-commissioning activities are the nonoperating
adjustments and cold alignment checks made by Foster Wheeler as
detailed in Sections IV. and V.
B. Commissioning: The commissioning period follows the completion of
the precommissioning activities performed by Foster Wheeler.
Commissioning activities are associated with the operation of items
of equipment or facilities in preparation for plant startup and may
continue through the initial operation of the plant. These
activities are the Owner's responsibilities unless the contract
specifically provides otherwise.
C. Completion of Construction: Completion of construction means that
Foster Wheeler has:
1. Erected the Plant.
2. Completed pre-commissioning work, provided that utilities are
made available by Clark, where applicable.
3. Completed all special commissioning activities. Special
commissioning activities are defined as those activities not
specifically covered herein and dictated by contractual
agreements as being specifically required.
4. Completed final cleanup, painting, and thermal insulation
work.
The responsibility of the parties are outlined in the following plant
completion matrix.
D. Commissioning: Is, in general, the responsibility of Clark, but when
requested by the Owner, FW will provide assistance in the
commissioning activities by providing labor and supervision as
outlined in the following plant completion matrix.
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 3
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IV. GENERAL PROCEDURES
- -------------------------------------------------------------------------------------------------------------
The general work procedures listed below outline the
work to be performed by Foster Wheeler and by the
Owner. Procedures applicable to specific systems or
items of equipment are covered separately in Section V.
- -------------------------------------------------------------------------------------------------------------
A. Manufacturer or Vendor Service Assistance
- -------------------------------------------------------------------------------------------------------------
1. Obtain the assistance of the X X
manufacturer or vendor when necessary
to make a satisfactory installation as
agreed upon by Foster Wheeler and the
Owner.
- -------------------------------------------------------------------------------------------------------------
2. Obtain the assistance of the X
manufacturer or vendor, as required,
for technical assistance during run-in
by the Owner's operating and
maintenance personnel, for training or
for informational and operating
purposes.
- -------------------------------------------------------------------------------------------------------------
3. Furnish names and telephone numbers, X
including contacts, of manufacturers and
vendors; technical service represen-tatives
for use by the Owner.
- -------------------------------------------------------------------------------------------------------------
B. Permits
- -------------------------------------------------------------------------------------------------------------
1. Assist the Owner in procuring all X X
permits and certifica-tions required to
be secured by the Owner for initial use
of plant.
- -------------------------------------------------------------------------------------------------------------
2. Make applications for all permits X
issued in the Owner's name that are required
for plant installation, use, occupancy, and
operation.
- -------------------------------------------------------------------------------------------------------------
C. Instructions
- -------------------------------------------------------------------------------------------------------------
1. Transmit to the Owner all applicable X
vendor's or manufacturer's instructions
and drawings.
- -------------------------------------------------------------------------------------------------------------
2. Provide the Owner with any special X
instructions, such as the required
procedures for drying liners.
- -------------------------------------------------------------------------------------------------------------
3. Maintain an adequate vendor instruction X X
file so that information may be readily
retrieved throughout plant
commissioning.
- -------------------------------------------------------------------------------------------------------------
D. Removal of Rust Preventives
- -------------------------------------------------------------------------------------------------------------
1. Provide Owner with specification of X
work to be done.
- -------------------------------------------------------------------------------------------------------------
2. Remove all rust preventives and oils X
used to protect the equipment during the
construction period whenever these protective
materials will be detrimental to operation.
- -------------------------------------------------------------------------------------------------------------
3. Provide the Owner with a record of work X
completed.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 4
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
E. Lubricants
- -------------------------------------------------------------------------------------------------------------
1. Provide a list of the manufacturer's X
recommended lubricants for use in the
plant.
- -------------------------------------------------------------------------------------------------------------
2. Approve the lubricant list. X
- -------------------------------------------------------------------------------------------------------------
3. Provide all lubricants. X
- -------------------------------------------------------------------------------------------------------------
4. Flush system and dispose of flushing X
oil.
- -------------------------------------------------------------------------------------------------------------
5. Install initial charge of all X
lubricants.
- -------------------------------------------------------------------------------------------------------------
6. Maintain lubrication after initial X
charge.
- -------------------------------------------------------------------------------------------------------------
F. Packing and Seals
- -------------------------------------------------------------------------------------------------------------
1. Install mechanical seals and X
accessories, as required.
- -------------------------------------------------------------------------------------------------------------
2. Install permanent packing and X
accessories, as required.
- -------------------------------------------------------------------------------------------------------------
3. Adjust and replace mechanical seals, X
packing, and accessories, as necessary,
during the commissioning period.
- -------------------------------------------------------------------------------------------------------------
G. Removal of Temporary Bracing
- -------------------------------------------------------------------------------------------------------------
1. Remove all temporary supports, bracing, X
or other foreign objects that were
installed in vessels, transformers,
rotating machinery, or other equipment
to prevent damage during shipping,
storage, and erection and repair any
damage sustained.
- -------------------------------------------------------------------------------------------------------------
2. Remove other items as specified in X
items V.C.1, V.G.8 and V.J.1 for the
appropriate equipment type.
- -------------------------------------------------------------------------------------------------------------
H. Rotation and Alignment
- -------------------------------------------------------------------------------------------------------------
1. Check rotating machinery for correct X
direction of rotation and for freedom
of moving parts before connecting
driver.
- -------------------------------------------------------------------------------------------------------------
2. Perform cold alignment to the X
manufacturer's tolerances.
- -------------------------------------------------------------------------------------------------------------
3. Perform hot alignment. X
- -------------------------------------------------------------------------------------------------------------
4. Perform any doweling required. X
- -------------------------------------------------------------------------------------------------------------
5. Obtain the services of a factory X
representative to witness installation
of equipment, as required.
- -------------------------------------------------------------------------------------------------------------
J. Tie-ins at Unit Limits
- -------------------------------------------------------------------------------------------------------------
1. Prepare all systems for safe tie-ins. X
- -------------------------------------------------------------------------------------------------------------
2. Obtain approval and make the necessary X
tie-ins at the unit limits, as required
by the specifications and as directed
by the Owner.
- -------------------------------------------------------------------------------------------------------------
3. Remove blinds, car seals and so forth, X
as required.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 5
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
K. Leak and Pressure Tests
- -------------------------------------------------------------------------------------------------------------
1. Provide Test pressures. X
- -------------------------------------------------------------------------------------------------------------
2. Provide system test packages if X
required.
- -------------------------------------------------------------------------------------------------------------
3. Notify the Owner of the schedule for X
non-operating field leak tests or field
pressure tests on piping and field
fabricated equipment, unless otherwise
directed by the Owner.
- -------------------------------------------------------------------------------------------------------------
4. Provide any special media for test X
purposes and facilities for their
disposal (material only).
- -------------------------------------------------------------------------------------------------------------
5. Conduct all tests in accordance with X
applicable codes, specifications and
regulations.
- -------------------------------------------------------------------------------------------------------------
6. Witness tests. X
- -------------------------------------------------------------------------------------------------------------
7. Maintain records, as required X X
- -------------------------------------------------------------------------------------------------------------
8. Drain of test media in accordance with X
the Owner's instructions.
- -------------------------------------------------------------------------------------------------------------
9. Conduct all operational tightness tests. X
Note: Individual items of equipment
of the following types, if pressure
tested in the fabricator's shop,
will not require retesting in the
field, unless specified by the
Owner. Such individual items of
equipment shall be included in the
testing of attendant piping systems
whenever practical and approved by
the Owner.
1. Shell and tube exchangers
2. Air cooled exchangers
- -------------------------------------------------------------------------------------------------------------
L. Inspection
- -------------------------------------------------------------------------------------------------------------
1. Conduct flow diagram check of installed X X
systems.
- -------------------------------------------------------------------------------------------------------------
2. Provide inspection of the plant to X X
verify that erected facilities conform
to flow diagrams, construction
drawings, vendor prints, and
specifications.
- -------------------------------------------------------------------------------------------------------------
3. Verify that specified materials have X X
been installed in the plant and
document verification to the extent
required by the Contract.
- -------------------------------------------------------------------------------------------------------------
4. Verify and approve the plant inspection X
check list. Note any exceptions on a
separate work order list (punch list).
- -------------------------------------------------------------------------------------------------------------
5. Provide for special inspections, such X X X
as those required by insurance or
governmental agencies.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 6
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6. Perform and report routine shop X X
inspection and witness tests.
- -------------------------------------------------------------------------------------------------------------
7. Witness final shop inspections, as X X
desired.
Note: Shop inspected equipment will
not be reopened for inspection
in the field except as specifically
noted in Section V.A.
- -------------------------------------------------------------------------------------------------------------
M. Pressure/Vacuum Safety Relief Devices
- -------------------------------------------------------------------------------------------------------------
1. Provide the Owner with a list of proper X
pressure settings.
- -------------------------------------------------------------------------------------------------------------
2. If required, transfer relief devices to X
and from the Owner's specified testing
facility.
- -------------------------------------------------------------------------------------------------------------
3. Factory test, adjust and tag all safety X
devices and seal wherever necessary or
desirable.
- -------------------------------------------------------------------------------------------------------------
4. Install all devices after testing, X
adjusting and tagging.
- -------------------------------------------------------------------------------------------------------------
5. Clark/PACC to adjust PSV's during X
startup.
- -------------------------------------------------------------------------------------------------------------
6. Maintain records, as required. X
- -------------------------------------------------------------------------------------------------------------
N. Flushing and Chemical/Mechanical Cleaning
- -------------------------------------------------------------------------------------------------------------
1. Except as noted in IV.P, V.D, V.E, V.F,
V.J, V.K and V.M:
- -------------------------------------------------------------------------------------------------------------
a. Conduct all flushing, blowing, X
and chemical/mechanical cleaning
operations where such operations
can be accomplished without using
permanently installed equipment.
Flushing by FW to include dump
flush only. Any labor and jumpers
supplied by FW.
NOTE: Third party chemical cleaning X
contractor to be supplied by
Clark.
- -------------------------------------------------------------------------------------------------------------
b. Conduct all flushing and blowing X
operations where permanently installed
equipment must be used to obtain
proper line velocities.
- -------------------------------------------------------------------------------------------------------------
c. Provide any special media for X
flushing and/or cleaning purposes.
- -------------------------------------------------------------------------------------------------------------
d. Dispose of all media in X
accordance with the Owner's
instructions.
- -------------------------------------------------------------------------------------------------------------
2. Turn systems over to the client free of X X
trash and construction debris (not
necessarily free of welding slag).
- -------------------------------------------------------------------------------------------------------------
3. Maintain records, as required. X X
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 7
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
P. Temporary Screens, Strainers, and Blinds
- -------------------------------------------------------------------------------------------------------------
1. Provide and install all required X
temporary strainers.
- -------------------------------------------------------------------------------------------------------------
2. Clean strainers, as required, during X
circulation.
- -------------------------------------------------------------------------------------------------------------
3. Remove strainers when system is adequately X
cleaned.
- -------------------------------------------------------------------------------------------------------------
4. Provide, install, and remove all blinds X
required for flushing.
- -------------------------------------------------------------------------------------------------------------
5. Provide, install and remove all blinds X
required for isolation.
- -------------------------------------------------------------------------------------------------------------
Q. Purging/Inerting
- -------------------------------------------------------------------------------------------------------------
1. Install purge/inerting connections. X
- -------------------------------------------------------------------------------------------------------------
2. Provide purge materials and conduct X
necessary purge operations.
- -------------------------------------------------------------------------------------------------------------
3. Provide inerting materials and X
introduce where specified.
- -------------------------------------------------------------------------------------------------------------
R. Drying Out
- -------------------------------------------------------------------------------------------------------------
1. Dry out facilities, as required to X X
prevent contamination of catalysts,
operating materials and/or product.
- -------------------------------------------------------------------------------------------------------------
2. Dry out systems, refractories and X X
linings when this drying operation is
to be accomplished with temporary
facilities such as in refractory lined
ducts and vessels.
- -------------------------------------------------------------------------------------------------------------
3. Dry out systems, refractories, and X
linings when this drying can be
accomplished by means of permanently
installed equipment such as fired
heaters and during startup.
- -------------------------------------------------------------------------------------------------------------
S. Vessel Packing and Fixed Beds
- -------------------------------------------------------------------------------------------------------------
1. Install all inert materials such as X X
sand, gravel, balls, rings, and saddles.
NOTE: Loading of catalyst in X
Hydrocracker and Naphtha
Hydrotreater by Clark/PACC.
- -------------------------------------------------------------------------------------------------------------
2. Install all materials other than the X X
materials specifically noted in Section V.
- -------------------------------------------------------------------------------------------------------------
3. Install all mixed beds involving X X
combinations of materials covered 1.
and 2. above.
- -------------------------------------------------------------------------------------------------------------
4. Inspect vessel interior before and X X
during loading to ensure proper
installation.
- -------------------------------------------------------------------------------------------------------------
5. Maintain records as required. X
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 8
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. Housekeeping
- -------------------------------------------------------------------------------------------------------------
1. At completion of construction, remove X
excess materials, temporary facilities,
and scaffolding; rough sweep or rake
the area; and pick up train. Washing or
further cleanup is not included.
- -------------------------------------------------------------------------------------------------------------
2. After completion of construction, X
maintain adequate housekeeping
practices, as required for safe
operation.
- -------------------------------------------------------------------------------------------------------------
U. Maintenance, Spare Parts and Special Tools
- -------------------------------------------------------------------------------------------------------------
1. Before and during precommissioning, X
protect equipment from normal weather
conditions, corrosion or damage.
- -------------------------------------------------------------------------------------------------------------
2. After precommissioning is complete, X
provide adequate maintenance for
equipment, including the cleaning of
strainers and the repairing of steam
traps.
- -------------------------------------------------------------------------------------------------------------
3. Provide the Owner with spare parts X
lists as recommended by the
manufacturers.
- -------------------------------------------------------------------------------------------------------------
4. After commissioning, maintain adequate X
spare parts and supplies.
- -------------------------------------------------------------------------------------------------------------
V. Noise Survey
- -------------------------------------------------------------------------------------------------------------
1. Conduct individual equipment noise X
surveys, as required by the
Occupational Safety and Health
Administration or the Owner's
specifications.
- -------------------------------------------------------------------------------------------------------------
2. Document all survey data. X
- -------------------------------------------------------------------------------------------------------------
V. Specific Procedures
In addition to the work responsibilities
described in Section IV, the detailed
procedures outlined below further define the
work responsibilities of Foster Wheeler and
the Owner for specific systems and items of
equipment.
- -------------------------------------------------------------------------------------------------------------
A. Vessels
- -------------------------------------------------------------------------------------------------------------
1. Open vessels after erection and put in X X
place any internals requiring field
installation. These internals will be
inspected before and after installation.
- -------------------------------------------------------------------------------------------------------------
2. Open both internal and external manways X X
for inspection of vessel by the Owner,
unless otherwise specified.
- -------------------------------------------------------------------------------------------------------------
3. Witness inspections to the extent X X
desired.
- -------------------------------------------------------------------------------------------------------------
4. Head up after proper execution of X X
closure Permits.
- -------------------------------------------------------------------------------------------------------------
B. Shell and Tube Exchangers
- -------------------------------------------------------------------------------------------------------------
1. Perform field inspection, if required, X
of exchangers that have been shop
tested.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 9
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
C. Air-Cooled Exchangers
- -------------------------------------------------------------------------------------------------------------
1. Inspect exchangers to ensure that X
temporary shipping supports and erection
material have been removed.
- -------------------------------------------------------------------------------------------------------------
2. Adjust fan assemblies to obtain X
specified tip clearance and test.
- -------------------------------------------------------------------------------------------------------------
3. Check operation of louvers and X
operating linkage.
- -------------------------------------------------------------------------------------------------------------
D. Fired Heaters
- -------------------------------------------------------------------------------------------------------------
1. Perform pressure test in accordance X
with the applicable codes and specifications.
- -------------------------------------------------------------------------------------------------------------
2. Provide all nonoperating prefiring X
checks in accordance with manufacturer's
instructions.
- -------------------------------------------------------------------------------------------------------------
3. Blow fuel lines, check them for X
cleanliness, and connect
burner piping.
- -------------------------------------------------------------------------------------------------------------
4. Check operation of registers and X
dampers, and verify position of
indicators.
- -------------------------------------------------------------------------------------------------------------
5. Check operation of air preheaters, X
blowers and soot blowers.
- -------------------------------------------------------------------------------------------------------------
6. Dry refractories during initial firing X
by following the manufacturer's
temperature cycles.
- -------------------------------------------------------------------------------------------------------------
7. Conduct boilout, chemical cleaning, and X
flushing operations as required. Dispose
of wastes and cleaning media. Any labor
and jumpers supplied by FW.
NOTE: Third party chemical cleaning X
contractor to be supplied by Clark.
- -------------------------------------------------------------------------------------------------------------
8. Obtain and charge liquid heat transfer X
media, if required.
- -------------------------------------------------------------------------------------------------------------
9. Conduct lightoff, drying, and purging X
operations.
- -------------------------------------------------------------------------------------------------------------
10. Obtain service engineer for technical X
assistance during installation, if desired.
- -------------------------------------------------------------------------------------------------------------
11. Obtain service engineer for technical X
assistance during start-up if desired.
- -------------------------------------------------------------------------------------------------------------
E. Pumps, Compressors, and Drivers
- -------------------------------------------------------------------------------------------------------------
1. Level baseplates and soleplates and X
grout all bearing surfaces.
- -------------------------------------------------------------------------------------------------------------
2. Alleviate any excess piping stresses X
that may be imposed on pipes,
compressors, and drivers.
- -------------------------------------------------------------------------------------------------------------
3. Chemically clean any completed lube and X
seal oil system, when specified.
Dispose of wastes and cleaning media in
accordance with the Owner's
instructions.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 10
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4. Charge the lube oil, seal oil, and oil X
cooling systems with flushing oil.
- -------------------------------------------------------------------------------------------------------------
5. Circulate flushing oil through lube X X
oil, seal oil and oil cooling systems
for cleaning purposes. Dispose of any
flushing oil.
- -------------------------------------------------------------------------------------------------------------
6. Make final charge of the lube oil, seal X
oil, and oil cooling systems with the
operating oil recommended by the
manufacturer.
- -------------------------------------------------------------------------------------------------------------
7. Operate equipment and make vibration, X
trip, governor, and safety device
checks, and any initial tests and
adjustments required.
- -------------------------------------------------------------------------------------------------------------
8. Operate equipment and make vibration, X
trip, governor, and safety device
checks, and any operating tests and
adjustments required.
- -------------------------------------------------------------------------------------------------------------
9. Obtain the assistance of a service X
engineer for technical advise during
installation, if desired.
- -------------------------------------------------------------------------------------------------------------
10. Obtain the assistance of a service X
engineer for technical advise during
startup, if desired.
- -------------------------------------------------------------------------------------------------------------
11. Maintain records as required. X X
- -------------------------------------------------------------------------------------------------------------
F. Tanks
- -------------------------------------------------------------------------------------------------------------
1. After erection and installation, X
install any internals which require
field installation.
- -------------------------------------------------------------------------------------------------------------
2. Test tank and internals, as required. X
Dispose of test water in accordance with
the Owner's instructions.
- -------------------------------------------------------------------------------------------------------------
3. Conduct chemical cleaning or flushing X
operations, as required. Dispose of
wastes and cleaning media. Any labor
and jumpers supplied by FW.
NOTE: Third party chemical cleaning X
contractor to be supplied by Clark
- -------------------------------------------------------------------------------------------------------------
4 Witness test and inspections to the X
extent desired.
- -------------------------------------------------------------------------------------------------------------
5. Close after proper execution of closure X X
permits.
- -------------------------------------------------------------------------------------------------------------
G. Piping Systems
- -------------------------------------------------------------------------------------------------------------
1. Notify the Owner of test schedule. X
- -------------------------------------------------------------------------------------------------------------
2. Hydrostatically or pneumatically test X
all piping as required by the codes and
specifications.
- -------------------------------------------------------------------------------------------------------------
3. Witness field pressure tests when X
noticed.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 11
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4. Flush and drain system, and install X
orifice plates. Orifice plates should
not be installed before testing. If
installed, they will be removed as
necessary. (See Section V.J. for the
removal or isolation of other inline
components.)
- -------------------------------------------------------------------------------------------------------------
5. Remove blinds and perform tightness X
tests, as required.
- -------------------------------------------------------------------------------------------------------------
6. Insulate or paint flanges, threaded X
joints, or field welds after the
specified testing of each item has been
completed unless instructed otherwise
by the Owner.
- -------------------------------------------------------------------------------------------------------------
7. Leave exposed all welded joints X
(longitudinal, girth, and nozzle)
in underground piping that have not been
shop tested until the specified testing has
been completed. This does not apply to the
longitudinal fabrication joint in ERW pipe.
After final testing of these joints, cover
the system.
- -------------------------------------------------------------------------------------------------------------
8. Check pipehangers, supports, guides, X
and pipe specialties for the removal of
all shipping and erection stops and for
the correctness of cold settings for
the design service. Also, provide the
Owner with instructions for hot
settings.
- -------------------------------------------------------------------------------------------------------------
9. Check pipehangers, supports, guides, X
and pipe specialties for hot settings and make
minor adjustments as necessary.
- -------------------------------------------------------------------------------------------------------------
10. Install permanent filter elements as X
required.
- -------------------------------------------------------------------------------------------------------------
11. Verify that specified valve packing has X
provided on valves installed in the
plant.
- -------------------------------------------------------------------------------------------------------------
12. Install car seals or chain locks on X
valves where required by Engineering
Flow Diagrams.
- -------------------------------------------------------------------------------------------------------------
13. Check and record position of all X
car-sealed or chain-locked valves;
identify valves as specified.
- -------------------------------------------------------------------------------------------------------------
14. Correct support, vibration, and thermal X X X
expansion problems detected during
commissioning.
- -------------------------------------------------------------------------------------------------------------
15. Retorque all hot and cold service X
bolting during commissioning as required.
- -------------------------------------------------------------------------------------------------------------
H. Electrical Power and Lightning Systems
- -------------------------------------------------------------------------------------------------------------
1. Notify the Owner of the test schedule. X
- -------------------------------------------------------------------------------------------------------------
2. Witness tests when notified and record X
test data if desired.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 12
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3. Using a megohmmeter, make insulation X
tests on all wiring except lighting wiring
- -------------------------------------------------------------------------------------------------------------
4. Using a megohmmeter, make insulation X
test on motor and transformer windings
from phase to phase and phase to ground.
- -------------------------------------------------------------------------------------------------------------
5. Make grounding system tests to X
determine the continuity of connections
and the value of resistance to ground.
- -------------------------------------------------------------------------------------------------------------
6. Arrange for breakdown tests on oil X
samples from oil insulated transformers
larger than 100 kva absolute.
- -------------------------------------------------------------------------------------------------------------
7. Charge electrical gear with oil and/or X
other media, when required.
- -------------------------------------------------------------------------------------------------------------
8. Perform trails and adjustments on all X
switchgear, motor control equipment and
generators.
- -------------------------------------------------------------------------------------------------------------
9. Test and set switchgear and circuit X
breaker relays for proper coordination
as required by ENG STD 70A2.
- -------------------------------------------------------------------------------------------------------------
10. Obtain local inspector's approval where X
required.
- -------------------------------------------------------------------------------------------------------------
11. Energize all substations, with approval X X
of the Owner, after completion of all tests.
- -------------------------------------------------------------------------------------------------------------
12. Check phase sequence and polarity. X
- -------------------------------------------------------------------------------------------------------------
13. Check installation of emergency power X
and lighting systems, including light
intensity.
- -------------------------------------------------------------------------------------------------------------
14. Provide the Owner with a record of work X
completed.
- -------------------------------------------------------------------------------------------------------------
15. Measure light intensity if required. X
- -------------------------------------------------------------------------------------------------------------
J. Instrument Systems
- -------------------------------------------------------------------------------------------------------------
1. Conduct any nonoperating checks to X
ensure instrument operability, e.g.,
remove all shipping stops; check pointer
travels; and verify instrument capability
to measure, operate, and stroke in the
direction and manner required by the
process application.
- -------------------------------------------------------------------------------------------------------------
2. Perform bench calibrate instruments X
with standard test equipment and make
all required adjustments and control
point settings.
- -------------------------------------------------------------------------------------------------------------
3. Perform field calibration and final X
calibration of instruments and make all
required adjustments and control point
settings.
- -------------------------------------------------------------------------------------------------------------
4. Clean all transmission and control X
tubing by blowing with cooled and
filtered clean air before
connecting to instrument components.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 13
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5. Clean all air-supply headers by blowing X
with clean air and check them for
tightness.
- -------------------------------------------------------------------------------------------------------------
6. Leak test pneumatic control circuits X
in accordance with the latest edition of
ISA Recommended practice 7.1: Pneumatic
Control Circuit Pressure Test.
- -------------------------------------------------------------------------------------------------------------
7. Check piping from instruments to X
process piping for tightness.
- -------------------------------------------------------------------------------------------------------------
8. Install and connect all system hardware X
and verify their conformance to specifications
and design criteria for function and
range.
- -------------------------------------------------------------------------------------------------------------
9. Check all electrical signals and alarm X
wiring for continuity, correct source
of power, and polarity.
- -------------------------------------------------------------------------------------------------------------
10. Check thermocouples for proper joining X
of wires, position of elements in
wells, proper polarity, and continuity
of receiving instruments.
- -------------------------------------------------------------------------------------------------------------
11. Identify orifice plates by tagging and X
deliver to the Owner.
- -------------------------------------------------------------------------------------------------------------
12. Check and record bores of orifice X
plates and install after completion of
flushing operations.
- -------------------------------------------------------------------------------------------------------------
13. Isolate or remove, if necessary, inline X
components such as control valves,
positive displacement meters, and
turbine meters for pressure testing.
Reinstall these items after testing the
system with the components removed or
isolated.
- -------------------------------------------------------------------------------------------------------------
14. Isolate or remove inline components for X
flushing operations and reinstall them
on the completion of these operations.
- -------------------------------------------------------------------------------------------------------------
15. Install any sealing fluids, as required. X
- -------------------------------------------------------------------------------------------------------------
16. Fully pressurize and energize the X
transmitting and control signal system(s)
by opening process connections at primary
sensors and final regulators, and by
making control mode settings for
automatic operation of equipment as the
process unit is charged and brought on
stream.
- -------------------------------------------------------------------------------------------------------------
17. Provide a schedule of recorder charts. X
- -------------------------------------------------------------------------------------------------------------
K. Water Systems (Service Wells, Cooling Towers,
Fire Water Systems, and Sea Water Systems)
- -------------------------------------------------------------------------------------------------------------
1. Inspect for completeness and X
correctness of installation and
make any nonoperating
checks that may be required.
- -------------------------------------------------------------------------------------------------------------
2. Clean the cooling tower basin and X
install screens in the suction pit
before water circulation.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 14
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3. Provide test pump for wells; test well X
delivery; and flush wells when wells
are provided by Foster Wheeler.
- -------------------------------------------------------------------------------------------------------------
4. Flush, drain, and clean the cooling X
tower basins.
- -------------------------------------------------------------------------------------------------------------
5. Clean intake screens after flushing. X
- -------------------------------------------------------------------------------------------------------------
6. Adjust cooling tower fans to obtain X
specified tip clearance and test.
- -------------------------------------------------------------------------------------------------------------
7. Operate fire pumps to check output of X
systems.
- -------------------------------------------------------------------------------------------------------------
8. Head up reservoirs, vessels, tanks, and X
other water systems equipment as required,
fill with water, check for leaks, and
flush to clean.
- -------------------------------------------------------------------------------------------------------------
9. Provide insurance company inspection of X
the fire system as required.
- -------------------------------------------------------------------------------------------------------------
10. Obtain and install all required fire X
fighting chemicals and portable
equipment such as hoses, fire
extinguishers, and related equipment.
- -------------------------------------------------------------------------------------------------------------
11. Establish water treatment program. X
- -------------------------------------------------------------------------------------------------------------
12. Obtain the services of a water X X
consultant to advise and monitor the
water treatment.
- -------------------------------------------------------------------------------------------------------------
L. Waste Disposal
- -------------------------------------------------------------------------------------------------------------
1. Inspect facilities for completeness and X
correctness of installation and make
any nonoperating checks to ensure their
conformance to specifications.
- -------------------------------------------------------------------------------------------------------------
2. Operate all equipment and supply all X
chemicals and agents related to waste
treatment.
- -------------------------------------------------------------------------------------------------------------
3. Obtain the services of a waste X X
treatment consultant to advise and
monitor the system operation.
- -------------------------------------------------------------------------------------------------------------
M. Buildings and Accessories
- -------------------------------------------------------------------------------------------------------------
1. Check installation of buildings and X
accessories, including all heating,
ventilating, and air-cooling equipment,
to ensure their completeness and
conformance to specifications.
- -------------------------------------------------------------------------------------------------------------
2. As required, obtain certification that X
all plumbing and elevator installations
comply with local government
regulations.
- -------------------------------------------------------------------------------------------------------------
3. Operate heating, ventilating, and air X
conditioning units and make all
performance tests.
- -------------------------------------------------------------------------------------------------------------
4. Obtain certificate for occupancy and X
use, if required.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
JOB SPEC 4610-05A1
[LOGO] FOSTER WHEELER PLANT COMPLETION PAGE 15
USA CORPORATION REV 2
DATE June 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RESPONSIBLE PARTY
PRE-COMMISSIONING COMMISSIONING
----------------- -------------
FW ENG/ FW CLARK
PROC CONSTR WITNESS CLARK FW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
N. Miscellaneous Equipment (Agitators, Mixers,
Rotary Filters, Weigh Scales, and Materials
Handling Equipment)
- -------------------------------------------------------------------------------------------------------------
1. Fully assemble rotary filters except X
the final filter media (cloth, precoat,
or screen)
- -------------------------------------------------------------------------------------------------------------
2. Install all final filter media. X
- -------------------------------------------------------------------------------------------------------------
3. Level and calibrate weigh scales with X
the assistance of the manufacturer's
representative and set tare weights
possible.
- -------------------------------------------------------------------------------------------------------------
4. Manually check materials handling X
equipment for freedom and direction of
movement.
- -------------------------------------------------------------------------------------------------------------
5. Check clearance on materials handling X
equipment.
- -------------------------------------------------------------------------------------------------------------
6. Make all final adjustments during X
run-in and conduct any performance
tests required.
- -------------------------------------------------------------------------------------------------------------
7. Obtain service engineer for technical X
assistance during installation or
startup, if desired.
- -------------------------------------------------------------------------------------------------------------
8. As required, obtain certification that X
all lifting and materials handling
installations and other items of
equipment comply with government
regulations. Example: Gantry Crane
System and Elevator.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONTRACT SCHEDULE 1.7
TURNKEY SPECIFICATION
The Turnkey Specification, which serves to define the scope of the Port Arthur
Heavy Oil Upgrade Project for the CONTRACT, is presented in separate attached
volumes as listed below.
Volume I General
1. Project Description and Overall Block Flow
2. Basic Engineering Design Data
3. Project Specifications
4. Project Drawing Index
5. Project Requisitions Index
Volume II Delayed Coker and Vapor Recovery Unit
1. Process Design
1.1 Introduction
1.2 Design Basis
1.3 Description of Flow
1.4 Summary of Utility and Chemical Requirements
1.5 Process Flow Diagrams and Material Balance Sheets
2.0 Process Specifications
2.1 Equipment and Piping Specialty Item Lists
2.2 Vessels
2.3 Heat Transfer Equipment
2.4 Mechanical Equipment
2.5 Miscellaneous Equipment, Filters and Strainers and
Skid Units
2.6 Coke Handling Equipment
2.7 Instrumentation
3.0 Drawings
3.1 Plot Plans
3.2 General Engineering Flow Diagrams
3.3 Engineering Flow Diagrams
3.4 Auxiliary Flow Diagrams
3.5 Utility Flow Diagrams
3.6 LPG (C3/C4) Treater Package
3.7 Design Pressure / Temperature Diagrams
3.8 Material of Construction Diagrams
3.9 Line Classification Lists
Volume III Hydrocracker (similar content as above)
Volume IV Sulfur Recovery Unit
Volume V Amine Treatment Unit and Sour Water Stripper
Volume VI Coker Tankage, Flare, Cooling Tower and Interconnecting Piping
<PAGE>
CONTRACT SCHEDULE 2.4.2
CONSUMABLES
Requirements for catalysts and initial-fill chemicals are defined in the
Technical Specification (Schedule 1.7) for each of the process units and are
compiled on the pages that follow.
Lube oils as required, for the lube oil users on the attached equipment lists.
<PAGE>
REF.: 13-004611
[LOGO] FOSTER WHEELER USA CORPORATION UNIT: DCU-843
DATE: JUNE1999
PAGE: 1.4-24
REV.: 1
DELAYED COKER AND VAPOR RECOVERY UNIT
1.0 PROCESS DESIGN
1.4 Summary of Utility and Chemical Requirements
1.4.2 Consumption and Production (Cont'd)
Chemical Consumption
Item No. Service Chemical Consumption
SK-4015 De-Emulsifier Injection EC2345A or equivalent 3,250 Gal/yr
Package
SK-4500 Antifoam Injection Package EC9019A or equivalent 10,000 Gal/yr
Catalyst Consumption
Item No. Service Catalyst Consumption
R-9600 Di-Olefin Reactor TK-437 NiMo or Equivalent 780 ft/3/2 Yrs
R-9650 Silica Reactor TK-437 NiMo or Equivalent 3,440 ft/3/Yr
C(3)/C(4) Treater Consumption
Item No. Service Description Consumption
SK-6700 C(3)/C(4) Treater Solvent (Naphtha) 1.5 GPM (2)
SK-6700 C(3)/C(4) Treater Fresh Caustic (Dry) 0.4 GPM (2)
(4,590 gal
Initial Fill)
SK-6700 C(3)/C(4) Treater Caustic Regeneration 0.4 Lb/day (2)
Catalyst (17.5 Lbs Initial
Charge)
(1) Maximum simultaneous load.
(2) Denotes estimated consumption for equipment not specified by Process.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Clark Refining company - Port Arthur, Texas
Catalyst Loading Summary
Reactor No: R-1000 Units of Volume are in ft3
Reactor I.D. = 15 ft Units of Depth are In ft
Estimated T-T = 92 ft Units of Weight are in lb
- -----------------------------------------------------------------------------------------------
Loading Predicted
Reactor Position Type Vol% Volume Weight Depth Method Densities
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bed 1
Guard Layer SA-5518 - 88 5632 0.5 Sock 64
HDM ICR 122 ZSB - 495 14850 2.8 Sock 30
HDM ICR 132 NAQ - 530 18020 3.0 Sock 34
Support Catalyst ICR 114 ZF - 88 4312 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 2
Active Catalyst ICR 135 KAQ 3.2 353 14826 2.0 Dense 42
Active Catalyst ICR 154 KF 6.4 707 43127 4.0 Dense 61
Support Catalyst ICR 114ZF - 88 4312 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 3
Active Catalyst ICR 141 L32 14.5 1590 84270 9.0 Dense 53
Support Catalyst ICR 114ZF 88 4312 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 4
Active Catalyst ICR 141L34 16.9 1856 96512 10.5 Dense 52
Support Catatyst ICR 114ZF - 88 4312 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 5
Active Catalyst ICR 141L34 19.3 2121 110292 12.0 52
Support Catalyst ICR 114ZF - 88 4312 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 6
Active Catalyst ICR 141L34 19.3 2121 110292 12.0 52
Support Catalyst ICR 114ZF - 88 4312 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 7
Active Catalyst ICR 141L38 14.7 1626 82926 92 Dense 51
Mercaptan Catalyst ICR 154KF 5.7 628 37052 3.5 Dense 59
Support Catalyst ICR 114ZF - 176 8624 Sock 49
- -----------------------------------------------------------------------------------------------
Totals Guard Layer SA-5518 88 5632
Demet ICR 122 ZSB 495 14850
Demet ICR 132 NAQ 530 18020
Active Catalyst ICR 135 KAQ 3.2 353 14826
Active Catalyst ICR 154 KF 12.1 1335 80179
Active Catalyst ICR 141L32 14.5 1590 84270
Active Catalyst ICR 141L34 55.4 6098 317096
Active Catalyst ICR 141L38 14.7 1626 82926
Support Catalyst ICR 114ZF - 704 34496
- -----------------------------------------------------------------------------------------------
</TABLE>
All values below Include - 5 % contingency rounded to the nearest supersack
SA-5518 6,000 lbs.
ICR 122 ZSB 15,600 lbs.
ICR 132 NAQ 19,500 lbs.
ICR 135 KAQ 16,200 lbs.
ICR 154 KF 97,200 lbs. (Stage 1 + 2 total)
ICR 141L32 88,200 lbs.
ICR 141L34 333,000 lbs.
ICR 141L38 108,000 lbs.
ICR 210L 93,500 lbs. (Stage 2)
ICR 114ZF 45,900 lbs. (Stage 1 + 2 total)
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Clark Refining Company - Port Arthur, Texas
Catalyst Loading Summary
Reactor No: R-2000 Units of Volume are in ft3
Reactor I.D. = 9 ft Units of Depth are In ft
Estimated T-T = 58ft Units of Weight are in lb
- -----------------------------------------------------------------------------------------------
Loading Predicted
Reactor Position Type Vol% Volume Weight Depth Method Densities
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bed 1
Active Catalyst ICR 141L38 14.4 382 19482 6.0 Dense 51
Support Catalyst ICR 114ZF - 32 1568 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 2
Active Catalyst ICR 210L 19.0 503 21629 7.9 Dense 43
Support Catalyst ICR 114ZF - 32 1568 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 3
Active Catalyst ICR 210L 19.0 503 21629 7.9 Dense 43
Support Catalyst ICR 114ZF - 32 1568 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 4
Active Catalyst ICR 210L 19.0 503 21629 7.9 Dense 43
Support Catalyst ICR 1I4ZF - 32 1568 0.5 Sock 49
- -----------------------------------------------------------------------------------------------
Bed 5
Active Catalyst ICR 210L 21.4 566 24338 8.9 Dense 43
Mercaptan Catalyst ICR 154KF 7.1 187 11407 3.0 Dense 61
Support Catalyst ICR 114ZF - 50 2450 Sock 49
- -----------------------------------------------------------------------------------------------
Totals Active Catalyst ICR 210L 78.5 2075 89225
Active Catalyst ICR 154KF 7.1 187 11407
Active Catalyst ICR 141L38 14.4 382 19482
Support Catalyst ICR 114ZF - 178 8722
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SPC CHEMICAL AND CATALYST REQUIREMENTS
Page 1 of 2
<TABLE>
<CAPTION>
SRU 545
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Description Type Supplier 0n-site Quantity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
No. 1 Claus Reactor Alumina Oxide Catalyst S-501 Alcoa 117,600 lbs (2,352 cil. ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
No. 2 Claus Reactor Alumina Oxide Catalyst S-201 Alcoa 108,200 lbs (2,352 cu. ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
No. 3 Claus Reactor Alumina Oxide Catalyst S-201 Alcoa 108,200 lbs (2,352 cu. ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
SCOT Reactor Ni-Mo on Alumina Base 534 Criterion 75,000 lbs (1,600 cu. ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
SCOT Solvent Amine MDEA Huntsman 21,000 gal. (Loss: 0.143 gpm) Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
SCOT ph Control Chemical Caustic 34 (degrees) Baume' NaOH Van Water & Roger 2,l00 gal (Usage: 0.97 gpm)
- ------------------------------------------------------------------------------------------------------------------------------------
BFW Treatment Chemical Polymer AP-0200 Betz-Dearborn 500 gal (50lb/day or 5.88 gpd)
- ------------------------------------------------------------------------------------------------------------------------------------
BFW Treatment Chemical 0(2) Scavenger OS-2001 Betz-Dearborn 500 gal (30lb/day or 3.33 gpd)
- ------------------------------------------------------------------------------------------------------------------------------------
BFW Treatment Chemical Neutralizing Amine Filmer NA-2440 Betz-Dearborn 500 gal (25lb/day or 3.05 gpd)
- ------------------------------------------------------------------------------------------------------------------------------------
Note 1: MDEA is purchased at 100% concentration and is diluted to a 45%
concentration with steam condensate for the process.
DCU 843
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Description Type Supplier 0n-site Quantity
- ------------------------------------------------------------------------------------------------------------------------------------
Silica Removal Reactor Alumina Based Only TBD TBD 160,000 lbs (4,396 cu. ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
Di-Olefin Reactor Ni-Mo on Alumina Base TBD TBD 30,000 lbs (800 cu. ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
LPG Mercaptan Treater Caustic NaOH By Refinery 5,000 gal (0.5 GPD)
- ------------------------------------------------------------------------------------------------------------------------------------
Coke Drums Anti-foam ProChem 6A60C Betz-Dearborn 2,000 gal (Usage: 16 gpd)
- ------------------------------------------------------------------------------------------------------------------------------------
Blowdown System De-emulsifier EC-2345A or eq. Nalco-Exxon 1,000 gal (Usage: 9 gpd)
- ------------------------------------------------------------------------------------------------------------------------------------
HCU 942
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Description Type Supplier 0n-site Quantity
- ------------------------------------------------------------------------------------------------------------------------------------
Stage No. 1 & 2 Reactors Zeolite/Ni Mo Combination ICR Series Chevron 823,100 lbs
- ------------------------------------------------------------------------------------------------------------------------------------
Catalyst Presulfiding DMDS Chemical Grade Elf-Atochem 0 lbs (as needed by truck) Note 2
- ------------------------------------------------------------------------------------------------------------------------------------
Catalyst Presulfiding Tri-butylamine Chemical Grade To be determined 0 lbs (as needed by truck) Note 3
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 2: Catalyst changeout with an anticipated life of 2 years minimum, requires
120,000 lbs of DMDS for presulfiding
Note 3: Catalyst changeout with an anticipated life of 2 years minimum, requires
12263 gallons of Tri-butyl amine
JAG
03/07/ 1999
<PAGE>
SPC CHEMICAL AND CATALYST REQUIREMENTS
Page 1 of 2
<TABLE>
<CAPTION>
ATU 7841
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Description Type Supplier 0n-site Quantity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Solvent Amine MDEA Huntsman 125,000 gal (Note 4)
- ------------------------------------------------------------------------------------------------------------------------------------
Note 4: MDEA is purchased at 100% concentration and is diluted to a 45%
concentration with steam condensate for the process.
SWS 8747
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Description Type Supplier 0n-site Quantity
- ------------------------------------------------------------------------------------------------------------------------------------
Not Applicable (Note 5)
- ------------------------------------------------------------------------------------------------------------------------------------
Note 5 - No chemicals or catalysts are required. The design provides for future
caustic injection, if required. Facilities to inject caustic will be
provide if operating experience with the SWS indicates the need for pH
control.
COOLING TOWER - P.S. 432
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Description Type Supplier 0n-site Quantity (Note 6)
- ------------------------------------------------------------------------------------------------------------------------------------
Cooling Water System Chlorine Commercial Dixie Chemical 3 - 1 Ton cylinder (18.7 lb/day)
- ------------------------------------------------------------------------------------------------------------------------------------
Cooling Water System Biocide BD-1500 Betz-Dearborn 550 gal (7 gal/month)
- ------------------------------------------------------------------------------------------------------------------------------------
Cooling Water System Phosphate DN-2300 Betz-Dearborn 500 gal (14 gal/day)
- ------------------------------------------------------------------------------------------------------------------------------------
Cooling Water System Inhibitor DN-2102 Betz-Dearborn 1000 gal (4 gal/day)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 6: Chemical addition based on normal water circulating rate of 18,677 gpm
with 93 (degrees) F supply and 115 (degrees) F return temperatures.
JAG
03/08/1999
<PAGE>
HCU 942 CATALYST
Catalyst Type PDP Design Cat. Agreement TBA DMDS
LBS LBS Gal LBS
SA-5517 5655 6000
ICR - 122 Z5B 14844 15600
ICR 132 NAQ 18025 19500
ICR 135 KAQ 14844 16200
ICR 141 L32 84293 88200 1852.2
ICR 141 L34 317026 333000 6993
ICR 141 L38 102381 108000 2268
ICR 154 KF 92833 97200
ICR 210L 89179 93500 1150.05
ICR 114ZF 43290 45900
Total 782370 823100 12263.25 120000
<PAGE>
8522 East 61st Street TELEPHONE NO.: (918) 250-8522
Tulsa, Oklahoma 74133 FACSIMILE NO.: (918)250-6915
TELEFAX TRANSMITTAL
TO: Moustafa El-Khashab DATE TRANSMITFED: 6/22/99
COMPANY: Foster Wheeler USA Corp. LOCATION: Houston, TX
FAX NO.: 281-597-3377
FROM: Scott Lewis NO. OF PAGES: 1
REFERENCE: Clark SRU 545, Job No. 98- 926, PQ/FW-151
SUBJECT: Quantities of Catalyst
Dear Moustafa,
Included in our proposal is the Catalyst for the SRU Reactors and the SCOT
Catalyst. Our proposal estimated that 325,000 lbs of La Roche S-201 would be
required for the SRU Reactors and 81,500 lbs of Criterion 534 SH would be used
in the SCOT Reactor. The initial fill of these Catalysts have been included in
our pricing.
The solvent utilized in the SCOT unit is approximately 45 wt% MDEA. Our design
circulation rate is around 770 gpm. We estimate the initial system fill will
require 16,000 gallons. We do not have a current price for MDEA, but a call to
UCARSOL or Dow Spec could probably provide you with pricing. We have NOT
included any charge of solvent in our proposal
I trust this is the information that you requested.
Sincerely,
/s/ J. Scott Lewis
J. Scott Lewis
Project Manager
cc: File 3926-2.10
Problems with transmission? Please call operator @ (918) 250-8522.
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- -----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- -----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO P.O. NO.
=================================================================================================================
<S> <C> <C> <C> <C> <C>
TOWERS 843- T-5200 Coker Fractionator 021/022 1111-A PH-6
- -----------------------------------------------------------------------------------------------------------------
843-T-5230/40 LCGO/HCGO Stripper 023 1111-G PH-19
- -----------------------------------------------------------------------------------------------------------------
DRUMS 843- D-1100 Coke Drum 002 1131-A PH-2
- -----------------------------------------------------------------------------------------------------------------
843- D-1200 Coke Drum 004 1131-A PH-2
- -----------------------------------------------------------------------------------------------------------------
843- D-2100 Coke Drum 005 1131-A PH-2
- -----------------------------------------------------------------------------------------------------------------
843- D-2200 Coke Drum 007 1131-A PH-2
- -----------------------------------------------------------------------------------------------------------------
843- D-3100 Coke Drum 008 1131-A PH-2
- -----------------------------------------------------------------------------------------------------------------
843- D-3200 Coke Drum 010 1131-A PH-2
- -----------------------------------------------------------------------------------------------------------------
843- D-1010 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-1025 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-2010 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-3010 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-1020 Fuel Gas K.O. Drum 054 1131-K PH-33
- -----------------------------------------------------------------------------------------------------------------
843- D-1130 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-4000 Coker Blowdown Drum 038 1131-C PH-14
- -----------------------------------------------------------------------------------------------------------------
843- D-4010 Blowdown Settling Drum 043 1131-G PH-12
- -----------------------------------------------------------------------------------------------------------------
843- D-4020 Water Seal Drum 043 1131-L PH-33
- -----------------------------------------------------------------------------------------------------------------
843- D-4030 Coke Condensate Drum 011 1131-F PH-19
- -----------------------------------------------------------------------------------------------------------------
843- D-5210 Fractionator Overhead Drum 036 1131-E PH-12
- -----------------------------------------------------------------------------------------------------------------
843- D-5245 Steam Blowdown Drum 031 1131-J PH-19
- -----------------------------------------------------------------------------------------------------------------
843- D-5246 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-7000 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- D-7050 Flushing Oil Coalescer 161 1131-0 PH-76
- -----------------------------------------------------------------------------------------------------------------
TANKS 843- TK-4100 Decoking Water Tank 045 2141-A PH-50
- -----------------------------------------------------------------------------------------------------------------
843- TK- 8010 Sludge Tank 069 2141-B
- -----------------------------------------------------------------------------------------------------------------
843- TK-4015 De-Emulsifier Tank 071
- -----------------------------------------------------------------------------------------------------------------
843- TK-4500 Antifoam Injection Tank 070
- -----------------------------------------------------------------------------------------------------------------
843- TK-4167 Lube Oil Sump 1394-A PH-8
- -----------------------------------------------------------------------------------------------------------------
EXCHANGERS 843- E-4001 Blowdown Drum Heater 038 1211-D PH-l8
- -----------------------------------------------------------------------------------------------------------------
843-E-4167A/B Lube Oil Cooler 148 1394-A PH-8
=================================================================================================================
=================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- ---------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
=================================================================================================================================
<S> <C> <C> <C> <C>
TOWERS 843- T-5200 Coker Fractionator 18'-O" top; 22-0" bottom ID x 12'-6" T-T 2
- ---------------------------------------------------------------------------------------------------------------------------------
843-T-5230/40 LCGO/HCGO Stripper 6'-0" ID x 53'-0" T-T 3
- ---------------------------------------------------------------------------------------------------------------------------------
DRUMS 843- D-1100 Coke Drum 28'-O" ID x109'-9" F/F 1
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-1200 Coke Drum 28'-O" ID x 109'-9" F/F 1
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-2100 Coke Drum 28'-0" ID x 109'-9" F/F 1
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-2200 Coke Drum 28'-0" x 109'-9" F/F 1
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-3100 Coke Drum 28'-0" ID x 109'-9" F/F 1
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-3200 Coke Drum 28'-0" ID x 109'-9" F/F 1
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-1010 Deleted 5
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-1025 Deleted 5
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-2010 Deleted 5
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-3010 Deleted 5
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-1020 Fuel Gas K.O. Drum 6'-6" ID x 15'-0" T-T 4
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-1130 Deleted 2
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-4000 Coker Blowdown Drum 15'-0" ID x 55'-0" T-T 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-4010 Blowdown Settling Drum 11'-O" ID x 47'-0" T-T 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-4020 Water Seal Drum 6'-0" ID x 12'-0" T-T 4
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-4030 Coke Condensate Drum 6'-0" ID x 10'-0" T-T 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-5210 Fractionator Overhead 15-0" ID x 30'-0" T-T 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-5245 Steam Blowdown Drum 2'-6" ID x 6'-0" T-T 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-5246 Deleted 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-7000 Deleted 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-7050 Flushing Oil Coalescer Size by vendor 0-10" od X 5'-4" T-T 6
- ---------------------------------------------------------------------------------------------------------------------------------
TANKS 843- TK-4100 Decoking Water Tank 60'-0" Dia. x 60'-0" High 5
- ---------------------------------------------------------------------------------------------------------------------------------
843- TK- 8010 Sludge Tank 16'-0" Dia x 26'- 0" High 4
- ---------------------------------------------------------------------------------------------------------------------------------
843- TK-4015 De-Emulsifier Tank Furnished by Clark for SK-4015 4
- ---------------------------------------------------------------------------------------------------------------------------------
843- TK-4500 Antifoam Injection Tan Furnished by Clark for SK-4500 5
- ---------------------------------------------------------------------------------------------------------------------------------
843- TK-4167 Lube Oil Sump Part of Lube Oil Console (N-4167). 4
Supplied with Wet Gas Compressor, K-6300
- ---------------------------------------------------------------------------------------------------------------------------------
EXCHANGERS 843- E-4001 Blowdown Drum Heater Stub-In Heater 2
- ---------------------------------------------------------------------------------------------------------------------------------
843-E-4167A/B Lube Oil Cooler Part of Lube Oil Console (N-4167) 4
- ---------------------------------------------------------------------------------------------------------------------------------
Supplied with Coke Cutting Pump, P-4110
=================================================================================================================================
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- -----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- -----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=================================================================================================================
<S> <C> <C> <C> <C> <C>
843- E-5231A/B LCGO/BFW Exchanger 033 1221-A PH-22
- -----------------------------------------------------------------------------------------------------------------
843- E-5241 HCGO Product/Steam Genrtr 029 1211-K PH-34
- -----------------------------------------------------------------------------------------------------------------
843- E-5251A-F HCGO PA/Feed Exchanger 027 1211-F PH-18
- -----------------------------------------------------------------------------------------------------------------
843- E-5252 HCGO PA/Steam Generator 029 1211-L PH-34
- -----------------------------------------------------------------------------------------------------------------
843- E-1001 Air preheater 060 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- E-2001 Air Preheater 062 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- E-3001 Air Preheater 064 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- E-1002 Air Tempering Steam Coil 060 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- E-2002 Air Tempering Steam Coil 062 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- E-3002 Air Tempering Steam Coil 064 1242-A PH-3
AIR 843- C-4010A-H Blowdown Condenser 041/042 1231-A PH-17
- -----------------------------------------------------------------------------------------------------------------
COOLERS 843- C-4050 Blowdown Circulating Oil Cooler 040 1231-B PH-17
- -----------------------------------------------------------------------------------------------------------------
843- C-5210A-L Fractionator OH Condenser 034/035 1231-C PH-17
- -----------------------------------------------------------------------------------------------------------------
843- C-5232A/B LCGO Product Cooler 033 1231-F PH-17
- -----------------------------------------------------------------------------------------------------------------
843- C-5233A-C LCGO Pumparound cooler 028 1231-G PH-17
- -----------------------------------------------------------------------------------------------------------------
843- C-5243A-D HCGO Product Cooler 032 1231-H PH-17
- -----------------------------------------------------------------------------------------------------------------
843- C-7000 Deleted
- -----------------------------------------------------------------------------------------------------------------
HEATERS 843 F- 1000 Coker Heater 013 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843 F- 2000 Coker Heater 015 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843 F- 3000 Coker Heater 017 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843 F- 1000S MP Steam Coil 075 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843 F- 2000S MP Steam Coil 076 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843 F- 3000S MP Steam Coil 077 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
FANS 843- K-1001 Forced Draft Fan 060 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- K-2001 Forced Draft Fan 062 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- K-3001 Forced Draft Fan 064 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- K-1002 Induced Draft Fan 060 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- K-2002 Induced Draft Fan 062 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- K-3002 Induced Draft Fan 064 1242-A PH-3
=================================================================================================================
================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- --------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
843- E-5231A/B LCGO/BFW Exchanger Double Pipe 4
- --------------------------------------------------------------------------------------------------------------------------------
843- E-5241 HCGO Product/Steam Genrtr 4
- --------------------------------------------------------------------------------------------------------------------------------
843- E-5251A-F HCGO PA/Feed Exchanger 4
- --------------------------------------------------------------------------------------------------------------------------------
843- E-5252 HCGO PA/Steam Generator 4
- --------------------------------------------------------------------------------------------------------------------------------
843- E-1001 Air preheater Supplied with F-1000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- E-2001 Air Preheater Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- E-3001 Air Preheater Supplied with F-3000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- E-1002 Air Tempering Steam Coil Supplied with F-1000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- E-2002 Air Tempering Steam Coil Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- E-3002 Air Tempering Steam Coil Supplied with F-3000 2
AIR 843- C-4010A-H Blowdown Condenser 3
- --------------------------------------------------------------------------------------------------------------------------------
COOLERS 843- C-4050 Blowdown Circulating Oil Cooler 3
- --------------------------------------------------------------------------------------------------------------------------------
843- C-5210A-L Fractionator OH Condenser 3
- --------------------------------------------------------------------------------------------------------------------------------
843- C-5232A/B LCGO Product Cooler 3
- --------------------------------------------------------------------------------------------------------------------------------
843- C-5233A-C LCGO Pumparound cooler 3
- --------------------------------------------------------------------------------------------------------------------------------
843- C-5243A-D HCGO Product Cooler 3
- --------------------------------------------------------------------------------------------------------------------------------
843- C-7000 Deleted 3
- --------------------------------------------------------------------------------------------------------------------------------
HEATERS 843 F- 1000 Coker Heater 1
- --------------------------------------------------------------------------------------------------------------------------------
843 F- 2000 Coker Heater 1
- --------------------------------------------------------------------------------------------------------------------------------
843 F- 3000 Coker Heater 1
- --------------------------------------------------------------------------------------------------------------------------------
843 F- 1000S MP Steam Coil Supplied with F-1000 2
- --------------------------------------------------------------------------------------------------------------------------------
843 F- 2000S MP Steam Coil Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843 F- 3000S MP Steam Coil Supplied with F-3000 2
- --------------------------------------------------------------------------------------------------------------------------------
FANS 843- K-1001 Forced Draft Fan Supplied with F-1000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- K-2001 Forced Draft Fan Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- K-3001 Forced Draft Fan Supplied with F-3000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- K-1002 Induced Draft Fan Supplied with F-1000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- K-2002 Induced Draft Fan Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- K-3002 Induced Draft Fan Supplied with F-3000 2
================================================================================================================================
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
PUMPS 843- P-1000A/B/C Heater Charge Pump 019 1311-B PH-11
- ----------------------------------------------------------------------------------------------------------------
843- P-401OA/B Blowdown Sour Water Pump 044 1311-K PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-4015A/B De-Emulsifier Pump 071 1315-A PH-75
- ----------------------------------------------------------------------------------------------------------------
843- P-4020A/B Slop Oil Pump 044 1311-L PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-4030 Coke Condensate Pump 012 1311-D PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-4050A/B Biowdown Circulating Oil Pump 039 1311-M PH-24
- ----------------------------------------------------------------------------------------------------------------
843- P-4110 Coke Cutting Pump 046 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- P-4120A/B Quench Water Pump 045 1311-C PH-10
- ----------------------------------------------------------------------------------------------------------------
843- P-4130A-D Clear Water Pump 050 1311 -E PH-9
- ----------------------------------------------------------------------------------------------------------------
843- P-4167A/B Lube Oil Pumps 148 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- P-4500A/B/C Antifoam Injection Pump 070 1315-B PH-75
- ----------------------------------------------------------------------------------------------------------------
843- P-4600A/B Oily Water Sump Pump 142 1311-DD
- ----------------------------------------------------------------------------------------------------------------
843- P-5210A/B Fractionator Sour Water Pump 037 1311-N PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-5220A/B Unstabilized Naphtha Pump 037 1311-P PH-24
- ----------------------------------------------------------------------------------------------------------------
843- P-5225A/B Fractionator Reflux Pump 036 1311-Q PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-5230A/B LCGO Product Pump 024 1311-F PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-5231 A/B LCGO Pumparound Pump 028 1311-R PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-5232A/B Sponge Oil Pump 111 1311-J PH-24
- ----------------------------------------------------------------------------------------------------------------
843- P-5240A/B HCGO Product Pump 024 1311 G PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-5250A/B HCGO Pumparound Pump 025 1311-H PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-5260 Recirculation Pump 020 1311-A PH-10
- ----------------------------------------------------------------------------------------------------------------
843- P-7000A/B Deleted
- ----------------------------------------------------------------------------------------------------------------
843- P-8010A/B Oily Sludge injection Pump 069 1313-A PH-27
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
SPECIAL 843-M-4035A/B Coke Condensate Strainer 012 1354-A PH-82
- ----------------------------------------------------------------------------------------------------------------
EQUIPMENT 843-M-4050A/B Blowdown Circulating Oil Strnr 039 1354-B PH-82
- ----------------------------------------------------------------------------------------------------------------
843-M-4167A/B Lube Oil Filters 1394A PH-8
- ----------------------------------------------------------------------------------------------------------------
843-M-5240A/B Quench/Wash Oil Strainer 026 1354-C PH-82
- ----------------------------------------------------------------------------------------------------------------
843-M-5260A/B Recirculatlon Strainer 020 1354-D PH-82
- ----------------------------------------------------------------------------------------------------------------
843-M-7000A/B Seal Oil Filter (LCGO) 162 1354-A PH-79
================================================================================================================
================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- --------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
PUMPS 843- P-1000A/B/C Heater Charge Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4010A/B Blowdown Sour Water Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4015A/B De-Emulsifier Pump Part of SK-4015 5
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4020A/B Slop Oil Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4030 Coke Condensate Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4050A/B Biowdown Circulating Oil Pump 5
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4110 Coke Cutting Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4120A/B Quench Water Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4130A-D Clear Water Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4167A/B Lube Oil Pumps Part of Lube Oil Console (N-4167) 4
Supplied with Coke Cutting Pump P-4110
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4500A/B/C Antifoam Injection Pump Part of SK-45OO 5
- --------------------------------------------------------------------------------------------------------------------------------
843- P-4600A/B Oily Water Sump Pump HOLD 6
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5210A/B Fractionator Sour Water Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5220A/B Unstabilized Naphtha Pump 4
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5225A/B Fractionator Ref lux Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5230A/B LCGO Product Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5231 A/B LCGO Pumparound Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5232A/B Sponge Oil Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5240A/B HCGO Product Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5250A/B HCGO Pumparound Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-5260 Recirculation Pump 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-7000A/B Deleted 3
- --------------------------------------------------------------------------------------------------------------------------------
843- P-8010A/B Oily Sludge injection Pump 4
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
SPECIAL 843-M-4035A/B Coke Condensate Strainer 6
- --------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT 843-M-4050A/B Blowdown Circulating Oil Strnr 5
- --------------------------------------------------------------------------------------------------------------------------------
843-M-4167A/B Lube Oil Filters Part of Lube Oil Console (N-4167) 4
Supplied with Coke Cutting Pump, P-4110
- --------------------------------------------------------------------------------------------------------------------------------
843-M-5240A/B Quench/Wash Oil Strainer 6
- --------------------------------------------------------------------------------------------------------------------------------
843-M-5260A/B Recirculatlon Strainer 6
- --------------------------------------------------------------------------------------------------------------------------------
843-M-7000A/B Seal Oil Filter (LCGO) 6
================================================================================================================================
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- -----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- -----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
=================================================================================================================
<S> <C> <C> <C> <C> <C>
843- M-701OA/B Seal Oil Filter (HCGO) 162 1354-B PH-79
- -----------------------------------------------------------------------------------------------------------------
843- S-5241 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- S-5252 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- M-1001 Coker Switch Valve 003 1919-D PH-37
- -----------------------------------------------------------------------------------------------------------------
843- M-2001 Coker Switch Valve 006 1919-D PH-37
- -----------------------------------------------------------------------------------------------------------------
843- M-3001 Coker Switch Valve 009 1919-D PH-37
- -----------------------------------------------------------------------------------------------------------------
843- M-1100 Bottom Unheading Device 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-1200 Bottom Unheading Device 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-2100 Bottom Unheading Device 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-2200 Bottom Unheading Device 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-3100 Bottom Unheading Device 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-3200 Bottom Unheading Device 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-1010 Hydraulic Power Unit 1397-A PH-42
- -----------------------------------------------------------------------------------------------------------------
843- M-1101 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- M-1201 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- M-2101 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- M-2201 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- M-3101 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- M-3201 Deleted
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
MISCELLAN 843- N-1100 Coke Drum Vent Silencer 002 1591-MA PH-69
- -----------------------------------------------------------------------------------------------------------------
843- N-1200 Coke Drum Vent Silencer 004 1591-MA PH-69
- -----------------------------------------------------------------------------------------------------------------
843- N-2100 Coke Drum Vent Silencer 005 1591-MA PH-69
- -----------------------------------------------------------------------------------------------------------------
843- N-2200 Coke Drum Vent Silencer 007 1591-MA PH-69
- -----------------------------------------------------------------------------------------------------------------
843- N-3100 Coke Drum Vent Silencer 008 1591-MA PH-69
- -----------------------------------------------------------------------------------------------------------------
843- N-3200 Coke Drum Vent Silencer 010 1591-MA PH-69
- -----------------------------------------------------------------------------------------------------------------
843- N-1001 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- N-2001 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- N-3001 Deleted
- -----------------------------------------------------------------------------------------------------------------
843- N-1002 Forced Draft Fan Silencer 060 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- N-2002 Forced Draft Fan Silencer 062 1242-A PH-3
- -----------------------------------------------------------------------------------------------------------------
843- N-3002 Forced Draft Fan Silencer 064 1242-A PH-3
=================================================================================================================
================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- --------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
843- M-701OA/B Seal Oil Filter (HCGO) 6
- --------------------------------------------------------------------------------------------------------------------------------
843- S-5241 Deleted 1
- --------------------------------------------------------------------------------------------------------------------------------
843- S-5252 Deleted 1
- --------------------------------------------------------------------------------------------------------------------------------
843- M-1001 Coker Switch Valve 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-2001 Coker Switch Valve 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-3001 Coker Switch Valve 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-1100 Bottom Unheading Device 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-1200 Bottom Unheading Device 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-2100 Bottom Unheading Device 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-2200 Bottom Unheading Device 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-3100 Bottom Unheading Device 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-3200 Bottom Unheading Device 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-1010 Hydraulic Power Unit 5
- --------------------------------------------------------------------------------------------------------------------------------
843- M-1101 Deleted
- --------------------------------------------------------------------------------------------------------------------------------
843- M-1201 Deleted
- --------------------------------------------------------------------------------------------------------------------------------
843- M-2101 Deleted
- --------------------------------------------------------------------------------------------------------------------------------
843- M-2201 Deleted
- --------------------------------------------------------------------------------------------------------------------------------
843- M-3101 Deleted
- --------------------------------------------------------------------------------------------------------------------------------
843- M-3201 Deleted
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MISCELLAN 843- N-1100 Coke Drum Vent Silencer 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-1200 Coke Drum Vent Silencer 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-2100 Coke Drum Vent Silencer 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-2200 Coke Drum Vent Silencer 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-3100 Coke Drum Vent Silencer 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-3200 Coke Drum Vent Silencer 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-1001 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-2001 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-3001 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-1002 Forced Draft Fan Silencer Supplied with K-1001 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-2002 Forced Draft Fan Silencer Supplied with K-2001 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-3002 Forced Draft Fan Silencer Supplied with K-3001 5
================================================================================================================================
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
843- N-4100A/B Coke Handling Bucket Crane 1362-A PH-31
- ----------------------------------------------------------------------------------------------------------------
843- N-4110 Coke Hopper & Grizzly 1345-A
- ----------------------------------------------------------------------------------------------------------------
843- N-4120 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- N-4130 Not used
- ----------------------------------------------------------------------------------------------------------------
843- N-4140 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- N-4150A/B Deleted
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
843- N-4160A-F Decoking Bypass Valve 046 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4161A-F Boring and Cutting Tools 047/8/9 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4162A-F Drill Stem 047/8/9 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4163A-F Rotary Joint 047/8/9 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4164A-F Reversible Drum Hoist 047/8/9 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4165A-F Rotary Drilling Hoses 047/8/9 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4166 Hoist Control Console 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4167 Lube Oil Console for P-4110 148 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- N-4170 Oil Mist Generator System 1393-A
- ----------------------------------------------------------------------------------------------------------------
843- N-1000 Elevator 1493-A PH-64
- ----------------------------------------------------------------------------------------------------------------
843- X-1110 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- X-1210 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- X-2110 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- X-2210 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- X-3110 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- X-3210 Deleted
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
843- N-2401 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- N-2903 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- N-4401 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- N-8010 Sludge Tank Mixer 69 1391-A
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
SKID UNITS 843- SK-4500 Antifoam Injection Skid 070 1315-B PH-75
- ----------------------------------------------------------------------------------------------------------------
843- SK-4015 De-Emulsifier Skid 071 1315-A PH-75
- ----------------------------------------------------------------------------------------------------------------
BUILDINGS 843- B-1001 Fuel Gas & H2S Analyzer Shield
- ----------------------------------------------------------------------------------------------------------------
843- B-2001 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- B-3001 Deleted
================================================================================================================
================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- --------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
843- N-4100A/B Coke Handling Bucket Crane 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4110 Coke Hopper & Grizzly 4
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4120 Deleted 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4130 Not used 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4140 Deleted 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4150A/B Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
843- N-4160A-F Decoking Bypass Valve Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4161A-F Boring and Cutting Tools Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4162A-F Drill Stem Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4163A-F Rotary Joint Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4164A-F Reversible Drum Hoist Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4165A-F Rotary Drilling Hoses Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4166 Hoist Control Console Part of Coke Cutting Pump (P-4110) Pckg. 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4167 Lube Oil Console for P-4110 Part of Coke Cutting Pump (P-4110) Pckg. 4
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4170 Oil Mist Generator System To be revised as a D&E Package 3
- --------------------------------------------------------------------------------------------------------------------------------
843- N-1000 Elevator 4
- --------------------------------------------------------------------------------------------------------------------------------
843- X-1110 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- X-1210 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- X-2110 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- X-2210 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- X-3110 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- X-3210 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-2401 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-2903 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-4401 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- N-8010 Sludge Tank Mixer 6
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
SKID UNITS 843- SK-4500 Antifoam Injection Skid 6
- --------------------------------------------------------------------------------------------------------------------------------
843- SK-4015 De-Emulsifier Skid 6
- --------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 843- B-1001 Fuel Gas & H2S Analyzer Shield By Instruments 5
- --------------------------------------------------------------------------------------------------------------------------------
843- B-2001 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
843- B-3001 Deleted 5
================================================================================================================================
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
DRIVERS 843- CM-4010A1-H1 Motors for C-4010A-H 041/042 1231-A PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-4010A2-H2 Motors for C-4010A-H 041/042 1231-A PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-4050 - 1 Motors for C-4050 040 1231-B PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-4050 - 2 Motors for C-4050 040 1231-B PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5210A1-L1 Motors for C-5210A-L 034/035 1231-C PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5210A2-L2 Motors for C-5210A-L 034/035 1231-C PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5232A1-B1 Motors for C-5232A-B 033 1231-F PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5232A2-B2 Motors for C-5232A-B 033 1231-F PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5233A1-C1 Motors for C-5233A-C 023 1231-G PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5233A2-C2 Motors for C-5233A-C 023 1231-G PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5243A1-D1 Motors for C-5243A-D 032 1231-H PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-5243A2-D2 Motors for C-5243A-D 032 1231-H PH-17
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
843- KM-1001 Motor for K-1001 060 1242-A PH-3
- ----------------------------------------------------------------------------------------------------------------
843- KM-2001 Motor for K-2001 062 1242-A PH-3
- ----------------------------------------------------------------------------------------------------------------
843- KM-3001 Motor for K-3001 064 1242-A PH-3
- ----------------------------------------------------------------------------------------------------------------
843- KM-1002 Motor for K-1002 060 1242-A PH-3
843- KM-2002 Motor for K-2002 062 1242-A PH-3
- ----------------------------------------------------------------------------------------------------------------
843- KM-3002 Motor for K-3002 064 1242-A PH-3
- ----------------------------------------------------------------------------------------------------------------
843- PM-1000A/B/C Motor for P-1000A/B/C 019 1311-B PH-11
- ----------------------------------------------------------------------------------------------------------------
843- PM-4010A/B Motor for P-4010A/B 044 1311-K PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-4015A/B Motor for P-4015A/B 071 1315-A PH-75
- ----------------------------------------------------------------------------------------------------------------
843- PM-4020A/B Motor for P-4020A/B 044 1311-L PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-4030 Motor for P-4030 012 1311-D PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-4050A/B Motor for P-4050A/B 039 1311-M PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-4110 Motor for P-4110 046 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- PM-4120A/B Motor for P-4120A/B 045 1311-C PH-10
- ----------------------------------------------------------------------------------------------------------------
843- PM-4130A-D Motor for P-5130A-D 050 1311-E PH-9
- ----------------------------------------------------------------------------------------------------------------
843- PM-4167A/B Motor for P-4167AB 1394-A PH-8
- ----------------------------------------------------------------------------------------------------------------
843- PM-4500A/B Motor for P-4500A/B 070 1315-B PH-75
================================================================================================================
================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- --------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
DRIVERS 843- CM-4010A1-H1 Motors for C-4010A-H 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-4010A2-H2 Motors for C-4010A-H 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-4050 - 1 Motors for C-4050 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-4050 - 2 Motors for C-4050 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5210A1-L1 Motors for C-5210A-L 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5210A2-L2 Motors for C-5210A-L 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5232A1-B1 Motors for C-5232A-B 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5232A2-B2 Motors for C-5232A-B 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5233A1-C1 Motors for C-5233A-C 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5233A2-C2 Motors for C-5233A-C 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5243A1-D1 Motors for C-5243A-D 5
- --------------------------------------------------------------------------------------------------------------------------------
843- CM-5243A2-D2 Motors for C-5243A-D 5
- --------------------------------------------------------------------------------------------------------------------------------
843- KM-1001 Motor for K-1001 Supplied with F-1000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- KM-2001 Motor for K-2001 Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- KM-3001 Motor for K-3001 Supplied with F-3000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- KM-1002 Motor for K-1002 Supplied with F-1000 2
843- KM-2002 Motor for K-2002 Supplied with F-2000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- KM-3002 Motor for K-3002 Supplied with F-3000 2
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-1000A/B/C Motor for P-1000A/B/C 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4010A/B Motor for P-4010A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4015A/B Motor for P-4015A/B 6
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4020A/B Motor for P-4020A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4030 Motor for P-4030 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4050A/B Motor for P-4050A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4110 Motor for P-4110 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4120A/B Motor for P-4120A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4130A-D Motor for P-5130A-D 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4167A/B Motor for P-4167AB 4
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-4500A/B Motor for P-4500A/B 6
================================================================================================================================
</TABLE>
Page 6
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Coker Area
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
843- PM-4600A/B Motor for P-4600 1311-DD
- ----------------------------------------------------------------------------------------------------------------
843- PM-5210A/B Motor for P-5210A/B 037 1311-N PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-5220A/B Motor for P-5220A/B 037 1311-P PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-5225A/B Motor for P-5225A/B 036 1311-Q PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-5230A/B Motor for P-5230A/B 024 1311-F PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-5231 A/B Motor for P-5231A/B 028 1311-R PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-5232A/B Motor for P-5232A/B 111 1311-J PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-5240A/B Motor for P-5240A/B 024 1311-G PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-5250A/B Motor for P-5250A/B 025 1311-H PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-5260 Motor for P-5260 020 1311-A PH-10
- ----------------------------------------------------------------------------------------------------------------
843- PM-8010A/B Motor for P-8010A/B 069 1313-A PH-27
================================================================================================================
================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Coker Area DELAYED COKER
- --------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
843- PM-4600A/B Motor for P-4600 HOLD 6
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5210A/B Motor for P-5210A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5220A/B Motor for P-5220A/B 4
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5225A/B Motor for P-5225A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5230A/B Motor for P-5230A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5231 A/B Motor for P-5231A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5232A/B Motor for P-5232A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5240A/B Motor for P-5240A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5250A/B Motor for P-5250A/B 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-5260 Motor for P-5260 3
- --------------------------------------------------------------------------------------------------------------------------------
843- PM-8010A/B Motor for P-8010A/B 4
================================================================================================================================
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: GAS PLANT
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
TOWERS 843- T-6400/50 Absorber/ Stripper 107/109 1111-B PH-14
- ----------------------------------------------------------------------------------------------------------------
843- T-6480 Sponge Absorber 112 1111-C PH-14
- ----------------------------------------------------------------------------------------------------------------
843- T-6500 Debutanizer 115 1111-D PH-14
- ----------------------------------------------------------------------------------------------------------------
843- T-6600 C3/C4 Splitter 122 1111-E PH-14
- ----------------------------------------------------------------------------------------------------------------
843- T-6750 Oxidizer Tower 120 111-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- T-6825 Coker Product Gas Amine 113 1111-F PH-14
Scrubber
- ----------------------------------------------------------------------------------------------------------------
843- T-6850 C3/C4 Amine Contactor 119 1111-H PH-19
- ----------------------------------------------------------------------------------------------------------------
DRUMS 843- D-6310 Compressor Interstage Drum 103 1131-H PH-12
- ----------------------------------------------------------------------------------------------------------------
843- D-6320 Lube Oil Rundown Drum 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- D-6350 Absorber Stripper Feed Drum 105 113l-B PH-14
- ----------------------------------------------------------------------------------------------------------------
843- D-6470 Deleted 107
- ----------------------------------------------------------------------------------------------------------------
843- D-6471 Deleted 110
- ----------------------------------------------------------------------------------------------------------------
843- D-6525 Debutanizer Overhead Drum 117 1131-D PH-19
- ----------------------------------------------------------------------------------------------------------------
843- D-6570 Deleted 116
- ----------------------------------------------------------------------------------------------------------------
843- D-6625 C3/C4 Splitter Overhead Drum 123 1131-M PH-19
- ----------------------------------------------------------------------------------------------------------------
843- D-6700 Phase Separator 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- D-6710 Phase Separator 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- D-6760 D5S Gravity Separator 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- D-6770 Solvent Wash Phase Separator 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- D-6830 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- D-6850 C3/C4 Amine Settler 119 1131-P PH-33
- ----------------------------------------------------------------------------------------------------------------
843- D-6870 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- D-7520 Air K. O. Drum
- ----------------------------------------------------------------------------------------------------------------
843- D-9010 MP Condensate Flash Drum 152 1131-Q PH-33
- ----------------------------------------------------------------------------------------------------------------
843- D-9020 Deleted
- ----------------------------------------------------------------------------------------------------------------
TANKS 843- TK-6910 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- TK-6310 Lube Oil Sump 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- TK-6790 Fresh Caustic Day Tank 125 1315-C
- ----------------------------------------------------------------------------------------------------------------
EXCNGRS 843- C-6310A/B Lube Oil Cooler 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- E-6470 Stripper Upper Reboiler A 108 1211-G PH-34
- ----------------------------------------------------------------------------------------------------------------
843- E-6471 Stripper Upper Reboller B 110 1211-H PH-34
- ----------------------------------------------------------------------------------------------------------------
843- E-6475 Stripper Lower Reboiler A 108 1211-K PH-34
================================================================================================================
==============================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: GAS PLANT DELAYED COKER
- ----------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
==================================================================================================================================
<S> <C> <C> <C> <C>
TOWERS 843- T-6400/50 Absorber/ Stripper 11'-0" ID x 78'-6" T-T / 14-0" ID x 76'-8"TT 3
- ----------------------------------------------------------------------------------------------------------------------------------
843- T-6480 Sponge Absorber 6'-6" ID x 66'-6" T-T 3
- ----------------------------------------------------------------------------------------------------------------------------------
843- T-6500 Debutanizer 11'-0" top; 14'-0" bottom ID x 106'-6" T-T 3
- ----------------------------------------------------------------------------------------------------------------------------------
843- T-6600 C3/C4 Splitter 4'-6" ID x 93'-0" T-T 3
- ----------------------------------------------------------------------------------------------------------------------------------
843- T-6750 Oxidizer Tower 5'-6" ID x 32'-0"T-T (Part of C3/C4 Pacages SK-6700) 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- T-6825 Coker Product Gas Amine 6'-0" ID x 83'-0" T-T 3
Scrubber 1
- ----------------------------------------------------------------------------------------------------------------------------------
843- T-6850 C3/C4 Amine Contactor 7'-6" ID x 65'-0" T-T 5
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
DRUMS 843- D-6310 Compressor Interstage Drum 12'-6" ID x 25'-0" T-T 3
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6320 Lube Oil Rundown Drum Part of Lube Oil Console, N-6310 4
Furnished with Gas Compressor K-6300
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6350 Absorber Stripper Feed Drum 13'-6" ID x 52'-0" T-T 3
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6470 Deleted 5
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6471 Deleted 5
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6525 Debutanizer Overhead Drum 10'-0" ID x 40'-0" T-T 1
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6570 Deleted 5
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6625 C3/C4 Splitter Overhead Drum 6'-6" ID x 26'-0" T-T 1
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6700 Phase Separator 6'-6" ID x 18-0" T-T (Part of C3/C4 Pacages SK-6700 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6710 Phase Separator 6'-6" ID x 18'-0" T-T (Part of C3/C4 Pacages SK-6700 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6760 D5O Gravity Separator 4'-0" ID x 16'-0" T-T (Part of C3/C4 Pacages SK-6700 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6770 Solvent Wash Phase Separator 4'-0" ID x 16'-0" T-T (Part of C3/C4 Pacages SK-6700 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6830 Deleted 0
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6850 C3/C4 Amine Settler 4'-6" ID x 18'-0" T-T 4
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-6870 Deleted 0
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-7520 Air K. O. Drum Item number was D-6810 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-9010 MP Condensate Flash Drum 5'-0" ID X 18'-6" T-T 4
- ----------------------------------------------------------------------------------------------------------------------------------
843- D-9020 Deleted 3
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TANKS 843- TK-6910 Deleted 6
- ----------------------------------------------------------------------------------------------------------------------------------
843- TK-6310 Lube Oil Sump Part of Lube Oil Console N-6310 4
Furnished with Gas Compressor K-6300
- ----------------------------------------------------------------------------------------------------------------------------------
843- TK-6790 Fresh Caustic Day Tank Part of SK-6750 6
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
EXCNGRS 843- C-6310A/B Lube Oil Cooler Part of Lube Oil Console N-6310 4
- ----------------------------------------------------------------------------------------------------------------------------------
843- E-6470 Stripper Upper Reboiler A 4
- ----------------------------------------------------------------------------------------------------------------------------------
843- E-6471 Stripper Upper Reboller B 4
- ----------------------------------------------------------------------------------------------------------------------------------
843- E-6475 Stripper Lower Reboiler A 4
==================================================================================================================================
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: GAS PLANT
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
843- E-6476 Stripper Lower Reboiler B 110 1211-J PH-34
- ----------------------------------------------------------------------------------------------------------------
843- E-6480A/B Lean/Rich Sponge Oil Exchangr 111 1211-E PH-18
- ----------------------------------------------------------------------------------------------------------------
843- C-6490 Lean Sponge Oil Trim Cooler 112 1211-A PH-18
- ----------------------------------------------------------------------------------------------------------------
843- C-6500A-D Debutanizer OH Condenser 117 1211-P PH-34
- ----------------------------------------------------------------------------------------------------------------
843- E-6570A/B Debutanizer Upper Reboiler 114/116 1211-M PH-32
- ----------------------------------------------------------------------------------------------------------------
843- E-6575A/B Debutanizer Lower Reboiler 114/116 1211-N PH-32
- ----------------------------------------------------------------------------------------------------------------
843- E-6586A/B Total Naphtha Trim Cooler 106 1211-B PH-18
- ----------------------------------------------------------------------------------------------------------------
843- C-6600 C3/C4 Splitter OH Condenser 123 1211-Q PH-34
- ----------------------------------------------------------------------------------------------------------------
843- C-6630 C3 Product Cooler 124 1221-B PH-22
- ----------------------------------------------------------------------------------------------------------------
843- C-6675 C3/C4 Splitter Reboiler 122 1211-R PH-34
- ----------------------------------------------------------------------------------------------------------------
843- C-6680 C3/C4 Splitter Feed/Bottoms 121 1221-C PH-22
Exchanger
- ----------------------------------------------------------------------------------------------------------------
843- C-6685 Butane Product Trim Cooler 121 1221-D PH-22
- ----------------------------------------------------------------------------------------------------------------
843- C-6710 Caustic Heater 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- C-6830 Deleted
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
AIR 843- C-6300A-D Compressor Instrtg Condenser 102 1231-D PH-17
- ----------------------------------------------------------------------------------------------------------------
COOLERS 843- C-6340A-D Absorber/Stripper Feed Cndsr 104 1231-E PH-17
- ----------------------------------------------------------------------------------------------------------------
843- C-6485 Lean Sponge Oil Cooler 111 1231-K PH-17
- ----------------------------------------------------------------------------------------------------------------
843- C-6485A-C Total Naphtha Pump 106 1231-J PH-17
- ----------------------------------------------------------------------------------------------------------------
843- C-6835 Deleted
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
PUMPS 843- P-6310A/B Compressor Intrstg Condenser 103 1311-S PH-24
- ----------------------------------------------------------------------------------------------------------------
843- P-6320A/B Lube Oil Pump 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- P-6350A/B Stripper Feed Pump 105 1311-T PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-6745A/B Debutanizer Feed Pump 109 1311-U PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-6525A/B Debutanizer Reflux Pump 118 1311-X PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-6530A/B Debutanizer OH Product Pump 118 1311-Y PH-24
- ----------------------------------------------------------------------------------------------------------------
843- P-6585A/B Total Naphtha Cooler 106 1311-Z PH-25
- ----------------------------------------------------------------------------------------------------------------
843- P-6525A/B C3/C4 Splitter Overhead Pump 124 1311-W PH-24
- ----------------------------------------------------------------------------------------------------------------
121 1311AA PH-24
- ----------------------------------------------------------------------------------------------------------------
843- P-6685A/B C4 Product Booster Pump 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- P-6710A/B Caustic Transfer Pumps 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- P-6760A/B Solvent/DSO Metering Pumps 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- P-6770A/B Solvent Recycle Pumps 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- P-6780A/B Caustic Regeneration Pumps 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- P-6790A/B Sulfidic Causic Metering Pumps 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- P-6870A/B Deleted
================================================================================================================
====================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: GAS PLANT DELAYED COKER
- -----------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
====================================================================================================================================
<S> <C> <C> <C> <C>
843- E-6476 Stripper Lower Reboiler B 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- E-6480A/B Lean/Rich Sponge Oil Exchangr 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6490 Lean Sponge Oil Trim Cooler 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6500A-D Debutanizer OH Condenser 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- E-6570A/B Debutanizer Upper Reboiler 4
- -----------------------------------------------------------------------------------------------------------------------------------
843- E-6575A/B Debutanizer Lower Reboiler 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- E-6586A/B Total Naphtha Trim Cooler 2
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6600 C3/C4 Splitter OH Condenser 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6630 C3 Product Cooler Double Pipe 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6675 C3/C4 Splitter Reboiler 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6680 C3/C4 Splitter Feed/Bottoms Double Pipe 3
Exchanger
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6685 Butane Product Trim Cooler Double Pipe 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6710 Caustic Heater 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6830 Deleted 1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AIR 843- C-6300A-D Compressor Instrtg Condenser 3
- ------------------------------------------------------------------------------------------------------------------------------------
COOLERS 843- C-6340A-D Absorber/Stripper Feed Cndsr 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6485 Lean Sponge Oil Cooler 5
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6485A-C Total Naphtha Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- C-6835 Deleted 1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PUMPS 843- P-6310A/B Compressor Intrstg Condenser 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6320A/B Lube Oil Pump Part of Lube Oil Console, N-6310 4
Furnished with Gas Compressor K-6300
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6350A/B Stripper Feed Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6745A/B Debutanizer Feed Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6525A/B Debutanizer Reflux Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6530A/B Debutanizer OH Product Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6585A/B Total Naphtha Cooler 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6525A/B C3/C4 Splitter Overhead Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6685A/B C4 Product Booster Pump 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6710A/B Caustic Transfer Pumps Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6760A/B Solvent/DSO Metering Pumps Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6770A/B Solvent Recycle Pumps Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6780A/B Caustic Regeneration Pumps Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6790A/B Sulfidic Causic Metering Pumps Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6870A/B Deleted 1
====================================================================================================================================
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: GAS PLANT
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
843- P-6910A/B Deleted
- ----------------------------------------------------------------------------------------------------------------
843- P-9020A/B Deleted
- ----------------------------------------------------------------------------------------------------------------
843- P-6795A/B Fresh Caustic Metering Pump 125 1315-C
- ----------------------------------------------------------------------------------------------------------------
CMPRSRS 843- K-6300 Coker Gas Compressor 101 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
SPECIAL 843- M-6470 Deleted (Stripper Reboiler Desuperheater)
- ----------------------------------------------------------------------------------------------------------------
EQUIPMNT 843- M-6570 Deleted (Debutanizer Reboiler Desuperheater)
- ----------------------------------------------------------------------------------------------------------------
843- M-6310A/B Lube Oil Filters 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- M6720A/B Air Filters 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- M6760 Sand filters 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- M6770A/B Solvent Basket Strainer 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- M6780A/B Aqueous basket Strainers 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
SKID UNITS 843- SK-6700 C3/C4 Treater 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- SK-6750 Caustic Injection Package 125 1315-C
- ----------------------------------------------------------------------------------------------------------------
843- SK-7500 Instrument Air Drier 1392-A PH-90
- ----------------------------------------------------------------------------------------------------------------
MISCELLAN 843- N-11901 Deleted
- ----------------------------------------------------------------------------------------------------------------
843- N-6310 Lube Oil Console for K-6300 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- N-6770 20" Fiber-Film Contactor 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
DRIVERS 843- CM-6300A1-D1 Motors for C-6300 102 1231-D PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6300A2-D2 Motors for C-6300 102 1231-D PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6340A1-D1 Motors for C-6340 104 1231-E PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6340A2-D2 Motors for C-6340 104 1231-E PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6485-1 Motors for C-6485 111 1231-I PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6485-2 Motors for C-6485 111 1231-I PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6585A1-C1 Motors for C-6585 106 1231-J PH-17
- ----------------------------------------------------------------------------------------------------------------
843- CM-6585A2-C2 Motors for C-6585 106 1231-J PH-17
- ----------------------------------------------------------------------------------------------------------------
843- PM-6310A/B Motor for P-6310A/B 103 1311-S PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-6320A/B Motor for P-6320A/B 1321-A PH-7
- ----------------------------------------------------------------------------------------------------------------
843- PM-6350A/B Motor for P-6350A/B 105 1311-T PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-6475A/B Motor for P-6475A/B 109 1311-U PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-6525A/B Motor for P-6525A/B 118 1311-X PH-25
- ----------------------------------------------------------------------------------------------------------------
843- PM-6530A/B Motor for P-6530A/B 118 1311-Y PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-6585A/B Motor for P-6585A/B 106 1311-Z PH-25
================================================================================================================
====================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: GAS PLANT DELAYED COKER
- -----------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
====================================================================================================================================
<S> <C> <C> <C> <C>
843- P-6910A/B Deleted 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-9020A/B Deleted 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- P-6795A/B Fresh Caustic Metering Pump Part of SK-6750 6
- ------------------------------------------------------------------------------------------------------------------------------------
CMPRSRS 843- K-6300 Coker Gas Compressor 3
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL 843- M-6470 Deleted (Stripper Reboiler Desuperheater) Provided by Instruments 4
- ------------------------------------------------------------------------------------------------------------------------------------
EQUIPMNT 843- M-6570 Deleted (Debutanizer Reboiler Desuperheater) Provided by Instruments 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- M-6310A/B Lube Oil Filters Part of Lube Oil Console, N-6310 4
Furnished with Gas Compressor K-6300
- ------------------------------------------------------------------------------------------------------------------------------------
843- M6720A/B Air Filters Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- M6760 Sand filters Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- M6770A/B Solvent Basket Strainer Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- M6780A/B Aqueous basket Strainers Part of C3/C4 Pacages SK-6700 6
- ------------------------------------------------------------------------------------------------------------------------------------
SKID UNITS 843- SK-6700 C3/C4 Treater 5
- ------------------------------------------------------------------------------------------------------------------------------------
843- SK-6750 Caustic Injection Package 6
- ------------------------------------------------------------------------------------------------------------------------------------
843- SK-7500 Instrument Air Drier 6
- ------------------------------------------------------------------------------------------------------------------------------------
MISCELLAN 843- N-11901 Deleted Moved to Piping Specialty List 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- N-6310 Lube Oil Console for K-6300 Supplied with K-6300 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- N-6770 20" Fiber-Film Contactor 6
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVERS 843- CM-6300A1-D1 Motors for C-6300 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6300A2-D2 Motors for C-6300 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6340A1-D1 Motors for C-6340 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6340A2-D2 Motors for C-6340 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6485-1 Motors for C-6485 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6485-2 Motors for C-6485 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6585A1-C1 Motors for C-6585 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- CM-6585A2-C2 Motors for C-6585 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6310A/B Motor for P-6310A/B 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6320A/B Motor for P-6320A/B 4
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6350A/B Motor for P-6350A/B 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6475A/B Motor for P-6475A/B 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6525A/B Motor for P-6525A/B 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6530A/B Motor for P-6530A/B 3
- ------------------------------------------------------------------------------------------------------------------------------------
843- PM-6585A/B Motor for P-6585A/B 3
====================================================================================================================================
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: GAS PLANT
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 12-Jun-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
843- PM-6625A/B Motor for P-6625A/B 124 1311-W PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-6685A/B Motor for P-6685A/B 121 1311AA PH-24
- ----------------------------------------------------------------------------------------------------------------
843- PM-6710A/B Motor for P-6710A/B 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- PM-6760A/B Motor for P-6760A/B 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- PM-6770A/B Motor for P-6770A/B 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- PM-6780A/B Motor for P-6780A/B 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- PM-6790A/B Motor for P-6790A/B 120 1911-A PH-58
- ----------------------------------------------------------------------------------------------------------------
843- PM-6795A/B Motor for P-6795A/B 125 1315-C
- ----------------------------------------------------------------------------------------------------------------
843- PM-6910A/B Motor for P-6910A/B
- ----------------------------------------------------------------------------------------------------------------
843- KM-6300 Motor for K-6300 101 1321-A PH-7
================================================================================================================
===============================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: GAS PLANT DELAYED COKER
- -------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 07/06/98 07/28/98 10/02/98 11/16/98 2/3/99 4/1/99
- -------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
===============================================================================================================================
<S> <C> <C> <C> <C>
843- PM-6625A/B Motor for P-6625A/B 3
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6685A/B Motor for P-6685A/B 3
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6710A/B Motor for P-6710A/B 6
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6760A/B Motor for P-6760A/B 6
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6770A/B Motor for P-6770A/B 6
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6780A/B Motor for P-6780A/B 6
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6790A/B Motor for P-6790A/B 6
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6795A/B Motor for P-6795A/B 6
- -------------------------------------------------------------------------------------------------------------------------------
843- PM-6910A/B Motor for P-6910A/B Deleted 5
- -------------------------------------------------------------------------------------------------------------------------------
843- KM-6300 Motor for K-6300
===============================================================================================================================
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 EQUIPMENT LIST
HOUSTON, TEXAS SECTION: Naphta Pre-Treater
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 2-Oct-98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
REACTORS 843- R-9600 Di-Olefin Reactor 132 1121A PH-49
- ----------------------------------------------------------------------------------------------------------------
843- R-9650 Silica Reactor 133 1121A PH-49
- ----------------------------------------------------------------------------------------------------------------
DRUMS 843- D-9500 Feed Surge Drum 130 1131R PH-40
- ----------------------------------------------------------------------------------------------------------------
843- D-9700 Cold High Pressure Separator 134 1131S PH-40
- ----------------------------------------------------------------------------------------------------------------
843- D-9750 Cold Low Pressure Separator 135 1131T PH-40
- ----------------------------------------------------------------------------------------------------------------
EXCHANGER 843- E-9520 Reactor Feed/Effluent Exchanger 131 1211T PH-66
- ----------------------------------------------------------------------------------------------------------------
843- E-9530 Di-Olefin Reactor Feed/HCGO Exch 132 1211U PH-66
- ----------------------------------------------------------------------------------------------------------------
843- E-9610 Silica Reactor Feed/HCGO Exch 133 1211V PH-66
- ----------------------------------------------------------------------------------------------------------------
843- C-9680 Silica Reactor Outlet Trim Cooler 134 1211W PH-66
- ----------------------------------------------------------------------------------------------------------------
843- C-9760 Pretreated Naphtha Cooler 135
- ----------------------------------------------------------------------------------------------------------------
AIR 843- C-9670 Silica Reactor Effluent Condenser 131 1231L PH-47
COOLERS
- ----------------------------------------------------------------------------------------------------------------
PUMPS 843- P-9510A/B Naphtha Pretreater Feed Pumps 130 1311BB PH-65
- ----------------------------------------------------------------------------------------------------------------
843- P-9750A/B Pretreated Naphtha Pumps 135 1311CC PH67
- ----------------------------------------------------------------------------------------------------------------
FILTERS 843- M-9510A/B Naphtha Pretreater Feed Filter 130
- ----------------------------------------------------------------------------------------------------------------
DRIVERS 843- CM-9670A/B Motors for C-9670 131 1231L PH-47
- ----------------------------------------------------------------------------------------------------------------
843- PM-9510A/B Motors for P-9510A/B 130 1311BB PH-65
843- PM-9750A/B Motors for P-9750A/B 135 1311CC PH-67
================================================================================================================
=================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004611 UNIT
HOUSTON, TEXAS SECTION: Naphta Pre-Treater DCU
- ---------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS 10/28/98 11/16/98 2/3/99 4/1/99 2/3/99 4/1/99
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
=================================================================================================================================
<S> <C> <C> <C> <C>
REACTORS 843- R-9600 Di-Olefin Reactor 8'-O" ID X 20'-6" T/T 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- R-9650 Silica Reactor 16'-0" ID X 22'-0" T/T 3
- ---------------------------------------------------------------------------------------------------------------------------------
DRUMS 843- D-9500 Feed Surge Drum 11`-0" ID X 24'-O"T/T, Vertical 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-9700 Cold High Pressure Separator 5'-6" ID X 23'-0" T/T, Vertical 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- D-9750 Cold Low Pressure Separator 5'-6" ID X 22'-6" T/T, Vertical 3
- ---------------------------------------------------------------------------------------------------------------------------------
EXCHANGER 843- E-9520 Reactor Feed/Effluent Exchanger 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- E-9530 Di-Olefin Reactor Feed/HCGO Exch 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- E-96b0 Silica Reactor Feed/HCGO Exch 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- C-9680 Silica Reactor Outlet Trim Cooler 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- C-9760 Pretreated Naphtha Cooler DELETED 3
- ---------------------------------------------------------------------------------------------------------------------------------
AIR 843- C-9670 Silica Reactor Effluent Condenser 2
COOLERS
- ---------------------------------------------------------------------------------------------------------------------------------
PUMPS 843- P-9510A/B Naphtha Pretreater Feed Pumps 3
- ---------------------------------------------------------------------------------------------------------------------------------
843- P-9750A/B Pretreated Naphtha Pumps 3
- ---------------------------------------------------------------------------------------------------------------------------------
FILTERS 843- M-9510A/B Naphtha Pretreater Feed Filter DELETED 3
- ---------------------------------------------------------------------------------------------------------------------------------
DRIVERS 843- CM-9670A/B Motors for C-9670 2
- ---------------------------------------------------------------------------------------------------------------------------------
843- PM-9510A/B Motors for P-95b0A/B 3
843- PM-9750A/B Motors for P-9750A/B 3
=================================================================================================================================
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- ----------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 6/22/98
- ----------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. Inq.or Req.# P.O. NO.
================================================================================================================
<S> <C> <C> <C> <C> <C>
TOWERS 942-T-1250 PRODUCT STRIPPER 031 1111-A 21
- ----------------------------------------------------------------------------------------------------------------
942-T-1300 FRACTIONATOR 037 1111-B 21
- ----------------------------------------------------------------------------------------------------------------
942-T-1320 HEAVY NAPHTHA STRIPPER 046 1111-E 28
- ----------------------------------------------------------------------------------------------------------------
942-T-1330 KEROSENE STRIPPER 044 1111-F 28
- ----------------------------------------------------------------------------------------------------------------
942-T-1340 DIESEL STRIPPER 041 1111-G 28
- ----------------------------------------------------------------------------------------------------------------
942-T-1510 CIPS VAPOR AMINE ABSORBER 030 1111-C 21
- ----------------------------------------------------------------------------------------------------------------
942-T-1530 PROD STRIPPER OVHD AMINE ABSORBER 034 1111-D 21
- ----------------------------------------------------------------------------------------------------------------
REACTORS 942-R-1000 FIRST STAGE REACTOR 013 1121-A 4
- ----------------------------------------------------------------------------------------------------------------
942-R-2000 SECOND STAGE REACTOR 027 1121-A 4
- ----------------------------------------------------------------------------------------------------------------
VESSELS 942-D-1000A HCGO FEED SURGE DRUM 004 1131-J 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1000B LP FEED SURGE DRUM 005 1131-K 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1010 FILTERED FEED SURGE DRUM 010 1131-L 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1020 BACKWASH SURGE DRUM 009 1593-A 73
- ----------------------------------------------------------------------------------------------------------------
942-D-1100 1ST STG M/U HYDR. COMPR K.O. DRUM 022 1131-A 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1120 NB Deleted
- ----------------------------------------------------------------------------------------------------------------
942-D-1210 HOT HIGH PRESSURE SEPARATOR 015 1121-B 4
- ----------------------------------------------------------------------------------------------------------------
942-D-1215 INJECTION WATER DRUM 017 1131-N 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1220 HOT LOW PRESSURE SEPARATOR 028 1131-C 28
- ----------------------------------------------------------------------------------------------------------------
942-D-1230 COLD HIGH PRESSURE SEPARATOR 019 1131-D 23
- ----------------------------------------------------------------------------------------------------------------
942-D-1240 COLD LOW PRESSURE SEPARATOR 029 1131-E 28
- ----------------------------------------------------------------------------------------------------------------
942-D-1260 PRODUCT STRIPPER REFLUX DRUM 033 1131-P 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1270 Deleted
- ----------------------------------------------------------------------------------------------------------------
942-D-1290 FRACTIONATOR FEED FLASH DRUM 035 1131-F 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1310 FRACTIONATOR REFLUX DRUM 049 1131-0 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1325 HEAVY NAPHTHA SULFUR SORBER DRUM 047 1131-R 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1400 SOUR WATER FLASH DRUM 054 1131-G 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1520 CLPS OFFGAS K.O. DRUM (COMBINED IN T-1510) 030 1111-C 21
- ----------------------------------------------------------------------------------------------------------------
942-D-1540 Deleted
- ----------------------------------------------------------------------------------------------------------------
942-D-1560 RICH AMINE FLASH DRUM 053 1131-S 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1610 BLOWDOWN FLASH DRUM 072 1131-U 39
- ----------------------------------------------------------------------------------------------------------------
942-D-1620 Deleted
================================================================================================================
===================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 NAME OF UNIT DRWG. NO.
HOUSTON, TEXAS SECTION: HCU-942 PAGE:
- -----------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 3 4 5 6 7 8
LOCATION: PORT ARTHUR, TEXAS 08/21/98 09/21/98 11/16/98 02/08/99 4/2/99 4/1/99
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
===================================================================================================================================
<S> <C> <C> <C> <C>
TOWERS 942-T-1250 PRODUCT STRIPPER ID = 8 ft (Top) & 12 ft (Bot), T/T = 88'-10" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-T-1300 FRACTIONATOR ID = 16 ft, T/T = 169 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-T-1320 HEAVY NAPHTHA STRIPPER ID = 5'-6", T/T = 32'-7" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-T-1330 KEROSENE STRIPPER ID = 9 ft, T/T = 36 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-T-1340 DIESEL STRIPPER ID = 5 ft, T/T = 43'-10" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-T-1510 CLPS VAPOR AMINE ABSORBER ID = 3 ft, T/T = 72'- 7" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-T-1530 PROD STRIPPER OVHD AMINE ABSORBER ID = 4 ft, T/T = 63'- 5"
- -----------------------------------------------------------------------------------------------------------------------------------
REACTORS 942-R-1000 FIRST STAGE REACTOR ID = 15'-10", T/T = 92ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-R-2000 SECOND STAGE REACTOR ID = 9 ft, T/T = 58 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
VESSELS 942-D-1000A HCGO FEED SURGE DRUM ID = 7'-8", T/T = 25'-5" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1000B LP FEED SURGE DRUM ID = 10 ft, T/T = 30 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1010 FILTERED FEED SURGE DRUM ID= 10'-8", T/T = 39 ft
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1020 BACKWASH SURGE DRUM D-1020 IS PART OF M - 1000 PACKAGE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1100 1ST STG M/U HYDR. COMPR K.O. DRUM ID = 4 ft, T/T = 12'-10" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1120 NB Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1210 HOT HIGH PRESSURE SEPARATOR ID = 12 ft, T/T = 18 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1215 INJECTION WATER DRUM ID = 6'-6", T/T = 22 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1220 HOT LOW PRESSURE SEPARATOR ID = 9'-6", T/T = 37'-2" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1230 COLD HIGH PRESSURE SEPARATOR ID = 10'-6", T/T = 16'4" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1240 COLD LOW PRESSURE SEPARATOR ID = 8 ft, T/T = 27'-8" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1260 PRODUCT STRIPPER REFLUX DRUM ID = 11 ft, T/T = 15'-8' 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1270 Deleted 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1290 FRACTIONATOR FEED FLASH DRUM ID = 9 ft, T/T = 33 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1310 FRACTIONATOR REFLUX DRUM ID = 13'-4", T/T = 31 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1325 HEAVY NAPHTHA SULFUR SORBER DRUM ID = 6 ft, T/T = 20'-8" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1400 SOUR WATER FLASH DRUM ID = 6'-10", T/T = 10ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1520 CLPS OFFGAS K.O. DRUM (COMBINED IN T-1510) ID = 3 ft, T/T = 19'-3" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1540 Deleted
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1560 RICH AMINE FLASH DRUM ID = 12ft, T/T = 46'-6" 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1610 BLOWDOWN FLASH DRUM ID = 3 ft, T/T = 6 ft 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-D-1820 Deleted 6
===================================================================================================================================
</TABLE>
Page 1 of 6
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- -----------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 6/22/98
- -----------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=====================================================================================================
<S> <C> <C> <C> <C> <C>
942-D-2020 2ND STG FEED SURGE DRUM 039 1131-T 39
- -----------------------------------------------------------------------------------------------------
942-D-2100 RECYCLE GAS COMPRESSOR K.O. DRUM 020 1131-H 23
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
EXCHANGERS 942-E-1000 1ST STG REACTOR FEED/EFFL. EXCH. 011 1211-A 48
- -----------------------------------------------------------------------------------------------------
942-E-1200 REACTOR EFFL/HP STEAM GENERATOR 014 1211-B 44
- -----------------------------------------------------------------------------------------------------
942-E-1211 HHPS VAPOR/MAKEUP GAS EXCHANGER 016 1211-C 48
- -----------------------------------------------------------------------------------------------------
942-E-1212 HHPS VAPOR/REACTOR FEED GAS EXCH. 016 1211-D 48
- -----------------------------------------------------------------------------------------------------
942-E-1213 HHPS VAPOR/CLPS LIQUID EXCH. 016 1211-E 44
- -----------------------------------------------------------------------------------------------------
942-E-1251 REACTOR EFFL/FRAC FEED PREHEAT EX. 014 1211-F 44
- -----------------------------------------------------------------------------------------------------
942-E-1252 A/B FRAC BOTTOMS/FRAC FEED PREHEAT EX. 035 1211-G 43
- -----------------------------------------------------------------------------------------------------
942-E-1325 HEAVY NAPHTHA STRIPPER REBOILER 046 1211-H 32
- -----------------------------------------------------------------------------------------------------
942-E-1329 HEAVY NAPHTHA PRODUCT TRIM COOLER 047 1221-A 30
- -----------------------------------------------------------------------------------------------------
942-E-1331 A/B KEROSENE PROD/FEED PREHEAT EXCH. 006 1211-J 46
- -----------------------------------------------------------------------------------------------------
942-E-1335 KEROSENE STRIPPER REBOILER 044 1211-K 32
- -----------------------------------------------------------------------------------------------------
942-E-1341 DIESEL PRODUCT/FEED PREHEAT EXCH. 006 1211-L 43
- -----------------------------------------------------------------------------------------------------
942-E-1343 FEED PREHEAT/FRAC BOTTOMS EXCH. 006 1211-M 46
- -----------------------------------------------------------------------------------------------------
942-E-1345 DIESEL STRIPPER REBOILER 041 1211-N 43
- -----------------------------------------------------------------------------------------------------
942-E-1451 BFW PREHEAT/FRAC PUMPAROUND EX. 007 1211-R 46
- -----------------------------------------------------------------------------------------------------
942-E-1452 BFW PREHEAT/FRAC PUMPAROUND EX. 007 1211-P 46
- -----------------------------------------------------------------------------------------------------
942-E-1600 SURFACE CONDENSER 088 1282-A 60
- -----------------------------------------------------------------------------------------------------
942-E-1610 BLOWDOWN COOLER 072 1221-B 30
- -----------------------------------------------------------------------------------------------------
942-E-1620 Deleted
- -----------------------------------------------------------------------------------------------------
942-E-1630 HP WASH WATER COOLER 073 1221-C 30
- -----------------------------------------------------------------------------------------------------
942-E-1640 MP WASH WATER COOLER
- -----------------------------------------------------------------------------------------------------
942-E-2000 2ND STG REACTOR EFFL/FEED GAS EXCH. 025 1211-Q 48
=====================================================================================================
=============================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 NAME OF UNIT DRWG. NO.
HOUSTON, TEXAS SECTION: HCU-942 PAGE:
- -----------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 3 4 5 6 7 8
LOCATION: PORT ARTHUR, TEXAS 08/21/98 09/21/98 11/16/98 02/08/99 4/2/99 4/1/99
- -----------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
=============================================================================================================================
<S> <C> <C> <C> <C>
942-D-2020 2ND STG FEED SURGE DRUM ID = 8'-10", T/T = 25'-10" 5
- -----------------------------------------------------------------------------------------------------------------------------
942-D-2100 RECYCLE GAS COMPRESSOR K.O. DRUM ID = 9'-8", T/T = 12'-4" 5
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
EXCHANGERS 942-E-1000 1ST STG REACTOR FEED/EFFL. EXCH. Q = 145.9 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1200 REACTOR EFFL/HP STEAM GENERATOR Q = 52.3 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1211 HHPS VAPOR/MAKEUP GAS EXCHANGER Q = 17.2 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1212 HHPS VAPOR/REACTOR FEED GAS EXCH. Q = 48.1 MMBTU/HR (SOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1213 HHPS VAPOR/CLPS LIQUID EXCH Q = 41.7 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1251 REACTOR EFFL/FRAC FEED PREHEAT EX. Q = 43.0 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1252 A/B FRAC BOTTOMS/FRAC FEED PREHEAT EX. Q = 11.6 MMBTU/HR (SOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1325 HEAVY NAPHTHA STRIPPER REBOILER Q = 6.7 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1329 HEAVY NAPHTHA PRODUCT TRIM COOLER Q = 0.7 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1331 A/B KEROSENE PROD/FEED PREHEAT EXCH. Q = 27.8 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1335 KEROSENE STRIPPER REBOILER Q = 18.3 MMBTU/HR (SOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1341 DIESEL PRODUCT/FEED PREHEAT EXCH. Q = 21.1 MMBTU/HR (SOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1343 FEED PREHEAT/FRAC BOTTOMS EXCH. Q = 19.8 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1345 DIESEL STRIPPER REBOILER Q = 2.8 MMBTU/HR (SOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1451 BFW PREHEAT/FRAC PUMPAROUND EX. Q = 10.7 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1452 BFW PREHEAT/FRAC PUMPAROUND EX. Q = 10.7 MMBTU/HR (EOR) 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1600 SURFACE CONDENSER Q = 63.4 MMBTU/HR 6
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1610 BLOWDOWN COOLER Q = 0.57 MMBTU/HR 5
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1620 Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1630 HP WASH WATER COOLER Q = 8.92 MMBTU/HR 7
- -----------------------------------------------------------------------------------------------------------------------------
942-E-1640 MP WASH WATER COOLER 7
- -----------------------------------------------------------------------------------------------------------------------------
942-E-2000 2ND STG REACTOR EFFL/FEED GAS EXCH. Q = 34.0 MMBTU/HR (EOR) 5
=============================================================================================================================
</TABLE>
Page 2 of 6
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- ---------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 6/22/98
- ---------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
===============================================================================================================
<S> <C> <C> <C> <C> <C>
AIR COOLERS 942-C-1020 Deleted
- ---------------------------------------------------------------------------------------------------------------
942-C-1120 A/B M/U HYD COMP 1ST INT STG AIR COOLER 023/024 1231-A 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1160 M/U HYDR COMP. SPILLBACK 022 1231-B 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1214 A-H HHPS VAPOR AIR COOLER 018 1231-C 36
- ---------------------------------------------------------------------------------------------------------------
942-C-1221 HLPS VAPOR AIR COOLER 028 1231-D 36
- ---------------------------------------------------------------------------------------------------------------
942-C-1260 A/B PRODUCT STRIPPER CONDENSER 032 1231-E 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1310 A-F FRACTIONATOR CONDENSER 048 1231-F 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1327 HEAVY NAPHTHA PRODUCT AIR COOLER 047 1231-G 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1332 KEROSENE AIR COOLER 045 1231-H 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1335 TOP FRAC. PUMPAROUND AIR COOLER 007 1231-K 36
- ---------------------------------------------------------------------------------------------------------------
942-C-1342 DIESEL AIR COOLER 042 1231-N 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1351 A-D UNCONVERTED OIL COOLER 040 1231-J 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1352 Deleted -- --
- ---------------------------------------------------------------------------------------------------------------
942-C-1530 A-C LEAN AMINE COOLER (DCU) 051 1231-L 35
- ---------------------------------------------------------------------------------------------------------------
942-C-1531 LEAN AMINE COOLER (HCU) 052 1231-M 35
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
HEATERS 942-F-1000 FIRST STAGE REACTOR FEED HEATER 012 1242-A 61
- ---------------------------------------------------------------------------------------------------------------
942-F-1300 FRACTIONATOR FEED HEATER 036 1242-A 61
- ---------------------------------------------------------------------------------------------------------------
942-F-2000 SECOND STAGE REACTOR FEED HEATER 026 1242-A 61
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
PUMPS 942-P-1000 A/B LP FEED PUMP 005 1311-A 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1010 A/B 1ST STG PRESSURE FEED PUMP 010 1311-B 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1020 A/B Deleted
- ---------------------------------------------------------------------------------------------------------------
942-P-1215 A/B INJECTION WATER PUMPS 017 1311-Q 55
- ---------------------------------------------------------------------------------------------------------------
942-P-1260 A/B PRODUCT STRIPPER REFLUX PUMPS 033 1311-C 59
- ---------------------------------------------------------------------------------------------------------------
942-P-1310 A/B FRACTIONATOR REFLUX PUMPS 050 1311-D 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1311 A/B FRAC. REFLX DRUM SOUR WATER PUMPS 049 1311-E 59
- ---------------------------------------------------------------------------------------------------------------
942-P-1312 FRACTIONATOR PRODUCT PUMP 050 1311-F 59
- ---------------------------------------------------------------------------------------------------------------
942-P-1320 A/B HEAVY NAPHTHA PRODUCT PUMPS 046 1311-G 59
- ---------------------------------------------------------------------------------------------------------------
942-P-1325 A/B KEROSENE PUMPAROUND PUMPS 043 1311-H 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1330 A/B KEROSENE PRODUCT PUMPS 044 1311-Z 55
- ---------------------------------------------------------------------------------------------------------------
942-P-1335 DIESEL PUMPAROUND PUMPS 043 1311-K 59
- ---------------------------------------------------------------------------------------------------------------
942-P-1340 DIESEL PRODUCT PUMPS 041 1311-M 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1350 A/B FRACTIONATOR BOTTOMS PUMPS 038 1311-M 55
- ---------------------------------------------------------------------------------------------------------------
942-P-1400 A/B SOUR WATER PUMPS 054 1311-N 59
- ---------------------------------------------------------------------------------------------------------------
942-P-1511 A/B Deleted
===============================================================================================================
=================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 NAME OF UNIT DRWG. NO.
HOUSTON, TEXAS SECTION: HCU-942 PAGE:
- ---------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 3 4 5 6 7 8
LOCATION: PORT ARTHUR, TEXAS 08/21/98 09/21/98 11/16/98 02/08/99 4/2/99 4/1/99
- --------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
================================================================================================================================
<S> <C> <C> <C> <C>
AIR COOLERS 942-C-1020 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1120 A/B M/U HYD COMP 1ST INT STG AIR COOLER HOLD Q = 8.1 MMBTU/HR (EOR), Q = 9.5 MMBTU/HR 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1160 M/U HYDR COMP. SPILLBACK HOLD Q = 8.4 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1214 A-H HHPS VAPOR AIR COOLER Q = 141.7 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1221 HLPS VAPOR AIR COOLER Q = 4.1 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1260 A/B PRODUCT STRIPPER CONDENSER Q = 28.3 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1310 A-F FRACTIONATOR CONDENSER Q = 103.5 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1327 HEAVY NAPHTHA PRODUCT AIR COOLER Q = 8.9 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1332 KEROSENE AIR COOLER Q = 8.6 MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1335 TOP FRAC. PUMPAROUND AIR COOLER Q = - MMBTU/HR (EOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1342 DIESEL AIR COOLER Q = 11.7 MMBTU/HR (SOR) 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1351 A-D UNCONVERTED OIL COOLER Q = (later) MMBTU/HR (EOR) 7
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1352 Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1530 A-C LEAN AMINE COOLER (DCU) Q = - MMBTU/HR 6
- --------------------------------------------------------------------------------------------------------------------------------
942-C-1531 LEAN AMINE COOLER (HCU) Q = - MMBTU/HR 6
- --------------------------------------------------------------------------------------------------------------------------------
6
- --------------------------------------------------------------------------------------------------------------------------------
HEATERS 942-F-1000 FIRST STAGE REACTOR FEED HEATER BOX, Q = 2.3 MMBTU/HR (EOR) 6
- --------------------------------------------------------------------------------------------------------------------------------
942-F-1300 FRACTIONATOR FEED HEATER CYL, Q = 72.7 MMBTU/HR (EOR) 6
- --------------------------------------------------------------------------------------------------------------------------------
942-F-2000 SECOND STAGE REACTOR FEED HEATER BOX, Q = 8.7 MMBTU/HR (EOR) 6
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
PUMPS 942-P-1000 A/B LP FEED PUMP RATED FLOW = 1175 GPM, DIFF. PRESS. = 212 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1010 A/B 1ST STG PRESSURE FEED PUMP RATED FLOW = 1277 GPM. DIFF. PRESS. = 2763 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1020 A/B Deleted 5
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1215 A/B INJECTION WATER PUMPS RATED FLOW = 158 GPM, DIFF. PRESS. = 2165 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1260 A/B PRODUCT STRIPPER REFLUX PUMPS RATED FLOW = 463 GPM, DIFF. PRESS. = 88 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1310 A/B FRACTIONATOR REFLUX PUMPS RATED FLOW = 1088 GPM, DIFF. PRESS. = 100 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1311 A/B FRAC. REFLX DRUM SOUR WATER PUMPS RATED FLOW = 31 GPM, DIFF. PRESS. = 69 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1312 FRACTIONATOR PRODUCT PUMP RATED FLOW = 161 GPM, DIFF. PRESS. = 256 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1320 A/B HEAVY NAPHTHA PRODUCT PUMPS RATED FLOW = 231 GPM. DIFF. PRESS. = 268 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1325 A/B KEROSENE PUMPAROUND PUMPS RATED FLOW = 2080 GPM. DIFF. PRESS. = 127 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1330 A/B KEROSENE PRODUCT PUMPS RATED FLOW = 580 GPM, DIFF. PRESS. = 193 PSI 7
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1335 DIESEL PUMPAROUND PUMPS RATED FLOW = 1728 GPM, DIFF. PRESS. = 212 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1340 DIESEL PRODUCT PUMPS RATED FLOW = 580 GPM, DIFF. PRESS. = 193 PSI 7
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1350 A/B FRACTIONATOR BOTTOMS PUMPS RATED FLOW = 1021 GPM, DIFF. PRESS. = 237 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1400 A/B SOUR WATER PUMPS RATED FLOW = 181 GPM, DIFF. PRESS. = 115 PSI 6
- --------------------------------------------------------------------------------------------------------------------------------
942-P-1511 A/B Deleted 5
================================================================================================================================
</TABLE>
Page 3 of 6
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- ---------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 6/22/98
- ---------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
===============================================================================================================
<S> <C> <C> <C> <C> <C>
942-P-1531 A/B HCU LEAN AMINE PUMPS 052 1311-R 55
- ---------------------------------------------------------------------------------------------------------------
942-P-1532 A/B DCU LEAN AMINE PUMPS 051 1311-Y 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1550 A/B RICH AMINE PUMPS 053 1311-S 55
- ---------------------------------------------------------------------------------------------------------------
942-P-1560 SLOP OIL PUMPS 053 1311-T 55
- ---------------------------------------------------------------------------------------------------------------
942-P-1600 A/B SURFACE CONDENSER PUMPS 088 1311-U 56
- ---------------------------------------------------------------------------------------------------------------
942-P-1620 A/B Deleted
- ---------------------------------------------------------------------------------------------------------------
942-P-1621 A/B Deleted
- ---------------------------------------------------------------------------------------------------------------
942-P-1650 A/B OILY WATER SUMP PUMPS 064 1311-X
- ---------------------------------------------------------------------------------------------------------------
942-P-2010 SECOND STAGE FEED PUMP 039 1311-P 58
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
COMPRESSORS 942-K-1100 A/B MAKEUP HYDROGEN COMPRESSORS 023/024 1322-A 26
- ---------------------------------------------------------------------------------------------------------------
942-K-2100 RECYCLE GAS COMPRESSOR 021 1321-A 26
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
FILTERS 942-M-1000 FEED FILTER 008 1593-A 73
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
MISCELLANEOUS 942-N-1000 OIL MIST SYSTEM
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
DRIVERS 942-PM-1000 A LP FEED PUMP MOTOR 005 1311-A 58
- ---------------------------------------------------------------------------------------------------------------
942-PM-1000 B SPARE 005 1311-A 56
- ---------------------------------------------------------------------------------------------------------------
942-PM-1010 A 1ST STG PRESSURE FEED PUMP MOTOR 010 1311-B 56
- ---------------------------------------------------------------------------------------------------------------
942-PM-1010 B SPARE 010 1311-B 56
- ---------------------------------------------------------------------------------------------------------------
942-PM-1215 A INJECTION WATER PUMP MOTOR 017 1311-Q 55
- ---------------------------------------------------------------------------------------------------------------
942-PM-1215 B SPARE 017 1311-Q 55
- ---------------------------------------------------------------------------------------------------------------
942-PM-1260 A PRODUCT STRIPPER REFLUX PUMP MOTOR 033 1311-C 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1260 B SPARE 033 1311-C 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1310 A FRACTIONATOR REFLUX PUMP MOTOR 050 1311-D 56
- ---------------------------------------------------------------------------------------------------------------
942-PM-1310 B SPARE 050 1311-D 56
- ---------------------------------------------------------------------------------------------------------------
942-PM-1311 A FRAC. REFLX DRUM SOUR WATER PUMP MOTOR 049 1311-E 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1311 B SPARE 049 1311-E 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1312 FRACTIONATOR PRODUCT PUMP MOTOR 050 1311-F 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1312 B DELETED
- ---------------------------------------------------------------------------------------------------------------
942-PM-1320 A HEAVY NAPHTHA PRODUCT PUMP MOTOR 046 1311-G 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1320 B SPARE 046 1311-G 59
- ---------------------------------------------------------------------------------------------------------------
942-PM-1325 A KEROSENE PUMPAROUND PUMP MOTOR 043 1311-H 56
- ---------------------------------------------------------------------------------------------------------------
942-PM-1325 B SPARE 043 1311-H 56
===============================================================================================================
===============================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 NAME OF UNIT DRWG. NO.
HOUSTON, TEXAS SECTION: HCU-942 PAGE:
- -------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 3 4 5 6 7 8
LOCATION: PORT ARTHUR, TEXAS 08/21/98 09/21/98 11/16/98 02/08/99 4/2/99
- -------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
===============================================================================================================================
<S> <C> <C> <C> <C>
942-P-1531 NB HCU LEAN AMINE PUMPS RATED FLOW = 508 GPM. DIFF. PRESS. = 710 PSI 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1532 NB DCU LEAN AMINE PUMPS RATED FLOW = 1045 GPM. DIFF. PRESS. = 353 PSI 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1550 NB RICH AMINE PUMPS RATED FLOW =1714 GPM. DIFF. PRESS. = 270 PSI 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1560 SLOP OIL PUMPS RATED FLOW = 42 GPM. DIFF. PRESS. = 43.8 PSI 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1600 NB SURFACE CONDENSER PUMPS RATED FLOW. 139 GPM. DIFF. PRESS. = 65.2 PSI 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1620 NB Deleted 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1621 NB Deleted 6
- -------------------------------------------------------------------------------------------------------------------------------
942-P-1650 NB OILY WATER SUMP PUMPS 7
- -------------------------------------------------------------------------------------------------------------------------------
942-P-2010 SECOND STAGE FEED PUMP RATED FLOW = 641 GPM, DIFF. PRESS. = 2491 PSI 6
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
COMPRESSORS 942-K-1100 NB MAKEUP HYDROGEN COMPRESSORS RATED FLOW = 1204 ACFM, DISCH. PRESS. = 2646 PSI 5
- -------------------------------------------------------------------------------------------------------------------------------
942-K-2100 RECYCLE GAS COMPRESSOR RATED FLOW = 3072 ACFM, DIF. PRESS. = 457 PSI 5
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
FILTERS 942-M-1000 FEED FILTER 6
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS 942-N-1000 OIL MIST SYSTEM 5
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
DRIVERS 942-PM-1000 A LP FEED PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1000 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1010 A 1ST STG PRESSURE FEED PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1010 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1215 A INJECTION WATER PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1215 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1260 A PRODUCT STRIPPER REFLUX PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1260 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1310 A FRACTIONATOR REFLUX PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1310 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1311 A FRAC. REFLX DRUM SOUR WATER PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1311 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1312 FRACTIONATOR PRODUCT PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1312 B DELETED 5
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1320 A HEAVY NAPHTHA PRODUCT PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1320 B SPARE 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1325 A KEROSENE PUMPAROUND PUMP MOTOR 6
- -------------------------------------------------------------------------------------------------------------------------------
942-PM-1325 B SPARE 6
===============================================================================================================================
</TABLE>
Page 4 of 6
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- -------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 6/22/98
- -------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=============================================================================================================
<S> <C> <C> <C> <C> <C>
942-PM-1330 A KEROSENE PRODUCT PUMP MOTOR 044 1311-J 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1330 B SPARE 044 1311-J 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1335 DIESEL PUMPAROUND PUMP MOTOR 043 1311-K 59
- -------------------------------------------------------------------------------------------------------------
942-PM-1335 B DELETED
- -------------------------------------------------------------------------------------------------------------
942-PM-1340 DIESEL PRODUCT PUMP MOTOR 041 1311-L 56
- -------------------------------------------------------------------------------------------------------------
942-PM-1340 B DELETED
- -------------------------------------------------------------------------------------------------------------
942-PM-1350 A FRACTIONATOR BOTlTOMS PUMP MOTOR 038 1311-M 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1350 B SPARE 038 1311-M 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1400A SOUR WATER PUMP MOTOR 054 1311-N 59
- -------------------------------------------------------------------------------------------------------------
942-PM-1400 B SPARE 054 1311-N 59
- -------------------------------------------------------------------------------------------------------------
942-PM-1531 A HCU LEAN AMINE PUMP MOTOR 052 1311-R 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1531 B SPARE 052 1311-R 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1532 A DCU LEAN AMINE PUMP MOTOR 051 1311-Y 58
- -------------------------------------------------------------------------------------------------------------
942-PM-1532 B SPARE 051 1311-Y 56
- -------------------------------------------------------------------------------------------------------------
942-PM-1550 A RICH AMINE PUMP MOTOR 053 1311-5 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1550 B SPARE 053 1311-5 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1551 SLOP OIL PUMP MOTOR 053 1311-T 55
- -------------------------------------------------------------------------------------------------------------
942-PM-1551 B Deleted
- -------------------------------------------------------------------------------------------------------------
942-PM-1600 B SPARE PUMP MOTOR 088 1311-U 58
- -------------------------------------------------------------------------------------------------------------
942-PM-1620 B Deleted - -
- -------------------------------------------------------------------------------------------------------------
942-PM-1621 A Deleted - -
- -------------------------------------------------------------------------------------------------------------
942-PM-1621 B Deleted - -
- -------------------------------------------------------------------------------------------------------------
942-PM-1650 A OILY WATER SUMP PUMP MOTOR 064 1311-X
- -------------------------------------------------------------------------------------------------------------
942-PM-1650 B SPARE - -
- -------------------------------------------------------------------------------------------------------------
942-PM-2010 SECOND STAGE FEED PUMP MOTOR 039 1311-P
- -------------------------------------------------------------------------------------------------------------
942-PM-2010 B Deleted
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
942-PT-1600 A SURFACE CONDENSER PUMP TURBINE 088 1311-U 56
- -------------------------------------------------------------------------------------------------------------
942-PT-1620 A Deleted - -
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
942-KM-1100 A MAKEUP HYDROGEN COMPRESSOR MOTOR 023/024 1322-A 26
- -------------------------------------------------------------------------------------------------------------
942-KM-1100 B SPARE 023/024 1322-A 26
- -------------------------------------------------------------------------------------------------------------
942-KT-2100 RECYCLE GAS COMPRESSOR STEAM TURBINE 021 1321-A 26
=============================================================================================================
===================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 NAME OF UNIT DRWG. NO.
HOUSTON, TEXAS SECTION: HCU-942 PAGE:
- -----------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 3 4 5 6 7 8
LOCATION: PORT ARTHUR, TEXAS 08/21/98 09/21/98 11/16/98 02/08/99 4/2/99
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
===================================================================================================================================
<S> <C> <C> <C> <C>
942-PM-1330 A KEROSENE PRODUCT PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1330 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1335 DIESEL PUMPAROUND PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1335 B DELETED 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1340 DIESEL PRODUCT PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1340 B DELETED 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1350 A FRACTIONATOR BOTlTOMS PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1350 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1400A SOUR WATER PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1400 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1531 A HCU LEAN AMINE PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1531 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1532 A DCU LEAN AMINE PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1532 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1550 A RICH AMINE PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1550 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1551 SLOP OIL PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1551 B Deleted 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1600 B SPARE PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1620 B Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1621 A Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1621 B Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1650 A OILY WATER SUMP PUMP MOTOR 5
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-1650 B SPARE 7
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-2010 SECOND STAGE FEED PUMP MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PM-2010 B Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
942-PT-1600 A SURFACE CONDENSER PUMP TURBINE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-PT-1620 A Deleted 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
942-KM-1100 A MAKEUP HYDROGEN COMPRESSOR MOTOR 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-KM-1100 B SPARE 6
- -----------------------------------------------------------------------------------------------------------------------------------
942-KT-2100 RECYCLE GAS COMPRESSOR STEAM TURBINE 6
===================================================================================================================================
</TABLE>
Page 5 of 6
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- -------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 6/22/98
- -------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=============================================================================================================
<S> <C> <C> <C> <C> <C>
942-CM-1120A MOTOR FOR C-1120A 023/024 1231-A 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1120 B MOTOR FOR C-1120 B 023/024 1231-A 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1160-1 MOTOR FOR C-1160 022 1231-B 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1160-2 MOTOR FOR C-1160 022 1231-B 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1214 A1-H1 MOTORS FOR C-1214 A-H 018 1231-C 36
- -------------------------------------------------------------------------------------------------------------
942-CM-1214 A2-H2 MOTORS FOR C-1214 A-H 018 1231-C 36
- -------------------------------------------------------------------------------------------------------------
942-CM-1221 MOTOR FOR C-1221 028 1231-D 36
- -------------------------------------------------------------------------------------------------------------
942-CM-1260 A1-B1 MOTORS FOR C-1260 A-B 032 1231-E 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1260 A2-B2 MOTORS FOR C-1260 A-B 032 1231-E 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1310 A1-F1 MOTORS FOR C-1310 A-F 048 1231-F 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1310 A2-F2 MOTORS FOR C-1310 A-F 048 1231-F 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1327 MOTOR FOR C-1327 047 1231-G 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1332 MOTOR FOR C-1332 045 1231-H 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1335 MOTOR FOR C-1335 007 1231-K 36
- -------------------------------------------------------------------------------------------------------------
942-CM-1342-1 MOTOR FOR C-1342 042 1231-N 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1342-2 MOTOR FOR C-1342 042 1231-N 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1351 A1-F1 MOTORS FOR C-1351 A-F 040 1231-J 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1351 A2-F2 MOTORS FOR C-1351 A-F 040 1231-J 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1530 A1-C1 MOTOR FOR C-1530 A-C 051/052 1231-L/M 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1530 A2-C2 MOTOR FOR C-1530 A-C 051/052 1231-L/M 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1531-11 MOTORS FOR C-1531 051/052 1231-L/M 35
- -------------------------------------------------------------------------------------------------------------
942-CM-1531-2 MOTORS FOR C-1531 051/052 1231-L/M 35
=============================================================================================================
====================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004612 NAME OF UNIT DRWG. NO.
HOUSTON, TEXAS SECTION: HCU-942 PAGE:
- ------------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 3 4 5 6 7 8
LOCATION: PORT ARTHUR, TEXAS 08/21/98 09/21/98 11/16/98 02/08/99 4/2/99 4/1/99
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION REMARKS REV
====================================================================================================================================
<S> <C> <C> <C> <C>
942-CM-1120A MOTOR FOR C-1120 A Combined with C-1120 B In the same bay 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1120 B MOTOR FOR C-1120 B Combined with C-1120 A In the same bay 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1160-1 MOTOR FOR C-1160 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1160-2 MOTOR FOR C-1160 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1214 A1-H1 MOTORS FOR C-1214 A-H 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1214 A2-H2 MOTORS FOR C-1214 A-H 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1221 MOTOR FOR C-1221 Combined with C-1335 ln the same bay 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1260 A1-B1 MOTORS FOR C-1260 A-B 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1260 A2-B2 MOTORS FOR C-1260 A-B 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1310 A1-F1 MOTORS FOR C-1310A-F 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1310 A2-F2 MOTORS FOR C-1310 A-F 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1327 MOTOR FOR C-1327 Combined with C-1332 In the same bay 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1332 MOTOR FOR C-1332 Combined with C-1327 In the same bay 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1335 MOTOR FOR C-1335 Combined with C-1221 In the same bay 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1342-1 MOTOR FOR C-1342 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1342-2 MOTOR FOR C-1342 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1351 A1-F1 MOTORS FOR C-1351 A-F 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1351 A2-F2 MOTORS FOR C-1351 A-F 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1530 Al-Cl MOTOR FOR C-1530 A-C 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1530 A2-C2 MOTOR FOR C-1530 A-C 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1531-1 MOTORS FOR C-1531 6
- ------------------------------------------------------------------------------------------------------------------------------------
942-CM-1531-2 MOTORS FOR C-1531 6
====================================================================================================================================
</TABLE>
Page 6 of 6
<PAGE>
k/Foster Wheeler EQUIPMENT LIST
Project ,200 TPD Sulfur Plants
Location: Port Arthur, Texas
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT P&ID DATA SHEET LOCATION PURCHASE ORDER SUPPLIER
Number Code Number Nbr-Rev System Area Nbr-Rev Date
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
VESSELS - TPQ 010
------------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D-1001 Acid Gas Knock-Out Drum 001001 -0011 10.01/0 SRU Various Pro-Quip
D-2001 Sour Water Gas Knock-Out Drum 001002 -0014 10.02/0 SRU Various Pro-Quip
H-1001 Reaction Furnace-Train 100 001003 -0017 10.03/1 SRU 100 Various Pro-Quip
Train
H-2001 Reaction Furnace - Train 200 001003 -0022 10.03/1 SRU 200 Various Pro-Quip
Train
R-1001 A/B/C Reactors A/B/C 001004 -0025 10.04/1 SRU 200 Various Pro-Quip
Train
R-2001 A/B/C Reactors A/B/C 001004 -0020 10.04/1 SRU 100 Various Pro-Quip
Train
N-1007 A/B/C/D Sulfur Drain Seal Assembly - Train 100 001005 -0027 10 05/1 SRU 100 Various Pro-Quip
Train
N-2007 A/B/C/D Sulfur Drain Seal Assembly - Train 200 001005 -0027 10.05/1 SRU 200 Various Pro-Quip
Train
H-9001 SCOT In-Line Healer 001006 -0032 10.06/1 SCOT Various Pro-Quip
R-9001 Hydrogenation Reactor 001007 -0033 10.07/1 SCOT Various Pro-Quip
T-9001 Quench Tower 001008 -0035 10.06/3 SCOT Various Pro-Quip
N-9001 Quench Tower Packing 001009 -0035 10.09 SCOT 7006269 03/95/99 Sulzer Chemtech
T-9002 Absorber 001010 -0036 10.10/3 SCOT Various Pro-Quip
T-9002 Absorber Packing 001011 -0036 10.11 SCOT 7006269 03/05199 Sulzer Chemtech
T-9003 Stripper 001012 -0038 10.12/2 SCOT Various Pro-Quip
N-9003 Stripper Trays 001013 -0038 10.13 1006269 03/05/99 Sulzer Chemtech
D-9002 Stripper Reboiler Condensate Pot 001014 -0039 10.14/3 SCOT Various Pro-Quip
D-9003 Stripper Reflux Accumulator 001015 -0039 10.15/3 SCOT Various Pro-Quip
H-9002 Incinerator 001016 -0040 10.16/2 TTO Various Pro-Quip
H-9003 Incinerator Stack 001017 -0042 10.17 ITO Various Pro-Quip
SC-1001 PEDA Sump 001018 -0051 10.18/2 SCOT Various Pro-Quip
SP-1001 Process Drain Sump 001019 -0050 10.19 UTIL Various Pro-Quip
D-1002 Boiler Slowdown Pot 001020 -0063 10.20 SRU Various Pro-Quip
R-1002 Sulfur Degassing Reactor 001021 -0030 10.21 SRU Various Pro-Quip
N-1031 Sulfur Drain Seal Assembly 001022 -0029 10.22 SRU Various Pro-Quip
TANKS 015
TK-9003 Caustic Storage Tank 001501 15.01 SCOT
TK-9001 MDEA Storage Tank 001502 -0051 15.02 SCOT
TK-9002 Spent MDEA Tank 001503 -0051 15.03 SCOT
- --------------------------------------------------------------------------------------------------------------------
TAG SERVICE DESCRIPTION SIZE
Number Manufacturer/Model/Design
- --------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ
-------------
VESSELS - TPQ
-------------
<S> <C> <C> <C>
D-1001 Acid Gas Knock-Out Drum Design: 50 psig @ 250/-20 (degrees) F 60" I.D. x 16'-0" S/S
D-2001 Sour Water Gas Knock-Out Drum Design: 50 psig @ 250/-20 (degrees) F 42" I.D. X 14'-0" S/S
H-1001 Reaction Furnace-Train 100 Design: 50 psig @ 750/-20 (degrees) F 114" I.D. x 22'-0" E E
H-2001 Reaction Furnace - Train 200 Design: 14 psig @ 750/-20 (degrees) F 114" I.D. x 22'-0" E E
R-1001 A/B/C Reactors A/B/C Design: 14 psig @ 750/-20 (degrees) F 144" I.D. x 68'-0" S/S
R-2001 A/B/C Reactors A/B/C Design: 14 psig @ 7501-20 (degrees) F 144" I.D. x 68'-0" S/S
N-1007 A/B/C/D Sulfur Drain Seal Assembly - Train 100 Process:14 psig @ 470/-20 (degrees) F 3" x 16' - 6"
Jacket 180 psig @ 4701-20 (degrees) F
N-2007 A/B/C/D Sulfur Drain Seal Assembly - Train 200 Process: 14 psig @ 470/-21 (degrees) F 3" x 16' - 6"
Jacket 180 psig @ 470/-20 (degrees) F
H-9001 SCOT In-Line Healer Design: 14 psig @ 7501-20 (degrees) F 72" I.D. x 14'-0" F-E
R-9001 Hydrogenation Reactor Design: 14 psig @ 7501-20 (degrees) F 144" I.D. x 28'-0" S/S
T-9001 Quench Tower Design: 14 palg 04001-20" (degrees) F 120" I.D. x 36'-0" S/S
N-9001 Quench Tower Packing (2) Tower internals consisting of 808 120" I.D. Column
cubic ft of M125.X Structured
304L SS packing, (1) SPS-101 bed
support & (1) HLT-538 liquid
distributor.
T-9002 Absorber Design: 14 psig @ 200/-20 (degrees) F 102" I.D. x 44'-0" S/S
T-9002 Absorber Packing Tower internals consisting of 1021 cubic 102" I.D. Column
fe. of M125.Y stuctured 304L SS packing. (1)
SPS-101 bed support & (1) HLT-538 liquid
distributor
T-9003 Stripper Design: 50 psig @ 350/-20 (degrees) F 90" I.D. x 97'0" SIS
N-9003 Stripper Trays (4) 90" dia. single pass trays w/16.5"wide
downcomers. (26) 90" dia. two pass trays
w/17.5" wide center downcomers & 16.5"
wide side downcomers & (1) chimney tray.
D-9002 Stripper Reboiler Condensate Pot Design: 160 psig @ 470/-20 (degrees) F 30" I.D. x 4'-6"
D-9003 Stripper Refllux Accumulator Design: 5O psig @ 300/-20 (degrees) F 36" I.D. x 6'-0"
H-9002 Incinerator Design: 14 psig @ 750/-20 (degrees) F 120" I.D. x 28'-0" E-E
H-9003 Incinerator Stack Design: atmosphere @ 750/-20 (degrees) F 48" I.D. x 200'-0" OAH
SC-1001 PEDA Sump Design: 150 psig @ 300/-20 (degrees) F 60" I.D. x 12'-0"
SP-1001 Process Drain Sump Design: 50 psig @ 250/-20 (degrees) F 60" I.D. x 14'-O"S/S
D-1002 Boiler Slowdown Pot Design: 50 psig @ 300/-20 (degrees) F 48" I.D. x 14'-0" S/S
R-1002 Sulfur Degassing Reactor Design: 50 pslg @ 465/-20 (degrees) F 72" I.D. x 6'-0" S/S
N-1031 Sulfur Drain Seal Assembly B4CNF 4"
TANKS
TK-9003 Caustic Storage Tank 50 BBLS - Design: 4 Oz. positive/O.4 Oz. 8' DIA X 6' OAH
Vacuum @ 0/300 (degrees) F
TK-9001 MDEA Storage Tank 200 BBLS - Design: 4 Oz. positive/0.4 [ILLEGIBLE]
Oz.Vacuum @ 0/300 (degrees) F
TK-9002 Spent MDEA Tank 500 BBLS - Design:4 Oz. positive/0.4 12' DIA x 25' OAH
Oz.Vacuum @ 0/300 (degrees) F
</TABLE>
---------------
FOR YOUR
MAY 14, 1999
INFORMATION
---------------
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT P&ID DATA SHEET LOCATION PURCHASE ORDER SUPPLIER
Number Code Number Nbr-Rev System Area Nbr-Rev Date
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
HEAT EXCHANGERS 020
--------------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E-1000 Waste Heat Boiler - Train 100 002001 -0018 20.01/1 SRU 100 7004863 12/10/98 Rentech
Train
E-2000 Waste Heat Solar - Train 200 002001 -0023 20.01 SRU 200 7004863 12/10/98 Rentech
Train
E-1100 Sulfur Condenser - Train 100 002002 -0021 20.02 SRU 100 7004863 12/10/98 Rentech
Train
E-2200 Sulfur Condenser - Train 200 002002 -0026 20.02 SRU 200 7004863 12/10/98 Rentech
Train
E-1001 SRU Reheat Exchanger No. 1 - Train 100 002003 -0019 20.03 SRU 100 7004946 12/15/98 Steeltek
Train
E-2001 SRU Reheat Exchanger No. 1 - TrainB 002003 -0024 20.03 SRU 200 7004946 12/15/98 Steeltek
Train
E-1002 SRU Reheat Exchanger No. 2 - Train 100 002004 -0019 20.04 SRU 100 7004946 12/15/98 Steeltek
Train
E-2002 SRU Reheat Exchanger No.2 - Train 200 002004 -0024 20.04 SRU 200 7004946 12/15/98 Steeltek
Train
E-1003 SRU Reheat Exchanger No. 3 - Train 100 002005 -0019 20.05 SRU 100 7004946 12/15/98 Steeltek
Train
E-2003 SRU Reheat Exchanger No. 3 - TrainB 002005 -0024 20.05 SRU 200 7004946 12/15/98 Sleeltek
Train
E-1004 Acid Gas Preheater 002006 -0013 20.06 SRU 7004946 12/15/98 Steeltek
E-9001 SCOT Waste Heat Steam Generator 002007 -0034 20.07 SCOT 7004946 12/15/98 Steeltek
E-9002 Lean/Rich MDEA Exchanger 002008 -0037 20.08 SCOT 7005054 12/22/98 Steeltek
E-9003 Stripper Reboiler 002009 -0038 20.09 SCOT 7005056 12/22/98 Fabsco
E-9004 Incinerator Waste Heat Solar 002010 -0041 20.10 TTO 7004863 12/10/98 Rentech
AIR COOLERS 025
----------- ---
C-1001 Acid Gas Cooler 002501 -0012 25.01 SRU
- -------------------------------------------------------------------------------------------------------------------
TAG SERVICE DESCRIPTION SIZE
Number Manufacturer/Model/Design
- -------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ
-------------
HEAT EXCHANGERS
---------------
<S> <C> <C> <C>
E-1000 Waste Heat Boiler - Train 100 106-364 NEN (Special) 56667 MBTU/HR 106" I.D. x 41'-O" OAL
7226 ft/2/ Shell: 750 psig @ 0/550 (degrees) F
Tubes: 14 psig@0/650 (degrees) F
E-2000 Waste Heat Solar - Train 200 108-384 NEN (Special) 56,667 MBTU/HR 106" I.D. x 41'-0" OAL
14 psig @ 0/650 (degrees) F
E-1100 Sulfur Condenser - Train 100 108-288 NEN (Special) 19.714 MBTU/HR 108" I.D. x 54'-0" OAL
14.635 ft/2/ Shell: 160 psig @ 0/470 (degrees) F
Tubes: 14 psig @ 0/650 (degrees) F
E-2200 Sulfur Condenser - Train 200 108-288 NEN (Special) 19.714 MBTU/HR 108" I.D. 54'0" OAL
14,635 ft/2/ Shell: 18O psig @ 0/470 (degrees) F
Tubes: 14 psig @ 0/650 (degrees) F
E-1001 SRU Reheat Exchanger No. 1 - Train 100 48-192 NEN 3000 MBTU/HR 2256 ft/2/ 48" I.D. x 24'0" OAL
Shell: 750 psig @ 0/550 (degrees) F Tubes: 14 psig
@ 0/550 (degrees) F
E-2001 SRU Reheat Exchanger No. 1 - TrainB 48-192 NEN 3,000 MBTU/HR 2256 ft/2/ 45" I.D. x 24''0" OAL
Shell:750 psig @ 0/550 (degrees) F -
Tubes: 14 psig @ 0/550 (degrees) F
E-1002 SRU Reheat Exchanger No. 2 - Train 100 45-144 NEN 2,800 MBTU/HR 1442 ft/2/ 45" I.D. x 18'-0" OAL
Shell: 750 psig @ 0/550 (degrees) F - Tubes:
14 psig @ 0/550 (degrees) F
E-2002 SRU Reheat Exchanger No.2 - Train 200 45-144 NEN 2,600 MBTU/HR 1442 ft/2/ 45" I.D. x 18'-0" OAL
Shell: 75O psig @ 0/550 (degrees) F - Tubes: 14
psig @ 0/550 (degrees) F
E-1003 SRU Reheat Exchanger No. 3 - Train 100 45l NEN 2,850 MBTU/HR 1442 ft/2/ 45" I.D. x 18'-0" OAL
Shell 75O psig @ 0/550 (degrees) F - Tubes: 14
psig @ 0/550 (degrees) F
E-2003 SRU Reheat Exchanger No. 3 - TrainB 45-144 NEN 2850 MBTU/HR 1442 ft/2/ 45" I.D. x 18'-0" OAL
Shell: 50 psig @ 0/550 (degrees) F - Tubes: 14 psig
@0/550 (degrees) F
E-1004 Acid Gas Preheater 34-192 NEN 1256 MBTU/HR 1037ft/2/ 34" I.D. x 24'-0" OAL
Shell: 180 psig @ 0/470 (degrees) F - Tubes: 14 psig
@0/470 (degrees) F
E-9001 SCOT Waste Heal Steam Generator 89-288 NEN (Spectial) 11,611 MBTU/HR 89" I.D. x 36'0" OAL
8831 ft/2/ Shell: 150 psig @ 0/470 (degrees) F
Tubes:14 psig @ 0/650 (degrees) F
E-9002 Lean/Rich MDEA Exchanger 36-288 BFU 36,850 MBTU/HR x 1.10 36" I.D.
10,928 11" Shell: 150 psig @ 0/300 (degrees) F
Tubes: 150 psig @ 0/300 (degrees) F
E-9003 Stripper Reboiler 54-288 BEM 36,000 MBTU/HR maximum 54" I.D.
9694 ft/2/ She11: 180 psig @ O/465P.
Tubes: 50 psig
E-9004 Incinerator Waste Heat Solar 52275 MBTU/HR (Maximum)
AIR COOLERS
-----------
C-1001 Acid Gas Cooler 1HAC0910S07 - 500 MBTU/HR x 1.20 [ILLEGIBLE]
</TABLE>
---------------
FOR YOUR
MAY 14, 1999
INFORMATION
---------------
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT P&ID DATA SHEET LOCATION PURCHASE ORDER SUPPLIER
Number Code Number Nbr-Rev System Area Nbr-Rev Date
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
C-9001 Quench Water Cooler 002502 -0035 25.02 SCOT 7005617 01/28/99 HAMMCO, Inc.
C-9002 Lean Amine Cooler 002503 -0036 25.03 SCOT 7005617 01/28/99 HAMMCO, Inc.
C-9003 Stripper Condenser 002504 -0039 25.04 SCOT 7005617 01/28199 HAMMCO. Inc.
P-1001 A/B Acid Gas Knock-Out Drum Pumps 003001 -0011 30.01 SRU 7005076 12/23/99 Raguse & Co.
7.5 Hp
P-2001 A/B Sour Water Gas Knock-Out Drum Pumps 003002 -0014 30.02 SRU 7005076 12/23/99 Raguse & Co.
P-1002 A/B Sulfur Pit Pumps 003003 -0029 30.03 SRU 7005654 01/29/99 Chas. S. & Lewis
& Co.
P-9002 A/B Quench Water Circulation Pumps 003004 -0035 30.04 SCOT 7005076 12/23/99 Raguce & Co.
P-9002 A/B Rich MDEA Pumps 003005 -0036 30.05 SCOT 7005076 12/23/99 Raguse & Co.
P-9003 A/B Lean MDEA Pumps 003006 -0038 30.06 SCOT 7005076 12/23/99 Raguse & Co.
P-9004 A/B Stripper Reflux Pumps 003007 -0039 30.07 SCOT 7005076 12/23199 Raguse & Co.
P-9005 SCOT Caustic Injection Pump 003008 30.08 SCOT
P-9008 MDEA Makeup Pump 003009 -0051 30.09 SCOT 7005076 12/23/99 Raguse & Co.
P-9009 A/B Closed Drain Pumps 003010 -0050 30.10 UTIL
P-9100 A/B Sump Rainwater Pumps 003011 30.11 UTIL
P-9006 A/B L.P. Boiler Feedwater Pumps 003012 -0063 30.12 UTIL
P-9007 A/B H.P. Boiler Feedwater Pumps 003013 -0062 30.13 UTIL
SP-1001A/B Seal Pots or Acid Gas Knock-out Drum
Pumps 003014 -0011 30.14
SP-2001A/B Seal Pots for Sour Water Gas Knock-
out Drum Pumps 003014 -0014 30.14
SP-9004 A/B Seal Pots for Stripper Reflux Pump 003014 -0039 30.14
P-1003 A/B Sulfur Feed Pump 003015 30.15
BURNERS 040
------- ---
BA-1001 Acid Gas Furnace Burner- Train 100 004001 -0017 40.01 SRU 100 7005208 01/07/99 Callidus Tech, Inc.
Train
BA-2001 Acid Gas Furnace Burner - Train 200 004001 -0022 40.01 SRU 200 7005208 01/07/99 Callidus Tech, Inc.
BA-9001 SCOT In-Line Burner 004002 -0032 40.03 SCOT 7005208 01/07/99 Callidus Tech, Inc.
BA-9002 Incinerator Burner 004003 -0040 40.02 TTO 7005208 01/07/99 Callidus Tech, Inc.
- -----------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT DESCRIPTION SIZE
Number Code Manufacturer/Model/Design
- -----------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
<S> <C> <C> <C> <C>
C-9001 Quench Water Cooler 002502 3HAC1540T13 - 31.363 MBTU/HR x 110 (3) 15' x 40'
Design:100 psig @ 250/-20 (degrees) F
(2)Fans/Bay @ 40 Hp (3) Bays
C-9002 Lean Amine Cooler 002503 2HAC1440T12 - 21.4.23 MBTU/HR x 110 (2) 14' x 40'
Design: 150 psig @ 250/-20 (degrees) F
(2)Fans/Say @ 40 Hp (2) Says
C-9003 Stripper Condenser 002504 1HAC1740T14 - 23,410 MBTU/HR x 1.10 (1) 17' x 40'
Design:50 psig @ 300/-20 (degrees) F (2) Fans @ 30
Hp (1) Bay
PUMPS 030
----- ---
P-1001 A/B Acid Gas Knock-Out Drum Pumps 003001 Durco Pump/Model 2 x 1.5V-6 2 gpm @ 60 psid / 7.5 Hp
P-2001 A/B Sour Water Gas Knock-Out Drum Pumps 003002 Durco Pump/Model 2 x 2 x 1.5V-6 10 gpm @ 60 psid / 7.5 Hp
P-1002 AJD Suflur Pit Pumps 003003 Lewis/Model MSS-1655-5 450 gpm @ 55 psid / 30 Hp
P-9001 AID Quench Water Circulation Pumps 003004 Durco Pump/Model 3K6 x 6 -16A with SS 1977 gpm @ 75psid x 1.10/125
Catch Basin Hp
P-9001 A/B Rich MDEA Pumps 003005 Durco Pump/Model 2K6 x 4 with SS 787 gpm @ 95psid x 1.15/100 Hp
Catch Basin
P-9003 A/B Lean MDEA Pumps 003006 Durco Pump/Model 3K6 x 4-16 with SS 833 gpm@90psid a 1.10/100 Hp
Catch Basin
P-9004 A/B Stripper Reflux Pumps 003007 Durco Pump/Model 2x1.5V - 8 53 gpm @ 63 psid / 7.5 Hp
P-9005 SCOT Caustic Injection Pump 003008 Pulsafeeder/Model 340-S-E 5.0 gph @50 psid / 0.25 Hp
P-9006 MDEA Makeup Pump 003009 Durco Pump/Model 1K1.5 x 1-6 with SS 60 psid/7.5 Hp
Catch Basin
P9009 A/B Closed Drain Pumps 003010 IDP Model ESP2/1.5 x 1.6 25 gpm @ 6O psid/3 Hp
P9100 A/B Sump Rainwater Pumps 003011 Air operated
P-9006 A/B L.P. Boiler Feedwater Pumps 003012
P-9007 A/B H.P. Solar Feedwater Pumps 003013
SP-1001A/B Seal Pots or Acid Gas Knock-out Drum
Pumps 003014
SP-2001A/B Seal Pots for Sour Water Gas Knock-
out Drum Pumps 003014
SP-9004 A/B Seal Pots for Stripper Rellux Pump 003014
P-1003 A/B Sulfur Feed Pump 003015
43 [email protected] psid/5Hp
BURNERS 040
------- ---
BA-1001 Acid Gas Furnace Burner- Train 100 004001 14,000 MBTU/HR Heat Release 13" I.D. x 25'-0" Long
BA-2001 Acid Gas Furnace Burner - Train 200 004001 14,000 MBTU/HR Heat Release 13" I.D. x 25'-0" Long
BA-9001 SCOT In-Line Burner 004002 10,320 MBTU/HR Heat Release [ILLEGIBLE]
BA-9002 Incinerator Burner 004003 65,150 MBTU/HR Heat Release 108" I.D. x 26'-11" Long
</TABLE>
---------------
FOR YOUR
MAY 14, 1999
INFORMATION
---------------
<PAGE>
k/Foster Wheeler EQUIPMENT LIST
Project ,200 TPD Sulfur Plants
Location: Port Arthur, Texas
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT P&ID DATA SHEET LOCATION PURCHASE ORDER SUPPLIER
Number Code Number Nbr-Rev System Area Nbr-Rev Date
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
BLOWERS 045
------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
K-1000 A/B Acid Gas Blower 004501 -0012 45.01 SRU
K-1001 A/B/C Combustion Air Blower 004502 -0015 45.02 SRU 7005531 01/28/99 Hoffman Air &
Filtration
Sulfur Pit Vent Gas Recycle Compressors ALT SRU
K-1005 A/B Degassing Air Blower 004503 -0028 45.03 SRU
K-1002 A/B In-Line Heater Air Blower 004504 -0030 45.04 SCOT 7005532 01/28/99 Hoffman Air &
Filtration
K-1003 SCOT Start-Up Blower 004505 -0034 45.05 SCOT Robinson
Industries
K-1004 A/B Incinerator Air Blower 004506 -0040 45.06 TTO Robinson
Industries
FILTERS 055
F-1001A/B/C Combustion Air Blower Screen/Silencer 005501 -0015 55.01 SRU 7005531 01/28/99 Hoffman Air &
Filtration
F-9001 In-Line Air Blower Suction Screen 005502 -0026 55.02 SCOT 7005532 01/28/99 Hoffman Air &
Filtration
F-9002 Quench Water Filter 005503 -0035 55.03 SCOT 7005529 01/27/99 Plenty Products
F-9008 pH Meter Sample Filter 005504 -0035 55.04 SCOT
F-9004 Lean MDEA Filter 005505 -0037 55.05 SCOT 7005530 01/27/99 Plenty Products
F-9005 Lean MDEA Carbon Filter 005506 -0037 55.06 SCOT 7005528 01/25/99 Perry Equipment
F-9006 Carbon Bed After Filter 005507 -0032 55.07 SCOT 7005530 01/27/99 Plenty Products
F-9007 MDEA Sump Filter 005508 -0051 55.06 SCOT 7005529 01/27/99 Plenty Products
PACKAGED EQUIPMENT 070
D-9001 Deaerator 007001 UTIL
SK-1001 Instrument Air Dryer 007002 UTIL
SPECIAL EQUIPMENT 085
N-1002 Ceramic Ferrules for WHR -Train 100 008501 -0018 SRU 100
Train
N-2002 Ceramic Ferrules for WHR - Train 200 008501 -0023 SRU 200
Train
N-1009 Sulfur Pit Vent Ejector 008502 -0029 SRU
N-1005 Catalyst for Sulfur Reactors -
Train 100 008503 -0020 SRU
N-2005 Catalyst for Sulfur Reactors- Train
200 008503 -0025
N-9000 Catalyst for SCOT Reactor 008504 -0033 SCOT
N-1008 A/B/C Combustion Air Blower Vent Silencer 008505-0 -0015 85.05-01 SRU 7005531 01/28/99 Hoffman Air &
Filtration
N-9007 A/B In-Line Htr Air Blower Vent Silencer 008505-0 -0030 65.05-02 SCOT 7005532 01/28/99 Hoffman Air &
2 Filtration
N-1006 Rainshield for SRU Reactor Furnace-
Train 100 -0017 SRU 100
Train
N-2006 Rainshield for SRU Reactor Furnace -
Train 200 -0022 SRU 200
Train
N-1011
N-1012 A/B/C
- -------------------------------------------------------------------------------------------------------------------------
TAG SERVICE DESCRIPTION SIZE
Number Manufacturer/Model/Design
- -------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ
-------------
BLOWERS
-------
<S> <C> <C> <C>
K-1000 A/B Acid Gas Blower 7286 SCFM/ 2 X 150 HP
K-1001 A/B/C Combustion Air Blower
67 106A 12,555 SCFM x 1.15 @ 10 psid
Sulfur Pit Vent Gas Recycle Compressors
K-1005 A/B Degassing Air Blower 700 SCFM/2 X 100 HP
K-1002 A/B In-Line Heater Air Blower
74104A/1930 SCFM/2 X 100 HP
K-1003 SCOT Start-Up Blower
RL-150-24/11000 SCFM / 1 X 125 HP
K-1004 A/B Incinerator Air Blower
BI-1242/15940 SCFM /2 X 125 HP
FILTERS
F-1001A/B/C Combustion Air Slower Screen/Silencer
Universal/FSH-24-12/1225110 SCFM FSH-24-12 (Weight 1240#)
F-9001 In-Line Air Blower Suction Screen
Universal/FSH-10-2/1930 SCFM FSH-10-2 (Weight 190#)
F-9002 Quench Water Filter Plenty/CFW-19-3-100-6-CS/230 GPM 16" DIA X 74" OAH
F-9008 pH Meter Sample Filer
F-9004 Lean MDEA Filer Plenty/CFW-40-4-150-4-CS/160 GPM 22" DIA X 81" OAH
F-9005 Lean MDEA Carbon Filer PECO/10-FB-98-60-150/160 GPM 60" DIA X 188" OAH
F-9006 Carbon Bed After Filter Plenty/CFW-40-4-150-4-CS/160 GPM 22" DIA X 81" OAH
F-9007 MDEA Sump Filter Plenty/CFW-8-3-150-2-CS 10" DIA X 61" OAH
PACKAGED EQUIPMENT
D-9001 Deaerator 8' DIA x 15'-0" S/S 8' DIA X 15'-0" S/S
SK-1001 Instrument Air Dryer
SPECIAL EQUIPMENT
N-1002 Ceramic Ferrules for WHR -Train 100
N-2002 Ceramic Ferrules for WHR - Train 200
N-1001 Sulfur Pit Vent Ejector
N-1005 Catalyst for Sulfur Reactors -
Train 100
N-2005 Catalyst 101 Sulfur Reactors- Train
200
N-9000 Catalyst for SCOT Reactor
N-1008A/B/C Combustion Air Blower Vent Silencer Universal/SU5/14
N-9007 A/B In-Line Htr Air Slower Vent Silencer Universal/SU5/6
N-1006 Rainshield for SRU Reactor Furnace-
Trains 100
N-2006 Rainshield for SRU Reactor Furnace -
Train 200
N-1011
N-1012 A/B/C
</TABLE>
---------------------------
FOR YOUR
SU5-14 (weight 375#)
SU5-16 (weight [ILLEGIBLE])
INFORMATION
---------------------------
<PAGE>
Foster Wheeler
00 TPD Sulfur Plants
EQUIPMENT LIST
Location: Port Arthur, Texas
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT P&ID DATA SHEET LOCATION PURCHASE ORDER SUPPLIER DESCRIPTION SIZE
Number Code Number Nbr-Rev System Area Nbr-Rev Date Manufacturer/Model/Design
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N-1013
N-2013
N-1014
N-2014
N-1015 A/B/C
N-1016
N-2016
N-1017 A/B/C
N-2017 A/B/C
N 1018
N-2018
N-1019
N-2019
N-1020 A/B/C/D
N-2020 A/B/C/D
N-1021 A/B
N-1022 A/B
N-1023 A/B
N-9008 A/B
N-9010
N-9011
N-9012
N-1025
N-2025
N-1026
N-2026
N-1027
N-2027
N-1028
N-2028
N-9013
N-9014
N-9015
N-9016
N-9017
N-1030 A/B
N-2030 A/B
N-9020 A/B
N-9021 A/B
N-9022 A/B
N-9023 A/B
N-9024
N-9025 A/B
N-9026 A/B/C
REFRACTORY 135
---------- ---
N-1OOl Refractory for SRU SRU 100
Reactor Furnace - Train
Train 500
</TABLE>
---------------
FOR YOUR
MAY 14, 1999
INFORMATION
---------------
<PAGE>
Foster Wheeler
200 TPD Sulfur Plants
EQUIPMENT LIST
Location: Port Arthur, Texas
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAG SERVICE ACCT P&ID DATA SHEET LOCATION PURCHASE ORDER SUPPLIER DESCRIPTION SIZE
Number Code Number Nbr-Rev System Area Nbr-Rev Date Manufacturer/Model/Design
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS - TPQ 010
------------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N-2001 Refractory for SRU Reactor Furnace - Train 200 SRU 200
Train
N-1004 Refractory for Sulfur Condenser - Train 100 SRU 100
Train
N-2004 Refractory for Sulfur Condenser - Train 200 SRU 200
Train
N-1003 Refractory for SRU Reactor - Train 100 SRU 100
Train
N-2003 Refractory for SRU Reactor - Train 200 SRU 200
Train
N-9006 Refractory for Thermal Oxidizer TTO
N-9004 Refractory for SCOT Mixing Chamber SCOT
N-9005 Refractory for SCOT Reactor SCOT
</TABLE>
---------------
FOR YOUR
MAY 14 1999
INFORMATION
---------------
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004622 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- -------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 02/09/99
- -------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=============================================================================================================
<S> <C> <C> <C> <C> <C>
HT. EXs C-802 A/B Sour Water Stripper A203 1231A PH-0064
Pumparound Cooler
- -------------------------------------------------------------------------------------------------------------
0-804 A/B Sour Water Stripper Bottoms A200 1231B PH-0064
Cooler
- -------------------------------------------------------------------------------------------------------------
E-801 A/B Sour Water Stripper Feed/ A201 1211A PH-0053
Bottoms Exchanger
- -------------------------------------------------------------------------------------------------------------
E-803 Sour Water Stripper Reboiler A202 1211B PH-0053
- -------------------------------------------------------------------------------------------------------------
PUMPS P-801 A/B Sour Water Stripper A203 1311C PH-0041
Pumparound Pumps
- -------------------------------------------------------------------------------------------------------------
P-802 A/B Sour Water Stripper Bottoms A201 1311B PH-0039
Pumps
- -------------------------------------------------------------------------------------------------------------
TOWER T-801 Sour Water Stripper A202 12110 PH-0050
- -------------------------------------------------------------------------------------------------------------
T-801T Sour Water Stripper Trays A202 1112A PH-0054
=============================================================================================================
====================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004622 UNIT
HOUSTON, TEXAS SECTION: SWS
- --------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS
- --------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION 04/30/99 REMARKS REV
====================================================================================================================
<S> <C> <C> <C> <C>
HT. EXs C-802 A/B Sour Water Stripper Ecodyne MRM, Inc. 1
Pumparound Cooler
- --------------------------------------------------------------------------------------------------------------------
0-804 A/B Sour Water Stripper Bottoms Ecodyne MRM, Inc. 1
Cooler
- --------------------------------------------------------------------------------------------------------------------
E-801 A/B Sour Water Stripper Feed/ Heat Transfer Equipment, Co. 1
Bottoms Exchanger
- --------------------------------------------------------------------------------------------------------------------
E-803 Sour Water Stripper Reboiler Heat Transfer Equipment, Co. 1
- --------------------------------------------------------------------------------------------------------------------
PUMPS P-801 A/B Sour Water Stripper Sulzer Bingham Pumps Inc. 1
Pumparound Pumps
- --------------------------------------------------------------------------------------------------------------------
P-802 A/B Sour Water Stripper Bottoms David Brown Union Co. 1
Pumps
- --------------------------------------------------------------------------------------------------------------------
TOWER T-801 Sour Water Stripper General Welding Works, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
T-801T Sour Water Stripper Trays Koch-Glitsch 1
====================================================================================================================
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004623 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- -------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 02/09/99
- -------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=============================================================================================================
<S> <C> <C> <C> <C> <C>
HI. EXs. C-101A/B Amine Reg Pumparound Cooler A203 1221C PH-0077
- -------------------------------------------------------------------------------------------------------------
C-104 Amine Pumpout Cooler A201 1221C PH-0077
- -------------------------------------------------------------------------------------------------------------
E-102A/B Rich/Lean Amine Exchanger A201 1211A PH-0057
- -------------------------------------------------------------------------------------------------------------
E-103 Amine Regenerator Reboiler A202 1211B PH-0057
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
FILTERS F-101 Rich Amn Particulate Filter A200 1593A PH-0080
- -------------------------------------------------------------------------------------------------------------
F-102 Rich Amn Carbon Bed Filter A200 1593B PH-0081
- -------------------------------------------------------------------------------------------------------------
F-103 Rich Amn Carbon Bed After Fltr A200 1593A PH-0080
- -------------------------------------------------------------------------------------------------------------
F-104 Amine Sump Filter A204 b593A PH-0080
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PUMPS P-101A/B Amn Reg Pumparound Pump A203 1311B PH-0055
- -------------------------------------------------------------------------------------------------------------
P-102A/B Amn Reg Bottoms Pump A201 1311C PH-0055
- -------------------------------------------------------------------------------------------------------------
P-103 Amine Transfer Pump A204 1311D PH-0055
- -------------------------------------------------------------------------------------------------------------
P-104 Amine Sump Pump A204 1311A PH-0056
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
TANK SC-101 Amine Sump A204 1131A PH-0079
- -------------------------------------------------------------------------------------------------------------
TK-4002 Spent Amine Storage Tank A204
- -------------------------------------------------------------------------------------------------------------
TK-4003 Fresh Amine Storage Tank A204 1141A PH-0078
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
TOWER T-101 Amine Regenerator A202 1124A PH-0061
- -------------------------------------------------------------------------------------------------------------
T-101T Amine Regenerator Trays A202 1112A PH-0075
=============================================================================================================
====================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004623 UNIT
HOUSTON, TEXAS SECTION: ATU
- --------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS
- --------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION 04/30/99 REMARKS REV
====================================================================================================================
<S> <C> <C> <C> <C>
HI. EXs. C-101A/B Amine Reg Pumparound Cooler Ecodyne MRM, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
C-104 Amine Pumpout Cooler Ecodyne MRM, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
E-102A/B Rich/Lean Amine Exchanger Ohmstede, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
E-103 Amine Regenerator Reboiler Ohmstede, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
FILTERS F-101 Rich Amn Particulate Filter Hatfield and Company 1
- --------------------------------------------------------------------------------------------------------------------
F-102 Rich Amn Carbon Bed Filter AWC, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
F-103 Rich Amn Carbon Bed After Fltr Hatfield and Company 1
- --------------------------------------------------------------------------------------------------------------------
F-104 Amine Sump Filter Hatfield and Company 1
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
PUMPS P-101A/B Amn Reg Pumparound Pump David Brown Union Pump 1
- --------------------------------------------------------------------------------------------------------------------
P-102A/B Amn Reg Bottoms Pump David Brown Union Pump 1
- --------------------------------------------------------------------------------------------------------------------
P-103 Amine Transfer Pump David Brown Union Pump 1
- --------------------------------------------------------------------------------------------------------------------
P-104 Amine Sump Pump Goulds Pumps, Inc. 1
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TANK SC-101 Amine Sump Vessel Technology 1
- --------------------------------------------------------------------------------------------------------------------
TK-4002 Spent Amine Storage Tank Field Erected 1
- --------------------------------------------------------------------------------------------------------------------
TK-4003 Fresh Amine Storage Tank Baker Tank 1
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOWER T-101 Amine Regenerator Graver Manufacturing Co., Inc. 1
- --------------------------------------------------------------------------------------------------------------------
T-101T Amine Regenerator Trays Koch-Glitsch 1
====================================================================================================================
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004623 EQUIPMENT LIST
HOUSTON, TEXAS SECTION:
- ---------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL
LOCATION: PORT ARTHUR, TEXAS DATE: 02/09/99
- ---------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO.
=============================================================================================
<S> <C> <C> <C> <C> <C>
DCU FEED PS-430
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
TANKS 430-TK-108 Coker Feed Tank A220A
- ---------------------------------------------------------------------------------------------
430-TK-109 Coker Feed Tank A221A
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
PUMPS 430-J-1 Coker Feed Pump A220C 1311-G
- ---------------------------------------------------------------------------------------------
430-J-2 Coker Feed Pump A220C 1311-G
- ---------------------------------------------------------------------------------------------
430-J-3 Dirty Water Sump Pump A221D 1311-H
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
EXCHANGERS 430-H-1 A/B Coker Tank Heater A220 B/C 1229-A
- ---------------------------------------------------------------------------------------------
DRIVERS 430-JM-1 Motor for 430-J-1 A220C 1311-G
- ---------------------------------------------------------------------------------------------
430-JM-2 Motor for 430-J-2 A220C 1311-G
- ---------------------------------------------------------------------------------------------
430-JM-3 Motor for 430-J-3 A221D 1311-H
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
COOLING TOWER PS-432
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
HEAT TRANSFER 432-CT-432 Cooling Tower A401 2261-A PH-089
- ---------------------------------------------------------------------------------------------
432-F-1 Cooling Tower Fan A401 2261-A PH-089
- ---------------------------------------------------------------------------------------------
432-F-2 Cooling Tower Fan A401 2261-A PH-089
- ---------------------------------------------------------------------------------------------
432-F-3 Cooling Tower Fan A401 2261-A PH-089
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
PUMPS 432-J-1 Cooling Water Circulating Pump A4O1A 1131-D
- ---------------------------------------------------------------------------------------------
432-J-2 Cooling Water Circulating Pump A4O1A 1131-D
- ---------------------------------------------------------------------------------------------
432-J-3 Cooling Water Circulating Pump A4O1A 1131-D
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
DRIVERS 432-JM-1 Motor for 432-J-1 401A 1311-D
- ---------------------------------------------------------------------------------------------
432-JM-2 Motor for 432-J-2 401A 1311-D
- ---------------------------------------------------------------------------------------------
432-JT-3 Turbine for 432-J-3 401A 1311-D
- ---------------------------------------------------------------------------------------------
432-FM-1 Motor for 432-F-1 401A 2261-A PH-089
- ---------------------------------------------------------------------------------------------
432-FM-2 Motor for 432-F-2 401A 2261-A PH-089
- ---------------------------------------------------------------------------------------------
432-FM-3 Motor for 432-F-3 401A 2261-A PH-089
=============================================================================================
===============================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004623 UNIT
HOUSTON, TEXAS SECTION: OFFSITES
- ---------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS
- ---------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION 04/30/99 REMARKS REV
===============================================================================================================
<S> <C> <C> <C> <C>
DCU FEED PS-430
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
TANKS 430-TK-108 Coker Feed Tank Modify existing tank by S/C
- ---------------------------------------------------------------------------------------------------------------
430-TK-109 Coker Feed Tank Modify existing tank by S/C
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
PUMPS 430-J-1 Coker Feed Pump Pump G.O.C. #11217
- ---------------------------------------------------------------------------------------------------------------
430-J-2 Coker Feed Pump Pump G.O.C. #11218
- ---------------------------------------------------------------------------------------------------------------
430-J-3 Dirty Water Sump Pump Pump G.O.C. #11219
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
EXCHANGERS 430-H-1 A/B Coker Tank Heater 1
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
DRIVERS 430-JM-1 Motor for 430-J-1 Motor I.D. #
- ---------------------------------------------------------------------------------------------------------------
430-JM-2 Motor for 430-J-2 Motor I.D. #
- ---------------------------------------------------------------------------------------------------------------
430-JM-3 Motor for 430-J-3 Motor I.D. #
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
COOLING TOWER PS-432
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
HEAT TRANSFER 432-CT-432 Cooling Tower 1
- ---------------------------------------------------------------------------------------------------------------
432-F-1 Cooling Tower Fan 1
- ---------------------------------------------------------------------------------------------------------------
432-F-2 Cooling Tower Fan 1
- ---------------------------------------------------------------------------------------------------------------
432-F-3 Cooling Tower Fan 1
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
PUMPS 432-J-1 Cooling Water Circulating Pump Pump G.O.C. #11220
- ---------------------------------------------------------------------------------------------------------------
432-J-2 Cooling Water Circulating Pump Pump G.O.C. #11221
- ---------------------------------------------------------------------------------------------------------------
432-J-3 Cooling Water Circulating Pump Pump G.O.C. #11222
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
DRIVERS 432-JM-1 Motor for 432-J-1 Motor I.D. #
- ---------------------------------------------------------------------------------------------------------------
432-JM-2 Motor for 432-J-2 Motor I.D. #
- ---------------------------------------------------------------------------------------------------------------
432-JT-3 Turbine for 432-J-3 Turbine G.O.C. #11223
- ---------------------------------------------------------------------------------------------------------------
432-FM-1 Motor for 432-F-1 Motor I.D. # 1
- ---------------------------------------------------------------------------------------------------------------
432-FM-2 Motor for 432-F-2 Motor I.D. # 1
- ---------------------------------------------------------------------------------------------------------------
432-FM-3 Motor for 432-F-3 Motor I.D. # 1
===============================================================================================================
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004623 EQUIPMENT LIST UNIT
HOUSTON, TEXAS SECTION: OSBL OFFSITES
- ------------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS DATE: 4/5/99 6/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO. REMARKS REV
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
FLARE
- ------------------------------------------------------------------------------------------------------------------------------------
STACKS FS-23 Flare Stack A201 1248-A PH-093 1
- ------------------------------------------------------------------------------------------------------------------------------------
DRUMS 23-M-1 Flare Knock Out Drum A200 1131-A PH-82 168" ID. x 70'-0" T/T 1
- ------------------------------------------------------------------------------------------------------------------------------------
PUMPS 23-J-1 Flare Drip Pump A200 1311-C Pump G.O.C. # 11224
- ------------------------------------------------------------------------------------------------------------------------------------
23-J-2 Flare Drip Pump A200 1311-C Pump G.O.C. # 11225
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVERS 23-JM-1 Motor for 23-J-1 A200 1311-C Motor ID. #
- ------------------------------------------------------------------------------------------------------------------------------------
23-JT-2 Turbine for 23-J-2 A200 1311-C Turbine G.O.C. # 11226
- ------------------------------------------------------------------------------------------------------------------------------------
PS41
- ------------------------------------------------------------------------------------------------------------------------------------
EXCHANGERS 41-E-1 Crude Preheater A252 1211-A 1
- ------------------------------------------------------------------------------------------------------------------------------------
PUMPS 41-J-1 Crude Oil Pump A250 1311-E PH-0084 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-J-2 Crude Oil Pump A250 1311-E PH-0084 Pump G.O.C. # 11228 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-J-3 Crude Oil Pump A250 1311-E PH-0084 Pump G.O.C. # 11229 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-J-4 Water Drawoff Pump A251 1311-J Pump G.O.C. # 11230 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-J-5 Storm Water Pump A251 1311-K Pump G.O.C. # 11231 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-J-17* Crude Transfer Pump A252 1311-F Pump G.O.C. # 8779 1
- ------------------------------------------------------------------------------------------------------------------------------------
*(Relocated from PH-41)
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVERS 41-JM-1 Motor for 41-J-1 A250 1311-E PH-0084 Motor ID. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-JM-2 Motor for 41-J-2 A250 1311-E PH-0084 Motor ID. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-JM-3 Motor for 41-J-3 A250 1311-E PH-0084 Motor ID. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-JM-4 Motor for 41-J-4 A251 1311-J Motor I.D. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-JM-5 Motor for 41-J-5 A251 1311-K Motor I.D. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
41-JM-17 Motor for 41-J-17 A252 1311-F Motor I.D. # 1
====================================================================================================================================
</TABLE>
----------------
FW purchase
responsibility
only.
No
responsibility
for Engineering
& Design
----------------
Page 2
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
[LOGO] FOSTER WHEELER USA CONTRACT: 13-004623 EQUIPMENT LIST UNIT
HOUSTON, TEXAS SECTION: OSBL OFFSITES
- ------------------------------------------------------------------------------------------------------------------------------------
CLIENT: CLARK REFINING AND MARKETING, INC. REVISION ORIGINAL 1 2 3 4 5 6
LOCATION: PORT ARTHUR, TEXAS DATE: 4/5/99 6/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS ITEM NO. DESCRIPTION P&ID NO. REQN. NO. P.O. NO. REMARKS REV
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
SOURWATER PS-162
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PUMPS 162-J-13 Sour Water Transfer Pump A006 1311-E Pump G.O.C.# 11232 1
- ------------------------------------------------------------------------------------------------------------------------------------
162-J-14 Sour Water Transfer Pump A006 1311-E Pump G.O.C.# 11233 1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TANKS 162-TK-78 Sour Water Bulk Storage Tank A006 N/A (Existing Tank) 1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVERS 162-JM-13 Motor for 162-J-13 A006 1311-E Motor I.D. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
162-JM-14 Motor for 162-J-14 A006 1311-E Motor I.D. # 1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONDENSATE RETURN
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DRUMS D-9010 H.P. Condensate Flash Drum 4611- PH-088
405 113-Q 60" I.D. x 18'-2" S-S with 5' Skirt 1
- ------------------------------------------------------------------------------------------------------------------------------------
TANKS TK-889 Coker Gas Oil - - Existing Tank - Add Nitrogen Blanket 1
====================================================================================================================================
</TABLE>
----------------
FW purchase
responsibility
only.
No
responsibility
for Engineering
& Design
----------------
<PAGE>
CONTRACT SCHEDULE 2.6
OWNER CONSTRUCTION SERVICES
Construction support services to be provided to CONTRACTOR by OWNER are:
1. Electrical Power Note 1
2. Construction water Note 1
3. Hydrotest Water Note 1
4. Potable Water Note 1
5. Removal of pre-existing hazardous waste
6. Removal of pre-existing contaminated waste
7. Telephone and electrical connections to Contractor's trailer(s), if
required by Clark/Port Arthur Coker Company Note 1
8. Disposal of stockpiled soil spoils, derived from pre-existing soil at the
site, unless used in construction
9. Dirty water disposal Note 1
10. Use of Clark's buildings, such as: Warehouse 28 & 31, etc.
11. Use of Clark's forklifts in Warehouse 31 Note 2
12. Trash disposal: manifesting of trash, hazardous waste, and contaminated
waste by Clark, bin supply and removal by Contractor
Note 1: Hookup is by Contractor, service is provided by Clark
Note 2 Any repairs required to the forklift(s) due to Contractor's use
shall be to Contractor's account
<PAGE>
CONTRACT SCHEDULE 2.11 (a)
OWNER OBTAINED PERMITS
The Texas Natural Resource Conservation Commission Permit (presented in
CONTRACT ATTACHMENT 1.3) is the only permit required of OWNER
<PAGE>
CONTRACT SCHEDULE 2.11 (b)
CONTRACTOR OBTAINED PERMITS
Heavy-haul transportation permits are the only permits required to be obtained
by Contractor.
<PAGE>
CONTRACT SCHEDULE 2.13.2
ORGANIZATION CHART
The CONTRACTOR organization chart is presented on the next page.
<PAGE>
[LOGO] FOSTER WHEELER USA CORPORATION
ENGINEERING & CONSTRUCTION GROUP
SOUTHWEST OPERATIONS
CLARK - 13206
<TABLE>
<CAPTION>
-----------------------
Vice President &
Program Director
M. Autrey
-----------------------
|
|
|
----------------------------------------------------------------------------------------------------------------
| | | | | | | |
| | | | | | | |
- ----------- ------------- ---------- ------------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Deputy Hydrocracker Coker Project Process Procurement Construction Business
Program Project Project Engineering Manager Director Manager Manager
Director Manager Manager Manager
J.M. Papon S. Keller R. Klick M. El-Khashab D. Fontugne M. Weisberg T. Roder C. Myers
- ----------- ------------- ---------- ------------- ----------- ------------ ------------- -----------
</TABLE>
<PAGE>
CONTRACT SCHEDULE 2.14
CONSTRUCTION SCHEDULE
The construction schedule is shown on the project summary for each process unit
schedule on the pages that follow.
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> (C) <C>
Expected Start 01APR98 [GRAPHIC OMITTED] early bar LUMP Sheet 1 of 1
Expected Finish 01NOV00 [GRAPHIC OMITTED] Progress Bar Clark Refining & Marketing
Data Date 26APR99 Heavy Oil Upgrade Project [LOGO]
Run Date 26MAY99 Level I Coker Summary
Primavera Systems, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONTRACT SCHEDULE 2.15
PAYMENT SCHEDULE
<PAGE>
CLARK - PAYMENT SCHEDULE
$ MM
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MONTH ENGINEERING (1) MATERIALS CONSTRUCTION (1)
Progress Pmt % Progress Payment $ Progress Payment $ Progress Pmt % Progress Payment $
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Apr98-Jul99 F'cast 77.0% $61.600 $70.200 12.4% $19.460
Aug-99 (3) 7.0% $5.629 $40.500 3.3% $5.186
Sep-99 6.0% $4.829 $34.600 4.0% $6.286
Oct-99 4.0% $3.229 $31.000 5.0% $7.856
Nov-99 3.0% $2.429 $17.500 5.5% $8.646
Dec-99 1.0% $0.829 $9.800 6.6% $10.366
Jan-00 1.0% $O.829 $8.600 7.3% $11.466
Feb-00 1.0% $0.829 $8.600 8.1% $12.726
Mar-00 $7.500 9.1% $14.296
Apr-00 $5.900 6.6% $10.366
May-00 $2.100 7.0% $10.996
Jun-00 $1.400 6.1% $9.586
Jul-00 $0.970 6.4% $10.056
Aug-00 $3.000 5.9% $9.266
Sep-00 $2.638 4.0% $6.286
Oct-00 $0.0O0 2.0% $3.146
Nov-00 $1.600 0.7% $1.106
TOTALS 100.0% $80.200 $245.908 100.0% $157.100
<CAPTION>
Rev.2
- --------------------------------------------------------------------------------------
MONTH OH&P/CONTINGENCY (2) $ TOTALS
Progress Payment $
- --------------------------------------------------------------------------------------
<S> <C> <C>
Apr98-Jul99 F'cast $0.00 $151.260
Aug-99 (3) $28.17 $79.485
Sep-99 $4.14 $49.855
Oct-99 $4.18 $46.265
Nov-99 $3.78 $32.355
Dec-99 $2.77 $23.765
Jan-00 $2.77 $23.665
Feb-00 $2.92 $25.075
Mar-00 $2.88 $24.676
Apr-00 $2.15 $18.416
May-00 $1.73 $14.826
Jun-00 $1.45 $12.436
Jul-00 $1.43 $12.456
Aug-00 $1.23 $13.496
Sep-00 $0.83 $9.754
Oct-00 $0.42 $3.566
Nov-00 $0.15 $2.856
TOTALS $61.00 $544.206
</TABLE>
Notes:
(1) Engineering & Construction progress payments based on earned
value (% complete)
(2) OH&P/Contingency progress payment based on overall composite %
of total EPC
(3) Aug99 payments will include a reconciliation to account for
any unbilled charges due Foster Wheeler at the time of
financial closure.
<PAGE>
CONTRACT SCHEDULE 2.46
Third Party Technology Licenses
The Third Party Technology Licenses for the Port Arthur Heavy Oil Upgrade
Project are as listed below.
Coker LPG Treating: Merichem
Hydrocracker Unit: Chevron Research and Technology Corporation
SRU: Shell SCOT
<PAGE>
CONTRACT SCHEDULE 5.3
PERFORMANCE TEST STANDARDS
The attached document shall serve as the Performance Test Standard for the Port
Arthur Heavy Oil Upgrade Project.
<PAGE>
SCHEDULE 5.3
PERFORMANCE TEST STANDARDS
Purpose: The Performance Test measures the ability of the Port Arthur
Coker Company L.P. ("Owner" or "PACC") facilities to generate cash
flow, adequate to service its Senior Debt outstanding, using the
assumptions for average market prices of products and feedstocks,
and average unit prices for utilities contained in the Base Case for
years 2001 through 2011. The Performance Test is intended to
demonstrate that the PACC facilities can operate in conjunction with
the Clark facilities at the forecasted throughput, yield and
operating efficiency without any effects of changes in the market
prices of, or price relationships between, feedstocks and refined
products.
General Test Parameters
1. The Performance Test will consist of a Capacity Test and a
Reliability Test to be conducted following Mechanical Completion and
Commissioning. All General Test Parameters will apply to both the
Capacity Test and Reliability Test.
2. The Candidate crude oils charged to crude unit AVU-146 will be from
the list in Table IV-1 and actual crude oils as agreed to between
Owner, Foster Wheeler USA Corporation (Contractor), and the
Independent Engineer (IE) during all test runs. The volume mix of
crudes shall be approximately 80% from the heavy category and 20%
from the light sour category.
3. All products produced and sold to Clark during the Performance Test
shall meet the specifications set forth in the Process Technical
Specifications set forth in Schedule 1.7, Turnkey Specifications. To
the extent the products actually produced deviate from the product
specification, the price shall be adjusted to reflect the values for
the processing or sale of such products by the PACC or Clark R&M as
approved by IE.
4. During the Performance Test, the Guaranteed Emission and Effluent
Limits shown in Schedule 1.3 of the EPC Contact shall not be
exceeded on a ratable basis.
5. During the test period, only one component of spared equipment will
be utilized at any time where redundant components (pumps,
compressors, etc.) are installed. This does not preclude switching
among components of spared equipment during the test period.
6. For purposes of measuring the consumption of each feedstock and
utility, and production of products for calculation of Daily Net
Margin, Clark and PACC will use the measurement systems and
equipment that are utilized for accounting purposes. Meters shall be
installed for measurement of the main feeds, products and utilities
<PAGE>
2
between Clark and the PACC. Calibration of such meters will be
carried out prior to the commencement of the Performance Test.
7. Details of the yield accounting approach including measurement
tolerances, analytical procedures, scheduling and reporting during
the Performance Test will be developed between Owner and Contractor
and the IE before the commencement of the test.
8. Owner and Contractor may from time to time request modifications to
any of the procedures of the Performance Test. Such modifications
will become effective upon the consent of the IE, which consent
shall not be unreasonably withheld or delayed.
Capacity Test
9. During a continuous 72 hour period, which can be during the
Reliability Test or at another time, the PACC units will be operated
at or within the conditions identified in the process unit
performance guarantees included as attachments to this document. The
capacity test will demonstrate that PACC can achieve design capacity
and efficiency.
9.1 Crude unit AVU-146 will be operated by Clark at a nominal 250,000
B/SD during the Capacity Test to provide necessary adequate vacuum
bottoms feedstock for the delayed coking unit DCU 843.
9.2 The delayed coker feedstock will be vacuum resid. The hydrocracker
feedstock will be mixed coker gas oil, light cycle oil, and vacuum
gas oil.
Reliability Test
10. Crude Unit AVU-146 will be operated for 60 consecutive days at a
crude oil charge rate of not less than an average of 245,000 B/D to
provide feedstocks for the Project units. The coker will be operated
during the same period at an average charge rate of not less than
76,340 B/D of vacuum resid feedstocks. There will be no limitation
on the amount of feedstock processed in Crude Unit AVU 146 and
Vacuum Resid feedstock sent to the coker subject to physical
limitations of the Crude Unit AVU 146 and safety considerations. The
hydrocracker will be operated during the same period at an average
charge rate of not less than 33,250 B/D of mixed coker gas oil,
light cycle oil and vacuum gasoil feedstocks.
<PAGE>
3
11. The Guaranteed Reliability of the Project will be determined by the
achievement of 100% of the Daily Net Margin of $904,500 as described
below. The Project can achieve Substantial Completion by achieving
at least a Daily Net Margin of $859,200 and by Contractor paying
Reliability Test Buydown Payments according to the schedule in Table
IV-2.
The "Daily Net Margin" generated during a Performance Test is
calculated as follows: (i) the sum of Product Values (as defined
below) for each product produced during the Performance Test minus
the sum of the Feedstock Values (as defined below) minus Variable
Costs (as defined below) divided by (ii) the number of days in such
Performance Test. The Daily Net Margin shown in Table IV-2 and Table
IV-3 is based on a 80/20 Maya/Arab Light crude slate; any alternate
Light Sour crude oil will affect product yields and utility
consumption. It is not anticipated that changes in the Light Sour
crude selection will have a material impact on the Daily Net Margin.
However, any change in crude selection and the corresponding Daily
Net Margin calculation will be subject to review and agreement by
the Owner, Contractor, and the IE.
As used in Daily Net Margin, the following terms have the following
meanings:
"Product Value" means, for any product produced in a Performance Test, (i)
the volume or other measure of such product produced during such
Performance Test multiplied by (ii) the Dollar Value (as defined
below) of such product.
"Feedstock Value" means, for any feedstock consumed in a Performance Test,
(i) the volume or other measure of such feedstock consumed during
such Performance Test multiplied by (ii) the Dollar Value of such
feedstock.
"Dollar Value" of any product or feedstock means the value therefore as
set forth in the Base Case and as listed in Table IV-3 or, if there
is no value set forth in Table IV-3 for such product or feedstock,
as the case may be, a value determined by the Owner, with the
written approval of the IE, on a basis consistent with the
methodology used to determine the prices of similar products or
feedstocks, as the case may be, set forth in the Base Case, adjusted
to reflect any differences in quality and transportation costs.
"Variable Costs" means the total cost of major utilities consumed (or
produced) multiplied by the unit price of each utility assuming base
fuel and electricity costs of $2.307/MMBTU and $.032/KWH,
respectively. The consumption basis for each utility is outlined in
the Heavy Oil Project Guarantee Basis (Table IV-3).
<PAGE>
4
TABLE IV-1
APPROVED CRUDE OILS
LIGHT SOUR HEAVY
- --------------------------------------------------------------------------------
Arab Light Maya
* Basrah Light
* Kirkuk
* Kuwait
* Olmeca
* Oriente
* Poseidon
* Mars
* Urals
* Vasconia
* These crudes are candidates for use subject to selection of the most
likely crude to be run by PACC and Clark and a process design check to be
performed by Foster Wheeler after such crude is selected by PACC and
Clark.
<PAGE>
5
TABLE IV-2
RELIABILITY TEST BUYDOWN PAYMENTS
Liquidated Damages Schedule
Net Daily Margin Buydown
($/Day) ($)
------- ----
904,500 -0-
899,500 8,280,000
894,000 16,560,000
889,500 24,840,000
884,500 33,110,000
879,500 41,390,000
874,500 49,670,000
869,500 57,950,000
864,500 66,230,000
859,500 74,510,000
859,200 75,000,000
Buydown (MM$) = 1.6557 MM$ / 1.0 M$ Net Daily Margin Impairment
Note: The Net Daily Margin guarantee basis will be updated to reflect the final
utility volume design data. The Buydown amount of 1.6557 MM$ / 1.0 M$ Net
Daily Margin Impairment will not change with this update.
<PAGE>
6
TABLE IV-3
HOUP PROJECT GUARANTEE BASIS
<TABLE>
<CAPTION>
Volume Price/Unit MS/D Comments
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Products
843 Coker
Propane/Propylene ........ 2.69 MBPCD $17.05 $ 45.92
Propane % ................ 72.58% $14.98
Propylene % .............. 27.42% $22.51
Butane/Butylene ............ 1.94 MBPCD $17.55 $ 33.99
Isobutane % .............. 12.80% $18.29
Normal Butane % .......... 43.24% $16.27
Normal Butylene % ........ 31.34% $18.58
Isobutylene % .............. 12.61% $18.58
Naphtha .................... 11.68 MBPCD $19.07 $ 222.70
LGO (Diesel) ............... 23.33 BPCD $19.90 $ 464.23
Petroleum Coke ............. 23.31 MFOEBCD $ 0.00 $ 0.00
942 Hydrocracker
Light Unstabilized Naphtha . 2.91 MBPCD $17.28 $ 50.32
Propane % ................ 11.56% $14.98
Mixed Butanes % .......... 25.46% $16.27
Light Naphtha % .......... 62.98% $18.11
Heavy Naphtha .............. 6.02 MBPCD $23.29 $ 140.10
Jet ........................ 10.61 MBPCD $22.71 $ 241.00
LS Diesel .................. 5.35 MBPCD $22.66 $ 121.32
ULS Cat Feed ............... 13.50 MBPCD $20.86 $ 281.57
545 Sulfur Plant
Sulfur ..................... 324.75 LTCD $41.00 $ 13.31
Total Products ............... $1,614.45
Feedstocks
843 Coker
Vacuum Tower Buttons ..... 76.34 MBPCD $ 4.05 $ 308.82
Hydrogen ................. 0.05 MFOEBCD $13.84 $ 0.69 100% Purity Basis
942 Hydrocracker .............
Vacuum Gas Oil ........... 6.21 MBPCD $18.55 $ 115.24
Light Cycle Oil .......... 8.56 MBPCD $19.46 $ 166.82
Coker Gas Oil ............ 18.47 MBPCD $ 0.00 $ 0.00
Hydrogen ................. 3.78 MFOEBCD $28.03 $ 106.09 100% Purity Basis
Sulfur Plant .................
Hydrogen ................. 0.04 MFOEBCD $28.03 $ 0.99 100% Purity Basis
Total Feedstocks ............. $ 698.65
Gross Margin ................... $ 915.81
Variable Cost .................. $ 11.30
Net Daily Margin ............... $ 904.50
</TABLE>
Note: The variable cost guarantee basis will be updated based on the final
utility volume design data.
<PAGE>
HOUP Project Guarantee Basis
Produced Utilities Volume Price/Unit M$/D Comments
843 Coker
650# Steam 0 MLB/D 3.803383 --
125# Steam 1,318 MLB/D 3.59 4.73
Fuel 22,447 MMBTU/D 2.306634 51.78
942 Hydrocracker
650# Steam 0 MLB/D 3.803383 --
125# Steam 0 MLB/D 3.59 --
Fuel 2,468 MMBTU/D 2.306634 5.69
545 Sulfur Plant
650# Steam 3,888 MLB/D 3.803383 14.79
Total Produced Utilities $76.99
Consumed Utilities
843 Coker
Electricity 485,160 KWH/D 0.032 15.53
650# Steam 3,306 MLB/D 3.803383 12.57
125# Steam MLB/D 3.59 --
Fuel 11,940 MMBTU/D 2.306634 27.54
942 Hydrocracker
Electricity 269,256 KWH/D 0.032 8.62
650# Steam 106 MLB/D 3.803383 0.40
125# Steam 211 MLB/D 3.59 0.76
Fuel 1,029 MMBTU/D 2.306634 2.37
545 Sulfur Plant
Electricity 41,040 KWH/D 0.032 1.31
650# Steam MLB/D 3.803383 --
Fuel 3,368 MMBTU/D 2.306634 7.77
7841 Amine Regenerator
Electricity 5,544 KWH/D 0.032 0.18
125# Steam 1,805 MLB/D 3.59 6.48
Fuel 0 MMBTU/D 2.306634 --
8747 Sour Water Stripper
Electricity 4,104 KWH/D 0.032 0.13
125# Steam 1,291 MLB/D 3.59 4.63
Fuel 0 MMBTU/D 2.306634 --
Total Consumed Utilities $88.29
Variable Cost $11.30
Note: The utility volume guarantee basis will be updated based on the final
design data.
<PAGE>
Pricing - Purvin & Getz 2001-2011 Average
Fuel $2.31 /MMBTU
Reg UL 87 $23.13 $/bbl
Prem UL 93 $25.04 $/bbl
Penhex Sales $18.74 $/bbl
Propylene $22.51 $/bbl
Propane $14.98 $/bbl
N-Butane Sales $16.27 $/bbl
Isobutane $18.29 $/bbl
Butylene $18.58 $/bbl
Naphtha Purchase $21.63 $/bbl
Kero $23.13 $/bbl
Jet 54 $23.13 $/bbl
LS Dies $22.66 $/bbl
HS Dies $22.00 $/bbl
LS VGO $20.86 $/bbl
HS VGO $19.39 $/bbl
#6 Fuel $11.72 $/bbl
Coke $0.00 $/FOEB
Hydrogen $1.42 /MSCF
Power 3.2 cents/kwH
CW m/u 10 c/gal
Sulfur $41.00 $/LT
Coker Naphtha $19.07 $/bbl
Coker LGO $19.90 $/bbl
Hydrocracker Light Naphtha $18.11 $/bbl
Hydrocracker Heavy Naphtha $23.29 $/bbl
Hydrocracker Jet $22.71 $/bbl
Coker VTB $4.05 $/bbl
Vacuum Gas Oil $18.55 $/bbl
Coker Gas Oil to Storage $16.87 $/bbl
Coker Gas Oil to HCU 942 $0.00 $/bbl
FCC Light Cycle Oil $19.48 $/bbl
650# Steam $3.80 $/mlb
125# Steam $3.59 $/mlb
<PAGE>
CONTRACT SCHEDULE 5.3.1
CAPACITY TEST STANDARDS
Copies of the Chevron Guaranty to be attached.
<PAGE>
Port Arthur Heavy Oil Upgrade Project
Delayed Coking Unit
Process Guarantees Rev 6, 7/11/99
Page 1 of 5
SCHEDULE 5.3.1 - PART I
DELAYED COKING UNIT PERFORMANCE GUARANTEES:
1. Process Unit Guarantees
Foster Wheeler guarantees that the Delayed Coker containing the following
sections: coking, gas plant, tail gas and C(3)/C(4) amine absorbers, coke
cutting, and green coke pit/pad shall meet the process guarantees
described below.
When the delayed coker (hereinafter referred to as "the plant") is
installed by Foster Wheeler, and continuously operated strictly in
accordance with Foster Wheeler's Turnkey Specifications and the operating
guidelines to be furnished by Foster Wheeler, and if the plant includes
coker heaters designed and supplied by Foster Wheeler, and if the plant is
supplied uniformly with feedstock having properties defined in the
following paragraphs, Foster Wheeler's guarantee is set forth below. If
during the performance tests, the characteristics of the feedstock to the
plant, utilities, or ambient conditions materially differ from those
defined therein, the guarantees affected thereby shall be modified by
methods mutually acceptable to the parties hereto to compensate for the
deviation. The performance tests will be valid only if the plant is
responsive to controls, in sound mechanical condition and operating in
stable conditions at equipment efficiencies specified in the technical
specifications. CLARK shall provide to the battery limits of the plant, as
required, the utilities as specified in the basic engineering data sheets.
CLARK shall provide to the plant battery limits vacuum residuum conforming
to the following:
Capacity, BPSD 80,000
Gravity, (degrees)API 1.9
CCR, wt% 25
Sulfur, wt% 5.42
Nitrogen, wppm 7,100
Nickel, wppm 111 max.
Vanadium, wppm 600 max.
Viscosity, cSt 42 @ 450(degrees)F
Viscosity, cSt 230,000 @ 21(degrees)F
Sodium, wppm 10 max*
<PAGE>
Port Arthur Heavy Oil Upgrade Project
Delayed Coking Unit
Process Guarantees Rev 6, 7/11/99
Page 2 of 5
Simulated TBP
LV% IBP 774
5 951
10 1070
30 1172
50 1300
Battery Limit Conditions
Feedstock Temperature, (degrees)F Pressure, PSIG
--------- ----------------------- --------------
(measured at grade)
Vacuum Residue 450 (min) 100 (min)
H(2) Purge 140 605
HCU Flash Gas To be established To be established
during design during design
Caustic 80 60
* There shall be no caustic injection in the crude or straight-run
residues downstream.
Temperature, (degrees)F Pressure, PSIA
----------------------- --------------
Ambient Conditions 80(degrees)F 14.7
When the plant, which is installed and operating in accordance with the
provisions stated herein, is processing the feedstock whose physical
properties are in accordance with those set forth above, Foster Wheeler
guarantees:
a. That the plant shall be capable of processing 80,000 BPSD of
vacuum residue from a 80/20 blend of Maya/Light Arabian Crudes
while operating at or within an eighteen (18) hour coking
cycle, to produce products including Fuel Gas,
Propane/Propylene, Butanes/Butylenes, Naphtha, LCGO, HCGO and
Coke.
<PAGE>
Port Arthur Heavy Oil Upgrade Project
Delayed Coking Unit
Process Guarantees Rev 6, 7/11/99
Page 3 of 5
b. That the products shall meet the following yield and
specifications or have the following recoveries based on an
average over the period of the 72 hour performance test:
Yield
1. That the C(5) plus yield shall be a minimum of 58.9 wt%
(98% of estimated C(5) plus products) for the design
case.
Specifications
Product Specification Value
------- ------------- -----
2. Offgas to Fuel Gas C(3)+ Content 3.5 mole% (max)
3. Naphtha D86 End Point 375(degrees)F (max)
4. Naphtha C(4)- content 1.0 liquid volume%
(max)
5. LCGO D86 End Point 690(degrees)F (max)
6. Coke VCM Content 11 wt% (max)
7. HCGO Metals, Nickel 2.0 ppmwt (max)
plus Vanadium
content (Ni + V)
8. HCGO Conradson Carbon 0.8 wt.% (max)
Content
c. Coker Fired Heaters On-Stream Factor
The coker fired heaters shall achieve an on-stream factor of
94.5% on an annual basis, based on use of online spalling as
required.
2. FOSTER WHEELER's Sublimits of Liability for Failure to Meet Process
Guarantees
FOSTER WHEELER's liabilities to OWNER with regard to breach or default by
FOSTER WHEELER in fulfilling process guarantees pursuant to Section 2 of
this Exhibit shall be limited to the following:
a. Feedstock capacity guarantee $500,000 for each 5,000 barrels per
stream day below 80,000 barrels per stream day that the unit is not
capable of processing.
<PAGE>
Port Arthur Heavy Oil Upgrade Project
Delayed Coking Unit
Process Guarantees Rev 6, 7/11/99
Page 4 of 5
b. Yields, Specifications and Recoveries:
1. Total C5 plus yield guarantee: $500,000 for each 1.0 wt% that
the total C5 plus yield is less than the guaranteed value.
2. Fuel Gas, C(3)+ Content guarantee: $200,000 for each 1 mole%
that the C(3)+ content in the Fuel Gas exceeds the
guaranteed value.
3. Stabilized Coker Naphtha, ASTM D-86 End Point guarantee:
$100,000 for each 10(degrees)F that the ASTM D-86 End Point is
greater than the guaranteed value.
4. C(4)- in Stabilized Coker Naphtha product guarantee: $25,000
for each 0.10 liquid volume% the C(4)- in Stabilized Coker
Naphtha product is greater than the guaranteed value.
5. LCGO, ASTM D-86 End Point for guarantee: $300,000 for each
10(degrees)F the ASTM D-86 End Point is greater than the
guaranteed value.
6. VCM content of coke guarantee: $300,000 for each 1.0 wt% of
coke VCM content that exceeds the guaranteed value.
7. HCGO Metals (Ni + V) content: $100,000 for each 0.1 ppmwt that
the Metals (Ni + V) content exceeds 2.0 ppmwt.
8. HCGO Conradson Carbon content: $250,000 for each 0.1 wt.% that
the Conradson Carbon content exceeds 0.8 wt.%.
c. Coker Fired Heaters On-Stream Factor: $200,000 for each 0.5% the
Coker Fired Heaters on-stream factor is less than 94.5%.
The values for each parameter guaranteed in Section 2 shall be averaged
over the test run period of 72 hours. In determining Foster Wheeler's
liability under this Section 2, the values for each category under
Sections 2.b.1., 2.b.2., 2.b.3., 2.b.4., 2.b.5., 2.b.6, 2.b.7, 2.b.8, and
2.c. shall be calculated separately and then aggregated in total, and
achievement of better than guaranteed performance in any above-listed
categories shall be used to offset less than guaranteed performance in any
of the above-listed categories.
<PAGE>
Port Arthur Heavy Oil Upgrade Project
Delayed Coking Unit
Process Guarantees Rev 6, 7/11/99
Page 5 of 5
As a material condition of entering into the Agreement, it is expressly
understood and agreed that the cumulative financial liability of Foster
Wheeler for all obligations, warranties, guarantees, representations and
indemnifications, whether expressed or implied, whether arising by reason
of statute, contract, tort, negligence, strict liability, or otherwise,
arising by reason of Foster Wheeler's entering into this Agreement is
limited to Two Million Dollars ($2,000,000 USD).
Foster Wheeler's maximum financial liability for failure to meet process
guarantees will be reduced by any amount Foster Wheeler spends in an
attempt to meet guarantees by making changes beyond corrections to the
original scope of services. This amount will be calculated on the basis of
rates established in the Contract and the charges for modification of the
plant. Any costs and charges incurred by Foster Wheeler to meet the
above-listed process guarantees specified in Section 2 of this Exhibit
shall be deducted from the payment of liquidated damages under Section 2
of this Exhibit.
<PAGE>
SCHEDULE 5.3.1 - PART II
SULFUR RECOVERY
COMPLETION AND PERFORMANCE WARRANTIES
The Pro-Quip Corporation guarantees that when operating with feed gases as
shown in the "Design Basis" section of the Turnkey Specifications, Schedule 1.7,
the Sulfur Recovery Unit will meet the following performance standards (the
"Guaranteed Values") during a test or tests conducted in a manner mutually
agreeable to Owner, Contractor, The Pro-Quip Corporation, Ortloff Engineers, LTD
and the Independent Engineer.
I. SULFUR RECOVERY
A minimum of 96.0% of the sulfur in the feed gas to the Sulfur
Recovery Unit (SRU) will be recovered as defined in the Design Basis
("Guaranteed Sulfur Recovery").
There are three (3) limitations on the sulfur recovery guarantee:
1. The sulfur content of the total fresh feed to the SRU shall not
exceed the amount shown in the "Design Basis".
2. The hydrocarbon content of the total fresh feed to the SRU shall not
exceed the amount shown in the "Design Basis". For the purposes of
comparing differences in feed composition, hydrocarbon contents
shall be expressed on a methane-equivalent basis.
3. The SRU shall be operating with the specified sulfur conversion
catalyst charges and equipment that have not been significantly
damaged by operation at abnormal conditions.
If the Sulfur Recovery Unit is operating on feed stream(s) with
compositions, conditions, or flow rates different from those given in the
"Design Basis", the sulfur plant simulation program
<PAGE>
2
program (SULFUR, Version 5.3, dated 07MAY94) shall be used to calculate the
sulfur recovery capability of the SRU when processing the actual feed streams.
The difference between this calculated sulfur recovery and that originally
calculated for the "Design Basis" feed streams shall be used to adjust the
guaranteed sulfur recovery percentage.
Sulfur Specification
1. The sulfur recovered, when processing feed stream(s) with
hydrocarbon contents not exceeding that given for the feed streams
in the "Design Basis" will be commercially free of arsenic,
selenium, and tellurium with a minimum purity of 99.5% pure sulfur
as analyzed by the procedures described in the Sixth Edition of
Standard Methods of Analysis by Furman, Volume 1, pages 1039 through
1048, and will have a color known in the industry as "Texas Bright"
which is commonly defined as sulfur with a maximum carbon content of
0.2% by weight. Provided, however, that the type and quantity of
hydrocarbons in the feed steam does not exceed that given in the
"Design Basis", the maximum carbon content will not exceed 0.1
percent (1000 PPM) by weight.
2. The H(2)S content of the sulfur leaving the Sulfur Pit will not
exceed 0.01 percent (100 PPM) by weight as long as the sulfur
content of the total fresh feed to the SRU does not exceed the
amount shown in the "Design Basis". The H(2)S content of the liquid
sulfur product shall be determined by maintaining a known quantity
of liquid sulfur at 130-145(degrees)C, bubbling gaseous nitrogen
through the sample to strip the residual H(2)S from the sulfur, and
titrating the collected effluent nitrogen with iodine. As H(2)S is
stripped from the sulfur, any residual H(2)S(x) will dissociate to
H(2)S and sulfur, with the H(2)S removed from the sample by the
nitrogen sweep. The procedure shall continue until no further H(2)S
evolves from the sample. The results of the iodine titration shall
be used to compute the mass of H(2)S evolved from the sample, for
comparison to the
<PAGE>
3
mass of the original sulfur sample to determine the H(2)S
concentration in parts per million on a weight basis.
3. The sulfur recovered, when processing feed stream(s) as described in
the "Design Basis" will contain no more than 0.001 percent (10 PPM)
by weight of chlorides, no more than 0.5 percent by weight of
moisture, and no more than 0.05 percent (500 PPM) by volume of ash.
II. EFFLUENT GAS
The effluent gas from the Tailgas Thermal Oxidation Unit (TTO)
stack shall comply with the following specifications ("Effluent
Guarantees"):
a. The sulfur dioxide concentration will not exceed 0.025 percent
(250 PPM) by volume at zero percent excess air on a dry basis.
The resulting emission rate of sulfur dioxide is approximately
350 ton/year.
b. The hydrogen sulfide concentration will not exceed 0.001
percent (10 PPM) by weight on a wet basis.
c. The carbon monoxide concentration will not exceed 0.01 percent
(100 PPM) by volume on a wet basis.
d. The nitrogen oxides concentration will not exceed 0.08 Lb per
MMBTU, relative to the heat release of the TTO burner.
e. The total reduced sulfur (TRS) concentration will not exceed
0.03 percent (300 PPM) by volume on a wet basis.
III. The following limitations apply to the Effluent Guarantees:
<PAGE>
4
a. The TGCU shall be operating with the specified
hydrolysis/hydrogenation catalyst charge and equipment that
have not been significantly damaged by operation at abnormal
conditions.
b. Commercial pipeline quality fuel gas shall be used for fuel to
the SCOT In-Line Burner.
c. The external reducing gas used in the TGCU shall comply with
the following requirements:
(1) C(4)+hydrocarbons less than 1.0 mole%.
(2) No significant amounts of olefins or aromatics (which
are notoriously bad at fouling catalysts with carbon).
(3) No significant amounts of NO(x), cyanide, or chlorides
(catalyst poisons).
(4) No free liquids.
d. The TTO shall be operating at the specified temperature with
equipment that has not been significantly damaged by operation
at abnormal conditions.
e. The TTO shall be operating with a minimum of 25 percent excess
air, or with a minimum oxygen concentration of 1.8 percent by
volume (dry basis) in the stack, whichever requires the higher
air flow rate.
PLANT CAPACITY
The completed Sulfur Recovery Unit shall be capable of stable
operations while processing the Feed Rate defined in the Design Basis
while meeting Effluent Guarantees and achieving at least 95 percent of the
Guaranteed Sulfur Recovery ("Guaranteed Capacity").
<PAGE>
5
IV. PLANT RELIABILITY
The completed Sulfur Recovery Unit will be capable of maintaining
stable operations for seven consecutive days (168 continuous hours) during
which the Sulfur Recovery Unit will meet Effluent Guarantees and at least
95 percent of the guaranteed Sulfur Recovery and 95 percent of the
guaranteed Capacity ("Guaranteed Reliability").
<PAGE>
SCHEDULE 5.3.1 - PART III
GUARANTEE AGREEMENT
Between
PORT ARTHUR COKER COMPANY L.P.,
FOSTER WHEELER USA CORPORATION
and
CHEVRON RESEARCH AND TECHNOLOGY COMPANY
Relating to
CHEVRON ISOCRACKING PROCESS
---------------------------------------
CONFIDENTIAL
PROPERTY OF CHEVRON RESEARCH AND
TECHNOLOGY COMPANY
TO BE REPRODUCED, AND USED, ONLY IN
ACCORDANCE WITH WRITTEN PERMISSION OF
CHEVRON RESEARCH AND TECHNOLOGY COMPANY
---------------------------------------
<PAGE>
SCHEDULE 7.2
OFFSITE AND REVAMP WORK
The Technical Specifications for the Offsite and Revamp Work are presented
in separate volumes which are on file at the Contractor's office in Houston,
Texas.
<PAGE>
CONTRACT SCHEDULE 9.1
REQUIRED INSURANCE
Insurance requirements are presented on the pages that follow.
<PAGE>
7/12/99
Schedule 9.1
Required Insurance
9.1 Contractor agrees to cause sub-contractors awarded subcontracts by
Contractor after the Effective Date of the Contact signed by Owner and
Contractor, to provide and maintain in full force and effect with
financially responsible insurance carriers acceptable to the Contractor,
Owner and the Lenders but in any case Insurers rated no less than A- by
Best Insurance Ratings, Inc. ("Best's") and having a Best's Financial Size
Category no less than Class IX (or other rating agency equivalent) (the
"Minimum Rating") rating or with the appropriate government agency, if
applicable, the following insurance:
9.1.1 Workers Compensation as required by applicable law or authorized
governmental authority covering all persons employed by
sub-contractors for work performed under this agreement in
accordance with the laws of the state in which the sub-contractors
may be required to pay compensation. Limits for Employers Liability
shall be a minimum of $1,000,000 per accident or disease, aggregate
as to disease and Workers Compensation benefits to full statutory
obligations.
To the extent applicable coverage shall include Jones Act, USL & H
and FELA.
9.1.2 Automobile insurance on licensed motor vehicles owned, non-owned
rented or leased by contractors and sub-contractors and used in
connection with the work to be performed under this agreement
covering Bodily Injury and Property Damage Liability to a combined
inclusive limit of $1,000,000.
9.1.3 Contractors Equipment Insurance covering equipment and tools, owed,
rented or leased for the full replacement cost of such equipment on
an All Risks basis including marine based risk subject to normal
exclusions.
9.1.4 Marine Insurance:
i) Hull and Machinery insurance covering the full replacement
value of any barges, scows or watercraft used in connection
with the work.
ii) Marine Liability or Protection Indemnity insurance on any
barges, scows or other watercraft used in connection with the
work including coverage for special operations, pollution
liability and voluntary removal of wreck for limits which are
the greater of those afforded under a Protection and Indemnity
Club or $25 million per occurrence, without aggregate. In the
event such vessels are not entered in a Protection and
Indemnity Club, and
1
<PAGE>
American policy form including special operations and
pollution liability shall be acceptable.
9.1.5 Aircraft Liability Insurance with respect to owned or non-owned
aircraft to the extent used directly or indirectly in the
performance of the Work for limits not less than $25 million each
occurrence without aggregate, for bodily injury, death (including
the passenger hazard) and damage to property including loss of use
thereof.
9.1.6 Commercial General Liability with Limits of $1,000,000 inclusive per
occurrence, and $2,000,000 in the aggregate annually and such
aggregate to apply on a per site basis, for bodily injury, death and
damage to property including loss of use thereof. This insurance
shall be maintained continuously from commencement of the Work until
the date of Final Completion of the Work, as set out in the
Certificate of Final Completion of the Work, or until the
certificate of Final Completion of the Work is issued, whichever is
the later.
Coverage shall specifically be subject to the following inclusions
of coverage:
i) Contractual Liability
ii) Products & Completed Operations including for a period not
less than 12 months post the issuance of the Certificate of
Final Completion
iii) Warranty Work extending one year after Final Completion
iv) Blasting, pile driving, caisson work, underground work
v) Damage to property including loss of use thereof
vi) Broad-form property damage
vii) Severability of interests clause
viii) Cross Liability cover
ix) Contractor Protective
9.1.7 Excess Liability Insurance in excess of the coverages under Articles
9.1.1 (excess over Employers Liability only 9.1.1), 9.1.2, 9.1.5
and 9.1.6 in an amount not less than $5,000,000 per occurrence and
in the aggregate annually and such aggregate to apply on a per site
basis.
9.2 Contractor agrees to provide and maintain in full force and effect with
financially responsible insurance carriers acceptable to the Owner and the
Financing Parties but in any case Insurers with no less than the Minimum
Rating or with the appropriate government agency, if applicable, the
following insurance:
9.2.1 Workers Compensation as required by applicable law or authorized
governmental authority covering all persons employed by Contractor
for work performed under this agreement in accordance with the laws
of the state in which the Contractor may be
2
<PAGE>
required to pay compensation. Limits for Employers Liability shall
be a minimum of $1,000,000 per accident or disease, aggregate as to
disease and Workers Compensation benefits to full statutory
obligations.
To the extent applicable coverage shall include Jones Act, USL & H
and FELA.
9.2.2 Automobile insurance on licensed motor vehicles owned or leased by
Contractor and used in connection with the work to be performed
under this Contract covering Bodily Injury and Property Damage
Liability to a combined inclusive limit of $5,000,000.
9.2.3 Contractors Equipment Insurance covering equipment and tools, owned,
rented or leased for the full replacement cost of such equipment on
an All Risks basis including marine based risk subject to normal
exclusions.
9.2.4 Commercial General Liability with limits of $2,000,000 inclusive per
occurrence, and $4,000,000 in the aggregate annually for products
and completed operations, and $4,000,000 general aggregate, for
bodily injury, death and damage to property including loss of use
thereof. This insurance shall be maintained continuously from
commencement of the Work until the date of Final Completion of the
Work, as set out in the Certificate of Final Completion of the Work,
or until the certificate of Final Completion of the Work is issued,
whichever is the later. Deductibles shall not exceed $50,000 per
occurrence with an aggregate limit of $250,000. Clark shall pay up
to $250,000 of the deductibles into a pool and if at Final
Completion, less than $250,000 in deductibles have been incurred
under this Commercial General Liability Insurance the remainder in
the pool shall be refunded to Clark.
Coverage shall specifically be subject to the following inclusions
of coverage:
i) Contractual Liability
ii) Products & Completed Operations to the extent not covered
under the Maintenance Provisions of the policy within 9.2.7
such coverage to be maintained for a period not less than 12
months post the issuance of the Certificate of Final
Completion
iii) Warranty Work extending one year after Final Completion
iv) Blasting, pile driving, caisson work, underground work
v) Damage to property including loss of use thereof
vi) Broad-form property damage
vii) Railway Liability
viii) Pollution Liability coverage on at least a Sudden & Accidental
basis
ix) Severability of interests clause
x) Cross Liability cover
3
<PAGE>
xi) Contractor Protective
xii) Non owned and hired automobiles
9.2.5 Excess Liability Insurance in excess of the coverages under Articles
9.2.1, excess over Employer's Liability only, and 9.2.4 in an amount
not less than $48,000,000 per occurrence and in the aggregate
annually.
9.2.6 Marine Cargo Insurance and Consequential Loss:
i) The Contractor shall insure equipment and materials for
incorporation into the Work or to be used in the execution of
the scope of work, while in the course of marine, air and
inland transit. Coverage shall be in force from the time that
such insured property leaves the last factory or warehouse of
the Contractor, Sub-Contractors or suppliers, for shipment,
and terminates after discharge at Site. Coverage shall be on a
full replacement cost basis with a limit equivalent to the
value of the greatest shipment. Coverage shall include both
loading and unloading and shall remain in effect until
property in transit is delivered to the Project site, unloaded
and comes under the cover of the Builders All Risk Policy
(9.2.7).
Deductible shall not exceed $25,000. Marine cargo insurance
shall apply with respect to all equipment valued in excess of
$50,000.
ii) Marine Consequential Insurance covering only the Owner as
Insured for loss of net income and fixed and semi variable
expenses insured resulting from a loss insured under item (i)
above which necessarily delays the project beyond the
substantial completion or turnover date. Such insurance shall
provide a limit of $90 million and be subject to a 6-month
indemnity period. Deductible or waiting period shall not
exceed 30 days or other collectively agreed period between
Lender and Owner and Contractor. Any recovery shall be applied
against Contractor's liability to Owner and Financing Parties,
provided that the application of proceeds does not reduce
Contractor's liability under this Contract.
9.2.7 i) All Risks Builders Risk insurance including the Owner,
Contractor as named insured and Contractor's Sub-Contractors
as additional insureds, to a limit of the value of the full
replacement cost of the Project, any one occurrence covering
physical loss or damage to the Work, the materials, operating
equipment, and supplies for incorporation therein, including
temporary or off-site storage and Project lay-down areas,
expendable construction tools, and all temporary structures
used in the erection of the Work while in transit to and from
the site or in storage, while at the site, before and during
erection
4
<PAGE>
and until completed and while waiting tests and during tests
and until the date the plant or portion thereof has achieved
Final Completion. This insurance shall be subject to London
Design/Error DE5 coverage or equivalent and be subject to a 12
month guaranteed maintenance period. Such policy shall not
contain exclusions with respect to manufacturer, supplier or
Contractor warranty. During construction, the deductible shall
not exceed $100,000 for material damage and Foster Wheeler
shall pay any such deductibles. During start-up, commissioning
and operations prior to Final Completion, the deductible shall
not exceed $250,000 for material damage and Clark shall pay
any such deductibles.
This insurance shall be maintained continuously from
commencement of the Work until the date of Final Completion.
ii) Delay in Start Up insurance covering only the Owner as Insured
for the loss of profit and fixed and semi variable expenses
(including but not limit to interest during construction, debt
repayment, mobilization costs, demobilization costs, fixed
takes on supply agreements, etc.) resulting from a loss
insured under (i) above. Such insurance shall provide a limit
of $334 million and subject to a 12-month indemnity period.
Deductible or waiting period shall not exceed 30 days or other
mutually agreed period between Lender and Owner. Any recovery
shall be applied against any liability of Contractor to Owner
and Financing Parties, provided that the application of
proceeds does not reduce Contractor's liability under this
Contract.
9.2.8 Contractor shall provide a wrap-up insurance program to provide
Pollution Liability coverage on at least a sudden and accidental
basis, with primary coverage for subcontractors liability arising
out of their activity under this Contract of $1,000,000
occurrence/aggregate and $5,000,000 occurrence/aggregate coverage in
excess of the primary coverage.
9.3 GENERAL INSURANCE CONDITIONS
9.3.1 All deductibles shall be to the account of Sub-Contractors under
9.1.1; 9.1.2, 9.1.3, 9.1.4, 9.1.5, 9.1.6, and 9.1.7; and for the
Contractor except for coverages described under 9.2.6 i), 9.2.6 ii)
and 9.2.7 ii) which shall be for the account of Owner. The
deductibles under 9.2.7 i) shall be allocated as provided therein.
The aggregate limits of $250,000 under 9.2.4 shall be for the
account of Owner.
9.3.2 Contractor shall provide Owner and Financing Parties, with complete
wordings prior to the Notice to Proceed; otherwise, agreed upon
wording or expanded cover notes,
5
<PAGE>
acceptable to Financing Parties, until such time as actual policy
wording can be delivered to the Financing Parties. Owner and
Financing Parties shall review and approve wording with respect to
9.2.4, 9.2.5, 9.2.6 and 9.2.7 prior to each policy being put into
effect, and provided any disclosure of such policy wording shall be
made under binder of secrecy.
Contractor shall supply to Owner and Financing Parties
certification, from its insurance representative or a senior officer
of the company, that insurance coverages for which the Contractor
has responsibility under Section 9.2 of Schedule 9.1 are in full
force and effect and meet the terms and conditions of Section 9.2 of
Schedule 9.1, and that all premiums then due and payable, are paid.
No insurance shall be bound until Owner has authorized Contractor to
bind such insurance and Owner has agreed to reimburse Contractor for
the cost of premiums for such insurance policies.
9.3.3 With the exception of 9.2.6 and 9.2.7 Insurances shall not be
cancellable without 90 days advance written notice of such
cancellation to the Owner and the Financing Parties. Cover under
9.2.6 and 9.2.7 shall be written on policies which are
non-cancellable, with the exception of non-payment of premiums and
industry provisions as respects certain perils on the marine covers.
Any notice of cancellation will require no less than fifteen days
prior written notice to the Financing Parties.
9.3.4 A waiver of subrogation shall be provided by the insurers to the
Contractor, Owner and the Financing Parties for coverages under
9.1.1 (to the extent permitted by law), 9.1.3 and 9.1.4 i), 9.1.5,
9.2.6 and 9.2.7.
9.3.5 The Contractor, Owner and the approved Financing Parties as
designated by Owner, shall be included as Additional Insured under
coverages 9.1.2, 9.1.4 ii) and 9.1.5, 9.1.6 and 9.1.7.
9.3.6 The Contractor will supply and cause all subcontractors awarded
subcontracts by Contractor after the Contract is signed by Owner and
Contractor to supply certificates of insurance certifying the above
coverages and conditions under 9.1.1, 9.1.2, 9.1.3, 9.1.4, 9.1.5
9.1.6 and 9.1.7 (all to the extent applicable) are in place within
thirty (30) days after the Contract is signed by Owner and
Contractor, except those for which the Contractor has responsibility
to place covering all such parties.
9.3.7 With respect to 9.2.6 and 9.2.7, the Collateral Trustee, or its
assigns, shall be named as loss payee on a loss payable/mortgagee
clause equivalent to 438 BFU or as otherwise approved by Financing
Parties.
9.3.8 Coverage provided for Contractor, Financing Parties and Owner shall
not be invalidated or vitiated by actions or inactions of others.
6
<PAGE>
9.3.9 The Owner and Contractor shall be a Named Insured under coverage
specified in 9.2.4 and 9.2.5; the Financing Parties as Additional
Insured. Contractor and Owner shall be Named Insured and the
Financing Parties shall be Additional Insureds with respect to 9.2.6
and 9.2.7.
7
<PAGE>
CONTRACT SCHEDULE 16.9
RECORD KEEPING AND REPORTING PROCEDURES
The CONTRACT Record Keeping and Reporting Procedures are defined in the attached
Coordination Procedure for the Port Arthur Heavy Oil Upgrade Project.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 1 Issue No. D
Date: April 14, 1999
COORDINATION PROCEDURE
HEAVY OIL UPGRADE PROJECT
for
CLARK REFINING & MARKETING, INC.
PORT ARTHUR, TEXAS
================================================================================
Section Index
1. Introduction 7. Procurement 13. Operations
2. Scope of Project 8. Expediting 14. Accounting
3. Personnel 9. Inspection 15. Reports
4. Communications 10. Shipping 16. Variance Program
5. Engineering 11. Insurance 17. Change Order Program
6. Requisitions 12. Construction 18. Status Meetings
Appendices
A. Distribution of Requisitions G. Filing System Index (Foster Wheeler)
B. Distribution of Job Specifications H. Deleted
C. Distribution of FW Drawings I. Project Organization Charts
D. Distribution of Vendor Drawings J. Project Calendar
E. Distribution of Correspondence K. FW Drawing Numbering System
F. Transmittal Letter Form L. Clark Equipment Numbering System
M. Document Distribution Matrix
Revision Index
- --------------------------------------------------------------------------------
Issue No. Date Approved By Remarks
- --------------------------------------------------------------------------------
A 3/20/98 Draft
- --------------------------------------------------------------------------------
B 4/23/98 Revision
- --------------------------------------------------------------------------------
C 7/8/98 General Revision
- --------------------------------------------------------------------------------
D 4/14/99 /s/ [ILLEGIBLE] General Revision
- --------------------------------------------------------------------------------
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 2 Issue No. D
Date: April 14, 1999
COORDINATION PROCEDURE
1. INTRODUCTION
1.1 This Coordination Procedure establishes the functions and routine
procedures to be followed by Clark Refining & Marketing, Inc., and
Foster Wheeler USA Corporation, hereinafter referred to as Clark,
and Foster Wheeler respectively, with regard to the projects
described below.
1.2 The official name of the project will be:
PORT ARTHUR REFINERY
HEAVY OIL UPGRADE PROJECT
1.3 The subject project will be located at Clark's Port Arthur, Texas
refinery.
1.4 The individual contract numbers for each specific project are as
noted below:
For Contract 13-004610
----------------------------------------------
Heavy Oil Upgrade Project
For Contract 13-004611
----------------------------------------------
Delayed Coker Unit For
For Contract 13-004612
----------------------------------------------
Hydrocracker Unit
For Contract 13-004621
----------------------------------------------
Sulfur Recovery Unit
For Contract 13-004622
----------------------------------------------
Sour Water Stripper
For Contract 13-004623
----------------------------------------------
Amine Treating Unit
For Contract 13-004631
----------------------------------------------
Crude/Vacuum Revamp
For Contract 13-004632
----------------------------------------------
Feed/Distillate Hydrotreaters GFU-24 1/242/244
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 3 Issue No. D
Date: April 14, 1999
For Contract 13-004633
----------------------------------------------
Naphtha Hydrotreater NHT-1344
For Contract 13-004634
----------------------------------------------
Diesel Hydrotreater GFU-243
For Contract 13-004641
----------------------------------------------
Off sites
For Contract 13-004646
----------------------------------------------
Offistes (Outside Foster Wheeler LSTK)
2. SCOPE OF PROJECT
2.1 The overall responsibility for the work, under a reimbursable
contract, is with Foster Wheeler. FW subcontracted various portions
of the work as indicated in the table below. Subcontracting will be
used as appropriate to minimize overall project cost. The
performance of the work shall be executed as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
(4641) (4646) Hydro-
Hydro- Crude Offsites Offsites treaters Sulfur ATU/
cracker Coker Unit (1) (2) (3) Recovery SWS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Process Design Chev. FW FW FW FW FW/Clark PROQUIP FW
- ------------------------------------------------------------------------------------------------------------
Mechanical Design FW FW TBD FW TBD TBD PROQUIP MATRIX
- ------------------------------------------------------------------------------------------------------------
Procurement FW FW FW FW TBD FW PROQUIP FW/MATRIX
(4)
- ------------------------------------------------------------------------------------------------------------
Expediting FW FW FW FW TBD FW PROQUIP FW/MATRIX
(4)
- ------------------------------------------------------------------------------------------------------------
Inspection FW FW FW FW TBD FW PROQUIP FW
- ------------------------------------------------------------------------------------------------------------
Field Supervision (1) FW FW FW FW TBD TBD PROQUIP MATRIX
- ------------------------------------------------------------------------------------------------------------
Construction Mgmt. FW FW FW FW TBD TBD PROQUIP MATRIX
- ------------------------------------------------------------------------------------------------------------
Operating Manual FW FW TBD TBD Clark TBD PROQUIP CLARK
- ------------------------------------------------------------------------------------------------------------
Startup Operation FW FW TBD TBD Clark TBD PROQUIP CLARK
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes flare, cooling tower, Coker feed tanks and offsite piping
interconnecting units south of Hwy 87.
(2) Includes offsites located north of Hwy. 87 and interconnecting piping
between north and south areas
(3) Includes contracts 4632, 4633, 4634
(4) FW to purchase/expedite major equipment items and selected bulks (CV's),
Matrix to purchase/expedite balance of materials
2.2 The project will consist of the engineering, procurement, and
construction of facilities at the Clark Refining & Marketing, Inc.
Port Arthur Refinery to expand the refinery throughput from
approximately 210,000 BPSD TO 250,000 BPSD, while processing 30%
Maya and 20% Arabian Light crudes.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 4 Issue No. D
Date: April 14, 1999
The summary of process units involved in the expansion of the Port Arthur
refinery is as follows:
New Units Units to be Revamped
--------- --------------------
Delayed Coker Atmospheric / Vacuum (AVU-146)
Hydrocracker Hydrotreaters (GFU-241, 242, 243, 244)
Sulfur Recovery Naphtha Hydrotreater (CRU-1344)
Sour Water Stripper Offsites
Amine Treating
3. PERSONNEL
3.1 The following Clark personnel have been assigned to this project:
Function Name Primary Resp. Telephone No.
-------- ---- ------------- -------------
Program Director K. Isom 281 / 597-3231
Project Manager D. Alvarez SRU/SWS/ATU/Revamp/ 281 / 597-3163
Offsites
Project Engineer K. Bullion OSBL/Offsites 281 / 597-3574
Project Engineer B. Smith Revamp 281 / 597-3576
Project Manager A. Richard HCU 281 / 597-3126
Project Manager M. Rogers DCU 281 / 597-3235
Process Manager J. Robbins Offsites 281 / 597-3571
Project Engineer E. Verdeja SRU/SWS/ATU 281 / 597-3575
Project Engineer D. Hamilton DCU 281 / 597-3451
Process Engineer S. Sedlacek GFU/HCU 281 / 597-3294
Process Engineer J. Gray SRU/SWS/ATU 281 / 597-3577
Process Engineer P. Cannatella Crude/DCU 281 / 597-3327
Process Engineer C. Cupit DCU 281 / 597-3059
Instrument Engineer J. Lemarr DCU/HCU 231 / 597-3293
Instrument Engineer J. Boor OSBL/Crude/ 281 / 597-3404
SRU/SWS/ATU/GFU
Mechanical Engineer J. Cayro All units 281 / 597-3236
Electrical Engineer D. Collida All units 281 / 752-3405
Operations Support T. Bramblett HCU/SRU/SWS/ATU 281 / 752-3578
Operations Support T. Smith DCU 409 / 985-1304
Business Manager K. Hager 231 / 597-3179
Cost Control M. Powell 281 / 597-3384
Accounting M. Powell 281 / 597-3384
Planning J. Hillard 281 / 597-3473
Construction Director TBN
Construction Manager R. Howe DCU/HCU 409 / 985-1559
Construction Supervisor A. Jones OSBL/Crude/ 409 / 985-1466
SRU/SWS/ARU/GFU
Field Engineers TBN
Field Engineers TBN
Field Engineers TBN
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 5 Issue No. D
Date: April 14, 1999
3.2 The following FW personnel have been assigned to this project:
Prim.
Function Name Resp. Telephone No.
-------- ---- ----- -------------
Executive Sponsor Mike Beaumont 281 / 597-3153
Program Director Mike Autrey 281 / 597-3010
Deputy Program Director Jean-Marc Papon 281 / 597-3288
Project Manager Rich Klick DCU 281 / 597-3302
Project Manager Bruce Dodds HCU 281 / 597-3047
Project Manager Moustafa El-Khashab SRU/ATU/SWS 281 / 597-3285
Project Manager Dale Reed Offsites 281 / 597-3048
Process Technology Manager John Elliott 281 / 597-3220
Process Manager Dan Fontugne 281 / 597-3053
Construction Director Troy Roder 281 / 597-3240
Procurement Director Marty Weisberg 281 / 597-3217
Quality Assurance Manager Mohammed Roayaie 281 / 597-3370
Business Manager Carl Myers 281 / 597-3467
Piping Delbert Strimple 281 / 597-3026
Civil/Structural Ted Ban 281 / 597-3109
Control/Automation Tom Atkins 281 / 597-3082
Electrical Kevork Dekmezian DCU 281 / 597-3187
Mechanical Fred Lowery DCU 281 / 597-3158
Heat Transfer Ron Kowalczyk DCU 281 / 597-31
[ILLEGIBLE]
Vessel Mahendra Jagirdar DCU 281 / 597-306
[ILLEGIBLE]
3.4 Project Organization Charts are attached as Appendix "I".
4. COMMUNICATIONS
4.1 General
4.1.1 All correspondence and attachments shall be distributed in
accordance with Appendices "A" through "E".
4.1.2 All correspondence to FW shall be an original plus one copy;
together with two sets of any attachments. "Action Copies"
shall be distributed in accordance with section 4.3.4.
4.1.3 All correspondence to Clark shall be in triplicate. K. W. Isom
receives the original and two file copies, one to Clark File -
FW and one to Clark File - PA. "Action Copies" shall be
distributed in accordance with section 4.3.4.
4.1.4 Each letter shall be limited to one subject.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 6 Issue No. D
Date: April 14, 1999
4.1.5 All telephone calls, meetings and discussions which should be
a matter of record shall be confirmed in writing, and issued
as a Project Note. FW shall prepare and issue all Project
Notes. Matter of record is meant to be items, which affect the
project such as promise dates for deliverables, data. Project
Notes will be consecutively numbered by contract number.
General conversation comments need not be documented.
4.1.6 All correspondence shall be sent to the resident Clark Project
Manager as shown in section 4.3.4.
4.1.7 All correspondence with any License Technology company will be
sent / received by Clark.
4.2 Headings and Closures
4.2.1 The heading of all letters originating from Clark or FW shall
include:
(Date)
Letter No. _______
File No.(s) _____
FW CONTRACT NO. 13-004610*
CLARK REFINING & MARKETING, INC.
HEAVY OIL UPGRADE PROJECT
(SPECIFIC SUBJECT)
* Per applicable contract, (See section 1.4)
4.2.2 All letters from FW to Clark shall be signed by or for the
Program Director. When written and/or signed for the Program
Director, the closure shall show only the name of the Program
Director. However, the typed initials of both the Program
Director and the writer shall appear next to those of the
typist.
4.2.3 All letters from Clark to FW shall be signed by or for the
Program Director. When written and/or signed for the Program
Director, the closure shall show only the name of the Program
Director. However, the typed initials of both the Program
Director and the writer shall appear next to those of the
typist.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 7 Issue No. D
Date: April 14, 1999
4.3 Addresses
4.3.1 All correspondence to Clark shall be addressed as follows,
with additional distribution as shown in Appendices A-E and
section 4.3.4:
Mr. K. W. Isom,
Program Director
Clark Refining & Marketing, Inc.
Port Arthur Refinery
P.O. Box 909
Port Arthur, Texas 77641-0909
4.3.2 All correspondence to FW shall be addressed as follows:
Mr. M. T. Autrey
Vice President & Program Director
Foster Wheeler USA Corporation
2020 Dairy Ashford
Houston, Texas 77077
4.3.4 Action copies of all correspondence shall also be distributed
as follows:
For Contract 13-004610 General
------------------------------------------------------------
J. Papon - FW D. Alvarez - Clark
B. Dodds - FW M. Rogers - Clark
M. El-Khashab - FW J. Robbins - Clark
R. Klick - FW K. Bullion - Clark
0. Reed - FW B. Smith - Clark
A. Richard - Clark
S. Boullion - Clark
R. Howe - Clark
D. Collida - Clark
D. Hamilton - Clark
For Contract 13-004611 General
------------------------------------------------------------
J. Papon - FW M. Rogers - Clark
R. Klick - FW C. Cupit - Clark
P. Cannatella - Clark
J. Robbins - Clark
S. Boullion - Clark
D. Hamilton - Clark
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 8 Issue No. D
Date: April 14, 1999
For Contract 13-004612 HCU
------------------------------------------------------------
J. Papon - FW M. Rogers - Clark
B. Dodds - FW D. Alvarez - Clark
A. Richard - Clark
S. Sedlacek - Clark
J. Robbins - Clark
S. Boullion - Clark
For Contract 13-004621/22/23 SRU, SWS, ARU
------------------------------------------------------------
J. Papon - FW D. Alvarez - Clark
M. El-Khashab - FW B. Smith - Clark
E. Verdeja - Clark
J. Robbins - Clark
J. Gray - Clark
S. Boullion - Clark
For Contract 13-004631 AVU REVAMP
------------------------------------------------------------
J. Papon - FW D. Alvarez - Clark
M. El-Khashab B. Smith - Clark
J. Robbins - Clark
P. Cannatella - Clark
S. Boullion - Clark
For Contract 13-004632/33/34 HDS REVAMPS
------------------------------------------------------------
J. Papon - FW D. Alvarez - Clark
M. El-Khashab J. Robbins - Clark
S. Sedlacek - Clark
B. Smith - Clark
S. Boullion
For Contract 13-004641/46 OFFSITES
------------------------------------------------------------
J. Papon - FW D. Alvarez - Clark
J. Robbins - Clark
B. Smith - Clark
K. Bullion - Clark
S. Boullion - Clark
4.4 Telephone and Telecopy Numbers:
Telephone Telecopy/Fax
--------- ------------
Clark - FW 281 / 597-3000 281 / 597-3234
FW - Houston Office 281 / 597-3000 281 / 597-3061
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 9 Issue No. D
Date: April 14, 1999
4.5 Letter Numbers
All correspondence, including telexes and telecopies, shall be
numbered consecutively in accordance with the following series:
4.5.1 FW to Clark Series (Note 1) Kept by
----- ----------- --------------- -------
(a) All correspondence 2.1-001, 2.1-002, T. Williams (4612)
except as noted etc. M. Pettye (4611)
below. M. Pettye (4610)
S. Wilson (all
others)
(b) Requisition Section 2.3-001, 2.3-002, G. Hackleman
Transmittals: etc.
Requisitions,
Specifications,
Drawings, etc.
(c) Procurement Transmitt. 2.4-001, 2.4-002, L. DeLeon
etc.
(d) Faxes 2.7-001, 2.7-002 T. Williams (4612)
etc. M. Pettye (4611)
M. Pettye (4610
S. Wilson (all
others)
4.5.1 Clark to FW Series Kept by
----- ----------- ------ -------
(a) All correspondence 2.2-001, 2.2-002, L. Lunz
except as noted etc.
below.
(b) Requisition Section 2.6-001, 2.6-002, L. Lunz
Transmittals: etc.
Requisitions,
Specifications,
Drawings, etc.
(c) Faxes 2.8-001, 2.8-002 L. Lunz
etc.
4.5.3 FW to JE - CLOSED
4.5.4 JE to FW - CLOSED
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 10 Issue No. D
Date: April 14, 1999
4.5.5 FW to/from Subcontractors Series Kept by
(a) All correspondence 2.21, 2.22, S. Wilson
except as noted
below.
(b) Faxes 2.25, 2.26 S. Wilson
(c) Requisition Section 2.23, 2.24 G. Hackleman
Transmittals:
Requisitions,
Specifications,
Drawings, etc.
Note 1: Correspondence will be segregated into separate series,
designated by a prefix, e.g.:
Series
4610 - 2.1 General Correspondence to Clark
4611 - 2.1 Delayed Coker Correspondence to Clark
4612 - 2.1 Hydrocracker Correspondence to Clark
4621 - 2.1 Sulfur Recovery Unit Correspondence to Clark
4622 - 2.1 Sour Water Stripper Correspondence to Clark
4623 - 2.1 Amine Treating Unit Correspondence to Clark
4631 - 2.1 Crude / Vacuum Revamp Correspondence to Clark
4632 - 2.1 Feed / Distillate Hydrotreaters Correspondence to
Clark
4633 - 2.1 Naphtha Hydrotreating Correspondence to Clark
4634 - 2.1 Diesel Hydrotreater Correspondence to Clark
4641 - 2.1 Offsite Correspondence to Clark
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 11 Issue No. D
Date: April 14, 1999
5. ENGINEERING
5.1 Design Basis
5.1.1 The basis of the process design for the Delayed Coker unit
shall be furnished by FW. The basis of the process design for
the Hydrocracker unit shall be furnished by Chevron. The basis
of design for the Sulfur Recovery Unit shall be furnished by
ProQuip. The basis of design for the balance of the work shall
be furnished by FW and Clark as indicated in Section 2.1.
5.1.2 Any deviations from the design bases shall be approved by
Clark prior to implementation.
5.1.3 Any deviations from the Hydrocracker design basis shall be
resolved through Clark with Chevron.
5.2 Job Specifications
5.2.1 Job Specifications shall be prepared on the basis of FW and
Clark Standards. Clark specifications may be used as the basis
of the job specification.
5.2.2 Job Specifications shall be distributed per Appendix "B".
5.2.3 Job specifications shall be issued to Clark for approval prior
to final release. If comments and/or approval are not received
within ten (10) working days of issue, it will be deemed that
approval has been granted, and engineering and design will
proceed.
5.3 Drawings
5.3.1 Foster Wheeler Scope of Work
All drawings for the Delayed Coker and Hydrocracker process
units shall be prepared in accordance with Foster Wheeler's
standard practice and numbering system as described in
Appendix K. The serial numbers for FW Process flow diagrams
(PFD) and engineering flow diagram (P&ID) are specific and
shall be assigned in accordance with the following:
Coker Unit:
P&ID'S 1-1000
PFD 1100-1199
DPT 1200-1299
MOC 1300-1399
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 12 Issue No. D
Date: April 14, 1999
Hydrocracker Unit:
P&ID's 1-109
PFD 110-199
MOC 200-299
DPT 300-399
5.3.2 Balance of Plant
Revised drawings in existing units or new drawings in existing
units will follow Clark's drawing numbering system to
alleviate any problems with cross references. New
subcontractor unit drawings shall follow the subcontractor's
drawing numbering system.
5.3.3 FW Drawings that require Clark's approval shall be noted as
such in Appendix "C".
5.3.4 Drawings for this project shall be prepared in accordance with
the following guidelines:
All Drawings shall be 24" x 36", except for design sketches,
isometrics, installation details and loop drawings which may
use 11" x 17" or 8-1/2" x 11". MOC drawings shall be produced
in 11 x 17 size drawings only.
5.3.5 For drawing format and title block information, see Appendix
H.
5.3.6 Drawings issued for Clark's Review and Approval or Issued for
Design, shall have revision "A", "B", etc. for the drawing
number.
Internal issues between revisions A, B, etc., shall be
identified with a 1 3/4" dia. circle containing the revision
letter and number Al, A2 etc., or B1, B2 etc. The circle shall
be located adjacent to the title box and the date of the issue
shall be indicated at the bottom of it.
Drawings issued for construction shall have revision "1" for
the drawing number. Subsequent revisions shall be numbered
"2", "3", etc. for the drawing number.
If an existing Clark drawing is to be revised, a copy of the
drawing will be obtained from Clark. The original number and
revision shall be maintained for record purposes only. The
drawing shall be issued in accordance with the procedures
outlined above. Clark is responsible to adjust the final
drawing numbered revision when the drawing is returned to
Clark at the end of Project.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 13 Issue No. D
Date: April 14, 1999
5.3.7 Engineering drawings shall be distributed per Appendix "C".
5.3.8 If comments and/or approval are not received from Clark
within ten (10) working days of issue, it will be considered
that the document is approved and design work will proceed.
5.3.9 At completion of the project, the originals of the final
drawings and a copy of all required CAD drawing files, stored
on a magnetic media, shall be transmitted to Clark in the
format(s) used for their preparation.
5.3.10 Engineering documents shall be considered in the following
order of precedence:
1. Drawings
2. Data Sheets
3. Job Specifications
In the event of conflict between the project documents, Clark
shall be consulted for resolution.
5.3.11 Vendor drawings shall be handled in the standard manner and
be distributed as shown in Appendix "D"
5.3.12 Reproducibles of all final vendor drawings shall be provided
to Clark.
5.3.13 Drawings of P&ID's, Plot Plans, underground installations and
electrical one lines shall be revised to reflect the
"as-built" condition to the extent relevant to work under
this contract.
5.3.14 The seal of a Professional Engineer licensed in the State of
Texas will be provided on all Civil drawings including
underground piping drawings.
5.3.15 Intergraph PDS will be used to prepare piping drawings
(isometric, etc.) for the Delayed Coker and Hydrocracker
process units. Plan and isometric drawings will be provided
for the offsite revamps and package units in AutoCAD format.
5.3.16 Revised drawing in existing units and new drawings in
existing units will follow Clark's line numbering, equipment
numbering, instrument tag numbering and tie-in numbering
systems to alleviate any problems with cross references.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 1 Issue No. D
Date: April 14, 1999
5.4 Models (3-D CAD)
5.4.1 When the model of a unit is approximately 85% complete, Clark
will be invited to conduct a review by his engineering,
operating, maintenance and any other interested personnel.
Clark's approval after this review shall be understood to be a
specific approval of piping layouts, accessibility for
operation and maintenance, adequacy of platforming, etc., and
plant design will proceed accordingly.
5.5 Recommended Spare Parts for Equipment
5.5.1 All requisitions shall request recommended spare parts
(start-up and for 2 years) lists and pricing which will be
reviewed by FW and given to Clark for their approval.
5.6 Mechanical Catalogs and Calculations
5.6.1 At the completion of the project, FWUSA shall furnish Clark
with six (6) bound sets of Mechanical Catalogs and two (2)
sets of process calculations (orifice calculations, process
calculations, and simulations) complete with all information
available.
5.6.2 In addition to the requirements of Clark, one set of
Mechanical Catalog will be maintained by FW.
6. REQUISITIONS
6.1 All requisitions shall be prepared in accordance with FWUSA standard
practices and numbering systems. FW will utilize its own forms for
requisitions.
6.2 Requisitions shall be distributed per Appendix "A".
6.3 All requisitions shall show:
Project name as Heavy Oil Upgrade Project
Project No. as 13-004610
Client's name as Clark Refining & Marketing, Inc.
Location as Port Arthur, Texas
6.4 Requisitions shall be issued to Clark for review at the same time
that the requisitions are issued for inquiry. If comments and/or
approval are not received within five (5) working days of issue, it
will be considered that the requisition is approved and work will
proceed.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 1 Issue No. D
Date: April 14, 1999
7. PROCUREMENT
7.1 Material procurement shall be in accordance with FW's standard
procedures unless modified below.
7.2 Procurement Department inquiry documents shall be distributed per
Appendix "U".
7.3 Clark shall approve sole source vendors prior to issuance of the
inquiry documents.
7.4 Bid Tabulations, both technical and commercial, shall be completed
and presented to Clark concurrently. Approval will be per the
Project Procurement Coordination Procedure.
7.5 Foster Wheeler Procurement Department shall prepare and issue a
Project Procurement Coordination Procedure, which will cover all
aspects of procurement as well as the Purchase Order format.
8. EXPEDITING
8.1 Expediting shall be in accordance with FWUSA standard procedures and
the Project Expediting and Inspection Plan.
8.2 Distribution of expediting reports shall be per Appendix "E".
9. INSPECTION
9.1 Inspection shall be in accordance with FWUSA standard procedures and
the Project Expediting and Inspection Plan..
9.2 Distribution of Inspection / Status reports shall be per Appendix
"E".
9.3 Mill test certificates, manufacturer's data and other related
documents shall be distributed to Clark per "purchasing documents"
in Appendix "E'.
9.4 Positive material identification will be required for this project
10. SHIPPING
10.1 Shipping will be in accordance with the specific Purchase Orders for
each individual item of equipment.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 16 Issue No. D
Date: April 14, 1999
11. INSURANCE
11.1 Insurance requirements shall be in accordance with the Contractual
Agreement.
12. CONSTRUCTION
12.1 Responsibilities for construction management of the various units
will be as specified in Section 2.1 of this Coordination Procedure.
Clark will be responsible for obtaining all permits for the subject
project.
12.2 FW will utilize a mixture of direct hire and subcontract packages to
complete the work.
13. OPERATIONS
13.1 Start-up Operations - Per Section 2.1 of this Coordination
Procedure.
13.2 Operation Manuals - Per Section 2.1 of this Coordination Procedure.
14. ACCOUNTING AND COST CONTROL
14.1 Accounting procedures shall be in accordance with FW's standard cost
coding system.
14.2 Tax liability - Per Contract requirements.
15. REPORTS
The following reports shall be prepared and issued to Clark by FW and
shall be distributed in accordance with Appendix "E" and scheduled per the
Project Calendar in Appendix "J".
15.1 Progress Report
Progress reports will be issued on a monthly basis according to the
project calendar. The report will assess all work in progress and
work planned and contains narrative sections highlighting
accomplishments and areas of concern with action taken or
recommendations for solution. This report includes Project Summary
Schedule, Project Master Schedules and Milestone Schedules.
15.2 Project Summary Schedule
A bar chart which shows major project activities and target
milestones. It is issued monthly to reflect the status of the work
in progress.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 17 Issue No. D
Date: April 14, 1999
15.3 Project Master Schedule
A monthly report issued by Project Control covering the scheduled
and actual incremental progress of Engineering and Design. It
consists of summary sheets which contain the schedule, actual
performance curves and bar graphs. A construction master schedule
will be included when construction is fully integrated.
15.4 Needs List
A listing prepared bi-monthly by the Project Manager which
identifies critical information required between contractual parties
to support project target milestones.
15.5 Inquiry Status Report
Bi-Monthly reports prepared by Procurement which shows the current
status of inquires.
16. VARIANCE PROGRAM
16.1 Variance Notice Program is a method for identifying changes from an
approved baseline and managing the impact of changes to a project's
costs, manhours and/or schedule.
16.2 Variance notices are not limited to only scope changes in
engineering, design, procurement or construction. They are meant to
be an early warning system for identifying deviations from a
baseline budget or schedule whether originating from scope change,
developmental change, market change, error in the original budget,
productivity, escalation, currency fluctuations, schedule delays,
etc.
16.3 A variance may become a contract change order only if it affects the
Contract (Agreement) between Clark and FWUSA.
16.4 A detailed variance procedure for the project has been issued.
17. CHANGE ORDER PROGRAM
17.1 Change order program is a method for monitoring and controlling
changes to the agreed upon Project control baselines.
17.2 All change Orders are evaluated in terms of me project's total scope
of work with impact assessed on cost, schedule and overall schedule.
<PAGE>
Foster Wheeler USA Corporation
FW Contract No. 13-004610
Page 18 Issue No. D
Date: April 14, 1999
17.3 All Change Orders are monitored against the project budget baselines
established for both cost and schedule.
17.4 No Change Orders are incorporated in the work prior to formal
approval by Clark.
17.5 The formal Change Order procedure implemented by FW includes the
following phases:
(1) Change Order Request Phase
(2) Change Order Preparation Phase
(3) Change Order Approval Phase
17.6 A detailed Change Order procedure for the project has been issued.
18. STATUS MEETINGS
18.1 Monthly
A monthly project review meeting will be held between Clark and
Foster Wheeler management to ascertain the status of the project.
Information provided will be from the Monthly Project Status Report.
Please reference the project calendar (Appendix J) for the proposed
meeting date. A memo will be issued prior to each month's meeting
confirming exact time and location.
<PAGE>
APPENDICES
<PAGE>
APPENDIX "A"
DISTRIBUTION OF REQUISITIONS
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 1 of 2
APPENDIX "A"
DISTRIBUTION OF REQUISITIONS
- --------------------------------------------------------------------------------
CLARK
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PROCESS
SR. PROJECT MANAGER/ SR. PROCESS
REQUISITION PROGRAM MANAGER/SR. TEAM PROJECT ENGR_/ MECHANICAL INSTR. ELECTRICAL
TYPE (a) DIRECTOR (k) TEAM LEADER LEADER ENGINEER PROC ENG. ENGINEER ENGINEER ENGINEER
- --------------------------------------------------------------------------------------------------------------------------------
A. MATERIAL PROCUREMENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1111 THRU 1199 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1211 THRU 1299 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1311 Thru 1399 1 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1411 Thru 1499 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1511 Thru 1599 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1611 Thru 1699 1 1 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1711 Thru 1799 1 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
1911 Thru 1969 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
B. SUBTRACT 2000 SERIES 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
C. FIELD PROCUREMENT
- --------------------------------------------------------------------------------------------------------------------------------
REQUISITIONS (c) 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
DWGS, & ATTACHMENTS 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
D. CONSTRUCTION RELEASE 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
E. REQUISITION INDEX 1 1 1 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FILE @ PROCESS DESIGN
REQUISITION FILE @ PORT BUSINESS GROUP GROUP LEAD I & E
TYPE (a) FW ARTHUR MANAGER LEADER LEADER ENGINEER INSPECTION CONSTRUCTION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. MATERIAL PROCUREMENT
- ---------------------------------------------------------------------------------------------------------------------------------
1111 THRU 1199 1 1 T 1 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1211 THRU 1299 1 1 T 1 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1311 Thru 1399 1 1 T 1 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1411 Thru 1499 1 1 T 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1511 Thru 1599 1 1 T 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1611 Thru 1699 1 1 T 1 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1711 Thru 1799 1 1 T 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
1911 Thru 1969 1 1 T 1 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
B. SUBTRACT 2000 SERIES 1 1 T 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
C. FIELD PROCUREMENT
- ---------------------------------------------------------------------------------------------------------------------------------
REQUISITIONS (c) 1 1 T 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
DWGS, & ATTACHMENTS 1 1 T 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
D. CONSTRUCTION RELEASE 1 1 T 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
E. REQUISITION INDEX 1 1 1 1 1 1(B)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
T= Transmittal only
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) Distribution by requisition section except that project procurement
coordinator shall receive requisitions for transmittal to vendors directly
from DMS.
(b) For attachments to project superintendent (field) copies of type D
requisitions see:
1. APPENDIX "B" for copies of FW drawings
2. APPENDIX "C" for copies of FW drawings
3. APPENDIX "D" for copies of VENDOR drawings
(c) Requisitions and attachments prepared by design engineering for field
procurement.
(d) Distribution of 2000 series subcontract requisition, and construction
release requisitions shall be the same as shown for material procurement
(1000 SERIES) requisitions
(e) In addition, the following personnel shall receive copies of requisition
series listed below
Engineer, Electr 1231,1244
1471 THRU 1479
1641 THRU 1649
Chief Support F 1411 THRU 1419
1471 THRU 1479
1491 THRU 1499
(f) 1. For inquiry issue vendor quantity +1.
2. For purchase or change 6 copies are required.
3. For attachments; see APPENDIX "C" for copies of FWEC drawings which are
attachments to type A & B requisitions
(g) When a definitive estimate is to be prepared, copies shall be included for
the chief estimator as noted and totals adjusted accordingly.
(h) Requisitions required only when operating instructions are to be prepared.
(j) Senior quality assurance engineer shall receive one (1) copy of all
requisitions and drawings associated with the ASME Section 1 Boller Code
(i.e.) subcontracts, pipe valves, package units, equipment, instruments
etc.
(k) One full size and one 11" x 17" reduced copy
CAUTION
1. Client requirement as shown are examples only and will vary.
2. FW requirements are minimum distribution and should not be varied without
permission of recipient.
3. This chart indicates that client is to receive copies of requisitions for
approval prior to releasing for Inquiry. If client does not have this
prerogative this section of the chart should be deleted.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 2 of 2
APPENDIX "A"
DISTRIBUTION OF REQUISITIONS
- --------------------------------------------------------------------------------
FWUSA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION
VP & DEPUTY DIRECTOR/ PROCUREMENT PROJECT
REQUISITION PROGRAM PROGRAM DEPUTY CONSTRUCTION DIR./DEPUTY PROJECT ENGINEERING
TYPE (a) DIRECTOR DIRECTOR CONSTRUCTION DIR. MANAGER PROCUREMENT DIR. MANAGER MANAGER
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A. MATERIAL PROCUREMENT
- ---------------------------------------------------------------------------------------------------------------------------------
1111 THRU 1199 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1211 THRU 1299 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1311 THRU 1399 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1411 THRU 1499 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1511 THRU 1599 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1611 THRU 1699 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1711 THRU 1799 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
1911 THRU 1969 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
B. SUBCONTRACT 2000 SERIES 1(m) 1(b) 2 (a/f) 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
C. FIELD PROCUREMENT
- ---------------------------------------------------------------------------------------------------------------------------------
REQUISITIONS (c) 1(m) 1(b) 2 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
DWGS & ATTACHMENTS 1(m) 1(b) 2 1(m)
- ---------------------------------------------------------------------------------------------------------------------------------
D. CONSTRUCTION RELEASE 1(m) 1(b) 2 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
E. REQUISITION INDEX 1(m) 1(b) 2 1(m) 1
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PURCHASING HEAT PRINCIPAL
REQUISITION SUBCONTRACT & MATERIAL VESSELS TRANSFER MECHANICAL CIVIL PROCESS PIPING
TYPE (a) ADMINISTRATOR COORDINATOR ENGINEER ENGINEER ENGINEER ENGINEER SUPERVISOR SUPERVISOR
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. MATERIAL PROCUREMENT
- ----------------------------------------------------------------------------------------------------------------------------------
1111 THRU 1199 1 1 1 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
1211 THRU 1299 1 1 1 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
1311 THRU 1399 1 1 1 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
1411 THRU 1499 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
1511 THRU 1599 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
1611 THRU 1699 1 1(h) 1
- ----------------------------------------------------------------------------------------------------------------------------------
1711 THRU 1799 1
- ----------------------------------------------------------------------------------------------------------------------------------
1911 THRU 1969 1 1 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
B. SUBCONTRACT 2000 SERIES 1(d) 1(d) 1(d) 1(d) 1(d)
- ----------------------------------------------------------------------------------------------------------------------------------
C. FIELD PROCUREMENT
- ----------------------------------------------------------------------------------------------------------------------------------
REQUISITIONS (c)
- ----------------------------------------------------------------------------------------------------------------------------------
DWGS & ATTACHMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
D. CONSTRUCTION RELEASE 1(d) 1(d) 1(d) 1(d) 1(d)
- ----------------------------------------------------------------------------------------------------------------------------------
E. REQUISITION INDEX
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PIPE TOTALS-
REQUISITION INSTRUMENT ELECTRICAL STRESS PIPE CHIEF PROJECT DEF. EST.
TYPE (a) ENGINEER ENGINEER SUPPORTS SPECS ESTIMATOR FILES DMS REQ'D (g)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. MATERIAL PROCUREMENT (+1)
- -------------------------------------------------------------------------------------------------------------------
1111 THRU 1199 1 2(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1211 THRU 1299 1 1(e) 2(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1311 THRU 1399 1 1 2(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1411 THRU 1499 1(e) 1(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1511 THRU 1599 1 1 1(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1611 THRU 1699 1 1(h) 1(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1711 THRU 1799 1 1(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
1911 THRU 1969 1 1 2(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
B. SUBCONTRACT 2000 SERIES 1(d) 1(d) 1(g) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
C. FIELD PROCUREMENT 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
REQUISITIONS (c) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
DWGS & ATTACHMENTS
- -------------------------------------------------------------------------------------------------------------------
D. CONSTRUCTION RELEASE 1(d) 1(d) 1(d) 1(d) 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
E. REQUISITION INDEX 1 Orig.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) Distribution by requisition section except that project procurement
coordinator shall receive requisitions for transmittal to vendors directly
from DMS.
(b) For attachments to project superintendent (field) copies of type D
requisitions see:
1. APPENDIX "B" for copies of FW drawings
2. APPENDIX "C" for copies of FW drawings
3. APPENDIX "D" for copies of VENDOR drawings
(c) Requisitions and attachments prepared by design engineering for field
procurement.
(d) Distribution of 2000 series subcontract requisition, and construction
release requisitions shall be the same as shown for material procurement
(1000 SERIES) requisitions
(e) In addition, the following personnel shall receive copies of requisition
series listed below
Engineer, Electrical 1231,1244
1471 THRU 1479
1641 THRU 1649
Chief Support Facilities 1411 THRU 1419
1471 THRU 1479
1491 THRU 1499
(f) 1. For inquiry issue vendor quantity +1.
2. For purchase or change 6 copies are required.
3. For attachments; see APPENDIX "C" for copies of FWEC drawings which are
attachments to type A & B requisitions
(g) When a definitive estimate is to be prepared, copies shall be included for
the chief estimator as noted and totals adjusted accordingly.
(h) Requisitions required only when operating instructions are to be prepared.
(j) Senior quality assurance engineer shall receive one (1) copy of all
requisitions and drawings associated with the ASME Section 1 Boller Code
(i.e.) subcontracts, pipe valves, package units, equipment, instruments
etc.
(k) One full size and one 11" x 17" reduced copy
CAUTION
1. Client requirement as shown are examples only and will vary.
2. FW requirements are minimum distribution and should not be varied without
permission of recipient.
3. This chart indicates that client is to receive copies of requisitions for
approval prior to releasing for inquiry. If client does not have this
prerogative this section of the chart should be deleted.
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX "B"
DISTRIBUTION OF JOB SPECIFICATIONS
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 1 of 2
APPENDIX "B"
DISTRIBUTION OF JOB SPECIFICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ALL ISSUES (a)
- -----------------------------------------------------------------------------------------------------------------------
CLARK
- -----------------------------------------------------------------------------------------------------------------------
FW CODE
OF ACCOUNTS SR. PROJECT
SPECIFICATION CATEGORY PROGRAM MANAGER/SR. PROJECT DESIGN
TYPE NUMBER DIRECTOR TEAM LDR. ENGINEER GROUP LDR. INSPECTION FILE @ FW
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GENERAL 0-9 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
VESSELS 10-19 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
HEAT TRANSFER 20-29 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 30-39 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
CIVIL/ARCHITECTURAL 40-49 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PIPING 50-59 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 60-69 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
ELECTRICAL 70-79 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MATERIAL PROTECTION 80-89 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PROJECT & MISCELLANEOUS 90-99 1 1 1(r) 1 1 1
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------
ALL ISSUES (a)
- -----------------------------------------------------------
CLARK
- -----------------------------------------------------------
SPECIFICATION FILE @
TYPE PORT ARTHUR CONSTRUCTION
- -----------------------------------------------------------
<S> <C> <C>
GENERAL 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
VESSELS 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
HEAT TRANSFER 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
MECHANICAL EQUIPMENT 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
CIVIL/ARCHITECTURAL 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
PIPING 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
AUTOMATION CONTROLS 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
ELECTRICAL 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
MATERIAL PROTECTION 1 1
- -----------------------------------------------------------
- -----------------------------------------------------------
PROJECT & MISCELLANEOUS 1 1
- -----------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) Distribution by 1996 Series Construction requisition.
(b) Distribution to be made to FW.
(c) Electrical motor specification only.
(d) Distribution to others as required depending on subject.
(e) (Open)
(f) For attachment to Project Superintendent (field) copies of type D
(Construction release) requisitions per APPENDIX "A".
(g) (Open)
(h) (Open)
(j) 40A1 and 46A1 only.
(k) 83A1 only.
(m) When a estimate is to be prepared, copies shall be included for the
estimator as noted and totals adjusted accordingly.
(n) Distribution to be made only when contract scope includes support facility
equipment and/or systems.
(p) 50A1 and 50A10 only.
(q) ASME boller code specs only.
(r) Distribute to all Clark Project Mgrs.
CAUTION
1. Client requirements shown are examples only and will vary.
2. FW requirements are minimum distribution and should not be varied without
permission of recipient.
3. This chart indicates that client is to receive copies of job
specifications for approval. If client does not have prerogative, this
section of the chart should be deleted or modified as required.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 2 of 2
APPENDIX "B"
DISTRIBUTION OF JOB SPECIFICATIONS
ALL ISSUES (a)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES (a)
- -------------------------------------------------------------------------------------------------------------------------------
FWUSA
- -------------------------------------------------------------------------------------------------------------------------------
FW CODE
OF ACCOUNTS VP & PROCESS DEPUTY CONSTRUCTION
SPECIFICATION CATEGORY PROGRAM MGR./DEPUTY PROGRAM PROJECT DIRECTOR/DEP CONSTRUCTION
TYPE NUMBER DIRECTOR PROC MGR. DIRECTOR MGR. ENGR'G CONST DIR MANAGER
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GENERAL 0-9 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
VESSELS 10-19 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
HEAT TRANSFER 20-29 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 30-39 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
CIVIL/ARCHITECTURAL 40-49 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
PIPING 50-59 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 60-69 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 70-79 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
MATERIAL PROTECTION 80-89 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
PROJECT & MISCELLANEOUS 90-99 1(b) 1(?) 1 2 2
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES (a)
- ------------------------------------------------------------------------------------------------------------------------------
FWUSA
- ------------------------------------------------------------------------------------------------------------------------------
PROCUREMENT HEAT CIVIL PRINCIPLE
SPECIFICATION DIR/DEP VESSEL TRANSFER MECHANICAL STRUCTURAL PIPING INSTRUMENT
TYPE PROCURE DIR ENGINEER ENGINEER ENGINEER ENGINEER SUPERVISOR ENGINEER
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GENERAL 1 1 1 1(b) 1(b) 1(b) 1(b)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
VESSELS 1 1
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
HEAT TRANSFER 1 1(b)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 1 1() 2
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
CIVIL/ARCHITECTURAL 1 1(j) 1(?) 1 1
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1(p) 1(p) 1 1 1(b/p)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 1 1 1 1(b)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 1 1 1(b)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
MATERIAL PROTECTION 1 1(k) 1(k) 1 1
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
PROJECT & MISCELLANEOUS 1 1(d) 1(d) 1(d) 1(d) 1(d) 1(b/d)
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES (a)
- ------------------------------------------------------------------------------------------------------------------------------------
FWUSA
- ------------------------------------------------------------------------------------------------------------------------------------
PIPE
SPECIFICATION ELECTRICAL STRESS/ PIPE INSPECTION CHIEF PROJECT TOTALS - DEF.
TYPE ENGINEER SUPPORTS SPECS COORDINATOR ESTIMATOR FILES DMS MATRIX (s) EST. REQ'D. (m)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GENERAL 1(b) 1(b) 1(b) 1 2 1 Orig. (+1)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
VESSELS 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
HEAT TRANSFER 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 1(c) 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CIVIL/ARCHITECTURAL 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 1 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MATERIAL PROTECTION 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT & MISCELLANEOUS 1(d) 1 2 1 Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) Distribution by 1996 Series Construction requisitions.
(b) Distribution to be made to FW.
(c) Electrical motor specification only.
(d) Distribution to others as required depending on subject.
(e) 2.3 Transmittal only.
(f) For attachment to Project Superintendent (field ) copies of type D
(Construction release) requisitions per APPENDIX "A".
(g) (Open)
(h) (Open)
(j) 40A1 and 46A1 only.
(k) 83A1 only.
(m) When a estimate is to be prepared, copies shall be included for the
estimator as noted and totals adjusted accordingly.
(n) Distribution to be made only when contract scope includes a support
facility equipment and/or systems.
(p) 50A1 and 50A10 only.
(q) ASME boller code specs only.
(r) Distribute to all Clark Project Mgrs.
(s) Provide copies to Project Secretary.
CAUTION
1. Client requirements shown are examples only and will vary.
2. FW requirements are minimum distribution and should not be varied without
permission of recipient.
3. This chart indicates that client should receive copies of all job
specifications for approval. If client does not have prerogative, this
section of the chart should be deleted or modified as required
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX "C"
DISTRIBUTION OF ENGINEERING DRAWINGS
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 1 of 2
APPENDIX "C"
DISTRIBUTION OF JOB SPECIFICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES
- -----------------------------------------------------------------------------------------------------------------------------------
CLARK (v)
- -----------------------------------------------------------------------------------------------------------------------------------
FW CODE
OF
ACCOUNTS
SR. PROJECT
DRAWING MANAGER/SR. PROCESS SR. PROCESS
DRAWING CATEGORY PROGRAM TEAM MANAGER PROJECT ENGINEER MECHANICAL INSTRUMENT
TYPE NUMBER DIRECTOR LEADER TEAM LEADER ENGINEER PROCESS ENG. ENGINEER ENGINEER
- -----------------------------------------------------------------------------------------------------------------------------------
PLOT PLAN 51 1 1(v) 1(v) 1(v) 1(v) 1(v) 1(v)
- -----------------------------------------------------------------------------------------------------------------------------------
VESSELS 11/18 1 1 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 41/42/43 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 46 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 47 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
FLOWSHEETS 50 1 1 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS (q) 50 1 1 1 2 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 50 1 1 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
PIPING 51/52/56 1 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERGROUND (s) 58/71 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
MISC PIPE SUPPORTS 59 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 85/00 1 1 2 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 71,73-76/78 1 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
INSULATION 82 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
FIREPROOFING 84 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
LINE LIST 1 1 1 2 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
BLOCK FLOW DIAGRAM 1 1 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
PROCESS FLOW SHEETS 1 1 1 2 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES
- ----------------------------------------------------------------------------------------------------------------------------------
CLARK (v)
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS
DRAWING ELECTRICAL FILE @ GROUP OPS GENERAL OPS PROCESS AREA
TYPE ENGINEER FILE @ FW PORT ARTHUR LEADER MANAGER SUPERINTENDENT SUPERVISOR MTCE SUP'T
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PLOT PLAN 1(v) 1(v) 1(v) 1(v) 1(v) 1(v) 1(v) 1(v)
- ----------------------------------------------------------------------------------------------------------------------------------
VESSELS 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
FLOWSHEETS 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS (q) 1 1 1 1 (r) 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
UNDERGROUND (s) 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
MISC PIPE SUPPORTS 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
INSULATION 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
FIREPROOFING 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
LINE LIST 1 1 (r) 1
- ----------------------------------------------------------------------------------------------------------------------------------
BLOCK FLOW DIAGRAM 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS FLOW SHEETS 1 1 1 (r) 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES
- ------------------------------------------------------------------------------------------------------------------------------
CLARK (v)
- ------------------------------------------------------------------------------------------------------------------------------
FIRE LEAD UNIT UNIT
DRAWING EHS PROTECTION E & I DESIGN PROCESS COORDINATION PLANNING/
TYPE MANAGER CHIEF INSPECTION ENGINEER ENGINEER ENGINEER MANAGER ECONOMICS MGR.
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PLOT PLAN 1(v) 1(v) 1(v) 1(v) 1(v) 1(v) 1
- ------------------------------------------------------------------------------------------------------------------------------
VESSELS 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 1 1
- ------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 (r)
- ------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1
- ------------------------------------------------------------------------------------------------------------------------------
FLOWSHEETS 1
- ------------------------------------------------------------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS (q) 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1
- ------------------------------------------------------------------------------------------------------------------------------
UNDERGROUND (s) 1 1
- ------------------------------------------------------------------------------------------------------------------------------
MISC PIPE SUPPORTS 1 1
- ------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 1 1 (r)
- ------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 (r)
- ------------------------------------------------------------------------------------------------------------------------------
INSULATION 1 1
- ------------------------------------------------------------------------------------------------------------------------------
FIREPROOFING 1 1
- ------------------------------------------------------------------------------------------------------------------------------
LINE LIST 1 1
- ------------------------------------------------------------------------------------------------------------------------------
BLOCK FLOW DIAGRAM 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------
PROCESS FLOW SHEETS 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------
ALL ISSUES
- ---------------------------------------------------------------------------
CLARK (v)
- ---------------------------------------------------------------------------
REFINERY
DRAWING GENERAL BUSINESS DESIGN
TYPE MANAGER MANAGER GROUP LDR. CONSTRUCTION
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PLOT PLAN 1(v) 1(v) 1(v) 1
- ---------------------------------------------------------------------------
VESSELS 1
- ---------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 1
- ---------------------------------------------------------------------------
STRUCTURAL STEEL 1 1
- ---------------------------------------------------------------------------
BUILDINGS 1
- ---------------------------------------------------------------------------
FLOWSHEETS 1
- ---------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS (q) 1 1 1
- ---------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 1
- ---------------------------------------------------------------------------
PIPING 1
- ---------------------------------------------------------------------------
UNDERGROUND (s) 1
- ---------------------------------------------------------------------------
MISC PIPE SUPPORTS 1
- ---------------------------------------------------------------------------
AUTOMATION CONTROLS 1
- ---------------------------------------------------------------------------
ELECTRICAL 1
- ---------------------------------------------------------------------------
INSULATION 1
- ---------------------------------------------------------------------------
FIREPROOFING 1
- ---------------------------------------------------------------------------
LINE LIST 1 1
- ---------------------------------------------------------------------------
BLOCK FLOW DIAGRAM 1 1
- ---------------------------------------------------------------------------
PROCESS FLOW SHEETS 1 1
- ---------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) General distribution to client and for construction release by requisition
section except for Process Schematic. Technical Aide of originating
section to distribute drawings for internal FWEC review.
(b) Distribution by Process Supervisor.
(c) (Open)
(d) Drawings of piping requiring shop inspection only.
(e) As required for attachment to Proj. Procurement Coordinator copies of type
A&B requisitions per APPENDIX "A".
Type A
Material Procurement
For inquiry 10 copies
For purchase 0 copies
(f) For attachment to Prof. Superintendent (field) copies of type D
(construction release) requisition per APPENDIX "A".
(g) Isometrics or plan drawings of HP synthesis lines and heater transfer
lines only.
(h) Exclusive of Proj. Procurement Coord. requirement see note (s).
(i) (Open)
(k) Control house drawing only.
(m) (Open)
(n) Vessel platform & ladder clip dwgs. general notes for struct. & misc. pipe
support attachments to vessels.
(p) Number of copies for ch. estimate or when definitive estimate is not
required (when definitive estimate is req'd) add 10 plot plan & vessel, 5
flowsheets and line list to distribution.
(q) Reduce to 11"x random length forward one (1) additional copy to Proj.
Engr. Mgr. for record purposes.
(r) 2.3 transmittal only for final/ ch'd dwgs.
(s) 2 copies of 71 series drawings only to Engr. Civil and Engr. Piping.
(t) ASME section 1 boiler code material only
(v) Reduce to 11" x random length
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 2 of 2
APPENDIX "C"
DISTRIBUTION OF JOB SPECIFICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES
- -----------------------------------------------------------------------------------------------------------------------------------
FWUSA
- -----------------------------------------------------------------------------------------------------------------------------------
FW CODE
OF
ACCOUNTS
DRAWING VP & PROCESS MAN. DEPUTY CONSTRUCTION PROCUREMENT
DRAWING CATEGORY PROGRAM DEPUTY PROGRAM DIR. DEPUTY CONSTRUCTION DIR. DEPUTY
TYPE NUMBER DIRECTOR PROCESS MAN. DIRECTORY CONSTRUCTION DIR. MANAGER PROCUREMENT DIR.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PLOT PLAN 51 1 1 1(v) 1 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
VESSELS 11/18 1 T 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 41/42/43 T 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 46 T 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 47 T 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
FLOWSHEETS 50 2 T 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS(q) 50 1(v) 2
- -----------------------------------------------------------------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 50 2 1(v) 2
- -----------------------------------------------------------------------------------------------------------------------------------
PIPING 51/52/56 1(g) 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERGROUND (s) 58/71 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
MISC PIPE SUPPORTS 58 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 65/66 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 71,73-76/78 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
INSULATION 82 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
FIREPROOFING 84 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
LINE LIST 2 1(v) 1 2
- -----------------------------------------------------------------------------------------------------------------------------------
BLOCK FLOW DIAGRAM 1 1(v) 2
- -----------------------------------------------------------------------------------------------------------------------------------
PROCESS FLOW SHEETS 2 1(v) 2
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES
- ---------------------------------------------------------------------------------------------------------------------------------
FWUSA
- ---------------------------------------------------------------------------------------------------------------------------------
BUS. MGR. PROJECT HEAT CIVIL PRINCIPLE
DRAWING QA DEPUTY PROJECT ENGINEER VESSEL TRANSFER MECHANICAL STRUCTURAL PIPING
TYPE MANAGER BUS.MGR. MANAGER MANAGER ENGINEER ENGINEER DESIGNER ENGINEER SUPERVISOR
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PLOT PLAN 1 1 1 1 1 1 1 (r)
- ---------------------------------------------------------------------------------------------------------------------------------
VESSELS 1 1 (r) 1 3
- ---------------------------------------------------------------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 1 1 1 (r)
- ---------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 1 1 (r)
- ---------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1 1 1 (r)
- ---------------------------------------------------------------------------------------------------------------------------------
FLOWSHEETS 1 1 1 1 11
- ---------------------------------------------------------------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS(q) 1 1 1 1 1 1 1 2
- ---------------------------------------------------------------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1 1 (r)
- ---------------------------------------------------------------------------------------------------------------------------------
UNDERGROUND (s) 1 1 1 (r)
- ---------------------------------------------------------------------------------------------------------------------------------
MISC PIPE SUPPORTS 1 1 3(n) 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
INSULATION 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
FIREPROOFING
- ---------------------------------------------------------------------------------------------------------------------------------
LINE LIST 1 1 1 1 1 11
- ---------------------------------------------------------------------------------------------------------------------------------
BLOCK FLOW DIAGRAM
- ---------------------------------------------------------------------------------------------------------------------------------
PROCESS FLOW SHEETS 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ALL ISSUES
- ----------------------------------------------------------------------------------------------------------------------------------
FWUSA
- ----------------------------------------------------------------------------------------------------------------------------------
CHIEF
DRAWING INSTRUMENT ELECTRICAL PIPE STRESS PIPE INSPECTION ESTIMATOR RIGGING PROJECT
TYPE ENGINEER ENGINEER SUPPORT SPECS. COORDINATOR (p) ENGINEER FILES DMS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PLOT PLAN 1 1 1 1 10 (r) 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
VESSELS 1 1(v) 2 2 (r) 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
SITE PREP/PILING/CONCRETE 1(v) 2 (r) 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 3 (r) 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1(k) 1 2 (r) 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
FLOWSHEETS 1 1 5 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
REDUCED SIZE FLOW SHTS(q) 1 1 1 1 1 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS SCHEMATIC (b) 1 1 1 1 1 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
UNDERGROUND (s) 1(v) 1 1 3 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
MISC PIPE SUPPORTS 1 1 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMATION CONTROLS 1 1 1 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 (r) 1 2 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
INSULATION 1 2 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
FIREPROOFING 2 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
LINE LIST 1 1 1 2 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
BLOCK FLOW DIAGRAM 1 Orig.
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS FLOW SHEETS 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) General distribution to client and for construction release by requisition
section except for Process Schematic. Technical Aide of originating
section to distribute drawings for internal FWEC review.
(b) Distribution by Process Supervisor.
(c) 2.3 Transmittal only
(d) Drawings of piping requiring shop inspection only.
(e) As required for attachment to Proj. Procurement Coordinator copies of type
A&B requisitions per APPENDIX "A".
Type A
Material Procurement
For inquiry 10 copies
For purchase 0 copies
(f) For attachment to Prof. Superintendent (field) copies of type D
(construction release) requisition per APPENDEX "A".
(g) Isometrics or plan drawings of HP synthesis lines and heater transfer
lines only.
(h) Exclusive of Proj. Procurement Coord. requirement see note (s).
(i) (Open)
(k) Control house drawing only.
(m) (OPEN)
(n) Vessel platform & ladder clip dwgs. general notes for struct. & misc. pipe
support attachments to vessels.
(p) Number of copies for chief estimate or when definitive estimate is not
required (when definitive estimate is req'd) add 10 plot plan & vessel, 5
flowsheets and line list to distribution.
(q) Reduce to 11"x random length forward one (1) additional copy to Proj.
Engr. Mgr. for record purposes.
(r) 2.3 transmittal only for final/ ch'd dwgs.
(s) 2 copies of 71 series drawings only to Engr. Civil and Engr. Piping.
(t) ASME section 1 boiler code material only
(v) Reduce to 11" x random length
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX "D"
DISTRIBUTION OF VENDOR DRAWINGS
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 1 of 2
APPENDIX "D"
DISTRIBUTION OF VENDOR DRAWINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINTS FOR REVIEW, COMMENT, APPROVAL
- ----------------------------------------------------------------------------------------------------------------------------------
CLARK
- ----------------------------------------------------------------------------------------------------------------------------------
SR. PROJECT PROCESS SR. PROCESS
MANAGER/SR. MANAGER ENGINEER
DRAWING PROGRAM TEAM TEAM PROJECT PROCESS MECHANICAL INSTRUMENT ELECTRICAL
TYPE DIRECTOR LEADER LEADER ENGINEER ENGINEER ENGINEER ENGINEER ENGINEER
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VESSELS & TRAYS (b) (b) (b) 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
HEAT EXCH. & HEATERS (b) (b) (b) 2 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT (b) (b) (b) 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL (b) (b) 2
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDINGS (b) (b) 2
- ----------------------------------------------------------------------------------------------------------------------------------
PIPING (b) (b) 2
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUMENTS (b) (b) (b) 2 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL (b) (b) 2 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
PROJ. & MISC. EQUIPMENT (b) (b) (b) 2 1
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINTS FOR REVIEW, COMMENT, APPROVAL
- ---------------------------------------------------------------------------------------------------------------------------------
CLARK FWUSA
- ---------------------------------------------------------------------------------------------------------------------------------
PROCUREMENT PROJECT
DRAWING FILE @ DIR/DEPUTY ENGINEERING PROJECT
TYPE INSPECTION FILE @ FW PORT ARTHUR CONSTRUCTION PROCUREMENT DIR. MANAGER ENGINEER
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
VESSELS & TRAYS 1 1 1 1 1(m) 1 1(p)
- ---------------------------------------------------------------------------------------------------------------------------------
HEAT EXCH. & HEATERS 1 1 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 1 1 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
INSTRUMENTS 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROJ. & MISC. EQUIPMENT 1 1 1 1 1 2 1
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINTS FOR REVIEW, COMMENT, APPROVAL
- -----------------------------------------------------------------------------------------------------------------------------------
FWUSA
- -----------------------------------------------------------------------------------------------------------------------------------
HEAT CIVIL/ PRINCIPLE
DRAWING VESSEL TRANSFER MECHANICAL STRUCTURAL PIPING INSTRUMENT ELECTRICAL INSPECTION
TYPE ENGINEER ENGINEER ENGINEER ENGINEER SUPERVISOR ENGINEER ENGINEER COORD. DMS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VESSELS & TRAYS 2 1(p) 1(p) 1(p) (?) 2 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
HEAT EXCH. & HEATERS 2 2 3(?) 1 1 2 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 2 2 3(?) 1 1 2 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 3(?) 2(?) 1 1 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
PIPING 1 2(?) 2 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
INSTRUMENTS 1(q) 1 2(?) 1(?) Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1(?) 2 Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
PROJ. & MISC. EQUIPMENT 2 1 1 1(?) Orig.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) (Open)
(b) 2.3 transmittal only
(c) 4.3 transmittal only
(d) Additional copies of final drawings (for some categories) will be required
for inclusion in the mechanical catalog.
(e) For attachment to project superintendent (field) type D (construction
releases) requisitions per APPENDIX "A".
(f) Distribution to project superintendent (field) directly by vendor. A type
(construction release) requisition will not be issued.
(g) Drawings of panel boards only.
(h) Drawings of instruments requiring shop inspection only.
(j) Includes comment print for circulation to all design engineering
recipients.
(k) Compressor arrangements only.
(l) Switchgear & transformers.
(m) Drawings of trays only.
(p) If item is not covered by a FW vessel drawing.
(r) Prefabricated or outline building drawing only.
(s) Spool drawings for review and comment.
(t) One copy of all equipment with electrical components.
(u) One print of all ASME section 1 boiler code material.
CAUTION
1. Client requirement as shown are examples only and will vary.
2. FW requirement are minimum distribution and should not be varied without
permission of receiptor.
3. This chart indicates that client is to receive copies of all vendor drwgs,
(except structural steel & piping) for approval. If client does not have
this prerogative, this section of the chart should be deleted or modified
as required.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Pg 2 of 2
APPENDIX "D"
DISTRIBUTION OF VENDOR DRAWINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINTS FOR REVIEW, COMMENT, APPROVAL
- ------------------------------------------------------------------------------------------------------------------------------------
CLARK
- ------------------------------------------------------------------------------------------------------------------------------------
SR. PROJECT PROCESS SR. PROCESS
MANAGER/SR. MANAGER ENGINEER/
DRAWING PROGRAM SR. TEAM TEAM PROJECT PROCESS MECHANICAL INSTRUMENT ELECTRICAL
TYPE DIRECTOR LEADER LEADER MANAGER ENGINEER ENGINEER ENGINEER ENGINEER INSPECTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VESSELS & TRAYS (b) (b) (b) 2 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
HEAT EXCH. & HEATERS (b) (b) (b) 2 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT (b) (b) (b) 2 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL (b) (b) 2 1
- ------------------------------------------------------------------------------------------------------------------------------------
BUILDINGS (b) (b) 2 1
- ------------------------------------------------------------------------------------------------------------------------------------
PIPING (b) (b) 2 1
- ------------------------------------------------------------------------------------------------------------------------------------
INSTRUMENTS (b) (b) (b) 2 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL (b) (b) 2 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
PROJ. &MISC. EQUIPMENT (b) (b) (b) 2 1
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PRINTS FOR REVIEW, COMMENT, APPROVAL
- --------------------------------------------------------------------------------------------------------------------------------
CLARK FWUSA
- --------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION PROCUREMENT PROJECT
DRAWING FILE @ DIR/DEPUTY CONSTRUCTION DIR/DEPUTY ENGINEERING PROJECT
TYPE FILE @ FW JACOBS CONSTRUCTION CONSTRUC MANAGER PROCUREMENT DR. MANAGER ENGINEER
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VESSELS & TRAYS 1 1 1 1 2 1(m) 1 2
- --------------------------------------------------------------------------------------------------------------------------------
HEAT EXCH. & HEATERS 1 1 1 1 2 1 1 2
- --------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 1 1 1 1 2 1 1 2
- --------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 1 1 1 2
- --------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1 1 1 1 2 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PIPING 1 1 1 1 2
- --------------------------------------------------------------------------------------------------------------------------------
INSTRUMENTS 1 1 1 1 2 1 2(h)
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1 1 1 1 2 1 2
- --------------------------------------------------------------------------------------------------------------------------------
PROJ. &MISC. EQUIPMENT 1 1 1 1 2 1 1 2
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINTS FOR REVIEW, COMMENT, APPROVAL
- ------------------------------------------------------------------------------------------------------------------------------------
FWUSA
- ------------------------------------------------------------------------------------------------------------------------------------
HEAT CIVIL/ PRINCIPLE
DRAWING VESSEL TRANSFER MECHANICAL STRUCTURAL PIPING INSTRUMENT ELECTRICAL INSPECTION RIGGING
TYPE ENGINEER ENGINEER ENGINEER ENGINEER SUPERVISOR ENGINEER ENGINEER COORD. ENGINEER DMS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VESSELS & TRAYS 1 1 1(p) 1(p/1) 1(?) 1 (b) Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
HEAT EXCH. & HEATERS 1 1 1 1 1(?) (b) (b) Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
MECHANICAL EQUIPMENT 1 1 1 1 1(?) (b) (b) Orig.
- ------------------------------------------------------------------------------------------------------------------------------------
STRUCTURAL STEEL 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
BUILDINGS 1 1 1 1(?) (b) Orig
- ------------------------------------------------------------------------------------------------------------------------------------
PIPING 1
- ------------------------------------------------------------------------------------------------------------------------------------
INSTRUMENTS 1 1 1(g) 1 Orig
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL 1(L) 1(L) 1(L) Orig
- ------------------------------------------------------------------------------------------------------------------------------------
PROJ. &MISC. EQUIPMENT 1 1 1 1 1 1 1 Orig
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) (Open)
(b) 2.3 transmittal only
(c) 4.3 transmittal only
(d) Additional copies of final drawings (for some categories) will be required
for inclusion in the mechanical catalog.
(e) For attachment to project superintendent (field) type D (construction
releases) requisitions per APPENDIX "A".
(f) Distribution to project superintendent (field) directly by vendor. A type
(construction release) requisition will not be issued.
(g) Drawings of panel boards only.
(h) Drawings of instruments requiring shop inspection only.
(j) Includes comment print for circulation to all design engineering
recipients.
(k) Compressor arrangements only.
(l) Switchgear & transformers.
(m) Drawings of trays only.
(p) If item is not covered by a FW vessel drawing.
(r) Prefabricated or outline building drawing only.
(s) Spool drawings for review and comment.
(t) One copy of all equipment with electrical components.
(u) One print of all ASME section 1 boiler code material.
CAUTION
1. Client requirement as shown are examples only and will vary.
2. FW requirement are minimum distribution and should not be varied without
permission of receiptor.
3. This chart indicates that client is to receive copies of all vendor drwgs,
(except structural steel & piping) for approval. If client does not have
this prerogative, this section of the chart should be deleted or modified
as required.
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX "E"
DISTRIBUTION OF CORRESPONDENCE
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Page 1 of 2
APPENDIX "E"
CORRESPONDENCE PURCHASING DEPT DOCUMENTS
REPORTS, AND MISCELLANEOUS DATA
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PURCHASING DEPT.
DOCUMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
HOME
OFFICE
VENDOR BID PURCHASE
CORRESPONDENCE INQUIRIES QUOTATIONS TABULATIONS ORDERS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR SEE (x)
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. NOTE (a) 1(m/e) 1(m/e)
- ----------------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1 1(y) 1(y) 1(y)
- ----------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1 1(f) 1(n)
- ----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION DIR./DEPUTY CONSTRUCTION DIR. 1(g) 1(h) 1(h) 1
- ----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION MANAGER 2 2 2 2
- ----------------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR/DEPUTY PROCUREMENT DIR. 1 1 1 4
- ----------------------------------------------------------------------------------------------------------------------------------
QA MANAGER
- ----------------------------------------------------------------------------------------------------------------------------------
BUS MGR./DEPUTY BUS MGR. 1
- ----------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1(y) 1(y)
- ----------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER
- ----------------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1(c) 1(c) 1(c) 1(c)
- ----------------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR
- ----------------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 2(r) 1(r) 1(r) 1(r)
- ----------------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER
- ----------------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT. 1
- ----------------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT.
- ----------------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT.
- ----------------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER.
- ----------------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER
- ----------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER
- ----------------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER 1(c) 1(c) 1(c)
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER 1(c) 1(c) 1(c)
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER 1(c) 1(c) 1(c)
- ----------------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1(g) 1(h) 1(h) 1
- ----------------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER
- ----------------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
PURCHASING DEPT.
DOCUMENTS REPORTS
- -----------------------------------------------------------------------------------------------------------------------------
FIELD
OFFICE MASTER
PURCHASE EXPEDITING INSPECTION PROJECT MATERIAL
ORDERS REPORTS REPORTS SCHEDULE PROGRESS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR 1
- -----------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. 1
- -----------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1(y) 1(y) 1(y) 1 1
- -----------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1(n) 1(n) 1(n) 1 1
- -----------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION DIR./DEPUTY CONSTRUCTION DIR. 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION MANAGER 2 2 2 2 2
- -----------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR/DEPUTY PROCUREMENT DIR. 1 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
QA MANAGER
- -----------------------------------------------------------------------------------------------------------------------------
BUS MGR./DEPUTY BUS MGR. 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1
- -----------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1
- -----------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1(c) 1(c) 1(d)
- -----------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR 2 1
- -----------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 1 1
- -----------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER
- -----------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT. 1
- -----------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT.
- -----------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT.
- -----------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER. 1 1(p)
- -----------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS 1 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER
- -----------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER
- -----------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER 1(c) 1(c)
- -----------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER 1(c) 1(c)
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER 1(c) 1(c)
- -----------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER 1 1
- -----------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
REPORTS
- ------------------------------------------------------------------------------------------------------------------------
MONTHLY ENGINEERING WEEKLY WEEKLY
CONSTRUCTION & DESIGN CONSTRUCTION FIELD
(CIR) STATUS PROGRESS MANHOUR
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR.
- ------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1
- ------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION DIR./DEPUTY CONSTRUCTION DIR. 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION MANAGER 2 2 2 2
- ------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR/DEPUTY PROCUREMENT DIR. 1(L)
- ------------------------------------------------------------------------------------------------------------------------
QA MANAGER
- ------------------------------------------------------------------------------------------------------------------------
BUS MGR./DEPUTY BUS MGR. 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1
- ------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1
- ------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR
- ------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR
- ------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER
- ------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT.
- ------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT.
- ------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT.
- ------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER.
- ------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER
- ------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER
- ------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER
- ------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER
- ------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER
- ------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
REPORTS
- --------------------------------------------------------------------------------------------------------------------------
WEEKLY CONSTRUCTION
LABOR PROCESS DEPT. DAILY MONTHLY
DISTRIBUTION COST SCHEDULE REPORT PROGRESS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. 1 1
- --------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1
- --------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION DIR./DEPUTY CONSTRUCTION DIR. 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION MANAGER 2 2 2 2 2
- --------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR/DEPUTY PROCUREMENT DIR. 1 1
- --------------------------------------------------------------------------------------------------------------------------
QA MANAGER
- --------------------------------------------------------------------------------------------------------------------------
BUS MGR./DEPUTY BUS MGR. 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER
- --------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR.
- --------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR
- --------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 1
- --------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER
- --------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT.
- --------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT.
- --------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT. 1
- --------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER. 1 1
- --------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS 1
- --------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 1 1 8
- --------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER 1 1
- --------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER 1
- --------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER
- --------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER
- --------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER
- --------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
REPORTS
- --------------------------------------------------------------------------------------------------
PROJECT
MATERIAL SUMMARY MEETING
COMMITMENT SCHEDULE NOTES
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR 1 1
- --------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. 1 1
- --------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1 1 1
- --------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1 1
- --------------------------------------------------------------------------------------------------
CONSTRUCTION DIR./DEPUTY CONSTRUCTION DIR. 1 1
- --------------------------------------------------------------------------------------------------
CONSTRUCTION MANAGER 2 2 2
- --------------------------------------------------------------------------------------------------
PROCUREMENT DIR/DEPUTY PROCUREMENT DIR. 1 1
- --------------------------------------------------------------------------------------------------
QA MANAGER
- --------------------------------------------------------------------------------------------------
BUS MGR./DEPUTY BUS MGR. 1 1 1
- --------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1
- --------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1
- --------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1(d)
- --------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR 1
- --------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 1
- --------------------------------------------------------------------------------------------------
RIGGING ENGINEER
- --------------------------------------------------------------------------------------------------
ACCOUNTING DEPT.
- --------------------------------------------------------------------------------------------------
LEGAL DEPT.
- --------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT.
- --------------------------------------------------------------------------------------------------
DIR. PROJECT OPER. 1
- --------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS
- --------------------------------------------------------------------------------------------------
PROJECT FILES - DMS 1 1 1
- --------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 1
- --------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1
- --------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER 1
- --------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1
- --------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER (w)
- --------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER (w)
- --------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER (w)
- --------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER (w)
- --------------------------------------------------------------------------------------------------
INSPECTION 1 1 1
- --------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1
- --------------------------------------------------------------------------------------------------
BUSINESS MANAGER 1 1 1
- --------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1
- --------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1
- --------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) Internal distribution by originator as required including other personnel
not on chart. Ref. to section 4.3.4.
(b) Internal distribution by project mgr. as required with 1 copy to proj.
engr. mgr.
(c) Copy to specialty/design engr. only.
(d) Copies to all specialty/design leads (Vessel, Heat Transfer, Mech. Equip.,
Civil, Piping, Instruments and Electrical).
(f) All except for specialty/design engr. Items.
(g) Subcontracts only with attachments.
(h) Subcontracts only.
(j) For filing by proj. mechanical catalog group.
(k) For direct transmittal to field by project or specialty engineer of
selected data.
(l) Vendor dwg. status portion of report only.
(m) Process supv. to review project or specialty engineer for specific items
per std. procedure.
(n) Proj. engr. mgr. to receive project managers copy.
(p) Abbreviated version.
(q) Specialty groups to receive 1 copy of applicable process specs.
distribution to be by process supv.
(r) When a definitive estimate is to be prepared, copies shall be included for
the chief estimator as noted. When definitive estimate is not required,
chief estimator to receive 1 copy only of the equipment list.
(s) Final Issue only.
(u) Original signature copy plus three sets to Sr. Q.A. Engr.
(v) Original maintained by Manager Contract Administration.
(w) Attendees only.
(x) Program Director to sign off on all bid tabs prior to client approval.
(y) Transmittal only.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] FOSTER WHEELER FOSTER WHEELER USA CORP.
USA CORPORATION FW CONTRACT NO: 13-004610
REVISION: D
DATE: APRIL 14, 1999
Page 2 of 2
APPENDIX "E"
CORRESPONDENCE PURCHASING DEPT DOCUMENTS
REPORTS, AND MISCELLANEOUS DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------------------------------------------------------
RECOMMEND
COORDINATION MECHANICAL EQUIPMENT SPARE
CONTRACT PROCEDURE CATALOGS LIST PARTS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. 1 1
- --------------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1 1(y) 1(y) 1(y) 1(y)
- --------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
CONSTUCITON DIR./DEPUTY CONSTRUCTION DIR. 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR./DEPUTY PROCUREMENT DIR. 5 4
- --------------------------------------------------------------------------------------------------------------------------------
QA MANAGER 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
BUS. MGR/DEPUTY BUS. MGR. 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1 1
- --------------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1(d) 1(d) 1(c)
- --------------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR 1
- --------------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 1(r) 1 1
- --------------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER 1
- --------------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT. 1 1
- --------------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT. 1 1
- --------------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT. 1(v)
- --------------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER. 1
- --------------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS
- --------------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 4 1 1
- --------------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER 1 1
- --------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER 1 1
- --------------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER 1 1 1c
- --------------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER 1 1 1c
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER 1 1 1c
- --------------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1 1
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS
- ---------------------------------------------------------------------------------------------------------------------------------
EQUIP. MAT'LS. OF CONTRACT CONTRACT
CODE OPERATING CONSTRUCTION CHANGE CHANGE
DATA INSTRUMENTS F.S. SUMMARY INDEX
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1(y) 1(y) 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
CONSTUCITON DIR./DEPUTY CONSTRUCTION DIR. 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR./DEPUTY PROCUREMENT DIR. 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
QA MANAGER
- ---------------------------------------------------------------------------------------------------------------------------------
BUS. MGR/DEPUTY BUS. MGR. 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1
- ---------------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1(c) 1(d)
- ---------------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR 1
- ---------------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER
- ---------------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT.
- ---------------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT.
- ---------------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT. 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER. 1
- ---------------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS
- ---------------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 4 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER
- ---------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER
- ---------------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER 1c
- ---------------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER 1c 1
- ---------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER 1c
- ---------------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------------------------------------------------------------
INT.
DESIGN MASTER ELECTRONIC BOILER
PRESS. & PROCESS INST. INDEXES LOOP CODE
TEMP. F.S. SPECIFICATION (FINAL) DIAG. DATA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FWUSA TO CLARK FWUSA VP & PROGRAM DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
PROCESS MGR./DEPUTY PROCESS MGR. 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIRECTOR 1 1(y) 1(y) 1(y) 1(y)
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER ENGINEERING 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
CONSTUCITON DIR./DEPUTY CONSTRUCTION DIR. 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
PROCUREMENT DIR./DEPUTY PROCUREMENT DIR.
- ------------------------------------------------------------------------------------------------------------------------------------
QA MANAGER 1
- ------------------------------------------------------------------------------------------------------------------------------------
BUS. MGR/DEPUTY BUS. MGR.
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
DISCIPLINE ENGR. 1(d) 1(q) 1(c) 1(c) 1(c)
- ------------------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR 1(u)
- ------------------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR 1
- ------------------------------------------------------------------------------------------------------------------------------------
RIGGING ENGINEER 1
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNTING DEPT.
- ------------------------------------------------------------------------------------------------------------------------------------
LEGAL DEPT.
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT ADM DEPT.
- ------------------------------------------------------------------------------------------------------------------------------------
DIR. PROJECT OPER.
- ------------------------------------------------------------------------------------------------------------------------------------
V. P. PROJ. OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT FILES - DMS
- ------------------------------------------------------------------------------------------------------------------------------------
CLARK PROGRAM DIRECTOR 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
SR. P. M./SR TEAM LEADER 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER/TEAM LEADER 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
SR. PROCESS ENGINEER/PROC. ENGINEER 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGINEER 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGINEER 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGINEER
- ------------------------------------------------------------------------------------------------------------------------------------
INSPECTION 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
BUSINESS MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
FILE @ FW 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
FILE @ PORT ARTHUR 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COORDINATION PROCEDURE
(CLARK/FOSTER WHEELER)
NOTES
(a) Internal distribution by originator as required including other personnel
not on chart. Ref. to section 4.3.4.
(b) Internal distribution by project mgr. as required with 1 copy to proj.
engr. mgr.
(c) Copy to specialty/design engr. only.
(d) Copies to all specialty/design leads (Vessel, Heat Transfer, Mech. Equip.,
Civil, Piping, Instruments and Electrical).
(f) All except for specialty/design engr. Items.
(g) Subcontracts only with attachments.
(h) Subcontracts only.
(j) For filing by proj. mechanical catalog group.
(k) For direct transmittal to field by project or specialty engineer of
selected data.
(l) Vendor dwg. status portion of report only.
(m) Process supv. to review project or specialty engineer for specific items
per std. procedure.
(n) Proj. engr. mgr. to receive project managers copy.
(p) Abbreviated version.
(q) Specialty groups to receive 1 copy of applicable process specs.
(r) When a definitive estimate is to be prepared, copies shall be included for
the chief estimator as noted. When definitive estimate is not required,
chief estimator to receive 1 copy only of the equipment list.
(s) Final Issue only.
(u) Original signature copy plus three sets to Sr. Q.A. Engr.
(v) Original maintained by Manager Contract Administration.
(w) Attendees only.
(x) Program Director to sign off on all bid tabs prior to client approval.
(y) Transmittal only.
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX "F"
TRANSMITTAL FORM LETTER
(FOSTER WHEELER)
<PAGE>
Foster Wheeler USA Corporation Appendix "F"
Clark Refining Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
[LOGO] DWG
FOSTER WHEELER USA CORPORATION ----------------------------------------------------------------------
HOUSTON, TEXAS
2020 Dairy Ashford FULL
Houston, TX 77077 TRANSMITTAL SIZE REDUCED
PHONE: 281/597-3000 LETTER PRINTS PRINTS REPRODCIBLES SPECIFICATIONS DOCUMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MGMT VP & PROGRAM DIRECTOR M. AUTREY
- ------------------------------------------------------------------------------------------------------------------------------------
DEPUTY PROGRAM DIR. J. PAPON
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER *
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT FILE *
- ------------------------------------------------------------------------------------------------------------------------------------
PRJ CRL PROJECT CONTROL MANAGER C. MEYERS
- ------------------------------------------------------------------------------------------------------------------------------------
COST ENGINEER
- ------------------------------------------------------------------------------------------------------------------------------------
SCHEDULING ENGR. R. BROOKS
- ------------------------------------------------------------------------------------------------------------------------------------
CHIEF ESTIMATOR M. FORTE
- ------------------------------------------------------------------------------------------------------------------------------------
COST ENGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
SCHEDULING ENGR *
- ------------------------------------------------------------------------------------------------------------------------------------
DOCUMENT CONTROL G. HACKLEMAN
- ------------------------------------------------------------------------------------------------------------------------------------
PROJ PROJ. ENGRG. MGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT ENGINEER *
- ------------------------------------------------------------------------------------------------------------------------------------
ENGINEERING PROCESS MANAGER D. FONTUGNE
- ------------------------------------------------------------------------------------------------------------------------------------
PROCESS SUPERVISOR *
- ------------------------------------------------------------------------------------------------------------------------------------
HEAT TRANSFER ENGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
MECH. ENGINEER *
- ------------------------------------------------------------------------------------------------------------------------------------
VESSEL ENGINEER *
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY *
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPLE PIPING SUPV. *
- ------------------------------------------------------------------------------------------------------------------------------------
PIPE SPECS D. WENNER
- ------------------------------------------------------------------------------------------------------------------------------------
PIPE STRESS/SUPPORTS B. PATEL
- ------------------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
CIVIL/STRUCTURAL ENGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
QA MANAGER M. ROAYAIE
- ------------------------------------------------------------------------------------------------------------------------------------
PROCURE PROCUREMENT DIR3ECTOR M. WEISBERG
- ------------------------------------------------------------------------------------------------------------------------------------
PURCH & MMS COOR. J. RICHARDSON
- ------------------------------------------------------------------------------------------------------------------------------------
EXPEDITING COORDINATOR *
- ------------------------------------------------------------------------------------------------------------------------------------
INSPECTION COORDINATOR B. PHILLIPS
- ------------------------------------------------------------------------------------------------------------------------------------
TRAFFIC COORDINATOR *
- ------------------------------------------------------------------------------------------------------------------------------------
CONS CONSTRUCTION DIRECTOR T. RODER
- ------------------------------------------------------------------------------------------------------------------------------------
CLARK COPY PROGRAM DIRECTOR K. ISOM
- ------------------------------------------------------------------------------------------------------------------------------------
SR. PROJECT MANAGER *
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER *
- ------------------------------------------------------------------------------------------------------------------------------------
PROCESS ENGINEER *
- ------------------------------------------------------------------------------------------------------------------------------------
MECHANICAL ENGR. J. CAYRO
- ------------------------------------------------------------------------------------------------------------------------------------
INSTRUMENT ENGR. *
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL ENGR. D. COLLIDA
- ------------------------------------------------------------------------------------------------------------------------------------
BUSINESS MGR. K. HAGER
- ------------------------------------------------------------------------------------------------------------------------------------
COST CONTROL M. POWELL
- ------------------------------------------------------------------------------------------------------------------------------------
PROCESS MANAGER J. ROBBINS
- ------------------------------------------------------------------------------------------------------------------------------------
CLARK FILE @ FW
- ------------------------------------------------------------------------------------------------------------------------------------
CLARK FILE @ PA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
TRANSMITTAL LETTER
DATE:
FW CONTRACT: 13-46XX
FW FILE NO: 46XX-2.3,
Transmittal No.: 13-46XX-2.3-XXX
SUBJECT: FW CONTRACT NO. 13-46XX
CLARK REFINING & MARKETING, INC.
PORT ARTHUR REFINERY
HEAVY OIL UPGRADE PROJECT
(subject)
Transmitted herewith
|_| FOR INQUIRY/PROCUREMENT
|_| FOR REVIEW AND APPROVAL
|_| FOR RECORD
|_| APPROVED FOR CONSTRUCTION
are Engineering Documents as listed below. This Transmittal
Letter is numbered sequentially in accordance with the Coord.
Procedure. Please notify the Project Manager if there is an
interruption in continuity.
* Per applicable Contract
Very truly yours,
FOSTER WHEELER USA CORPORATION
Micheal T. Autrey
VICE PRESIDENT & PROGRAM DIRECTOR
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX "G"
FOSTER WHEELER
FILING SYSTEM INDEX
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
FOSTER WHEELER
FILING SYSTEM INDEX
1.0 PROPOSAL & CONTRACT MATTERS (File under 4610 only) (Note 4)
1.1 Proposal
1.1.1 Press Releases
1.2 Contract
1.3 Contract Changes
1.5 Litigation
1.7 Subcontract with Jacobs
1.8 Secrecy Agreements
1.9 Permit Applications
2.0 CLIENT & LICENSOR CORRESPONDENCE (Note 1)
2.1 Letters to Clark from FW
2.2 Letters from Clark to FW
2.3 Transmittal Letters to Clark
2.4 Procurement Transmittal Letters to Clark (File under 4610
only) (Note 4)
2.6 Transmittals from Clark to FW
2.7 Faxes to Clark from FW
2.8 Faxes from Clark to FW
2.9 Letters to JE from FW
2.10 Letters from JE to FW
2.11 Faxes to JE from FW
2.12 Faxes from JE to FW
2.13 Transmittals from JE to FW
2.14 Clark IOC (Clark Use Only)
2.15 Clark Misc. Correspondence (Clark Use Only)
2.16 Clark Internal Letters (Clark Use Only)
2.17 Clark Letters to Others (Clark Use Only)
2.18 Clark to Air Products (Clark Use Only) (File under 4643 only)
2.19 Air Products to Clark (Clark Use Only) (File under 4643 only)
2.21 Letters to Subcontractors
2.22 Letters from Subcontractors
2.23 Transmittal Letters to Subcontractors
2.24 Transmittal Letters from Subcontractors
2.25 Faxes to Subcontractors
2.26 Faxes from Subcontractors
3.0 NOTES OF MEETINGS (Note 1)
3.1 Project Notes (Client)
3.2 Notes of Meetings (Internal)
3.3 Jacobs Notes of Meeting (JE Internal)
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
4.0 ESTIMATES, FINANCIAL & COMMERCIAL
4.1 Estimates
4.2 Budgets & Commitments (File under 4610 only) (Note 4)
4.3 Insurance (File under 4610 only) (Note 4)
4.4 Taxes (File under 4610 only) (Note 4)
4.5 Accounting (File under 4610 only) (Note 4)
4.6 Invoices (File under 4610 only) (Note 4)
4.7 Procurement (File under 4610 only) (Note 4)
4.8 Variance Notice
4.9 Change Orders (File under 4610 only) (Note 4)
4.10 Cash Flow Information (File under 4610 only) (Note 4)
4.11 FW Audits by Clark (File under 4610 only) (Note 4)
5.0 COORDINATION & PERSONNEL (File under 4610 only) (Note 4)
5.1 Coordination Procedure (Including Filing System Index)
5.2 Coordination Memos
5.3 Personnel
5.4 Advertising/Public Relations
5.5 Project Execution Plan
6.0 SCHEDULES & COST REPORTS (File under 4610 only) (Note 4)
6.01 Progress Letter/Report
6.02 Kickoff/Front End Schedules
6.03 Project Schedule/Milestone Schedule
6.04 Master Progress Schedule/Man-hour Reports
6.05 Detail Work Plans (Drawing Status Report)
6.06 Commitment Profile
6.07 Expenditure Schedule
6.08 Cost Reports
6.09 Variance Notice Program
6.10 Cost Reporting & Control System (CRCS)
6.11 Supplier Requests for Purchase Order Value Change (Summary)
6.12 Change Order Summary Report
6.13 Process Status Report
6.14 Engineering and Design Status Reports
6.16 Inquiry Status Report
6.17 Material Progress Report
6.18 Expediting/Inspection Plan and Reports
6.19 Labor Distribution Reports
6.20 Home Office Manpower
6.21 Construction Field Reports
6.22 Monthly Construction (Progress) Report
6.23 Construction Schedules
6.24 Deleted (moved to 8.99)
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
7.0 PROCESS DATA (Note 1)
7.00 Utility Data
7.11-7.19 Vessel Sketches
7.21-7.23 Heat Exchangers
7.24 Fired Heaters
7.27 Vacuum Equipment
7.31 Pumps
7.32 Compressors
7.34 Material Handling Equip.
7.37 Mech. Thermal Equip.
50 Flow Diagrams
7.60 Instrument Process Data
7.91 Package Systems
7.92 Utility Thermal Equip.
7.93 Water Treating
7.96 Catalysts and Chemicals
a. File process data in 3-ring binders with a tab for each
file section or each equipment item.
As indicated by the above list, tabs need only show the
last two digits of the file section number.
VOID superseded issues of process data and file the
latest issue on top.
b. File process data transmittals in Section 8.03.
c. The official Engineering Departments' files are
maintained by the Project Engineer(s) or Discipline
Leads.
8.0 ENGINEERING CORRESPONDENCE (Note 1)
8.01 Basic Engineering Data
8.01.1 Equipment Lists
8.02 Design Press./Temp.
8.03 Gen. Process Corresp. & Transmittals
8.04 Gen. Job Spec. Corresp.
8.05 Positive Material Identification
8.06 Licenses & Permits
8.07 Vendor Dwg. Transmittals
8.08 Spare Parts
8.09 Mech. Catalog Corresp. & Transmittals
8.11 Towers and Internals
8.11.l Coke Drums
8.12 Reactors and Internals
8.13 Drums
8.14 Tanks
8.16 Lg. Dia. Lines, Refrac. Lined Pipe
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
8.21 Shell Tube Exchangers
8.22 Double Pipe Exchangers
8.23 Air Cooled Exchangers
8.24 Fired Heaters
8.27 Vacuum Equipment
8.31 Pumps
8.32 Compressors
8.33 Electrical Generators
8.34 Material Handling Equip.
8.37 Mech. Thermal Equip.
8.38 Drivers
8.39 Misc. Mechanical Equip.
8.40 Civil/Soils Reports
8.41 Site Preparation
8.42 Piling
8.43 Concrete (including fdns.)
8.44 Heating, Ventilation & Air Cond.
8.46 Structural Steel
8.47 Building Architecture
8.49 Misc. Civil Items
8.50 Flow Diagram
8.50.1 PFD's
8.50.2 EFD's (P&ID's)/Line List
8.51 Plot Plans, Piping Plans, Elevations
8.52 Shop Fabric. Piping
8.54 Stress
8.56 Field Fabric. Piping
8.57 Steam/Liquid Tracing
8.57.1 Piping Material, Special Values
8.58 Underground
8.59 Piping Specialties & Supports
8.59.1 Supports
8.59.2 Spring Hangers
8.60 Instruments
8.61 Packaged Instrument Systems
8.62 Control Valves
8.63 PSVs (Relief Valves)
8.64 DCS (Control System)
8.65 ESD (Shutdown System)
8.66 Analyzers
8.67 Field Instruments/Monitors
8.70 Electrical
8.75 Electric Heater
8.81 Materials of Construction
8.82 Insulation and Refractory
8.83 Painting
8.84 Fireproofing
8.87 Refractory
8.89 Testing/Welding
8.90 Constructibility
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
8.91 Package Systems
8.92 Util. Thermal Equip./Flare
8.93 Water Treating
8.94 Waste Treating
8.95 Mainten., Office & Whse Equip.
8.96 Catalysts & Chemicals
8.97 Environmental
8.98 HAZOP
8.98.1 P&ID Change List
8.99 Needs List
9.0 JOB SPECIFICATIONS (File under 4610 only) (Note 4)
9.1 Job Specifications (Filed in 3-ring binder)
9.2 Clark Comments
9.3 Jacobs Comments
10.0 REQUISITIONS (Note 1)
(Filed in 3-ring binder)
11.0 DESIGN CALCULATIONS (Note 1)
12.0 DESIGN INSTRUCTIONS (Note 1)
(Filed in 3-ring binder)
13.0 DRAWINGS (Note 1) (Note 2)
13.1 FWUSA & JE Drawings
13.2 Vendor Drawings (Existing)
13.3 Clark Drawings (Existing)
13.4 Clark Comments (Comments for drawings)
Note: Drawings will be filed by classification and may be filed on
stick files, in flat files, or folded in file cabinets.
14.0 PURCHASE ORDER & INSPECTION/EXPEDITING REPORTS
(Filed under 4610 only) (Note 3 & 4)
14.1 Vendor Lists
14.2 Procurement Coordination Procedures
14.3 Inquiry Status Report
14.4 Inspection Plan
15.0 CONSTRUCTION (Filed under 4610 only) (Note 4)
15.1 Site Visit Reports/Project Background Information
15.2 Construction Procedures and Execution Plans
15.2.1 Execution Plan
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
15.2.2 Subcontract Procedure
15.2.3 Procurement Procedures (Off Shore)
15.2.4 Procurement Procedures (On Shore)
15.2.5 QA/QC Procedures
15.2.6 Project Control Procedures
15.2.7 Material Management Procedure
15.2.8 Material Storage & Preservation
15.2.9 Backcharge Procedure
15.2.10 Backcharge Correspondence
15.3 Safety, Security, Health and Fire
15.3.1 Foster Wheeler Construction Safety Statistics Report
15.3.2 Project Safety Program/OSHA Visit
15.3.3 Weekly Safety Inspection Reports
15.3.4 Notes of Weekly Safety Meetings
15.3.5 Tool Box Safety Notes
15.3.6 First Aid Logs
15.3.7 Injury Log Summary
15.3.8 Foreman's Accident Investigation Check List
15.3.9 Monthly Safety Status Summary
15.3.10 Construction Safety Inspection Check List
15.3.11 Corporate Safety Directives Including Loss Prevention
Program
15.3.12 Corporate Safety Visits to Jobsite, Reports and
Follow-up
15.3.13 Safety News and Equipment
15.3.14 Liberty Mutual Visits to Jobsite, Reports and
Follow-up
15.3.15 Liberty Mutual Itemized Statement of Loss-Workers
Comp.
15.3.16 Hot and Cold Work Permits Procedures & Correspondence/
Lockout-Tagout/Scaffolding
15.3.17 Security
15.3.18 Vehicle Passes
15.3.19 Jobsite Entrance Procedures
15.3.20 Fire Prevention
15.3.21 Evacuation Procedure
15.3.22 Time Clock & Check in Procedure/Alarms
15.3.23 Incident Reports
15.3.24 Safety Orientation Reports
15.3.25 Safety Responses/Safety Grams
15.3.26 Employee Drug Testing
15.3.27 E-Mail Procedures
15.3.28 OSHA 10-hr Program
15.3.29 Recognition Plan
15.4 Labor Relations and Labor Rates
15.4.1 Memo Shop Procedures
15.4.2 FWCI Code of Ethics/Warning Letters
15.4.3 Craft Billing Rates
15.5 Construction Temporary Facilities and Indirects
15.5.1 Temporary/Construction Power
15.5.2 Office Layout
15.5.3 Open
15.5.4 Construction and Potable Water at Jobsite
15.5.7 Lay Down Yard and Warehouse
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
15.5.8 Temporary Fencing
15.5.9 Craft and Staff Parking Areas
15.5.10 Craft Busing Plan
15.5.11 Brass Alley
15.5.12 Telephone Communication Facilities
15.5.13 Scaffolding
15.5.14 Jobsite Radio System
15.5.15 Jobsite Computer Equipment
15.5.16 Courier Services (DHL, FED-EX)
15.5.17 Open
15.6 Constructability and Rigging
15.6.1 Constructability Check List/Lessons Learned
15.6.2 Rigging Diagrams and Plans/Lift Beams
15.6.3 Preassembly/Prefabrication/Inspection Reports for
Cranes
15.6.4 Concrete Metal Forming System
15.6.5 Open
15.7 Equipment and Tools
15.7.1 Construction Tool and Equipment Cost Summary/Billing
Schedule
15.7.2 Transport, Shipping, and Receiving of FW owned
Equipment and Tools
15.7.3 FET Reports (Received)
15.7.4 FET Reports (Shipped)
15.7.5 Construction Tool and Rental Report
15.7.6 Tool Hound
15.8 Job End Report
15.8.1 Job End Report Outline and Assignments
15.9 Surveying and As-builts
15.9.1 Baseline Layouts, Monuments and Tech. Points
15.9.2 Survey Prices and Arrangements
16.0 PLANT OPERATION & STARTUP (Filed under 4610 only) (Note 4)
16.1 Operating Manual
16.2 Field testing and reports
16.3 Startup
16.4 Personnel
17.0 QUALITY ASSURANCE (Filed under 4610 only) (Note 4)
17.1 QA Activity and Audit Schedule
17.2 QA Audit Reports
17.3 Non-Conformance Reports
17.4 Quality Notices
17.5 Corrective Action Reports
17.6 Preventive Action Reports
17.7 QA Correspondence and Follow-Up
<PAGE>
Foster Wheeler USA Corporation Appendix "G"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
19.0 CONSTRUCTION CONTRACTS (Subcontracts and Direct Hire Work packages)
19.1 Subcontract Database (Subcontractor List)
19.2 Inquiry Status Report
19.3 Subcontract Bidders by Work Breakdown Structure
19.4 Work Breakdown Structure (WBS) Summary
19.4.1 Work Package Data Sheets
19.5 Subcontract Documents - Individual Files
19.6 Escalation
19.7 Payment Requests by Subcontract #
19.8 SCR's by Subcontract #
19.9 Subcontractors Checklist
19.10 Contractor Questionnaires
19.11 Letters of Regret to Unsuccessful Bidders
19.12 Interoffice Correspondence
Note 1: File according to contract number, e.g. file 4610-2.1, 4610-2.2,
4611-2.1, 4611-2.2 etc.
Note 2: File by drawing number, within the code of accounts.
Note 3: File purchase orders numerically with the associated inspection and
expediting reports.
Note 4: Master log for all 4610 correspondence will be maintained by FW.
<PAGE>
APPENDIX "H"
DELETED
<PAGE>
APPENDIX "I"
PROJECT ORGANIZATION CHART
<PAGE>
[LOGO] FOSTER WHEELER USA CORPORATION
ENGINEERING & CONSTRUCTION GROUP
SOUTHWEST OPERATIONS
CLARK - 13206
[the following information was depicted as an organization chart in the printed
material]
---------------------------------
Vice President & Program Director
M. Autrey
---------------------------------
- ------------------- ------------ -------- ------------- -----------
Deputy Hydrocracker Coker Project
Program Project Project Engineering Process
Director Manager Manager Manager Manager
J.M. Papon S. Keller R. Klick M. El-Khashab D. Fontugne
- ------------------- ------------ -------- ------------- -----------
----------- ------------ --------
Procurement Construction Business
Director Manager Manager
M. Weisberg T. Roder C. Myers
----------- ------------ --------
<PAGE>
APPENDIX "J"
PROJECT CALENDAR
<PAGE>
[LOGO] Project Calendar [LOGO]
FWUSA Contract No. 13-004610-00
Clark Refining & Marketing, Inc.
Heavy Oil Upgrade Project
Port Arthur, Texas
[GRAPHIC OMITTED]
<PAGE>
Foster Wheeler USA Corporation Appendix "K"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
APPENDIX "K"
FW DRAWING NUMBERING SYSTEM
<PAGE>
Foster Wheeler USA Corporation Appendix "K"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
FOSTER WHEELER
DRAWING NUMBERING SYSTEM
1) Drawings are identified by hyphenated number groups as follows:
4611-2-46-101 (Drawing Number):
4611 Contract Number
2 Drawing Size Number
46 Lab Class Number
101 Serial Number
2) Contract number is first number group. This number is the last four digits
of the contract number.
For Example: For Contract 13-004611, use 4611.
3. Second number is drawing form size (see 3.2) and is number 0, 1, 2, 3, 4
or 5 which is equivalent to F, E, D, C, B or A size respectively.
4. Third number group is the two digit Lab Class number that identifies the
discipline producing the drawing and the drawing subject matter. This
number is selected from following table:
Lab Class Drawing Subject
--------- ---------------
01 Initial Plot Plan
11 Towers, Reactors, Drums and Tanks (Trays, Internals and
Linings if by Fabricator)
16 Large Diameter Lines and Refractory Lined Pipe
34 Material Handling Arrangements
41 Site Preparation
42 Piling
43 Concrete Foundations, Concrete Structures, Concrete Yard
Racks and Deck Paving
44 Heating, Ventilation and Air Conditioning
46 Steel Structures, Steel Yard Racks, Platforms and Misc.
Steel
47 Building Architecture
50 Engineering Flow Diagrams
51 Plot Plans, Piping Layouts, Piping Plans, Equipment
Elevations
52 (Note a) Piping Isometrics (Shop Fabricated)
56 (Note a) Piping Isometrics (Field Fabricated)
57 Piping Bills of Material
58 (Note b) Underground Installations
59 Pipe Supports
64 Logic Diagrams
65 Instrument Piping
66 Instrument Wiring
69 Instrument Loop Diagrams
71 (Note c) Electrical Underground Installations
<PAGE>
Foster Wheeler USA Corporation Appendix "K"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
73 Electrical Power
74 Electrical Lighting
75 Communications
76 Electrical Instrument Wiring
78 Electrical Heat Tracing/Cathodic Protection
79 Pole Lines
82 Insulation
84 Fireproofing
(Note a) PDS isometrics uses the line number as the drawing
number.
(Note b) Lab Class 58 drawings are normally used for both
Piping and Electrical U/G installations.
(Note c) Lab Class 71 drawings are normally used for electrical
underground notes, symbols, sections, details and misc.
plans.
5. Fourth number is the serial number for the Lab Class and is usually a
consecutive number series for each Lab Class starting with 001. These
numbers are consecutive regardless of drawing size. For example, a Lab
Class drawing series might typically be:
XXXX-1-51-001
XXXX-1-51-002
XXXX-1-51-003
XXXX-1-51-004
Income cases, delineated areas of the plot may use 100, 200, 300, etc. in
lieu of 001 number series.
6. Drawings produced for limited and special purposes may be prefixed "SK"
identifying it as a "Sketch". "SK" series drawings are numbered the same
as regular contract drawings and are controlled by the originating
discipline. SK series drawings are not normally issued outside of FWUSA
and are temporary sources of information only. Typical numbering might be:
SK-XXXX-1-51-1, SK-XXXX-2-71-1, etc.
7. Drawing numbers shall be given in the "Drawing Number" section of the
title block and repeated in an inverted position in the block at the top
left corner of the drawing for drawing sizes 0, 1, 2 and 3. Drawing sizes
4 and 5 do not require this filing retrieval aid.
8. Drawings that apply to more than one contract on a multi-unit project
should be numbered by the common contract number, and referenced as
necessary on the unit contract drawings. Example: 4610-2-46-001.
<PAGE>
Foster Wheeler USA Corporation Appendix "L"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
APPENDIX "L"
CLARK EQUIPMENT CATEGORY CODES
<PAGE>
FOSTER WHEELER USA CORPORATION REF.: Clark PDM-4
Houston, Texas DATE: June 1998
PAGE: 4-2
REV.: 1
PDM-4 (Cont'd)
TABLE 4.1.1
- --------------------------------------------------------------------------------
EQUIPMENT CATEGORY CODES
- --------------------------------------------------------------------------------
A Analyzers
- --------------------------------------------------------------------------------
B Buildings
- --------------------------------------------------------------------------------
C Coolers
(Air or water cooler exchangers)
- --------------------------------------------------------------------------------
D Drums
(i.e. Reflux, Overhead, KO, etc.)
- --------------------------------------------------------------------------------
E Heat Exchangers
- --------------------------------------------------------------------------------
F Process Heaters, Flares, Thermal Oxidizers and Stacks
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
H Piping Specialties
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
K Compressors, Fans, or Blowers
KM Motor Drive
KT Turbine Drive
- --------------------------------------------------------------------------------
L Uncovered Process Equipment
(e.g. Clarifier, open top Aeration Tank)
- --------------------------------------------------------------------------------
M Pressurized Process Equipment that does not fit any other category,
including Filters [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
N Miscellaneous equipment not covered by this table
- --------------------------------------------------------------------------------
P Pumps
PM Motor Drive
PT Turbine Drive
- --------------------------------------------------------------------------------
PP Power Plant
- --------------------------------------------------------------------------------
PS Power Station
- --------------------------------------------------------------------------------
R Reactors or Regenerators
- --------------------------------------------------------------------------------
S Sumps
SC Chemical
SD Surface Drain
SP Process
SV Vault (buried or sealed)
- --------------------------------------------------------------------------------
SK Skid Mounted Units
(i.e. Air Dryers, Refrigeration Systems)
- --------------------------------------------------------------------------------
SS Electrical Substations
- --------------------------------------------------------------------------------
T Towers
- --------------------------------------------------------------------------------
TK Any Tanks designed in accordance with API 650
- --------------------------------------------------------------------------------
<PAGE>
Foster Wheeler USA Corporation Appendix "M"
Clark Refining & Marketing, Inc. Issue No. D
Port Arthur, Texas Date: April 14, 1999
APPENDIX "M"
DOCUMENT DISTRIBUTION MATRIX
<PAGE>
APPENDIX "M"
HEAVY OIL UPGRADE PROJECT
FW CONTRACT #13-004610
DOCUMENT DISTRIBUTION MATRIX
FOSTER WHEELER
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TITLE APPENDIX GENERAL DCU HCU AVU REVAMP
- ------------------------------------------------------------------------------------------------------------------------------
13-04611 13-004612 13-004631
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLARK:
- ------------------------------------------------------------------------------------------------------------------------------
Project Team
- ------------------------------------------------------------------------------------------------------------------------------
Program Director A, B, C, D, E Isom, K. Isom, K. Isom, K. Isom, K.
- ------------------------------------------------------------------------------------------------------------------------------
Sr. Project Manager/Sr. A, B, C, D, E Rogers, M./Alvarez, D. Rogers, M. Rogers, M. Alvarez, D.
Team Ldr.
- ------------------------------------------------------------------------------------------------------------------------------
Process Manager/Team Ldr. A, C, D, E Robbins, J./TBN Robbins, J. Robbins, J. Robbins, J.
- ------------------------------------------------------------------------------------------------------------------------------
Project Engineer A, B, C, D, E Bullion, K./Smith, B. Richard, Hamilton, D. Richard, A. Smith, B.
A/Rogers, M./Alvarez, D.
- ------------------------------------------------------------------------------------------------------------------------------
Sr. Process Engineer/ A, C, D, E Cupit/Sedlacek/Gray/Cannatella Cupit, C./ Sedlacek, S. Canatella, P.
Process Engineer Cannatella, P.
- ------------------------------------------------------------------------------------------------------------------------------
Mechanical Engineer A, C, D, E Cayro, J. Cayro, J. Cayro, J. Cayro, J.
- ------------------------------------------------------------------------------------------------------------------------------
Instrument Engineer A, C, D, E LeMarr, J./Boor, J. LeMarr, J. LeMarr, J. Boor, J.
- ------------------------------------------------------------------------------------------------------------------------------
Electrical Engineer A, C, D, E Collida, D. Collida, D. Collida, D. Collida, D.
- ------------------------------------------------------------------------------------------------------------------------------
Business Mgr. C, D, E Hager, K. Hager, K. Hager, K. Hager, K.
- ------------------------------------------------------------------------------------------------------------------------------
Cost Control C, D, E Powell, M. Powell, M. Powell, M. Powell, M.
- ------------------------------------------------------------------------------------------------------------------------------
Accounting C, D, E Powell, M. Powell, M. Powell, M. Powell, M.
- ------------------------------------------------------------------------------------------------------------------------------
Clark File @ FW A, B, C, D, E
- ------------------------------------------------------------------------------------------------------------------------------
Clark File @ Port Arthur A, B, C, D, E
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Refinery Personnel
- ------------------------------------------------------------------------------------------------------------------------------
Refinery General Manager C Kuenzli, D. Kuenzli, D. Kuenzli, D. Kuenzli, D.
- ------------------------------------------------------------------------------------------------------------------------------
Refining Controller Shobe, S.
- ------------------------------------------------------------------------------------------------------------------------------
Operations General Manager C Gentry, G. Gentry, G. Gentry, G. Gentry, G.
- ------------------------------------------------------------------------------------------------------------------------------
Operations Superintendent C Schomerus, M/Wros, E/Jacobs, Schomerus, M. Schomerus, M. Getz, C.
B./Getz, C./Smith, T.
- ------------------------------------------------------------------------------------------------------------------------------
EH & S Manager C Carter, M. Carter, M. Carter, M. Carter, M.
- ------------------------------------------------------------------------------------------------------------------------------
Inspection A, B, C, D, E Boullion, S. Boullion, S. Boullion, S. Boullion, S.
- ------------------------------------------------------------------------------------------------------------------------------
Process Supervisor C Smith, T./Bramblett, T/Hanes, Smith, T. Bramblett, T McMillan, R.
J./McMillan, R.
- ------------------------------------------------------------------------------------------------------------------------------
Process Group Leader A, C Beckers, D. Beckers, D. Beckers, D. Beckers, D.
- ------------------------------------------------------------------------------------------------------------------------------
Design Group Leader A, B, C Johnson, E. Johnson, E. Johnson, E. Johnson, E.
- ------------------------------------------------------------------------------------------------------------------------------
Unit Design Engineer C Primeaux, V. Primeaux, V. TBD TBD
- ------------------------------------------------------------------------------------------------------------------------------
Unit Process Engineer C TBD TBD Young, C.
- ------------------------------------------------------------------------------------------------------------------------------
Planning/Economics Manager C McCune, B. McCune, B. McCune, B. McCune, B.
- ------------------------------------------------------------------------------------------------------------------------------
Lead I & E Engineer A, C Collida, D. Collida, D. Collida, D. Collida, D.
- ------------------------------------------------------------------------------------------------------------------------------
Area MTCE Sup't C Wilkerson, R./Cricchio, M. Wilkerson, R. TBD Wilkerson, R.
- ------------------------------------------------------------------------------------------------------------------------------
Fire Protection Chief C Nicely, R. Nicely, R. Nicely, R. Nicely, R.
- ------------------------------------------------------------------------------------------------------------------------------
Construction A, B, C, D, E Howe, R. Howe, R. Howe, R. Howe, R.
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------
TITLE HDS REVAMPS PKG UNITS OFFSITES
- ---------------------------------------------------------------------------------
13-004631/33 13-004621/22/23 13-004641/46
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
CLARK:
- ---------------------------------------------------------------------------------
Project Team
- ---------------------------------------------------------------------------------
Program Director Isom, K. Isom, K. Isom, K.
- ---------------------------------------------------------------------------------
Sr. Project Manager/Sr. Alvarez, D. Alvarez, D. Alvarez, D.
Team Ldr.
- ---------------------------------------------------------------------------------
Process Manager/Team Ldr. Robbins, J. Robbins, J. Robbins, J.
- ---------------------------------------------------------------------------------
Project Engineer Smith, B. Verdeja, E Bullion, K/
Smith B.
- ---------------------------------------------------------------------------------
Sr. Process Engineer/ Sedlacek, S. Grey, J. Robbins, J.
Process Engineer
- ---------------------------------------------------------------------------------
Mechanical Engineer Cayro, J. Cayro, J. Cayro, J.
- ---------------------------------------------------------------------------------
Instrument Engineer Boor, J. Boor, J. Boor, J.
- ---------------------------------------------------------------------------------
Electrical Engineer Collida, D. Collida, D. Collida, D.
- ---------------------------------------------------------------------------------
Business Mgr. Hager, K. Hager, K. Hager, K.
- ---------------------------------------------------------------------------------
Cost Control Powell, M. Powell, M. Powell, M.
- ---------------------------------------------------------------------------------
Accounting Powell, M. Powell, M. Powell, M.
- ---------------------------------------------------------------------------------
Clark File @ FW
- ---------------------------------------------------------------------------------
Clark File @ Port Arthur
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Refinery Personnel
- ---------------------------------------------------------------------------------
Refinery General Manager Kuenzli, D. Kuenzli, D. Kuenzli, D.
- ---------------------------------------------------------------------------------
Refining Controller
- ---------------------------------------------------------------------------------
Operations General Manager Gentry, G. Gentry, G. Gentry, G.
- ---------------------------------------------------------------------------------
Operations Superintendent Wros, E. Schomerus, M. Jaobs, B.
- ---------------------------------------------------------------------------------
EH & S Manager Carter, M. Carter, M. Carter, M.
- ---------------------------------------------------------------------------------
Inspection Boullion, S. Boullion, S. Boullion, S.
- ---------------------------------------------------------------------------------
Process Supervisor Cluelow, G/Dean, E. Bramblett, T. Ross, T.
- ---------------------------------------------------------------------------------
Process Group Leader Beckers, D. Beckers, D. Beckers, D.
- ---------------------------------------------------------------------------------
Design Group Leader Johnson, E. Johnson, E. Johnson, E.
- ---------------------------------------------------------------------------------
Unit Design Engineer Brown, L./Rios, M. Primeaux, V. TBD
- ---------------------------------------------------------------------------------
Unit Process Engineer Grey, M. Watson, D. TBD
- ---------------------------------------------------------------------------------
Planning/Economics Manager McCune, B. McCune, B. McCune, B.
- ---------------------------------------------------------------------------------
Lead I & E Engineer Collida, D. Collida, D. Collida, D.
- ---------------------------------------------------------------------------------
Area MTCE Sup't Cricchio, M. Wilkerson, R. Cricchio, M.
- ---------------------------------------------------------------------------------
Fire Protection Chief Nicely, R. Nicely, R. Nicely, R.
- ---------------------------------------------------------------------------------
Construction Howe, R. Howe, R. Howe, R.
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX "M"
HEAVY OIL UPGRADE PROJECT
FW CONTRACT #13-004610
DOCUMENT DISTRIBUTION MATRIX
FOSTER WHEELER
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TITLE APPENDIX GENERAL DCU HCU AVU REVAMP HDS REVAMPS
- -----------------------------------------------------------------------------------------------------------------------------------
13-046141 13-004612 13-004631 13-004631/33
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOSTER WHEELER:
- -----------------------------------------------------------------------------------------------------------------------------------
Vice President & Program A, C, E Autrey, M. Autrey, M. Autrey, M. Autrey, M. Autrey, M.
Director
- -----------------------------------------------------------------------------------------------------------------------------------
Process Manager B, C, E Fontugne, D. Fontugne, D. Fontugne, D. Fontugne, D. Fontugne, D.
- -----------------------------------------------------------------------------------------------------------------------------------
Deputy Process Manager B, C, E N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Deputy Program Director A, B, C, E Papon, J. Papon, J. Papon, J.
- -----------------------------------------------------------------------------------------------------------------------------------
Construction Director A, B, C, D, E Roder, T. Roder, T. Roder, T. Roder, T. Roder, T.
- -----------------------------------------------------------------------------------------------------------------------------------
Deputy Construction A, B, C, D, E N/A N/A Hempstead, S. Hempstead, S.
Director
- -----------------------------------------------------------------------------------------------------------------------------------
Procurement Director A, B, C, D, E Weisberg, M. Weisberg, M. Weisberg, M. Weisberg, M. Weisberg, M.
- -----------------------------------------------------------------------------------------------------------------------------------
Deputy Procurement A, B, C, D, E N/A N/A
Director
- -----------------------------------------------------------------------------------------------------------------------------------
QA Manager C, E Roayaie, M. Roayaie, M. Roayaie, M. Roayaie, M. Roayaie, M.
- -----------------------------------------------------------------------------------------------------------------------------------
Business Manager C, E Myers, C. Myers, C. Myers, C. Myers, C. Myers, C.
- -----------------------------------------------------------------------------------------------------------------------------------
Deputy Business Manager C, E N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Project Manager A, C, E Klick, R. Dodds, B. El-Khashab, M. El-Khashab, M.
- -----------------------------------------------------------------------------------------------------------------------------------
Project Engineering A, C, D, E Ortiz, G. Chaudhuri, D. Kwong, H Kwong, H
Manager
- -----------------------------------------------------------------------------------------------------------------------------------
Project Engineer C, D, E Buckner, E./ Gonzalez, B. Chirayil, T. Chirayil, T.
Yan, J.
- -----------------------------------------------------------------------------------------------------------------------------------
Purchasing & Materials A, C Richardson, J. Richardson, J. Richardson, J. Richardson, J.
Coord.
- -----------------------------------------------------------------------------------------------------------------------------------
Vessel Engineer A, B, C, D, E Jagirdar, M. Lee, F. Jagirdar, M. Jagirdar, M.
- -----------------------------------------------------------------------------------------------------------------------------------
Heat Transfer Engineer A, B, C, D, E Kowalczyk, R. Chen, E. Ngo, L. Ngo, L.
- -----------------------------------------------------------------------------------------------------------------------------------
Mechanical Engineer A, B, C, D, E Lowery, F. Raza, A. Raza, A. Raza, A.
- -----------------------------------------------------------------------------------------------------------------------------------
Civil Structural A, B, C, D, E Chawlani, A. Yong, J. Rivera, M. Rivera, M.
Engineer
- -----------------------------------------------------------------------------------------------------------------------------------
Process Supervisor A Kwik, C. Robinson, B. Fontugne, D. Robinson, B.
- -----------------------------------------------------------------------------------------------------------------------------------
Principle Piping A, B, C, D, E Maltbie, D. Elrod, T. Beverly, C. Beverly, C.
Supervisor
- -----------------------------------------------------------------------------------------------------------------------------------
Instrument Engineer A, B, C, D, E Haire, D. Balazs, F. Farrell, J. Farrell, J.
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Engineer A, B, C, D, E Dekmezian, K. Gupta, R. Owens, J. Owens, J.
- -----------------------------------------------------------------------------------------------------------------------------------
Pipe Stress/Supports A, B, C Patel, B. Patel, B. Patel, B. Patel, B.
- -----------------------------------------------------------------------------------------------------------------------------------
Pipe Specs A, B, C Wenner, D. Wenner, D. Wenner, D. Wenner, D.
- -----------------------------------------------------------------------------------------------------------------------------------
Inspection Coordinator B, E, D Phillips, B. Phillips, B. Phillips, B. Phillips, B.
- -----------------------------------------------------------------------------------------------------------------------------------
Expediting Coordinator Gajewski, F. Gajewski, F. Gajewski, F. Gajewski, F.
- -----------------------------------------------------------------------------------------------------------------------------------
Traffic Coordinator Nagel, J. Nagel, J. Nagel, J. Nagel, J.
- -----------------------------------------------------------------------------------------------------------------------------------
Chief Estimator A, B, C, E Forte, M. Forte, M. Forte, M. Forte, M.
- -----------------------------------------------------------------------------------------------------------------------------------
Technology TBD TBD TBD TBD
- -----------------------------------------------------------------------------------------------------------------------------------
Scheduling Engineer Brooks, R./ Brooks, R./ TBD TBD
Ilagan, B. Sullivan, K.
- -----------------------------------------------------------------------------------------------------------------------------------
Cost Engineer King, J. J. DeStena McGregor, D. McGregor, D.
- -----------------------------------------------------------------------------------------------------------------------------------
Document Control Hackleman, G. Hackleman, G. Hackleman, G. Hackleman, G.
- -----------------------------------------------------------------------------------------------------------------------------------
Rigging Engineer C, D Moore, P. Moore, P. TBD TBD
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------
TITLE PKG UNITS OFFSITES
- -------------------------------------------------------------------
13-004621/22/23 13-004641/46
- -------------------------------------------------------------------
<S> <C> <C>
FOSTER WHEELER:
- -------------------------------------------------------------------
Vice President & Program Autrey, M. Autrey, M.
Director
- -------------------------------------------------------------------
Process Manager Fontugne, D. Fontugne, D.
- -------------------------------------------------------------------
Deputy Process Manager
- -------------------------------------------------------------------
Deputy Program Director
- -------------------------------------------------------------------
Construction Director Roder, T. Roder, T.
- -------------------------------------------------------------------
Deputy Construction Hempstead, S. Hempstead, S.
Director
- -------------------------------------------------------------------
Procurement Director Weisberg, M Weisberg, M
- -------------------------------------------------------------------
Deputy Procurement
Director
- -------------------------------------------------------------------
QA Manager Roayaie, M. Roayaie, M.
- -------------------------------------------------------------------
Business Manager Myers, C. Myers, C.
- -------------------------------------------------------------------
Deputy Business Manager
- -------------------------------------------------------------------
Project Manager El-Khashab, M. Reed, D
- -------------------------------------------------------------------
Project Engineering Kapsalis, T. Minner, M.
Manager
- -------------------------------------------------------------------
Project Engineer Chirayil, T. TBD
- -------------------------------------------------------------------
Purchasing & Materials Richardson, J. Richardson, J.
Coord.
- -------------------------------------------------------------------
Vessel Engineer Jagirdar, M. Jagirdar, M.
- -------------------------------------------------------------------
Heat Transfer Engineer Ngo, L. Ngo, L.
- -------------------------------------------------------------------
Mechanical Engineer Raza, A. Raza, A.
- -------------------------------------------------------------------
Civil Structural Rivera, M. Rivera, M.
Engineer
- -------------------------------------------------------------------
Process Supervisor Robinson, B. Robinson, B.
- -------------------------------------------------------------------
Principle Piping Wimberly, B. Wimberly, B.
Supervisor
- -------------------------------------------------------------------
Instrument Engineer Farrell, J. Farrell, J.
- -------------------------------------------------------------------
Electrical Engineer Gupta, R. Owens, J.
- -------------------------------------------------------------------
Pipe Stress/Supports Patel, B. Patel, B.
- -------------------------------------------------------------------
Pipe Specs Wenner, D. Wenner, D.
- -------------------------------------------------------------------
Inspection Coordinator Phillips, B. Phillips, B.
- -------------------------------------------------------------------
Expediting Coordinator Gajewski, F. Gajewski, F.
- -------------------------------------------------------------------
Traffic Coordinator Nagel, J. Nagel, J.
- -------------------------------------------------------------------
Chief Estimator Forte, M. Forte, M.
- -------------------------------------------------------------------
Technology TBD TBD
- -------------------------------------------------------------------
Scheduling Engineer Sall, N. Sall, N.
- -------------------------------------------------------------------
Cost Engineer McGregor, D. 2
- -------------------------------------------------------------------
Document Control Hackleman, G. Hackleman, G.
- -------------------------------------------------------------------
Rigging Engineer TBD TBD
- -------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
FORM OF APPLICATION FOR PAYMENT
<PAGE>
- --------------------------------------------------------------------------------
Invoice Number
FOSTER WHEELER USA CORPORATION --------------------------
Perryville Corporate Park Invoice Date
Clinton, New Jersey 08809-4000 --------------------------
Project Number
SOLD TO: Port Arthur Coker Company L.P. --------------------------
Port Arthur, Texas Customer P.O.
--------------------------
Payment Terms
--------------------------
Tax Code & LOC
--------------------------
-------
INVOICE
-------
- --------------------------------------------------------------------------------
To invoice you for ____% of the total Lump Sum amount in accordance with the
agreed Payment Schedule for the Port Arthur Heavy Oil Upgrade Project.
The following attached Detailed Payment Backup Sheets demonstrate Foster
Wheeler's progress to support this invoice:
1. Engineering Progress
2. Equipment Procurement Progress (by Tagged Item for Individual
Process Units)
3. Bulk Material Procurement Progress
4. Construction Progress (including Subcontracts)
Due This Period: $______________
Remit to: First Union National Bank
190 River Rd. NJ3130
Summit, NJ 07901
Account No. 21200000065402 ABA No. 031201467
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT B
FORM OF GUARANTEE
<PAGE>
Exhibit B
FORM OF PARENT COMPANY GUARANTEE
This Agreement (hereinafter called the "Guarantee") made this 13th
day of July, 1999, between Foster Wheeler Corporation, a New York corporation,
with a principal place of business at Perryville Corporate Park, Clinton, New
Jersey 08809-4000 (hereinafter called "Guarantor") of the first part, and Port
Arthur Coker Company L.P., a Delaware limited partnership ("Owner"), with a
principal place of business at Port Arthur Refinery, P.O. Box 908, Port Arthur,
Texas 77641 -0908(hereinafter called "Owner") of the second part. Capitalized
terms not defined herein shall have the meanings ascribed to them in the
Contract for Engineering, Procurement and Construction Services (the
"Contract"), dated as of July 12, 1999, between Owner and Foster Wheeler USA
Corporation, a Delaware corporation, whose principal place of business is at
Perryville Corporate Park, Clinton, New Jersey 08809-4000 (hereinafter called
"Contractor").
WITNESSETH:
In consideration of Owner entering into the Contract with
Contractor, a subsidiary of Guarantor, for the performance by Contractor of
engineering, procurement and construction services for a delayed coking unit and
certain related refinery equipment (the "Coker Complex") to be located at Clark
Refining and Marketing, Inc.'s existing refinery in Port Arthur, Jefferson
County, Texas, upon land leased by Owner, the Guarantor hereby agrees with Owner
as follows:
1. (a) Guarantor does hereby acknowledge that it is fully aware of
the terms and conditions of the Contract and the transactions contemplated
thereby, and does hereby irrevocably and unconditionally guarantee, as primary
obligor and not as surety merely, to Owner, the performance by Contractor of all
Contractor's obligations under the Contract (the "Obligations"), when due,
strictly in accordance with the terms of the Contract, including without
limitation the payment of any damages arising out of or based upon any failure
of Contractor to perform any obligations required of it under the Contract.
(b) Guarantor waives notice of the acceptance of this Guarantee and
of the performance or nonperformance by Contractor, demand for payment from
Contractor or any other person and notice of nonpayment or failure to perform on
the part of Contractor, diligence, presentment, protest, dishonor (to the
fullest extent permitted by law), all other demands or notices whatsoever other
than the request for payment or performance under this Guarantee. The
obligations of Guarantor shall be absolute, irrevocable and unconditional and
shall remain in full force and effect until satisfaction in full of all
Obligations and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by the existence of any set-off or
counterclaim that Guarantor, Contractor, or any affiliate of Guarantor or
Contractor may have at any time and from time to time against Owner. This
Guarantee shall continue to be effective or be reinstated, as the case may be,
notwithstanding whether at any time for any reason
<PAGE>
any payment of any Obligation is rescinded or must otherwise be returned by
Owner upon the insolvency, bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar proceeding with respect to
Contractor or otherwise, all as though such payment had not been made.
(c) Guarantor, by virtue of any payment under this Section 1 to
Owner, shall be subrogated to such Owner's claim against Contractor or any other
person relating thereto. The Guarantor agrees that it shall not exercise any
rights of subrogation which it may acquire due to any payment or payments made
under this Section 1 until all of the Obligations shall have been paid and
performed in full.
(d) The obligations of Guarantor under this Guarantee shall not be
affected by the genuineness, validity, regularity or enforceability of any of
Contractor's obligations under the Contract, or any amendment, waiver or other
modification thereof (except, with respect to the Contract, to the extent of
such amendment, waiver or modification), or substitution, release or exchange of
collateral for, or other guarantee, of any of the Obligations (except to the
extent of such substitution, release or exchange), any priority or preference to
which any other obligations of Contractor may be entitled over the Contractor's
obligations under the Contract or, to the fullest extent permitted by applicable
law, any other circumstance which might otherwise constitute a legal or
equitable defense to or discharge of the obligations of a surety or guarantor,
including, without limitation, any defense arising out of any laws of the United
States of America or any State or subdivision thereof which would either exempt,
modify or delay the due or punctual payment and performance of the obligations
of Guarantor hereunder.
(e) Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall, to the fullest
extent permitted by law, neither release Guarantor from its obligations
hereunder nor affect the liability of Guarantor under this Section 1: (i) the
extension of the time for or waiver of, at any time or from time to time,
without notice to Guarantor, the Contractor's performance of or compliance with
any of its obligations under the Contract (except that such extension or waiver
shall be given effect in determining the obligations of Guarantor hereunder),
(ii) any assignment, transfer or other arrangement by which the Contractor
transfers its rights under the Contract, (iii) any merger or consolidation of
Contractor or Guarantor into or with any other person, (iv) any change in the
ownership of any shares of capital stock of Contractor, (v) termination of the
Contract (other than for the convenience of Owner under Section 14.2 of the
Contract), (vi) forbearance or forgiveness in respect of any matter or thing
concerning the Contractor on the part of Owner or Contractor, or (vii) any
assignment of the rights of Owner under the Contract to the Financing Parties
(as such term is defined in the Contract).
(f) This Guarantee is an absolute, present and continuing Guarantee
of payment and performance and not of collectibility and is in no way
conditional or contingent upon any attempt to collect from Contractor any unpaid
amounts due or otherwise to enforce performance by Contractor. Guarantor further
specifically agrees that it shall not be necessary or
2
<PAGE>
required for Owner to take any action against Contractor or any other person to
enforce the terms of this Guarantee, including the following actions:
(v) file suit or proceed to obtain or assert a claim for personal
judgment against Contractor for the Obligations, or
(w) make any effort to enforce the performance of the Obligations by
Contractor or to collect any such Obligation under the Contract or under
this Guarantee, or
(x) foreclose against or seek to realize upon security, if any, now
or hereafter existing for the Obligations, or
(y) file suit or proceed to obtain or assert a claim for personal
judgment against any other person liable for the Obligations, or make any
effort at collection of the Obligations from any such other person, or
exercise or assert any other right or remedy to which Owner is or may be
entitled in connection with the Obligations or any security or other
guarantee therefor, or
(z) assert or file any claim against the assets of Contractor or any
other guarantor or other person liable for the Obligations, or any part
thereof, before or as a condition of enforcing the liability of Guarantor
under this Guarantee or requiring payment of said Obligation by Guarantor
hereunder, or at any time thereafter.
Guarantor hereby unconditionally waives any requirement that, as a condition
precedent to the enforcement of the obligations of Guarantor hereunder,
Contractor or all or any one or more of any other guarantors of any of the
Obligations be joined as parties to any proceedings for the enforcement of any
provision of this Guarantee.
2. (a) If Contractor fails to perform any of its obligations under
the Contract, or commits any breach thereof, Guarantor shall, within five (5)
days of advance written notice from Owner, immediately: (i) take such steps as
may, in the judgment of Owner reasonably exercised, be necessary to have
Contractor perform all Contractor's obligations under the Contract, or remedy
any breach thereof, or (ii) take such steps as may, in the judgment of Owner
reasonably exercised, be necessary to perform itself, or through a third party
other than Contractor, all of Contractor's obligations under the Contract, or to
remedy any breach thereof.
(b) If Guarantor fails, to the satisfaction of Owner, at any time to
perform any obligations under this Guarantee, Owner may, after affording
Guarantor written notice of any such failure and a reasonable opportunity to
cure the same, itself perform, or have any third party perform, any such
obligations, and Guarantor shall be responsible for all costs incurred by Owner
in so performing or so having performed, such obligations.
3
<PAGE>
3. Notwithstanding anything which may be to the contrary in this
Guarantee, the obligations guaranteed by Guarantor and Guarantor's liability
under this Guarantee shall not be greater than those of Contractor under the
Contract.
4. The Guarantor hereby represents and warrants to Owner as follows
(all as of the date hereof):
(a) The Guarantor is a corporation duly organized and existing under
the laws of New York, and has the power and authority to carry on its
business as now conducted, to own or hold under lease the properties it
holds itself out as owning or leasing and to enter into and perform its
obligations under this Guarantee.
(b) The Guarantor has power to issue this Guarantee, and this
Guarantee has been duly authorized by all necessary action on the part of
Guarantor, does not require any approval or other action of the
shareholders of Guarantor or approval or consent of any trustee or holders
of any indebtedness or obligations of Guarantor, except for such as have
been obtained, and has been duly executed and delivered by Guarantor, and
the execution and delivery and performance thereof, contravenes any law,
judgment, governmental rule, regulation or order applicable to or binding
on Guarantor or contravenes or results in any breach of or constitutes any
default under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, corporate
charter, bylaw or other agreement or instrument to which Guarantor is a
party or by which Guarantor or its properties may at present be bound or
affected.
(c) Neither the execution and delivery by Guarantor of this
Guarantee, nor the performance thereof by Guarantor contemplated hereby,
requires the consent or approval of, or the giving of notice (other than
ex-post-facto reporting requirements) to, or the registration with, or the
taking of any other action in respect of, any governmental authority or
agency of the United States of America or any State or subdivision
thereof.
(d) This Guarantee has been duly entered into and delivered by
Guarantor and constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with the terms
hereof, except as limited by bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the enforcement of creditors' rights
and remedies generally, subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(e) There are no pending, and to the best of Guarantor's knowledge
after due inquiry, no threatened, actions or proceedings against the
Guarantor before any court or administrative agency of the United States
or any State or subdivision thereof which, either individually or in the
aggregate would adversely affect the ability of Guarantor to perform its
obligations under this Guarantee, taking into consideration reserves
4
<PAGE>
which have been allocated and the probability of unfavorable judgments in
any such actions or proceedings.
5. THIS GUARANTEE AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND IN ALL RESPECTS CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6. Each of the parties hereto submits to the jurisdiction of the
courts of the State of New York and the courts of the United States of America
located in the State of New York over any suit, action or proceeding with
respect to this Guarantee or the transactions contemplated hereby. Any suit,
action of proceeding with respect to this Guarantee or the transactions
contemplated hereby may be brought only in the Supreme Court of the State of New
York or the United States District Court of the United States of America, in
each case located in the County of New York, or Southern District of New York,
respectively, and which shall be accepted as the proper legal venue for the
settlement of any controversy or dispute arising in connection with it. Each of
the parties hereto waives any objection that it may have to the venue of such
suit, action or proceeding in any such court or that such suit, action or
proceeding in such court was brought in an inconvenient court and agrees not to
plead or claim the same.
7. Owner hereto irrevocably appoints CT Corporation, at 1633
Broadway, New York, New York 10019, as its authorized agent in the State of New
York upon which process may be served, and Guarantor hereto irrevocably appoints
Prentice Hall Corporation System Inc., 80 State Street, Albany, New York
12207-2543 as its authorized agent in the State of New York upon which process
may be served, in any suit, action or proceeding with respect to this Guarantee
or the transactions contemplated hereby, and agrees that service of process upon
such agent, and written notice of said service to such party by the person
serving the same to the address stipulated herein for the sending of notices,
shall be deemed in every respect effective service of process upon such party in
any such suit or proceeding. Each party hereto further agrees to take any and
all action as may be necessary to maintain such designation and appointment of
such agent in full force and effect so long as this Guarantee is in effect.
8. Notices to Guarantor which are required under the terms of this
Guarantee shall be sent by certified mail, return receipt requested, postage
prepaid at Guarantor's address first above written and to the attention of
Secretary, Foster Wheeler Corporation. Notice shall be considered given and
received on the latest original delivery or attempted delivery date as indicted
in the postage receipt.
9. This Guarantee shall bind and inure to the benefit of the parties
of this Guarantee, their successors and permitted assigns.
10. This Guarantee shall not be assigned by Guarantor without the
prior written consent of Owner and the Financing Parties. Owner may without
consent of Guarantor assign or collaterally assign its interest and obligations
hereunder to the Financing Parties for security
5
<PAGE>
purposes. The Guarantor hereby expressly authorizes the Financing Parties to
exercise the rights of Owner under this Guarantee following realization of their
security interest in this Guarantee.
6
<PAGE>
The foregoing rights and obligations are in addition to those set forth in
Section 9 above.
11. This Guarantee may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and shall be binding upon the successors and
assigns of Guarantor and shall inure to the benefit of, and shall be enforceable
by, Owner to the fullest extent permitted by applicable laws.
12. No failure on the part of Owner to exercise, no delay in
exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver thereof, nor will any single or partial
exercise of any right or remedy hereunder preclude any other further exercise of
any other right or remedy.
13. All representations and warranties contained herein or made in
writing by Guarantor in connection herewith shall survive the execution and
delivery of this Guarantee regardless of any investigation made by Owner or any
other person.
14. To the fullest extent permitted by applicable law, any provision
of this Guarantee which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof or of any provision in the Contract, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. The Guarantor agrees to pay to Owner any and all reasonable
costs and expenses (including reasonable legal fees and expenses) incurred by
Owner in enforcing this Guarantee.
IN WITNESS WHEREOF, the Parties to this Guarantee have caused this
Guarantee to be executed by their duly authorized representatives the day and
year first above written.
PORT ARTHUR COKER FOSTER WHEELER CORPORATION
COMPANY L. P.
By: SABINE RIVER HOLDING
CORP., General Partner By:
--------------------------
Name:
Title:
By:
----------------------
Name:
Title:
7
<PAGE>
EXHIBIT C
FORM OF LETTER OF CREDIT
<PAGE>
EXHIBIT C
FORM OF LETTER OF CREDIT
ISSUING BANK NAME
ADDRESS
IRREVOCABLE STANDBY LETTER OF CREDIT DATE:
Beneficiary: Customer's Name
Address
Applicant: Foster Wheeler USA Corporation
Perryville Corporate Park
Clinton, New Jersey 08809-4000
We hereby issue in your favor our irrevocable letter of credit for the account
of Foster Wheeler USA Corporation (hereinafter called the Seller) for an amount
or amounts not to exceed in the aggregate US Dollars (Amount) (Amount written
out) available by your drafts at sight presented to us in accordance with the
terms and conditions of this letter of credit prior to its expiration.
Your draft(s) must mention our letter of credit number as it appears above, and
must include the below mentioned documents.
Beneficiary's statement, purportedly signed by an officer of the company,
certifying at least one of the following:
1. a. that Seller has defaulted in the performance of the
following obligations as set forth under its Contract,
No. ______ (the "Contract") with (Beneficiary) dated
___________.
(Beneficiary must list the defaulted obligations)
b. that (Beneficiary) has notified Seller in writing of
such default or that the notice provisions of Section
14.1 of the Contract do not require notice of such
default; and
c. that Seller has failed to cure such default in
accordance with the notice and cure provisions of
Section 14.1 of the Contract;
2. Final Completion (as defined in the Contract) has not occurred
on or before the date that is thirty (30) days prior to the
expiration date of this letter of credit and Seller has not
caused this letter of credit to be extended or substituted on
the same terms as this letter of credit;
3. the rating of (Issuing Bank's Name) outstanding unsecured
indebtedness has fallen below a rating of A, as determined by
Standard & Poor's Ratings Group or a rating of A2, as
determined by Moody's Investors Service, Inc.; or
<PAGE>
4. (i) Final Completion has occurred despite Seller's failure to
complete Punch List (as defined in the Contract) items, (ii)
Seller has subsequently failed to complete such Punch List
items in accordance with the Contract and (iii) the amount
being drawn hereunder is equal to or less than the amount
required to complete such Punch List items.
Your drafts must also include the original of this letter of credit.
This letter of credit will expire at our office on the date which is one (1)
year from the date of issue or upon receipt of a signed statement from the
Beneficiary agreeing to the termination of this letter of credit, whichever is
earlier. It is a condition of this letter of credit that it shall be deemed
automatically extended, without amendment, for one year from the present or any
future expiration date hereof, unless, at least sixty (60) days before any such
expiration date, we shall send notice to you and Foster Wheeler USA Corporation
that we elect not to renew this credit for such additional period. This letter
of credit shall be returned to us upon its expiration.
This letter of credit will be considered automatically as null and void if no
claim is received by us prior to such expiration.
This letter of credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication Number 500.
The Seller acknowledges and agrees that this letter of credit may be assigned by
the Beneficiary to the Financing Parties (as such term is defined in the
Contract) and that upon such assignment, the Financing Parties may exercise all
the rights of the Beneficiary under this letter of credit.
Very truly yours,
ISSUING BANK
_________________________________
AUTHORIZED SIGNATURE(S)
<PAGE>
EXHIBIT D
FORM OF CONSTRUCTION REPORT
A Form of Construction Report is presented on the pages that follow.
<PAGE>
HOUP [LOGO] FW
Safety
Quality
Schedule [LOGO] CLARK
Cost
- --------------------------------------------------------------------------------
Heavy Oil Upgrade Project
CLARK REFINING AND MARKETING, INC
Port Arthur Refinery
Contract No. 13-020-4718-00
Construction Report
Week Ending XXX XX, XXXX
Issued By: _____________________________
Steve Kokosa- Construction Manager
DISTRIBUTION:
FW Houston FW Clinton: Clark- Houston: Clark- Site FW-Site
- ---------- ----------- --------------- ----------- -------
M. Autrey R. Burcin/Relyea K. Isom R. Howe E. Crogan
M. El-Khaskab B. Kutcher S. Kokosa
R. Klick M. Matlosz/Miele B. Miller
P. Mannion P. Baylot T. Miller
Myers G. Segelke
J. Papon M. Barnette
D. Reed K. Abbey
T. Roder Doc Control-Orig
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
1.0 Highlights of Major Events Worked/Accomplished
>
>
>
>
>
>
>
>
2.0 Highlights of Work Planned
>
>
>
>
>
>
>
>
3.0 Site Conditions
- --------------------------------------------------------------------------------
Weather Site
----------------------- ----------
Day Date Temp Conditions Conditions
- --------------------------------------------------------------------------------
Monday
- --------------------------------------------------------------------------------
Tuesday
- --------------------------------------------------------------------------------
Wednesday
- --------------------------------------------------------------------------------
Thursday
- --------------------------------------------------------------------------------
Friday
- --------------------------------------------------------------------------------
Saturday
- --------------------------------------------------------------------------------
Sunday
- --------------------------------------------------------------------------------
3.0 Progress/Manpower (See Charts and Graphs on following pages)
- --------------------------------------------------------------------------------
Overall This Week Cumulative Comments
- --------------------------------------------------------------------------------
Plan From FW Project Schedule
- --------------------------------------------------------------------------------
Actual Based on CIR Earned Value
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
4.0 Safety
- --------------------------------------------------------------------------------
Job National
YTD Job Inception Average
Month Year ORIR Inception ORIR ORIR
- --------------------------------------------------------------------------------
Lost Time Accident
- --------------------------------------------------------------------------------
Recorded Injury
- --------------------------------------------------------------------------------
Fist Aid Case
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
5.0 Quality
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
6.0 Engineering
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
7.0 Material/Procurement
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
8.0 Subcontractor Progress--
- --------------------------------------------------------------------------------
Overall This Week Cumulative Comments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Progress
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
8.0 Subcontractor Progress- Continued
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
Construction Management Team
Clark Refining and Marketing
Port Arthur, TX
- --------------------------------------------------------------------------------
9.0 Areas of Concern/Needs List
- --------------------------------------------------------------------------------
Weekly Construction Report W/E xx/xx/xx
<PAGE>
EXHIBIT E
FORM OF FINAL CONTRACTOR LIEN WAIVER AND RELEASE
<PAGE>
Exhibit E
CONTRACTOR FINAL AFFIDAVIT AND LIEN WAIVER
Contract No. __________________________
KNOW ALL MEN BY THESE PRESENTS
THAT Foster Wheeler USA Corporation as Principal (hereinafter referred to as
"CONTRACTOR") with offices located at :Perryville Corporate Park, Clinton, New
Jersey 08809-4000 in accordance with the terms and conditions of Contract No.
___________________ with Port Arthur Coker Company L.P., (hereinafter referred
to as "Owner") dated _______________, _______, for work to be performed by
Contractor, as part of or related to the Coker Complex, comprised of the Delayed
Coking Unit, the Hydrocracking Unit, the Sulfur Recovery Unit, the Amine Unit,
the Sour Water Unit, and all other equipment and installations related thereto
to be located primarily in Jefferson County, Texas (such Coker Complex, Units,
equipment and installations related thereto hereinafter referred to as "Coker
Project"), as described in the Contract and all amendments thereto ( such
Contract and all amendments thereto hereinafter collectively referred to as
"Contract") and in consideration of:
___________________________________ dollars ($__________.____),
representing final payment under said Contract, hereby releases, forever
discharges, and agrees to hold harmless and indemnify Port Arthur Coker Company
L.P. ( hereinafter referred to as "Owner"), Owner's successors and assigns, the
Coker Project, and the Coker Project site which is leased by Owner from Clark
Refining & Marketing. Inc. (hereinafter referred to as "Clark R&M") and which
site is located at Clark R & M's Port Arthur, Jefferson County, Texas refinery
and any and all improvements, materials and equipment placed, erected or
installed thereon (such site hereinafter referred to as "Owner's Site") from any
and all liens, removal rights, debts, claims, charges, demands, encumbrances,
security interests, mechanic's liens, supplier's, labor or materialmen's liens
(constitutional, statutory and common law), obligations and causes of action in
the nature of lien claims or removal rights which Contractor has, might have or
could have against Owner, Owner's successors and assigns, and the Owner's Site
by reason of or otherwise arising out of or in connection with said Contract.
Contractor represents, certifies and warrants that all costs, charges, expenses.
payrolls, bills for materials and equipment and other indebtedness connected
with the Work for Owner and Owner's successors and assigns might be deemed
responsible or Owner's Site or other property might be encumbered, and claims
incurred by Contractor or on its behalf, or against said Contractor, in the
nature of lien claims or removal rights arising out of work, labor, or services
performed or material or equipment supplied, or because of the performance of
the Contractor, have been paid or otherwise satisfied, from the proceeds of the
payments received from Owner, and that there are no expected or known claims,
liens, security interests or encumbrances in the nature of mechanic's or
materialmen's liens or claims arising out of or in connection with the
performance by Contractor of the work to be performed by Contractor under said
Contract, except for:
_____________________________________________________________________________
(Note, if none, write none in space provided; any claim to which exception is
taken, must be described and the specific amount claimed must be set forth) and
that this Final Affidavit and Lien Waiver is made for the purpose of inducing
payment under the said Contract.
Contractor, further represents, certifies and warrants that each of its
sub-contractors and sub-suppliers has
<PAGE>
made full payment of all costs, charges, expenses, bills and claims incurred by
them or on their behalf in the nature of lien claims arising out of work, labor
or services performed or material or equipment supplied or because of the
performance of the Contractor or its sub-contractors and sub-suppliers under
said Contract.
The foregoing shall not relieve the Contractor of its obligations under the
provisions of said Contract as amended, or applicable law which by their nature
survive completion of the work or services including, without limitation,
warranties, guarantees and indemnities, all as set forth in said Contract.
IN WITNESS WHEREOF the undersigned has duly executed this Final Affidavit and
Lien Waiver and this _______________________ day of ________, ___________.
Principal:___________________
Contractor Name
By:__________________________
Authorized Signature
_____________________________
Name and Title
STATE OF ___________________
COUNTY OF __________________
____________________________________________________ being duly sworn deposes
and says that he/she is the ___________________________________ of the
Contractor named above, that he/she is duly authorized to execute the foregoing
Lien Waiver and to make this Final Affidavit, and that the representations,
certifications, warranties and statements made in the foregoing Lien Waiver and
in this Final Affidavit, are true to his/her own knowledge.
_____________________________
Signature
Subscribed and sworn to before me this _________ day of ________,
___________.
_____________________________
Notary Public
<PAGE>
EXHIBIT F
FORM OF FINAL SUBCONTRACTOR LIEN WAIVER AND
RELEASE
<PAGE>
Exhibit F
SUBCONTRACTOR FINAL AFFIDAVIT, LIEN WAIVER AND GENERAL RELEASE
Subcontract No. _____________________: Purchase Order No.________________ KNOW
ALL MEN BY THESE PRESENTS
THAT ______________________________ as Principal (hereinafter referred to as
Subcontractor), located at: ADDRESS: _________________________________________
______________________________________________________________________________
In accordance with the terms and conditions of Subcontract No.
_____________________ with Foster Wheeler USA Corporation dated ______________,
_______, and Purchase Order No.____________________ with Foster Wheeler USA
Corporation dated ________________, ________, for work to be performed by
Subcontractor, as part of or related to the Coker Complex. comprised of the
Delayed Coking Unit, the Hydrocracking Unit, the Sulfur Recovery Unit, the Amine
Unit, the Sour Water Unit, and all other equipment and installations related
thereto to be located primarily in Jefferson County, Texas (such Coker Complex,
Units, equipment and installations related thereto hereinafter referred to as
"Coker Project"), as described in the Subcontract and all amendments thereto
(such Subcontract, Purchase Order, and all amendments thereto hereinafter
collectively referred to as "Subcontract") and in consideration of:
___________________________________ dollars ($______.__)
representing final payment under said Subcontract, hereby releases, forever
discharges, and agrees to hold harmless and indemnify Port Arthur Coker Company
L.P. ( hereinafter referred to as "Owner"), Owner's successors and assigns, the
Coker Project, and the Coker Project site which is leased by Owner from Clark
Refining & Marketing, Inc. (hereinafter referred to as "Clark R&M") and which
site is located at Clark R & M's Port Arthur, Jefferson County, Texas refinery
and any and all improvements, materials and equipment placed, erected or
installed thereon (such site hereinafter referred to as "Owner's Site") from any
and all liens, removal rights, debts, claims, charges, demands, encumbrances,
security interests, mechanic's liens, supplier's, labor or materialmen's liens
(constitutional, statutory and common law), obligations and causes of action of
every nature which Subcontractor has, might have or could have against Owner,
Owner's successors and assigns, Foster Wheeler USA Corporation and its
affiliates, and the Owner's Site by reason of or otherwise arising out of or in
connection with said Subcontract.
Subcontractor represents, certifies and warrants that all costs, charges,
expenses, payrolls, bills for materials and equipment and other indebtedness
connected with the Work for which Owner and Owner's successors and assigns might
be deemed responsible or Owner's Site or the property might be encumbered, and
claims incurred by Subcontractor or on its behalf, or against said
Subcontractor, of even nature and kind whatsoever arising out of Work, labor,
or services performed or material or equipment supplied, or because of the
performance of the Subcontractor, have been paid or otherwise satisfied, from
the proceeds of the payments received from Foster Wheeler USA Corporation, and
that there are no expected or known claims, liens, security interests or
encumbrances in the nature of mechanic's or materialmen's liens or claims
arising out of or in connection with the performance by Subcontractor of the
Work to be performed by Subcontractor under said Subcontract, except for:
<PAGE>
_______________________________________________________________________________
(Note, if none, write none in space provided: any claim to which exception is
taken, must be described and the specific amount claimed must be set forth.) and
that this Final Affidavit, Lien Waiver and General Release is made for the
purpose of inducing payment under the said Subcontract.
Subcontractor, further represents, certifies and warrants that each of its
sub-subcontractors and sub-suppliers has made full payment of all costs,
charges, expenses, bills and claims incurred by them or on their behalf of even
nature and kind whatsoever arising out of Work, labor or services performed or
material or equipment supplied or because of the performance of the
Subcontractor or its sub-subcontractors and sub-suppliers under said
Subcontract.
AS ADDITIONAL CONSIDERATION FOR THE FINAL PAYMENT, THE SUBCONTRACTOR AGREE
TO INDEMNIFY AND HOLD HARMLESS OWNER, CLARK R & M FOSTER WHEELER USA
CORPORATION AND ITS AFFILIATES, AND OWNER'S SITE, FROM AND AGAINST ALL COSTS,
LOSSES, DAMAGES, CLAIMS, CAUSES OF ACTION, JUDGMENTS AND EXPENSES, INCLUDING
ATTORNEY'S FEES ARISING OUT OF OR IN CONNECTION WITH CLAIMS AGAINST OWNER,
CLARK R&M, FOSTER WHEELER USA CORPORATION AND ITS AFFILIATES, AND OWNER'S
SITE WHICH CLAIMS ARISE OUT OF THE PERFORMANCE OF THE WORK UNDER THE
SUBCONTRACT AND WHICH MAY BE ASSERTED BY THE SUBCONTRACTOR OR ANY OF ITS
SUB-SUBCONTRACTORS OR SUB-SUPPLIERS OF ANY TIER OR ANY OF THEIR
REPRESENTATIVES, OFFICERS, OR EMPLOYEES EXCEPT FOR THOSE CLAIMS LISTED ABOVE.
The foregoing shall not relieve the Subcontractor of its obligations under the
provisions of said Subcontract as amended, or applicable law, which by their
nature survive completion of the Work or services including, without limitation,
warranties, guarantees and indemnities, all as set forth in said Subcontract.
IN WITNESS WHEREOF the undersigned has duly executed this Final Affidavit, Lien
Waiver and General Release this ________________________ day of
__________________________, ________.
Principal:________________________
Subcontractor Name
By:_______________________________
Authorized Signature
__________________________________
Name and Title
STATE OF ___________________
COUNTY OF __________________
____________________________________________________ being duly sworn deposes
and says that he/she is the ___________________________________ of the
Contractor named above, that he/she is duly authorized to execute the foregoing
Lien Waiver and to make this Final Affidavit, and that the representations,
certifications, warranties and statements made in the foregoing Lien Waiver and
in this Final Affidavit, are true to his/her own knowledge.
<PAGE>
_____________________________
Signature
Subscribed and sworn to before me this _________ day of ________,
___________.
_____________________________
Notary Public
<PAGE>
EXHIBIT G
FORM OF CONTRACTOR PARTIAL LIEN WAIVER AND
RELEASE
<PAGE>
Exhibit G
CONTRACTOR PARTIAL AFFIDAVIT AND LIEN WAIVER
Contract No. __________________________
KNOW ALL MEN BY THESE PRESENTS
THAT Foster Wheeler USA Corporation as Principal (hereinafter referred to as
"CONTRACTOR"), with offices located at :Perryvillle Corporate Park, Clinton, New
Jersey 08809-4000, in accordance with the terms and conditions of Contract No.
_________________ with Port Arthur Coker Company L.P. (hereinafter referred to
as "Owner") dated _______________, _______, for work to performed by Contractor,
as part of or related to the Coker Complex, comprised of the Delayed Coking
Unit, the Hydrocracking Unit, the Sulfur Recovery Unit, the Amine Unit, the Sour
Water Unit, and all other equipment and installations related thereto to be
located primarily in Jefferson County, Texas (such Coker Complex, Units,
equipment and installations related thereto hereinafter referred to as "Coker
Project"), as described in the Contract and all amendments thereto ( such
Contract and all amendments thereto hereinafter collectively referred to as
"Contract" and in consideration of:
_____________________________________ dollars ($_______.___)
representing partial payment under said Contract, hereby releases, forever
discharges, and agrees to hold harmless and indemnify Port Arthur Coker Company
L.P. ( hereinafter referred to as "Owner"), Owner's successors and assigns, the
Coker Project, and the Coker Project site which is leased by Owner from Clark
Refining & Marketing, Inc. (hereinafter referred to as "Clark R&M") and which
site is located at Clark R & M's Port Arthur, Jefferson County, Texas refinery
and any and all improvements, materials and equipment placed, erected or
installed thereon (such site hereinafter referred to as "Owner's Site") from any
and all liens, removal rights, debts, claims, charges, demands, encumbrances,
security interests, mechanic's liens, supplier's, labor or materialmen's liens
(constitutional, statutory or common law), obligations and causes of action in
the nature of lien claims or removal rights which Contractor has, might have or
could have against Owner, Owner's successors and assigns, and the Owner's Site
by reason of or otherwise arising out of or in connection with the Contract.
Contractor represents, certifies and warrants that all costs, charges, expenses,
payrolls, bills for materials and equipment and other indebtedness connected
with the work for which Owner and Owner's successors and assigns might be deemed
responsible or Owner's Site or other property might be encumbered, and claims
incurred by Contractor or on its behalf, or against said Contractor, in the
nature of lien claims or removal rights arising out of work, labor, or services
performed or material or equipment supplied, or because of the performance of
the Contractor, have been paid or otherwise satisfied, from the proceeds of the
payments received from Owner, and that there are no expected or
known claims, liens, security interests or encumbrances in the nature of
mechanic's or materialmen's liens or claims arising out of or in connection with
the performance by Contractor of the work to be performed by Contractor under
said Contract to the date of certification, except for:
________________________________________________________________________________
(Note, if none, write none in space provided; any claim to which exception is
taken, must be described and the specific amount claimed must be set forth) and
that this Partial Affidavit and Lien Waiver is made for the purpose of inducing
payment under the said Contract.
Contractor, further represents, certifies and warrants that each of its
sub-contractors and sub-suppliers has
<PAGE>
made full payment of all costs, charges, expenses, bills and claims incurred by
them or on their behalf in the nature of lien claims arising out of work, labor
or services performed or material or equipment supplied or because of the
performance of the Contractor or its sub-contractors and sub-suppliers under
said Contract.
The foregoing shall not relieve the Contractor of its obligations under the
provisions of said Contract as amended or applicable law, which by their nature
survive completion of the work or services including, without limitation,
warranties, guarantees and indemnities, all as set forth in said Contract.
IN WITNESS WHEREOF the undersigned has duly executed this Partial Affidavit and
Lien Waiver and this _________________________ day of
___________________________, _________ (the "date of certification").
Principal:_______________________________
Contractor Name
By:______________________________________
Authorized Signature
_________________________________________
Name and Title
STATE OF ___________________
COUNTY OF __________________
__________________________________________________ being duly sworn deposes and
says that he/she is the ___________________________________ of the Contractor
named above, that he/she is duly authorized to execute the foregoing Partial
Lien Waiver and to make this Affidavit, and that the representations,
certifications, warranties and statements made in the foregoing Partial Lien
Waiver and in this Affidavit, are true to his/her own knowledge.
_____________________________
Signature
Subscribed and sworn to before me this _________ day of ________, ___________.
_____________________________
Notary Public
<PAGE>
EXHIBIT H
FORM OF SUBCONTRACTOR PARTIAL LIEN WAIVER AND
RELEASE
<PAGE>
Exhibit H
SUBCONTRACTOR PARTIAL AFFIDAVIT, LIEN WAIVER AND GENERAL RELEASE
Subcontract No. _________________________; Purchase Order No.___________________
KNOW ALL MEN BY THESE PRESENTS
THAT _________________________________ as Principal (hereinafter referred to as
Subcontractor), located at: ADDRESS: ___________________________________________
____________________________________ ___________________________________________
In accordance with the terms and conditions of Subcontract No.
____________________ with Foster Wheeler USA Corporation dated ______________,
_______, and Purchase Order No.___________________ with Foster Wheeler USA
Corporation dated ______________, _______, for work to performed by
Subcontractor, as part of or related to the Coker Complex, comprised of the
Delayed Coking Unit, the Hydrocracking Unit, the Sulfur Recovery Unit, the Amine
Unit, the Sour Water Unit, and all other equipment and installations related
thereto to be located primarily in Jefferson County, Texas (such Coker Complex,
Units, equipment and installations related thereto hereinafter referred to as
"Coker Project"), as described in the Subcontract and all amendments thereto
(such Subcontract, Purchase Order, and all amendments thereto hereinafter
collectively referred to as "Subcontract") and in consideration of:
_____________________________________ dollars ($______.___),
representing partial payment under said Subcontract, hereby releases, forever
discharges, and agrees to hold harmless and indemnify Port Arthur Coker Company
L.P. ( hereinafter referred to as "Owner"), Owner's successors and assigns,
Foster Wheeler USA Corporation and its affiliates, the Coker Project, and the
Coker Project site which is leased by Owner from Clark Refining & Marketing,
Inc. (hereinafter referred to as "Clark R&M") and which site is located at Clark
R & M's Port Arthur, Jefferson County, Texas refinery and any and all
improvements, materials and equipment placed, erected or installed thereon
(such site hereinafter referred to as "Owner's Site") from any and all liens,
removal rights, debts, claims, charges, demands, encumbrances, security
interests, mechanic's liens, supplier's, labor or materialmen's liens
(constitutional, statutory or common law), obligations and causes of action of
even nature which Subcontractor has, might have or could have against Owner,
Owner's successors and assigns, Foster Wheeler USA Corporation and its
affiliates, and/or the Owner's Site by reason of or otherwise arising out of or
in connection with the performance of Subcontractor under said Subcontract.
Subcontractor represents, certifies and warrants that all costs, charges,
expenses, payrolls, bills for materials and equipment and other indebtedness
connected with the work for which Owner and Owner's successors and assigns might
be deemed responsible or Owner's Site or other property might be encumbered, and
claims incurred by Subcontractor or on its behalf, or against said
Subcontractor, of every nature and kind whatsoever arising out of work, labor,
or services performed or material or equipment supplied, or because of the
performance of the Subcontractor, have been paid or otherwise satisfied, from
the proceeds of the payments received from Foster Wheeler USA Corporation, and
that there are no expected or known claims, liens, security interests or
encumbrances in the nature of mechanic's or materialmen's liens or claims
arising out of or in connection with the performance by Subcontractor of the
Work to be performed by Subcontractor under said Subcontract, except for:
_______________________________________________________________________________
(Note, if none, write none in space provided: any claim to which exception is
taken, must be described and the specific amount claimed must be set forth.) and
that this Partial Affidavit, Lien Waiver and General
<PAGE>
Release is made for the purpose of inducing payment under said Subcontract.
Subcontractor, further represents. certifies and warrants that each of its
sub-subcontractors and sub-suppliers has made full payment of all costs,
charges, expenses, bills and claims incurred by them or on their behalf of every
nature and kind whatsoever arising out of work, labor or services performed or
material or equipment supplied or because of the performance of the
Subcontractor or its sub-subcontractors and sub-suppliers under said
Subcontract.
AS ADDITIONAL CONSIDERATION FOR THE PARTIAL PAYMENT, THE SUBCONTRACTOR AGREES TO
INDEMNIFY AND HOLD HARMLESS OWNER, CLARK R & M, FOSTER WHEELER USA CORPORATION
AND ITS AFFILIATES, AND OWNER'S SITE, FROM AND AGAINST ALL COSTS, LOSSES,
DAMAGES, CLAIMS, CAUSES OF ACTION, JUDGMENTS AND EXPENSES, INCLUDING ATTORNEY'S
FEES ARISING OUT OF OR IN CONNECTION WITH CLAIMS AGAINST OWNER, CLARK R & M.
FOSTER WHEELER USA CORPORATION AND ITS AFFILIATES, AND OWNER'S SITE WHICH CLAIMS
ARISE OUT OF THE PERFORMANCE OF THE WORK UNDER THE SUBCONTRACT AND WHICH MAY BE
ASSERTED BY THE SUBCONTRACTOR OR ANY OF ITS SUB-SUBCONTRACTORS OR SUB-SUPPLIERS
OF ANY TIER OR ANY OF THEIR REPRESENTATIVES, OFFICERS, OR EMPLOYEES EXCEPT FOR
THOSE CLAIMS LISTED ABOVE.
The foregoing shall not relieve the Subcontractor of its obligations under the
provisions of said Subcontract as amended, or applicable law, which by their
nature survive completion of the Work or services including, without limitation,
warranties, guarantees and indemnities, all as set forth in said Subcontract.
IN WITNESS WHEREOF the undersigned has duly executed this Partial Affidavit,
Lien Waiver and General Release this _______________________ day of
_________________________, _________( the "date of certification").
Principal:_______________________________
Subcontractor Name
By:______________________________________
Authorized Signature
_________________________________________
Name and Title
STATE OF ___________________
COUNTY OF __________________
__________________________________________________ being duly sworn deposes and
says that he/she is the ____________________________________ of the
Subcontractor named above, that he/she is duly authorized to execute the
foregoing Partial Lien Waiver and General Release and to make this Affidavit,
and that the representations, certifications, warranties and statements made in
the foregoing Partial Lien Waiver and General Release and in this Affidavit, are
true to his/her own knowledge.
_____________________________
Signature
<PAGE>
Subscribed and sworn to before me this _________ day of ________,
___________.
_____________________________
Notary Public
<PAGE>
EXHIBIT I
FORM OF CHANGE ORDER
The Form of Change Order is attached, form 142-100.
<PAGE>
CHANGE IN ORDER VALUE REQUEST
FOSTER WHEELER USA CORPORATION [LOGO] NO.__________ DATE __________
PROCUREMENT DEPARTMENT
CLIENT_______________________
FW CONTRACT__________________
- --------------------------------------------------------------------------------
To: ___________________________ SUBJECT: VENDOR EXTRAS/DEDUCTS
(Procurement Coordinator)
VENDOR _________________________
FROM:__________________________ P.0. NO. _______________________
(Buyer)
TAG. NO. _______________________
DATE SUBMITTED ________________ MATERIAL _______________________
_______________________
THE ATTACHED DOCUMENTS/CORRESPONDENCE SUBSTANTIATE A PROPOSED CHANGE IN ORDER
VALUE:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
DESCRIPTION OF CHANGE(S) PRICE CHANGE(S)
_________________________________________________ __________________________
_________________________________________________ __________________________
_________________________________________________ __________________________
_________________________________________________ __________________________
_________________________________________________ __________________________
TOTAL __________________________
CHANGE INITIATED BY: CHANGE WILL ALSO AFFECT:
|_| VENDOR |_| VENDOR'S SHIPPING DATE
|_| CLIENT ______________________
|_| PRICE ENGINEERING |_| INSTALLED COST
|_| PROJECT ENGINEERING |_| SCHEDULE
|_| DESIGN ENGINEERING |_| ENGRG. MAN HOURS
PLEASE CIRCULATE FOR REVIEW/APPROVAL PROMPTLY AND RETURN WITH FINAL DISPOSITION
MARKED BELOW.
|_| NOT APPROVED BY _________________ DATE ___________
|_| APPROVED
PRICE ENGR. BY _______________ DATE ___________ COMMENTS ______________
SPEC. ENGR. _______________ ___________ ______________
PROJ. ENGR. _______________ ___________ ______________
PROJ. CONTROL _______________ ___________ ______________
PROJ. MANAGER _______________ ___________ ______________
CLIENT _______________ ___________ ______________
PRICE CHANGE(S) VERIFIED TOTAL CHANGE IN PRICE APPROVED $___
BY ESTIMATING |_| YES
|_| NOT REQ'D. DATE RETURNED TO BUYER FOR ACTION _
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] [LOGO]
CONTRACT CHANGE FORM
- --------------------------------------------------------------------------------
CHANGE NO. CONTRACT NO. UNIT CLIENT DATE
- --------------------------------------------------------------------------------
46xx-001 13-004610 46xx CLARK Refining & Marketing
- --------------------------------------------------------------------------------
I. DESCRIPTION OF CHANGE
- --------------------------------------------------------------------------------
II. BASIS OF CHANGE:
|_| CLIENT SCOPE |_| FW SCOPE |_| NON-CONFORMANCE |_| OTHER
- --------------------------------------------------------------------------------
III. SUMMARY OF COST CHANGE:
CODE DESCRIPTION MANHOURS AMOUNT
1000 Direct Materials
2000 Subcontracts - Mtl. & Labor
3000 Subcontracts - Labor Only
40OO Direct Labor
5000 Indirect Materials
6000 Indirect Labor
7000 Payroll Burden
8000 Home Office
9000 Miscellaneous
-------- ------
TOTAL COST(1000-9000) $ 0
Escalation
Contingency
Fee for GOAH & P
Total Price of Charge $ 0
======
- --------------------------------------------------------------------------------
IV. SUMMARY OF SCHEDULE IMPACT
- --------------------------------------------------------------------------------
V. COST OF PREPARING CHANGE: $
(Incl'd in 8000) -----------------
- --------------------------------------------------------------------------------
VI. APPROVALS:
FWUSA CLIENT
----------------- ------------------
M. A. Autrey Ken Isom
Project Director Technical Director
----------------- ------------------
Date Date
- --------------------------------------------------------------------------------
<PAGE>
Exhibit J
FORM OF SUBCONTRACTOR ASSIGNMENT AND CONSENT AGREEMENT
CONSENT AND AGREEMENT, dated as of __, 1999, by the undersigned (the
"Counterparty").
BACKGROUND
(a) The Counterparty has entered into the contract, sub-contract or
license agreement attached hereto (the "Contract") with Foster Wheeler USA
Corporation (the "Contractor").
(b) The Contract was entered into in connection with the construction and
development by Contractor of a delayed coking facility and related equipment
construction or upgrade (the "Project").
(c) In connection with the development of the Project, it is intended that
the Contractor may assign the Contract to Port Arthur Coker Company L.P. (the
"Owner").
(d) In connection with the financing of the Project, it is intended that
the Owner assign its rights in the Contract, by way of security, and grant a
lien on and a security interest in, all of the Owner's right, title and interest
in the Contract, to |_|, as Collateral Trustee for the Secured Parties.
Now, therefore, the Counterparty hereby delivers this Consent and
Agreement to the Owner and the Collateral Trustee.
SECTION 1. CONSENTS TO ASSIGNMENTS
The Counterparty hereby:
(a) acknowledges that the Contract attached hereto may be assigned by the
Contractor to Owner as provided in the Contract for Engineering, Procurement and
Construction Services dated as of July __, 1999 between Owner and
Contractor ("EPC Contract"), and irrevocably consents to such assignment; and
(b) (i) acknowledges that Owner may assign its rights under the EPC
Contract to obtain an assignment of the Contract, by way of security, and grant
a lien on and a security interest in, all of the Owner's right, title and
interest in the Contract, to { ], as Collateral Trustee for the Secured Parties
to secure indebtedness incurred or guaranteed by Owner in connection with the
Project ("Project Debt") and (ii) irrevocably consents to such assignment by the
Owner and any and all subsequent assignments of the Contract by the Collateral
Trustee or any other Secured Party to any third party.
<PAGE>
2
SECTION 2. ATTORNMENT
(a) If an assignment pursuant to Section 1(a) occurs (i) the Counterparty
shall continue to perform, for the benefit of the person to whom or the entity
to which the Contract is assigned, its obligations under the Contract pursuant
to its terms as modified by this Consent and Agreement, without regard to any
default by the Contractor thereunder, and (ii) the Contractor shall remain
liable to the Counterparty for all its obligations and duties under the Contract
accrued through the effective time of such assignment.
(b) If an assignment by the Collateral Trustee or any other Secured Party
to a third party occurs pursuant to the Section 1(b)(ii), the Counterparty
agrees to enter into a consent and agreement with such third party, which
consent and agreement shall be in the form of this Consent and Agreement, except
that such consent and agreement (i) shall omit any terms and conditions that may
be inapplicable, but (ii) shall contain a provision to the effect that the
third-party transferee shall be liable, not personally, but solely to the extent
of its direct or indirect right, title and interest in and to the Project, to
perform the duties and obligations of the Contractor under the Contract as arise
in respect of the period commencing on the effective date of such assignment.
(c) The Counterparty hereby acknowledges and agrees that neither the
Owner, nor the Collateral Trustee or any other Secured Party shall have any
liability under, arising from, or in connection with, the Contract unless and
until it assumes all obligations of the Contractor under the Contract in
writing.
SECTION 3. BENEFICIARIES
This Consent and Agreement is executed by the Counterparty for the benefit
of the Owner, the Collateral Trustee and the other Secured Parties and each of
them is hereby expressly made a third-party beneficiary hereof, is entitled to
rely hereon and is entitled to directly exercise and enforce all rights and
remedies hereunder.
SECTION 4. MISCELLANEOUS
(a) This Consent and Agreement may not be amended or waived, except by an
instrument in writing signed by each of the parties hereto. This Consent and
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York. Delivery of an executed signature page of this Consent
and Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. This Consent and Agreement is separate and
subsequent to the Contract and shall supersede anything in the Contract to the
contrary, including without limitation any provision therein stating that the
Contract is the entire agreement of the parties thereto. This consent is
intended to be effective upon its execution and delivery by the Counterparty to
the Contractor and the Counterparty waives acceptance, notice of
<PAGE>
3
acceptance, notice of reliance and any other doctrine by which the effectiveness
of this consent would be voidable, void or otherwise limited.
(b) The Counterparty hereby irrevocably and unconditionally: (i) submits
for itself and its property in any legal action or proceeding relating to this
Consent and Agreement to the non-exclusive general jurisdiction of the courts of
the State of New York located in the City of New York and the Federal courts of
the U.S. for the Southern District of New York located in the City of New York;
and (ii) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same.
SECTION 5. DEFINITIONS
As used in this Consent and Agreement: (a) the term "Secured Parties"
shall mean all of the secured parties (including their respective successors and
permitted assigns) that may be identified a such in the documentation relating
to the financing of the Project; and (b) the term "Collateral Trustee" shall
mean [___________] (including its successors and permitted assigns) and any
other entity that may from time to time be appointed by the Secured Parties to
act as collateral trustee for their benefit.
CORPORATE NAME
OF COUNTERPARTY: _______________________________
By: _____________________________
Name:
Title:
<PAGE>
4
ACCEPTED AND ACKNOWLEDGED:
FOSTER WHEELER USA CORPORATION
By: _____________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINTE RIVER HOLDING CORP.,
General Partner
By: _____________________________
Name:
Title:
[COLLATERAL TRUSTEE]
By: _____________________________
Name:
Title:
<PAGE>
Exhibit K
FORM OF CONTRACTOR ASSIGNMENT AND CONSENT AGREEMENT
CONSENT AND AGREEMENT, dated as of ___________, 1999, among FOSTER
WHEELER USA CORPORATION, a Delaware corporation ("Contractor"),
______________________________ a ________, as Collateral Trustee for the benefit
of the Secured Parties (as hereinafter defined) (in such capacity, together with
its successors and assigns, the "Collateral Trustee"), and PORT ARTHUR COKER
COMPANY L.P., a Delaware limited partnership (the "Owner").
WHEREAS, the Owner is constructing and will own and operate a new
delayed Coker facility and certain related refinery equipment, located at the
Clark Refining & Marketing, Inc. refinery in Port Arthur, Texas (the "Coker
Complex") ___________;
WHEREAS, the Contractor and the Owner have entered into the Contract
for Engineering, Procurement and Construction Services dated as of ________,
1999 (as amended, supplemented or otherwise modified from time to time, the "EPC
Contract"), pursuant to which Contractor has agreed construct the Coker Complex,
all on the terms and conditions set forth in the EPC Contract;
WHEREAS, in order to finance the construction and operation of the
Coker Complex, the Owner has entered into financing arrangements (as the same
may be amended, supplemented or otherwise modified, or extended or refinanced,
from time to time, the "Financing Arrangements") with the banks and other
financial institutions from time to time parties thereto (together with their
respective successors and assigns, the "Financing Parties") ____________;
WHEREAS, the Financing Arrangements provide, among other things, for
the making of the loans and other extensions of credit to the Owner, the
proceeds of which are to be applied to finance the construction of the Coker
Complex;
WHEREAS, the loans, bonds and other obligations of Owner incurred in
connection with the Financing Arrangements will be secured by substantially all
of the assets of the Owner pursuant to a Common Security Agreement, dated as
of_________ __, 1999, entered into by the Owner in favor of the Collateral
Trustee, pursuant to which the Owner has assigned to the Collateral Trustee for
the benefit of the Secured Parties, as collateral security for the Senior Debt
Obligations, all of the Owner's right, title and interest in, to and under among
other things the EPC Contract;
WHEREAS, it is a condition to the obligations of the Financing
Parties under the Financing Arrangements that the Contractor execute and deliver
this Consent;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
2
SECTION 1. DEFINITIONS.
(a) Defined Terms. The following terms shall have the meanings indicated:
"Coker Complex" has the meaning specified in the recitals.
"Collateral Trustee" has the meaning specified in the caption of
this Consent.
"Common Security Agreement" means the Common Security Agreement,
dated as of __________, 1999, among the Owner, the Collateral Trustee and
the other parties named therein, as the same may be amended, supplemented
or otherwise modified from time to time.
"Consent" means this Consent and Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Contractor" has the meaning specified in the caption of this
Consent.
"Default Notice" has the meaning specified in Section 5(a).
"EPC Contract" has the meaning specified in the recitals to this
Consent.
"Event of Default" means any of the events listed in Section __ of
the Common Security Agreement.
"Financing Arrangements" has the meaning specified in the recitals
to this Consent.
"Financing Documents" means the Common Security Agreement and any
other agreement or instrument entered into by the Owner or any other
Person pursuant to the Financing Arrangements which secures, evidences or
governs payment or performance of any of the Senior Debt Obligations.
"Financing Parties" has the meaning specified in the recitals to
this Consent.
"Nominee" has the meaning specified in Section 5(b).
"Notice" has the meaning specified in Section 5(a).
"Owner" has the meaning specified in the caption of this Consent.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other legal entity of whatever nature.
<PAGE>
3
"Refinancing" means any financing transaction or debt offering
transaction, or series of such transactions, all or part of the proceeds
of which are used to repay the Senior Debt Obligations or otherwise are
used to provide financing for the Coker Complex.
"Replacement Owner" has the meaning specified in Section 5(c).
"Secured Parties" has the meaning specified in the Common Security
Agreement.
"Senior Debt Obligations" has the meaning specified in the Common
Security Agreement.
"Transferee" has the meaning specified in Section 5(b)(iii).
(b) Other Definitional Provisions.
(i) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Consent shall refer to this Consent as a whole
and not to any particular provision of this Consent, and section and subsection
references are to this Consent unless otherwise specified.
(ii) Each reference in this Consent to an agreement, instrument or
document shall be deemed to refer to such agreement, instrument or document as
the same may be amended, supplemented or otherwise modified from time to time.
(iii) Any term defined by reference to an agreement, instrument or
other document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.
(iv) Each reference in this Consent to a Person shall be deemed to
include such Person's successors and assigns.
SECTION 2. CONSENTS TO ASSIGNMENTS, ETC.
The Contractor hereby:
(a) acknowledges that the Secured Parties are entering into the Financing
Arrangements in reliance upon the performance by the Contractor of its
obligations under the EPC Contract and this Consent, and irrevocably consents to
the assignment of the EPC Contract by the Owner to the Collateral Trustee for
the benefit of the Secured Parties as collateral security for the Senior Debt
Obligations of all of Owner's right, title and interest in, to and under the EPC
Contract;
<PAGE>
4
(b) irrevocably consents to any subsequent assignments of the EPC Contract
by the Collateral Trustee pursuant to Section 5(b), upon and after receipt by
the Contractor of written notice from the Collateral Trustee that it desires to
exercise its rights and remedies as a secured party, or as trustee for the
benefit of the Secured Parties, in respect of the Senior Debt Obligations (but
without any right or obligation of the Contractor to know or confirm whether any
such subsequent assignment is permitted under the Financing Documents),
including the acquisition of all of the Owner's existing and future rights under
the EPC Contract by sale, foreclosure or otherwise, or the construction and/or
operation of the Coker Complex pending sale or foreclosure through a receiver or
otherwise, or the assignment of the EPC Contract to any Person who is a
Transferee; and the Contractor will, at the request of any such Transferee,
enter into a consent and agreement in connection therewith having terms the same
as the terms of this Consent, except such terms as may be inapplicable;
(c) irrevocably agrees that the Collateral Trustee and the other Secured
Parties shall not be subject to, except as set forth in and pursuant to Sections
5(b), 5(b)(i) and 5(b)(ii), any liability or obligation under the EPC Contract,
and acknowledges the right of the Collateral Trustee and the other Secured
Parties to cure defaults by the Owner under the EPC Contract pursuant to the
terms of this Consent (notwithstanding anything to the contrary contained in the
EPC Contract), without assuming or being responsible for any of the obligations
of the Owner thereunder;
(d) acknowledges the right of the Collateral Trustee, following the
occurrence of an Event of Default under the Common Security Agreement, to
exercise its rights thereunder as a secured creditor and collateral assignee of
the EPC Contract to make all demands, give all notices, take all actions and
exercise all rights of the Owner under the EPC Contract and to enforce such
rights against the Contractor, notwithstanding anything to the contrary
contained in the EPC Contract as to the party entitled to exercise and enforce
those rights (but without any right or obligation of the Contractor to know or
confirm whether any such subsequent assignment is permitted under the Financing
Documents);
(e) acknowledges and irrevocably agrees, notwithstanding anything to the
contrary contained in the EPC Contract, but subject to the provisions of this
Consent, that none of the following shall constitute in and of itself, as
between the Contractor and the Collateral Trustee or any other Secured Party, a
default or breach by Owner under the EPC Contract:
(i) the collateral assignment of the EPC Contract to the Collateral
Trustee for the benefit of the Secured Parties;
(ii) the sale or foreclosure of the Coker Complex or any other
enforcement by the Collateral Trustee or any other Secured Party of secured
creditor remedies;
(iii) the acquisition of the rights of the Owner under the EPC
Contract by the Collateral Trustee or any other Person as a result of sale or
foreclosure (or acceptance of an absolute assignment of the EPC Contract in lieu
of sale or foreclosure) or the exercise of other secured creditor remedies; or
<PAGE>
5
(iv) the assignment of the EPC Contract by the Collateral Trustee or
any other Secured Party or a Nominee to any other Person, following the
acquisition of the EPC Contract by the Collateral Trustee or any other Secured
Party or Nominee in the exercise of rights and remedies as a secured creditor
(or in lieu of the exercise of such rights and remedies); and
(f) irrevocably agrees at the request of the Owner, to enter into a
consent and agreement in connection with a Refinancing having terms the same as
this Consent, except such terms as may be inapplicable or other non-substantive
change.
SECTION 3. PAYMENT OF ASSIGNED SUMS
Until notified in writing by the Collateral Trustee that the Senior Debt
Obligations have been paid in full, the Contractor shall pay by wire transfer in
U.S. dollars of same day funds directly to the account designated in writing by
the Collateral Trustee or as otherwise instructed in writing by the Collateral
Trustee any and all amounts, if any, payable by the Contractor to the Owner
under the EPC Contract or as a result of a breach thereof. The place and
currency of such payment are of the essence of this Consent. All amounts paid to
the Collateral Trustee shall be accompanied by a notice specifying the amount of
such payment and the purpose for which such payment is being made. After the
Contractor has been notified in writing by the Collateral Trustee that the
Senior Debt Obligations have been paid in full, the Contractor shall pay such
amounts directly to Owner.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF CONTRACTOR
The Contractor hereby represents and warrants that:
(a) Organization. It is a corporation duly organized and existing under
the laws of Delaware and has the legal capacity to enter into and perform this
Consent.
(b) Government Authorizations. It has obtained all necessary
authorizations from the competent governmental authorities for the execution of
this Consent and the performance of its obligations hereunder.
(c) Corporate Authority. The execution and performance by Contractor of
this Consent has been duly authorized by all necessary corporate action. This
Consent has been duly executed by the Contractor and, assuming the due
authorization and execution of this Consent by the Owner and the Collateral
Trustee, constitutes the legal, valid and binding obligation of the Contractor,
enforceable against the Contractor in accordance with its terms subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws, now or hereinafter in effect, affecting creditors' rights
generally and to general principles of equity.
(d) No Conflict. Neither the execution of this Consent by the Contractor
nor the performance by the Contractor of its obligations hereunder will conflict
with or result in any
<PAGE>
6
breach of, or constitute a violation of or default under, any applicable law or
regulation, the Contractor's charter or by-laws, or any indenture, mortgage,
deed of trust, or other instrument or agreement (including, without limitation,
any negative pledge or similar clause), to which the Contractor or any of its
affiliates is a party, or by which any of them may be bound, or to which any of
their respective property or assets may be subject.
(e) No Litigation. No lawsuit or other proceeding is pending or, to the
knowledge of the Contractor, threatened against the Contractor which, if
determined adversely to the Contractor, may materially and adversely affect its
business or financial condition or the consummation of the transactions
contemplated by, or the performance of its obligations under, this Consent or
the EPC Contract. No action or proceeding has been instituted and no order,
decree, injunction or judgment of any kind from any court or other governmental
authority has been issued to avoid, restrain or in any other manner prevent the
consummation of the transactions contemplated by this Consent or the EPC
Contract.
(f) Enforcement. The EPC Contract and this Consent are in proper legal
form to be enforced against the Contractor, and it is not necessary to ensure
the legality, validity, enforceability or admissibility into evidence of the EPC
Contract or this Consent that either be filed, recorded or enrolled with any
governmental authority, or that any such document be stamped with any stamp,
registration or similar transaction tax.
(g) Execution, Delivery; Binding Agreements. The EPC Contract is in full
force and effect and has not been assigned by the Contractor. Except for the
assignments referred to in Section 2(a) hereof, the Contractor has not received
any notice of transfer or assignment of the EPC Contract by the Owner.
(h) No Default or Amendment. Neither the Contractor nor, to its knowledge,
the Owner is in default under the EPC Contract. The Contractor has no existing
claims, counterclaims, offsets or defenses against the Owner in respect of the
EPC Contract. The EPC Contract has not been amended, modified or supplemented in
any manner.
SECTION 5. RIGHTS OF COLLATERAL TRUSTEE
The Contractor agrees that the Collateral Trustee, for the benefit of the
Secured Parties, so long as any Senior Debt Obligations remain outstanding,
shall have the following rights with respect to the EPC Contract:
(a) Notwithstanding anything to the contrary contained in the EPC
Contract, the EPC Contract shall not be terminated or canceled by action of the
Contractor as the result of any breach or default of the Owner without prior
notice in writing to the Collateral Trustee, specifying the basis therefor
(hereinafter called a "Notice"). In the event of a default by Owner under the
EPC Contract, the Contractor (i) will give prompt written notice to the
Collateral Trustee (a "Default Notice") of such default and any cure period
pursuant to the EPC Contract
<PAGE>
7
(the "Owner's Cure Period"), (ii) will allow the Collateral Trustee and the
other Secured Parties to cure such default during the Owner's Cure Period
(whether or not the Owner or any equity investor in the Owner also has the right
to cure such default during such period) and (iii) prior to the exercise by the
Contractor of any right to terminate the EPC Contract, will afford the
Collateral Trustee and the other Secured Parties the longer of (A) 120 days
after the receipt by the Collateral Trustee of the Default Notice and (B) 60
days after the expiration of the Owner's Cure Period (the "Secured Parties' Cure
Period") to cure such default, provided that the Secured Parties' Cure Period
shall be extended for such longer period of time as is necessary as long as the
Collateral Trustee or any other Secured Party shall be diligently acting in good
faith to cure such default or to obtain title to the Coker Complex; and
provided, further, that notwithstanding the foregoing, in no event shall the
Secured Parties' Cure Period with respect to a payment default by the Owner
exceed 90 days after the Default Notice from the Contractor. No curing of any
defaults under the EPC Contract shall be construed as an assumption by the
Collateral Trustee or the Secured Party of any of the obligations, covenants or
agreements of the Owner under the EPC Contract.
(b) If the Collateral Trustee or any other Secured Party, or a Nominee (as
defined below), shall become the legal or beneficial owner of the Coker Complex,
or shall become entitled to cause the disposition of the Coker Complex pursuant
to the exercise of its rights and remedies as a secured creditor, then:
(i) Such Person, at its election, may continue the EPC Contract by
delivering to the Contractor a written notice of continuation. Such Person may
thereafter cause the Owner's interest in the EPC Contract to be transferred to
itself or to a third party by delivering to the Contractor a written notice of
such transfer and an agreement from such Person or such third party satisfying
the conditions of Section 5(b)(ii) hereof (such Person or such third party, as
the case may be, being herein called a "Transferee"), and in the event of any
transfer and any successive transfers thereafter, (A) the Contractor will
continue to perform, for the benefit of such Transferee, its obligations under
the EPC Contract pursuant to its terms as modified hereby, without regard to any
default by the Owner thereunder, (B) the Owner shall remain liable to the
Contractor for all its obligations and duties under the EPC Contract, and (C)
any Transferee shall become liable, not personally but solely to the extent of
its direct or indirect right, title and interest in and to the Coker Complex and
the operating contracts relating thereto, to perform the duties and obligations
of the Owner under the EPC Contract only as arise in respect of the period
commencing on the date of such Transferee's succession, provided Transferee has
assumed, in connection with such succession, any payment and other obligations
of Owner to Contractor which were outstanding prior to such date of Transferee's
succession. Only the Transferee, and not the Person delivering a notice of
continuation, shall have liabilities and obligations under the EPC Contract.
(ii) Any agreement delivered pursuant to the second sentence of
subparagraph (i) of this Section 5(b) shall provide that the Transferee shall
(A) assume and agree to perform all future obligations of the Owner under the
EPC Contract and agree to be bound by the terms of the EPC Contract in
connection therewith and (B) be bound by all actions taken and notices given by
the parties under the EPC Contract prior to any such transfer.
<PAGE>
8
(iii) As used in this Section 5, "Nominee" shall mean (A) any Person
or entity that is directly or indirectly owned and controlled by the Collateral
Trustee, the Collateral Trustee or any other Secured Party and (B) which has
acquired the Owner's right, title and interest in the Coker Complex.
(c) If (i) the Owner or a trustee or receiver or any Person
exercising the powers of a trustee or receiver in any bankruptcy, insolvency,
receivership, arrangement, liquidation or similar proceeding applicable to the
Owner rejects the EPC Contract, or (ii) the EPC Contract is terminated (x) by
reason of any bankruptcy, insolvency, receivership, arrangement, liquidation or
similar proceeding applicable to the Owner or (y) by reason of any default by
the Owner under the EPC Contract, and if, in any such case, within 90 days after
such termination, the Collateral Trustee shall so request, the Contractor will
execute and deliver to the Collateral Trustee, one or more of the Secured
Parties, a Nominee or a Transferee, as shall be designated by the Collateral
Trustee (herein called the "Replacement Owner"), a new contract with the
Replacement Owner. The new contract shall contain substantially the same terms
and provisions as the EPC Contract for the balance of the unexpired term
thereof.
SECTION 6. AGREEMENTS OF CONTRACTOR
(a) Continuation of Performance. The Contractor agrees to continue the
performance of its obligations under the EPC Contract notwithstanding any
default by the Owner under any Financing Document, or the exercise by any Person
of its rights under any Financing Document as long as all payments due
Contractor under the EPC Contract continue to be made by Owner, the Financing
Parties or any Transferee.
(b) Arbitration. The Contractor agrees that the Collateral Trustee may
monitor any arbitration proceedings or judicial proceedings between the parties
to the EPC Contract.
(c) No Set-Offs, Deductions or Counterclaim. The Contractor agrees that no
amounts due to the Owner under the EPC Contract shall be subject to any
reduction for any set-off, deduction, counterclaim (except for compulsory
counterclaims) or otherwise based upon any claim against the Owner. The
Contractor shall not assert any claim it may have by reason of the Owner's
default under the EPC Contract as a defense to performance of its obligations
under any other agreement with the Owner or any affiliate of the Owner or under
this Consent. Nothing contained in this paragraph (c) shall waive the
Contractor's rights to enforce any such claim as a cause of action against the
Owner.
(d) Compliance with Instructions from Collateral Trustee. The Contractor
hereby agrees that it shall (i) comply with any and all written instructions
received from the Collateral Trustee pursuant to the Financing Documents, (ii)
treat such instructions as coming directly from the Owner, (iii) disregard any
contradictory instructions received from the Owner and (iv) with effect as of
the date of receipt of such instructions, direct to the Collateral Trustee (with
a copy to the Owner) all communications and correspondence arising out of or in
connection with the EPC Contract.
<PAGE>
9
(e) Notices. All notices or other communications to be delivered to the
Collateral Trustee or any of the other Secured Parties pursuant to this Consent
or the EPC Contract shall be delivered to the Collateral Trustee at the address
specified in Section 8 below and, in the case of the Contractor or the Owner, to
each of these respective entities at the addresses specified in Section 8 below.
(f) Amendments of EPC Contract, Etc. The Contractor will not agree to any
amendment, cancellation or early termination of the EPC Contract, and will not
assign its rights or obligations under the EPC Contract to a third party,
without the prior written consent of the Collateral Trustee.
(g) Reservation of Rights. The Contractor expressly reserves all rights
and remedies available at law or in equity under the EPC Contract, except to the
extent expressly modified in this Consent.
(h) Copies of Notices to Owner. The Contractor will deliver to the
Collateral Trustee a copy of each notice given by it to the Owner concurrently
with delivery of such notice to the Owner.
SECTION 7. FURTHER ASSURANCES
The parties hereto hereby agree to provide to each other such
documents and to take such other action as may be reasonably necessary to
effectuate fully the purposes of this Consent.
SECTION 8. NOTICES
All notices and other communication under or in connection with this
Consent shall be in writing, shall refer on their face to the EPC Contract
(although failure to so refer shall not render any such notice or communication
ineffective), shall be sent by first class registered or certified mail (in
which case such notice shall be effective three days after mailing), by
facsimile (in which case such notice shall be effective immediately), by hand
(in which case such notice shall be effective upon receipt or by overnight
courier service (in which case such notice shall be effective on the business
day immediately following the day it is delivered to the courier) and shall be
addressed:
(i) if to the Contractor, in accordance with the EPC Contract;
(ii) if to the Collateral Trustee, to
[ADDRESS]
(iii) if to Owner, in accordance with the EPC Contract;
<PAGE>
10
or
(iv) to such other address as the Contractor, the Owner or the
Collateral Trustee, as the case may be, may designated by prior written notice
to the other parties given pursuant hereto.
SECTION 9. MISCELLANEOUS
(a) Separate Counterparts; Amendments, Waiver. This Consent may be
executed in separate counterparts, each of which when so executed and delivered
shall be an original but all of such counterparts together shall constitute one
and the same instrument. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by the Contractor, the Collateral Trustee and the Owner.
(b) Severability. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(c) Successors and Assigns. This Consent shall be binding upon and inure
to the benefit of the Contractor, the Collateral Trustee, the other Secured
Parties, the Owner and their respective successors and permitted assigns.
(d) GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(e) Submission to Jurisdiction. Contractor hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof or the enforcement of an award rendered pursuant to
Section 11.3 of the EPC Contract, to the non-exclusive general jurisdiction of
the courts of the State of New York located in the City of New York and the
Federal courts of the U.S. for the Southern District of New York located in the
City of New York; and (ii) notwithstanding anything to the contrary contained in
the EPC Contract consents that any action or proceeding in connection with the
EPC Contract may be brought by the Collateral Trustee and the Financing Parties
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same.
(f) Enforcement of Judgments. The Contractor agrees that a final non
appealable judgment against it in any action, suit or proceeding brought in any
New York State or Federal court in accordance with paragraph (e) above shall be
conclusive and may be enforced in any
<PAGE>
11
jurisdiction by suit on the judgment, a certified copy of which judgment shall
be conclusive evidence thereof, or by any other means provided by law.
(g) No Implied Waiver. Failure or delay on the part of any party hereto to
exercise a right under this Consent shall not operate as a waiver thereof; nor
shall any single or partial exercise of a right preclude any other future
exercise thereof.
(h) Agent for Service of Process. The Contractor hereby irrevocably and
unconditionally appoints United States Corporation Company, with an office on
the date hereof at 80 State Street, Albany, NY 12207-2543, as its agent, which
shall be a commercial process agent (the "Process Administrative Agent") to
receive on behalf of the Contractor and its property service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding in such New York State or Federal court. In any such action
or proceeding, such service may be made on Contractor by delivering a copy of
such process to the Contractor in care of the Process Administrative Agent at
the Process Administrative Agent's above address and by depositing a copy of
such process in the mails by certified or registered air mail, addressed to the
Contractor at its address set forth beneath its signature hereto (such service
to be effective upon such receipt by the Process Administrative Agent and the
depositing of such process in the mails as aforesaid). The Contractor hereby
further irrevocably and unconditionally authorizes and directs such Process
Administrative Agent to accept such service on its behalf. If for any reason the
Process Administrative Agent shall cease to be available to act as such, the
Contractor agrees to designate a new agent in New York City on the terms and for
the purposes of this provision satisfactory to the Collateral Trustee. As an
alternate method of service, the Contractor irrevocably and unconditionally
consents to the service of any and all process in any such action or proceeding
in such New York State or Federal court by mailing of copies of such process to
Contractor by certified or registered air mail at its address set forth in the
EPC Contract, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to sue in any other
jurisdiction. The Contractor hereby agrees that, to the fullest extent permitted
by applicable law, a final non-appealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(i) Conflicts. Owner hereby acknowledges, in the event of any conflict
between this Consent and the EPC Contract, insofar as the obligations of the
Contractor with respect to Owner are concerned, the terms of this Consent are to
govern.
<PAGE>
12
FOSTER WHEELER USA CORPORATION
By: ______________________________________________
Name:
Title:
Acknowledged and agreed:
[______________________],
as Collateral Trustee for the benefit of the
Secured Parties
By: _______________________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: ___________________________________
Name:
Title:
<PAGE>
Exhibit L
FORM OF NOTICE TO PROCEED
____, 1999
To: Foster Wheeler USA Corporation
2020 Dairy Ashford
Houston, Texas 77077
Attn: M.T. Autrey
Perryville Corporate Park
Clinton, New Jersey 08809-4000
Attn: John Blythe
Reference is hereby made to the Contract for Engineering,
Procurement and Construction Services, between Foster Wheeler USA Corporation
and Port Arthur Coker Company L.P., dated as of ____ __, 1999 (the "Contract").
Capitalized terms used herein without definition shall have the meanings given
such terms in the Contract.
Owner certifies that the following conditions set forth in Section
16.16 of the Contract have been met:
(i) the insurance required to be obtained by the Owner pursuant to
Section 9.1 is in effect;
(ii) the Applicable Permits on Schedule 2.11(a) of the Contract to
be obtained by Owner have been obtained;
(iii) the Project Documents have been executed and delivered by all
parties thereto; and
(iv) the financing pursuant to the Financing Documents had closed
and sufficient funds are available for acquisition by Owner of
the work in progress under the Interim Reimbursable Contract
from Clark R&M.
We hereby provide you with the Notice to Proceed referred to in
Section 16.16(b)(iii) of the Contract and Work under the Contract shall commence
on the __ day of ___, 1999.
<PAGE>
2
Please acknowledge receipt of this Notice to Proceed by executing on
the signature line provided below.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
General Partner
By:___________________________________
Name:
Title:
Acknowledged and Agreed:
FOSTER WHEELER USA CORPORATION
By:___________________________
Name:
Title:
<PAGE>
Exhibit 10.07
FORM OF PARENT COMPANY GUARANTEE
This Agreement (hereinafter called the "Guarantee") made this 13th day
of July, 1999, between Foster Wheeler Corporation, a New York corporation, with
a principal place of business at Perryville Corporate Park, Clinton, New Jersey
08809-4000 (hereinafter called "Guarantor") of the first part, and Port Arthur
Coker Company L.P., a Delaware limited partnership ("Owner"), with a principal
place of business at Port Arthur Refinery, P.O. Box 908, Port Arthur, Texas
77641-0908(hereinafter called "Owner") of the second part. Capitalized terms
not defined herein shall have the meanings ascribed to them in the Contract for
Engineering, Procurement and Construction Services (the "Contract"), dated as of
July 12, 1999, between Owner and Foster Wheeler USA Corporation, a Delaware
corporation, whose principal place of business is at Perryville Corporate Park,
Clinton, New Jersey 08809-4000 (hereinafter called "Contractor").
WITNESSETH:
In consideration of Owner entering into the Contract with Contractor,
a subsidiary of Guarantor, for the performance by Contractor of engineering,
procurement and construction services for a delayed coking unit and certain
related refinery equipment (the "Coker Complex") to be located at Clark Refining
and Marketing, Inc.'s existing refinery in Port Arthur, Jefferson County, Texas,
upon land leased by Owner, the Guarantor hereby agrees with Owner as follows:
1. (a) Guarantor does hereby acknowledge that it is fully aware of
the terms and conditions of the Contract and the transactions contemplated
thereby, and does hereby irrevocably and unconditionally guarantee, as primary
obligor and not as surety merely, to Owner, the performance by Contractor of all
Contractor's obligations under the Contract (the "Obligations"), when due,
strictly in accordance with the terms of the Contract, including without
limitation the payment of any damages arising out of or based upon any failure
of Contractor to perform any obligations required of it under the Contract.
(b) Guarantor waives notice of the acceptance of this Guarantee and
of the performance or nonperformance by Contractor, demand for payment from
Contractor or any other person and notice of nonpayment or failure to perform on
the part of Contractor, diligence, presentment, protest, dishonor (to the
fullest extent permitted by law), all other demands or notices whatsoever other
than the request for payment or performance under this Guarantee. The
obligations of Guarantor shall be absolute, irrevocable and unconditional and
shall remain in full force and effect until satisfaction in full of all
Obligations and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by the existence of any set-off or
counterclaim that Guarantor, Contractor, or any affiliate of Guarantor or
Contractor may have at any time and from time to time against Owner. This
Guarantee shall continue to be
<PAGE>
effective or be reinstated, as the case may be, notwithstanding whether at any
time for any reason any payment of any Obligation is rescinded or must otherwise
be returned by Owner upon the insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding with respect to Contractor or otherwise, all as though such payment
had not been made.
(c) Guarantor, by virtue of any payment under this Section 1 to Owner,
shall be subrogated to such Owner's claim against Contractor or any other person
relating thereto. The Guarantor agrees that it shall not exercise any rights of
subrogation which it may acquire due to any payment or payments made under this
Section 1 until all of the Obligations shall have been paid and performed in
full.
(d) The obligations of Guarantor under this Guarantee shall not be
affected by the genuineness, validity, regularity or enforceability of any of
Contractor's obligations under the Contract, or any amendment, waiver or other
modification thereof (except, with respect to the Contract, to the extent of
such amendment, waiver or modification), or substitution, release or exchange of
collateral for, or other guarantee, of any of the Obligations (except to the
extent of such substitution, release or exchange), any priority or preference to
which any other obligations of Contractor may be entitled over the Contractor's
obligations under the Contract or, to the fullest extent permitted by applicable
law, any other circumstance which might otherwise constitute a legal or
equitable defense to or discharge of the obligations of a surety or guarantor,
including, without limitation, any defense arising out of any laws of the United
States of America or any State or subdivision thereof which would either exempt,
modify or delay the due or punctual payment and performance of the obligations
of Guarantor hereunder.
(e) Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall, to the fullest
extent permitted by law, neither release Guarantor from its obligations
hereunder nor affect the liability of Guarantor under this Section 1: (i) the
extension of the time for or waiver of, at any time or from time to time,
without notice to Guarantor, the Contractor's performance of or compliance with
any of its obligations under the Contract (except that such extension or waiver
shall be given effect in determining the obligations of Guarantor hereunder),
(ii) any assignment, transfer or other arrangement by which the Contractor
transfers its rights under the Contract, (iii) any merger or consolidation of
Contractor or Guarantor into or with any other person, (iv) any change in the
ownership of any shares of capital stock of Contractor, (v) termination of the
Contract (other than for the convenience of Owner under Section 14.2 of the
Contract), (vi) forbearance or forgiveness in respect of any matter or thing
concerning the Contractor on the part of Owner or Contractor, or (vii) any
assignment of the rights of Owner under the Contract to the Financing Parties
(as such term is defined in the Contract).
(f) This Guarantee is an absolute, present and continuing Guarantee of
payment and performance and not of collectibility and is in no way conditional
or contingent upon any attempt to collect from Contractor any unpaid amounts due
or otherwise to enforce
2
<PAGE>
performance by Contractor. Guarantor further specifically agrees that it shall
not be necessary or required for Owner to take any action against Contractor or
any other person to enforce the terms of this Guarantee, including the following
actions:
(v) file suit or proceed to obtain or assert a claim for personal
judgment against Contractor for the Obligations, or
(w) make any effort to enforce the performance of the Obligations by
Contractor or to collect any such Obligation under the Contract or under
this Guarantee, or
(x) foreclose against or seek to realize upon security, if any, now
or hereafter existing for the Obligations, or
(y) file suit or proceed to obtain or assert a claim for personal
judgment against any other person liable for the Obligations, or make any
effort at collection of the Obligations from any such other person, or
exercise or assert any other right or remedy to which Owner is or may be
entitled in connection with the Obligations or any security or other
guarantee therefor, or
(z) assert or file any claim against the assets of Contractor or any
other guarantor or other person liable for the Obligations, or any part
thereof, before or as a condition of enforcing the liability of Guarantor
under this Guarantee or requiring payment of said Obligation by Guarantor
hereunder, or at any time thereafter.
Guarantor hereby unconditionally waives any requirement that, as a condition
precedent to the enforcement of the obligations of Guarantor hereunder,
Contractor or all or any one or more of any other guarantors of any of the
Obligations be joined as parties to any proceedings for the enforcement of any
provision of this Guarantee.
2. (a) If Contractor fails to perform any of its obligations under
the Contract, or commits any breach thereof, Guarantor shall, within five (5)
days of advance written notice from Owner, immediately: (i) take such steps as
may, in the judgment of Owner reasonably exercised, be necessary to have
Contractor perform all Contractor's obligations under the Contract, or remedy
any breach thereof; or (ii) take such steps as may, in the judgment of Owner
reasonably exercised, be necessary to perform itself, or through a third party
other than Contractor, all of Contractor's obligations under the Contract, or to
remedy any breach thereof.
(b) If Guarantor fails, to the satisfaction of Owner, at any time to
perform any obligations under this Guarantee, Owner may, after affording
Guarantor written notice of any such failure and a reasonable opportunity to
cure the same, itself perform, or have any third party perform, any such
obligations, and Guarantor shall be responsible for all costs incurred by Owner
in so performing or so having performed, such obligations.
3
<PAGE>
3. Notwithstanding anything which may be to the contrary in this
Guarantee, the obligations guaranteed by Guarantor and Guarantor's liability
under this Guarantee shall not be greater than those of Contractor under the
Contract.
4. The Guarantor hereby represents and warrants to Owner as follows
(all as of the date hereof):
(a) The Guarantor is a corporation duly organized and existing under
the laws of New York, and has the power and authority to carry on its
business as now conducted, to own or hold under lease the properties it
holds itself out as owning or leasing and to enter into and perform its
obligations under this Guarantee.
(b) The Guarantor has power to issue this Guarantee, and this
Guarantee has been duly authorized by all necessary action on the part of
Guarantor, does not require any approval or other action of the
shareholders of Guarantor or approval or consent of any trustee or holders
of any indebtedness or obligations of Guarantor, except for such as have
been obtained, and has been duly executed and delivered by Guarantor, and
the execution and delivery and performance thereof, contravenes any law,
judgment, governmental rule, regulation or order applicable to or binding
on Guarantor or contravenes or results in any breach of or constitutes any
default under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, corporate
charter, bylaw or other agreement or instrument to which Guarantor is a
party or by which Guarantor or its properties may at present be bound or
affected.
(c) Neither the execution and delivery by Guarantor of this
Guarantee, nor the performance thereof by Guarantor contemplated hereby,
requires the consent or approval of, or the giving of notice (other than
ex-post-facto reporting requirements) to, or the registration with, or the
taking of any other action in respect of, any governmental authority or
agency of the United States of America or any State or subdivision thereof.
(d) This Guarantee has been duly entered into and delivered by
Guarantor and constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with the terms
hereof, except as limited by bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the enforcement of creditors' rights
and remedies generally, subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at law).
(e) There are no pending, and to the best of Guarantor's knowledge
after due inquiry, no threatened, actions or proceedings against the
Guarantor before any court or administrative agency of the United States or
any State or subdivision thereof which, either individually or in the
aggregate would adversely affect the ability of Guarantor to perform its
obligations under this Guarantee, taking into consideration reserves
4
<PAGE>
which have been allocated and the probability of unfavorable judgments in
any such actions or proceedings.
5. THIS GUARANTEE AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND IN ALL RESPECTS CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6. Each of the parties hereto submits to the jurisdiction of the
courts of the State of New York and the courts of the United States of America
located in the State of New York over any suit, action or proceeding with
respect to this Guarantee or the transactions contemplated hereby. Any suit,
action of proceeding with respect to this Guarantee or the transactions
contemplated hereby may be brought only in the Supreme Court of the State of New
York or the United States District Court of the United States of America, in
each case located in the County of New York, or Southern District of New York,
respectively, and which shall be accepted as the proper legal venue for the
settlement of any controversy or dispute arising in connection with it. Each of
the parties hereto waives any objection that it may have to the venue of such
suit, action or proceeding in any such court or that such suit, action or
proceeding in such court was brought in an inconvenient court and agrees not to
plead or claim the same.
7. Owner hereto irrevocably appoints CT Corporation, at 1633
Broadway, New York, New York 10019, as its authorized agent in the State of New
York upon which process may be served, and Guarantor hereto irrevocably appoints
Prentice Hall Corporation System Inc., 80 State Street, Albany, New York 12207-
2543 as its authorized agent in the State of New York upon which process may be
served, in any suit, action or proceeding with respect to this Guarantee or the
transactions contemplated hereby, and agrees that service of process upon such
agent, and written notice of said service to such party by the person serving
the same to the address stipulated herein for the sending of notices, shall be
deemed in every respect effective service of process upon such party in any such
suit or proceeding. Each party hereto further agrees to take any and all action
as may be necessary to maintain such designation and appointment of such agent
in full force and effect so long as this Guarantee is in effect.
8. Notices to Guarantor which are required under the terms of this
Guarantee shall be sent by certified mail, return receipt requested, postage
prepaid at Guarantor's address first above written and to the attention of
Secretary, Foster Wheeler Corporation. Notice shall be considered given and
received on the latest original delivery or attempted delivery date as indicted
in the postage receipt.
9. This Guarantee shall bind and inure to the benefit of the parties
of this Guarantee, their successors and permitted assigns.
10. This Guarantee shall not be assigned by Guarantor without the
prior written consent of Owner and the Financing Parties. Owner may without
consent of Guarantor assign or collaterally assign its interest and obligations
hereunder to the Financing Parties for security
5
<PAGE>
purposes. The Guarantor hereby expressly authorizes the Financing Parties to
exercise the rights of Owner under this Guarantee following realization of their
security interest in this Guarantee.
6
<PAGE>
The foregoing rights and obligations are in addition to those set forth in
Section 9 above.
11. This Guarantee may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and shall be binding upon the successors and
assigns of Guarantor and shall inure to the benefit of, and shall be enforceable
by, Owner to the fullest extent permitted by applicable laws.
12. No failure on the part of Owner to exercise, no delay in
exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other further exercise of
any other right or remedy.
13. All representations and warranties contained herein or made in
writing by Guarantor in connection herewith shall survive the execution and
delivery of this Guarantee regardless of any investigation made by Owner or any
other person.
14. To the fullest extent permitted by applicable law, any provision
of this Guarantee which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof or of any provision in the Contract, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. The Guarantor agrees to pay to Owner any and all reasonable costs
and expenses (including reasonable legal fees and expenses) incurred by Owner in
enforcing this Guarantee.
IN WITNESS WHEREOF, the Parties to this Guarantee have caused this
Guarantee to be executed by their duly authorized representatives the day and
year first above written.
PORT ARTHUR COKER COMPANY L. P. FOSTER WHEELER CORPORATION
By: SABINE RIVER HOLDING
CORP., General Partner By: /s/ Richard J. Swift
---------------------------
Name: Richard J. Swift
Title: Chairman & CFO
By: /s/ Maura J. Clark
-------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
7
<PAGE>
Exhibit 10.08
EXECUTION COPY
================================================================================
SERVICES AND SUPPLY AGREEMENT
BETWEEN
CLARK REFINING & MARKETING, INC.
AND
PORT ARTHUR COKER COMPANY L.P.
August 19, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINITIONS 2
Section 1.1 Definitions......................................................... 2
Section 1.2 Other Definitional Provisions....................................... 2
ARTICLE 2. GENERAL SCOPE OF CLARK R&M RESPONSIBILITIES................................... 2
ARTICLE 3. ANCILLARY EQUIPMENT; SUPPLY AND SERVICES...................................... 3
Section 3.1 Crude Supply Management Services.................................... 3
Section 3.2 Docking, Pipeline Delivery, Handling and Storage of Crude Deliveries 4
Section 3.3 Supply of Other Ancillary Equipment Feedstocks...................... 4
Section 3.4 Operation of Ancillary Equipment.................................... 5
Section 3.5 Processing of Clark R&M Products.................................... 5
Section 3.6 Title to Product Streams from Ancillary Equipment................... 6
Section 3.7 Disposition of Product Streams from Ancillary Equipment............. 6
ARTICLE 4. COKER COMPLEX; SUPPLY AND SERVICES............................................ 6
Section 4.1 Operation of Coker Complex.......................................... 6
Section 4.2 Processing of Clark R&M Products; Coker............................. 7
Section 4.3 Processing of Clark R&M Products; Hydrocracker...................... 7
Section 4.4 Supply and Delivery of Other Feedstocks to Coker Complex............ 8
Section 4.5 Title to Product Streams from Coker Complex......................... 9
Section 4.6 Disposition of Product Streams from Coker Complex................... 9
ARTICLE 5. GENERAL SERVICES AND SUPPLIES................................................. 9
Section 5.1 Construction Management............................................. 9
Section 5.2 Contract Management................................................. 9
Section 5.3 Maintenance Services................................................ 10
Section 5.4 Operation and Maintenance of Clark Equipment........................ 10
Section 5.5 Utility Services.................................................... 11
Section 5.6 Waste Management and Wastewater Services............................ 12
Section 5.7 Support Services.................................................... 13
Section 5.8 Personnel and Management Services................................... 13
Section 5.9 Spare Parts......................................................... 14
Section 5.10 Catalysts, Chemicals and Consumables................................ 14
Section 5.11 Quantity and Quality Control........................................ 14
Section 5.12 Environmental, Health and Safety Services........................... 16
Section 5.13 Insurance Coverage.................................................. 16
Section 5.14 Licensing, Permits and Approvals.................................... 16
Section 5.15 Sulfur Recovery..................................................... 17
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 6. ANNUAL BUDGET AND OPERATING PLAN.............................................. 17
Section 6.1 Annual Budget....................................................... 17
Section 6.2 Operating Adjustments............................................... 18
Section 6.3 Quarterly Reports................................................... 19
ARTICLE 7. PRICING AND PAYMENT........................................................... 20
Section 7.1 Pricing of Services and Supplies.................................... 20
Section 7.2 Net Pricing and Statements.......................................... 20
Section 7.3 Payment Procedure................................................... 20
Section 7.4 Alternative Pricing................................................. 20
Section 7.5 Recordkeeping; Right to Audit; Access to Books and Records.......... 21
Section 7.6 Interest Rate for Late Payments..................................... 21
ARTICLE 8. DEFAULTS, REMEDIES AND TERMINATION............................................. 22
Section 8.1 Clark R&M's Right to Terminate...................................... 22
Section 8.2 Coker Company's Right to Terminate and Other Remedies............... 22
Section 8.3 Termination Option.................................................. 23
Section 8.4 Non-Exclusive Remedies; Specific Performance........................ 23
ARTICLE 9. TERM, AND COMMENCEMENT OF SERVICES............................................ 23
Section 9.1 Effectiveness; Term................................................. 23
Section 9.2 End of Term Obligations............................................. 23
ARTICLE 10. REPRESENTATIONS AND WARRANTIES................................................ 24
Section 10.1 Representations and Warranties of the Coker Company................. 24
Section 10.2 Representations and Warranties of Clark R&M......................... 25
ARTICLE 11. FURTHER AGREEMENTS............................................................ 26
Section 11.1 Intellectual Property; Confidentiality.............................. 26
Section 11.2 Force Majeure....................................................... 26
Section 11.3 Cooperation with Other Parties...................................... 26
Section 11.4 Site Access......................................................... 26
Section 11.5 Indemnity........................................................... 26
Section 11.6 Dispute Resolution.................................................. 27
Section 11.7 Taxes............................................................... 28
Section 11.8 Title to Property................................................... 28
Section 11.9 Subcontractors...................................................... 29
ARTICLE 12. MISCELLANEOUS................................................................. 29
Section 12.1 Relationship of Parties............................................. 29
Section 12.2 Third Party Beneficiaries........................................... 29
Section 12.3 Clark R&M Warranties................................................ 30
Section 12.4 No Indirect Damages................................................. 30
Section 12.5 Assignments......................................................... 30
Section 12.6 Amendments.......................................................... 31
Section 12.7 Notices............................................................. 31
</TABLE>
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<S> <C>
Section 12.8 GOVERNING LAW....................................................... 32
Section 12.9 Submission to Jurisdiction; Forum Selection......................... 32
Section 12.10 Appointment of Agent for Service of Process......................... 33
Section 12.11 No Waiver........................................................... 33
Section 12.12 Counterparts........................................................ 33
Section 12.13 Integration......................................................... 33
Section 12.14 Severability........................................................ 33
Section 12.15 Headings............................................................ 33
Section 12.16 WAIVER OF JURY TRIAL................................................ 34
</TABLE>
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<PAGE>
APPENDIX A -- DEFINITIONS
SCHEDULES
Schedule 3.1 Crude Supply Management Services
Schedule 3.2 Dock, Pipeline and Storage Services
Schedule 3.3 Ancillary Equipment Feedstock Supply
Schedule 3.5 Clark Processing Fee -- Ancillary Equipment
Schedule 4.1 Coker Company Employees
Schedule 4.2 Clark R&M Processing Fee -- Coker
Schedule 4.3 Clark R&M Processing Fee -- Hydrocracker
Schedule 4.4 Hydrogen Supply Services
Schedule 5.1 Construction Management Services
Schedule 5.3 Maintenance Services
Schedule 5.5.1 Electricity
Schedule 5.5.2 Steam
Schedule 5.5.3 Natural and Fuel Gas
Schedule 5.5.4 Water
Schedule 5.5.5 Compressed Air
Schedule 5.5.6 Nitrogen
Schedule 5.5(b) Utility Meters
Schedule 5.6 Waste Management and Wastewater Treatment Services
Schedule 5.7.1 Sulfur and Coke Transport Service
Schedule 5.7.2 Broad Band and Network Computing Services
Schedule 5.7.3 Radio and Phone Services
Schedule 5.7.4 Analytical Laboratory and Custody Transfer Services
Schedule 5.7.5 Security Services
Schedule 5.7.6 Other Support Service
Schedule 5.8.1 Operations Services
Schedule 5.8.2 Engineering Services
Schedule 5.8.3 Human Resources Services
Schedule 5.8.4 Accounting Services
Schedule 5.8.5 Administrative Services
Schedule 5.9 Coker Company Spares
Schedule 5.10 Catalyst and Caustic
Schedule 5.12.1 Environmental, Health and Safety Services
Schedule 5.12.2 Emergency Response Services
Schedule 5.13 Insurance
Schedule 5.14 Licenses, Permits and Approvals
Schedule 6.1 Annual Budget and Operating Plan
EXHIBITS
Exhibit A Base Case Financial Model
iv-
<PAGE>
AGREEMENT FOR SUPPLY AND SERVICES, dated as of August 19, 1999,
between Clark Refining & Marketing, Inc., a Delaware corporation ("Clark R&M")
---------
and Port Arthur Coker Company L.P., a Delaware limited partnership (the "Coker
-----
Company").
- -------
RECITALS
WHEREAS, the Coker Company has entered into an EPC Contract with the
Contractor for the construction of the Coker Complex;
WHEREAS, the Coker Company is causing the Coker Complex to be
constructed on land within the Refinery leased from Clark R&M, which Coker
Complex is intended to have at least the Coker Complex Design Capacity;
WHEREAS, the Coker Company has leased the Ancillary Equipment located
within the Refinery, which Ancillary Equipment is being upgraded to have the
Crude Design Capacity to permit the production of at least the minimum volume of
feedstocks for the Coker Complex to operate at the Coker Complex Design
Capacity;
WHEREAS, the Coker Company, pursuant to the Long-Term Oil Supply
Agreement, has access to Maya Crude Oil for processing through the Heavy Oil
Processing Facility;
WHEREAS, Clark R&M has access to additional crude oil and other
feedstreams necessary to operate the Ancillary Equipment at the Crude Design
Capacity and the Coker Complex at the Coker Complex Design Capacity;
WHEREAS, the Coker Company desires to deliver and Clark R&M desires to
purchase the Required Product Mix under the Product Purchase Agreement;
WHEREAS, the Coker Company requires supplies and services in order to
operate the Ancillary Equipment and the Coker Complex and to produce the
Required Product Mix;
WHEREAS, Clark R&M has the necessary technical and operational
capacity to deliver the such supplies and to provide such services required to
operate the Ancillary Equipment and the Coker Complex; and
WHEREAS, the obligations of Clark R&M and the rights of the Coker
Company hereunder will be assigned to the Financing Parties as security in order
to finance the construction of the Coker Complex.
NOW THEREFORE, for and in consideration of the mutual covenants,
premises and agreements set forth herein, and good and valuable consideration,
the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
<PAGE>
2
ARTICLE 1. DEFINITIONS
Section 1.1 Definitions. Except as contained in this Section 1.1 or
-----------
as otherwise defined herein, the capitalized terms used herein shall have the
respective meanings assigned thereto in Appendix A. For all purposes of this
Services and Supply Agreement, the following terms shall have the following
meanings:
"Applicable Price" means, with respect to each Service or Supply to be
----------------
provided by Clark R&M hereunder during any monthly period, the total
reimbursable cost or fee due and payable by the Coker Company to Clark R&M for
such Service or Supply determined in accordance with the formula set forth under
the heading "Applicable Price" on the Schedule relating to such Service or
Supply, provided that to the extent any Service or Supply is not described in a
--------
Schedule, the "Applicable Price" for such Service or Supply shall equal the
Permitted Reimbursable Expenses incurred by Clark R&M in providing such Service
or Supply.
Section 1.2 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Services and Supply Agreement shall refer to
this Services and Supply Agreement as a whole and not to any particular
provision of this Services and Supply Agreement, and Article, Section and
Schedule references are to this Services and Supply Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE 2. GENERAL SCOPE OF CLARK R&M RESPONSIBILITIES
Clark R&M shall operate, manage and maintain all components of the
Ancillary Equipment and the Coker Complex and perform all other necessary
services (all of the foregoing, collectively, the "Services") and provide all
--------
necessary feedstocks and other materials (collectively, the "Supplies"), other
--------
than matters expressly stated herein to be the obligations of the Coker Company,
in order to generate the Required Product Mix on a continuous basis during the
term of this Services and Supply Agreement. Clark R&M shall provide the
Services and Supplies in a prudent and efficient manner in compliance with the
following:
(a) Applicable Law;
(b) Prudent Industry Practice;
(c) requirements of applicable Warranties;
(d) applicable equipment manufacturers' recommended maintenance
procedures;
<PAGE>
3
(e) the Operating Manuals, the Maintenance and Instruction Manuals
and the Mechanical Catalogs (each as defined in the EPC Contract);
(f) the EPC Contract and the other Project Documents; and
(g) the Financing Documents.
ARTICLE 3. ANCILLARY EQUIPMENT; SUPPLY AND SERVICES
Section 3.1 Crude Supply Management Services. (a) Clark R&M shall
--------------------------------
coordinate the scheduling and execution of deliveries of the Contract Quantity
of Coker Company Maya to the Heavy Oil Processing Facility on behalf of the
Coker Company in accordance with the Long-Term Oil Supply Agreement and the
specifications set forth in Schedule 3.1.
(b) To the extent that the Coker Company does not have access under
the Long-Term Oil Supply Agreement to the volume of Maya Crude Oil required for
start-up and operation of the Heavy Oil Processing Facility during the Start-up
Period, Clark R&M shall supply the Coker Company with the additional volume of
Maya Crude Oil required for start-up and operation of the Heavy Oil Processing
Facility during such period and shall coordinate the scheduling and execution of
deliveries of such crude oil to the Heavy Oil Processing Facility on behalf of
the Coker Company, in accordance with the specifications set forth in Schedule
3.1. The Coker Company shall reimburse Clark R&M for the purchase price of such
crude oil and any reasonable administrative fees, financing fees or capital
allocation costs incurred by Clark R&M in procuring such crude oil by Clark R&M.
(c) Clark R&M shall procure on behalf of the Coker Company one or
more contracts for the supply of light crude oil necessary for the processing of
Coker Company Maya and shall coordinate the scheduling and execution of
deliveries of such crude oil to the Heavy Oil Processing Facility on behalf of
the Coker Company, in accordance with the specifications set forth in Schedule
3.1.
(d) Should the supply of Maya Crude Oil pursuant to the Long-Term Oil
Supply Agreement become unavailable for any reason, Clark R&M shall procure on
behalf of the Coker Company one or more alternative supplies of Maya Crude Oil
in amounts substantially equivalent to the Contract Quantity. Clark R&M shall
coordinate the scheduling and execution of deliveries of such Maya Crude Oil to
the Heavy Oil Processing Facility in accordance with the specifications set
forth in Schedule 3.1.
(e) In connection with its obligations under this Section 3.1, Clark
R&M shall engage tankers on behalf, and at the expense, of the Coker Company for
the shipment of Coker Company Maya and Coker Company light crude oil. All
shipping contracts in connection therewith shall be entered into directly by the
Coker Company. Clark R&M shall ensure that all
<PAGE>
4
such shipments of Coker Company Maya and Coker Company light crude oil are
adequately covered by marine cargo, casualty and other required insurance. In
addition, in connection with such shipping, Clark R&M shall ensure that prior to
arrival at the Refinery Clark Maya will not be commingled with any shipment of
Coker Company Maya and Clark R&M light crude oil will not be commingled with any
shipment of Coker Company light crude oil.
(f) To the extent that any Clark R&M-owned crude oil is delivered to
the Refinery by the same pipeline as Coker Company-owned crude oil of the same
type, title to such commingled crude oil shall be allocated in accordance with
the respective volume of crude oil purchased by Clark R&M or the Coker Company
as evidenced by the bills of lading for such shipments.
(g) Clark R&M shall not grant any Lien on Clark R&M-owned crude oil
that is to be commingled with Coker Company-owned crude oil at the Refinery,
other than purchase money security interests necessary to secure the purchase
price of such Clark R&M-owned crude oil.
Section 3.2 Docking, Pipeline Delivery, Handling and Storage of Crude
---------------------------------------------------------
Deliveries. (a) Clark R&M shall provide all docking, pipeline, handling and
- ----------
storage services necessary for the delivery of Coker Company Maya and other
Coker Company light crude oil to the Heavy Oil Processing Facility, in
accordance with the specifications set forth in Schedule 3.2.
(b) For the term of this Services and Supply Agreement, Clark R&M
shall (i) maintain the Marine Dock and Terminaling Agreement (as such term is
defined in the Common Security Agreement) in effect and comply with all of its
material obligations thereunder and (ii) make advance payments to Sun Pipe Line
Company every thirty (30) days in amounts equal to the maximum amount that Clark
R&M estimates, in its reasonable good faith judgment, will be due and payable by
Clark R&M to Sun Pipe Line Company pursuant to the Marine Terminaling Agreement
in the next succeeding thirty (30) days.
Section 3.3 Supply of Other Ancillary Equipment Feedstocks. (a)
----------------------------------------------
Clark R&M shall coordinate the scheduling and execution of deliveries of
Hydrogen needed to process Coker Company Maya and light crude oil through the
Ancillary Equipment on behalf of the Coker Company in accordance with the
Hydrogen Supply Agreement and shall otherwise perform the Coker Company's
obligations (other than payment to obligations) and exercise its rights under
the Hydrogen Supply Agreement, in accordance with Schedule 4.3.
(b) Clark R&M shall supply and the Coker Company shall purchase all
other feedstocks (including any additional hydrogen not available to the Coker
Company under the Hydrogen Supply Agreement) necessary for the processing of
Coker Company Maya and Coker Company light crude oil through the Ancillary
Equipment and Clark R&M shall deliver such products to the Ancillary Equipment,
in accordance with the specifications set forth in Schedule 3.3 and Schedule
4.4.
<PAGE>
5
(c) Clark R&M shall maintain the Clark Hydrogen Supply Contract in
effect for the term of this Services and Supply Agreement and shall comply with
all of its material obligations thereunder.
Section 3.4 Operation of Ancillary Equipment. Clark R&M shall
--------------------------------
operate and maintain the Ancillary Equipment and manage the processing of Maya
Crude Oil and other feedstreams thereby on behalf of itself and the Coker
Company.
Section 3.5 Processing of Clark R&M Products. (a) Prior to the
--------------------------------
Start-up Date, Clark R&M shall have the right to process Clark R&M-owned crude
oil through the Ancillary Equipment; provided that (i) all operating expenses
--------
related thereto shall be for the account of, and exclusively paid by, Clark R&M
and (ii) the processing of Clark R&M-owned crude oil pursuant to this clause (a)
shall (x) in no way interfere with the timely performance of the Lessor
Ancillary Equipment Upgrade, the construction of the Coker Complex by the
Contractor or the achievement of the Guranteed Values by the Guaranteed
Performance Dates (as such terms are defined in the EPC Contract) or (y) not
adversely affect the reliability or the useful life of the Ancillary Equipment.
The parties agree that consideration for the processing rights granted Clark R&M
under this Section 3.5(a) has been given to the Coker Company in the form of a
reduction in the rent payable that would otherwise be payable pursuant to
Section 13.1(a)(i) of the Ancillary Equipment Site Lease.
(b) After Final Completion, subject to the terms and conditions
hereinafter set forth, Clark R&M shall have the right (the "Excess Crude
Capacity Option") each calendar quarter during the term of this Service and
Supply Agreement to require the Coker Company to process Clark R&M-owned crude
oil and other feedstreams equal to the Excess Crude Capacity for each day during
such calendar quarter.
(c) If Clark R&M shall not have given the Coker Company written
notice at least thirty days prior to any calendar quarter that it does not
intend to exercise its Excess Crude Capacity Option for the succeeding calendar
quarter, Clark R&M shall be deemed to have exercised such right and shall pay
the Coker Company for the processing of Clark R&M-owned crude oil and other
feedstreams equal to the Excess Crude Capacity for each day during such calendar
quarter in accordance with the formulas set forth on Schedule 3.5.
(d) If Clark R&M chooses not to exercise its Excess Crude Capacity
Option in any calendar quarter, the Coker Company may sell such processing right
(or portion of such right) to an alternative purchaser and Clark R&M agrees to
provide such alternative purchaser and/or the Coker Company with such Services
and Supplies hereunder as may be required to process crude oil and other
feedstreams for such party through the Ancillary Equipment.
(e) If Clark R&M chooses to exercise its Excess Crude Capacity Option
in any calendar quarter, the Coker Company agrees to process Clark R&M-owned
crude oil and other feedstreams through the Ancillary Equipment or through any
other appropriate equipment to which the Coker Company may have access, provided
--------
that (i) if the Coker Company chooses to process such Clark R&M-owned crude oil
and other feedstreams through the Ancillary
<PAGE>
6
Equipment, such processing will not interrupt, reduce or otherwise materially
interfere with the processing of Coker Company Maya during such calendar quarter
or (ii) if the Coker Company chooses to process such Clark R&M-owned crude oil
and other feedstreams through alternative equipment, such processing will not
materially affect the expected product yields from such crude oil and other
feedstreams.
Section 3.6 Title to Product Streams from Ancillary Equipment. Title
-------------------------------------------------
to product streams resulting from the processing of Coker Company Maya and other
Coker Company-owned crude oil through the Ancillary Equipment shall be
determined on a pro rata basis in proportion to the relative volume of Coker
Company-owned crude oil and other crude oil processed through the Ancillary
Equipment for Clark R&M (or for other third parties if Clark R&M does not
exercise its Excess Crude Capacity Option), in accordance with the
specifications and formulas under the heading "Quantity" on the Schedules to the
Product Purchase Agreement (it being understood that Clark R&M shall have title
to those product streams resulting from the processing of Clark R&M-owned
feedstreams through the Ancillary Equipment pursuant to Section 3.5).
Section 3.7 Disposition of Product Streams from Ancillary Equipment.
-------------------------------------------------------
(a) Clark R&M shall determine the portion, if any, of Coker Company-
owned VGO and Clark R&M-owned VGO produced by the Crude Unit that is required to
fill the remaining Excess Hydrocracker Capacity of the Hydrocracker on any day
in accordance with the provisions of Section 4.3 and shall manage the delivery
of any such VGO to the Hydrocracker on behalf of the Coker Company and itself.
(b) Clark R&M shall manage the delivery of VTBs from the Ancillary
Equipment to the Coker on behalf of the Coker Company and itself.
(c) Clark R&M shall manage the delivery of all Products from the
Ancillary Equipment (including all Coker Company-owned VGO not delivered to the
Hydrocracker pursuant to clause (a) above) that are to be sold under the
Products Purchase Agreement in accordance with such agreement.
(d) Clark R&M shall deliver all other Clark R&M-owned product streams
(other than VTBs and VGO to be delivered to the Coker Complex) to the battery
limits of the Ancillary Equipment and shall take possession and control all such
Clark R&M-owned product streams delivered to the battery limits of the Ancillary
Equipment.
ARTICLE 4. COKER COMPLEX; SUPPLY AND SERVICES
Section 4.1 Operation of Coker Complex.
--------------------------
(a) The Coker Company shall employ the roster of personnel with the
job descriptions listed on Schedule 4.1; provided, however, that the Coker
-------- -------
Company may reduce the
<PAGE>
7
number of such employees to the extent (i) that changes in technology or
automation opportunities allow a reduced number of Coker Company to perform such
job descriptions in a more cost effective manner and (ii) permitted by the
Financing Documents.
(b) Clark R&M shall supervise and train the employees referred to in
clause (a) above and shall otherwise operate and maintain the Coker Complex and
manage the processing of VTBs, VGO, LCO and other feedstreams thereby on behalf
of the Coker Company.
(c) Clark R&M shall operate the Coker Complex in accordance with all
of the terms and conditions set forth in the EPC Contract.
Section 4.2 Processing of Clark R&M Products; Coker. (a) Subject to
---------------------------------------
the terms and conditions hereinafter set forth and to Section 6.2(d), Clark R&M
shall have the right (the "Excess Coker Capacity Option") each calendar quarter
during the term of this Service and Supply Agreement to require the Coker
Company to process Clark R&M-owned VTBs and other feedstreams equal to the
Excess Coker Capacity each day during such calendar quarter.
(b) If Clark R&M shall not have given the Coker Company written
notice at least thirty days prior to any calendar quarter that it does not
intend to exercise its Excess Coker Capacity Option for the succeeding calendar
quarter, Clark R&M shall be deemed to have exercised such right and shall pay
the Coker Company for the processing of VTBs and other feedstreams equal to the
Excess Coker Capacity each day during such calendar quarter in accordance with
the formula set forth on Schedule 4.2.
(c) If Clark R&M chooses not to exercise its Excess Coker Capacity
Option in any calendar quarter, the Coker Company may sell such processing right
(or portion of such right) to an alternative purchaser and Clark R&M agrees to
provide such alternative purchaser and/or the Coker Company with such Services
and Supplies hereunder as may be required to process VTBs and other feedstreams
for such party through the Coker.
(d) If Clark R&M chooses to exercise its Excess Coker Capacity Option
in any calendar quarter, the Coker Company agrees to process Clark R&M-owned
VTBs and other feedstreams through the Coker or through any other appropriate
equipment to which the Coker Company may have access, provided that (i) if the
--------
Coker Company chooses to process such Clark R&M-owned feedstreams through the
Coker, such processing will not interrupt, reduce or otherwise materially
interfere with the processing of Coker Company VTBS during such calendar quarter
or (ii) if the Coker Company chooses to process such Clark R&M-owned feedstreams
through alternative equipment, such processing will not materially affect the
expected product yields from such feedstreams.
Section 4.3 Processing of Clark R&M Products; Hydrocracker. (a)
----------------------------------------------
Subject to the terms and conditions hereinafter set forth, Clark R&M shall have
the right (the "Excess Hydrocracker Capacity Option") each calendar quarter
during the term of this Service and Supply Agreement to require the Coker
Company to process Clark R&M-owned feedstreams up to an amount equal to the
Excess Hydrocracker Capacity each day during such calendar quarter.
<PAGE>
8
(b) If Clark R&M shall not have given the Coker Company written
notice at least thirty days prior to any calendar quarter that it does not
intend to exercise its Excess Hydrocracker Capacity Option for the succeeding
calendar quarter, Clark R&M shall be deemed to have exercised such right and
shall pay the Coker Company for the processing of Clark R&M-owned feedstreams
during such calendar quarter in accordance with the formulas set forth on
Schedule 4.3.
(c) If Clark R&M chooses to exercise its Excess Hydrocracker Capacity
Option in any calendar quarter, the Coker Company agrees to process the volume
of Clark R&M-owned LCO, VGO and other feedstreams designated by Clark R&M each
day up to the Excess Hydrocracker Capacity for such day through the Hydrocracker
or through any other appropriate equipment to which the Coker Company may have
access, provided that (i) if the Coker Company chooses to process such Clark
--------
R&M-owned feedstreams through the Hydrocracker, such processing will not
interrupt, reduce or otherwise materially interfere with the processing of Coker
Company VGO produced by the Coker during such calendar quarter or (ii) if the
Coker Company chooses to process such Clark R&M-owned feedstreams through
alternative equipment, such processing will not materially affect the expected
product yields from such feedstreams. To the extent that Clark R&M does not
exercise its right to use all Excess Hydrocracker Capacity on any day during
such calendar quarter, Clark R&M shall ensure that pro rata portions of Coker
Company-owned and Clark R&M-owned VGO produced by the Crude Unit on such day are
used to fill the remaining Excess Hydrocracker Capacity of the Hydrocracker.
Clark R&M shall pay the Coker Company for all such Clark R&M-owned VGO processed
by the Hydrocracker in accordance with the formulas set forth on Schedule 4.3.
(d) If Clark R&M chooses not to exercise its Excess Hydrocracker
Capacity Option in any calendar quarter, the Coker Company may sell such
processing right (or portion of such right) to an alternative purchaser or
direct Clark R&M to ensure that the Excess Hydrocracker Capacity (or any portion
thereof) is used to process Coker Company VGO produced by the Crude Unit. In
either case, Clark R&M shall provide the Coker Company and/or such alternative
purchaser with such Services and Supplies hereunder as may be required to
process VGO or other feedstreams for such party through the Hydrocracker.
Section 4.4 Supply and Delivery of Other Feedstocks to Coker Complex.
--------------------------------------------------------
(a) Clark R&M shall coordinate the scheduling and execution of
deliveries of Hydrogen needed to process Coker Company-owned VTBs and VGO by the
Coker Complex on behalf of the Coker Company in accordance with the Hydrogen
Supply Agreement and shall otherwise perform the Coker Company's obligations
(other than payment to obligations) and exercise its rights under the Hydrogen
Supply Agreement, in accordance with Schedule 4.4.
(b) Clark R&M shall supply and the Coker Company shall purchase all
other feedstocks (including any additional hydrogen not available under the
Hydrogen Supply Agreement) necessary to process Coker Company-owned VTBs, VGO
and other feedstreams through the Coker Complex and shall manage the delivery of
such products to the Coker Complex, in accordance with the specifications set
forth in Schedule 4.4.
<PAGE>
9
(c) Clark R&M shall provide at its expense all hydrogen and other
feedstocks necessary to process any Clark R&M-owned VTBs, LCO and other
feedstreams through the Coker Complex and shall deliver such products to the
Coker Complex.
Section 4.5 Title to Product Streams from Coker Complex. Title to
-------------------------------------------
product streams resulting from the processing of Coker Company-owned VTBs and
VGO through the Coker Complex shall be determined on a pro rata basis in
proportion to the relative volume of Coker Company-owned VTBs and VGO and other
VTBs and VGO processed by the Coker Complex for Clark R&M (or for other third
parties if Clark R&M has not exercised its Excess Coker Capacity Option and/or
its Excess Hydrocracker Capacity Option, as the case may be), in accordance with
the specifications and formulas under the heading "Quantity" on the Schedules to
the Product Purchase Agreement (it being understood that Clark R&M shall have
title to any product streams resulting from the processing of Clark R&M-owned
LCO and other Clark R&M-owned product streams through the Coker Complex pursuant
to Section 4.2).
Section 4.6 Disposition of Product Streams from Coker Complex. (a)
-------------------------------------------------
Clark R&M shall coordinate and manage the delivery of Coker Company Products
from the Coker Complex, in accordance with the Product Purchase Agreement.
(b) Clark R&M shall deliver all Clark R&M-owned product streams from
the Coker Complex to the battery limits of the Coker Complex and shall take
possession and control all such Clark R&M-owned product streams delivered to the
battery limits of the Coker Complex.
ARTICLE 5. GENERAL SERVICES AND SUPPLIES
Section 5.1 Construction Management.
-----------------------
(a) Clark R&M (i) shall manage and supervise the construction of the
Coker Complex by the Contractor and cooperate with the Independent Engineer to
ensure the construction of the Coker Complex in accordance with the EPC Contract
and (ii) shall fulfill all obligations, and perform all functions, of the Coker
Company under the EPC Contract, other than payment obligations of the Coker
Company thereunder including, without limitation, those listed on Schedule 5.1
hereto.
(b) Without limiting the generality of the foregoing clause, Clark
R&M agrees to schedule, coordinate, manage and perform all start-up and
performance testing obligations of the Coker Company under the EPC Contract and
take such other steps as are necessary to cause the Coker Complex to achieve the
Guaranteed Values by the Guaranteed Performance Dates (as such terms are defined
in the EPC Contract).
Section 5.2 Contract Management. (a) Clark R&M shall supervise and
-------------------
monitor the performance by counterparties (other than itself) to all Coker
Company contracts (other than the Financing Documents) and the Coker Company's
relationships with such parties,
<PAGE>
10
including, without limitation, (i) the adequacy and timeliness of the
performance by such counterparties, (ii) timely assertion of the Coker Company's
rights under such contracts, (iii) enforcement of contractor, subcontractor and
vendor warranties and guaranties in connection therewith, and (iv) management of
dispute resolution and/or litigation in connection therewith.
(b) Clark R&M's performance of its obligations under clause (a) above
shall be subject to the on-going supervision and control of the Coker Company.
In connection with its obligations under Section 6.3, Clark R&M shall provide
the Coker Company quarterly reports describing actions taken by Clark R&M in the
previous calendar quarter in connection with the performance of its obligations
under clause (a) above.
Section 5.3 Maintenance Services
--------------------
(a) In compliance with Applicable Law and Prudent Industry Practice,
Clark R&M shall provide all maintenance services, materials and labor necessary
and advisable to efficiently operate and maintain the Heavy Oil Processing
Facility and the on-going production of the Required Product Mix, including,
without limitation, the services specified on Schedule 5.3. The Coker Company
shall pay for such Services in accordance with the pricing formula set forth in
Schedule 5.3. Notwithstanding the foregoing, the parties agree that certain
capital repairs and similar maintenance services with respect to the Ancillary
Equipment shall be provided at the expense of Clark R&M pursuant to Section 9.1
of the Ancillary Equipment Lease.
(b) Clark R&M shall regularly update and implement an equipment
upgrade, repair and preventive maintenance program with respect to the Heavy Oil
Processing Facility that meets the requirements of (i) Applicable Law, (ii) the
Permits, (iii) specifications of equipment manufacturers, (iv) the
recommendations of the Contractor and (v) the Financing Documents.
(c) Notwithstanding the foregoing provisions of this Section 5.3,
Clark R&M shall not be required to fund or commit to fund any capital
expenditures in connection with its obligations under this Section 5.3 that are
in excess of amounts available in the Coker Company's Major Maintenance Account
(as such term is defined in the Financing Documents), unless the Coker Company
has demonstrated that it is capable of compensating Clark R&M for such capital
expenditures and that payment of such compensation is permitted under the
Financing Documents.
Section 5.4 Operation and Maintenance of Clark Equipment.
--------------------------------------------
(a) In compliance with Applicable Law and Prudent Industry Practice,
throughout the term of this Services and Supply Agreement Clark R&M shall
operate and maintain all pipelines, interconnections and other Clark Equipment
as necessary for the efficient operation of the Heavy Oil Processing Facility
and the on-going production of the Required Product Mix. Without limiting the
generality of the foregoing, Clark R&M shall provide all maintenance services,
equipment improvements, personnel and other resources that are necessary for the
Clark Equipment to (i) generate the feedstocks for the Heavy Oil Processing
Facility that
<PAGE>
11
this Services and Supply Agreement contemplates will be generated by the Clark
Equipment, (ii) process intermediate products from the Heavy Oil Processing
Facility into saleable products, (iii) continue to operate the remainder of the
Refinery and produce intermediate and saleable products and (iv) otherwise
provide the Services and Supplies that this Services and Supply Agreement
contemplates will be provided by Clark Equipment.
(b) Clark R&M shall coordinate the scheduling and performance of all
necessary maintenance, including turnarounds and unscheduled unit shutdowns, at
the Refinery to ensure on-going production of the Required Product Mix.
Section 5.5 Utility Services. (a) Clark R&M shall provide the
----------------
following utility services, each in accordance with the more detailed
description on the Schedule referenced opposite such Service on the chart below,
to the Coker Company for the operation of the Heavy Oil Processing Facility. The
Coker Company shall reimburse Clark R&M for the cost of each such Service
(except for potable water, the cost for which is included in the rents payable
by the Coker Company under the Coker Complex Ground Lease and the Ancillary
Equipment Site Lease) in accordance with the formulas set forth in the Schedule
relating thereto:
Utility Schedule
------- --------
Electricity Schedule 5.5.1
Steam Schedule 5.5.2
Natural and Fuel Gas Schedule 5.5.3
Water Schedule 5.5.4
Compressed Air Schedule 5.5.5
Nitrogen Schedule 5.5.6
Notwithstanding anything in the foregoing to the contrary, in the event the
Clark Hydrogen Supply Agreement is terminated or expires prior to its stated
term, (i) the Coker Company shall have no obligation to purchase its full
requirements for electricity or steam from Clark R&M and (ii) to the extent that
the Coker Company purchases any portion of its requirements of steam and
electricity from Air Products pursuant to the Hydrogen Supply Agreement, Clark
R&M shall provide the Coker Company with any additional steam or electricity
required for operation of the Heavy Oil Processing Facility and the Coker
Company shall reimburse Clark R&M for the costs of such Services in accordance
with the formulas set forth in Schedule 5.5.1 or Schedule 5.5.2, as the case may
be.
(b) In order to properly measure each Service provided to the Coker
Complex pursuant to clause (a) above, Clark R&M shall (i) utilize the meter(s)
or calculation method, as the case may be, described under the heading
"Metering/Measurement Methodology for Services to the Coker Complex" on the
Schedule relating to such Service and/or Schedule 5.5(b), as the case may be,
(ii) operate and maintain all metering devices described on such Schedules and
(iii) test the accuracy of such meters and the calculation methods in accordance
with its regular practices.
<PAGE>
12
(c) If any test described in clause (b)(iii) of this Section 5.5
discloses that any metering device or calculation method related to the Services
provided pursuant to clause (a) above is materially inaccurate, Clark R&M shall
(i) promptly take such steps as necessary to correct such inaccuracy by
calibrating the applicable meters and/or adjusting the applicable calculation
method and (ii) adjust charges (except with respect to potable water) to the
Coker Company under Article 7 in order to compensate for the effect of such
inaccuracy on any charges related to the period extending back to the prior
accuracy test. For the purpose of calculating the amount of such adjustment,
the parties agree to assume that the inaccuracy occurred at the midpoint in time
between the prior accuracy test and the current accuracy test; provided,
--------
however, that if the time that such inaccuracy occurred can be ascertained by
- -------
Prudent Industry Practice, the amount of the applicable adjustment shall be
based on such time.
(d) Clark R&M shall preserve all its original test data, charts and
other records related to testing and measurements described in this Section for
a period of at least two years and make such records available, together with
calculations therefrom, for inspection or verification by the Coker Company.
(e) Should Clark R&M determine, in its reasonable judgment, that
additional and/or replacement meters are necessary to more accurately measure
the utilities described in this Section 5.5, it shall propose a metering upgrade
plan as part of the Annual Budget and Operating Plan for the Heavy Oil
Processing Facility.
(f) The agreement and obligation of Clark R&M to provide electric
utilities and electric service, natural gas and gas service and potable water
and water service under this Section 5.5 and sanitary sewage service under
Section 5.6 (each a "Regulated Utility") to the Coker Company is incident to,
-----------------
dependent upon and inseparable from the landlord/tenant relationship established
by the Coker Complex Ground Lease and the Ancillary Site Equipment Lease, and
such obligation shall continue only for the Coker Complex Ground Lease Term and
the Ancillary Site Lease Term, respectively, and the existence of such
landlord/tenant relationships between Clark R&M as landlord and the Coker
Company as tenant under such leases. The provisions of this Services and Supply
Agreement and the Ancillary Equipment Operating Fee are intended only to provide
a mechanism for Clark R&M to recover from the Coker Company the costs of
providing such Regulated Utilities described herein (and it is not intended that
Clark R&M shall make a profit by providing such utilities or utility services).
The Coker Company acknowledges, understands and agrees that none of the
Regulated Utilities provided by Clark R&M to the Coker Company may be sold or
resold by the Coker Company, and none of such Regulated Utilities may be used by
any other party or for any purposes other than in connection with its tenancies
under the Coker Complex Ground Lease and the Ancillary Site Equipment Lease,
respectively.
Section 5.6 Waste Management and Wastewater Services. Clark R&M
----------------------------------------
shall provide all collection, processing, treatment, transportation, storage,
disposal and recycling of waste generated by the Heavy Oil Processing Facility
and all rain water runoff, cooling tower blow down, sanitary sewage, recovered
oil, recovered residuals and all other hazardous and solid
<PAGE>
13
waste originating at the Heavy Oil Processing Facility in accordance with
Schedule 5.6. The Coker Company shall reimburse Clark R&M for the costs of such
Services (except sanitary sewage service, the costs for which are included in
the rents payable by the Coker Company under the Coker Complex Ground Lease and
the Ancillary Equipment Site Lease) in accordance with the formulas set forth in
Schedule 5.6.
Section 5.7 Support Services. Clark R&M shall provide the following
----------------
additional support services, each as more particularly described on the Schedule
opposite such Service on the chart below, as necessary for the operation of the
Heavy Oil Processing Facility. The Coker Company shall pay for each such
Service in accordance with the pricing formulas set forth in the Schedule
relating to such Service:
Support Service Schedule
--------------- --------
Sulfur and Coke Transport Service Schedule 5.7.1
Broad Band and Network Computing Services Schedule 5.7.2
Radio and Phone Services Schedule 5.7.3
Analytical Laboratory and
Custody Transfer Services Schedule 5.7.4
Security Services Schedule 5.7.5
Other Support Service Schedule 5.5.6
Section 5.8 Personnel and Management Services.
---------------------------------
(a) Clark R&M shall hire or provide all additional labor (other than
Coker Company employees) required to operate the Coker Complex and all labor and
professional, supervisory and management personnel as are required to operate
the Ancillary Equipment and to otherwise perform its obligations hereunder
including, without limitation, personnel required to provide the following
Services, each more particularly described on the Schedule referenced opposite
such Service on the chart below:
Operations Services Schedule 5.8.1
Engineering Services Schedule 5.8.2
Human Resources Services Schedule 5.8.3
Accounting Services Schedule 5.8.4
Administrative Services Schedule 5.8.5
(b) All personnel described in clause (a) above shall be employees of
Clark R&M for all purposes, including compensation, payroll, income and other
tax liabilities, pension contributions, insurance and workers compensation.
Clark R&M shall ensure that all key personnel are qualified and experienced in
operating facilities such as the Refinery.
(c) To the extent the Coker Company requires additional personnel to
fulfill its obligation under clause (a) of Section 4.1, Clark R&M shall assist
the Coker Company in
<PAGE>
14
hiring and training personnel that are qualified and experienced in operating
facilities such as the Refinery.
Section 5.9 Spare Parts.
-----------
(a) Pursuant to the Bill of Sale, the Coker Company is purchasing the
spare parts listed on Schedule 5.9 from Clark R&M (the "Existing Spare Parts").
--------------------
In accordance with Section 2.38 of the EPC Contract and its obligations under
Sections 5.1 and 5.2, Clark R&M shall procure additional spare parts on behalf
of the Coker Company or instruct the Contractor to purchase such spare parts on
behalf of the Coker Company (all such spare parts together with the Existing
Spare Parts, the "Coker Company Spare Parts"). Clark R&M shall use its best
-------------------------
efforts to ensure that all purchases of Coker Company Spare Parts are made at
competitive rates. At all times during the term of this Services and Supply
Agreement, Clark R&M shall maintain a complete inventory of all Coker Company
Spare Parts and shall manage and store such spare parts in a manner that ensures
that the Coker Company Spare Parts are at all time separate from the Common
Spare Parts and identifiable as property of the Coker Company. The Coker
Company shall reimburse Clark R&M for all Coker Company Spare Parts procured by
Clark R&M.
(b) Clark R&M shall acquire, manage and store all other spare parts
necessary for the operation of the Heavy Oil Processing Facility and the
performance of Clark R&M's obligations hereunder (the "Common Spare Parts").
------------------
The Coker Company shall reimburse Clark R&M for the cost of Common Spare Parts
utilized in connection with the Coker Complex.
(c) Clark R&M shall (i) ensure that all Coker Company Spare Parts are
new and that all spare parts described in this Section 5.9, including Coker
Company Spare Parts, are of good quality and free from defects, (ii) utilize all
such spare parts in accordance with manufacturer and supplier warranties and
recommendations, and (iii) assign to the Coker Company any warranties it obtains
in procuring Coker Company Spare Parts and other spare parts or equipment that
are utilized in connection with the Coker Complex.
Section 5.10 Catalysts, Chemicals and Consumables. Clark R&M shall
------------------------------------
supply all catalysts, chemicals and other consumable materials necessary for the
operation of the Heavy Oil Processing Facility and the performance of its
obligations hereunder, including, without limitation those more particularly
described on Schedule 5.10. The Coker Company shall pay Clark R&M for such
materials, in accordance with the pricing formulas set forth in Schedule 5.10.
Section 5.11 Quantity and Quality Control.
----------------------------
(a) In order to properly measure each product to be delivered under
this Services and Supply Agreement and the Product Purchase Agreement in
accordance with Prudent Industry Practice, Clark R&M shall (i) utilize the
meter(s) or calculation method, as the case may be, described under the headings
"Quantity" and "Quantity Measurement" on the Schedules to the Product Purchase
Agreement or the heading "Metering/Measurement Methodology" on the
<PAGE>
15
Schedules to the Services and Supply Agreement relating to such product, (ii)
operate and maintain all metering devices described on such Schedules and (iii)
test the accuracy of such meters and the calculation methods as described in
clause (d) below.
(b) Clark R&M shall implement, manage and maintain a system of
quality control and sampling to ensure that each product delivered under this
Services and Supply Agreement complies with (i) the specifications in the
Schedules and (ii) the Product Purchase Agreement, as the case may be.
(c) Every three days, Clark R&M shall provide the Coker Company with
the product quantity and quality information necessary for the Coker Company to
bill Clark R&M under Section 4.2 of the Product Purchase Agreement.
(d) In accordance with its regular practices, Clark R&M shall test
the accuracy of the meters and calculation methods described in clause (a) above
through a combination of field verifications of meters and material balances of
Refinery units. The Coker Company may from time to time request Clark R&M to
conduct additional accuracy tests, at the Coker Company's expense. If any
material inaccuracy is disclosed by any such test, Clark R&M shall (i) promptly
take such steps as necessary to correct such inaccuracy by calibrating meters
and/or adjusting the applicable calculation method and (ii) as applicable,
adjust charges to the Coker Company under Article 7 and/or provide the Coker
Company the information to adjust charges to Clark R&M under Section 4.2 of the
Products Purchase Agreement in order to compensate for the effect of such
inaccuracy on any charges related to the period extending back to the prior
accuracy test. For the purpose of calculating the amount of such adjustment, the
parties agree to assume that the inaccuracy occurred at the midpoint in time
between the prior accuracy test and the current accuracy test; provided,
--------
however, that if the time that such inaccuracy occurred can be ascertained by
- -------
Prudent Industry Practice, the amount of the applicable adjustment shall be
based on such time.
(e) Clark R&M shall preserve all its original test data, charts and
other records related to the quantity and quality measurements described in this
Section for a period of at least two years and make such records available,
together with calculations therefrom, for inspection or verification by the
Coker Company.
(f) Should Clark R&M determine, in its reasonable judgment, that
additional and/or replacement meters are necessary to more accurately measure
the Products, it shall propose a metering upgrade plan as part of the Annual
Budget and Operating Plan for the Heavy Oil Processing Facility.
(g) To the extent that any meters described on the Exhibits to the
Product Purchase Agreement are designated "XX-XXX", the Coker Company and Clark
R&M shall promptly replace such designation with meter identification numbers
upon completion of design engineering relating to such meter.
<PAGE>
16
Section 5.12 Environmental, Health and Safety Services.
-----------------------------------------
(a) Clark R&M shall be solely responsible for initiating, maintaining
and supervising all environmental, health and safety precautions and programs in
connection with the construction, operation and maintenance of the Heavy Oil
Processing Facility and the performance of its duties hereunder and shall
maintain the safety of the Heavy Oil Processing at a level consistent with
Applicable Law and Prudent Industry Practice, in accordance with Schedule
5.12.1.
(b) Clark R&M shall provide the emergency response services described
on Schedule 5.12.2. If an emergency conditions arises, Clark R&M may take
whatever steps it deems necessary and/or appropriate consistent with Prudent
Industry Practice and Applicable Law to preserve and protect any portion of the
Refinery and persons at the Refinery and to overcome the emergency condition,
restore the Refinery and continue performance of its duties hereunder. To the
extent such emergency action involves the Heavy Oil Processing Facility, the
Coker Company will reimburse Clark R&M for its pro rata share of expenses
incurred in connection with such action, in accordance with Schedule 5.12.2.
Section 5.13 Insurance Coverage.
------------------
(a) Clark R&M shall purchase and maintain, on behalf of the Coker
Company, the insurance coverage specified in Schedule 5.13 for the Heavy Oil
Processing Facility. Clark R&M shall cause such insurance coverage to (i) be
available at such times and in such amounts as required by the Financing
Documents, (ii) comply in form and substance to the requirements of the
Financing Documents, including, without limitation, the naming of Financing
Parties as mortgagees, additional insureds and loss payees, as appropriate, on
each insurance policy obtained pursuant to this clause (a) and (iii) provide an
insurer's waiver of subrogation in favor of each insured party thereunder.
(b) The Coker Company shall reimburse Clark R&M for its share of
costs associated with insurance coverage obtained pursuant to clause (a) above
according to the pricing formulas set forth in Schedule 5.13.
Section 5.14 Licensing, Permits and Approvals.
--------------------------------
(a) Clark R&M shall investigate, determine, procure, pay for and
maintain in effect, including all renewals and updating thereof, any and all
professional licenses, other Permits, or governmental approvals necessary for
continuous operation of the Heavy Oil Processing Facility including, without
limitation, those listed on Schedule 5.14.
(b) To the extent that any Permits are necessary for the continuous
operation of the Coker Complex, Clark R&M shall, to the extent permitted by
Applicable Law, (i) procure such Permits in the Coker Company's name or (ii)
ensure that such Permits are freely assignable by Clark R&M to the Coker Company
and, subsequently, to the Financing Parties. With respect to any Permits
currently held by Clark R&M that are necessary for the continuous operation of
<PAGE>
17
the Coker Complex that are not assignable under Applicable Law, Clark R&M agrees
to use its best efforts to ensure that such Permits are procured in the Coker
Company's name.
(c) The Coker Company shall reimburse Clark R&M for its share of
costs associated with any licenses, Permits or approvals obtained pursuant to
clause (a) above in accordance with the pricing formula set forth in Schedule
5.14.
(d) The Coker Company hereby agrees not to exercise its right,
pursuant to its air emissions permit No. 6825Z and PSD-TX-492 issued by the
Texas Natural Resource Conservation Commission (the "Standby Permit"), to
activate the Standby Permit to cover the entire Refinery, including the
Ancillary Equipment, unless activating the Standby Permit is required to allow
the Coker Company to continue operation of the Coker Complex. If the Coker
Company activates the Standby Permit, the Coker Company shall cooperate with
Clark R&M, at Clark R&M's sole cost and expense, to modify the Standby Permit to
the extent necessary to obtain air emission permits for the Clark Equipment;
provided that no such modification shall impair or restrict the right of the
- --------
Coker Company to operate the Heavy Oil Processing Facility at the greater of its
design capacity or its then actual capacity.
Section 5.15 Sulfur Recovery Services.
------------------------
(a) To the extent, at any time, the Sulfur Plant is unable to process
sulfur produced by the processing of Coker Company-owned feedstreams through the
Ancillary Equipment, the Hydrocracker and the Coker, Clark R&M shall provide the
Coker Company with alternative sulfur recovery services.
(b) In exchange for the provision of sulfur recovery services by
Clark R&M pursuant to clause (a) of this Section 5.15, to the extent, at any
time, the Clark R&M-owned sulfur recovery units at the Refinery are unable to
process sulfur produced by the processing of the Clark R&M-owned feedstreams at
the Refinery, the Coker Company agrees to the processing of Clark R&M-owned
sulfur through the Sulfur Plant to the extent that capacity is available at the
Sulfur Plant.
(c) Clark R&M shall coordinate the sulfur recovery activities
described in this Section 5.15.
ARTICLE 6. ANNUAL BUDGET AND OPERATING PLAN; REPORTING
Section 6.1 Annual Budget and Operating Plan.
--------------------------------
(a) The Annual Budget and Operating Plan for the first Operating Year
shall be the budget attached hereto as Schedule 6.1, as the same may be amended
by mutual consent, subject to any approval rights of the Financing Parties or
Independent Engineer set forth in the Financing Documents.
<PAGE>
18
(b) Sixty (60) calendar days prior to the start of each Operating
Year, other than the first Operating Year, Clark R&M shall prepare and submit to
the Coker Company, the Financing Parties and the Independent Engineer, for their
review and comment, a proposed annual budget and operating plan for such year
which Annual Budget and Operating Plan shall be substantially in the form of
Schedule 6.1 and include, without limitation, (i) detailed line items of the
anticipated revenues and expenses relating to the operation of the Heavy Oil
Processing Facility for such year and (ii) the scheduled maintenance shutdown(s)
of units comprising the Heavy Oil Processing Facility during such year.
(c) Subject to any approval rights of the Financing Parties or
Independent Engineer set forth in the Financing Documents, the Coker Company
shall accept or object to all or any portion of the proposed Annual Budget and
Operating Plan within thirty (30) calendar days of receipt thereof. If the Coker
Company objects to any portion of such proposed Annual Budget and Operating
Plan, the Coker Company and Clark R&M shall attempt in good faith to agree to an
Annual Budget and Operating Plan. If the Coker Company and Clark R&M have not
reached agreement on the Annual Budget and Operating Plan for any Operating Year
prior to the first day of such Operating Year, the Annual Budget and Operating
Plan in effect for such Operating Year shall be the same as the Annual Budget
and Operating Plan for the immediately preceding calendar year (with each item
on the budget adjusted based on a percentage change in the U.S. Consumer Price
Index, in each case, from the date the Annual Budget and Operating Plan then in
effect was approved) until a new Annual Budget and Operating Plan is approved.
Section 6.2 Operating Adjustments.
---------------------
(a) Clark R&M may modify the operations of the Ancillary Equipment or
the Coker Complex at its discretion so long as such modification does not (i) in
any way impede production of the Required Product Mix, (ii) cause an increase in
the reimbursable costs of the Coker Company that are payable hereunder that is
not offset by a corresponding increase in revenues under the Product Purchase
Agreement, (iii) adversely affect the reliability of or the useful life of
either the Coker Complex or the Ancillary Equipment, or (iv) otherwise have a
material adverse effect on the Coker Company, the Coker Complex, the Ancillary
Equipment or the Refinery (including, without limitation, a material adverse
effect on the ability of the Coker Company to pay its Senior Debt Obligations
when they become due and payable or to prepay Senior Debt in accordance with the
Base Case Financial Model).
(b) The Coker Company and Clark R&M agree to modify the Schedules
when and to the extent necessary in connection with adjustments permitted by
this Section 6.2. In the event of any such adjustments, Clark R&M shall notify
the Coker Company as soon as reasonably possible, and the parties shall
cooperate to effect the intent of this Section.
(c) To the extent Clark R&M determines, in its reasonable business
judgment and in conformity with Prudent Industry Practices, that it is
economically and technically prudent to process Coker Company feedstreams
through another Clark R&M processing unit at the Refinery which has
substantially the same processing capabilities as a unit comprising the Heavy
Oil Processing Facility, Clark R&M may substitute the processing capacity of
such unit with the
<PAGE>
19
other Clark R&M unit so long as (i) a substantially equivalent volume of Clark
R&M feedstreams are processed through the unit comprising the Ancillary
Equipment, (ii) the Clark Processing Fees shall be calculated as if the Coker
Company feedstreams were processed through the Heavy Oil Processing Facility
unit, and (iii)Clark R&M believes in its reasonable good faith judgment that the
result of such exchange of processing capacities will be to maximize the
profitability of the Refinery as a whole in a manner (A) that is mutually
beneficial to Clark R&M and the Coker Company and (B) that does not maximize the
profitability of Clark R&M at the expense of the Coker Company.
(d) To the extent that operational difficulties cause Actual Crude
Capacity for any day to be less than Crude Design Capacity, Clark R&M shall use
commercially reasonable efforts to procure alternative Coker feedstocks on
behalf of itself and the Coker Company in order operate the Coker at Actual
Coker Capacity and preserve the relative processing capacities of Clark R&M and
the Coker Company as would exist if the Ancillary Equipment were operating at
Crude Design Capacity. In such event, the Coker Company shall reimburse Clark
R&M for all Permitted Reimbursable Expenses incurred by Clark R&M in procuring
such feedstocks on behalf of the Coker Company and the Excess Coker Capacity for
such day shall be deemed to equal the volume necessary to preserve the relative
processing capacities of Clark R&M and the Coker Company as would exist if the
Ancillary Equipment were operating at Crude Design Capacity.
To the extent that such operating difficulties involve the Crude Unit,
Clark R&M shall use commercially reasonable efforts to procure alternative
feedstocks for the other units comprising the Ancillary Equipment on behalf of
itself and the Coker Company in order operate such units at their actual
capacities and preserve the relative processing capacities of Clark R&M and the
Coker Company as would exist if the Crude Unit were operating at Crude Design
Capacity. In such event, the Coker Company shall reimburse Clark R&M for all
Permitted Reimbursable Expenses incurred by Clark R&M in procuring such
feedstocks on behalf of the Coker Company and the capacity of such units
available for processing Clark R&M feedstreams pursuant to Section 3.5 hereof
for such day shall be deemed to equal the volume necessary to preserve the
relative processing capacities of Clark R&M and the Coker Company as would exist
if the Crude Unit were operating at Crude Design Capacity.
Section 6.3 Quarterly Reports. Clark R&M shall, within forty five
-----------------
(45) calendar days after the end of each of the first three calendar quarters of
each year and within ninety (90) days after the end of each calendar year,
submit a report to the Coker Company, the Financing Parties and the Independent
Engineer summarizing the actual operating activities at the Heavy Oil Processing
Facility during that quarter or year, as the case may be, including, without
limitation, the feedstream mixes and volumes utilized and such other operation
information as may be reasonably requested by the Coker Company the Financing
Parties or the Independent Engineer.
<PAGE>
20
ARTICLE 7. PRICING AND PAYMENT
Section 7.1 Pricing of Services and Supplies.
--------------------------------
(a) The Coker Company shall pay Clark R&M the Applicable Price for
each Service and Supply provided by Clark R&M to the Coker Company hereunder
(except for potable water and sanitary sewage services as provided in Sections
5.5 and 5.6, respectively).
(b) Clark R&M shall pay the Coker Company the Clark Processing Fee
for the processing services provided by the Coker Company to Clark R&M
hereunder.
Section 7.2 Net Pricing and Statements.
--------------------------
(a) Clark R&M shall deliver to the Coker Company an itemized
statement substantially in the form of Exhibit A hereto (the "Reconciliation
--------------
Statement") showing computation of the following for the prior monthly period:
- ---------
(i) a calculation of the Applicable Price for each Service and
Supply provided by Clark R&M to the Coker Company during such period;
(ii) a calculation of the Clark Processing Fee for such period;
and
(iii) the difference obtained as a result of subtracting the
amount in 7.2(a)(i) from the amount in 7.2(a) (ii), as such difference
may be adjusted from time to time pursuant to clause (d) Section 5.11.
(b) The Reconciliation Statement shall be considered an invoice to
the Coker Company of the amount computed in clause (a)(iii) above which shall be
paid in accordance with Section 7.3.
Section 7.3 Payment Procedure. Payments due under this Article 7
-----------------
shall be made pursuant to Reconciliation Statements to be rendered by Clark R&M
to the Coker Company on the eleventh (11/th/) Business Day of each month and to
be paid on the twentieth (20/th/) calendar day of each month.
Section 7.4 Alternative Pricing.
-------------------
(a) If a change in Applicable Law requires Clark R&M to make capital
expenditures or change its operating procedures in a manner that directly
results in a material increase in the cost of providing the Services and
Supplies hereunder, then upon the written request of Clark R&M the parties shall
meet to negotiate in good faith an equitable adjustment or adjustments to the
pricing of Services and Supplies hereunder (or an adjustment to the rents
payable under the Coker Complex Ground Lease and/or the Ancillary Equipment Site
Lease, respectively, with respect to the provision of potable water or sanitary
sewage service); provided, however, that no such adjustment or adjustments shall
-------- -------
become effective unless or until Clark
<PAGE>
21
R&M has demonstrated to the satisfaction of the Coker Company (and such other
parties as required under the Financing Documents) that such adjustment or
adjustments shall not (i) have a material adverse effect on the ability of the
Coker Company to pay its Senior Debt Obligations when they become due or payable
and (ii) become effective until approved by the Independent Engineer.
(b) In the event that either party hereto determines in good faith
judgment that the provisions set forth under the heading "Applicable Price" on
the Schedule relating to any Service or Supply hereunder does not accurately
reflect the actual cost of providing such Service or Supply (for any reason
other than a change in Applicable Law), then upon written request of such party
the parties shall meet to negotiate in good faith an equitable adjustment or
adjustments to the pricing of such Services or Supply to reflect the actual cost
of providing such Service or Supply (and to preserve the profit component, if
any, of such price); provided, however, that such adjustment or adjustments
-------- -------
shall not (i) have a material adverse effect on the ability of the Coker Company
to pay its Senior Debt Obligations when they become due or payable and (ii)
become effective until approved by the Independent Engineer.
(c) To the extent that any expansion of operations of Clark R&M at
the Refinery (including, without limitation, the operation of the existing Clark
R&M cokers after the Start-up Date) causes the Applicable Price of any Service
to be provided pursuant to Sections 5.5 or 5.6 to increase, Clark R&M shall
reduce the amounts charged the Coker Company for such Service so that the
Applicable Price of such Service shall conform to the pricing that would have
been in effect if such expansion had not occurred.
(d) Any disputes with respect to the foregoing shall be resolved in
accordance with Section 11.6 below.
Section 7.5 Recordkeeping; Right to Audit; Access to Books and
--------------------------------------------------
Records.
-------
(a) Clark R&M shall, in accordance with good business practices, keep
and maintain such books, records, accounts and other documents as may be
necessary to the performance of its obligations hereunder and which are
sufficient to reflect accurately and completely all amounts which form the basis
for Reconciliations Statements. Such records shall include receipts, memoranda,
vouchers, inventories, and accounts of every kind and nature pertaining to the
accounting for the Services and Supplies, as well as complete summaries and
reports setting forth in reasonably detail all reimbursable expenses incurred.
(b) The Coker Company shall have the right to audit all costs
incurred by Clark R&M for which Clark R&M seeks payment hereunder and shall have
the right to inspect and examine, during regular business hours and on not less
than five (5) days notice to Clark R&M all records maintained pursuant to clause
(a) above.
Section 7.6 Interest Rate for Late Payments. All amounts payable
-------------------------------
hereunder if not paid when due will accrue interest daily at the annual rate of
interest announced from time to time for dollars by The Chase Manhattan Bank,
N.A. at its offices located in New York, New
<PAGE>
22
York as its prime commercial interest rate for U.S. Dollar-denominated loans
originated in the United States plus two percent (2%) calculated from the due
date of such payment until the date of payment.
ARTICLE 8. DEFAULTS, REMEDIES AND TERMINATION
Section 8.1 Clark R&M's Right to Terminate. The failure of the Coker
------------------------------
Company to pay any amount due hereunder in excess of $250,000 which remains
uncured for a period of five (5) consecutive days from the date when payment of
such amount is due shall constitute a Coker Company default hereunder.
If a Coker Company default shall occur and be continuing, Clark R&M
after having given the Coker Company and the Financing Parties ninety (90) days
prior written notice may terminate this Services and Supply Agreement upon the
Coker Company's and/or the Financing Parties' subsequent failure to cure such
default within such ninety (90) day cure period.
Section 8.2 Coker Company's Right to Terminate and Other Remedies.
-----------------------------------------------------
Each of the following shall constitute a Clark R&M default hereunder:
(a) Failure by Clark R&M to pay any amount due hereunder in excess of
$250,000 on the date when payment of such amount is required, which continues
uncured for a period of five (5) consecutive days;
(b) Failure by Clark R&M to perform substantially any material
obligation hereunder, which failure continues uncured for a period of thirty
(30) consecutive days;
(c) Commencement of insolvency, receivership, reorganization or
bankruptcy proceedings by or against Clark R&M, which are not dismissed within
60 days;
(d) Any material representation or warranty of Clark R&M herein that
continues uncured for a period of sixty (60) consecutive days;
(e) Default by Clark R&M under Section 6.2 to the Product Purchase
Agreement; and
(f) Failure by Clark R&M to perform substantially any material
obligation under the Ancillary Equipment Site Lease or the Coker Complex Ground
Lease, which failure continues uncured for a period of thirty (30) consecutive
days.
Upon the occurrence of a Clark R&M default hereunder and subject to
such consent as may be required under the Financing Documents, the Coker Company
may take any of the following actions, provided that with respect to a default
--------
pursuant to clause (a) or (b) of this Section 8.2, the Coker Company shall have
first given Clark R&M sixty (60) days notice and
<PAGE>
23
opportunity to cure such default and Clark R&M shall have failed to cure such
default in its entirety within such sixty (60) day cure period: (x) terminate
this Services and Supply Agreement, and/or (y) exercise any or all remedies
available to it at law or in equity.
Section 8.3 Termination Option. Notwithstanding anything to the
------------------
contrary herein and subject to such consent as may be required under the
Financing Documents, this Services and Supply Agreement shall terminate at the
option of either party hereto should Final Completion (as such term is defined
in the EPC Contract) and completion of the Lessor Ancillary Equipment Upgrade
not occur on or before March 1, 2002 or such later date for completion of
construction of the Heavy Oil Processing Facility as may be contemplated by the
Financing Documents.
Section 8.4 Non-Exclusive Remedies; Specific Performance.
--------------------------------------------
(a) None of the provisions in this Article 8 are intended to be
exclusive of, or to limit, any rights available to either party at law or in
equity.
(b) Each of the parties hereto acknowledges and agrees that (i)
monetary damages may be an inadequate remedy for a breach of any of the
provisions of this Services and Supply Agreement, (ii) in addition to being
entitled to exercise all of its rights granted by law, including recovery of
damages, the other party shall therefore be entitled to specific performance of
the other party's obligations under this Services and Supply Agreement and (iii)
in the event of any action for specific performance it shall waive the defense
that a remedy at law would be adequate.
ARTICLE 9. TERM, AND COMMENCEMENT OF SERVICES
Section 9.1 Effectiveness; Term. This Services and Supply Agreement
-------------------
shall become effective on the date hereof and shall continue in effect until the
earlier of (a) the date on which this Services and Supply Agreement is
terminated pursuant to Article 8, and (b) the date of that is thirty (30) years
after the date hereof.
Section 9.2 End of Term Obligations.
-----------------------
Upon the expiration or termination, for whatever reason, of this
Services and Supply Agreement:
(a) Clark R&M shall cooperate with the Coker Company to enable it to
continue operation of the Coker Complex, reclaim goods, equipment and materials,
and otherwise effectuate the smooth transition of operations of the Coker
Complex to the Coker Company or a new manager engaged by the Coker Company;
(b) The Coker Company shall have the right, in its sole discretion,
directly to assume and become liable for any contracts or obligations that Clark
R&M may have undertaken
<PAGE>
24
with third parties in connection with the Services or provision of the Supplies
(other than any contracts or obligations related to the provision of electric
utilities or electric service), and Clark R&M shall execute all documents and
take all other reasonable steps requested by the Coker Company which may be
required to assign to and vest in the Coker Company all rights, benefits,
interest and title in connection with such contracts or obligations;
(c) Clark R&M shall deliver to the Coker Company all materials and
documents that are the Coker Company property including, without limitation, the
property referred to in Section 11.8; and
(d) Clark R&M and the Coker Company shall cooperate to amend their
respective Permits to reallocate their respective rights thereunder as necessary
for the Coker Company to continue operation the Heavy Oil Processing Facility
and Clark R&M to continue operation of the Clark Equipment.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties of the Coker Company.
---------------------------------------------------
The Coker Company represents and warrants to Clark R&M that:
(a) The Coker Company is a limited partnership duly formed and
validly existing under the laws of the State of Delaware; the Coker Company has
the power and authority to own its assets and to transact the business in which
it is now engaged or proposed to be engaged in; and the Coker Company is duly
qualified to do business in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
(b) The execution, delivery and performance by the Coker Company of
this Services and Supply Agreement has been duly authorized by all necessary
corporate action and does not and will not: (1) require any further consent or
approval of the members of the Coker Company; (2) contravene the Coker Company's
partnership agreement or limited partnership certificate; (3) violate any
provision of any law, rule, regulation, order, writ, judgment, decree,
determination, or award presently in effect having applicability to the Coker
Company; (4) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
the Coker Company is a party or by which it or its properties may be bound or
affected; (5) result in, or require, the creation or imposition of any lien,
upon or with respect to any of the properties now owned or hereafter acquired by
the Coker Company; or (6) cause the Coker Company to be in default under any
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease or instrument.
(c) This Services and Supply Agreement is in full force and effect
and is the legal, valid, and binding obligation of the Coker Company,
enforceable against the Coker
<PAGE>
25
Company in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, moratorium, insolvency or other similar
laws affecting creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
Section 10.2 Representations and Warranties of Clark R&M.
-------------------------------------------
Clark R&M represents and warrants to the Coker Company that:
(a) Clark R&M is a corporation duly formed and validly existing under
the laws of Delaware; Clark R&M has the corporate power and authority to own its
assets and to transact the business in which it is now engaged or proposed to be
engaged in; and Clark R&M is duly qualified to do business in each jurisdiction
in which the character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary.
(b) The execution, delivery and performance by Clark R&M of this
Services and Supply Agreement has been duly authorized by all necessary
corporate action and does not and will not: (1) require any further consent or
approval of the members of Clark R&M; (2) contravene Clark R&M's certificate of
incorporation or by laws, (3) violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination, or award presently in
effect having applicability to Clark R&M; (4) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Clark R&M is a party or by which
it or its properties may be bound or affected; (5) result in, or require, the
creation or imposition of any lien, upon or with respect to any off the
properties now owned or hereafter acquired by Clark R&M; or (6) cause Clark R&M
to be in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award or any such indenture, agreement,
lease or instrument.
(c) This Services and Supply Agreement is in full force and effect
and is the legal, valid, and binding obligation of Clark R&M enforceable against
Clark R&M in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, moratorium, insolvency, or
other similar laws affecting creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(d) Clark R&M has all the required skills and capacity necessary to
provide and shall diligently provide the Services and Supplies in a timely and
professional manner, utilizing sound operation principles, project management
procedures and supervisory procedures, all in accordance with Applicable Law,
Prudent Industry Practice and the Base Case Financial Model.
<PAGE>
26
ARTICLE 11. FURTHER AGREEMENTS
Section 11.1 Intellectual Property; Confidentiality. Clark R&M agrees
--------------------------------------
to be bound by all confidentiality agreements and all agreements with respect to
intellectual property rights contained in the other Project Documents.
Section 11.2 Force Majeure.
-------------
(a) If an Event of Force Majeure causes a material adverse effect on
a party's ability to carry out its obligations hereunder, other than the
obligation to pay money, such party shall give to the other party prompt notice
of such Event of Force Majeure with reasonably full particulars thereof, and any
such obligations so far as they are affected by such Event of Force Majeure
shall be suspended during but not longer than the continuance of such Event of
Force Majeure and such further period thereafter as shall be reasonable in the
circumstances.
(b) As soon as practicable after giving notice under clause (a) above
the claiming party shall provide to the other party confirmation of the
particulars required to be given under clause (a) above.
(c) Nothing in this Section 11.2 shall suspend, excuse or delay any
party's obligation to pay hereunder.
(d) The non-performing party shall use reasonable diligence to remedy
its inability to perform or to minimize the impact of the Event of Force Majeure
as quickly as possible.
Section 11.3 Cooperation with Other Parties. Clark R&M shall
------------------------------
reasonably cooperate with the Coker Company, the Independent Engineer and the
Financing Parties in connection with the Financing Documents and/or any
refinancing thereof including, without limitation, the furnishing of such
information, the giving of such certificates and the furnishing of a reasonable
consent and such reasonable opinions of counsel and other matters as the Coker
Company, the Independent Engineer or the Financing Parties may reasonably
request in connection with the transactions contemplated hereby or by the
Financing Documents.
Section 11.4 Site Access. The Coker Company hereby grants to Clark
-----------
R&M a continuing license to use the portions of the Refinery owned or leased by
the Coker Company (the "Coker Company Site") to the extent necessary to perform
------------------
its obligations hereunder.
Section 11.5 Indemnity.
---------
(a) The Coker Company shall protect, indemnify, defend and hold
harmless Clark R&M, and Clark R&M shall protect, indemnify, defend and hold
harmless the Coker Company and the Financing Parties, together with in each case
the respective indemnitee's directors, officers, employees and agents (including
but not limited to affiliates and their employees) from and against all
liabilities, damages, losses, penalties, claims, judgments,
<PAGE>
27
awards, costs, expenses (including reasonable legal fees and any fines or
assessments charged against it), demands, suits and proceedings of any nature
whatsoever for death, injury or property damage that arise out of or are in any
manner connected with the negligence or willful misconduct of that party in its
performance of this Services and Supply Agreement.
(b) Each party's obligations with respect to claims and suits covered
by this Section are subject to the conditions that (i) the indemnitee gives the
indemnitor reasonably prompt notice of any such claim or suit, (ii) the
indemnitee cooperates in the defense of any such claim or suit and (iii) the
indemnitor has sole control of the defense and settlement to the extent of the
indemnitor's liability for any such claim or suit, provided that indemnitor
--------
shall confirm in writing its obligation to indemnify the indemnitee with respect
to all costs and expenses with respect to such claim or suit. Nothing contained
in this clause (b), however, shall preclude the indemnitee from (x) being
represented by its own counsel at its own expense or (y) participating in the
settlement if the claimed relief is non-monetary in nature.
(c) The Coker Company hereby agrees that, notwithstanding any
provision herein to the contrary, with respect to any loss that is or would be
covered by the policies of insurance specified in Section 5.13, Clark R&M shall
first seek to recover insurance proceeds under such policies, through submission
of a claim and exercise of good faith efforts over the ensuing sixty (60) day
period toward recovery of damages hereunder.
Section 11.6 Dispute Resolution.
------------------
(a) In the event of any dispute arising out of or in connection with
the Services and Supply Agreement, Clark R&M or the Coker Company may notify the
other party of the nature of the dispute and the parties shall, in good faith
and using all reasonable efforts, seek to settle the dispute amicably through
negotiation between senior executives. Within twenty (20) days after delivery of
such notice, such senior executives shall meet at a mutually acceptable time and
place, and thereafter as often as reasonably deemed necessary, to exchange
relevant information and to attempt to resolve the dispute. All discussions
pursuant to this clause (a) shall be confidential and shall be treated as
compromise and settlement negotiations for all purposes including the admission
of evidence in any subsequent arbitration. If the matter has not been resolved
within sixty (60) days of the delivery of notice of the dispute, or if the
parties fail to meet within the twenty-day period referred to above, either
party may initiate arbitration of the dispute pursuant to the terms of clause
(b) of this Section.
(b) All disputes arising out of or in connection with the Services
and Supply Agreement shall be settled finally by arbitration under rules
applicable to arbitrations of the American Arbitration Association (the "AAA
---
Rules") in effect at such time. The arbitration shall take place in New York
- -----
City. Subject to the provisions of paragraph (c) below, the arbitral tribunal
shall consist of three arbitrators, one designated by each of the parties and
the third, who shall be the chairman of the tribunal, selected by agreement of
the two designated arbitrators. In the event the two arbitrators fail to agree
on the selection of the chairman, the chairman shall be selected in accordance
with ABB Rules. The substantive law applicable to the subject matter of the
arbitration shall be the law indicated in Section 12.8. Copies of the request
for arbitration
<PAGE>
28
and the answer thereto shall be served by a party on the other party in
accordance with Section 12.7. Subject to paragraph (c) below, the award of the
arbitral tribunal shall be rendered within one hundred eighty (180) days from
signature or approval of the terms of reference, subject to extension for good
cause only. The award shall be final and binding on the parties, and may be
confirmed or embodied in any order or judgment of any court of competent
jurisdiction.
(c) In the case of any claim for damages in a principal amount of two
hundred fifty thousand U.S. dollars (U.S.$250,000) or less, (i) the claim shall
be resolved by a sole arbitrator selected in accordance with AAA Rules, (ii) the
terms of reference shall be signed and any hearing of the matter shall be held
within one hundred twenty (120) days following the later of service of the
answer and transmission of the file to the arbitrator, and (iii) the arbitrator
shall render the award within thirty (30) days after the hearing or, in the
event a hearing is not held, signature or approval of the terms of reference,
subject extension for good cause only.
Section 11.7 Taxes.
-----
(a) The Coker Company shall be responsible for payment of or
reimbursement of the cost to Clark R&M of (i) all duties and all real property,
personal property, sales, use, municipal or VAT, and other like taxes, in each
case assessed against the Coker Complex and (ii) its pro rata share of all
duties and all real property, personal property, sales, use, municipal or VAT,
and other like taxes, in each case assessed against the Ancillary Equipment.
(b) Clark R&M shall use commercially reasonable efforts to minimize
the tax obligations arising out of or associated with this Services and Supply
Agreement, the Ancillary Equipment or the Coker Complex and shall assist the
Coker Company in (i) applying for available tax exemptions including, without
limitation, a Texas direct pay permit and (ii) preparing and submitting any
exemption certificates required under the clause (a) above. When obtained, the
Coker Company shall issue Clark R&M its Texas direct pay permit for the
provisions of Services and Supplies hereunder. If, for any reason, during the
term of this Services and Supply Agreement, the Coker Company provides Clark R&M
products or services which are subject to Texas sales and use tax, Clark R&M
shall provide it Texas direct pay permit to the Coker Company.
(c) Each party shall be solely responsible for payment of any
federal, state or local taxes based on upon or measured by such party's income.
Section 11.8 Title to Property.
-----------------
(a) Title to all materials, equipment, supplies, consumables, spare
parts and other items purchased or obtained by Clark R&M in connection with
performance of the Services related to, and provision of the Supplies for, the
Coker Complex shall pass immediately to and vest in the Coker Company upon
passage of title from the vendor or supplier thereof.
(b) All materials and documents prepared or developed by Clark R&M or
its employees, representatives or contractors in connection with performance of
the Services related
<PAGE>
29
to, and provision of Supplies for, the Coker Complex, including all manuals,
data, designs, drawings, plans, specifications, reports, and accounts shall
become the property of the Coker Company when prepared, and Clark R&M and its
contractors.
Section 11.9 Subcontractors.
--------------
(a) Clark R&M shall have the right to subcontract any portion of the
Services to be provided hereunder and enter into supply agreements with third
parties in connection with the provision of Supplies hereunder. Clark R&M shall
assure that its subcontractors, subcontracts and supply agreements comply with
all pertinent provisions of this Services and Supply Agreement.
(b) Clark R&M shall remain responsible for all of its obligations
under this Supply and Service Agreement regardless of whether a subcontract or
supply agreement is made or whether Clark R&M relies upon any subcontractor to
any extent. Clark R&M's use of subcontractors for the performance of its
obligations hereunder shall in no way increase Clark R&M's rights or diminish
Clark R&M's liabilities hereunder with respect to the Coker Company and this
Services and Supply Agreement shall be as though Clark R&M had itself performed
such obligations.
(c) The Coker Company shall not be deemed by virtue of any
subcontract entered into by Clark R&M in connection herewith to have any
contractual obligation to or relationship with any subcontractor of Clark R&M.
ARTICLE 12. MISCELLANEOUS
Section 12.1 Relationship of Parties.
-----------------------
(a) Nothing in this Services and Supply Agreement shall be deemed to
constitute either party hereto a partner, joint venturer, agent or legal
representative of the other party or to create any fiduciary relationship
between or among the parties.
(b) Clark R&M shall at all times be deemed an independent contractor
with respect to the provision of Services and Supplies and neither it nor any of
its employees or the employees of any of its subcontractors shall be considered
an agent, servant or employee of the Coker Company.
Section 12.2 Third Party Beneficiaries. (a) The Financing Parties
-------------------------
are intended third party beneficiaries of this Services and Supply Agreement and
the representations, warranties, covenants and agreements of the parties hereto
are made for the benefit of, and may be relied upon by, the Financing Parties.
<PAGE>
30
(b) Except as otherwise provide in this Section 12.2, the rights and
obligations created hereunder shall apply exclusively to the parties hereto and
their successors and permitted assigns, and no right shall be created in any
third party by reason of this Services and Supply Agreement or separate act or
action taken independently by either party.
Section 12.3 Clark R&M Warranties.
--------------------
(a) Clark R&M warrants that at time of delivery, each product that
Clark R&M supplies to the Coker Company hereunder shall meet its respective
specifications set forth herein and in the Schedule in all material respects.
CLARK R&M DOES NOT MAKE, AND EXPRESSLY DISCLAIMS, ANY OTHER WARRANTIES
WHATSOEVER WITH RESPECT TO THE PRODUCTS TO BE SUPPLIED BY CLARK R&M HEREUNDER,
INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
(b) Clark R&M hereby assigns any assignable warranties made by third
party suppliers for any products supplied by it hereunder. Clark R&M shall
cooperate with the Coker Company in claims made by the Coker Company against any
third party suppliers regardless of any warranty rights. The Coker Company
hereby releases Clark R&M from claims arising from a breach of such third party
warranties.
(c) Clark R&M warrants that each Service or Supply provided by Clark
R&M to the Coker Company hereunder shall meet its respective specifications set
forth herein and in the Schedules in all material respects and shall meet the
practices Clark R&M generally uses to perform similar functions at other United
States refinery facilities it owns and operates. CLARK R&M DOES NOT MAKE, AND
EXPRESSLY DISCLAIMS, ANY OTHER WARRANTIES WHATSOEVER WITH RESPECT TO THE
SERVICES AND SUPPLIES TO BE PROVIDED BY CLARK R&M HEREUNDER, INCLUDING WITHOUT
LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
Section 12.4 No Indirect Damages. Notwithstanding anything to the
-------------------
contrary herein, in no event shall either party be liable for consequential,
incidental, indirect, special or punitive damages hereunder including, without
limitation, any damages measured by the principal amount of the Coker Company's
obligations under the Financing Documents.
Section 12.5 Assignments.
-----------
(a) Clark R&M shall not assign its rights hereunder without the prior
written consent of the Coker Company and the Financing Parties. The Coker
Company may assign its rights hereunder to the Financing Parties, as collateral
security for its obligations under the Financing Documents, but otherwise shall
not assign its rights hereunder without the prior written consent of Clark R&M
and the Financing Parties. Clark R&M hereby expressly authorizes the Financing
Parties, or the Collateral Trustee acting on behalf of the Financing Parties, as
a secured party, to exercise all rights of the Coker Company under this Services
and Supply Agreement and to subsequently assign such rights in connection
therewith.
<PAGE>
31
(b) This Services and Supply Agreement shall be binding upon and
shall inure to the benefit of, the successors and permitted assigns of Clark R&M
and the Coker Company.
(c) This Services and Supply Agreement shall inure to the benefit of
the Collateral Trustee, the Financing Parties and any subsequent transferee or
assignee thereof.
(d) Notwithstanding anything to the contrary herein, no assignment of
the rights of the Coker Company with respect to the Regulated Utilities to any
Person shall be effective unless and until the rights of the Coker Company under
the Coker Complex Ground Lease and the Ancillary Equipment Site Lease are
assigned to such Person.
Section 12.6 Amendments. No amendment, modification or alteration of
----------
the terms hereof shall be binding unless the same is in writing and duly
executed by each of the parties hereto.
Section 12.7 Notices. Any notice, request, consent, waiver or other
-------
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Clark R&M:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Richard A. Keffer
If to the Coker Company:
Port Arthur Coker Company L.P.
Port Arthur Refinery
1801 S. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
<PAGE>
32
Any such notice, request, consent, waiver or other communication
required or permitted hereunder, whether to Clark R&M or the Coker Company,
shall also be personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested, to the
Collateral Trustee on behalf of the Financing Parties, addressed as follows:
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4/th/ Floor
New York, New York 10006
Attention: James McDonough
Section 12.8 GOVERNING LAW. THE PLACE OF EXECUTION, DELIVERY OR
-------------
PERFORMANCE OF THIS SERVICES AND SUPPLY AGREEMENT OR OF THE DOMICILE OF THE
PARTIES HERETO NOTWITHSTANDING, THIS SERVICES AND SUPPLY AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SERVICES AND SUPPLY AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT MATTERS AFFECTING THE
OBLIGATION OF CLARK R&M TO PROVIDE ELECTRIC UTILITIES OR ELECTRIC SERVICE,
NATURAL GAS OR GAS SERVICE, POTABLE WATER OR WATER SERVICE OR SANITARY SEWAGE
SERVICES TO THE COKER COMPANY, INCLUDING THE ENFORCEMENT OF REMEDIES WITH
RESPECT THERETO, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
Section 12.9 Submission to Jurisdiction; Forum Selection.
-------------------------------------------
(a) Each of the parties hereto submits to the non-exclusive
jurisdiction of the courts of the State of New York, the State of Texas and the
courts of the United States of America located in the State of New York and the
State of Texas over (i) any suit, action or proceeding with respect to this
Services and Supply Agreement or the transactions contemplated hereby if not
settled by arbitration pursuant to Section 11.6 above and (ii) the enforcement
of any arbitral award issued pursuant to Section 11.6 above.
(b) Except for an arbitration award under Section 11.6 hereof, any
suit, action or proceeding with respect to this Services and Supply Agreement or
the transactions contemplated hereby, or the enforcement of any arbitral award
in connection therewith, may be brought only in the courts of the State of New
York or the courts of the United States of America located in the State of New
York, in each case located in the Borough of Manhattan, City of New York, State
of New York. Each of the parties hereto waives any objection that it may have to
the
<PAGE>
33
venue of such suit, action or proceeding in any such court or that such suit,
action or proceeding in such court was brought in an inconvenient court and
agrees not to plead or claim the same.
Section 12.10 Appointment of Agent for Service of Process. Each
-------------------------------------------
party hereto irrevocably appoint CT Corporation, at 1633 Broadway, New York, New
York 10019, as its authorized agent in the State of New York upon which process
may be served in any suit, action or proceeding with respect to this Services
and Supply Agreement or the transactions contemplated hereby, and agrees that
service of process upon such agent, and written notice of said service to such
party by the person serving the same to the address provided in Section 12.7,
shall be deemed in every respect effective service of process upon such party in
any such suit or proceeding. Each party hereto further agrees to take any and
all action as may be necessary to maintain such designation and appointment of
such agent in full force and effect so long as this Services and Supply
Agreement is in effect pursuant to Section 9.1.
Section 12.11 No Waiver. The waiver of either party of a default or
---------
breach of any provision of this Services and Supply Agreement by the other party
shall not operate or be construed to operate as a waiver of any subsequent
defaults or breaches of the same or different kind. The failure of a party to
exercise any rights hereunder in a particular instance shall not operate as a
waiver of such party's right to exercise the same or different rights in
subsequent instances. The making or acceptance of a payment by either party
with knowledge of the existence of a default or breach shall not operate or be
construed to operate as a waiver of any default or breach.
Section 12.12 Counterparts. This Services and Supply Agreement may
------------
be executed by one or more of the parties to this Services and Supply Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page of this Services and Supply Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
Section 12.13 Integration. This Services and Supply Agreement and
-----------
the other Project Documents represent the agreement of the Coker Company and
Clark R&M with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Coker Company or Clark R&M
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Project Documents.
Section 12.14 Severability. Any provision of this Services and
------------
Supply Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 12.15 Headings. Captions and headings in this Services and
--------
Supply Agreement are for reference only and do not constitute a part of the
substance of this Services and Supply Agreement.
<PAGE>
34
Section 12.6 WAIVER OF JURY TRIAL. THE COKER COMPANY AND CLARK R&M
--------------------
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS SERVICES AND SUPPLY AGREEMENT OR ANY OTHER
PROJECT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Services and Supply Agreement to be signed by their respective
officers thereunto duly authorized as of the day and year first set forth above.
CLARK REFINING & MARKETING, INC.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP., as
General Partner
By: /s/ Maura J. Clark
---------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
APPENDIX A-DEFINITIONS TO THE:
Services and Supply Agreement
Product Purchase Agreement
Coker Complex Ground Lease
Ancillary Equipment Site Lease
Transfer and Assignment Agreement
General Provisions
------------------
The following terms shall have the following meanings for all purposes of
the Services and Supply Agreement, the Product Purchase Agreement, Coker Complex
Ground Lease, the Ancillary Equipment Site Lease and the Transfer and Assignment
Agreement, each referred to below, unless otherwise defined in such agreements
or the context thereof shall otherwise require, and such meanings shall be
equally applicable to both the singular and the plural forms of the terms herein
defined. In the case of any conflict between the provisions of this Appendix A
and the provisions of the main body of any of the above agreements, the
provisions of the main body of such agreement shall control the construction of
such agreement.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreement (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the permitted successors and assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
"Actual Coker Capacity" means with respect to the Coker, its capacity, from
---------------------
time to time, to process feedstreams.
"Actual Crude Capacity" means with respect to the Ancillary Equipment, its
---------------------
capacity, from time to time, to process crude oil.
"Actual Hydrocracker Capacity" means with respect to the Hydrocracker, its
----------------------------
capacity, from time to time, to process gas oil.
"Adjacent Refinery Property" means the land described on Exhibit B to the
--------------------------
Coker Complex Ground Lease and also on Exhibit C to the Ancillary Equipment Site
Lease.
"Amine Treating Unit" means the amine treating unit to be constructed
-------------------
at the Refinery and designated ATU 7841.
"Ancillary Equipment" means, collectively, the Crude Unit and the other
-------------------
processing units described on Exhibit B to the Ancillary Equipment Site Lease.
"Ancillary Equipment Easement" has the meaning given such term in Section
----------------------------
2.2 of the Ancillary Equipment Site Lease.
<PAGE>
2
"Ancillary Equipment Operating Fee" has the meaning given such term in
---------------------------------
Section 13.2(b) of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site" has the meaning given such term in Section 2.1
------------------------
of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Initial Term" means the period commencing on the
-------------------------------------
August 19, 1999 and ending on August 19, 2029.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site Lease
------------------------------
and Easement Agreement, dated as of August 19, 1999, between Clark R&M and the
Coker Company.
"Ancillary Equipment Site Leasehold" has the meaning given such term in
----------------------------------
Section 2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Lease Term" has the meaning given such term in
-----------------------------------
Article XX of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Renewal Term" means each period following the end
-------------------------------------
of the Ancillary Equipment Initial Term with respect to which Lessee has the
option to renew the Ancillary Equipment Site Lease pursuant to Article XX of the
Ancillary Equipment Site Lease.
"Ancillary Equipment Upgrade Contract" means the Reimbursable Contract for
------------------------------------
Engineering, Procurement and Construction, dated as of March 24, 1998, between
Clark R&M and the Contractor, as amended by Amendment No. One, dated as of
August 19, 1999, as further amended, supplemented or otherwise modified from
time to time.
"Annual Budget and Operating Plan" means, for any Operating Year, the
--------------------------------
budget and operating plan in effect pursuant to Section 6 of the Services and
Supply Agreement.
"Applicable Law" means, collectively, (i) all Permits and (ii) all laws,
--------------
treaties, ordinances, judgments, decrees, injunctions, writs, orders and
stipulations of any court, arbitrator or governmental agency or authority and
statutes, rules, regulations, orders and interpretations thereof of any federal,
state, county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body applicable from time to
time to the Refinery, the operation or maintenance of the Refinery, or the
performance of any obligations under the Clark R&M Agreements, any other Project
Document or any other agreement entered into in connection therewith.
"Appraisal Procedure" with respect to any renewal option of any lease,
-------------------
means a procedure whereby two independent Qualified Appraisers, one appointed by
the lessor and one by the lessee, shall agree upon the value, period, amount or
determination then the subject of an appraisal, as follows: If either the
lessor or the lessee shall determine that a value, period or amount of
determination to be determined under such lease or any related document cannot
timely be established by agreement, such party shall appoint its Qualified
Appraiser and give
<PAGE>
3
notice thereof to the other party, which shall appoint its Qualified Appraiser
within 10 days thereafter. If such other party does not appoint its Qualified
Appraiser within such ten day period, the determination of the first Qualified
Appraiser made within 20 days thereafter shall be conclusive and binding on the
lessor and the lessee. If within 20 days after appointment of the second of the
two Qualified Appraisers, such Qualified Appraisers are unable to agree upon the
value, period, amount or determination in question, they jointly shall appoint a
third Qualified Appraiser within 10 days thereafter, or, if they do not do so,
either the lessor or the lessee may request the American Arbitration Association
office in Houston, Texas (or if no such office exists at such time, the American
Arbitration Association office in New York, New York), or any organization
successor thereto, to appoint the third Qualified Appraiser from a panel of
arbitrators knowledgeable on the subject of refinery land and asset valuations
in the Texas Gulf Coast area. The decision of the third Qualified Appraiser
shall be given within 20 days after his appointment. If three Qualified
Appraisers shall be so appointed, the average of all three determinations shall
be conclusive and binding on the lessor and the lessee unless the determination
of one Qualified Appraiser is disparate from the middle determination by more
than twice the amount by which the third determination is disparate from the
middle determination, in which case the determination of the most disparate
Qualified Appraiser shall be excluded and the average of the remaining two
determinations shall be conclusive and binding on the lessor and the lessee.
The obligation to pay the fees and expenses of Qualified Appraisers incurred in
connection with any Appraisal Procedure shall be divided equally between the
lessor and the lessee.
"Auxiliary Facilities" has the meaning given such term in Article VI of the
--------------------
Coker Complex Ground Lease.
"Auxiliary Rights" has the meaning given such term in Article VI of the
----------------
Coker Complex Ground Lease.
"Available Coker Company Maya" means, for any day, the sum of (a) the
----------------------------
Contract Quantity for such day, plus (b) the extent, if any, that the Available
----
Coker Company Maya for the preceding day exceeds the Actual Crude Capacity for
such preceding day.
"Available Coker Company VTBs" means, for any day, the sum of (a) the Coker
----------------------------
Company VTBs produced by the Crude Unit on such day, plus (b) the extent, if
----
any that Available Coker Company VTBs for the preceding day exceeds Actual Coker
Capacity for such preceding day.
"Base Case Financial Model" shall mean the financial model described on
-------------------------
Exhibit A to the Services and Supply Agreement.
"BPD" has the meaning given such term in the Long-Term Oil Supply
---
Agreement.
"Business Day" means any day other than Saturday, Sunday or a legal holiday
------------
in the United States of America.
<PAGE>
4
"Clark Equipment" means all Clark Refinery Property other than the
---------------
Ancillary Equipment.
"Clark Hydrogen Supply Contract" means the Product Supply Agreement, dated
------------------------------
as of August 1, 1999, between Clark R&M and Air Products, Inc.
"Clark Maya" means Maya Crude Oil purchased by Clark R&M.
----------
"Clark Processing Fee" means, for any monthly period, the total fees due
--------------------
the Coker Company from Clark R&M for processing services provided pursuant to
Sections 3.5, 4.2 and 4.3.
"Clark R&M" means Clark Refining & Marketing, Inc., a Delaware corporation.
---------
"Clark R&M Agreements" means, collectively, (i) the Services and Supply
--------------------
Agreement, (ii) the Product Purchase Agreement, (ii) the Coker Complex Ground
Lease and (iv) the Ancillary Equipment Site Lease.
"Clark Refinery Property" means all real and personal property owned by
-----------------------
Clark R&M and located at the Refinery.
"Coker" means the delayed coker to be constructed at the Refinery and
-----
designated DCU 843.
"Coker Company" means Port Arthur Coker Company L.P., a Delaware limited
-------------
partnership.
"Coker Company Crude Oil Volume" means, on any day, the volume, stated in
------------------------------
BPD, of Coker Company-owned crude oil processed through the Crude Unit.
"Coker Company Maya" means Maya Crude Oil purchased by the Coker Company.
------------------
"Coker Complex" means, collectively, the Coker, the Hydrocracker, the
-------------
Sulfur Plant, the Sour Water Stripper, the Amine Treating Unit and the Coker
Complex Offsites.
"Coker Complex Design Capacity" means with respect to the Coker Complex,
-----------------------------
its nameplate capacity, stated in BPD, to process feedstocks.
"Coker Complex Ground Lease" means the Coker Complex Ground Lease and
--------------------------
Blanket Easement Agreement, dated as of August 19, 1999, between Clark R&M and
the Coker Company.
"Coker Complex Ground Lease Term" has the meaning given such term in
-------------------------------
Article XX of the Coker Complex Ground Lease.
<PAGE>
5
"Coker Complex Initial Term" means the period commencing on August 19, 1999
--------------------------
and ending on August 19, 2029.
"Coker Complex Leasehold" has the meaning given such term in Section 2.1 of
-----------------------
the Coker Complex Ground Lease.
"Coker Complex Offsites" means, collectively, (a) the control room, flare,
----------------------
cooling tower, sulfur loading facilities and power station no. 6 that are being
constructed pursuant to the EPC Contract and (b) the coker feed tank nos. 108
and 109 that are being modified pursuant to the EPC Contract.
"Coker Complex Renewal Term" means each period following the end of the
--------------------------
Initial Term with respect to which Lessee has the option to renew the Coker
Complex Ground Lease pursuant to Article XX of the Coker Complex Ground Lease.
"Coker Complex Site" has the meaning give such term in Section 2.1(a) of
------------------
the Coker Complex Ground Lease.
"Coker Design Capacity" means with respect to the Coker, its nameplate
---------------------
capacity, stated in BPD, to process feedstocks.
"Collateral Trustee" means the collateral trustee granted a security
------------------
interest, on behalf of the Financing Parties, in the Senior Debt pursuant to the
Financing Documents and any successor collateral trustee thereunder.
"Common Security Agreement" means the Common Security Agreement, dated as
-------------------------
of August 19, 1999, among the Coker Company, the Funding Company, Sabine,
Neches, Bankers Trust Company, as Collateral Trustee and Depositary Bank,
Deutsche Bank AG, New York Branch, as Administrative Agent, Winterthur
International Insurance Company Limited, as Oil Payment Insurers Administrative
Agent and HSBC Bank USA, as Capital Markets Trustee,
"Contract Quantity" means (a) for any day when the Long-Term Oil Supply
-----------------
Agreement is in effect and PMI has not reduced the volume of Maya available to
the Coker Company pursuant thereto, the "Contract Quantity" in effect on such
day pursuant to the Long-Term Oil Supply Agreement or such lesser amount of Maya
Crude Oil as may be purchased thereunder pursuant to Section 8.2 of the Long-
Term Oil Supply Agreement, and (b) for any other day, the amount of Maya Crude
Oil sufficient to operate the Coker at eighty percent of Actual Coker Capacity.
"Contractor" means Foster Wheeler USA Corporation, a Delaware corporation.
----------
"Crude Design Capacity" means with respect to the Ancillary Equipment, its
---------------------
nameplate capacity, stated in BPD, to process heavy crude oil.
<PAGE>
6
"Crude Unit" means the crude unit and vacuum tower located at the Refinery
----------
and collectively designated AVU-146.
"CRU 1344 Hydrotreater" means the naphtha hydrotreater located at the
---------------------
Refinery and designated CRU 1344.
"Easements" has the meaning given such term in Section 2.2 of the Coker
---------
Complex Ground Lease.
"EPC Contract" means the Contract for Engineering, Procurement and
------------
Construction Services, dated as of July 12, 1999, between the Coker Company and
the Contractor, as amended, supplemented or otherwise modified from time to
time.
"Event of Force Majeure" means any event or circumstance if (i) such event
----------------------
or circumstance is beyond the reasonable control of the affected party and (ii)
such event or circumstance is not the direct or indirect result of a party's
negligence or the failure of such party to perform any of its obligations under
the applicable Clark R&M Agreement, including, without limitation:
1. any interruption or cessation in delivery of Coker Company Maya to the
Refinery, whether or not due to an event of force majeure under the
Long-Term Oil Supply Agreement;
2. acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, blight, famine, flood, hurricane,
or other extraordinary weather conditions more severe than those
experienced at any time in the last thirty (30) years for the geographic
area of the Refinery;
3. acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the power of eminent domain, police power, condemnation or
other taking by or on behalf of any public, quasi-public or private
entity;
4. laws, rules, regulations, orders, judgments or other acts of any
foreign, federal, state or local court, administrative agency,
governmental body or authority;
5. strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the
employees of Clark R&M; and
6. a partial or entire interruption or other failure of (a) the supply of
electricity, water, wastewater treatment, steam, hydrogen or other
utilities
<PAGE>
7
to the Refinery or any part thereof, or (b) pipeline service, ship or
barge service, dock access or usage or other transportation facilities.
"Excess Coker Capacity" means, for any day, the extent that Actual Coker
---------------------
Capacity for such day exceeds the capacity necessary for the Coker to process
the Available Coker Company VTBs for such day.
"Excess Coker Capacity Option" has the meaning given such term in Section
----------------------------
4.2(a) of the Services and Supply Agreement.
"Excess Crude Capacity" means, for any day, the extent that Actual Crude
---------------------
Capacity for such day exceeds the capacity necessary for the Ancillary Equipment
to process the Available Coker Company Maya for such day and the light crude oil
necessary to process such Available Coker Company Maya.
"Excess Crude Capacity Option" has the meaning given such term in Section
----------------------------
3.5(b) of the Services and Supply Agreement.
"Excess Hydrocracker Capacity" means, for any day, the extent that Actual
----------------------------
Hydrocracker Capacity for such day exceeds the capacity necessary for the
Hydrocracker to process Coker Company VGO produced by the Coker on such day.
"Excess Hydrocracker Capacity Option" has the meaning given such term in
-----------------------------------
Section 4.3(a) of the Services and Supply Agreement.
"Fair Market Rental Value" shall mean, with respect to any land and/or
------------------------
equipment to be leased pursuant to a lease, the value, which shall not in any
event be less than zero, that would be obtained in an arm's length transaction
for cash between an informed and willing lessee and an informed and willing
lessor, neither of whom is under any compulsion to lease, for the use of such
land and/or equipment for a given period, without regard, in the case of land,
(i) to the value of any equipment or improvements that are not included in such
lease but which are located on such land, (ii) to the value of any reversionary
interest of the lessor in any equipment or improvements located on such land,
whether or not included in such lease, or (iii) to the highest and best use of
such land.
"Final Completion" has the meaning given such term in the EPC Contract.
----------------
"Financial Close" means the date when the initial funding of the Senior
---------------
Debt has occurred.
"Financing Documents" has the meaning given such term in the Common
-------------------
Security Agreement.
"Financing Parties" means any lender or note purchaser that may at any time
-----------------
be party to the Financing Documents and any trustee or agent acting on their
behalf.
<PAGE>
8
"Funding Company" means Port Arthur Finance Corp., a Delaware corporation.
---------------
"GFU 241" means the distillate hydrotreater located at the Refinery and
-------
designated GFU 241.
"GFU 242" means the distillate hydrotreater located at the Refinery and
-------
designated GFU 242.
"GFU 243" means the distillate hydrotreater located at the Refinery and
-------
designated GFU 243.
"Guaranteed Values" has the meaning given such term in the EPC Contract.
-----------------
"Heavy Oil Processing Facility" means, collectively, the Coker Complex and
-----------------------------
the Ancillary Equipment.
"Hydrocracker" or "HCU 942" means the hydrocracker to be constructed at the
------------ -------
Refinery and designated HCU 942.
"Hydrogen" means hydrogen purchased by the Coker Company pursuant to the
--------
Hydrogen Supply Agreement.
"Hydrogen Supply Agreement" means the Supply Agreement, dated as of
-------------------------
August 1, 1999, between the Coker Company and Air Products, Inc.
"Independent Engineer" means Purvin & Gertz, Inc., or successor thereto
--------------------
appointed pursuant to the Financing Documents.
"Inflation Factor" shall mean, for any month, (a) the most current Producer
----------------
Price Index published by the U.S. Department of Labor, Bureau of Statistics,
divided by, (b) the Producer Price Index on August 19, 1999.
- ----------
"Labor Costs" shall mean, with respect to any service provided by Clark
-----------
R&M, all reasonable direct labor costs of Clark R&M in performing such service
including wages, salaries, overtime charges, reasonable and customary bonuses,
payroll insurance and taxes and holidays, vacations, group medical, dental and
life insurance and other employee benefits.
"LCO" means light cycle oil.
---
"Lessor Ancillary Equipment Upgrade" shall have the meaning given such term
----------------------------------
in Section 6.1 of the Ancillary Equipment Site Lease.
"Lien" any mortgage, security interest, pledge, hypothecation, encumbrance
----
or lien (statutory or other) of any kind or nature whatsoever.
<PAGE>
9
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sale Agreement,
------------------------------
dated as of March 10, 1998, between PMI and Clark R&M, as amended by the First
Amendment and Supplement to the Maya Crude Oil Sales Agreement, dated as of
August 19, 1999, and as assigned by Clark R&M to the Coker Company pursuant to
the Long-Term Oil Supply Agreement Assignment.
"Long-Term Oil Supply Agreement Assignment" means the Assignment of the
-----------------------------------------
Long-Term Oil Supply Agreement, dated as of August 19, 1999, by Clark R&M to the
Coker Company.
"Maya Crude Oil" means Mexican crude oil of the "Maya" type, as more
--------------
particularly described in the Long-Term Oil Supply Agreement and, to the extent
necessary, such alternative crude oil(s) and/or other feedstock(s) that may be
used to produce the Required Product Mix.
"Neches" mean Neches River Holding Corp., a Delaware corporation.
------
"Operating Year" means (i) the period beginning on the Start-up Date and
--------------
ending on the last day of the calendar year in which the Start-up Date occurs
and (ii) each calendar year thereafter. All annual amounts set forth in the
Clark R&M Agreements shall be adjusted pro rata for the first Operating Year.
"Performance Test Standards" has the meaning given such term in the EPC
--------------------------
Contract.
"Permit" means any valid waiver, exemption, variance, franchise, permit,
------
authorization, license or similar order of or from any federal, state, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over the Refinery,
the Coker Complex or the Ancillary Equipment or the performance of any
obligation under any Clark R&M Agreement, any Project Document or any other
agreement in connection therewith.
"Permitted Liens" means (i) the respective rights and interests created by
---------------
or under the Financing Documents and the Project Documents, (ii) Liens for Taxes
that either are not delinquent or are being contested in good faith and by
appropriate proceedings diligently conducted, so long as such proceedings do not
(a) involve a substantial risk of foreclosure, forfeiture, loss or sale of any
portion of the Clark Refinery Property subject to the Ancillary Equipment Site
Lease or the Coker Complex Ground Lease or interest therein, (b) interfere with
the use, possession or disposition of any Clark Refinery Property subject to the
Ancillary Equipment Site Lease or the Coker Complex Ground Lease or interest
therein or (c) interfere with the payment of rent under the Ancillary Equipment
Site Lease or the Coker Complex Ground Lease; (iii) materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other like
Liens arising in the ordinary course of business for amounts that either are not
more than 30 days past due or are being contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of
<PAGE>
10
proceedings to contest Taxes set forth in clause (ii) above; (iv) Liens of any
of the types referred to in clauses (ii) and (iii) above that have been bonded
for the full amount in dispute (or as to which other security arrangements
reasonably satisfactory to the Collateral Trustee have been made); (v) Liens
securing judgments, decrees or orders of any court (i) that are not currently
dischargeable or (ii) that have been discharged or stayed or appealed within
thirty (30) days after the date of such judgment, decree or order (in the case
of a stay or appeal, during the period of such stay or appeal); (vi) other Liens
that would not impair (x) the ability of the Coker Company or its successors,
assigns or subtenants to operate the Coker Complex in accordance with the Base
Case Financial Model or (y) any of the security interests granted, or to be
granted, by the Coker Company to the Financing Parties pursuant to the Financing
Documents, (vii) with respect to the Ancillary Equipment Site Lease, the Liens
listed on Schedule I thereto; and (viii) with respect to the Coker Complex
Ground Lease, the Liens listed on Schedule I thereto.
"Permitted Reimbursable Expenses" shall mean, with respect to any service
-------------------------------
provided by Clark R&M, any reasonable expense or expenditure incurred in
performance of such service including, without limitation, (i) Labor Costs, (ii)
purchases of spare parts, tools, equipment, consumables, materials and other
supplies necessary for performance of such service and (iii) direct cost of
subcontract labor or services needed to perform such service.
"Person" an individual, partnership, corporation, business trust, joint
------
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"PMI" means P.M.I. Comercio Internacional, S.A. de C.V., a corporation
---
organized under the laws of Mexico.
"Product Purchase Agreement" means the Product Purchase Agreement, dated as
--------------------------
of August 19, 1999, between Clark R&M and the Coker Company, as amended,
supplemented or otherwise modified from time to time.
"Products" means each product described under the heading "Product" on
--------
Exhibits A-1 through A-42 to the Product Purchase Agreement.
"Project Documents" means, collectively, the Services and Supply Agreement,
-----------------
the Product Purchase Agreement, the Long-Term Oil Supply Agreement, the EPC
Contract, the Coker Complex Ground Lease, the Ancillary Equipment Site Lease and
the Hydrogen Supply Agreement.
"Prudent Industry Practice" means those practices, methods, equipment,
-------------------------
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used in refinery facilities in the United
States of a type and size similar to the Refinery.
"Qualified Appraiser" means an appraisal firm with a national reputation
-------------------
and experience in appraising facilities of a nature and type similar to the
Refinery.
<PAGE>
11
"Reconciliation Statement" has the meaning given such term in Section
------------------------
7.2(a) of the Services and Supply Agreement.
"Refinery" means, collectively, the existing oil refinery owned by Clark
--------
R&M located in Port Arthur, Texas, the Ancillary Equipment and the Coker
Complex.
"Regulated Utilities" has the meaning given such term in Section 5.5(f) of
-------------------
the Services and Supply Agreement.
"Required Product Mix" means, from time to time, the quantity and quality
--------------------
specifications of products to be produced by the Heavy Oil Processing Facility
pursuant to Section 2.2 of the Product Purchase Agreement.
"Sabine" means Sabine River Holding Corp., a Delaware corporation.
------
"Senior Debt" has the meaning given such term in the Common Security
-----------
Agreement.
"Senior Debt Obligations" means the obligations to pay principal and
-----------------------
interest on the disbursed Senior Debt, and all commissions, fees, indemnitees,
prepayment premiums and other amounts payable to the senior lenders under the
Financing Documents.
"Services" has the meaning set forth in Section 2.1 of the Services and
--------
Supply Agreement.
"Services and Supply Agreement" means the Services and Supply Agreement,
-----------------------------
dated as of August 19, 1999, between Clark R&M and the Coker Company, as
amended, supplemented or otherwise modified from time to time.
"Sour Water Stripper" means the sour water stripper to be constructed at
-------------------
the Refinery and designated SWS-8747.
"Standards" means, in addition to any other standards set forth in the EPC
---------
Contract, the technical requirements of the Project Documents, generally
accepted standards of professional care, skill, diligence and competence
applicable to engineering and construction and project management practices,
good refinery and petrochemical industry practices for oil refineries of similar
size, type and design to the Refinery, manufacturer's specifications and
warranty requirements and all Applicable Laws.
"Start-up Date" means the date on which hydrocarbons are first introduced
-------------
into the Coker Complex for the processing of test runs under the EPC Contract.
"Start-up Period" means the period from the Start-up Date until Final
---------------
Completion.
<PAGE>
12
"Sulfur Plant" means the sulfur plant to be constructed at the Refinery and
------------
designated SRU 545.
"Supplies" has the meaning set forth in Section 2.1 of the Services and
--------
Supply Agreement.
"Tax" means, with respect to any site or parcel of land and the
---
improvements thereon, all real estate taxes and assessments, including
substitutes therefor or supplements thereto, assessed upon, levied against or
imposed on such land and improvements located thereon which accrue and are due
and payable during the term of the Coker Complex Ground Lease. Notwithstanding
anything to the contrary contained herein, the term "Taxes" shall not include
any franchise, income, corporation, inheritance, succession, gift, estate,
realty transfer, capital or other tax which may be charged or assessed against
Lessor or any income, excess profit or revenue tax or any other tax which may be
assessed against or become a lien upon the Coker Complex Site or the rent
accruing therefrom.
"Total Crude Oil Volume" means, for any day, the total daily volume, stated
----------------------
in BPD, of crude oil processed by the Crude Unit.
"Transfer and Assignment Agreement" means the Transfer and Assignment
---------------------------------
Agreement, dated as of August 19, 1999, between Clark R&M and the Coker Company,
as amended, supplemented or otherwise modified from time to time.
"VGO" means vacuum gas oil.
---
"VTBs" means vacuum tower bottoms.
----
"Warranties" means the requirements of all warranties and guarantees
----------
applicable to equipment and structures constituting the Coker Complex or
the Ancillary Equipment provided by the Contractor, subcontractors,
vendors,suppliers or others.
<PAGE>
Schedule 3.1
Services and Supply Agreement
CRUDE SUPPLY MANAGEMENT SERVICES
7. Scope.
-----
1.1. Long-Term Oil Supply Agreement
Clark R&M shall administer the Long-Term Oil Supply Agreement on
behalf of the Coker Company and perform all the Coker Company's
obligations (other than payment obligations) and exercise its rights
thereunder including, without limitation, the following:
a. providing quarterly progress reports to PMI with respect to (i)
construction under the EPC Contract and (ii) the Ancillary
Equipment Upgrade
b. providing PMI timely notice of the occurrence of events of
force majeure or other occurrences that may affect the Coker
Company's ability to perform its material obligations under the
Long-Term Oil Supply Agreement
c. furnishing monthly lifting programs to PMI (including, without
limitation, the quantity of Maya to be delivered each month and
the tankers that are to deliver such Maya) and cooperating with
PMI to agree on actual monthly lifting programs for deliveries
of Maya to the Refinery, all in accordance with Section 21.1 of
the Long-Term Oil Supply Agreement
d. engagement of tankers on behalf of the Coker Company for
delivery of Maya
e. cooperate with PMI (i) to determine if an alternative pricing
mechanism is required if so notified by PMI pursuant to Section
10.2 of the Long-Term Oil Supply Agreement and (ii) if so, to
determine the parameters of such mechanism
f. monitor and keep records of on-going calculations of the
Differential Guarantee, Quarterly Shortfalls and Quarterly
Surpluses (each as defined in the Long-Term Oil Supply
Agreement)
1.2 Other Crude Oil Contracts
a. Clark R&M shall administer and perform all the Coker Company's
obligations (other than payment obligations) and exercise its
rights under all other crude oil contracts procured on behalf
of the Coker Company pursuant to Section 3.1 of the Services
and Supply Agreement.
-13-
<PAGE>
Schedule 3.1
Services and Supply Agreement
b. Clark R&M shall procure, negotiate and administer such contracts
in a manner that ensures the timely delivery to the Refinery of
the volumes and types of crude oil necessary for the on-going
production of the Required Product Mix.
8. Applicable Price.
----------------
2.1 The Coker Company shall reimburse Clark R&M for all Permitted
Reimbursable Expenses (other than Labor Costs) incurred by Clark R&M
in connection with providing crude supply management services to the
Coker Company, including, without limitation, those expenses described
in 3.1 below. The allocation of Labor Costs incurred by Clark R&M in
providing crude supply management services to the Coker Company shall
be included in the charges to the Coker Company under Section 5.8 of
the Services and Supply Agreement.
2.2 In addition, the Coker Company shall pay Clark R&M a handling fee of
$0.03 for each barrel of Coker Company-owned crude oil delivered to
the Refinery.
9. Additional Terms.
----------------
3.1 Clark R&M shall pass through charges to the Coker Company for the
following Permitted Reimbursable Expenses associated with the
transportation of crude, including without limitation, the following
fees:
Customs Fees
MPA Fees
Harbor Maintenance
Merchandising Processing Fee
3.2 The Coker Company is expected to be billed directly (as part of
invoice for payment for crude oil purchases) by the applicable third
party for certain expenses associated with the transportation of
crude, including, without limitation, charges related to the
following:
Marine Freight
Freight
OPA
Lightering
Marine Losses
Insurance
Inspection
Pipeline Tariffs (excluding CPAP)
Pipeline Losses
Pour Depressant
-14-
<PAGE>
Schedule 3.1
Services and Supply Agreement
Viscosity Surcharge
Superfund Tax
State Tax
Oil Spill Fees
-15-
<PAGE>
Schedule 3.2
Services and Supply Agreement
DOCK, PIPELINE AND STORAGE SERVICES
1. Scope.
-----
1.1. Clark R&M shall provide and coordinate all dock, pipeline and spot
storage services needed to bring Maya and other Coker Company crude
oil to the Heavy Oil Processing Facility. As of the date hereof,
Clark R&M intends to provide such services by means of the following:
a. the Clark R&M-owned docks (the "Clark Docks") and tank farms;
b. the dock owned by Sunoco, Inc. located in Nederland, Texas
(the "Sun Dock") and the related storage facilities ("Sun
Storage");
c. the Refinery pipeline system (the "Refinery Pipeline);
d. the pipeline system located at 9405 West Port Arthur Road,
Beaumont, Texas and commonly know as the Lucas Station and the
related storage facilities (the "Lucas Station"); and
e. other third party pipeline and terminal services.
1.2 Clark R&M shall manage and coordinate vessel activities at the Clark
Docks and the Sun Dock as necessary for the delivery of Maya and
other Coker Company crude oil, including, without limitation,
scheduling vessels, arranging berthing, vessel tie-up and release,
connecting loading and unloading systems, furnishing standby and
safety operators, taking product samples, operating the spill
prevention system, preparing bills of lading and other required
documentation and hiring tankermen and independent inspectors.
1.3 Clark R&M shall manage and coordinate all other vessel and pipeline
activities necessary for the delivery of Coker Company crude oil to
the Heavy Oil Processing Facility, including, without limitation,
scheduling vessels, pipelines, arranging berthing, vessel tie-up and
release, connecting loading/unloading systems, furnishing
standby/safety operators, taking product samples, operating spill
prevention system and preparing bills of lading and other required
documentation including the hiring of tankermen and independent
inspectors.
1.4 Clark R&M shall maintain the Clark Dock facilities in a condition
suitable to meet the shipping requirements of the Coker Company and
manage priority of Clark Dock usage in a manner consistent therewith.
<PAGE>
Schedule 3.2
Services and Supply Agreement
2. Applicable Price.
----------------
2.1 Sun Dock to Refinery
For each barrel of Coker Company crude oil delivered to the Refinery
through the Sun Dock each month, the Coker Company shall pay Clark
R&M the Sun Dock Fee plus the CPAP Tariff I during such month.
----
Where:
"Sun Dock Fee" means, for any month, the price per barrel
charged Clark R&M for use of the Sun Dock by Sunoco Oil, Inc.
"CPAP Tariff I" means, for any month, the per barrel tariff
charged Clark R&M by CPAP for crude oil delivered from the Sun
Dock known as the "Lucas Crude Petroleum Tariff"(origin
Nederland).
2.2 Sun Storage
For each barrel of Coker Company crude oil stored at Sun Storage each
month, the Coker Company shall pay Clark R&M the Sun Spot Fee for
each fifteen day period that such crude oil is stored at Sun Storage.
Where:
"Sun Spot Fee" means, for any month, the price per barrel
charged by Sunoco, Inc. for each fifteen day period that crude
oil is stored at the Sun Storage.
2.3 Clark Docks to Refinery (including interim storage, if necessary)
For each barrel of Coker Company crude oil delivered to the Refinery
through the Clark Docks each month, the Coker Company shall pay Clark
R&M the Sun Dock Fee plus the CPAP Tariff I.
----
2.4 Third Party Pipelines to Refinery (including interim storage, if
necessary)
For each barrel of Coker Company crude oil delivered to the Refinery
through Lucas Station from sources other than the Clark Docks or the
Sun Dock each month, the Coker Company shall pay Clark R&M the CPAP
Tariff II.
Where:
"CPAP Tariff II" means, for any month, the price per barrel
charged Clark R&M by CPAP during such month for crude oil
delivered from Lucas
-2-
<PAGE>
Schedule 3.2
Services and Supply Agreement
Station to the Refinery from sources other than the Clark
Docks or the Sun Dock and known as the "Lucas Crude Petroleum
Tariff" (origin Lucas Station).
3. Additional Terms.
----------------
The following are the applicable rates, as of the date hereof, for the
various fees to be charged the Coker Company by Clark R&M hereunder.
3.1 Sun Dock Fee: 7 cents/bbl for the first 70,000 BPD then 6
cents/bbl for each barrel over 70,000 BPD.
3.2 Sun Spot Fee 9.5 cents/bbl (for fifteen days)
3.3 CPAP Tariff I 23 cents/bbl.
3.4 CPAP Tariff II 11 cents/bbl.
-3-
<PAGE>
Schedule 3.3
Services and Supply Agreement
CRUDE UNIT FEEDSTOCK SUPPLY
1. Scope.
-----
1.1. Clark R&M shall supply the Coker Company's requirements of overhead
liquid from GFU 244 to AVU 146 ("Overhead Liquid") which is expected
to have the following specifications:
Property Typical Test Method
-------- ------- -----------
API Gravity 41.1 Typical ASTM D-1298
1.2 Clark R&M shall supply the Coker Company's requirement of refinery
slop oil to AVU 146 ("Slop Oil").
2. Measurement
-----------
2.1 Overhead Liquid
Clark R&M shall sell and Coker Company shall purchase the "Coker
Company Share" of the total input of this Overhead Liquid to AVU
146. The Coker Company Share is defined as the total input of this
Overhead Liquid multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
2.2 Slop Oil
Clark R&M shall sell and Coker Company shall purchase the "Coker
Company Share" of the total input of this Feedstock to AVU 146. The
Coker Company Share is defined as the total input of this Feedstock
multiplied by the Coker Company Crude Oil Volume divided by the
Total Crude Oil Volume.
3. Applicable Price
----------------
3.1 Overhead Liquid
The arithmetic average of the high/low Platt's Oilgram Price Report
U. S. Gulf Coast Waterborne posting for spot purchases of No. 2 (0.2
wt% S diesel) for each publication day less 3.0 cents/gallon
multiplied by the quantity of the Overhead Liquid delivered on that
day.The price for non-publication day deliveries shall be the
arithmetic average of the prices for the last proceeding publication
day and the next following publication day.
3.2 Slop Oil
The volume weighted average price of crude oil charged to AVU 146
for each day multiplied by the quantity of the Feedstock delivered
on that day.
<PAGE>
Schedule 3.3
Services and Supply Agreement
4. Delivery Point/Risk of Loss:
---------------------------
4.1 Overhead Liquid
This Overhead Liquid shall be delivered by pipeline to the Coker
Company and risk of loss shall pass at the battery limits of AVU 146.
4.2 Slop Oil
This Feedstock shall be delivered by pipeline to the Coker Company
and risk of loss shall pass at the battery limits of AVU 146.
5. Quantity Measurement:
--------------------
5.1 Overhead Liquid
Quantity measurements shall be taken at the battery limits of AVU 146
utilizing a meter to be designated upon completion of design
engineering.
5.2 Slop Oil
Quantity measurements shall be calculated by changes in Refinery Slop
inventory utilizing standard yield accounting methods.
6. Quality Measurement
-------------------
6.1 Overhead Liquid
Grab samples shall be taken as needed.
6.2 Slop Oil
None.
-2-
<PAGE>
Schedule 3.5
Services and Supply Agreement
CLARK PROCESSING FEE -- ANCILLARY EQUIPMENT
Clark R&M shall pay the Coker Company for the processing of Clark R&M-owned
crude oil each day according to the following formula:
Crude Unit Fee + GFU 243 Fee + GFU 242 Fee + CRU 1344 Hydrotreater Fee
Where:
1. Crude Unit Fee Definitions
--------------------------
"Clark R&M Crude Fraction" means, for any day, (i) Excess
------------------------
Crude Capacity on such day, divided by (ii) Actual Crude Capacity on
----------
such day.
"Crude Unit Fee" means, for any day, the sum of (i) Crude
--------------
Unit Fixed, (ii) Crude Unit Non-Fuel Variable, (iii) Crude Unit Fuel
Variable and (iv) Crude Unit Electricity Variable.
"Crude Unit Fixed" means, for any day, (i) 250,000
----------------
multiplied by (ii) Clark R&M Crude Fraction for such day, multiplied
------------- ----------
by (iii) $0.421, multiplied by (iv) the Inflation Factor for such
-- -------------
day.
"Crude Unit Non-Fuel Variable" means, for any day, (i)
----------------------------
Excess Crude Capacity for such day, multiplied by (ii) $0.005,
-------------
multiplied by (iv) the Inflation Factor for such day.
-------------
"Crude Unit Fuel Variable" means, for any day, (i) Excess
------------------------
Crude Capacity for such day, multiplied by (ii) $0.239, multiplied
------------- ----------
by (iii) (x) the Current Period Fuel Price, divided by (y) $2.24.
-- ----------
"Crude Unit Electricity Variable" means, for any day, (i)
-------------------------------
Excess Crude Capacity for such day, multiplied by (ii) $0.016,
-------------
multiplied by (iii) (x) the Current Period Electricity Price,
-------------
divided by (y) $0.029.
----------
<PAGE>
Schedule 3.5
Services and Supply Agreement
2. GFU 243 Fee Definitions
-----------------------
"Actual GFU 243 Capacity" means, for any day, the capacity,
-----------------------
stated in BPD, of GFU 243 to process feedstreams.
"Clark R&M GFU 243 Capacity" means, for any day, (i) Actual
--------------------------
GFU 243 Capacity, less, (ii) the capacity necessary for GFU 243 to
----
process Coker Company feedstreams from the Crude Unit on such day
"Clark R&M GFU 243 Fraction" means, for any day, (i) Clark
R&M GFU 243 Capacity for such day, divided by (ii) Actual GFU 243
----------
Capacity on such day.
"GFU 243 Fee" means, for any day, the sum of (i) GFU 243
------- ---
Fixed, (ii) GFU 243 Non-Fuel Variable, (iii) GFU 243 Fuel Variable
and (iv) GFU 243 Electricity Variable.
"GFU 243 Fixed" means, for any day, (i) 43,000 multiplied
------------- ----------
by (ii) Clark R&M GFU 243 Fraction for such day, multiplied by
-- -------------
(iii) $0.380, multiplied by (iv) the Inflation Factor for such day.
-------------
"GFU 243 Non-Fuel Variable" means, for any day, (i) Clark
-------------------------
R&M GFU 243 Capacity for such day, multiplied by (ii) $0.094,
-------------
multiplied by (iii) the Inflation Factor for such day.
-------------
"GFU 243 Fuel Variable" means, for any day, (i) Clark R&M
---------------------
GFU 243 Capacity for such day, multiplied by (ii) $0.330, multiplied
------------- ----------
by (iii) (x) the Current Period Fuel Price, divided by (y) $2.24.
-- ----------
"GFU 243 Electricity Variable" means, for any day, (i) Clark
----------------------------
R&M GFU 243 Capacity for such day, multiplied by (ii) 0.042,
-------------
multiplied by (iii) (x) the Current Period Electricity Price,
-------------
divided by (y) $0.029.
----------
6. GFU 242 Fee Definitions
-----------------------
"Actual GFU 242 Capacity" means, for any day, the capacity,
-----------------------
stated in BPD, of GFU 242 to process feedstreams.
"Clark R&M GFU 242 Capacity" means, for any day, (i) Actual
--------------------------
GFU 242 Capacity, less (ii) the capacity necessary for GFU 242 to
----
process Coker Company feedstreams from the Crude Unit on such day.
"Clark R&M GFU 242 Fraction" means, for any day, (i) Clark
--------------------------
R&M GFU 242 Capacity for such day, divided by (ii) Actual GFU 242
----------
Capacity on such day.
-2-
<PAGE>
Schedule 3.5
Services and Supply Agreement
"GFU 242 Fee" means, for any day, the sum of (i) GFU 242
-----------
Fixed, (ii) GFU 242 Non-Fuel Variable, (iii) GFU 242 Fuel Variable and
(iv) GFU 242 Electricity Variable.
"GFU 242 Fixed" means, for any day, (i) 32,000 multiplied
------------- ----------
by (ii) Clark R&M GFU 242 Fraction for such day, multiplied by (iii)
-- -------------
$0.386, multiplied by (iv) the Inflation Factor for such day.
-------------
"GFU 242 Non-Fuel Variable" means, for any day, (i) Clark
-------------------------
R&M GFU 242 Capacity for such day, multiplied by (ii) $0.017,
-------------
multiplied by (iii) the Inflation Factor for such day.
-------------
"GFU 242 Fuel Variable" means, for any day, (i) Clark R&M
---------------------
GFU 242 Capacity for such day, multiplied by (ii) $ 0.342,
-------------
multiplied by (iii) (x) the Current Period Fuel Price, divided by
------------- ----------
(y) $2.24.
"GFU 242 Electricity Variable" means, for any day, (i) Clark
----------------------------
R&M GFU 242 Capacity for such day, multiplied by (ii) $0.014,
-------------
multiplied by (iii) (x) the Current Period Electricity Price,
-------------
divided by (y) $0.029.
----------
7. CRU 1344 Hydrotreater Fee Definitions
-------------------------------------
"Actual CRU 1344 Hydrotreater Capacity" means, for any day,
-------------------------------------
the capacity, stated in BPD, of CRU 1344 Hydrotreater to process
feedstreams.
"Clark R&M CRU 1344 Hydrotreater Capacity" means, for any
----------------------------------------
day, (i) Actual CRU 1344 Hydrotreater Capacity, less, (ii) the
----
capacity necessary for CRU 1344 Hydrotreater to process Coker
Company feedstreams from the Crude Unit on such day
"Clark R&M CRU 1344 Hydrotreater Fraction" means, for any
----------------------------------------
day, (i) Clark R&M CRU 1344 Hydrotreater Capacity for such day,
divided by (ii) Actual CRU 1344 Hydrotreater Capacity for such day.
----------
"CRU 1344 Hydrotreater Fee" means, for any day, the sum of
-------------------------
(i) CRU 1344 Hydrotreater Fixed, (ii) CRU 1344 Hydrotreater Non-Fuel
Variable, (iii) CRU 1344 Hydrotreater Fuel Variable and (iv) CRU 1344
Hydrotreater Electricity Variable.
"CRU 1344 Hydrotreater Fixed" means, for any day, (i) 51,500
---------------------------
multiplied by (ii) Clark R&M CRU 1344 Hydrotreater Fraction for such
-------------
day, multiplied by (iii) $0.231, multiplied by (v) the Inflation
------------- -------------
Factor for such day.
-3-
<PAGE>
Schedule 3.5
Services and Supply Agreement
"CRU 1344 Hydrotreater Non-Fuel Variable" means, for any
---------------------------------------
day, (i) Clark R&M CRU 1344 Hydrotreater Capacity, (ii) $0.020,
multiplied by (iii) the Inflation Factor for such day.
-------------
"CRU 1344 Hydrotreater Fuel Variable" means, for any day,
-----------------------------------
(i) Clark R&M CRU 1344 Hydrotreater Capacity for such day,
multiplied by (ii) $0.159, multiplied by (iii) (x) the Current
------------- -------------
Period Fuel Price, divided by (y) $2.24.
----------
"CRU 1344 Hydrotreater Electricity Variable" means, for any
------------------------------------------
day, (i) Clark R&M CRU 1344 Hydrotreater Capacity for such day,
multiplied by (ii) $0.012, multiplied by (iii) (x) the Current
------------- -------------
Period Electricity Price, divided by (y) $0.029.
----------
8. General Definitions
-------------------
"Current Period Fuel Price" means, for any day, the MMBTU
-------------------------
Price (as defined in Schedule 5.5.3) for the month in which such day
occurs.
"Current Period Electricity Price" means, for any day, the
--------------------------------
KWH Price (as defined in Schedule 5.5.1) for the month in which such
day occurs.
-4-
<PAGE>
Schedule 4.1
Services and Supply Agreement
COKER COMPANY EMPLOYEES
1. Nineteen (19) Coker - Front-End Operators
Responsible for operating the charge/heater/fractionation/tank field
sections of the Coker in a safe, environmentally sound, and efficient
manner. This individual concentrates on the daily activities of operation.
His/her input is required to resolve problems and optimize the facility
along with the engineers and supervision of the facility. Daily duties
include monitoring, documenting, and adjusting process variables to achieve
the above. The functional operator assignments include Head Operators (4),
Board Operators (4), Outside Operators (8) and Pool Operators (3).
2. Eight (8) Coker - Coke Cutters
Responsible for operating the coke cutting operations of the Coker in a
safe, environmentally sound, and efficient manner. This individual
concentrates on the daily activities of operation. His/her input is
required to resolve problems and optimize the facility along with the
engineers and supervision of the facility. Daily duties include drum
opening/closing and coke cutting.
3. Nineteen (19) Hydrocracker/Sulfur Plant Operators
Responsible for operating the charge/heater/reactor/fractionation sections
of the Hydrocracker and Sulfur Plant in a safe, environmentally sound, and
efficient manner. This individual concentrates on the daily activities of
operation. His/her input is required to resolve problems and optimize the
facility along with the engineers and supervision of the facility. Daily
duties include monitoring, documenting, and adjusting process variables to
achieve the above. The functional operator assignments include Head
Operators (4) Board Operators (4), Outside Operators (8) and Pool Operators
(3).
4. One (1) Accounting Manager
Responsible for (i) for the accounting and administration of the
intercompany agreements between Clark R&M and the Coker Company and all
Financing Documents, (ii) reviewing and approving draft invoices and
issuing final invoices to Clark R&M under the Services and Supply Agreement
and the Product Purchase Agreement, (iii) making payments due to third
parties under the Financing Documents and the Project Documents, (v)
cooperating with any required third party audits, (vi) performing all Coker
Company reporting and recordkeeping requirements under the Financing
Documents, the Project Document and Applicable Law, (vii) administering
Coker Company payroll, (viii) administering all other general accounting
activities of the Coker Company including, without limitation, (a)
maintaining general ledger balance sheet and expense accounts pertaining to
the Heavy Oil Processing Facility, (b) processing and payment of invoices
<PAGE>
Schedule 4.1
Services and Supply Agreement
created by operation of the Heavy Oil Processing Facility and (c) ensuring
that all Federal and State Tax guidelines are incorporated.
Based on information to be provided to the Coker Company by Clark R&M, the
accounting manager will also be responsible for the following:
a. Quantifying and documenting feedstocks to and Products from each
Heavy Oil Processing Facility. Attaching value to each of these
feedstocks and Products based on applicable fees in the Services
and Supply Agreement and the Product Purchase Agreement.
Monitoring all the laboratory data for such feedstocks and
Products.
b. Monitoring and quantifying each Service provided to the Coker
Company by Clark R&M.
c. Providing reconciliation analysis of the Coker Company's
inventory, fixed assets and authorization for expenditures for
capital or turnaround documentation.
d. Preparing and distributing monthly cost analysis
e. Providing planning and budgeting guidelines and participating in
preparation of the Annual Budget and Operating Plan.
f. Coordinating the preparation and approval of unaudited quarterly
and audited annual financial statements.
-2-
<PAGE>
Schedule 4.2
Services and Supply Agreement
CLARK PROCESSING FEE -- COKER
Clark R&M shall pay the Coker Company for the processing of Clark R&M-owned
feedstreams each day according to the following formula:
Coker Fixed + Coker Non-Fuel Variable + Coker Fuel Variable + Coker
Electricity Variable
Where:
"Clark R&M Coker Fraction" means, for any day, (i) (x) Actual
------------------------
Coker Capacity on such day, less (y) Excess Coker Capacity on such
----
day, divided by (ii) Actual Coker Capacity on such day.
-------
"Coker Fixed" means, for any day, (i) 80,000 multiplied by
----------- -------------
(ii) Clark R&M Coker Fraction for such day, multiplied by (iii)
-------------
$4.114, multiplied by (iv) the Inflation Factor for such day.
-------------
"Coker Non-Fuel Variable" means, for any day, (i) Excess Coker
-----------------------
Capacity for such day, multiplied by (ii) $0.045, multiplied by
------------- -------------
(iii) the Inflation Factor for such day.
"Coker Fuel Variable" means, for any day, (i) Excess Coker
-------------------
Capacity for such day, multiplied by (ii) $0.483, multiplied by
------------- -------------
(iii) (x) the Current Period Fuel Price, divided by (y) $2.24.
----------
"Coker Electricity Variable" means, for any day, (i) Excess
--------------------------
Coker Capacity for such day, multiplied by (ii) $0.216, multiplied
------------- ----------
by (iii) (x) the Current Period Electricity Price, divided by (y)
-- ----------
$0.029.
"Current Period Fuel Price" means, for any day, the MMBTU
-------------------------
Price (as defined in Schedule 5.5.3) for the month in which such day
occurs.
"Current Period Electricity Price" means, for any day, the KWH
--------------------------------
Price (as defined in Schedule 5.5.1) for the month in which such day
occurs.
<PAGE>
Schedule 4.3
Services and Supply Agreement
CLARK PROCESSING FEE -- HYDROCRACKER
Clark R&M shall pay the Coker Company for the processing of Clark R&M-owned
feedstreams each day according to the following formula:
Hydrocracker Fixed + Hydrocracker Non-Fuel Variable + Hydrocracker Fuel
Variable + Hydrocracker Electricity Variable
Where:
"Actual Hydrocracker Capacity" means, for any day, the
----------------------------
capacity, stated in BPD, of the Hydrocracker to process feedstreams.
"Clark R&M Hydrocracker Capacity" means, for any day, the
-------------------------------
volume of Clark R&M-owned feedstreams, stated in BPD, processed by the
Hydrocracker on such day pursuant to Section 4.3 of the Services and
Supply Agreement.
"Clark R&M Hydrocracker Fraction" means, for any day, (i)
-------------------------------
Clark R&M Hydrocracker Capacity on such day, divided by (ii) Actual
-------
Hydrocracker Capacity on such day.
"Hydrocracker Fixed" means, for any day, (i) 35,000 multiplied
------------------ ----------
by (ii) Clark R&M Hydrocracker Fraction for such day, multiplied by
-- -------------
(iii) $4.888, multiplied by (iv) the Inflation Factor for such day.
-------------
"Hydrocracker Non-Fuel Variable" means, for any day, (i) Clark
------------------------------
R&M Hydrocracker Capacity for such day, multiplied by (ii) $0.221,
-------------
multiplied by (iii) the Inflation Factor for such day.
-------------
"Hydrocracker Fuel Variable" means, for any day, (i) Clark R&M
--------------------------
Hydrocracker Capacity for such day, multiplied by (ii) $0.430,
-------------
multiplied by (iii) (x) the Current Period Fuel Price, divided by
------------- ----------
(y) $2.24.
"Hydrocracker Electricity Variable" means, for any day, (i)
---------------------------------
Clark R&M Hydrocracker Capacity for such day, multiplied by (ii)
-------------
$0.308, multiplied by (iii) (x) the Current Period Electricity
-------------
Price, divided by (y) $0.029.
----------
"Current Period Fuel Price" means, for any day, the MMBTU
-------------------------
Price (as defined in Schedule 5.5.3) for the month in which such day
occurs.
"Current Period Electricity Price" means, for any day, the KWH
--------------------------------
Price (as defined in Schedule 5.5.1) for the month in which such day
occurs.
<PAGE>
Schedule 4.4
Services and Supply Agreement
HYDROGEN SUPPLY SERVICES
1. Scope.
-----
1.1 Clark R&M shall administer the Hydrogen Supply Agreement on behalf of
the Coker Company and otherwise perform the Coker Company's
obligations (other than payment obligations) and exercise its rights
thereunder including, without limitation, the following:
1. ordering the rate of flow and production of hydrogen needed by
the Coker Company for operation of the Heavy Oil Processing
Facility and, as necessary, requesting changes to such rates from
time to time.
2. coordinating scheduled maintenance shutdowns and other
maintenance activities at the Refinery and the Hydrogen Plant
with Air Products, Inc.
3. monitoring compliance with required contract specifications for
hydrogen delivered under the agreement including, without
limitation, requesting additional analyses of batch samples and
rejecting or waiving non-compliance with contract
specifications.
4. monitoring the measurement and metering of hydrogen quantities
delivered under the agreement including, without limitation,
inspecting meters and other measurement equipment, witnessing
recalibrations and challenging the accuracy of meters and other
measurement equipment by requesting that the accuracy of such
meters and other equipment be tested.
1.2 Clark R&M shall supply the Coker Company's first requirements for
hydrogen ("Clark High Pressure Hydrogen") for use at the Coker
Complex. Clark High Pressure Hydrogen shall be delivered to the Coker
Company for use in HCU 942 from the Spill Stream Hydrogen System
owned and operated by Air Products for Clark R&M up to the maximum
capacity of the Spill Stream Hydrogen System estimated to be 6.0
MMSCF/D. Clark High Pressure Hydrogen shall meet the following
specifications:
Property Specification Test Method
-------- ------------- -----------
Hydrogen 99.9% Mole Minimum UOP-539
1.3 Clark R&M shall supply the Coker Company's additional requirements
for hydrogen ("Clark Hydrocracker Purge Hydrogen") for use at the
Coker Complex. Clark Hydrocracker Purge Hydrogen shall be delivered
to the Coker Company for use in DCU 843 Naphtha Hydrotreater from the
High Pressure Hydrogen Purge
<PAGE>
Schedule 4.4
Services and Supply Agreement
Gas from HCU 942. Clark Hydrocracker Purge Hydrogen shall meet the
following specifications:
Property Specification Test Method
-------- ------------- -----------
Hydrogen 80.0% Mole Minimum UOP-539
Higher 500 BTU/SCF Typical UOP-539
Heating Value
1.4 Clark R&M shall supply the Coker Company's requirements for hydrogen
("Clark Low Pressure Hydrogen") for use at the Ancillary Equipment and
GFU 241. Clark Low Pressure Hydrogen shall be delivered to the
Ancillary Equipment and GFU 241 from the Clark Hydrogen Gathering
System. Clark Low Pressure Hydrogen shall meet the following
specifications:
Property Specification Test Method
-------- ------------- -----------
Hydrogen 70.0% Mole Minimum UOP-539
Higher 650 BTU/SCF Typical UOP-539
Heating Value
2. Meters/Measurement.
------------------
2.1 Clark High Pressure Hydrogen
Clark High Pressure Hydrogen quantity measurements shall be taken at
the Spill Stream Hydrogen System meter owned and operated by Air
Products for Clark R&M.
2.2 Clark Hydrocracker Purge Hydrogen
Clark Hydrocracker Purge Hydrogen is calculated as a portion of the
Total Hydrocracker Purge Hydrogen which quantity shall be measured at
DCU 843 meter FE-3636. The Clark Hydrocracker Purge Hydrogen is
calculated as follows:
Clark Hydrocracker
Purge Hydrogen = Total Hydrocracker Purge Hydrogen * (Light Cycle
Oil to HCU 942 + Heavy Gas Oil from DCU 843 to HCU
942 * (1 - Coker Company Crude Oil Volume / Total
Crude Oil Volume) + Heavy Gas Oil from AVU 146 to
HCU 942 * (1 - Coker Company Crude Oil Volume /
Total Crude Oil Volume )) / (Light Cycle Oil to
HCU 942 + Heavy Gas Oil from DCU 843 to HCU 942 +
Heavy Gas Oil from AVU 146 to HCU 942)
-2-
<PAGE>
Schedule 4.4
Services and Supply Agreement
Where:
Light Cycle Oil to HCU 942, Heavy Gas Oil from DCU 843 to HCU 942,
Heavy Gas Oil from AVU 146 to HCU 942, Coker Company Crude Oil Volume,
and Total Crude Oil Volume are defined in Exhibit A-18 of the Product
Purchase Agreement.
2.3 Clark Low Pressure Hydrogen
Clark R&M Low Pressure Hydrogen quantity measurements shall be
calculated for the Ancillary Equipment and GFU 241 as follows:
2.3.1 Coker Company GFU 241 Hydrogen
Coker Company GFU 241 Hydrogen is calculated as a portion of
the Total GFU 241 Make-up Hydrogen which quantity shall be
measured at GFU 241 meter FI-105M. The Coker Company GFU 241
Hydrogen is calculated as follows:
Coker Company GFU
241 Hydrogen = Total GFU 241 Make-up Hydrogen * Coker
Company Crude Oil Volume / Total Crude
Oil Volume
Where:
Coker Company Crude Oil Volume and Total Crude Oil Volume are
defined in the Product Purchase Agreement.
2.3.1 Coker Company GFU 242 Hydrogen
Coker Company GFU 242 Hydrogen is calculated as a portion of
the Total GFU 242 Make-up Hydrogen which quantity shall be
measured at GFU 242 meter FI-205M. The Coker Company GFU 242
Hydrogen is calculated as follows:
Coker Company GFU
242 Hydrogen = Total GFU 242 Make-up Hydrogen * Total
Feed to GFU 242 - Unfinished Jet from
AVU 146 drawn from inventory * Coker
Company Crude Oil Volume / Total Crude
Oil Volume
Where:
-3-
<PAGE>
Schedule 4.4
Services and Supply Agreement
Total Feed to GFU 242, Unfinished Jet from AVU 146 drawn from
inventory, Coker Company Crude Oil Volume, and Total Crude Oil
Volume are defined in Exhibit A-33 of the Product Purchase
Agreement.
2.3.3 Coker Company GFU 243 Hydrogen
Coker Company GFU 243 Hydrogen is calculated as a portion of
the Total GFU 243 Make-up Hydrogen which quantity shall be
measured at GFU 243 meter FIC-143. The Coker Company GFU 243
Hydrogen is calculated as follows:
Coker Company GFU
243 Hydrogen = Total GFU 243 Make-up Hydrogen *
((Total Volume of Diesel from AVU 146 -
Diesel Charge Volume to GFU 241 + Total
Volume of Light Gas Oil from DCU 843 ) *
Coker Company Crude Oil Volume / Total
Crude Oil Volume - Coker Company Share
of the Excessed Unfinished Diesel ) /
Total Charge Volume to GFU 243
Where:
Total Feed to GFU 243, Total Volume of Diesel from AVU 146,
Diesel Charge Volume to GFU 241, Total Volume of Light Gas Oil
from DCU 843, Coker Company Share of the Excessed Unfinished
Diesel, Coker Company Crude Oil Volume, and Total Crude Oil
Volume are defined in Exhibit A-37 of the Product Purchase
Agreement.
2.3.4 Coker Company 1344 Naphtha Hydrotreater Hydrogen
Coker Company 1344 Naphtha Hydrotreater Hydrogen is calculated
as a portion of the Total 1344 Naphtha Hydrotreater Make-up
Hydrogen which quantity shall be measured at 1344 Naphtha
Hydrotreater meter FR-857. The Coker Company 1344 Naphtha
Hydrotreater Hydrogen is calculated as follows:
Coker Company 1344
Naphtha
Hydrotreater
Hydrogen = Total 1344 Naphtha Hydrotreater Make-up
Hydrogen * (Coker Naphtha to Naphtha
Hydrotreater 1344 + Total Unfinished
Naphtha - Excessed Unfinished Naphtha) *
Coker Company
-4-
<PAGE>
Schedule 4.4
Services and Supply Agreement
Crude Oil Volume / Total Crude Oil Volume /
(Total Naphtha Hydrotreater Feed )
Where:
Total Naphtha Hydrotreater Feed Coker Naphtha to Naphtha
Hydrotreater 1344, Total Unfinished Naphtha, Excessed
Unfinished Naphtha, Coker Company Crude Oil Volume, and Total
Crude Oil Volume are defined in Exhibit A-26 of the Product
Purchase Agreement.
3. Delivery Point/Risk of Loss.
----------------------------
3.1 Clark High Pressure Hydrogen
Clark High Pressure Hydrogen shall be delivered by pipeline and
title to, and risk of loss for, such hydrogen shall pass to the
Coker Company at the battery limit of Air Products Hydrogen
Plant.
3.2 Clark Hydrocracker Purge Hydrogen
Clark Hydrocracker Purge Hydrogen shall be delivered by pipeline
and title to, and risk of loss for, such hydrogen shall pass to
the Coker Company at the battery limit of HCU 942.
3.3 Clark Low Pressure Hydrogen
Clark Low Pressure Hydrogen shall be delivered by pipeline and
title to, and risk of loss for, such hydrogen shall pass to the
Coker Company at the battery limit of each unit described in the
Ancillary Equipment Lease and GFU 241.
4. Applicable Price.
----------------
4.1 Hydrogen Supply Contract
The Coker Company shall pay Clark R&M for all Permitted
Reimbursable Expenses incurred by Clark R&M each month in
administering the Hydrogen Supply Contract.
4.2 Clark High Pressure Hydrogen
-5-
<PAGE>
Schedule 4.4
Services and Supply Agreement
The Coker Company shall pay Clark R&M for Clark High Pressure
Hydrogen supplied to the Coker Company each month the actual cost
paid for hydrogen under contract with Air Products.
4.3 Clark Hydrocracker Purge Hydrogen
The Coker Company shall pay Clark R&M for contained hydrogen in
the Clark Hydrocracker Purge Hydrogen supplied to the Ancillary
Equipment and GFU 241 each month the actual cost paid for
hydrogen under contract with Air Products. For the balance of the
contents in the Clark Hydrocracker Purge Hydrogen, the Coker
Company shall pay Clark R&M the weighted average delivered cost
of natural gas purchased by Clark R&M in dollars per MMBTU.
4.4 Clark Low Pressure Hydrogen
The Coker Company shall pay Clark R&M for contained hydrogen in
the Clark Low Pressure Hydrogen supplied to the Ancillary
Equipment each month the actual cost paid for hydrogen under
contract with Air Products. For the balance of the contents in
the Clark Low Pressure Hydrogen, the Coker Company shall pay
Clark R&M the weighted average delivered cost of natural gas
purchased by Clark R&M in dollars per MMBTU.
4.5 Power Charges and Credits.
4.5.1 Power Charges
The Coker Company shall pay Clark R&M for power consumed by Air
Products' for the manufacture and delivery of High Pressure
Hydrogen supplied to the Coker Company each month. The monthly
Power Charge is composed of a Capacity Charge, an operations and
maintenance charge (O&M Charge), and a Fuel Charge as follows:
Pc\\n\\ = (CC + OM\\n\\)* ACF\\n\\ / 0.95 * TKWH\\n\\ /
GKWH\\n\\ + FC\\n\\ * (TKWH\\n\\ -FALKWH\\n\\)
Where:
Pc\\n\\ = The Power Charge for billing month n.
CC = The monthly Capacity Charge of $321,333.
Om\\n\\ = The O&M Charge as calculated pursuant to Section
5.1.3 for billing month n.
ACF\\n\\ = The Average Capacity Factor calculated on a
rolling average basis for the most recent 36 month
period, including the current billing month n, or
for the actual number of billing months since the
Commencement Date, in accordance to Section 5.1.1.
-6-
<PAGE>
Schedule 4.4
Services and Supply Agreement
TKWH\\n\\ = The total KWH consumed by Air Products' 4.16 kV
loads as measured at the Air Products' 4.16 kV
switchgear for all hourly periods in billing month
n including those hourly periods when generator
CG-500 is not operating.
Fc\\n\\ = The Fuel Charge as calculated pursuant to Section
5.1.4 for billing month n.
GKWH\\n\\ = The gross KWH delivered by Air Products at the
Generator Terminal during billing month n.
FALKWH\\n\\ = The total KWH consumed by Air Products' Facility
Auxiliary Load as determined in accordance with
Section 5.1.2 during billing month n.
Commencement Date shall have the meaning given such term in
Section 2.1 of the Hydrogen Supply Agreement.
Generator Terminal shall mean Air Products' KW and KWH metering
point located in Air Products' 13.8 kV switchgear for Air
Products' gas turbine generator where the gross output of the gas
turbine generator unit is measured.
4.5.2 Average Capacity Factor
The Average Capacity Factor shall be calculated at the end of
each billing month as follows:
ACF\\n\\ = ((GKWH\\n\\ - (FALKWH\\n\\) / (Committed
Capacity- Facility Auxiliary Load) / (BMH
Where:
[GKWH\\n\\ = The cumulative sum of GKWH\\n\\ delivered by
Air Products for the most recent 36 billing
month period, including the current billing
month n, or for the actual number of billing
months since the Commencement Date if less
than 36 billing months have elapsed since
the Commencement Date.
[FALKWH\\n\\= The cumulative sum of FALKWH\\n\\ consumed
by Air Products for the most recent 36
billing month period, including the current
billing month n, or for the actual number of
billing months since the Commencement Date
if less than 36 billing months have elapsed
since the Commencement Date.
[BMH = The sum of (1) the total number of hourly
periods in the most recent 36 billing
months, including the current billing
-7-
<PAGE>
Schedule 4.4
Services and Supply Agreement
month n, or for the actual number of billing
months since the Commencement Date if less
than 36 billing months have elapsed since the
Commencement Date less (2) the number of
hourly periods in the above billing months
when Air Products was excused from delivering
power due to events of Force Majeure or Clark
R&M being unable to receive power from Air
Products at the Delivery Point due to
maintenance, testing, or forced outages.
For avoidance of doubt, any partial hourly period is counted
as one full hourly period for purposes of this calculation.
Notwithstanding the foregoing, the Average Capacity Factor
for the first twelve billing months following the
Commencement Date shall be deemed to be 95 percent. Beginning
with the thirteenth billing month following the Commencement
Date and for each billing month thereafter, the actual
Average Capacity Factor will be calculated. In the event that
the actual Average Capacity Factor calculated for the first
twelve (12) billing months is greater or less than ninety-
five percent (95%), Clark R&M shall retroactively adjust the
Power Charge payments Clark R&M received for the first twelve
(12) billing months.
4.5.3 Monthly Facility Auxiliary Load
The Facility Auxiliary Load shall include all load connected to
Air Products' 4.16 KV electrical distribution system except for
the electric load associated with (i) Air Products' two hydrogen
compressors (CM-250A and CM-250B), (ii) Air Products' spill gas
compressor (CM-255), and (iii) a fixed allowance of 32 KW per
hour for all auxiliary loads required to operate Air Products'
two hydrogen compressors and spill gas compressor. The KWH
consumed by the Facility Auxiliary Load each billing month is
calculated as follows:
FALKWH\\n\\ = TKWH\\n\\ - (CAKWH\\n\\ + CBKWH\\n\\ + SGKWH\\n\\
+ (32 KW * ABMH\\n\\))
Where:
FALKWH\\n\\ = The total KWH consumed by the Facility Auxiliary
Load for billing month n.
TKWH\\n\\ = The total KWH consumed by Air Products' 4.16 KV
loads as measured at the Air Products' 4.16 KV
switchgear for all hourly periods in billing month
n excluding those hourly periods when generator
CG-500 is not operating.
CAKWH\\n\\ = The total KWH consumed by Air Products' product
hydrogen compressor, plant load CM-250A, for all
hourly periods in billing
-8-
<PAGE>
Schedule 4.4
Services and Supply Agreement
month n excluding those hourly periods when
generator CG-500 is not operating.
CBKWH\\n\\ = The total KWH consumed by Air Products' product
hydrogen compressor, plant load CM-250B, for all
hourly periods in billing month n excluding those
hourly periods when generator CG-500 is not
operating.
SGKWH\\n\\ = The total KWH consumed by Air Products' spill gas
compressor, plant load CM-255for all hourly
periods in billing month n excluding those hourly
periods when generator CG-500 is not operating.
ABMH\\n\\ = The adjusted number of hourly periods in billing
month n excluding those hourly periods when
generator CG-500 is not operating.
Initially, the Facility Auxiliary Load is deemed to be 950 KW.
4.5.4 O&M Charge
The O&M Charge shall be adjusted each month after the
Commencement Date and for the duration of this contract in
accordance with the following formula:
Om\\n\\ = OM\\0\\ x [0.16 x LI\\n\\/LI\\c\\ + .16 x P\\n\\/P\\c\\
+ .34 x L\\n\\/L\\c\\ + .34 x PPI\\n\\/PPI\\c\\]]
Where:
Om\\n\\ = O&M Charge for billing month n
OM\\0\\ = $207,333/mo.
Li\\n\\ = Labor Index for billing month n
Li\\c\\ = Labor Index at the Commencement Date
P\\n\\ = Parts Index for billing month n
P\\c\\ = Parts Index for August 1998
PPI\\n\\ = PPI for billing month n.
PPI\\c\\ = PPI at the Commencement Date
L\\n\\ = Employment Cost Index for billing month n.
L\\c\\ = Employment Cost Index at the Commencement Date.
4.5.5 Fuel Charge
The Fuel Charge shall be adjusted each month after the
Commencement Date and for the duration of this contract based on
the average cost of natural gas consumed by the Facility in
accordance with the following formula:
-9-
<PAGE>
Schedule 4.4
Services and Supply Agreement
Fc\\n\\ = FC\\0\\ x (NG\\n\\/NG\\0\\)
Where:
Fc\\n\\ = Fuel Charge for billing month n
FC\\0\\ = $0.0074/KWH
Ng\\n\\ = Average cost of natural gas for the Facility
in billing month n
NG\\0\\ = $2.25/MMBTU
"Facility" shall mean the designed, fabricated, and installed
equipment necessary for Air Products to manufacture hydrogen for the
Coker Company on a leased site as described in the Clark Hydrogen
Supply Agreement.
4.5.6 Power Credits
To the extent Air Products consumes electric power for compression
of hydrogen supplied into the Pipeline Network, Clark R&M shall
credit the Coker Company for such power, whether such power was
produced by Air Products or, during periods of gas turbine generator
shutdown, provided by Clark R&M to Air Products. The credit shall
be calculated monthly on the basis of a specific power in KWH/MSCF,
for hydrogen compression, in accordance with the following:
Pipeline hydrogen compression credit = 1.184 KWH/MSCF x MSCF\\n\\ x
CPC\\n\\
Where:
MSCF\\n\\ = Quantity of hydrogen in MSCF compressed and supplied
into the Pipeline Network for billing month n.
CPC\\n\\ = Cost of power in $/KWH for billing month n; if supplied
by Air Products, to be based PC\\n\\ divided by the sum
of GKWH\\n\\ minus FALKWH\\n\\, or if supplied by Clark
R&M, Clark R&M's incremental cost for power for each
billing day.
"Pipeline Network" shall mean the pipeline system connected to the
Facility and constructed, owned, or operated by Air Products or its
affiliates, which is used to transport hydrogen in Texas.
4.6. Taxes.
------
The Coker Company shall reimburse Clark R&M for payments made by
Clark R&M to Air Products for taxes, charges and fees pursuant to
Section 12 of the Clark Hydrogen Supply Agreement.
-10-
<PAGE>
Schedule 5.1
Services and Supply Agreement
CONSTRUCTION MANAGEMENT SERVICES
1. Scope.
-----
In accordance with its obligations under Section 5.1 of the Services and
Supply Agreement, Clark R&M shall administer the EPC Contract on behalf of
the Coker Company and otherwise perform (or ensure that Coker Company
employees perform) the Coker Company's obligations (other than payment
obligations) and exercise its rights thereunder including, without
limitation, the following:
a. performing Start-up (as defined in the EPC Contract)
activities
b. supporting Start-up and performance testing under the EPC
Contract by making available and operating all testing and
laboratory equipment, tools, machinery and vehicles (including
trucks, mobile cranes, loaders, forklifts and other rolling
stock) necessary for normal operation of the Coker Complex
c. providing water and temporary utilities, at such times and in
such quantities as required for Contractor's prosecution of the
EPC Contract
d. providing Contractor with initial drafts of the Operating Manuals
(as defined in the EPC Contract) for the Coker Complex
e. performing the Coker Company's obligations with respect to spare
parts under Section 2.38 of the EPC Contract
f. reviewing and approving Applications for Payment (as defined in
the EPC Contract) in cooperation with the Independent Engineer
g. providing operations and maintenance personnel for Start-up and
Performance Testing (as defined in the EPC Contract)
h. providing all necessary feedstreams for operation of the Coker
Complex during Start-up and Performance Testing
i. preparing and delivering the Start-up Protocol (as defined in the
EPC Contract) to the Contractor and the Independent Engineer 90
days prior to Mechanical Completion (as defined in the EPC
Contract) and cooperating to develop a final Start-up Protocol
prior to Mechanical Completion
j. reviewing and approving each Notice of Mechanical Completion,
Notice of Coker Completion and Notice of Final Completion
submitted by the Contractor (as each term is defined in the EPC
Contract) together with the Independent Engineer
<PAGE>
Schedule 5.1
Services and Supply Agreement
k. initiating necessary Change Orders (as defined in the EPC
Contract) and reviewing and approving Change Orders requested by
the Contractor
2. Applicable Price.
-----------------
The Coker Company shall pay Clark R&M $2,700,000 on (i) the date (the
"Initial Payment Date") that is the later of (y) the first anniversary of
the Start-up Date and (z) January 1, 2002 for providing the Services
described in this Schedule, (ii) the date that is one year after the
Initial Payment Date and (iii) the date that is two years after the Initial
Payment Date.
-2-
<PAGE>
Schedule 5.3
Services and Supply Agreement
MAINTENANCE SERVICES
1. Scope.
-----
1.1 Routine Repair and Preventative Maintenance
Clark R&M shall provide (or engage third party subcontractors to
provide) all repair and preventative maintenance (including necessary
materials and labor) of a regular nature that must be performed
periodically and on an ongoing basis to maintain the Heavy Oil
Processing Facility including, without limitation, the services
described below.
a. Cleaning Slab Services
Removal of equipment from processing units for cleaning at Clark
R&M-owned cleaning slabs at the Refinery including (i) removing
such equipment from its unit, (i) draining it of all free
liquids, (iii) transporting it to a Clark R&M cleaning slab, (iv)
cleaning it so that acidic or caustic substances are neutralized,
flammable or explosive substances are eliminated and hydrocarbon
sludges or other hazardous materials are removed and the
equipment is otherwise thoroughly clean, (iv) disposing of the
resulting waste in accordance with Applicable Law and (v) re-
installing such equipment into its unit.
b. Shop Services
Repair and maintenance work performed by (i) Clark R&M employees
at one of the various Clark R&M-owned and operated maintenance
shops located at the Refinery including, without limitation,
Clark R&M's central shop, machine shop, instrument/electrical
shop and sandblasting/cleaning shop, or (ii) third party
subcontractors at maintenance shops located outside the Refinery.
c. Maintenance Supervision
Supervision of maintenance personnel for the Coker Company
including, (i) monitoring operations and working with the
operations personnel described on Schedule 5.8.1 to plan,
schedule, and set maintenance priorities, (ii) assisting in the
development and execution of preventative and predictive
maintenance practices, (iii) supervising maintenance mechanics on
a daily basis including oversight of the maintenance resource
pool of electricians, machinists, pipefitters, welders,
boilermakers and other crafts.
d. Fixed Equipment Analysis
<PAGE>
Schedule 5.3
Services and Supply Agreement
Monitoring, collecting data regarding and documenting the
condition of the Heavy Oil Processing Facility's stationary
equipment (including piping, vessels, and structural steel)
including, without limitation (i) maintaining an inspection
database of information, (ii) reviewing such data, (iii)
developing recommendations for equipment repair and improvement
and (iv) inspecting on-going repairs to assure applicable
industry standards are followed.
e. Rotating Equipment Analysis
Monitoring and improving the performance of each unit's rotating
equipment to assure reliability and uptime of rotating equipment,
including, without limitation, (i) routinely perform data
collection of vibration and operational performance, (ii)
analyzing such data, and (iii) making recommendations for repair
and improvements.
f. DCS Technology Support
Maintenance of the Coker Company's distributed control equipment
including, without limitation, (i) interacting with unit
operators to generate and tune simple control loops and (ii)
working with the Clark R&M control engineers in maintaining and
improving the overall performance of the Heavy Oil Processing
Facility's process control systems.
g. Rolling Stock Services
Provision of tractors, trucks, frontloaders, cherry pickers,
exchange pickers or other vehicles necessary for performing the
maintenance services described in this Schedule.
1.2 Maintenance Turnarounds, Unit Shutdowns and Other Capital Maintenance
a. As part of the Annual Budget and Operating Plan, Clark R&M shall
provide the Coker Company with a schedule of planned maintenance
shutdowns in the next Operating Year for any unit comprising the
Heavy Oil Processing Facility.
b. Clark R&M shall assess the on-going need for additional unplanned
maintenance shutdowns and capital maintenance of units comprising
the Heavy Oil Processing Facility.
c. Clark R&M shall perform (or engage third party subcontractors to
perform) all scheduled and unscheduled maintenance shutdowns and
other capital maintenance of the Heavy Oil Processing Facility.
1.3 Janitorial and Grounds Services
-2-
<PAGE>
Schedule 5.3
Services and Supply Agreement
a. Clark R&M shall provide (or engage third party subcontractors to
provide) all janitorial type services at the Heavy Oil Processing
Facility
b. Clark R&M shall maintain (or engage third party subcontractors to
maintain) all grounds, yards and roads located on the Coker
Complex Site and the Ancillary Equipment Site.
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall reimburse Clark R&M for the direct costs
of all materials and other supplies and all subcontract labor or
services necessary for performance of the maintenance services
described herein each month for the Coker Complex and the Coker
Complex Site.
b. The Coker Company shall reimburse Clark R&M for the Labor Cost of
all hourly Clark R&M maintenance personnel necessary for the
performance of maintenance services described herein each month
for the Coker Complex and the Coker Complex Site. For the purpose
of this Schedule Labor Costs shall be deemed to equal a rate per
hour equal to (i) for any month prior to and including December
2000, $36.00 and (ii) for any other month, $36.00, multiplied by
-------------
the Inflation Factor.
c. For all supervisory and management services provided by Clark R&M
related to maintenance services for the Coker Complex described
herein each month, the Coker Company shall pay Clark R&M (i) for
any month after the Start-up Date and prior to and including
December 2000, $62,500.00 and (ii) for any month thereafter,
$62,500.00, multiplied by the Inflation Factor.
-------------
2.2 Ancillary Equipment
Consideration for maintenance services provided by Clark R&M to the
Coker Company related to the Ancillary Equipment and the Ancillary
Equipment Site is included in the Ancillary Equipment Operating Fee,
except to the extent that Clark R&M is required to perform capital
maintenance with respect to the Ancillary Equipment in order to comply
with a change in Applicable Law. In such case, the Coker Company shall
pay Clark R&M for its share of all Permitted Reimbursable Expenses
incurred by Clark R&M in performing all such unscheduled capital
maintenance related to the Ancillary Equipment. The Coker Company's
share of such Permitted Reimbursable Expenses shall be determined in
accordance with Section 7.4(a) of the Services and Supply Agreement.
-3-
<PAGE>
Schedule 5.5.1
Services and Supply Agreement
ELECTRICITY SERVICES
13. Scope.
-----
a. Coker Complex
Supply of electric energy requirements of the Coker Company for use at
the Coker Complex.
b. Ancillary Equipment
Supply of electric energy requirements of the Coker Company for use
at the Ancillary Equipment.
14. Metering/Measurement Methodology for Services to the Coker Complex.
------------------------------------------------------------------
3. 2.1 The following meters to be installed pursuant to the EPC Contract
shall be used to measure the number of kilowatt (1000 watts)
hours ("KWH") of electricity that are delivered to each distinct
area of the Coker Complex:
i. Main power station number 6
Meters located at:
a. Air Products Steam Methane Reformer
b. Gulf States #1 transformer
c. Gulf States #2 transformer
ii. DCU 843 Coker area main facilities.
Switch Gear -- 843-SG-01
iii. HCU 942 Hydrocracker/SRU 545 Sulfur Plant/SWS 8747 Sour Water
Stripper/ATU 7814 Amine Treating Unit
Switch Gear -- 942-SG-01
iv. Coker feed charge-pumps for tanks 108 and 109 and the Coker Complex
cooling tower
Substation 261
5. Flare No. 23 and other offsites
<PAGE>
Schedule 5.5.1
Services and Supply Agreement
Electricity delivered to flare no. 23 and other offsites comprising
the Coker Complex and not described above shall be measured by
subtracting metered usage in numbers 2 through 4 above from metered
usage in number 1 above.
2.2 Clark R&M shall read the Coker Complex meters described in 2.1 above
to determine the total KWH usage of the Coker Complex for each month
(the "Monthly Coker Complex Electricity Usage"); provided, however,
-------- -------
that at any time when such meters are not functioning the Monthly
Coker Complex Electricity Usage shall be determined (a) for any month
prior to three full calendar months after Final Completion, based on
the "typical" or expected usages described in the following chart, or
(b) for any other month, based on the average Monthly Coker Complex
Electricity Usage for the prior three calendar months.
- --------------------------------------------------------------------------------
Electrical Produced (Consumed), KWSD (68 oF)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Consumption
- --------------------------------------------------------------------------------
COKER COMPANY UNITS Typical Quantity Per Cent Usage
- --------------------------------------------------------------------------------
SRU 545 (2,128) 2.09
- --------------------------------------------------------------------------------
DCU 843 (20,550) 20.20
- --------------------------------------------------------------------------------
HCU 942 (13,326) 13.10
- --------------------------------------------------------------------------------
ATU 7841 (223) 0.22
- --------------------------------------------------------------------------------
SWS 8747 (194) 0.19
- --------------------------------------------------------------------------------
Sour Water Tank 78 (154) 0.15
- --------------------------------------------------------------------------------
C.T. 432 (602) 0.59
- --------------------------------------------------------------------------------
FLARE 23 (50) 0.05
- --------------------------------------------------------------------------------
Resid Tanks 108/109 (999) 0.98
- --------------------------------------------------------------------------------
Sub Total (38,226) 37.57
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANCILLARY EQUIPMENT UNITS
- --------------------------------------------------------------------------------
AVU 146 (6,154) 6.05
- --------------------------------------------------------------------------------
GFU 242 (731) 0.72
- --------------------------------------------------------------------------------
GFU 243 (2,007) 1.97
- --------------------------------------------------------------------------------
Cooling Tower 136--SMR (200) 0.20
- --------------------------------------------------------------------------------
NHT 1344 (715) 0.70
- --------------------------------------------------------------------------------
Pump House 41 (559) 0.55
- --------------------------------------------------------------------------------
Offsites--P.S. and B.H.'s (6,593) 6.48
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sub Total (16,959) 16.67
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-5-
<PAGE>
- --------------------------------------------------------------------------------
OTHER CLARK UNITS
- --------------------------------------------------------------------------------
GFU 241 (971) 0.95
- --------------------------------------------------------------------------------
GFU 244 (3,506) 3.45
- --------------------------------------------------------------------------------
HFAU 443 (1,205) 1.18
- --------------------------------------------------------------------------------
SRU 543/544 (2,380) 2.34
- --------------------------------------------------------------------------------
FCCU 1241 (2,246) 2.21
- --------------------------------------------------------------------------------
CRU 1344 (7,499) 7.37
- --------------------------------------------------------------------------------
SGRU 1242 (1,483) 1.46
- --------------------------------------------------------------------------------
Offsites (11,315) 11.12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Clark Sub Total (30,604) 30.08
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Coker Company Plus Clark R&M (85,789) 84.32
Sub Total
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CHEVRON CCC/PADC (5,781) 5.68
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Refinery Plus CCC Sub Total (91,570) 90.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HT PSA Off Gas (920) 0.90
- --------------------------------------------------------------------------------
AIR PRODUCTS (9,255) 9.10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Facility Consumption (101,745) 100.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Production or Purchases
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLARK R&M GENERATORS 43,498 42.75
- --------------------------------------------------------------------------------
AIR PRODUCTS 40,200 39.51
- --------------------------------------------------------------------------------
PURCHASED--ENTERGY 18,047 17.74
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Production or Purchased 101,745 100.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net 0
- --------------------------------------------------------------------------------
-6-
<PAGE>
Schedule 5.5.1
Services and Supply Agreement
15. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of providing
electric energy services to the Coker Complex each month based on the
following formula:
(KWH Price * Monthly Coker Complex Electricity Usage) +
Incremental Demand Charge
Where:
"KWH Price" means, for any month, the price per KWH charged Clark
R&M for electricity provided to Clark R&M by Air Products, Inc. in
such month.
"Incremental Demand Charge" means, for any month, the difference
between (i) the demand charge for standby electricity services
provided to Clark R&M by Entergy Corp. for use at the Refinery in
such month, less (ii) the average monthly demand charge for
----
standby electricity services provided to Clark R&M by Entergy
Corp. for use at the Refinery for one year period prior the date
hereof.
b. Ancillary Equipment
Consideration for electric energy provided by Clark R&M to the
Coker Company for use at the Ancillary Equipment is included in
the Ancillary Equipment Operating Fee.
Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
a. Total KWH measured through each Coker Complex meter.
b. Calculation of the Incremental Demand Charge and current KWH Price
c. Total amount due from Coker Company for electric energy provided to
the Coker Complex
-7-
<PAGE>
Schedule 5.5.2
Services and Supply Agreement
STEAM SERVICES
1. Scope.
-----
a. Clark R&M shall supply the full steam requirements of the Coker
Company for use at the Heavy Oil Processing Facility. Such steam is
expected to have the typical properties and specifications set forth
in the Turnkey Specifications and the chart in 2.2 below.
b. Clark R&M shall take delivery of all excess steam not consumed during
operation of the Heavy Oil Processing Facility and route such steam to
other units at the Refinery.
c. Metering/Measurement Methodology for Services to the Coker Complex.
------------------------------------------------------------------
a. Meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the number of pounds per hour
of actual steam that are delivered to the Coker Complex and returned
to Clark R&M which will then be converted to pounds of Standard Steam
("MLBS SS"). "Standard Steam" is a measure used to express the value
of steam of differing temperatures and pressures in a uniform way. It
shall be determined by multiplying the pounds of actual steam supplied
by the standard steam factor for the relevant poundage as described
below under 5.
2.2 Clark R&M shall read the applicable Coker Complex meters described on
Schedule 5.5(b) on the last day of every month to determine the total
pounds of actual steam usage of the Coker Complex for such month and
convert such poundage to MLBS SS (the "Monthly Coker Complex Steam
Usage") and the total actual pounds of steam returned to Clark R&M
from the Coker Complex in such month and convert such poundage to MLBS
SS (the "Monthly Coker Complex Return Steam"); provided, however, that
-------- -------
at any time when such meters are not functioning the Monthly Coker
Complex Steam Usage shall be determined (a) for any month prior to
three full calendar months after Final Completion, based on the
"typical" or expected usages described in the following chart, or (b)
for any other month, based on the average Monthly Coker Complex Steam
Usage for the prior three calendar months.
<PAGE>
Schedule 5.5.2
Services and Supply Agreement
<TABLE>
<CAPTION>
Steam Produced (Consumed), M Pounds/Hour
- ----------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
COKER COMPLEX UNITS 850 650 PSIG, 500 PSIG, 225 PSIG, 170 PSIG, 125 PSIG, 50 PSIG, 15 PSIG, Net Mlbs of Percent
PSIG, Actual Actual Actual Actual Actual Actual Actual SS/hour Usage
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SRU 545 115.8 (25.4) 76.3 (2.0) 182.6
- -----------------------------------------------------------------------------------------------------------------------------------
DCU 843 (130.1) 21.1 (149.8)
- -----------------------------------------------------------------------------------------------------------------------------------
HCU 942 2.5 (9.6) (5.5)
- -----------------------------------------------------------------------------------------------------------------------------------
ATU 7841 (63.4)
- -----------------------------------------------------------------------------------------------------------------------------------
SWS 8747 (53.8)
- -----------------------------------------------------------------------------------------------------------------------------------
C.T. 432 (41.4) 41.4
- -----------------------------------------------------------------------------------------------------------------------------------
FLARE 23 (1.0)
- -----------------------------------------------------------------------------------------------------------------------------------
OFFSITES 74.8 55.4
- -----------------------------------------------------------------------------------------------------------------------------------
Sub Total (11.8) (56.3) 75.3 (2.0) (12.2) (0.4%)
- -----------------------------------------------------------------------------------------------------------------------------------
ANCILLARY UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
AVU 146 (207.0) (137.2) (11.7) 23.9 (378.7)
- -----------------------------------------------------------------------------------------------------------------------------------
GFU 242 (21.0) (43.0) (21.0) (82.2)
- -----------------------------------------------------------------------------------------------------------------------------------
GFU 243 (54.2) (93.6) 14.8 (147.3)
- -----------------------------------------------------------------------------------------------------------------------------------
SGRU 1242 (117.7) (127.8) (35.5) 82.1 (247.3)
- -----------------------------------------------------------------------------------------------------------------------------------
Offsites (30.0) (27.5)
- -----------------------------------------------------------------------------------------------------------------------------------
Sub Total (192.9) (207.0) (431.6) (68.2) 120.8 (883.0) (27.6%)
- -----------------------------------------------------------------------------------------------------------------------------------
Clark R&M UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
GFU 241 (18.2) (23.7)
- -----------------------------------------------------------------------------------------------------------------------------------
GRU 244 (300.2) 49.0 61.4 (285.8)
- -----------------------------------------------------------------------------------------------------------------------------------
HFAU 443 (19.9) (77.8) (168.9) (197.7)
- -----------------------------------------------------------------------------------------------------------------------------------
SRU 543/544 139.0 (201.9) (34.0) 29.0 (18.9)
- -----------------------------------------------------------------------------------------------------------------------------------
FCCU 1241 (687.9) (399.0) 465.1 133.8 (887.7)
- -----------------------------------------------------------------------------------------------------------------------------------
CRU 1344 90.1 (63.7) 0.1 58.9
- -----------------------------------------------------------------------------------------------------------------------------------
Offsites (30.0)
- -----------------------------------------------------------------------------------------------------------------------------------
Sub Total (936.1) (260.0) 49.0 153.1 (34.0) (6.0) (1,382.3) (43.2%)
- -----------------------------------------------------------------------------------------------------------------------------------
Clark R&M BOILERS 768.0 790.0 3.0 3.0 (31.0) 2,137.8
- -----------------------------------------------------------------------------------------------------------------------------------
Clark R&M Sub Total 768.0 (339.0) (467.0) 0.0 52.0 (275.5) (102.2) 83.8 (127.5)
- -----------------------------------------------------------------------------------------------------------------------------------
Coker Company Plus 768.0 (350.8) (467.0) 0.0 52.0 (331.8) (26.9) 81.8 (139.7)
- -----------------------------------------------------------------------------------------------------------------------------------
Clark R&M Sub Tiak
- -----------------------------------------------------------------------------------------------------------------------------------
CHEVRON CCC/PADC (768.0) (114.0) (8.0) (252.0) (24.0) (1,526.7) (47.7%)
- -----------------------------------------------------------------------------------------------------------------------------------
Refinery Plus CCC
Sub Total 0.0 (464.8) (475.0) 0.0 52.0 (583.8) (26.9) 57.8 (1,666.4)
- -----------------------------------------------------------------------------------------------------------------------------------
DESTEC 388.0 504.4
Destec + Refinery +
CCC Sub Total 0.0 (76.8) (475.0) 0.0 52.0 (583.8) (26.9) 57.8 (1,162.0)
- -----------------------------------------------------------------------------------------------------------------------------------
AIR PRODUCTS 443.5 (23.0) 555.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total 0.0 366.7 (475.0) 0.0 52.0 (606.8) (26.9) 57.8 (12.7) (0.4%)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Producers of 100.0%
-----------
</TABLE>
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of providing
steam services to the Coker Complex each month based on the following
formula:
Average Monthly Refinery Steam Cost * (Monthly Coker Complex Steam
Usage - Monthly Coker Complex Return Steam).
Where:
"Average Monthly Refinery Steam Cost" means for any month, (a) the total
costs in dollars incurred by Clark R&M for the purchase, production and
distribution of
-2-
<PAGE>
Schedule 5.5.2
Services and Supply Agreement
steam at the Refinery during such month, divided by (b) the Total MLBS
----------
SS Distributed during such month.
"Total MLBS SS Distributed" means the total MLBS SS of steam
distributed between Clark R&M, affiliates of Clark R&M, Chevron
Chemical Company and affiliates of Chevron Chemical Company at the
Refinery and the adjacent facilities owned by Chevron Chemical Company
or the affiliates thereof.
b. Ancillary Equipment
Consideration for steam services provided by Clark R&M to the Coker
Company for use at the Ancillary Equipment is included in the
Ancillary Equipment Operating Fee.
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
a. Total actual steam measured through each Coker Complex meter described
above and conversion of such poundage to MLBS SS.
b. Calculation of the Average Monthly Refinery Steam Cost and the Total
MLBS SS Distributed
c. Total amount due from Coker Company for steam services provided to the
Coker Complex
5. Additional Terms.
----------------
5.1 Standard Steam Conversion Factors
---------------------------------
To convert steam to Standard Steam, the number of pounds of actual
steam shall be multiplied by the relevant standard steam factor.
-3-
<PAGE>
Schedule 5.5.2
Services and Supply Agreement
<TABLE>
<CAPTION>
Poundage of Steam Standard Steam Factor
----------------- ---------------------
<S> <C>
850 1.463
650 1.3
500 1.25
225 1.098
170 0.986
125 0.915
50 0.741
15 0.596
</TABLE>
5.2 Standard Steam Definition
-------------------------
The steam accounting system at the Refinery is based on energy
content. All actual pounds of steam are converted to Standard
Steam. All costs (from the appropriate cost centers in Clark
R&M's accounting system) in producing steam are then divided by
the pounds of Standard Steam.
One pound of Standard Steam is defined as the steam at the
conditions whereby ten pounds of steam generate 1 KWH of
electricity at 100% efficiency when exhausted through a turbine
to a pressure of 2.5" mercury absolute.
The Standard Steam conversion factors are then calculated as
illustrated in the following example.
(1) 850 PSIG, 800F steam at 100% efficiency requires
6.837 pounds of actual steam to generate a KWH of
electricity
(2) The Standard Steam factor equals 10 (the theoretical
steam rate of Standard Steam) divided by 6.837 (the
theoretical steam rate of 850 PSIG, 800F steam), or
1.463.
This means 100,000 pounds of 850 PSIG, 800F steam would equal
146,300 pounds of Standard Steam.
The energy basis for Standard Steam factors can be calculated by
the following formula:
Standard Steam Factor (energy basis) =
Ha - 568.409 Ea + 5.777
-----------------------
341.275
Where:
Ha = Enthalpy of actual steam (BTUs/lb)
-4-
<PAGE>
Schedule 5.5.2
Services and Supply Agreement
Ea = Entropy of actual steam (BTUs/lb F)
The basis for this formula is that enthalpy versus entropy for
steam-water mixture at 2.5" mercury absolute is a straight line
for values of entropy of 1.34 to 1.96 BTUs/lb F.
-5-
<PAGE>
Schedule 5.5.3
Services and Supply Agreement
NATURAL AND FUEL GAS SERVICES
1. Scope.
-----
a. Clark R&M shall supply the natural gas and fuel gas requirements of
the Coker Company for use at the Heavy Oil Processing Facility. Such
natural gas and fuel gas is expected to have the typical properties
and specifications set forth in the Turnkey Specifications and the
charts in 2 below.
1.2 Clark R&M shall take delivery of all natural gas and fuel gas not
consumed during operation of the Heavy Oil Processing Facility.
1.3 The Coker Company shall pay Clark R&M for the amount of natural gas
and fuel gas consumed by each unit of the Heavy Oil Processing
Facility and not returned to Clark R&M.
1.4 Pursuant to the Product Purchase Agreement, Clark R&M is purchasing
the fuel gas produced during operation of the units comprising the
Heavy Oil Processing Facility net of fuel gas supplied to such units.
2. Metering/Measurement Methodology for Services to the Coker Complex.
------------------------------------------------------------------
a. Monthly Natural Gas Consumption
Meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the millions of British
thermal units ("MMBTUs") of natural gas that are delivered to and
consumed by the Coker Complex each month ("Monthly Natural Gas
Consumption"); provided, however, that at any time when such meters
-------- -------
are not functioning the Monthly Coker Natural Gas Consumption Usage
shall be determined (a) for any month prior to three full calendar
months after Final Completion, based on the "typical" or expected
usages described in the following chart, or (b) for any other month,
based on the average Monthly Natural Gas Consumption for the prior
three calendar months.
<PAGE>
Schedule 5.5.3
Services and Supply Agreement
Consumed, MMBTU's/Hr.--HHV
- --------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Process Description Typical Volume Percent Usage
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COKER COMPLEX UNITS
SRU 545 77.5
DCU 843 37.1
HCU 942 7.8
ATU 7841 0
SWS 8747 0
C.T. 432 0
FLARE 23 0.19
DCU 843 Charge Tanks 0.01
Sub Total 123 2.6%
ANCILLARY EQUIPMENT UNITS
AVU 146 66
GFU 242 61.9
GFU 243 3.3
SGRU 1242 7.3
PRORATED, NG to Mix Drum 557
Sub Total 696 14.7%
Clark R&M UNITS
GFU 241 42.4
GFU 244 15.0
HFAU 443 42.0
SRU 543/4 62.2
FCCU 1241 36.0
CRU 1344 17.0
Miscellaneous 13.0
PRORATED, NG to Mix Drum 613.6
Reduced consumption (75.0)
Sub Total 766.2 16.2%
Clark R&M BOILERS 706 14.9%
Clark R&M Sub Total 2,168.1
Coker Complex Plus Clark R&M Sub Total 2291
CHEVRON CCC/PADC 295 6.2%
Refinery Plus CCC Sub Total 2,585.7
AIR PRODUCTS 2,156.0 45.5%
Total 4,741.7 100.0%
</TABLE>
b. Monthly Fuel Gas Consumption
Meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the MMBTUs of fuel gas
delivered to and consumed by, the Coker Complex each month ("Monthly
Fuel Gas Consumption"); provided, however, that at any time when such
-------- -------
meters are not functioning the Monthly Fuel Gas Consumption shall be
determined (a) for any month prior to three full calendar months after
Final Completion, based on the "typical" or expected usages described
in the following chart, or (b) for any other month, based on the
average Monthly Fuel Gas Consumption for the prior three calendar
months.
-2-
<PAGE>
Schedule 5.5.3
Services and Supply Agreement
Production (Consumption), MMBTU's/HR. (HHV)
- -------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Process Description Typical Volume Percent Usage
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COKER COMPANY UNITS
SRU 545 0.0
DCU 843 452.3
HCU 942 0.0
ATU 7841 0.0
SWS 8747 0.0
C.T. 432 0.0
FLARE 23 0.0
DCU 843 Charge Tanks 0.0
HT PSA (30.5)
Sub Total 421.8 (36.0%)
ANCILLARY EQUIPMENT UNITS
AVU 146 (597.4)
GFU 242 5.8
GFU 243 83.6
SGRU 1242 266.7
Sub Total (241.3) 20.6%
Clark R&M UNITS
GFU 241 53.9
GFU 244 157.8
HFAU 443 (83.4)
FCCU 1241 480.3
CRU 1344 (351.4)
Reduced production (129.0)
Miscellaneous consumption (34.0)
Sub Total 94.2 (8.0%)
Clark R&M BOILERS (1,737.0) 148.3%
Clark R&M Sub Total (1,884.1)
Coker Company Plus Clark R&M Sub Total (1,462.3)
CHEVRON CCC/PADC 519.0 (44.3%)
Refinery Plus CCC Sub Total (943.3)
AIR PRODUCTS
Refinery Fuel to SMR (228.0) 19.5%
Total (1,171.3) 100.0%
</TABLE>
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of
providing natural gas and fuel gas services to the Coker Complex each month
based on the following formula:
MMBTU Price * Monthly MMBTU Usage
Where:
"MMBTU Price" means, for any month the sum of (i) Gulf Coast NG for
such month, plus (ii) $.015.
----
<PAGE>
Schedule 5.5.3
Services and Supply Agreement
"Gulf Coast NG" means, for any month, the average Houston Ship
Channel (Large) Quote stated in MMBTUs in Inside FERCS Gas Market
Report (Trends in Spot Price Indicators) .
"Monthly MMBTU Usage" means for any month the sum of (a) Monthly
Natural Gas Consumption, and (b) Monthly Fuel Gas Consumption.
b. Ancillary Equipment
Consideration for natural and fuel gas services provided by Clark
R&M to the Coker Company for use at the Ancillary Equipment is
included in the Ancillary Equipment Operating Fee.
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to
its monthly Reconciliation Statements:
4.1 Total MMBTUs of natural gas and fuel gas delivered each unit of the
Coker Complex.
4.2 Total MMBTUs of natural gas and fuel gas produced by each unit of
the Coker Complex.
4.3 Calculation of the Monthly MMBTU Usage
4.4 Gulf Coast NG
4.5 Total amount due from Coker Company for natural gas and fuel gas
provided to the Coker Complex
-4-
<PAGE>
Schedule 5.5.4
Services and Supply Agreement
WATER SERVICES.
5. Scope.
-----
a. Supply of the Coker Company's requirements for the following
types of water for use at the Heavy Oil Processing Facility.
a. Boiler Feedwater
"Boiler Feedwater" means a combination of untreated water
and condensed steam meeting the specifications therefor set
forth in the Turnkey Specifications and under the heading
"BFW" on the chart in 4 below.
b. Filtered Water
"Filtered Water" means Clarified Water (as defined below)
that has been filtered to remove particulate matter and
meeting the specifications therefor set forth in the
Turnkey Specifications and under the heading "Filtered
Water" on the chart in 4 below.
c. Clarified Water
"Clarified Water" means untreated water purchased by Clark
R&M from the Lower Neches Valley Authority and meeting the
specifications therefor set forth in the Turnkey
Specifications and under the heading "Clarified Water" on
the chart in 4 below.
d. Potable Water
"Potable Water" means drinking water purchased by Clark R&M
from the City of Port Arthur.
e. Fire Water
"Fire Water" means Clarified Water used for fire fighting
purposes and purchased by Clark R&M from the City of Port
Arthur.
f. Demineralized Water
"Demineralized Water" means Clarified Water that has been
treated to remove particulate matter and meeting the
specifications therefor set forth in the Turnkey
Specifications and under the heading "Demineralized Water"
on the chart in 4 below.
<PAGE>
Schedule 5.5.4
Services and Supply Agreement
b. Offtake of all condensed steam ("Condensate") from
operation of the Heavy Oil Processing Facility.
6. Metering/Measurement Methodology for Services to the Coker Complex
------------------------------------------------------------------
The meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the thousands of gallons ("MGALs")
of each type of water that are delivered to the Coker Complex each month
and the MGALs of Condensate that are produced by the Coker Company each
month (the "Monthly Condensate MGALs"); provided, however, that at any time
-------- -------
when such meters are not functioning the Monthly Condensate MGALs shall be
determined (a) for any month prior to three full calendar months after
Final Completion, based on the "typical" or expected usages described in
the chart in number 4 below, or (b) for any other month, based on the
average Monthly Condensate MGALs for the prior three calendar months.
7. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the supply of each type of
water described above to the Coker Complex each month according to the
following formula:
Boiler Feedwater Cost + Filtered Water Cost + Clarified Water
Cost + Demineralized Water Cost - Condensate Payment.
Where:
a. Boiler Feedwater Cost
The "Boiler Feedwater Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Boiler Feedwater Cost * Monthly
Boiler Feedwater MGALs
Where:
"Average Monthly Refinery Boiler Feedwater Cost" means, for any
month, (a) the actual costs in dollars incurred by Clark R&M for
the provision of Boiler Feedwater throughout the Refinery, divided
-------
by (b) the MGALs of Boiler Feedwater distributed in such month
--
throughout the Refinery.
-2-
<PAGE>
Schedule 5.5.4
Services and Supply Agreement
"Monthly Boiler Feedwater MGALs" means, for any month the total
metered MGALs of Boiler Feedwater distributed to the Coker
Complex in such month; provided, however, that at any time when
-------- -------
such meters are not functioning the Monthly Boiler Feedwater
MGALs shall be determined (a) for any month prior to three full
calendar months after Final Completion, based on the "typical" or
expected usages described in the chart in 4 below, or (b) for any
other month, based on the average Monthly Boiler Water MGALs for
the prior three calendar months.
b. Filtered Water Cost
The "Filtered Water Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Filtered Water Cost * Monthly Filtered
Water MGALs
Where:
"Average Monthly Refinery Filter Water Cost" means, for any
month, (a) the actual costs in dollars incurred by Clark R&M for
the provision of Filtered Water throughout the Refinery, divided
-------
by (b) the total MGALs of Filtered Water distributed in such
--
month throughout the Refinery.
"Monthly Filtered Water MGALs" means, for any month the total
metered MGALs of Filtered Water distributed to the Coker Complex
in such month; provided, however, that at any time when such
-------- -------
meters are not functioning the Monthly Filtered Water MGALs shall
be determined (a) for any month prior to three full calendar
months after Final Completion, based on the "typical" or expected
usages described in the chart in 4 below, or (b) for any other
month, based on the average Monthly Filtered Water MGALs for the
prior three calendar months. provided, however, that at any time
-------- -------
when the applicable meters are not functioning the Monthly
Filtered Water MGALs shall be determined based on the "typical"
or expected usages described in the chart in 4 below.
c. Clarified Water Cost
The "Clarified Feedwater Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Clarified Water Cost * Monthly Clarified
Water MGALs
Where:
-3-
<PAGE>
Schedule 5.5.4
Services and Supply Agreement
"Average Monthly Refinery Clarified Water Cost" means, for any
month, (a) the actual costs in dollars incurred by Clark R&M for
the provision of Clarified Water (including Fire Water)
throughout the Refinery, divided by (b) the total MGALs of
----------
Clarified Water distributed in such month throughout the
Refinery.
"Monthly Clarified Water MGALs" means, for any month the total
metered MGALs of Clarified Water distributed to the Coker
Complex in such month; provided, however, that at any time when
-------- -------
such meters are not functioning the Monthly Clarified Water
MGALs shall be determined (a) for any month prior to three full
calendar months after Final Completion, based on the "typical"
or expected usages described in the chart in 4 below, or (b) for
any other month, based on the average Monthly Clarified Water
MGALs for the prior three calendar months.
d. Potable Water Cost
The cost of Potable Water provided to the Coker Company each
month for use in connection with operation of the Coker Complex
and the Ancillary Equipment is included in the rent payable under
the Coker Complex Ground Lease and the Ancillary Equipment Site
Lease, respectively.
e. Demineralized Water Cost
The "Demineralized Feedwater Cost" each month shall be determined
according to the following formula:
Average Monthly Refinery Demineralized Water Cost * Monthly
Demineralized Water MGALs
Where:
"Average Monthly Refinery Demineralized Water Cost" means, for
any month, (a) the actual costs in dollars incurred by Clark R&M
for the provision of Demineralized Water throughout the Refinery,
divided by (b) the total MGALs of Demineralized Water distributed
----------
in such month throughout the Refinery.
"Monthly Demineralized Water MGALs" means, for any month the
total metered MGALs of Demineralized Water distributed to the
Coker Complex in such month; provided, however, that at any time
-------- -------
when such meters are non functioning the Monthly Demineralized
Water MGALs shall be determined (a) for any month prior to three
full calendar months after Final Completion,
-4-
<PAGE>
Schedule 5.5.4
Services and Supply Agreement
based on the "typical" or expected usages described in the
chart in 4 below, or (b) for any other month, based on the
average Monthly Demineralized Water MGALs for the prior
three calendar months.
f. Condensate Payment
The "Condensate Payment" each month shall be determined according
to the following formula:
Average Monthly Refinery Boiler Feedwater Cost * Monthly
Condensate MGALs
4.
-5-
<PAGE>
Schedule 5.5.4
Services and Supply Agreement
4. Additional Terms.
----------------
<TABLE>
<CAPTION>
Water Produced (Consumed)
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COKER COMPLEX UNITS Clarified Filtered Demin Zeolite BFW Condensate Fire Potable Waste
Water, Water, Water, Water, Water Water Water,
Mlbs/Hr Mlbs/Hr. Mlbs/Hr Mlbs/Hr GPM
- ----------------------------------------------------------------------------------------------------------------------------------
SRU 545 (193.0) (193.0) 43.2 18.0
- ----------------------------------------------------------------------------------------------------------------------------------
DCU 843 (50.0) (68.0) 63.0 25.0
- ----------------------------------------------------------------------------------------------------------------------------------
HCU 942 (146.0) (84.0) 25.0
- ----------------------------------------------------------------------------------------------------------------------------------
ATU 7841 63.4 18.0
- ----------------------------------------------------------------------------------------------------------------------------------
SWS 8747 53.8 267.0
- ----------------------------------------------------------------------------------------------------------------------------------
C.T. 432 (492.0) 72.0
- ----------------------------------------------------------------------------------------------------------------------------------
FLARE 23 (23.0) (23.0)
- ----------------------------------------------------------------------------------------------------------------------------------
OFFSITES 10.0
- ----------------------------------------------------------------------------------------------------------------------------------
Sub Total (542.0) 0.0 (193.0) 0.0 (430.0) 116.4 435.0
- ----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Coker Company 6.6% 0.0% (26.9%) 0.0% 12.6% (3325.7%) #DIV/0! #DIV/0! 7.4%
- ----------------------------------------------------------------------------------------------------------------------------------
ANCILLARY EQUIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
AVU 146 103.7 420.0
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 242 33.9 25.0
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 243 41.7 0.0
- ----------------------------------------------------------------------------------------------------------------------------------
SGRU 1242 142.0 50.0
- ----------------------------------------------------------------------------------------------------------------------------------
Offsites--PH 41 30.0
- ----------------------------------------------------------------------------------------------------------------------------------
Sub Total 0.0 0.0 0.0 0.0 0.0 351.3 495.0
- ----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Ancillary 0.0% 0.0% 0.0% 0.0% 0.0% (10037.1%) #DIV/0! #DIV/0! 8.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Clark R&M UNITS
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 241 9.2 25.0
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 244 (10.0) 59.4 25.0
- ----------------------------------------------------------------------------------------------------------------------------------
HFAU 443 114.1 62.0
- ----------------------------------------------------------------------------------------------------------------------------------
SRU 543/544 (140.0) (52.0) 100.0
- ----------------------------------------------------------------------------------------------------------------------------------
FCCU 1241 (228.0) (228.0) 237.4 90.0
- ----------------------------------------------------------------------------------------------------------------------------------
CRU 1344 (58.0) (186.0) 0.0 100.0
- ----------------------------------------------------------------------------------------------------------------------------------
SWS 8746 52.0 233.0
- ----------------------------------------------------------------------------------------------------------------------------------
Cleaning Slab 27.0
- ----------------------------------------------------------------------------------------------------------------------------------
P.S 194 60.0
- ----------------------------------------------------------------------------------------------------------------------------------
Cooling Tower Blowdown 800.0
- ----------------------------------------------------------------------------------------------------------------------------------
Offsites-PH 136 99.4
- ----------------------------------------------------------------------------------------------------------------------------------
No. 2 WTP 20.0
- ----------------------------------------------------------------------------------------------------------------------------------
Firewater Make-up (250.0) 250.0
- ----------------------------------------------------------------------------------------------------------------------------------
Fire Water to Sewer 400.0
for Cooling
- ----------------------------------------------------------------------------------------------------------------------------------
Scaltech 50.0
- ----------------------------------------------------------------------------------------------------------------------------------
Storm Water Tank, 2,500.0
T-1912
- ----------------------------------------------------------------------------------------------------------------------------------
Clark R&M Boilers (171.0) (1,687.0) (1,389.0)
- ----------------------------------------------------------------------------------------------------------------------------------
Filtered Water to Ref. (2,001.0)
Dist.
- ----------------------------------------------------------------------------------------------------------------------------------
To Filtered Water (3,936.0) 3,936.0
- ----------------------------------------------------------------------------------------------------------------------------------
To Demin./Zeolite (725.0) 422.0 303.0
System
- ----------------------------------------------------------------------------------------------------------------------------------
To SMR (718.0) 718.0
Reject (389.0) (42.0)
- ----------------------------------------------------------------------------------------------------------------------------------
Sub Total (6,480.0) 450.0 911.0 65.0 (2,241.0) (869.5) 4,492.0
- ----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Clark R&M 79.3% 100.0% 126.9% 100.0% 65.8% 24842.9% #DIV/0! #DIV/0! 76.8%
- ----------------------------------------------------------------------------------------------------------------------------------
Clark Subtotal 450.0 911.0 65.0 (2,241.0) (518.2) 4,987.0
- ----------------------------------------------------------------------------------------------------------------------------------
Coker Company & Clark R&M (7,022.0) 450.0 718.0 65.0 (2,671.0) (401.8) 5,422.0
Sub
- ----------------------------------------------------------------------------------------------------------------------------------
CHEVRON CCC/PADC (900.0) 0.0 0.0 (65.0) 0.0 340.0 425.0
- ----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Chevron 11.0% 0.0% 0.0% (100.0%) 0.0% (9714.3%) #DIV/0! #DIV/0! 7.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Refinery Plus CCC (7,922.0) 450.0 718.0 0.0 (2,671.0) (61.8) 5,847.0
Sub Total
- ----------------------------------------------------------------------------------------------------------------------------------
DESTEC (450.0) 0.0 0.0 0.0 0.0 0.0
- ----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Destec 0.0% (100.0%) 0.0% 0.0% 0.0% 0.0% #DIV/0! #DIV/0! 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Ref. Plus CCC Plus (7,922.0) 450.0 718.0 0.0 (2,671.0) (61.8) 5,847.0
Destec
- ----------------------------------------------------------------------------------------------------------------------------------
AIR PRODUCTS (245.0) 0.0 (718.0) 0.0 (735.0) 58.3
- ----------------------------------------------------------------------------------------------------------------------------------
Percent Usage Air Products 3.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Net (8,167.0) 450.0 718.0 65.0 (3,406.0) (3.5) 0.0 0.0 5,847.0
- ----------------------------------------------------------------------------------------------------------------------------------
Total Percent Usage 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% #DIV/0! #DIV/0! 100.0%
</TABLE>
-6-
<PAGE>
Schedule 5.5.5
Services and Supply Agreement
COMPRESSED AIR SERVICES
1. Scope.
-----
a. Supply of the full compressed air requirements of the Coker Company
for use at the Coker Complex. Such compressed air shall meet the
specifications set forth in the Turnkey Specifications.
b. Supply of the full compressed air requirements of the Coker Company
for use at the Ancillary Equipment.
2. Metering/Measurement Methodology for Services to the Coker Complex.
The meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the thousands of standard cubic
feet ("MSCF") of compressed air are delivered to the Coker Complex each
month (the "Monthly Coker Complex MCSF").
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of providing
compressed air to the Coker Complex each month based on the following
formula:
Total Average Refinery Compressed Air Cost * Monthly Coker
Complex MSCF
Where:
"Total Average Refinery Compressed Air Cost" means, for any month
(a) the actual costs in dollars incurred by Clark R&M for the
production and distribution of compressed air at the Refinery in
such month, divided by (b) the total amount, expressed in MSCF,
----------
of compressed air distributed throughout the Refinery in such
month.
b. Ancillary Equipment
Consideration for compressed air provided by Clark R&M to the Coker
Company for use at the Ancillary Equipment is included in the
Ancillary Equipment Operating Fee.
<PAGE>
Schedule 5.5.5
Services and Supply Agreement
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
4.1 Total MSCF of compressed air measured through each Coker Complex
meter.
4.2 Calculation of the Total Average Refinery Compressed Air Costs
4.3 Total amount due from Coker Company for compressed air provided to the
Coker Complex
-2-
<PAGE>
Schedule 5.5.6
Services and Supply Agreement
NITROGEN SERVICES
1. Scope.
-----
a. Supply of the full nitrogen requirements of the Coker Company for use
at the Coker Complex meeting the following specifications:
Component Specification
--------- --------------
Nitrogen and inerts 99.999 Mole % minimum
Oxygen 10.0 ppm maximum
8.0 ppm minimum
Moisture (dew point) - 80[degrees] Fahrenheit or below
b. Supply of the full nitrogen requirements of the Coker Company for use
at the Ancillary Equipment.
2. Metering/Measurement Methodology for Services to the Coker Complex.
The meters to be installed pursuant to the EPC Contract and described on
Schedule 5.5(b) shall be used to measure the volume of nitrogen, expressed
in thousands of standard cubic feet ("MSCF"), that are delivered to the
Coker Complex each month (the "Monthly Coker Complex MCSF").
3. Applicable Price.
----------------
a. Coker Complex
The Coker Company shall pay Clark R&M for the actual cost of providing
nitrogen to the Coker Complex each month based on the following
formula:
(Total Average Refinery Nitrogen Cost * Monthly Coker Complex
MSCF) + Coker Complex Nitrogen Distribution Allocation
Where:
"Total Average Refinery Nitrogen Cost" means, for any month, (a)
the total dollar charges in such month to Clark R&M for nitrogen
supplied to the Refinery by third party suppliers, divided by (b)
----------
the Monthly Refinery MSCF.
"Monthly Refinery MSCF" means, for any month, the total volume of
nitrogen, expressed in MSCF, purchased by Clark R&M from third
party suppliers and distributed through the Nitrogen Distribution
System (as defined in 5 below) in such month.
<PAGE>
Schedule 5.5.5
Services and Supply Agreement
"Coker Company Nitrogen Distribution Allocation" means, for
any month (a) the total costs in dollars incurred by Clark R&M in
such month to maintain the Nitrogen Distribution System (as
defined below), multiplied by (b) the ratio of (i) Monthly Coker
-------------
Complex MSCF to (ii) Monthly Refinery MSCF.
b. Ancillary Equipment
Consideration for nitrogen provided by Clark R&M to the Coker Company
for use at the Ancillary Equipment is included in the Ancillary
Equipment Operating Fee.
4. Required Billing Information.
----------------------------
Clark R&M shall provide the following information as an attachment to its
monthly Reconciliation Statements:
4.1 Total MSCF of nitrogen measured through each Coker Complex meter.
4.2 Calculation of Total Average Refinery Nitrogen Cost and Coker Complex
Nitrogen Distribution Allocation.
4.3 Total amount due from Coker Company for nitrogen provided to the Coker
Complex
5. Additional Terms.
----------------
As used herein "Nitrogen Distribution System" means the interconnective
piping system owned by Clark R&M and used to distribute nitrogen to Clark
R&M and its affiliates (including the Coker Company).
-2-
<PAGE>
Schedule 5.5(b)
Services and Supply Agreement
UTILITY METERS
The Coker Company and Clark R&M agree to promptly complete the following
tables upon completion of design engineering by the Contractor related to
the applicable meters.
ATU-7841
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
- ----------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ----- ------
7841/4623/
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
5.5.5 AIR
- ----------------------------------------------------------------------------------------------------------
6 Plant Air frm Offsites A401
----------------------------------------------------------------------------------------------
6 Instrument Air frm Offisites A401
----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
- ----------------------------------------------------------------------------------------------------------
1 Nitrogen frm Offsites A401
----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
5.5.2 STEAM
- ----------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam frm SWS-8747 A400
----------------------------------------------------------------------------------------------
2 50 psig Steam frm SWS-8747 A400
----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
5.5.4 WATER
- ----------------------------------------------------------------------------------------------------------
3 50 psig Condensate to SWS-8747 A400
----------------------------------------------------------------------------------------------
3 Pumped Condensate frm SWS-8747 A400
----------------------------------------------------------------------------------------------
7 Filtered Water frm Offisites A401
----------------------------------------------------------------------------------------------
7 Clarified Water frm Offisites A401
----------------------------------------------------------------------------------------------
5 Cooling Water Supply frm Offsites A401
----------------------------------------------------------------------------------------------
5 Cooling Water Return to Offsites A401
----------------------------------------------------------------------------------------------
7 Potable Water frm Offisites A401
- ----------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
- ----------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to ATU-7841 3 N/A
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
</TABLE>
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the Product
Purchase Agreements for Coker Complex
<PAGE>
Schedule 5.5(b)
Services and Supply Agreement
SRU-545
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
- --------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ------ ------
<S> <C> <C> <C> <C> <C>
- --------------------------
5.5.5 AIR
- --------------------------------------------------------------------------------------------------------------------------------
6 Plant Air
-----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
- --------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen
-----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
- --------------------------------------------------------------------------------------------------------------------------------
2 650 psig Superheated Steam FI-1846 0041
-----------------------------------------------------------------------------------------------------------------
2 50 psig steam from SCOT WHB FI-1681 0034
-----------------------------------------------------------------------------------------------------------------
2 50 psig Steam from Cond - Tr1 FI-1161 0021
-----------------------------------------------------------------------------------------------------------------
2 50 psig Steam from Cond - Tr2
-----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
- --------------------------------------------------------------------------------------------------------------------------------
3 LP BFW to Condenser - Tr1 FI-1160 0021
-----------------------------------------------------------------------------------------------------------------
3 LP BFW to Condenser - Tr2
-----------------------------------------------------------------------------------------------------------------
3 LP BFW to SCOT WFB FI-1680 0034
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to 650# WHB - Tr1 FI-1090 0018
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to 650# WHB - Tr2
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to Incinerator Boiler FI-1840 0042
-----------------------------------------------------------------------------------------------------------------
3 HP BFW to Desuperheater FI-1845 0041
-----------------------------------------------------------------------------------------------------------------
Quench Water Makeup 0036
-----------------------------------------------------------------------------------------------------------------
Amine Makep Water 0032
-----------------------------------------------------------------------------------------------------------------
SCOT ATU SOUR Water FI-1771 0039
-----------------------------------------------------------------------------------------------------------------
7 Clarified Water
-----------------------------------------------------------------------------------------------------------------
7 Filtered Water
-----------------------------------------------------------------------------------------------------------------
5 Cooling Water Supply
-----------------------------------------------------------------------------------------------------------------
5 Cooling Water Return
-----------------------------------------------------------------------------------------------------------------
7 Potable Water
- --------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
- --------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to SRU-545 3 N/A
--------------
</TABLE>
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Purchase Agreements for Coker Complex
-2-
<PAGE>
Schedule 5.5(b)
Services and Supply Agreement
HCU-942
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
- ---------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------- ------------------ ------ ------
4612-2--50-
<S> <C> <C> <C> <C> <C>
- -----------------------------
5.5.5 AIR
- ---------------------------------------------------------------------------------------------------------------------------------
6 Plant Air frm Offsites 062
-------------------------------------------------------------------------------------------------------------
6 Instrument Air frm DCU-843 063
-------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
- ---------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen frm DCU-843 FI-3026 063
- ---------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
- ---------------------------------------------------------------------------------------------------------------------------------
2 HP (650 psig) Steam frm Offsites FI-3300 074
-------------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam frm Offsites FI-3325 075
-------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
- ---------------------------------------------------------------------------------------------------------------------------------
3 Condensate to Offsites 076
-------------------------------------------------------------------------------------------------------------
3 Surf. Cond. Condensate to Offsites FI-3670 088
-------------------------------------------------------------------------------------------------------------
5 Cooling Water Sup/Ret frm Offsites 065
-------------------------------------------------------------------------------------------------------------
7 Clarified Water frm DCU-843 067
-------------------------------------------------------------------------------------------------------------
7 Filter Water frm DCU-843 067
-------------------------------------------------------------------------------------------------------------
3 HP Boiler Feed Water frm Offsites FI-3276 073
-------------------------------------------------------------------------------------------------------------
7 Potable Water frm Offsites 067
-------------------------------------------------------------------------------------------------------------
Sour Water frm DCU-843 054
-------------------------------------------------------------------------------------------------------------
Sour Water frm SRU-545 054
-------------------------------------------------------------------------------------------------------------
Sour Water to Tank 78 FC-2801 054
- ---------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
- ---------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to HCU-942 3 N/A
-------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to Cooling Twr 4 N/A
-------------------------------------------------------------------------------------------------------------
-------------------------------------------- ---------------------------------
</TABLE>
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Purchase Agreements for Coker Complex
-3-
<PAGE>
Schedule 5.5(b)
Services and Supply Agreement
DCU-843
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
- -----------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ------ ------
<S> <C> <C> <C> <C> <C>
4611-2-50-
- -------------------------------
5.5.5 AIR
- -----------------------------------------------------------------------------------------------------------------------------------
6 Plant Air to DCU-843 FE-3615 171
------------------------------------------------------------------------------------------------------------------
6 Instrument Air to DCU-843 171
------------------------------------------------------------------------------------------------------------------
6 Plant Air to HCU-942 172
------------------------------------------------------------------------------------------------------------------
6 Instrument Air to HCU-942 172
------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
- -----------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen to DCU-843 FE-3616 171
------------------------------------------------------------------------------------------------------------------
1 Nitrogen to HCU-942 172
------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
- -----------------------------------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam to/from DCU-843 FE-3623 171
------------------------------------------------------------------------------------------------------------------
2 HP (650 psig) Steam to DCU-843 FE-3624 171
------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
- -----------------------------------------------------------------------------------------------------------------------------------
5 Cooling Water Supply to DCU-843 FE-3621 171
------------------------------------------------------------------------------------------------------------------
5 Cooling Water Return frm DCU-843 171
------------------------------------------------------------------------------------------------------------------
3 High Pressure BFW to DCU-843 FE-3637 172
------------------------------------------------------------------------------------------------------------------
3 Medium Pressure BFW to DCU-843 FE-3638 172
------------------------------------------------------------------------------------------------------------------
3 High Pressure Condensate to Deaerator FE-3639 172
------------------------------------------------------------------------------------------------------------------
3 Low Pressure Condensate to Deaerator FE-3640 172
------------------------------------------------------------------------------------------------------------------
7 Oily Water to WWTU F? 171
------------------------------------------------------------------------------------------------------------------
9 Phenolic Sour Water to HCU-942 FE1853,1992 172
------------------------------------------------------------------------------------------------------------------
7 Potable Water to DCU-843 171
------------------------------------------------------------------------------------------------------------------
7 Clarified Water to DCU-843 FE-3620 171
------------------------------------------------------------------------------------------------------------------
7 Filtered Water to DCU-843 FE-3620 171
------------------------------------------------------------------------------------------------------------------
7 Clarified Water to HCU-942 172
------------------------------------------------------------------------------------------------------------------
7 Filtred Water to HCU-942 172
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
- -----------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to DCU-843 2 N/A
------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to Feed Tanks 4 N/A
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Pruchase Agreements for Coker Complex
SWS-8747
-4-
<PAGE>
Schedule 5.5(b)
Services and Supply Agreement
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Schedule Utility Description Movement Flow Meter Drawing
- -----------------------------------------------------------------------------------------------------------------------------------
Diagram # STREAM Source/Destination number Number
--------- ------ ------------------ ------ ------
<S> <C> <C> <C> <C> <C>
8747/4622/
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.5 AIR
- -----------------------------------------------------------------------------------------------------------------------------------
6 Plant Air frm Offsites A401
------------------------------------------------------------------------------------------------------------------
6 Instrument Air frm Offisites A401
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.6 NITROGEN
- -----------------------------------------------------------------------------------------------------------------------------------
1 Nitrogen frm Offsites A401
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.2 STEAM
- -----------------------------------------------------------------------------------------------------------------------------------
2 MP (125 psig) Steam to SWS 8747 FI-1033 A400
------------------------------------------------------------------------------------------------------------------
2 50 psig Steam to SWS 8747 FI-1032 A400
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.4 WATER
- -----------------------------------------------------------------------------------------------------------------------------------
3 50 psig Condensate frm SWS 8747 A400
------------------------------------------------------------------------------------------------------------------
3 Pumped Condensate to SWS 8747 A400
------------------------------------------------------------------------------------------------------------------
7 Clarified Water frm Offisites A401
------------------------------------------------------------------------------------------------------------------
5 Cooling Water Supply frm Offsites A401
------------------------------------------------------------------------------------------------------------------
5 Cooling Water Return to Offsites A401
------------------------------------------------------------------------------------------------------------------
7 Potable Water frm Offisites A401
- -----------------------------------------------------------------------------------------------------------------------------------
5.5.1 ELECTRIC
- -----------------------------------------------------------------------------------------------------------------------------------
N/A Electric from Clark from PP6 to SWS-8747 3 N/A
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 1: Cooling Tower services all Coker Complex
Note 2: Natural Gas and Fuel Gas Meter are Reference in the
Product Pruchase Agreements for Coker Complex
-5-
<PAGE>
Schedule 5.6
Services and Supply Agreement
WASTE MANAGEMENT AND WASTEWATER TREATMENT SERVICES
5. 1. Scope.
-----
Collection, processing, treatment, transportation, storage, disposal and
recycling of all waste generated by the Heavy Oil Processing Facility and
all rain water runoff, cooling tower blow down, sanitary sewage (but the
cost of sanitary sewage service is included in the rent payable under the
Coker Complex Ground Lease and the Ancillary Equipment Site Lease,
respectively), recovered oil, recovered residuals and all other hazardous
and solid waste originating at the Heavy Oil Processing Facility ("Waste
Management and Wastewater Treatment Services").
1.1 Wastewater Treatment Services
Clark R&M shall provide wastewater treatment services to the Coker
Company through operation of the following four systems of Clark R&M's
waste water treatment facility at the Refinery (the "WWTF").
f. Waste Treatment System ("WTS")
A contaminant based unit that is the main treatment facility at
the Refinery. It handles treatment of all flow from the Dirty
Water Collection System (defined below) and the dry weather
Surface Drainage System (defined below) and all cooling tower
blowdown at the Refinery.
g. Dirty Water Collection System ("DWCS")
All equipment at the Refinery used for collection and convergence
of dirty water to the WTS, including all pumping, tanks, piping,
and reservoirs.
h. Surface Drainage System ("SDS")
This system handles all surface drainage at the Refinery and
currently consist of Clark R&M's pump house no. 15 and tanks nos.
1912 and 1913.
d. Oil Recovery Unit ("ORU")
This system handles recovered oil, recovered residuals and
hazardous and solid wastes (including, without limitation, slop
oil emulsions) from the WTS and vacuum trucks.
1.2. Waste Management System ("WMS")
Clark R&M shall utilize its WMS to provide waste management services
for the Heavy Oil Processing Facility including, without limitation,
all labor, equipment, vehicles, administration, contract manpower and
other resources necessary for
<PAGE>
Schedule 5.6
Services and Supply Agreement
spill response, spill site remediation and the collection, storage,
treatment, transportation and disposal of non-hazardous and hazardous
waste.
6. Metering/Measurement Methodology for Services to the Coker Complex.
------------------------------------------------------------------
2.1 WTS
a. The monthly usage of the WTS by the Coker Complex ("Monthly WTS
Allocation") shall be deemed to equal sixteen percent (16%) of
the total monthly usage of the WTS.
b. Pursuant to Section 7.4(b) of this Services and Supply Agreement,
from time to time, the parties may modify the Monthly WTS
Allocation based on their best efforts to determine the actual
dirty water volume attributable to the Coker Complex.
2.2 DWCS
The monthly usage of the DWCS by the Coker Complex (the "Monthly DWCS
Allocation") shall be deemed to equal twenty five percent (25%) of the
total monthly usage of the DWCS.
2.3 SDS
The monthly usage of the SDS by the Coker Complex (the "Monthly SDS
Allocation") shall equal (i) 47.7 (which is the total number of acres
occupied by the Coker Complex), divided by (ii) 2300 (which is the
----------
total number of acres drained by Clark R&M's pump house no. 15 located
at the Refinery).
2.4 ORU
a. The monthly usage of the ORU by the Coker Complex (the "Monthly
ORU Allocation") shall be deemed to equal twenty five percent
(25%) of the total monthly usage of the ORU.
b. Pursuant to Section 7.4(b) of this Services and Supply Agreement,
from time to time, the parties shall use their best efforts to
modify the Monthly ORU Allocation based on the actual volume of
slop oil emulsions, solids, recovered oil, recovered residuals,
vacuum truck deliveries and other wastes handled by the ORU and
attributable to the Coker Complex.
2.5 Waste Management System
a. The monthly usage of the WMS by the Coker Complex (the "Monthly
WMS Allocation") shall be deemed to equal 15% of the total usage
of the WMS.
-2-
<PAGE>
Schedule 5.6
Services and Supply Agreement
b. Pursuant to Section 7.4(b) of this Services and Supply
Agreement, from time to time, the parties may modify the Monthly
WMS Allocation based on their best efforts to determine actual
waste volume attributable to the Coker Complex.
3. Applicable Price.
----------------
3.1 Coker Complex
c. WTS
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the WTS each
month according to the following formula:
Total WTS Cost * Monthly WTS Allocation
Where:
"Total WTS Cost" means, for any month, the sum of (i) all
Permitted Reimbursable Expenses incurred by Clark R&M in
operating its waste water treatment unit designated WWTU 8743 at
the Refinery and (ii) without duplication, all Permitted
Reimbursable Expenses incurred by Clark R&M associated with the
treatment of dirty water at the Refinery and the processing of
oil, recovered oil, recovered residuals, emulsions, oily solids
and oily sludge generated at the WTS.
d. DWCS
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the DWCS each
month according to the following formula:
Total DWCS Cost * Monthly DWCS Allocation
Where:
"Total DWCS Cost" means, for any month, all Permitted
Reimbursable Expenses incurred by Clark R&M in operating the
DWCS.
e. SDS
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the SDS each
month according to the following formula:
-3-
<PAGE>
Schedule 5.6
Services and Supply Agreement
Total SDS Cost * Monthly SDS Allocation
Where:
"Total SDS Cost" means, for any month, the Permitted
Reimbursable Expenses incurred by Clark R&M in operating the
SDS.
f. ORU
The Coker Company shall pay Clark R&M for providing Waste
Management and Wastewater Treatment Services at the ORU each
month according to the following formula:
Total ORU Cost * Monthly ORU Allocation
Where:
"Total ORU Cost" means, for any month, the Permitted
Reimbursable Expenses incurred by Clark R&M in operating the
ORU.
WMS
The Coker Company shall pay Clark R&M for providing Waste
Management and Waste Water Treatment Services described above
under 1.2 each month according to the following formula:
Total WMS Cost * Monthly WMS Allocation
Where:
"Total WMS Cost" means, for any month, the Permitted
Reimbursable Expenses incurred by Clark R&M in operating its
WMS.
3.2 Ancillary Equipment
Consideration for Waste Management and Wastewater Services provided by
Clark R&M to the Coker Company for use at the Ancillary Equipment is
included in the Ancillary Equipment Operating Fee.
7.
-4-
<PAGE>
Schedule 5.7.1
Services and Supply Agreement
SULFUR AND COKE TRANSPORT SERVICES
1. Scope.
-----
1.1 Truck Weighing
Clark R&M shall maintain and operate truck scales at the Refinery
for the purposes of weighing sulfur trucks on behalf of the Coker
Company.
1.2 Rail Services
Clark R&M shall provide all railroad services necessary to
transport petroleum coke and sulfur from the Heavy Oil Processing
Facility, including, without limitation, (i) receiving inbound
railcars from serving railroad carriers, sorting and weighing
such cars and delivering them to the Coker Complex or Ancillary
Equipment, as the case may be; (ii) receiving outbound rail cars
from the Coker Complex and the Ancillary Equipment, sorting and
weighing such cars and delivering them to serving railroad
carriers; and (iii) providing switching to facilitate loading,
unloading and maintenance activities for such railcars.
1.3 Coker Handling
Clark R&M shall provide all coke handling services necessary to
transport petroleum coke to the delivery point for such Product
under the Product Purchase Agreement.
2. Applicable Price.
----------------
The cost to Clark R&M of providing sulfur and coke transport Services to
the Coker Company is reflected in the purchase price of such Products under
the Product Purchase Agreement.
<PAGE>
Schedule 5.7.2
Services and Supply Agreement
BROAD BAND AND NETWORK COMPUTING SERVICES
1. Scope.
-----
1.1 Clark R&M shall install all necessary coaxial cable connections
and television sets for Coker Company control rooms in order to
connect the Coker Company and its employees to the broad band
closed circuit televisions network at the Refinery which provides
video information throughout the Refinery, including, without
limitation, a bulletin board system, doppler radar, safety
information and information on operations meetings.
1.2 Clark R&M shall provide network computing services to the Coker
Company, including without limitation:
a. Installation of cable connections and desktop computers with
appropriate office software at the Coker Company's business
office and control room locations
b. Connection to Clark R&M's local area network, wide area
network, intranet, internet, e-mail system and the Refinery
information system.
1.3 Clark R&M shall provide routine hardware repairs, system problem
isolation and resolution, help desk service, network
administration and management, computer backup services and
testing for the Coker Company's broad band and computer network
connections and all equipment, hardware and software related
thereto.
2. Applicable Price.
----------------
2.1. The Coker Company shall reimburse Clark R&M for Permitted Reimbursable
Expenses in connection with equipment procurement and installation of
(a) the broad band cable connections for the Coker Company and (b)
desktop computer(s) and software and installation of the cable
connection(s) for the Coker Company.
2.2 The Coker Company shall pay Clark R&M the following fee each
month for all services provided by Clark R&M pursuant to 1.3
above: (a) for any month after the equipment described in 1.1 and
1.2 above is installed and connected and prior to and including
December 2000, $2100.00 and (b) for any month thereafter,
$2100.00, multiplied by the Inflation Factor.
-------------
<PAGE>
Schedule 5.7.3
Services and Supply Agreement
RADIO AND PHONE SERVICES
1. Scope.
-----
1.1 Trunked Radio Services
a. Clark R&M shall maintain (through a third party service
provider) and operate the radio antenna, computers, repeater
stations, mobile units and base stations used in connection
with the Refinery's 800 megaherz Federal Communications
Commission license (collectively, the "Trunked Radio
System").
b. Clark R&M shall provide the Coker Company with access to the
Trunked Radio System. Such access shall be limited to the
business purposes of the Coker Company and its affiliates.
c. Clark R&M shall procure all necessary portable 800 megahertz
radios on behalf of the Coker Company and provide on-going
repair and maintenance (through a third party service
provider) for such radios.
d. Trunked Radio Services and related portable radio services
are currently provided under Clark R&M's service contract
with Motorola Communications, Inc. All radios used by the
Coker Company shall be added to the inventory covered by
this service agreement.
1.2 Telephone Services
Clark R&M shall provide all labor for routine hardware and
software repairs, system problem isolation and resolution, cable
installation, telephone installation, PBX administration and
management, backup services, help desk services and testing for
the telephone environment at the Coker Complex and the business
offices of the Coker Company.
2. Applicable Price.
----------------
2.1 Trunked Radio Services
a. The Coker Company shall reimburse Clark R&M for the purchase
price of each radio procured on behalf of the Coker Company.
b. The Coker Company shall pay Clark R&M the following fee for
all other Services described in 1.1 above each month: (a)
for any month after the Start-up Date and prior to and
including
<PAGE>
Schedule 5.7.3
Services and Supply Agreement
December 2000, $670.00 and (b) for any month thereafter,
$670.00, multiplied by the Inflation Factor.
-------------
c. Upgrades to the Trunked Radio System agreed upon mutually by
Clark R&M and Coker Company to increase the reliability of
the system, the Coker Company will be responsible for a
percentage of the cost of any upgrade performed to increase
the reliability of the Trunked Radio System, provided that,
--------
prior to initiating such upgrade Clark R&M and the Coker
Company have agreed to (i) the undertaking of such upgrade,
(ii) the estimated cost of such upgrade and (iii) a
percentage sharing of such cost based on the number of
radios used by each party at such time.
2.2 Telephone Services
a. The Coker Company shall reimburse Clark R&M for all
Permitted Reimbursable Expenses incurred by Clark R&M in
connection with installation of phone lines at the Coker
Complex and the procurement of telephones and other
equipment in connection therewith on behalf of the Coker
Company.
b. The Coker Company shall pay Clark R&M the following fee for
all other Services described in 1.2 above each month: (a)
for any month after the Coker Company telephone environment
described in 1.2 above is installed and prior to and
including December 2000, $500.00 and (b) for any month
thereafter, $500.00, multiplied by the Inflation Factor.
-------------
-2-
<PAGE>
Schedule 5.7.4
Services and Supply Agreement
ANALYTICAL LABORATORY AND CUSTODY TRANSFER SERVICES
1. Scope.
-----
1.1 Analytical Laboratory Services
a. Clark R&M shall provide analytical laboratory services to
the Coker Company in a manner substantially similar to the
manner that such services have been provided at the Refinery
in the past.
b. Clark R&M shall provide (i) the analytical tests identified
in the Schedules to the Product Purchase Agreement under the
heading "Test Method" and (ii) such other tests that are
necessary to determine the quantity and quality of Products
produced by the Heavy Oil Processing Facility or to which
the parties otherwise mutually agree (collectively, "Coker
Company Lab Tests").
c. Clark R&M shall furnish the Coker Company with the results
obtained from all Coker Company Lab Tests within the same
time frame as results from similar tests have historically
been provided, typically 4 to 8 hours for routine tests and
typically 60 minutes for rush tests. The Coker Company (or
a party acting on behalf of the Coker Company) shall have
the right to audit the procedures used to perform each Coker
Company Lab Tests and to recommend changes thereto and to
the number and types of tests performed.
1.2 Custody Transfer Services
Clark R&M shall provide all other services related to
quantification of hydrocarbon receipts or deliveries,
coordination of third party inspections and maintain appropriate
procedures for Clark R&M and Coker Company employees to follow to
ensure accurate Product measurement.
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall pay Clark R&M the following fee
analytical lab services provided under 1.1 above for the
Coker Complex: (a) for any month after the Start-up Date and
prior to and including December 2000, $35,000 and (ii) for
any month thereafter, $35,000, multiplied by the Inflation
-------------
Factor.
b. The Coker Company shall also reimburse Clark R&M for a
proportional share of the costs of any laboratory equipment
purchased for performing Coker Complex testing.
<PAGE>
c. The Coker Company shall pay Clark R&M the following fee for
providing custody transfer services described under 1.2
above related to the Coker Complex: (a) for any month after
the Start-up Date and prior to and including December 2000,
$11,700 and (ii) for any month thereafter, $11,700,
multiplied by the Inflation Factor.
-------------
2.2 Ancillary Equipment
Consideration for analytical lab provided by Clark R&M to the Coker
Company related to the Ancillary Equipment and the Ancillary Equipment
Site is provided for in the Ancillary Equipment Operating Fee.
-2-
<PAGE>
Schedule 5.7.5
Services and Supply Agreement
SECURITY SERVICES
1. Scope.
-----
1.1. Clark R&M security personnel will monitor entrance and access to
the Refinery to ensure the safety and security of all Coker
Company and Clark R&M employees.
1.2 Clark R&M security personnel will also ensure compliance with
Foreign Trade Zone regulations.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M the following fee for security
services provided each month: (a) for any month prior to and including
December 2000, $25,000 and (b) for any month thereafter, $25,000,
multiplied by the Inflation Factor.
-------------
<PAGE>
Schedule 5.7.6
Services and Supply Agreement
OTHER SUPPORT SERVICES
1. Scope.
-----
1.1 Procurement and Contract Services
Clark R&M shall manage the day to day procurement of
equipment, materials, supplies and services provided to the
Coker Company by Clark R&M and use commercially reasonable
efforts to ensure that related procurement charges are
separately allocated to each unit comprising the Heavy Oil
Processing Facility and identifiable from any other charges to
Clark R&M.
1.2 Open Stores
Clark R&M shall coordinate and maintain open stores for
standard materials or equipment needed for operation of the
Heavy Oil Processing Facility (other than Coker Company Spare
Parts) either to be made readily available at Clark R&M's on-
site Refinery warehouse or at a reasonably accessible vendor
site.
1.3 General Supplies
Clark R&M shall maintain adequate supplies for the day to day
operation of the Heavy Oil Processing Facility including,
without limitation, janitorial supplies, lubricants, office
and copier supplies, toiletries, and specialty detergents
1.4 Warehousing
Clark R&M shall maintain segregated storage facilities for
Coker Company Spare Parts as required by Section 5.9(a) of the
Services and Supply Agreement. These warehousing facilities
shall be on either Refinery property or off-site warehousing
facilities depending on specialty storage requirements per the
equipment manufacturer specifications.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M the following fee for providing the
Services described in this Schedule: (a) for any month prior to and
including December 2000, $24,000 and (b) for any month thereafter, $24,000,
multiplied by the Inflation Factor.
-------------
<PAGE>
Schedule 5.8.1
Services and Supply Agreement
OPERATIONS SERVICES
1. Scope.
-----
1.1 Operations Oversight
A Clark R&M operations manager shall be responsible for the
safe, environmentally sound, and profitable operation of the
Heavy Oil Processing Facility. Such individual (or
individuals) shall be responsible for (i) monitoring key
operational and organizational variables to assure that
adequate procedures, processes, and personnel are in place to
accomplish and set operational goals for the Heavy Oil
Processing Facility, (ii) asset management, including
monitoring and assuring the assets under his/her control are
operated and maintained in good working order in regards to
Prudent Industry Practices, (iii) optimization, including
working with other Refinery groups to assure units are
optimized to achieve the greatest return on investment and
(iv) personnel, including managing personnel associated with
the Coker Company in regards to performance and staffing.
1.2. Shift Supervision
a. A Clark R&M shift supervisor shall have primary
responsibility for the following related to the Heavy Oil
Processing Facility: (i) shift process coordination,
(ii) operation and maintenance, (iii) unit coordination
of products and feedstocks and (iv) initial response for
incidents. Such position shall be staffed continuously,
during off-hours and weekends.
b. Three Clark R&M process operating supervisors shall
supervise all unit operators at the Heavy Oil Processing
Facility to accomplish unit and Refinery objectives.
Such individuals shall assure that each unit is operated
in a safe, environmentally sound, and efficient manner
and shall monitor day to day operations, coordinate with
planning and scheduling groups, set maintenance
priorities, and manage unit operating personnel.
1.3 Feed and Product Scheduling
A Clark R&M feed and product scheduler shall have primary
responsibility for product inventory logistics that are
required to manage feedstocks, intermediates and finished
products for the Heavy Oil Processing Facility. Such
individual (or individuals) shall (a) monitor and /track feed
and product inventories, (b) schedule feed and product
movements based on input from the Clark R&M's planning and
economics group, and (c) serve as the primary contact with
product sales personnel in order to monitor current market
statistics.
2. Applicable Price.
----------------
2.1 Coker Complex
<PAGE>
Schedule 5.8.1
Services and Supply Agreement
a. The Coker Company shall pay Clark R&M the following fee
for providing the Services described in 1.1 above related
to the Coker Complex: (a) for any month after the Start-up
Date and to and including December 2000, $11,700 and (b)
for any month thereafter, $11,700, multiplied by the
Inflation Factor . -------------
b. The Coker Company shall pay Clark R&M the following fee
for providing the Services described in 1.1 above related
to the Coker Complex: (a) for any month after the Start-up
Date and prior to and including December 2000, $22,500 and
(b) for any month thereafter, $22,500, multiplied by
-------------
the Inflation Factor.
c. The Coker Company shall pay Clark R&M the following fee
for providing the Services described in 1.1 above related
to the Coker Complex: (a) for any month after the Start-
up Date and prior to and including December 2000, $4,200
and (b) for any month thereafter, $4,200, multiplied by
-------------
the Inflation Factor.
2.2 Ancillary Equipment
Consideration for operations services provided by Clark R&M to
the Coker Company related to the Ancillary Equipment and the
Ancillary Equipment Site is provided for in the Ancillary
Equipment Operating Fee.
-2-
<PAGE>
Schedule 5.8.2
Services and Supply Agreement
ENGINEERING SERVICES
1. Scope.
-----
Clark R&M engineers shall provide the following services:
1.1 Technical Support and Capital Planning
a. Provide oversight to ensure that engineering and industry
standards are followed at the Heavy Oil Processing
Facility
b. Complete routine technical inspections in accordance with
industry practice to help maintain unit reliability, plan
future turnarounds and capital upgrades at the Heavy Oil
Processing Facility
1.2 Optimization and Scheduling
a. Run unit models with input from Refinery optimization
group to set optimal process targets to achieve the
highest profitability
b. Review current and future feed and product markets,
current operating parameters and product specifications,
and set operating targets
c. Provide data to schedule operating rates and product
specification targets
1.3 Design, Drafting, Reproduction and Record Management
a. Provide engineering oversight/supervision necessary to
improve unit reliability and throughput.
b. Provide engineering design complete with calculations and
material/equipment selections consistence with most cost
effect technology and material available.
c. Provide drafting/graphics services required to capture and
convey engineering designs to construction, operation, and
maintenance forces. Maintain life cycle process safety
information (PSI) and drawings necessary to meet the needs
of the business and comply with the requirements of OSHA
1910.119.
d. Provide reproduction and distribution services for text
(8.5 x 11) through large format (E size) engineering
drawings and maps.
e. Maintain a central engineering file to meet the needs of
the business and comply with the requirements of OSHA
1910.119.
1.4 Project Management and Reliability Support
<PAGE>
Schedule 5.8.2
Services and Supply Agreement
a. Provide management of Services to be provided by Clark
R&M pursuant to Section 5.3 of the Services and Supply
Agreement.
b. Identify and resolve problems
c. Perform mechanical failure investigations.
d. Provide technical input for improving the long-term
reliability of the Heavy Oil Processing Facility.
e. Liaison with project management and project safety
management to plan for and execute major maintenance and
capital planning for the Heavy Oil Processing Facility.
1.5 Process and Control Engineering
a. Provide supplemental management support to process
engineering and optimization for Heavy Oil Processing
Facility.
b. Monitor and track unit performance by developing key
performance parameters.
c. Work with the operating supervisors and unit operators to
improve performance, develop improvement projects, and
develop and accomplish long term goals.
d. Provide control engineering including monitoring and
developing process control configurations to optimize
and maximize the utilization of the Coker Company's
assets.
e. Monitor and track computer control equipment and
instrumentation performance including simple loop and
advanced control software, and tracking and continually
improving system uptimes.
f. Interact with unit operational and maintenance personnel,
the optimization group at the Refinery and other
engineering personnel.
1.6 Engineering Studies and Strategic Planning
Provide long-term planning for management of the Heavy Oil
Processing Facility and analysis of performance of the Heavy
Oil Processing Facility.
2. Applicable Price.
----------------
2.1 Coker Complex
-2-
<PAGE>
Schedule 5.8.2
Services and Supply Agreement
a. The Coker Company shall reimburse Clark R&M for all
Permitted Reimbursable Expenses incurred by Clark R&M in
utilizing outside professional services and consultants
necessary for the performance of engineering support
services related to the Coker Complex each month
b. The Coker Company shall pay Clark R&M the following fee
for the performance of all other engineering support
services related to the Coker Complex: (i) for each month
after the Start-up Date and prior to and including
December 2000, $50,000 and (ii) for each month
thereafter, $50,000, multiplied by the Inflation Factor.
-------------
2.2 Ancillary Equipment
Consideration for engineering services provided by Clark R&M
to the Coker Company related to the Ancillary Equipment and
the Ancillary Equipment Site is provided for in the Ancillary
Equipment Operating Fee.
-3-
<PAGE>
Schedule 5.8.3
Services and Supply Agreement
HUMAN RESOURCES
1. Scope.
-----
Clark R&M shall provide the following human resource functions for the
benefit of Coker Company employees:
1.1 Labor Management
Negotiate and administer collective bargaining agreements for
represented employees of the Coker Company.
1.2 Payroll Administration
Oversee the full payroll process for Coker Company delivering
accuracy and timeliness by ensuring process system
effectiveness.
1.3 Employee Training
Ensure regulatory compliance and requisite skills training for
Coker Company employees associated with the safe and efficient
operation of the Coker Complex.
1.4 Benefits
Administer benefits for Coker Company employees in accordance
with applicable benefit plans for both exempt/non-exempt and
represented wage classifications.
1.5 Employee Relations
Handle daily human resources activities as required for
employees of Coker Company including, without limitation,
recruitment, litigation, wages, administration of collective
bargaining agreements, employee activities and other human
resources functions.
1.6 Medical Services
Provide pre-employment physicals, drug and alcohol screens,
and assessment that employees are "fit for duty" when
reporting back to work after illness or injury.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M for providing human resource services
each month according to the following formula:
<PAGE>
Schedule 5.8.3
Services and Supply Agreement
Direct Coker Company Cost + Refinery Human Resources Cost *
Coker Company Employees
-----------------------
Refinery Employees
Where:
"Direct Coker Company Cost" means, for any month, Permitted
Reimbursable Expenses incurred by Clark R&M and directly
attributable to human resource functions provided exclusively
for the Coker Company or its employees including, without
limitation, recruitment agency fees for recruitment of Coker
Company employees, litigation relating exclusively to actions
of Coker Company employees and relocation expenses for Coker
Company employees.
"Refinery Human Resources Costs" means, for any month, the
difference between (a) the Permitted Reimbursable Cost
incurred by Clark R&M in providing the human resource
functions described above for Clark R&M and its affiliates
(including the Coker Company) at the Refinery, minus (b)
-----
Direct Coker Company Cost.
"Coker Company Employees" means, for any month, the average
number of individuals employed by the Coker Company.
"Refinery Employees" means, for any month, the sum of (a) the
average number of individuals employed by the Coker Company in
such month and (b) the average number of individuals employed
by Clark R&M and it affiliates (other than the Coker Company)
that are designated Refinery employees.
-2-
<PAGE>
Schedule 5.8.4
Services and Supply Agreement
ACCOUNTING SERVICES
1. Scope.
-----
Clark R&M shall provide the following accounting services in connection
with performance of its obligations under the Services and Supply
Agreement:
1.1. Billing Information
a. Products
Provide the Coker Company with all information necessary to (i)
quantify and document feedstocks to and Products from each Heavy
Oil Processing Facility unit, (ii) attach value to each of these
feedstocks and Products based on applicable fees in the Services
and Supply Agreement and the Product Purchase Agreement and (iii)
monitor all the laboratory data for such feedstocks and Products.
b. Services
Provide the Coker Company with all information necessary
to monitor and quantify each Service provided to the
Coker Company by Clark R&M
c. Invoices
Provide the Coker Company with drafts of invoices in
connection with payments to be made by Clark R&M to the
Coker Company pursuant to the Product Purchase Agreement.
1.2 General Accounting Information
Provide the Coker Company with information necessary to (i)
ensure that all Federal and State Tax guidelines are
incorporated into its accounting activities and (ii) prepare
reconciliation analysis of the its inventory, fixed assets and
authorization for expenditures for capital or turnaround
documentation.
1.3 Financial Reporting, Budget Coordination and Strategic Planning
Provide the Coker Company with drafts of monthly cost
analysis, planning and budgeting guidelines and the Annual
Budget and Operating Plan in a timely manner.
1.4 Yield Accounting
a. Maintain the Refinery inventory system database on
process unit meters and tank strapping data for the
purpose of documentation and reporting of
<PAGE>
Schedule 5.8.4
Services and Supply Agreement
Coker Company charges and yields, product inventories and
receipts and deliveries including, without limitation,
the tracking of product receipt or delivery documentation
of marine vessels, pipeline movements, rail cars and
deliveries by truck.
b. Provide governmental reporting services for the Coker
Company including, without limitation, to the Department
of Energy, the American Petroleum Institute, the Bureau
of the Census, and the Texas Railroad Commission relative
to Heavy Oil Processing Facility production and product
movements.
c. Track, reconcile and allocate distributed utilities
provided to the Coker Company pursuant to Section 5.5 of
the Services and Supply Agreement.
d. Provide specialty reporting including the capture and
reporting volumes related to any technology licenses held
by the Coker Company or otherwise related to the on-going
operation of the Heavy Oil Processing Facility.
1.5 Foreign Trade Zone
Administer all Foreign Trade Zone Subzone activities related
to the Heavy Oil Processing Facility including, without
limitation, (a) maintaining U.S. Customs Service and Foreign
Trade Zone Board Compliance Status, (b) providing weekly,
monthly and annual reporting, entries or submissions to the
appropriate governmental agencies, (c) maintaining inventory
control recordkeeping system records, (d) providing oversight
for the operational activities that are required to maintain
Foreign Trade Zone Subzone Status for the Heavy Oil Processing
Facility and (e) preparing such documentation as required for
optimizing Foreign Trade Zone Subzone benefits for the Heavy
Oil Processing Facility as required by Applicable Laws.
1.6 Property Tax Reporting and Management
Administer all property tax activities on behalf of the Coker
Company, including, without limitation maintaining asset or
contractor records for the purpose of filing annual tax
renditions and optimizing abatement benefits as required by
local, State and Federal laws
.
2. Applicable Price.
----------------
The Coker Company shall pay Clark R&M the following fee for providing
accounting services described in this Schedule: (a) for any month prior to
and including December 2000, $38,400 and (b) for any month thereafter,
$38,400, multiplied by the Inflation Factor.
-------------
-2-
<PAGE>
Schedule 5.8.5
Services and Supply Agreement
ADMINISTRATIVE SERVICES
1. Scope.
-----
Administrative and professional personnel from the headquarters office of
Clark R&M shall perform the following obligations of Clark R&M under the
Services and Supply Agreement.
1.1 Refining Support
a. Financial Services
Assisting the Coker Company accounting manager with
preparation of internal and external financial reporting and
analysis including, without limitation, providing such
accounting manager with information needed to prepare income
statements and balance sheets and providing market pricing
for yields and inventory and providing working capital
management.
b. Supply and Trading
Negotiation and execution of legal contracts necessary to
acquire crude oil and feedstocks to operate the Heavy Oil
Processing Facility and coordinating with plant personnel
to optimize supply of the Coker Company's requirements of
crude oil and feedstocks.
c. Emergency, Health & Safety
General legal and administrative support of Refinery
programs and liaison with governmental agencies that are
required for the Coker Company to comply with Applicable
Laws and provide guidelines for long-term planning for
compliance.
d. Executive Management
Clark R&M's Chief Operating Officer is responsible for
the oversight of profitable operation of the Heavy Oil
Processing Facility and shall provide strategic direction
that supports operational and organizational variables to
assure that resources, processes, and personnel are in
place to accomplish the Annual Budget and Operating Plan
for the Coker Company.
e. Business Development
Work with plant personnel that support the optimization
of Coker Complex units and the Ancillary Equipment
providing analytical support
<PAGE>
Schedule 5.8.5
Services and Supply Agreement
and industry benchmark studies and identification of
opportunities to optimize asset utilization.
1.2 Corporate Services
a. Income, Franchise, Sales & Use or Property Taxes
Responsible for ensuring (i) performance of Clark R&M's
obligations under Section 11.7 of the Services and Supply
Agreement and (ii) compliance by the Coker Company with all
reporting and other requirements of applicable state, local
and Federal tax laws.
b. General Insurance
Responsible for ensuring performance of Clark R&M's
obligations under Section 5.13 of the Services and Supply
Agreement.
c. Information Systems
Provide direction and systems support insuring year 2000
compliance and technology standards are followed to
manage information requirements of the Coker Company.
d. Investor and Public Relations
Provide specialty reporting and communication to the
Securities and Exchange Commission and any necessary
Public Notice and Liaison to Investors of the Coker
Company Assets.
e. Executive Management
Clark R&M's Chief Executive Officer and Chief Financial
Officer shall be responsible for providing for the
support of refining infrastructure to help insure the
profitable operation of the Heavy Oil Processing Facility
and shall provide strategic direction for financial
management and organizational variables to assure that
resources, processes, and personnel are in place to
accomplish the Annual Budget and Operating Plan for the
Coker Company.
f. Financial Services
Providing information needed by Coker Company for overall
consolidation of inter-company agreements for public
financial reporting of the Coker Company related to the
Heavy Oil Processing Facility.
2. Applicable Price.
----------------
-2-
<PAGE>
Schedule 5.8.5
Services and Supply Agreement
The Coker Company shall pay Clark R&M the following fee for the
support services described in this Schedule: (a) for any month prior to and
including December 2000, $60,000 and (b) for any month thereafter, $60,000,
multiplied by the Inflation Factor.
-------------
-3-
<PAGE>
Schedule 5.9
Services and Supply Agreement
COKER COMPANY SPARE PARTS
NONE.
<PAGE>
Schedule 5.10
Services and Supply Agreement
CATALYST, CHEMICALS AND CONSUMABLES
1. Scope.
-----
1.1. Coker Complex
a. Chemicals and Catalyst
Clark R&M shall provide the Coker Company's requirement of
chemicals and catalyst including, without limitation, the
following (or the commercial equivalent thereof):
<TABLE>
<CAPTION>
SRU 545 Description Estimated Quantity
------- ----------- ------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
No. 1 Claus Reactor Alcoa S-501 117,600 lbs. (density 50lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
No. 2 Claus Reactor Alcoa S-201 108,200 lbs. (density 46 lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
No. 3 Claus Reactor Alcoa S-201 108,200 lbs. (density 46 lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
SCOT Catalyst Criterion 534 75,000 lbs (density 47 lb/ft.3)-4 year life
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 183,600 pounds (45% concentration) inventory
unit
10,000 lbs./year make-up, (0.8 lbs/MMSCF of
treated gas)
BFW Polymer Betz AP 0200 500 gallons
BFW O2 Scavenger Betz OS 2001 500 gallons
---------------------------------------------------------------------------------------------------------
BFW Neutralizing Betz NA 2440 500 gallons
amine
<CAPTION>
ATU 7841 Description Estimated Quantity
-------- ----------- ------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Amine Solvent Huntsman MDEA 1.1 million pounds (45% concentration) to
inventory unit
<CAPTION>
DCU 843 Description Estimated Quantity
------- ----------- ------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Silica Removal Alumina Based 160,000 lbs (density 36.4 lb/ft.3) once per year
Reactor Only
---------------------------------------------------------------------------------------------------------
Di-olefin Reactor Ni-Mo Alumina 30,000 lbs. (density 37.5 lb/ft.3) every two years
Based
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 164,000 pounds (45% concentration) to inventory
unit.
79,000 lbs./year make-up, (0.8 lbs./mmscf of
treated gas and 0.8 lbs./1,000 gals., circulating
treated liquid)
Caustic US Filter ARI- 190 Pounds per hour
Regeneration 100L or ARI-100
catalyst EXL
---------------------------------------------------------------------------------------------------------
Antifoam Silicon Betz Antifoam 2,000 gallons per year (2,000 gallon tank)
---------------------------------------------------------------------------------------------------------
De-emulsifier Betz De-emulsifier 3,250 gallons per year (500 gallon tote tank)
---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 5.10
Services and Supply Agreement
<TABLE>
<CAPTION>
HCU 942 Description Estimated Quantity/1/
------- ----------- ---------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Chevron Catalyst SA 5517 6,000 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 122 Z5B 15,600 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 132 NAQ 19,500 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 135 KAQ 16,200 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 141 L32 88,200 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 141 L34 333,000 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 141 L38 108,000 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 154 KF 97,200 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 210L 93,500 pounds - every two years
---------------------------------------------------------------------------------------------------------
Chevron Catalyst ICR 114 ZF 45,900 pounds - every two years
---------------------------------------------------------------------------------------------------------
Amine Solvent Huntsman MDEA 270,000 pounds (45% concentration) to inventory
unit
3,600 lbs./year make-up, (0.8 lbs./mmscf of
treated gas).
---------------------------------------------------------------------------------------------------------
Catalyst Treatment Tri Butyl Amine 12,300 gallons every two years
---------------------------------------------------------------------------------------------------------
Catalyst Treatment Di-Methy Di-Sulfide 120,000 pounds every two years
---------------------------------------------------------------------------------------------------------
</TABLE>
1. The catalyst amounts listed include an additional 5% contingency and have
been rounded to the nearest whole drum or sack. These amounts will be precisely
defined upon loading the reactors.
b. Caustic
Clark R&M shall provide the Coker Company's requirement of
fresh caustic necessary for treatment of the Coker C3/C4
stream and shall provide for the disposal of spent caustic
from the Coker.
-2-
<PAGE>
Schedule 5.10
Services and supply Agreement
The expected specifications of fresh caustic to be supplied
by Clark R&M are described in the following table:
Fresh Caustic Properties
Component Element Basis Specification
------------------ --------------- ------ -------------
Sodium Oxide Na\\2\\O % 38.0 - 39.5
Sodium Hydroxide NaOH % 49.00 - 51.0
Sodium Chloride NaCl % 1.10 Max
Sodium Carbonate Na\\2\\CO\\3\\ % 0.20 Max
Sodium Sulfate Na\\2\\SO\\4\\ % 0.05 Max
Sodium Chlorate NaClO\\3\\ % 0.30 Max
Iron Fe ppm 10 Max
The following are the expected qualities of spent caustic from
the Coker:
Spent Caustic Properties
Component Element Basis Composition
--------- ------- ----- -----------
Water H\\2\\O Wt. % 82.8
Sodium Hydroxide NaOH Wt. % 6.9
Sodium Thiosulfate Na\\2\\S\\2\\O\\3\\ Wt. % 5.2
Sodium Carbonate Na\\2\\CO\\3\\ Wt. % 5.1
Di-Sulfide Oil DSO Wt. % Trace
1.2 Ancillary Equipment
Clark R&M shall provide all chemicals, catalyst, caustic and
other consumables required for the on-going operation of the
Ancillary Equipment.
2. Metering/Measurement Method for Supply to the Coker Complex.
-----------------------------------------------------------
2.1 Chemicals and Catalyst
The amount of catalyst or chemicals supplied to the Coker Company
for use at the Coker Complex each month shall be the amount of such
catalyst or chemicals actually purchased by Clark R&M in such month
for use in Coker Complex units.
2.2 Caustic
-3-
<PAGE>
Schedule 5.10
Services and Supply Agreement
The actual amount of fresh caustic supplied to the Coker Company
each month for use at the Coker Complex shall be measured by
gauging Tank 6790 located on DCU 843 each time fresh caustic is
received from the fresh caustic system at the Refinery.
3. Applicable Price.
----------------
3.1 Coker Complex
a. Chemicals and Catalyst
The Coker Company shall reimburse Clark R&M for all Permitted
Reimbursable Expenses incurred each month by Clark R&M in
providing chemicals and catalyst to the Coker Complex.
b. Caustic
The Coker Company shall pay Clark R&M for fresh caustic
supplied to the Coker Complex each month according to the
following formula:
Average Monthly Refinery Caustic Cost * Monthly Coker
Complex Usage
Where:
"Average Monthly Refinery Caustic Cost" means, for any
month (a) the actual costs incurred by Clark R&M in
purchasing, blending and delivering caustic for all
Refinery units in such month, divided by (b) the
----------
total volume of caustic supplied to Refinery units
in such month.
"Monthly Coker Complex Usage" means, for any month, the
metered usage of caustic by the Coker Complex units in
such month.
Consideration for disposal of spent caustic by Clark R&M is
included in the fees payable under Schedule 5.6 (Waste
Management and Waste Water Services)
3.2 Ancillary Equipment
Consideration for chemicals, catalyst, caustic and other
consumables provided by Clark R&M for the operation of the
Ancillary Equipment is provided for in the Ancillary Equipment
Operating Fee.
-4-
<PAGE>
Schedule 5.12.1
Services and Supply Agreement
ENVIRONMENTAL, HEALTH AND SAFETY SERVICES
1. Scope.
-----
1.1 Safety
Clark R&M shall provide safety and industrial hygiene support to
the Coker Company including, without limitation, safety
procedures, hygiene monitoring, injury recordkeeping, mandatory
employee training incident investigation, monitoring of
operations, OSHA and Texas Department of Health compliance
planning and budgeting, government agency liaisons during
inspections, enforcement actions and hearings, acquisition of all
required Permits and licenses, implementation and maintenance of
a structured safety process including internal audits and
inspections.
1.2 Process Safety Management ("PSM")
Clark R&M shall provide overall OSHA PSM compliance coordination
and oversight services for the Heavy Oil Processing Facility and
shall implement and maintain a structured PSM compliance program
that addresses (a) employee participation, (b) process safety
information, (c) process hazard analysis, (d) operating
procedures, (e) training, (f) contractor safety, (g) pre-start up
safety review, (h) mechanical integrity of units, (i) "hot work"
Permits, (j) management of change, (k) incident investigation,
(l) emergency planning and response, (m) compliance audits and
(o) trade secrets.
1.3 Environmental
Clark R&M shall provide environmental compliance coordination and
oversight services for the Heavy Oil Processing Facility
including, without limitation, regulatory and legislative
tracking, compliance planning and budgeting necessary to meet
current and future Environmental Protection Agency, Texas Natural
Resource Conservation Commission, Department of Transportation
and U.S. Coast Guard rules and regulations, mandatory employee
training, securing Permits and licenses, arranging for
performance tests, analyses and other measurements required by
Applicable Law, handling recordkeeping and reporting, providing
government agency liaisons during inspections, enforcement
actions and hearings and internal inspections and internal
audits.
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall pay Clark R&M the following fee for
providing environmental, health and safety services the Coker
Company related to the Coker Complex each month: (i) for any
month prior to and
<PAGE>
Schedule 5.12.1
Services and Supply Agreement
including December 2000, $22,900 and (ii) for any month
thereafter, $22,900, multiplied by the Inflation Factor
-------------
b. The Coker Company shall pay, or reimburse Clark R&M for, all
fees in connection with the procurement or renewal of any
Permits or other governmental approvals related solely to the
operation of the Coker Complex or the existence of the Coker
Company.
2.2 Ancillary Equipment
Consideration for environmental, health and safety services provided
by Clark R&M in connection with the operation of the Ancillary
Equipment is provided for in the Ancillary Equipment Operating Fee.
-2-
<PAGE>
Schedule 5.12.2
Services and Supply Agreement
EMERGENCY RESPONSE SERVICES
1. Scope.
-----
1.1 General
a. Clark R&M shall maintain and operate (i) the underground
piping and distribution system, pumping system, post
indicator valves, hydrants, fire monitors, deluge systems
and related equipment for the purpose of delivering Fire
Water (as defined below) throughout the Refinery (the
"Fire Water System") and (ii) medical response equipment,
hazardous release equipment, spill response equipment,
fire trucks, ambulances, hazmat vans, communications
vans, extinguishers, hose carts, self-contained breathing
apparatus ("SCBA") equipment and other equipment
necessary or desirable to respond to emergencies at the
Refinery (together with the Fire Water System, "Emergency
Response Equipment").
b. Clark R&M shall supply the Coker Company with raw water
that has been pumped into the Fire Water System to a
nominal pressure of 100 psig ("Fire Water") for fire
control and other purposes.
c. Clark R&M shall flush the Fire Water System main as
necessary to maintain and inspect the system.
d. Clark R&M shall conduct performance tests of the fire
pumps at least annually.
e. Clark R&M shall develop and implement an emergency
response plan for the Coker Complex.
f. Clark R&M shall maintain and repair the following fixed
and portable Emergency Response Equipment to be located
at the Coker Complex.
i. hand portable extinguishes (dry chemical)
ii. hose cam - annual hydrostatic test for hoses
iii. fire mains, post indicator valves, hydrants and monitors
iv. SCBA equipment
g. Clark R&M shall maintain all Emergency Response Equipment
in accordance with the manufacturers' service schedule
and repair it in accordance with recommended practices.
Maintenance of such equipment shall include lubricating
and replacing parts to the fire trucks, ambulances,
hazmat vans, communications vans and other vehicles.
<PAGE>
Schedule 5.12.2
Services and Supply Agreement
h. Clark R&M shall calibrate, maintain and repair all gas
detection equipment located in the Coker Complex in
accordance with the manufacturers' service schedule and
repair it in accordance with recommended practices.
1.2 Emergency Response Team
a. Clark R&M shall designate a "Fire Chief" who shall be
responsible for managing the Coker Company's emergency
response plan, and for general management of any
emergency. Each party shall cooperate in maintaining a
plant emergency response team who shall perform the duties
set forth in the emergency response plan including,
without limitation, the following:
i. response to alarms and other emergency calls
ii. response to medical emergencies, hazardous chemical
releases and rescue situations
iii. attending regularly scheduled emergency drills
iv. performance Fire Water System main flushing
v. attending quarterly group training sessions as
scheduled by the Fire Chief
b. The Fire Chief shall train and effectively implement the
emergency response plan with the team. In addition, Clark
R&M will review with Coker Company or provide additional
training to Coker Company employees to ensure proper
coordination of emergency response plan. All emergency
response team members must meet minimum standards
specified by Applicable Law.
c. The emergency response team shall consist of the following
minimum complement of personnel per shift unless otherwise
decided by Clark R&M or Applicable Law:
i. 2 Fire Mechanics from Clark R&M
ii. 8 Brigade Members from Clark R&M
iii. 2 Brigade Members from Coker Company
d. Emergency response team members shall be issued car passes
to allow entry into the Refinery or the Coker Complex
property.
1.3 Emergency Communications
Clark R&M shall maintain the Refinery radio emergency channel
equipment and the refinery-wide emergency alarm and
notification system (beeper) in good operating condition and
provide the Coker Company with access to all emergency
communications equipment at the Refinery.
-2-
<PAGE>
Schedule 5.12.2
Services and Supply Agreement
2. Applicable Price.
----------------
2.1 Coker Complex
a. The Coker Company shall reimburse Clark R&M for the actual cost of
materials used by Clark R&M in maintaining and repairing Emergency
Response Equipment (including the Fire Water System) for the Coker
Complex during each month and for the actual cost for materials
actually used by Clark R&M in responding to and emergency
situations at the Coker Complex.
b. The Coker Company shall pay Clark R&M a monthly fee of $10,000 for
all other emergency response services provided to the Coker
Company by Clark R&M.
c. Each party shall bear its own Labor Costs incurred with respect to
its own employees, including emergency response team members, who
may be involved in performing emergency response services
hereunder.
2.2 Ancillary Equipment
Consideration for emergency response services provided by Clark
R&M to the Coker Company related to the Ancillary Equipment is
provided for in the Ancillary Equipment Operating Fee.
-3-
<PAGE>
Schedule 5.13
Service and Supply Agreement
INSURANCE
1. Scope of Coverages.
------------------
1.1 Coker Company Insurance
Clark R&M shall cause the insurance coverages listed under the
headings "Construction Period -- Partnership" and "Operational
Period--Partnership" on Exhibit J to the Common Security Agreement
to be maintained in the name of the Coker Company in accordance with
the provisions of such Exhibit and Article 7 of the Common Security
Agreement.
1.2 Clark R&M shall provide and maintain the insurance coverages listed
under the headings "Construction Period -- Operator" and
"Operational Period -- Operator" on Exhibit J to the Common Security
Agreement to be maintained in its name in accordance with the
provisions of such Exhibit and Article 7 of the Common Security
Agreement.
2. Applicable Price.
----------------
2.1. Consideration for obtaining and maintaining insurance is included in
the fees payable under Schedule 5.8.5.
2.2 The Coker Company shall pay directly, or reimburse Clark R&M for
payment of, premiums, fees or deductibles payable in connection with
the insurance coverages described in 1.1 above.
2.3 Consideration for maintenance of the insurance coverages described
in 1.2 above is included in the Ancillary Equipment Operating Fee.
<PAGE>
Schedule 5.14
Service and Supply Agreement
LICENSING, PERMITS AND APPROVALS
1. Scope.
-----
1.1. Licenses, Permits and Approvals held by Clark R&M
a. Federal Communications Commission 800 megahertz license for the
Trunked Radio System (as such term is defined on Schedule
5.7.3)
b. AIR EMISSION PERMITS FROM TEXAS NATURAL RESOURCE CONSERVATION
COMMISSION ("TNRCC")
i. TNRCC No.6825A/PSD 49 -- Flexible Permit
Covering the Marine docks for feed receipts, product &
coke shipping, Refinery Units, Tanks, boilers, flares.
ii. TNRCC No. 7600 -- Crude Tanks
iii. TNRCC No. 802 -- Gas Turbine Generator
iv. TNRCC No. 5491 -- Crude Tanks
v. TNRCC No. 8369 -- Amine Treating
vi. TNRCC No. 4478
TNRCC No. 1535
TNRCC No. 7585
Crude Tanks at Lucas
Product Tanks at Lucas
c. WATER PERMITS - (Federal & State)
i. Wastewater Discharge NPDES No. TX 0005991
ii. Wastewater Discharge TNRCC No. 00309
iii. Wastewater Permit Expansion Wavier
iv. TNRCC Stormwater Discharge- LUCAS
v. TNRCC Water Rights Adudification Certificate-FANNETT
d. WASTE MANAGEMENT PERMITS
i. TNRCC Solid Waste Notice of Registration No. 30004
ii. EPA Hazardous Waste Generator Permit
iii. EPA PCB Waste Generator Permit
iv. TNRCC Solid Waste Notice of Registration - LUCAS
v. EPA Hazardous Waste Generator I.D. No.- LUCAS
vi. Railroad Commission of Texas Brine Disposal Permit-
Fannett
e. OPERATING PERMITS
<PAGE>
Schedule 5.14
Service and Supply Agreement
i. Corps of Engineers Pipeline Operating Permit 217
ii. Corps of Engineers Pipeline Operating Permits 218
iii. Corps of Engineers Pipeline Operating Permits 219
iv. Railroad Commission of Texas Salt Dome Permit
v. Railroad Commission of Texas Brine Pit Permit
1.2 Licenses, Permits and Approvals held by Coker Company
a. Air Emissions Permit TNRCC No. 2303A
Authorization to construct the Coker Complex covering the
following:
DCU 843
HCU 942
SRU 545
SWS 8747
Flare 23
Crude Oil Tanks 106 - 109 (Four Total)
b. Standby Air Emissions Permit No. 6825Z/PSD - TX - 492
2. Applicable Price.
----------------
Consideration for obtaining and maintaining Permits is included in the fees
payable under Schedule 5.12.1.
-2-
<PAGE>
Schedule 6.1
Services and Supply Agreement
ANNUAL BUDGET AND OPERATING PLAN
- --------------------------------------------------------------------------
INCOME STATEMENT
-------------------------------------
2001
-------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Total Product Revenue $263.5 $298.5 $289.5 $298.7
Total Chargestock Cost 203.6 234.2 233.6 231.9
------ ------ ------ ------
Refinery Gross Margin 59.9 64.4 55.9 66.8
- - - -
Margin Stabilization 12.1 6.1 15.2 10.4
------ ------ ------ ------
Total Gross Margin 72.1 70.4 71.1 77.2
Variable Operating Expenses 6.3 6.5 6.9 6.8
Fixed Operating Expenses 8.6 8.6 8.6 8.6
Lease Fees 8.5 8.6 8.7 8.7
Operating Fees 13.2 13.0 13.0 14.0
Processing Fees (17.1) (17.3) (17.4) (17.7)
G&A Expense 0.2 0.2 0.2 0.2
------ ------ ------ ------
Total Expenses 19.6 19.6 20.0 20.5
EBITDA 52.4 50.8 51.0 56.6
Amortization - - - -
Depreciation 2.9 2.9 2.9 2.9
------ ------ ------ ------
EBIT 49.5 47.9 48.1 53.7
Interest Expense, Net 16.4 18.3 14.7 16.4
------ ------ ------ ------
Net Income 33.1 29.6 33.5 37.3
<PAGE>
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
<TABLE>
<CAPTION>
-------------------------------------------------
2001
-------------------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
<S> <C> <C> <C> <C>
Products - Volume ('000 bpd)
DISTILLATES
LS Diesel 36.7 38.8 38.8 38.8
Jet Fuel 24.2 25.5 25.5 25.5
-------- -------- -------- --------
SUBTOTAL - Distillates 60.9 64.3 64.3 64.3
LPG
Propane 1.0 1.1 1.1 1.1
Isobutane 0.3 0.4 0.4 0.4
Normal Butane 2.0 2.1 2.1 2.1
-------- -------- -------- --------
SUBTOTAL - LPG 3.4 3.6 3.6 3.6
UNFINISHED
Coker Propane Propylene Mix 2.0 2.1 2.1 2.1
Coker Butane Butylene Mix 1.4 1.5 1.5 1.5
Penhex 8.7 9.2 9.2 9.2
Virgin Diesel 7.1 7.4 7.4 7.4
Naphtha - Sour 33.1 35.0 35.0 35.0
Heavy Naphtha 3.6 3.8 3.8 3.8
ULS VGO 9.7 10.3 10.3 10.3
VGO 41.9 44.2 44.2 44.2
-------- -------- -------- --------
SUBTOTAL - Unfinished 107.5 113.4 113.4 113.4
OTHER PRODUCTS
Sulfur 1.2 1.2 1.2 1.2
Coke 17.2 18.2 18.2 18.2
Produced Fuel 4.0 4.4 4.5 4.4
-------- -------- -------- --------
SUBTOTAL - Other Products 22.4 23.8 23.9 23.8
-------- -------- -------- --------
TOTAL PRODUCTS 194.1 205.1 205.1 205.1
======== ======== ======== ========
</TABLE>
-2-
<PAGE>
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
- ------------------------
<TABLE>
<CAPTION>
2001
------------------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
<S> <C> <C> <C> <C>
Chargestock - Volume ('000 bpd)
- -------------------------------
CRUDE
-----
Arab Lt. 36.2 38.2 38.2 38.2
-------- ------- -------- ------- -------
Maya - Market 144.8 152.9 152.9 152.9
------------- ------- -------- ------- -------
SUBTOTAL - Crude 181.0 191.1 191.1 191.1
---------------- ======= ======== ======= =======
OTHER CHARGESTOCKS
------------------
GFU Feed 1.5 1.5 1.5 1.5
--------- ------- ------- ------- -------
Hydrogen 3.2 3.4 3.4 3.4
-------- ------- ------- ------- -------
SUBTOTAL - Other Chargestocks 4.7 4.9 4.9 4.9
----------------------------- ------- ------- ------- -------
TOTAL CHARGESTOCK 185.7 196.0 196.0 196.0
----------------- ======= ======= ======= =======
</TABLE>
-3-
<PAGE>
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
- ------------------------
<TABLE>
<CAPTION>
2001
-----------------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
<S> <C> <C> <C> <C>
Products - Price ($/bbl)
- -----------------------
DISTILLATES
-----------
LS Diesel 18.65 18.64 18.52 19.95
--------- ------- ------- ------- -------
Jet Fuel 18.92 18.90 19.18 20.80
-------- ------- ------- ------- -------
LPG
---
Propane 11.48 11.63 11.42 12.13
------- ------- ------- ------- -------
Isobutane 14.82 15.67 14.94 15.09
--------- ------- ------- ------- -------
Normal Butane 13.24 11.27 11.11 14.17
------------- ------- ------- ------- -------
UNFINISHED
----------
Coker Propane Propylene Mix 13.30 13.99 14.03 14.45
--------------------------- ------- ------- ------- -------
Coker Butane Butylene Mix 14.30 17.48 15.47 14.40
--------------------------- ------- ------- ------- -------
Penhex 13.24 16.44 14.56 13.20
------ ------- ------- ------- -------
Virgin Diesel 16.69 16.79 16.74 18.32
------------- ------- ------- ------- -------
Naphtha - Sour 16.26 18.42 16.93 16.61
-------------- ------- ------- ------- -------
Heavy Naphtha 19.03 21.18 19.70 19.37
------------- ------- ------- ------- -------
ULS VGO 17.21 18.64 17.49 17.59
------- ------- ------- ------- -------
VGO 15.06 16.44 15.37 15.42
--- ------- ------- ------- -------
OTHER PRODUCTS
--------------
Sulfur 9.38 9.40 9.43 9.46
------ ------- ------- ------- -------
Coke (0.26) (0.19) (0.11) (0.11)
---- ------- ------- ------- -------
Produced Fuel 13.15 11.87 11.71 13.34
------------- ------- ------- ------- -------
</TABLE>
-4-
<PAGE>
Schedule 6.1
Services and Supply Agreement
GROSS MARGIN ASSUMPTIONS
- ------------------------
2001
------------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
Chargestocks - Price ($/bbl)
- ----------------------------
CRUDE
-----
Arab Lt. 14.27 15.15 14.81 15.06
-------- ----- ----- ----- -----
Maya - Market 11.22 12.26 12.13 11.86
------------- ----- ----- ----- -----
OTHER CHARGESTOCKS
------------------
GFU Feed 16.68 16.78 16.73 18.31
-------- ----- ----- ----- -----
Hydrogen 30.04 27.61 27.30 30.40
-------- ----- ----- ----- -----
Q1 Q2 Q3 Q4
-- -- -- --
DISTILLATES
-----------
LS Diesel $ 61.6 $ 65.8 $ 66.1 $ 71.2
--------- ------ ------ ------ ------
Jet Fuel 41.1 43.8 45.0 48.8
-------- ----- ----- ----- -----
SUBTOTAL - Distillates 102.8 109.6 111.0 119.9
---------------------- ----- ----- ----- -----
LPG
---
Propane 1.1 1.2 1.2 1.2
------- ----- ----- ----- -----
Isobutane 0.4 0.5 0.5 0.5
--------- ----- ----- ----- -----
Normal Butane 2.4 2.2 2.2 2.8
------------- ----- ----- ----- -----
SUBTOTAL - LPG 3.9 3.9 3.8 4.5
-------------- ----- ----- ----- -----
UNFINISHED
----------
Coker Propane Propylene Mix 2.4 2.7 2.7 2.8
--------------------------- ----- ----- ----- -----
Coker Butane Butylene Mix 1.8 2.4 2.1 2.0
------------------------- ----- ----- ----- -----
Penhex 10.4 13.8 12.3 11.2
------ ----- ----- ----- -----
Virgin Diesel 10.6 11.4 11.5 12.6
------------- ----- ----- ----- -----
Naphtha - Sour 48.5 58.6 54.4 53.4
-------------- ----- ----- ----- -----
Heavy Naphtha 6.1 7.2 6.8 6.7
------------- ----- ----- ----- -----
ULS VGO 15.1 17.4 16.5 16.6
------- ----- ----- ----- -----
VGO 56.7 66.1 62.5 62.7
--- ----- ----- ----- -----
SUBTOTAL - Unfinished 151.6 179.6 168.9 167.9
--------------------- ----- ----- ----- -----
OTHER PRODUCTS
--------------
Sulfur 1.0 1.1 1.1 1.1
------ ------ ------ ------ ------
Coke (0.4) (0.3) (0.2) (0.2)
---- ------ ------ ------ ------
Produced Fuel 4.7 4.8 4.8 5.4
------------- ------ ------ ------ ------
SUBTOTAL - Other Products 5.3 5.5 5.7 6.3
------------------------- ------ ------ ------ ------
TOTAL PRODUCT REVENUE $263.5 $298.5 $289.5 $298.7
--------------------- ------ ------ ------ ------
2001
---------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
GROSS MARGIN ASSUMPTIONS
- ------------------------
-5-
<PAGE>
Schedule 6.1
Services and Supply Agreement
Chargestock Cost ($ in millions)
- ---------------------------------
CRUDE
-----
Arab Lt. $ 46.5 $ 52.7 $ 52.1 $ 52.9
-------- ------ ------ ------ ------
Maya - Market 146.2 170.6 170.6 166.8
------------- ------ ------ ------ ------
SUBTOTAL - Crude 192.7 223.3 222.6 219.8
---------------- ------ ------ ------ ------
OTHER CHARGESTOCKS
------------------
GFU Feed 2.2 2.3 2.4 2.6
-------- ------ ------ ------ ------
Hydrogen 8.7 8.6 8.6 9.5
-------- ------ ------ ------ ------
SUBTOTAL - Other Chargestocks 10.9 10.9 10.9 12.1
-------------------------------------------------- ------ ------
TOTAL CHARGESTOCK COST $203.6 $234.2 $233.6 $231.9
---------------------- ====== ====== ====== ======
TOTAL PRODUCT GROSS MARGIN $ 59.9 $ 64.4 $ 55.9 $ 66.8
---------------------------------------------------- ------ ------
-6-
<PAGE>
Schedule 6.1
Services and Supply Agreement
- --------------------------------------------------------------------------------
VARIABLE & FIXED OPERATING EXPENSE
- ----------------------------------
<TABLE>
<CAPTION>
2001
---------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
<S> <C> <C> <C> <C>
Variable ($ in millions)
============================
Fuel Consumed $ 3.7 $ 3.5 $ 3.5 $ 4.0
- ------------- ------- ------ ------ -------
Electricity $ 2.4 $ 2.7 $ 3.2 $ 2.5
- ----------- ------- ------ ------ -------
Other 0.2 0.2 0.2 0.2
- ----- ------- ------ ------ -------
Total Variable expenses 6.3 6.5 6.9 6.8
- ----------------------- ------- ------ ------ -------
Fixed ($ in millions)
============================
Operating labor 2.8 2.8 2.8 2.8
- --------------- ------- ------ ------ -------
Cat / Chemicals 1.1 1.1 1.1 1.1
- --------------- ------- ------ ------ -------
Repairs & Maintenance 1.8 1.8 1.8 1.8
- --------------------- ------- ------ ------ -------
Environmental 0.2 0.2 0.2 0.2
- ------------- ------- ------ ------ -------
Insurance 0.5 0.5 0.5 0.5
- --------- ------- ------ ------ -------
Taxes 1.0 1.0 1.0 1.0
- ----- ------- ------ ------ -------
Other 1.2 1.2 1.2 1.2 Contingency
- ----- ------- ------ ------ ------- -----------
Total Fixed Operating expenses $ 8.6 $ 8.6 $ 8.6 $ 8.6
- ------------------------------ ------- ------ ------ -------
Total Operating expenses 14.9 15.1 15.5 15.3
- ------------------------ ------- ------ ------ -------
Processing Fees Paid to Clark 4.6 4.4 4.4 5.0
- ----------------------------- ------- ------ ------ -------
Contract Services 0.4 0.4 0.4 0.4
- ----------------- ------- ------ ------ -------
G&A Allocation 0.2 0.2 0.2 0.2
- -------------- ------- ------ ------ -------
Summary used to calculate accounts
- ----------------------------------
payable for operating expenses 30.0 30.3 30.9 31.2
- ------------------------------------------- ------ ------ -------
</TABLE>
Variable ($/bbl crude charge)
===================================
-7-
<PAGE>
Schedule 6.1
Services and Supply Agreement
<TABLE>
<S> <C> <C>
Fuel 0.00 0.00
- ---- ------- -------
Electricity 0.00 0.00
- ----------- ------- -------
Steam - -
- ----- ------- -------
Other - -
- ----- ------- -------
Total Variable expenses ($/bbl crude) 0.00 0.00
- -------------------------------------------- -------
Total Variable expenses ($) $ 0.00 $ 0.00
- --------------------------- ======= =======
Fixed ($/bbl crude charge)
============================================
Operating labor 0.00 0.00
- --------------- ------- -------
Cat / Chemicals 0.00 0.00
- --------------- ------- -------
Maintenance/Environmental 0.00 0.00
- ------------------------- ------- -------
0.00 0.00
------- -------
Taxes & insurance 0.00 0.00
- ----------------- ------- -------
Total fixed expenses ($/bbl crude)
- ----------------------------------
Total Fixed expenses ($) $ 0.00 $ 0.00
- ------------------------ ======= =======
$ 0.00 $ 0.00
------- -------
</TABLE>
-8-
<PAGE>
Schedule 6.1
Services and Supply Agreement
<TABLE>
<CAPTION>
2001
------------------------------
Q1 Q2 Q3 Q4
-- -- -- --
<S> <C> <C> <C> <C>
License Fees (Cash) 0.9
- ------------------- ----
License Fees (Expense)
- ----------------------
Catalyst Chemicals (Cash)
- -------------------------
Catalyst Chemicals (Expense) 0.7 0.7 0.7 0.7
- ---------------------------- ----- ---- ---- ----
Total Cat & Chem Expense 1.1 1.1 1.1 1.1
- ------------------------ ----- ---- ---- ----
Amortized Financing Charges - 2.4 - 2.2
- --------------------------- ----- ---- ---- ----
</TABLE>
HDS Catalyst
- ------------
Diolifin Catalyst
- -----------------
SCOTT Catalyst
- --------------
HKG Catalyst
- ------------
SRU Catalyst
- ------------
-9-
<PAGE>
EXHIBIT A
Services and Supply Agreement
TABLE V-9
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
CHARGES AND YIELDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2001 2002 2003 2004 2005 2006 2007 2008
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Products - Volume (bpd in thousands)
DISTILLATES
LS Diesel 38.3 40.6 40.8 38.5 40.8 40.6 40.8 38.5
Jet Fuel 25.2 26.3 26.8 25.3 26.8 26.3 26.8 25.3
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Distillates 63.4 66.9 67.6 63.8 67.6 66.9 67.6 63.8
LPG
Propane 1.1 1.1 1.2 1.1 1.2 1.1 1.2 1.1
Isobutane 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Normal Butane 2.1 2.2 2.2 2.1 2.2 2.2 2.2 2.1
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - LPG 3.5 3.7 3.8 3.6 3.8 3.7 3.8 3.6
UNFINISHED
Coker Propane Propylene Mix 2.1 2.2 2.2 2.1 2.2 2.2 2.2 2.1
Coker Butane Butylene Mix 1.5 1.6 1.6 1.5 1.6 1.6 1.6 1.5
Penhex 9.1 9.5 9.7 9.1 9.7 9.5 9.7 9.1
Virgin Diesel 7.3 7.0 7.8 7.4 7.8 7.0 7.8 7.4
Naphtha - Sour 34.5 36.1 36.8 34.7 36.8 36.1 36.8 34.7
Heavy Naphtha 3.7 3.8 4.0 3.7 4.0 3.8 4.0 3.7
ULS VGO 10.1 10.6 10.8 10.2 10.8 10.6 10.8 10.2
VGO 43.6 45.8 46.5 43.9 46.5 45.8 46.5 43.9
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Unfinished 112.0 116.5 119.4 112.5 119.4 116.5 119.4 112.5
OTHER PRODUCTS
Sulfur 1.2 1.3 1.3 1.2 1.3 1.3 1.3 1.2
Coke 17.9 18.8 19.1 18.0 19.1 18.8 19.1 18.0
Produced Fuel 4.3 4.3 4.4 4.2 4.4 4.3 4.4 4.2
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Other Products 23.5 24.4 24.9 23.4 24.9 24.4 24.9 23.5
TOTAL PRODUCTS 202.4 211.5 215.7 203.3 215.7 211.5 215.7 203.3
Chargestocks - Volume (bpd in thousands)
CRUDE
Arab Lt. 37.7 39.5 40.2 37.9 40.2 39.5 40.2 37.9
Maya 150.9 157.8 160.9 151.7 160.9 157.8 160.9 151.7
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Crude 188.6 197.3 201.1 189.6 201.1 197.3 201.1 189.6
OTHER CHARGESTOCKS
GFU Feed 1.5 1.6 1.6 1.5 1.6 1.6 1.6 1.5
Hydrogen 3.4 3.5 3.6 3.4 3.6 3.5 3.6 3.4
----- ----- ----- ----- ----- ----- ----- -----
SUBTOTAL - Other Chargestocks 4.9 5.1 5.2 4.9 5.2 5.1 5.2 4.9
TOTAL CHARGESTOCKS 193.5 202.4 206.3 194.5 206.3 202.4 206.3 194.5
</TABLE>
<PAGE>
TABLE V-10
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
PRICE FORECAST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2001 2002 2003 2004 2005 2006 2007 2008
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Products - ($/bbl)
DISTILLIATES
LS Diesel 18.94 20.69 21.66 22.39 22.85 23.09 23.35 23.60
Jet Fuel 19.45 21.16 22.12 22.84 23.30 23.55 23.80 24.07
LPG
Propane 11.67 12.65 13.22 13.63 13.91 14.16 14.36 14.55
Isobutane 15.13 16.35 17.10 17.61 17.93 18.04 18.23 18.41
Normal Butane 12.45 13.57 14.27 14.73 15.02 15.12 15.28 15.44
UNFINISHED
Coker Propane Propylene Mix 13.94 15.28 16.39 16.88 17.22 17.48 17.71 17.91
Coker Butane Butylene Mix 15.41 16.87 17.72 18.36 18.78 19.01 19.23 19.46
Penhex 14.36 15.60 16.31 16.84 17.18 17.34 17.53 17.73
Virgin Diesel 17.14 18.84 19.79 20.50 20.95 21.18 21.43 21.68
Naphtha - Sour 17.05 18.73 19.61 20.27 20.70 20.93 21.17 21.42
Heavy Naphtha 19.82 21.50 22.38 23.05 23.47 23.70 23.95 24.19
ULS VGO 17.73 19.43 19.93 20.53 20.97 21.20 21.43 21.67
VGO 15.57 17.22 17.69 18.24 18.66 18.88 19.10 19.33
OTHER PRODUCTS
Sulfur 9.42 9.48 9.66 9.77 9.88 9.99 10.10 10.22
Coke (0.17) 0.00 0.06 0.07 0.13 0.16 0.19 0.21
Produced Fuel 12.51 12.85 13.08 13.26 13.38 13.46 13.62 13.77
Chargestocks - ($/bbl)
CRUDE
Arab Lt. 14.82 16.25 16.98 17.50 17.89 18.09 18.29 18.49
Maya 11.87 12.98 13.46 13.73 14.08 14.24 14.41 14.58
OTHER CHARGESTOCKS
GFU Feed 17.13 18.82 19.76 20.46 20.91 21.14 21.38 21.62
Hydrogen 28.84 29.20 29.49 30.33 30.26 30.50 30.79 31.51
</TABLE>
2
<PAGE>
TABLE V-11
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
REVENUE AND FEEDSTOCK COST FORECAST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2001 2002 2003 2004 2005 2006 2007 2008
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Product Revenue (Dollars in Millions)
DISTILLATES
LS Diesel 264.6 306.5 322.6 315.2 340.4 342.1 347.7 332.3
Jet Fuel 178.7 203.3 216.6 211.4 228.2 226.3 233.2 222.8
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Distillates 443.4 509.8 539.3 526.6 568.6 568.4 580.9 555.1
LPG
Propane 4.6 5.2 5.6 5.4 5.9 5.8 6.1 5.8
Isobutane 1.9 2.2 2.3 2.3 2.4 2.4 2.5 2.4
Normal Butane 9.5 10.8 11.7 11.4 12.3 12.1 12.5 11.9
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - LPG 16.1 18.2 19.6 19.1 20.6 20.3 21.0 20.1
UNFINISHED
Coker Propane Propylene Mix 10.6 12.1 13.2 12.9 13.9 13.8 14.3 13.7
Coker Butane Butylene Mix 8.4 9.6 10.3 10.1 10.9 10.8 11.2 10.7
Penhex 47.6 53.9 57.6 56.2 60.7 59.9 61.9 59.2
Virgin Diesel 46.0 48.4 56.6 55.4 59.9 54.4 61.3 58.6
Naphtha-Sour 214.9 246.8 263.4 257.3 278.0 275.8 284.3 271.8
Heavy Naphtha 26.8 29.8 32.3 31.4 33.9 32.9 34.6 33.0
ULS VGO 65.6 75.4 78.6 76.5 82.7 82.3 84.6 80.8
VGO 248.1 287.7 300.3 292.7 316.9 315.4 324.4 310.2
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Unfinished 668.0 763.7 812.4 792.7 856.9 845.4 876.4 838.0
OTHER PRODUCTS
Sulfur 4.2 4.4 4.6 4.4 4.7 4.7 4.8 4.6
Coke (1.1) 0.0 0.4 0.5 0.9 1.1 1.3 1.4
Produced Fuel 19.6 20.3 21.1 20.1 21.6 21.3 21.9 21.1
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Other Products 22.8 24.8 26.1 25.0 27.2 27.0 28.1 27.2
TOTAL PRODUCT REVENUE 1150.2 1316.5 1397.4 1363.4 1473.3 1461.2 1506.4 1440.4
CRUDE
Arab Lt. 204.2 234.0 249.3 242.8 262.7 260.5 268.5 256.7
Maya - Market 654.2 747.6 790.3 762.3 827.1 820.5 846.3 809.3
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Crude 858.4 981.6 1039.6 1005.2 1089.8 1081.0 1114.8 1066.0
Chargestock Cost (Dollars in Millions)
OTHER CHARGESTOCK
GFU Feed 9.5 11.1 11.7 11.4 12.3 12.5 12.6 12.1
Hudrogen 35.3 37.4 38.6 37.5 39.6 39.1 40.3 39.0
------ ------ ------ ------ ------ ------ ------ ------
SUBTOTAL - Other Chargestocks 44.8 48.5 50.2 48.9 51.9 51.6 52.9 51.0
TOTAL CHARGESTOCK COST 903.2 1030.1 1089.8 1054.1 1141.7 1132.6 1167.7 1117.0
</TABLE>
3
<PAGE>
TABLE V-12
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
CASH FLOW AND DEBT AMORTIZATION
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Millions)
2001 2002 2003 2004 2005 2006 2007 2008
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Product Revenue 1,150.2 1,316.5 1,397.4 1,363.4 1,473.3 1,462.2 1,506.4 1,440.4
Total Chargestock Cost 903.2 1,030.1 1,089.8 1,054.1 1,141.7 1,132.6 1,167.7 1,117.0
------- ------- ------- ------- ------- ------- ------- -------
Refinery Gross Margin 247.0 286.4 307.5 309.3 331.6 328.6 338.7 323.4
PMI Contract Coker Gross Margin Guarantee 43.8 19.0 (2.7) (22.6) (28.0) (23.9)
------- ------- ------- ------- ------- ------- ------- -------
Total Gross Margin 290.8 305.4 304.8 286.7 303.6 304.6 338.7 323.4
Variable Operating Expenses 26.5 27.9 28.5 28.0 29.1 28.9 29.6 29.0
Fixed Operating Expenses 34.3 34.4 35.0 35.8 37.5 39.3 41.5 42.8
Lease Fees 31.6 32.2 32.8 33.6 34.2 34.8 35.5 36.4
Operating Fees 58.5 61.4 63.2 59.4 62.3 62.6 64.0 62.9
Processing Fees (69.7) (72.0) (73.4) (74.1) (76.1) (77.4) (78.9) (79.7)
G&A Expense 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.9
------- ------- ------- ------- ------- ------- ------- -------
Total Expenses 81.9 84.7 86.8 83.5 87.7 89.1 92.6 92.2
Operating Cash Flow 208.8 220.7 218.0 203.2 215.9 215.5 246.1 231.2
Other Cash Items
Interest Income 1.9 2.7 3.1 3.1 2.1 2.3 3.6 5.3
Cash Taxes (18.3) (32.1) (27.1) (48.5) (53.6) (68.1) (50.6)
Mandatory Capex (3.0) (2.3) (2.4) (2.4) (3.8) (3.9) (4.0) (4.1)
Turnaround Expense (7.5) (7.5) (7.5) (7.5) (9.9) (9.9) (9.9) (9.9)
Catalyst Adjustment 2.7 (2.1) 2.2 (2.9) 2.9 (2.9) 3.0 (3.1)
Other 1.6 5.7 5.4 5.0 1.4 (6.4) (0.7) (0.7)
------- ------- ------- ------- ------- ------- ------- ------
Total Other Cash Items (4.4) (21.9) (31.3) (31.9) (55.8) (74.4) (76.0) (63.0)
Cash Flow Available For Debt Service 204.4 198.9 186.7 171.3 160.0 141.2 170.1 168.2
Debt Service (1)
- ----------------
Interest / Financing Fees 70.4 57.1 44.4 33.3 28.2 22.4 16.8 11.1
Principal 12.4 44.5 29.0 30.6 46.4 46.4 40.3 61.7
------- ------- ------- ------- ------- ------- ------- -------
Total Debt Service 82.8 101.6 73.4 63.9 74.6 68.8 57.1 72.8
DSCR 2.5 2.0 2.5 2.7 2.1 2.1 3.0 2.3
Average 2.4
Minimum 2.0
Debt Amortization Schedule
- --------------------------
Capital Markets
Interest Payment 31.9 31.6 30.1 27.2 22.9 17.1 11.5 5.8
Principal Payment 8.7 20.9 30.6 46.4 46.4 40.3 61.7
Bank Debt
Interest Payment 31.6 20.1 9.0 0.8
Principal Payment - Scheduled 12.4 35.8 8.1
Principal Payment - Sweep 95.8 73.0 85.0 15.0
</TABLE>
(1) Annual debt service for a given year includes July 15 debt service for
subject year and January 15 debt service for following year.
4
<PAGE>
TABLE V-13
PORT ARTHUR COKER COMPANY L.P.
BASE CASE
SOURCES AND USES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions) Project Cost
Total PACC Total Clark Total Project
-----------------------------------------------------
<S> <C> <C> <C>
Uses of Funds
- ------------------------------------------------
EPC costs 543.9 92.0 635.9
Project Contingency 28.0 28.0
Taxes and Import Duties 5.0 5.0
Project Team Cost 26.0 26.0
Startup Cost (includes initial Cat & Chem) 14.6 14.6
------ ------ -------
Total Cash Construction Cost 591.5 118.0 709.5
Transfer of Value 2.2 (2.2)
Interesting during construction 89.7 89.7
Interest Income (0.9) (0.9)
Legal / Consulting / Other Fees 11.4 2.0 13.4
Financing expenses 21.1 21.1
------ ------ -------
Total Uses 715.0 117.8 832.8
Sources of Funds
- ------------------------------------------------
Bank Debt 325.0 325.0
Capital Markets 255.0 255.0
Cash Equity 135.0 117.8 252.8
------ ------ -------
Total Sources 715.0 117.8 832.8
</TABLE>
5
<PAGE>
Exhibit 10.09
EXECUTION COPY
================================================================================
PRODUCT PURCHASE AGREEMENT
BETWEEN
CLARK REFINING & MARKETING, INC.
AND
PORT ARTHUR COKER COMPANY L.P.
August 19, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINITIONS................................................................. 1
Section 1.1 Definitions..................................................... 1
Section 1.2 Other Definitional Provisions................................... 2
ARTICLE 2. PURCHASE AND SALE........................................................... 2
Section 2.1 Purchase and Sale Obligations................................... 2
Section 2.2 Required Product Mix............................................ 2
Section 2.3 Clark R&M's Obligations Absolute................................ 3
ARTICLE 3. DELIVERY; TITLE............................................................. 3
ARTICLE 4. PRICE, BILLING AND PAYMENT.................................................. 4
Section 4.1 Price........................................................... 4
Section 4.2 Billing......................................................... 4
Section 4.3 Payment......................................................... 4
Section 4.4 Recordkeeping; Access to Books and Records...................... 4
Section 4.5 Interest Rate for Late Payments................................. 4
Section 4.6 Price and Schedule Adjustments for Non-Specification Products... 4
ARTICLE 5. QUANTITY AND QUALITY DETERMINATION.......................................... 5
Section 5.1 Quantity Determinations; Metering Facilities.................... 5
Section 5.2 Quality Determinations.......................................... 5
Section 5.3 Disclaimer of Warranties........................................ 5
Section 5.4 Warranty of Title............................................... 5
ARTICLE 6. DEFAULTS, REMEDIES AND TERMINATION.......................................... 6
Section 6.1 Clark R&M's Right to Terminate.................................. 6
Section 6.2 Coker Company's Right to Terminate.............................. 6
Section 6.3 Right to Terminate and Other Remedies of the Coker Company...... 6
Section 6.4 Termination Option.............................................. 7
Section 6.5 Non-Exclusive Remedies; Specific Performance.................... 7
ARTICLE 7. TERM....................................................................... 7
ARTICLE 8. REPRESENTATIONS AND WARRANTIES.............................................. 7
Section 8.1 Representations and Warranties of the Coker Company............. 7
Section 8.2 Representations and Warranties of Clark R&M..................... 8
ARTICLE 9. MISCELLANEOUS............................................................... 9
Section 9.1 Taxes........................................................... 9
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 9.2 Intellectual Property; Confidentiality................... 9
Section 9.3 Maintenance Shutdowns.................................... 9
Section 9.4 Force Majeure............................................ 9
Section 9.5 Cooperation with Other Parties........................... 10
Section 9.6 Indemnity................................................ 10
Section 9.7 Dispute Resolution....................................... 11
Section 9.8 Relationship of Parties.................................. 11
Section 9.9 Third Party Beneficiaries................................ 11
Section 9.10 No Indirect Damages...................................... 12
Section 9.11 Assignments.............................................. 12
Section 9.12 Amendments............................................... 12
Section 9.13 Notices.................................................. 12
Section 9.14 GOVERNING LAW............................................ 13
Section 9.15 Submission to Jurisdiction; Forum Selection.............. 13
Section 9.16 Appointment of Agent for Service of Process.............. 14
Section 9.17 No Waiver................................................ 14
Section 9.18 Counterparts............................................. 14
Section 9.19 Integration.............................................. 14
Section 9.20 Severability............................................. 14
Section 9.21 Headings................................................. 15
Section 9.22 WAIVER OF JURY TRIAL..................................... 15
</TABLE>
APPENDIX A -- DEFINITION
EXHIBITS A-1 to A-42 -- PRODUCTS
-ii-
<PAGE>
PRODUCT PURCHASE AGREEMENT, dated as of August 19, 1999, between Clark
Refining & Marketing, Inc., a Delaware corporation ("Clark R&M") and Port Arthur
---------
Coker Company L.P., a Delaware limited partnership (the "Coker Company").
-------------
RECITALS
WHEREAS, the Coker Company is constructing the Coker Complex on land
within the Refinery leased from Clark R&M, which Coker Complex is intended to
have at least the Coker Complex Design Capacity;
WHEREAS, the Coker Company has leased the Ancillary Equipment located
within the Refinery, which Ancillary Equipment is being upgraded to have the
Crude Design Capacity to permit the production of at least the minimum volume of
feedstocks for the Coker Complex to operate at the Coker Complex Design
Capacity;
WHEREAS, the Heavy Oil Processing Facility, consisting of the Coker
Complex and the Ancillary Equipment, is expected to produce certain Target
Specifications of products;
WHEREAS, the Coker Company desires to sell, and Clark R&M desires to
purchase, all Coker Company products produced by the Heavy Oil Processing
Facility; and
WHEREAS, the obligations of Clark R&M and the rights of the Coker
Company hereunder will be assigned to the Financing Parties as security in order
to finance the construction of the Coker Complex.
NOW THEREFORE, for and in consideration of the mutual covenants,
premises and agreements set forth herein, and good and valuable consideration,
the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Definitions. Except as contained in this Section 1.1
-----------
or as otherwise defined herein, the capitalized terms used herein shall have the
respective meanings assigned thereto in Appendix A. For all purposes of this
Agreement, the following terms shall have the following meanings:
"Delivery Point" means for each Product the specification under the
--------------
heading "Delivery Point" on the Schedule relating to such Product.
"Product Price" means for each Product the U.S. dollar amount obtained
-------------
pursuant to the formula under the heading "Price" on the Schedule relating to
such Product; provided, however, that to the extent that any Product is
-------- -------
purchased by Clark R&M and immediately resold to a non-affiliated third party,
the "Product Price" for such Product shall be (a) the U.S. dollar amount
received by Clark R&M for such Product, less (ii) the applicable marketing fee
----
for such Product described on the Schedule relating thereto.
<PAGE>
2
"Target Specification" means for each Product, the specification of
--------------------
such Product described under the heading "Target Specification" on the Schedule
relating to such Product.
Section 1.2 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Product Purchase Agreement shall refer to
this Product Purchase Agreement as a whole and not to any particular provision
of this Product Purchase Agreement, and Article, Section and Schedule references
are to this Product Purchase Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE 2. PURCHASE AND SALE
Section 2.1 Purchase and Sale Obligations. During the term of this
-----------------------------
Product Purchase Agreement the Coker Company shall sell and deliver to Clark R&M
and Clark R&M shall purchase and accept from the Coker Company all Coker Company
intermediate and final Products of the Heavy Oil Processing Facility, in
accordance with the terms and conditions herein.
Section 2.2 Required Product Mix.
--------------------
(a) Unless Clark R&M shall have exercised its option to request a
different mix of products pursuant to clause (b) below, the Coker Company agrees
to use commercially reasonable efforts to cause the quantity and quality of each
Product delivered to Clark R&M hereunder to meet the Target Specification for
such Product. Notwithstanding the foregoing, the Coker Company shall have no
liability hereunder for failure to deliver the Target Specification of any
Product.
(b) Clark R&M shall have the right to request the Coker Company, and
the Coker Company agrees to use commercially reasonably efforts, to alter the
quality or quantity specification of any Product or Products; provided that such
--------
adjustment shall be subject to the following conditions:
(i) for any calendar month, such request, or combination of
requests, shall not require processing by the Ancillary Equipment of
less than the Contract Quantity of Coker Company Maya and shall not
require processing by the Coker Complex of less than all VTBs produced
by the Ancillary Equipment from the processing of the Contract
Quantity of the Coker Company Maya;
<PAGE>
3
(ii) such adjustments will, in the reasonable good faith
judgment of Clark R&M, maximize the profitability of the Refinery as a
whole in a manner (A) that is mutually beneficial to Clark R&M and the
Coker Company and (B) that does not maximize the profit of Clark R&M
at the expense of the Coker Company;
(iii) Clark R&M shall supply to the Coker Company, pursuant to
the Services and Supply Agreement, the necessary feedstocks and shall
make (or direct the employees of the Coker Company to make, as the
case may be) the necessary operational and other adjustments under the
Services and Supply Agreement in order to fulfill such request;
(iv) such adjustments will not (A) materially increase the net
reimbursable costs of the Coker Company that are payable under the
Services and Supply Agreement, (B) adversely affect the reliability or
the useful life of either the Coker Complex or the Ancillary
Equipment, or (C) otherwise have a material adverse effect on the
physical condition of the Heavy Oil Processing Facility; and
(v) it is otherwise feasible for the Heavy Oil Processing
Facility to produce the quantity and quality of Products so requested.
Section 2.3 Clark R&M's Obligations Absolute. This is a "take and
--------------------------------
pay contract." The obligation of Clark R&M is to accept and actually take
delivery of Products tendered for delivery by the Coker Company and to pay for
such Products at the prices and on the other terms set forth herein, absolutely
and unconditionally without regard to (i) the validity, regularity or
enforceability of this Product Purchase Agreement or any other Project Document,
(ii) any defense, set-off or counterclaim (other than (a) a defense of payment
or performance and (b) the netting of sums payable under the Services and Supply
Agreement with sums payable hereunder as provided in Article 7 of the Services
and Supply Agreement) which may at any time be available to or be asserted by
Clark R&M against the Coker Company (whether in connection with this Product
Purchase Agreement or any other transaction between Clark R&M and the Coker
Company), or (iii) any other circumstance whatsoever which constitutes, or might
be construed to constitute, an equitable or legal discharge of Clark R&M from
its obligations under this Product Purchase Agreement, in bankruptcy or in any
other instance. Clark R&M hereby waives, to the extent permitted by Applicable
Law, any and all rights that it may now have or which at any time hereafter may
be conferred on it, by statute or otherwise, to terminate, cancel or rescind
this Product Purchase Agreement.
ARTICLE 3. DELIVERY; TITLE
The Coker Company shall deliver all Products to be sold hereunder, and
title to all such Products shall pass, to Clark R&M at the applicable Delivery
Point. At the Delivery Point for any Product, Clark R&M shall take delivery of
such Product and the Coker Company's responsibility with respect to such Product
shall cease and Clark R&M shall assume all
<PAGE>
4
responsibility for, all risk of loss of, or damage to, and deterioration or
evaporation of, such Product so delivered.
ARTICLE 4. PRICE, BILLING AND PAYMENT
Section 4.1 Price. Clark R&M shall pay the Product Price, from
-----
time to time, for each Product delivered in accordance with this Product
Purchase Agreement.
Section 4.2 Billing. Every three (3) calendar days, the Coker
-------
Company shall furnish an invoice to Clark R&M setting forth: (i) a calculation
of the Product Price for each Product delivered during the preceding three (3)
day period, (ii) the total amount payable by Clark R&M to the Coker Company for
all such Products for such three (3) day period, and (iii) a calculation of any
necessary adjustments to previous invoices pursuant to clause (d) of Section
5.11 of the Services and Supply Agreement or Section 4.6 hereof.
Section 4.3 Payment. Clark R&M shall pay each invoice within five
-------
(5) calendar days of receipt thereof. All invoices will be expressed and paid
without set-off, counterclaim, withholding or deduction, in immediately
available funds to the account listed on Schedule 4.3 hereto.
Section 4.4 Recordkeeping; Access to Books and Records.
------------------------------------------
(a) The Coker Company shall, in accordance with good business
practices, keep and maintain such books, records, accounts and other documents
which are sufficient to reflect accurately and completely all amounts which form
the basis for invoices submitted hereunder including, without limitation,
records maintained pursuant to clause (c) of Section 5.11 of the Services and
Supply Agreement.
(b) Clark R&M shall have the right to inspect and examine, during
regular business hours and on not less than five (5)calendar days notice to the
Coker Company all records maintained pursuant to clause (a) above.
Section 4.5 Interest Rate for Late Payments. All amounts payable
-------------------------------
hereunder if not paid when due will accrue interest daily at the annual rate of
interest announced from time to time for dollars by The Chase Manhattan Bank,
N.A. at its offices located in New York, New York as its prime commercial
interest rate for U.S. Dollar-denominated loans originated in the United States
plus two percent (2%) calculated from the due date of such payment until the
date of payment.
Section 4.6 Price and Schedule Adjustments for Non-Specification
----------------------------------------------------
Products. If a material amount of any Product produced by the Heavy Oil
- --------
Processing Facility fails to meet the specifications on the Schedule related to
such Product and such failure to meet specifications has a material adverse
affect on the fair market value of such Product (or any finished product derived
from such Product), then upon written request of either party the parties shall
meet to
<PAGE>
5
negotiate a good faith and equitable adjustment to the next invoice to be
delivered to Clark R&M under Section 4.2; provided, however, that (i) the
-------- -------
failure of such Product to meet its specifications was not caused by a failure
of Clark R&M to operate the Heavy Oil Processing Facility in accordance with its
obligations under Article 2 of the Services and Supply Agreement, (ii) such
lower Product specification was not requested by Clark R&M pursuant to Section
2.2 hereof and (iii) no such adjustment shall become effective until the
Independent Engineer issues a certificate approving the reasonableness of such
adjustment. If such failure of any Product to meet the specifications on the
Schedule related to such Product is due to a design or construction defect of
the Coker Complex such that the failure to meet specifications is expected to
continue on an on-going basis, the parties shall meet to negotiate a good faith
adjustment or adjustments to the applicable Schedule or Schedules; provided,
--------
however, that no such adjustment or adjustments shall become effective until the
- -------
Independent Engineer issues a certificate approving the reasonableness of such
adjustment.
ARTICLE 5. QUANTITY AND QUALITY DETERMINATION
Section 5.1 Quantity Determinations; Metering Facilities. The
--------------------------------------------
quantity of each Product delivered by the Coker Company to Clark R&M shall be
measured in accordance with the methods specified under the heading "Quantity
Measurement" on the Schedule related to such Product and Section 5.11 of the
Services and Supply Agreement.
Section 5.2 Quality Determinations. Necessary determinations of
----------------------
the quality of any Product shall be determined in accordance with the sampling
procedure for such Product specified under the heading "Quality Measurement" on
the Schedule related to such Product and Section 5.11 of the Services and Supply
Agreement.
Section 5.3 Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED
------------------------
IN SECTION 5.4, BELOW, THE COKER COMPANY MAKES NO WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PRODUCTS TO BE SUPPLIED BY THE COKER COMPANY HEREUNDER,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
Section 5.4 Warranty of Title. The Coker Company warrants and
-----------------
represents to Clark R&M that the Coker Company has good title to, and the valid
right to transfer to Clark R&M, all Products delivered hereunder, free and clear
of all liens of persons claiming by, through or under the Coker Company.
<PAGE>
6
ARTICLE 6. DEFAULTS, REMEDIES AND TERMINATION
Section 6.1 Clark R&M's Right to Terminate. A material failure of
------------------------------
the Coker Company to deliver the Products substantially in accordance with the
terms contained herein, which remains uncured for a period of sixty (60)
consecutive days, shall constitute a Coker Company default hereunder.
If a Coker Company default occurs and is continuing, Clark R&M after
having given the Coker Company and the Financing Parties ninety (90) days prior
written notice may terminate this Product Purchase Agreement upon Coker
Company's and/or the Financing Parties' subsequent failure to cure such default
within such ninety (90) day cure period.
Section 6.2 Coker Company's Right to Terminate. Each of the
----------------------------------
following shall constitute a Clark R&M default hereunder:
(a) Failure by Clark R&M to pay any amount due under this Product
Purchase Agreement in excess of $250,000 on the date when payment of such amount
is required, which continues uncured for a period of five (5) consecutive days;
(b) Failure by Clark R&M to perform substantially any material
obligation under this Product Purchase Agreement, which failure continues
uncured for a period of thirty (30) consecutive days;
(c) Commencement of insolvency, receivership, reorganization or
bankruptcy proceedings by or against Clark R&M, which are not dismissed within
sixty (60) days;
(d) Any material breach of any covenant, representation or warranty
of Clark R&M herein that continues uncured for a period of sixty (60)
consecutive days;
(e) Default by Clark R&M under Section 8.2 of the Services and Supply
Agreement; or
(f) Failure by Clark R&M to perform substantially any material
obligation under the Ancillary Equipment Site Lease or the Coker Complex Ground
Lease, which failure continues uncured for a period of thirty (30) consecutive
days.
Section 6.3 Right to Terminate and Other Remedies of the Coker
--------------------------------------------------
Company.
- -------
(a) Upon the occurrence of a Clark R&M default hereunder and subject
to the consent of the Financing Parties, the Coker Company may (i) terminate
this Product Purchase Agreement and/or (ii) exercise any or all other remedies
available to it at law or in equity.
(b) In the event Clark R&M does not accept delivery of any Product,
for any reason, the Coker Company shall have the right to sell such Product to
any other purchaser.
<PAGE>
7
Section 6.4 Termination Option. Notwithstanding anything to the
------------------
contrary herein and subject to such consent as may be required under the
Financing Documents, this Product Purchase Agreement shall terminate at the
option of either party hereto should Final Completion (as such term is defined
in the EPC Contract) and completion of the Lessor Ancillary Equipment Upgrade
not occur on or before March 1, 2002 or such later date for completion of
construction of the Heavy Oil Processing Facility as may be contemplated by the
Financing Documents.
Section 6.5 Non-Exclusive Remedies; Specific Performance. (a) None
--------------------------------------------
of the provisions in this Article 6 are intended to be exclusive of, or to
limit, any rights available to either party at law or in equity.
(b) Each of the parties hereto acknowledges and agrees that (i)
monetary damages may be an inadequate remedy for a breach of any of the
provisions of this Product Purchase Agreement, (ii) in addition to being
entitled to exercise all of their rights granted by law, including recovery of
damages, the other party shall therefore be entitled to specific performance of
the other party's obligations under this Product Purchase Agreement and (iii) in
the event of any action for specific performance it shall waive the defense that
a remedy at law would be adequate.
ARTICLE 7. TERM
This Product Purchase Agreement shall become effective on the date
hereof and shall continue in effect until the earlier of (a) the date on which
this Product Purchase Agreement is terminated pursuant to Article 6, or (b) the
date that is thirty (30) years after the date hereof.
ARTICLE 8. REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations and Warranties of the Coker Company.
---------------------------------------------------
The Coker Company represents and warrants to Clark R&M that:
(a) The Coker Company is a corporation duly formed and validly
existing under the laws of the State of Delaware; the Coker Company has the
power and authority to own its assets and to transact the business in which it
is now engaged or proposed to be engaged in; and the Coker Company is duly
qualified to do business in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
(b) The execution, delivery and performance by the Coker Company of
this Product Purchase Agreement has been duly authorized by all necessary
corporate action and does not and will not: (1) require any further consent or
approval of the members of the Coker Company; (2) contravene the Coker Company's
partnership agreement or certificate of limited partnership; (3) violate any
provision of any law, rule, regulation, order, writ, judgment, decree,
<PAGE>
8
determination, or award presently in effect having applicability to the Coker
Company; (4) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
the Coker Company is a party or by which it or its properties may be bound or
affected; (5) result in, or require, the creation or imposition of any lien,
upon or with respect to any of the properties now owned or hereafter acquired by
the Coker Company; or (6) cause the Coker Company to be in default under any
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease or instrument.
(c) This Product Purchase Agreement is in full force and effect and
is the legal, valid, and binding obligation of the Coker Company, enforceable
against the Coker Company in accordance with its terms, except to the extent
that such enforcement may be limited by applicable bankruptcy, moratorium,
insolvency or other similar laws affecting creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
Section 8.2 Representations and Warranties of Clark R&M. Clark R&M
-------------------------------------------
represents and warrants to the Coker Company that:
(a) Clark R&M is a corporation duly formed and validly existing under
the laws of Delaware; Clark R&M has the corporate power and authority to own its
assets and to transact the business in which it is now engaged or proposed to be
engaged in; and Clark R&M is duly qualified to do business in each jurisdiction
in which the character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary.
(b) The execution, delivery and performance by Clark R&M of this
Product Purchase Agreement has been duly authorized by all necessary corporate
action and does not and will not: (1) require any further consent or approval of
the members of Clark R&M; (2) contravene Clark R&M's certificate of
incorporation or by laws; (3) violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination, or award presently in
effect having applicability to Clark R&M; (4) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Clark R&M is a party or by which
it or its properties may be bound or affected; (5) result in, or require, the
creation or imposition of any lien, upon or with respect to any off the
properties now owned or hereafter acquired by Clark R&M; or (6) cause Clark R&M
to be in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award or any such indenture, agreement,
lease or instrument.
(c) This Product Purchase Agreement is in full force and effect and
is the legal, valid, and binding obligation of Clark R&M, enforceable against
Clark R&M in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, moratorium, insolvency, or
other similar laws affecting creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
<PAGE>
9
ARTICLE 9. MISCELLANEOUS
Section 9.1 Taxes.
-----
(a) Each party shall be solely responsible for payment of (i) any
federal, state or local taxes based on upon or measured by such party's income
and (ii) personal property taxes levied on or measured by the value of the
Products to the extent such taxes are applicable or allocable to periods in
which such party had title to the Products so taxed.
(b) Any sales, use, transfer or similar taxes, now or hereafter
imposed, levied or assessed by any governmental authority directly upon the
transactions herein provided for shall, if collectible or payable by the Coker
Company, be paid or reimbursed by Clark R&M. If Clark R&M claims exemption for
any of the aforesaid taxes, then it shall furnish the Coker Company with a
properly completed exemption certificate. On items that are to be resold, Clark
R&M shall furnish the Coker Company with a properly executed resale certificate.
If, at any time, Clark R&M holds a Texas direct payment permit, it shall issue
to the Coker Company a properly completed direct payment exemption certificate
and thereafter hold harmless and indemnify the Coker Company for any sales or
use taxes assessed against the Coker Company by any taxing authority in respect
to any taxable sales, including the amounts of any penalties, interest and
reasonable attorneys' fees.
Section 9.2 Intellectual Property; Confidentiality. Clark R&M
--------------------------------------
agrees to be bound by all confidentiality agreements and all agreements with
respect to intellectual property rights contained in the other Project
Documents.
Section 9.3 Maintenance Shutdowns. The parties agree to cooperate
---------------------
in scheduling planned maintenance shutdowns of operating units within the Heavy
Oil Processing Facility and within the Clark Equipment in order to minimize the
impact on the operations of the other party. Notwithstanding the foregoing, no
maintenance shutdown of any unit comprising part of the Clark Equipment shall
relieve Clark R&M of its obligation to purchase and take delivery of Products
hereunder.
Section 9.4 Force Majeure.
-------------
(a) If an Event of Force Majeure causes a material adverse effect on
a party's ability to carry out its obligations under this Product Purchase
Agreement, other than the obligation to pay money, such party shall give to the
other party prompt notice of such Event of Force Majeure with reasonably full
particulars thereof, and its obligations so far as they are affected by such
Event of Force Majeure shall be suspended during but not longer than the
continuance of such Event of Force Majeure and such further period thereafter as
shall be reasonable in the circumstances.
(b) As soon as practicable after giving notice under clause (a)
above, the claiming party shall provide to the other party confirmation of the
particulars required to be given under clause (a) above.
<PAGE>
10
(c) Nothing in this Section 9.4 shall suspend, excuse or delay any
party's obligation to pay under this Product Purchase Agreement.
(d) The non-performing party shall use reasonable diligence to remedy
its inability to perform or to minimize the impact of the Event of Force Majeure
as quickly as possible.
Section 9.5 Cooperation with Other Parties. Purchaser shall
------------------------------
reasonably cooperate with the Coker Company, the Independent Engineer and the
Financing Parties in connection with the Financing Documents and/or any
refinancing thereof including, without limitation, the furnishing of such
information, the giving of such certificates and the furnishing of a reasonable
consent and such reasonable opinions of counsel and other matters as the Coker
Company, the Independent Engineer or the Financing Parties may reasonably
request in connection with the transactions contemplated hereby or by the
Financing Documents.
Section 9.6 Indemnity.
---------
(a) The Coker Company shall protect, indemnify, defend and hold
harmless Clark R&M, and Clark R&M shall protect, indemnify, defend and hold
harmless the Coker Company and the Financing Parties, together with in each case
the respective indemnitee's directors, officers, employees and agents (including
but not limited to affiliates and their employees) from and against all
liabilities, damages, losses, penalties, claims, judgments, awards, costs,
expenses (including reasonable legal fees and any fines or assessments charged
against it), demands, suits and proceedings of any nature whatsoever for death,
injury or property damage that arise out of or are in any manner connected with
the negligence or willful misconduct of that party in its performance of this
Product Purchase Agreement.
(b) Each party's obligations with respect to claims and suits covered
by this Section are subject to the conditions that (i) the indemnitee gives the
indemnitor reasonably prompt notice of any such claim or suit, (ii) the
indemnitee cooperates in the defense of any such claim or suit and (iii) the
indemnitor has sole control of the defense and settlement to the extent of the
indemnitor's liability for any such claim or suit, provided that indemnitor
--------
shall confirm in writing its obligation to indemnify the indemnitee with respect
to all costs and expenses with respect to such claim or suit. Nothing contained
in this clause, however, shall preclude the indemnitee from (x) being
represented by its own counsel at its own expense or (y) participating in the
settlement if the claimed relief is non-monetary in nature.
(c) The Coker Company hereby agrees that, notwithstanding any
provision in this Product Purchase Agreement to the contrary, with respect to
any loss that is or would be covered by the policies of insurance specified in
Section 5.13 of the Services and Supply Agreement, Clark R&M shall first seek to
recover insurance proceeds under such policies, through submission of a claim
and exercise of good faith efforts over the ensuing sixty (60) day period toward
recovery of damages under this Product Purchase Agreement.
<PAGE>
11
Section 9.7 Dispute Resolution.
------------------
(a) In the event of any dispute arising out of or in connection with
this Product Purchase Agreement, Clark R&M or the Coker Company may notify the
other party of the nature of the dispute and the parties shall, in good faith
and using all reasonable efforts, seek to settle the dispute amicably through
negotiation between senior executives. Within twenty (20) days after delivery of
such notice, such senior executives shall meet at a mutually acceptable time and
place, and thereafter as often as reasonably deemed necessary, to exchange
relevant information and to attempt to resolve the dispute. All discussions
pursuant to this clause (a) shall be confidential and shall be treated as
compromise and settlement negotiations for all purposes including the admission
of evidence in any subsequent arbitration. If the matter has not been resolved
within sixty (60) days of the delivery of notice of the dispute, or if the
parties fail to meet within the twenty-day period referred to above, either
party may initiate arbitration of the dispute pursuant to the terms of clause
(b) of this Section.
(b) All claims and disputes arising out of or in connection with this
Product Purchase Agreement shall be settled finally by arbitration under rules
applicable to arbitrations of the American Arbitration Association (the "AAA
---
Rules") in effect at such time. The arbitration shall take place in New York
- -----
City. Subject to the provisions of paragraph (c) below, the arbitral tribunal
shall consist of three arbitrators, one designated by each of the parties and
the third, who shall be the chairman of the tribunal, selected by agreement of
the two designated arbitrators. In the event the two arbitrators fail to agree
on the selection of the chairman, the chairman shall be selected in accordance
with AAA Rules. The substantive law applicable to the subject matter of the
arbitration shall be the law indicated in Section 12.8. Copies of the request
for arbitration and the answer thereto shall be served by a party on the other
party in accordance with Section 9.13. Subject to paragraph (c) below, the
award of the arbitral tribunal shall be rendered within one hundred eighty (180)
days from signature or approval of the terms of reference, subject to extension
for good cause only. The award shall be final and binding on the parties, and
may be confirmed or embodied in any order or judgment of any court of competent
jurisdiction.
(c) In the case of any claim for damages in a principal amount of two
hundred fifty thousand U.S. dollars (U.S.$250,000) or less, (i) the claim shall
be resolved by a sole arbitrator selected in accordance with AAA Rules, (ii) the
terms of reference shall be signed and any hearing of the matter shall be held
within one hundred twenty (120) days following the later of service of the
answer and transmission of the file to the arbitrator, and (iii) the arbitrator
shall render the award within thirty (30) days after the hearing or, in the
event a hearing is not held, signature or approval of the terms of reference,
subject extension for good cause only.
Section 9.8 Relationship of Parties. Nothing in this Product
-----------------------
Purchase Agreement shall be deemed to constitute either party hereto a partner,
joint venturer, agent or legal representative of the other party or to create
any fiduciary relationship between or among the parties.
Section 9.9 Third Party Beneficiaries. (a) The Financing Parties
-------------------------
are intended third party beneficiaries of this Product Purchase Agreement and
the representations, warranties,
<PAGE>
12
covenants and agreements of the parties hereto are made for the benefit of, and
may be relied upon by, the Financing Parties.
(b) The rights and obligations created under this Product Purchase
Agreement shall apply exclusively to the parties hereto and their successors and
permitted assigns, and no right shall be created in any third party by reason of
this Product Purchase Agreement or separate act or action taken independently by
either party.
Section 9.10 No Indirect Damages. Notwithstanding anything to the
-------------------
contrary herein, in no event shall either party be liable for consequential,
incidental, indirect, special or punitive damages hereunder including, without
limitation, any damages measured by the principal amount of the Coker Company's
obligations under the Financing Documents.
Section 9.11 Assignments. (a) Clark R&M shall not assign its rights
-----------
hereunder without the prior written consent of the Coker Company and the
Financing Parties. The Coker Company may assign its rights hereunder to the
Financing Parties, as collateral security for its obligations under the
Financing Documents, but otherwise shall not assign its rights hereunder without
the prior written consent of Clark R&M and the Financing Parties. Clark R&M
hereby expressly authorizes the Financing Parties, or the Collateral Trustee
acting on behalf of the Financing Parties, as a secured party, to exercise all
rights of the Coker Company under this Product Purchase Agreement and to
subsequently assign such rights in connection therewith.
(b) This Product Purchase Agreement shall be binding upon and shall
inure to the benefit of, the successors and permitted assigns of Clark R&M and
the Coker Company.
(c) This Product Purchase Agreement shall inure to the benefit of the
Collateral Trustee, the Financing Parties and any subsequent transferee or
assignee thereof.
Section 9.12 Amendments. No amendment, modification or alteration
----------
of the terms hereof shall be binding unless the same is in writing and duly
executed by each of the parties hereto.
Section 9.13 Notices. Any notice, request, consent, waiver or other
-------
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Clark R&M:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Richard A. Keffer
<PAGE>
13
If to the Coker Company:
Port Arthur Coker Company L.P.
Port Arthur Refinery
1801 S. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
Any such notice, request, consent, waiver or other communication
required or permitted hereunder, whether to Clark R&M or the Coker Company,
shall also be personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested, to the
Collateral Trustee on behalf of the Financing Parties, addressed as follows:
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4/th/ Floor
New York, New York 10006
Attention: James McDonough
Section 9.14 GOVERNING LAW. THE PLACE OF EXECUTION, DELIVERY OR
-------------
PERFORMANCE OF THIS AGREEMENT OR OF THE DOMICILE OF THE PARTIES HERETO
NOTWITHSTANDING, THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 9.15 Submission to Jurisdiction; Forum Selection.
-------------------------------------------
(a) Each of the parties hereto submits to the non-exclusive
jurisdiction of the courts of the State of New York, the State of Texas and the
courts of the United States of America located in the State of New York and the
State of Texas over (i) any suit, action or proceeding with respect to this
Product Purchase Agreement or the transactions contemplated hereby if not
settled by arbitration pursuant to Section 9.7 above and (ii) the enforcement of
any arbitral award issued pursuant to Section 9.7 above.
<PAGE>
14
(b) Except for an arbitration award under Section 9.7 hereof, any
suit, action or proceeding with respect to this Product Purchase Agreement or
the transactions contemplated hereby, or the enforcement of any arbitral award
in connection therewith, may be brought only in the courts of the State of New
York or the courts of the United States of America located in the State of New
York, in each case located in the Borough of Manhattan, City of New York, State
of New York. Each of the parties hereto waives any objection that it may have to
the venue of such suit, action or proceeding in any such court or that such
suit, action or proceeding in such court was brought in an inconvenient court
and agrees not to plead or claim the same.
Section 9.16 Appointment of Agent for Service of Process. Each
-------------------------------------------
party hereto irrevocably appoint CT Corporation, at 1633 Broadway, New York, New
York 10019, as its authorized agent in the State of New York upon which process
may be served in any suit, action or proceeding with respect to this Product
Purchase Agreement or the transactions contemplated hereby, and agrees that
service of process upon such agent, and written notice of said service to such
party by the person serving the same to the address provided in Section 9.13,
shall be deemed in every respect effective service of process upon such party in
any such suit or proceeding. Each party hereto further agrees to take any and
all action as may be necessary to maintain such designation and appointment of
such agent in full force and effect so long as this Product Purchase Agreement
is in effect pursuant to Article 7.
Section 9.17 No Waiver. The waiver of either party of a default or
---------
breach of any provision of this Product Purchase Agreement by the other party
shall not operate or be construed to operate as a waiver of any subsequent
defaults or breaches of the same or different kind. The failure of a party to
exercise any rights hereunder in a particular instance shall not operate as a
waiver of such party's right to exercise the same or different rights in
subsequent instances. The making or acceptance of a payment by either party
with knowledge of the existence a default or breach shall not operate or be
construed to operate as a waiver of any default or breach.
Section 9.18 Counterparts. This Product Purchase Agreement may be
------------
executed by one or more of the parties to this Product Purchase Agreement on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an
executed signature page of this Product Purchase Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
Section 9.19 Integration. This Product Purchase Agreement and the
-----------
other Project Documents represent the agreement of the Coker Company and Clark
R&M with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Coker Company or Clark R&M
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Project Documents.
Section 9.20 Severability. Any provision of this Product Purchase
------------
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
<PAGE>
15
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 9.21 Headings. Captions and headings in this Product
--------
Purchase Agreement are for reference only and do not constitute a part of the
substance of this Product Purchase Agreement.
Section 9.22 WAIVER OF JURY TRIAL. THE COKER COMPANY AND CLARK R&M
--------------------
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER PROJECT DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
<PAGE>
16
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Product Purchase Agreement to be signed by their respective
officers thereunto duly authorized as of the day and year first set forth above.
CLARK REFINING & MARKETING, INC.
By: /s/ Maura J. Clark
----------------------------------------
Name: Maura J. Clark
Title: Exec. Vice Pres. and CFO
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
General Partner
By: /s/ Maura J. Clark
----------------------------------
Name: Maura J. Clark
Title: Exec. Vice Pres. and CFO
<PAGE>
APPENDIX A -- DEFINITIONS TO THE:
Services and Supply Agreement
Product Purchase Agreement
Coker Complex Ground Lease
Ancillary Equipment Site Lease
Transfer and Assignment Agreement
General Provisions
------------------
The following terms shall have the following meanings for all purposes
of the Services and Supply Agreement, the Product Purchase Agreement, Coker
Complex Ground Lease, the Ancillary Equipment Site Lease and the Transfer and
Assignment Agreement, each referred to below, unless otherwise defined in such
agreements or the context thereof shall otherwise require, and such meanings
shall be equally applicable to both the singular and the plural forms of the
terms herein defined. In the case of any conflict between the provisions of
this Appendix A and the provisions of the main body of any of the above
agreements, the provisions of the main body of such agreement shall control the
construction of such agreement.
Unless the context otherwise requires, references to (i) agreements
shall include sections, schedules, exhibits and appendices thereto and shall be
deemed to mean and include such agreement (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the permitted successors and assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
"Actual Coker Capacity" means with respect to the Coker, its capacity,
---------------------
from time to time, to process feedstreams.
"Actual Crude Capacity" means with respect to the Ancillary Equipment,
---------------------
its capacity, from time to time, to process crude oil.
"Actual Hydrocracker Capacity" means with respect to the Hydrocracker,
----------------------------
its capacity, from time to time, to process gas oil.
"Adjacent Refinery Property" means the land described on Exhibit B to
--------------------------
the Coker Complex Ground Lease and also on Exhibit C to the Ancillary Equipment
Site Lease.
"Amine Treating Unit" means the amine treating unit to be constructed
-------------------
at the Refinery and designated ATU 7841.
"Ancillary Equipment" means, collectively, the Crude Unit and the
-------------------
other processing units described on Exhibit B to the Ancillary Equipment Site
Lease.
"Ancillary Equipment Easement" has the meaning given such term in
----------------------------
Section 2.2 of the Ancillary Equipment Site Lease.
<PAGE>
18
"Ancillary Equipment Operating Fee" has the meaning given such term in
---------------------------------
Section 13.2(b) of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site" has the meaning given such term in Section
------------------------
2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Initial Term" means the period commencing on
-------------------------------------
the August 19, 1999 and ending on August 19, 2029.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site
------------------------------
Lease and Easement Agreement, dated as of August 19, 1999, between Clark R&M and
the Coker Company.
"Ancillary Equipment Site Leasehold" has the meaning given such term
----------------------------------
in Section 2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Lease Term" has the meaning given such term
-----------------------------------
in Article XX of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Renewal Term" means each period following
-------------------------------------
the end of the Ancillary Equipment Initial Term with respect to which Lessee has
the option to renew the Ancillary Equipment Site Lease pursuant to Article XX of
the Ancillary Equipment Site Lease.
"Ancillary Equipment Upgrade Contract" means the Reimbursable Contract
------------------------------------
for Engineering, Procurement and Construction, dated as of March 24, 1998,
between Clark R&M and the Contractor, as amended by Amendment No. One, dated as
of August 19, 1999, as further amended, supplemented or otherwise modified from
time to time.
"Annual Budget and Operating Plan" means, for any Operating Year, the
--------------------------------
budget and operating plan in effect pursuant to Section 6 of the Services and
Supply Agreement.
"Applicable Law" means, collectively, (i) all Permits and (ii) all
--------------
laws, treaties, ordinances, judgments, decrees, injunctions, writs, orders and
stipulations of any court, arbitrator or governmental agency or authority and
statutes, rules, regulations, orders and interpretations thereof of any federal,
state, county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body applicable from time to
time to the Refinery, the operation or maintenance of the Refinery, or the
performance of any obligations under the Clark R&M Agreements, any other Project
Document or any other agreement entered into in connection therewith.
"Appraisal Procedure" with respect to any renewal option of any lease,
-------------------
means a procedure whereby two independent Qualified Appraisers, one appointed by
the lessor and one by the lessee, shall agree upon the value, period, amount or
determination then the subject of an appraisal, as follows: If either the
lessor or the lessee shall determine that a value, period or amount of
determination to be determined under such lease or any related document cannot
<PAGE>
19
timely be established by agreement, such party shall appoint its Qualified
Appraiser and give notice thereof to the other party, which shall appoint its
Qualified Appraiser within 10 days thereafter. If such other party does not
appoint its Qualified Appraiser within such ten day period, the determination of
the first Qualified Appraiser made within 20 days thereafter shall be conclusive
and binding on the lessor and the lessee. If within 20 days after appointment
of the second of the two Qualified Appraisers, such Qualified Appraisers are
unable to agree upon the value, period, amount or determination in question,
they jointly shall appoint a third Qualified Appraiser within 10 days
thereafter, or, if they do not do so, either the lessor or the lessee may
request the American Arbitration Association office in Houston, Texas (or if no
such office exists at such time, the American Arbitration Association office in
New York, New York), or any organization successor thereto, to appoint the third
Qualified Appraiser from a panel of arbitrators knowledgeable on the subject of
refinery land and asset valuations in the Texas Gulf Coast area. The decision
of the third Qualified Appraiser shall be given within 20 days after his
appointment. If three Qualified Appraisers shall be so appointed, the average
of all three determinations shall be conclusive and binding on the lessor and
the lessee unless the determination of one Qualified Appraiser is disparate from
the middle determination by more than twice the amount by which the third
determination is disparate from the middle determination, in which case the
determination of the most disparate Qualified Appraiser shall be excluded and
the average of the remaining two determinations shall be conclusive and binding
on the lessor and the lessee. The obligation to pay the fees and expenses of
Qualified Appraisers incurred in connection with any Appraisal Procedure shall
be divided equally between the lessor and the lessee.
"Auxiliary Facilities" has the meaning given such term in Article VI
--------------------
of the Coker Complex Ground Lease.
"Auxiliary Rights" has the meaning given such term in Article VI of
----------------
the Coker Complex Ground Lease.
"Available Coker Company Maya" means, for any day, the sum of (a) the
----------------------------
Contract Quantity for such day, plus (b) the extent, if any, that the Available
----
Coker Company Maya for the preceding day exceeds the Actual Crude Capacity for
such preceding day.
"Available Coker Company VTBs" means, for any day, the sum of (a) the
----------------------------
Coker Company VTBs produced by the Crude Unit on such day, plus (b) the extent,
----
if any that Available Coker Company VTBs for the preceding day exceeds Actual
Coker Capacity for such preceding day.
"Base Case Financial Model" shall mean the financial model described
-------------------------
on Exhibit A to the Services and Supply Agreement.
"BPD" has the meaning given such term in the Long-Term Oil Supply
---
Agreement.
"Business Day" means any day other than Saturday, Sunday or a legal
------------
holiday in the United States of America.
<PAGE>
20
"Clark Equipment" means all Clark Refinery Property other than the
---------------
Ancillary Equipment.
"Clark Hydrogen Supply Contract" means the Product Supply Agreement,
------------------------------
dated as of August 1, 1999, between Clark R&M and Air Products, Inc.
"Clark Maya" means Maya Crude Oil purchased by Clark R&M.
----------
"Clark Processing Fee" means, for any monthly period, the total fees
--------------------
due the Coker Company from Clark R&M for processing services provided pursuant
to Sections 3.5, 4.2 and 4.3.
"Clark R&M" means Clark Refining & Marketing, Inc., a Delaware
---------
corporation.
"Clark R&M Agreements" means, collectively, (i) the Services and
--------------------
Supply Agreement, (ii) the Product Purchase Agreement, (ii) the Coker Complex
Ground Lease and (iv) the Ancillary Equipment Site Lease.
"Clark Refinery Property" means all real and personal property owned
-----------------------
by Clark R&M and located at the Refinery.
"Coker" means the delayed coker to be constructed at the Refinery and
-----
designated DCU 843.
"Coker Company" means Port Arthur Coker Company L.P., a Delaware
-------------
limited partnership.
"Coker Company Crude Oil Volume" means, on any day, the volume, stated
------------------------------
in BPD, of Coker Company-owned crude oil processed through the Crude Unit.
"Coker Company Maya" means Maya Crude Oil purchased by the Coker
------------------
Company.
"Coker Complex"means, collectively, the Coker, the Hydrocracker, the
-------------
Sulfur Plant, the Sour Water Stripper, the Amine Treating Unit and the Coker
Complex Offsites.
"Coker Complex Design Capacity" means with respect to the Coker
-----------------------------
Complex, its nameplate capacity, stated in BPD, to process feedstocks.
"Coker Complex Ground Lease" means the Coker Complex Ground Lease and
--------------------------
Blanket Easement Agreement, dated as of August 19, 1999, between Clark R&M and
the Coker Company.
"Coker Complex Ground Lease Term" has the meaning given such term in
-------------------------------
Article XX of the Coker Complex Ground Lease.
<PAGE>
21
"Coker Complex Initial Term" means the period commencing on August 19,
--------------------------
1999 and ending on August 19, 2029.
"Coker Complex Leasehold" has the meaning given such term in Section
-----------------------
2.1 of the Coker Complex Ground Lease.
"Coker Complex Offsites" means, collectively, (a) the control room,
----------------------
flare, cooling tower, sulfur loading facilities and power station no. 6 that are
being constructed pursuant to the EPC Contract and (b) the coker feed tank nos.
108 and 109 that are being modified pursuant to the EPC Contract.
"Coker Complex Renewal Term" means each period following the end of
--------------------------
the Initial Term with respect to which Lessee has the option to renew the Coker
Complex Ground Lease pursuant to Article XX of the Coker Complex Ground Lease.
"Coker Complex Site" has the meaning give such term in Section 2.1(a)
------------------
of the Coker Complex Ground Lease.
"Coker Design Capacity" means with respect to the Coker, its nameplate
---------------------
capacity, stated in BPD, to process feedstocks.
"Collateral Trustee" means the collateral trustee granted a security
------------------
interest, on behalf of the Financing Parties, in the Senior Debt pursuant to the
Financing Documents and any successor collateral trustee thereunder.
"Common Security Agreement" means the Common Security Agreement, dated
-------------------------
as of August 19, 1999, among the Coker Company, the Funding Company, Sabine,
Neches, Bankers Trust Company, as Collateral Trustee and Depositary Bank,
Deutsche Bank AG, New York Branch, as Administrative Agent, Winterthur
International Insurance Company Limited, as Oil Payment Insurers Administrative
Agent and HSBC Bank USA, as Capital Markets Trustee,
"Contract Quantity" means (a) for any day when the Long-Term Oil
-----------------
Supply Agreement is in effect and PMI has not reduced the volume of Maya
available to the Coker Company pursuant thereto, the "Contract Quantity" in
effect on such day pursuant to the Long-Term Oil Supply Agreement or such lesser
amount of Maya Crude Oil as may be purchased thereunder pursuant to Section 8.2
of the Long-Term Oil Supply Agreement, and (b) for any other day, the amount of
Maya Crude Oil sufficient to operate the Coker at eighty percent of Actual Coker
Capacity.
"Contractor" means Foster Wheeler USA Corporation, a Delaware
----------
corporation.
"Crude Design Capacity" means with respect to the Ancillary Equipment,
---------------------
its nameplate capacity, stated in BPD, to process heavy crude oil.
<PAGE>
22
"Crude Unit" means the crude unit and vacuum tower located at the
----------
Refinery and collectively designated AVU-146.
"CRU 1344 Hydrotreater" means the naphtha hydrotreater located at the
---------------------
Refinery and designated CRU 1344.
"Easements" has the meaning given such term in Section 2.2 of the
---------
Coker Complex Ground Lease.
"EPC Contract" means the Contract for Engineering, Procurement and
------------
Construction Services, dated as of July 12, 1999, between the Coker Company and
the Contractor, as amended, supplemented or otherwise modified from time to
time.
"Event of Force Majeure" means any event or circumstance if (i) such
----------------------
event or circumstance is beyond the reasonable control of the affected party and
(ii) such event or circumstance is not the direct or indirect result of a
party's negligence or the failure of such party to perform any of its
obligations under the applicable Clark R&M Agreement, including, without
limitation:
1. any interruption or cessation in delivery of Coker Company Maya to
the Refinery, whether or not due to an event of force majeure under the
Long-Term Oil Supply Agreement;
2. acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, blight, famine, flood, hurricane, or
other extraordinary weather conditions more severe than those experienced
at any time in the last thirty (30) years for the geographic area of the
Refinery;
3. acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the power of eminent domain, police power, condemnation or
other taking by or on behalf of any public, quasi-public or private entity;
4. laws, rules, regulations, orders, judgments or other acts of any
foreign, federal, state or local court, administrative agency, governmental
body or authority;
5. strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the employees
of Clark R&M; and
6. a partial or entire interruption or other failure of (a) the
supply of electricity, water, wastewater treatment, steam, hydrogen or
other utilities
<PAGE>
23
to the Refinery or any part thereof, or (b) pipeline service, ship
or barge service, dock access or usage or other transportation
facilities.
"Excess Coker Capacity" means, for any day, the extent that Actual
---------------------
Coker Capacity for such day exceeds the capacity necessary for the Coker to
process the Available Coker Company VTBs for such day.
"Excess Coker Capacity Option" has the meaning given such term in
----------------------------
Section 4.2(a) of the Services and Supply Agreement.
"Excess Crude Capacity" means, for any day, the extent that Actual
---------------------
Crude Capacity for such day exceeds the capacity necessary for the Ancillary
Equipment to process the Available Coker Company Maya for such day and the light
crude oil necessary to process such Available Coker Company Maya.
"Excess Crude Capacity Option" has the meaning given such term in
----------------------------
Section 3.5(b) of the Services and Supply Agreement.
"Excess Hydrocracker Capacity" means, for any day, the extent that
----------------------------
Actual Hydrocracker Capacity for such day exceeds the capacity necessary for the
Hydrocracker to process Coker Company VGO produced by the Coker on such day.
"Excess Hydrocracker Capacity Option" has the meaning given such term
-----------------------------------
in Section 4.3(a) of the Services and Supply Agreement.
"Fair Market Rental Value" shall mean, with respect to any land and/or
------------------------
equipment to be leased pursuant to a lease, the value, which shall not in any
event be less than zero, that would be obtained in an arm's length transaction
for cash between an informed and willing lessee and an informed and willing
lessor, neither of whom is under any compulsion to lease, for the use of such
land and/or equipment for a given period, without regard, in the case of land,
(i) to the value of any equipment or improvements that are not included in such
lease but which are located on such land, (ii) to the value of any reversionary
interest of the lessor in any equipment or improvements located on such land,
whether or not included in such lease, or (iii) to the highest and best use of
such land.
"Final Completion" has the meaning given such term in the EPC
----------------
Contract.
"Financial Close" means the date when the initial funding of the
---------------
Senior Debt has occurred.
"Financing Documents" has the meaning given such term in the Common
-------------------
Security Agreement.
"Financing Parties" means any lender or note purchaser that may at any
-----------------
time be party to the Financing Documents and any trustee or agent acting on
their behalf.
<PAGE>
24
"Funding Company" means Port Arthur Finance Corp., a Delaware
---------------
corporation.
"GFU 241" means the distillate hydrotreater located at the Refinery
-------
and designated GFU 241.
"GFU 242" means the distillate hydrotreater located at the Refinery
-------
and designated GFU 242.
"GFU 243" means the distillate hydrotreater located at the Refinery
-------
and designated GFU 243.
"Guaranteed Values" has the meaning given such term in the EPC
-----------------
Contract.
"Heavy Oil Processing Facility" means, collectively, the Coker Complex
-----------------------------
and the Ancillary Equipment.
"Hydrocracker" or "HCU 942" means the hydrocracker to be constructed
------------ -------
at the Refinery and designated HCU 942.
"Hydrogen" means hydrogen purchased by the Coker Company pursuant to
--------
the Hydrogen Supply Agreement.
"Hydrogen Supply Agreement" means the Supply Agreement, dated as of
-------------------------
August 1, 1999, between the Coker Company and Air Products, Inc.
"Independent Engineer" means Purvin & Gertz, Inc., or successor
--------------------
thereto appointed pursuant to the Financing Documents.
"Inflation Factor" shall mean, for any month, (a) the most current
----------------
Producer Price Index published by the U.S. Department of Labor, Bureau of
Statistics, divided by, (b) the Producer Price Index on August 19, 1999.
----------
"Labor Costs" shall mean, with respect to any service provided by
-----------
Clark R&M, all reasonable direct labor costs of Clark R&M in performing such
service including wages, salaries, overtime charges, reasonable and customary
bonuses, payroll insurance and taxes and holidays, vacations, group medical,
dental and life insurance and other employee benefits.
"LCO" means light cycle oil.
---
"Lessor Ancillary Equipment Upgrade" shall have the meaning given such
----------------------------------
term in Section 6.1 of the Ancillary Equipment Site Lease.
"Lien" any mortgage, security interest, pledge, hypothecation,
----
encumbrance or lien (statutory or other) of any kind or nature whatsoever.
<PAGE>
25
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sale
------------------------------
Agreement, dated as of March 10, 1998, between PMI and Clark R&M, as amended by
the First Amendment and Supplement to the Maya Crude Oil Sales Agreement, dated
as of August 19, 1999, and as assigned by Clark R&M to the Coker Company
pursuant to the Long-Term Oil Supply Agreement Assignment.
"Long-Term Oil Supply Agreement Assignment" means the Assignment of
-----------------------------------------
the Long-Term Oil Supply Agreement, dated as of August 19, 1999, by Clark R&M to
the Coker Company.
"Maya Crude Oil" means Mexican crude oil of the "Maya" type, as more
--------------
particularly described in the Long-Term Oil Supply Agreement and, to the extent
necessary, such alternative crude oil(s) and/or other feedstock(s) that may be
used to produce the Required Product Mix.
"Neches" mean Neches River Holding Corp., a Delaware corporation.
------
"Operating Year" means (i) the period beginning on the Start-up Date
--------------
and ending on the last day of the calendar year in which the Start-up Date
occurs and (ii) each calendar year thereafter. All annual amounts set forth in
the Clark R&M Agreements shall be adjusted pro rata for the first Operating
Year.
"Performance Test Standards" has the meaning given such term in the
--------------------------
EPC Contract.
"Permit" means any valid waiver, exemption, variance, franchise,
------
permit, authorization, license or similar order of or from any federal, state,
county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body having jurisdiction over
the Refinery, the Coker Complex or the Ancillary Equipment or the performance of
any obligation under any Clark R&M Agreement, any Project Document or any other
agreement in connection therewith.
"Permitted Liens" means (i) the respective rights and interests
---------------
created by or under the Financing Documents and the Project Documents, (ii)
Liens for Taxes that either are not delinquent or are being contested in good
faith and by appropriate proceedings diligently conducted, so long as such
proceedings do not (a) involve a substantial risk of foreclosure, forfeiture,
loss or sale of any portion of the Clark Refinery Property subject to the
Ancillary Equipment Site Lease or the Coker Complex Ground Lease or interest
therein, (b) interfere with the use, possession or disposition of any Clark
Refinery Property subject to the Ancillary Equipment Site Lease or the Coker
Complex Ground Lease or interest therein or (c) interfere with the payment of
rent under the Ancillary Equipment Site Lease or the Coker Complex Ground Lease;
(iii) materialmen's, mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens arising in the ordinary course of business
for amounts that either are not more than 30 days past due or are being
contested in good faith by appropriate proceedings, so long as such proceedings
satisfy the conditions for the continuation of
<PAGE>
26
proceedings to contest Taxes set forth in clause (ii) above; (iv) Liens of any
of the types referred to in clauses (ii) and (iii) above that have been bonded
for the full amount in dispute (or as to which other security arrangements
reasonably satisfactory to the Collateral Trustee have been made); (v) Liens
securing judgments, decrees or orders of any court (i) that are not currently
dischargeable or (ii) that have been discharged or stayed or appealed within
thirty (30) days after the date of such judgment, decree or order (in the case
of a stay or appeal, during the period of such stay or appeal); (vi) other Liens
that would not impair (x) the ability of the Coker Company or its successors,
assigns or subtenants to operate the Coker Complex in accordance with the Base
Case Financial Model or (y) any of the security interests granted, or to be
granted, by the Coker Company to the Financing Parties pursuant to the Financing
Documents, (vii) with respect to the Ancillary Equipment Site Lease, the Liens
listed on Schedule I thereto; and (viii) with respect to the Coker Complex
Ground Lease, the Liens listed on Schedule I thereto.
"Permitted Reimbursable Expenses" shall mean, with respect to any
-------------------------------
service provided by Clark R&M, any reasonable expense or expenditure incurred in
performance of such service including, without limitation, (i) Labor Costs, (ii)
purchases of spare parts, tools, equipment, consumables, materials and other
supplies necessary for performance of such service and (iii) direct cost of
subcontract labor or services needed to perform such service.
"Person" an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"PMI" means P.M.I. Comercio Internacional, S.A. de C.V., a corporation
---
organized under the laws of Mexico.
"Product Purchase Agreement" means the Product Purchase Agreement,
--------------------------
dated as of August 19, 1999, between Clark R&M and the Coker Company, as
amended, supplemented or otherwise modified from time to time.
"Products" means each product described under the heading "Product" on
--------
Exhibits A-1 through A-42 to the Product Purchase Agreement.
"Project Documents" means, collectively, the Services and Supply
-----------------
Agreement, the Product Purchase Agreement, the Long-Term Oil Supply Agreement,
the EPC Contract, the Coker Complex Ground Lease, the Ancillary Equipment Site
Lease and the Hydrogen Supply Agreement.
"Prudent Industry Practice" means those practices, methods, equipment,
-------------------------
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used in refinery facilities in the United
States of a type and size similar to the Refinery.
"Qualified Appraiser" means an appraisal firm with a national
-------------------
reputation and experience in appraising facilities of a nature and type similar
to the Refinery.
<PAGE>
27
"Reconciliation Statement" has the meaning given such term in Section
------------------------
7.2(a) of the Services and Supply Agreement.
"Refinery" means, collectively, the existing oil refinery owned by
--------
Clark R&M located in Port Arthur, Texas, the Ancillary Equipment and the Coker
Complex.
"Regulated Utilities" has the meaning given such term in Section
-------------------
5.5(f) of the Services and Supply Agreement.
"Required Product Mix" means, from time to time, the quantity and
--------------------
quality specifications of products to be produced by the Heavy Oil Processing
Facility pursuant to Section 2.2 of the Product Purchase Agreement.
"Sabine" means Sabine River Holding Corp., a Delaware corporation.
------
"Senior Debt" has the meaning given such term in the Common Security
-----------
Agreement.
"Senior Debt Obligations" means the obligations to pay principal and
-----------------------
interest on the disbursed Senior Debt, and all commissions, fees, indemnitees,
prepayment premiums and other amounts payable to the senior lenders under the
Financing Documents.
"Services" has the meaning set forth in Section 2.1 of the Services
--------
and Supply Agreement.
"Services and Supply Agreement" means the Services and Supply
-----------------------------
Agreement, dated as of August 19, 1999, between Clark R&M and the Coker Company,
as amended, supplemented or otherwise modified from time to time.
"Sour Water Stripper" means the sour water stripper to be constructed
-------------------
at the Refinery and designated SWS-8747.
"Standards" means, in addition to any other standards set forth in the
---------
EPC Contract, the technical requirements of the Project Documents, generally
accepted standards of professional care, skill, diligence and competence
applicable to engineering and construction and project management practices,
good refinery and petrochemical industry practices for oil refineries of similar
size, type and design to the Refinery, manufacturer's specifications and
warranty requirements and all Applicable Laws .
"Start-up Date" means the date on which hydrocarbons are first
-------------
introduced into the Coker Complex for the processing of test runs under the EPC
Contract.
"Start-up Period" means the period from the Start-up Date until Final
---------------
Completion.
<PAGE>
28
"Sulfur Plant" means the sulfur plant to be constructed at the
------------
Refinery and designated SRU 545.
"Supplies" has the meaning set forth in Section 2.1 of the Services
--------
and Supply Agreement.
"Tax" means, with respect to any site or parcel of land and the
---
improvements thereon, all real estate taxes and assessments, including
substitutes therefor or supplements thereto, assessed upon, levied against or
imposed on such land and improvements located thereon which accrue and are due
and payable during the term of the Coker Complex Ground Lease. Notwithstanding
anything to the contrary contained herein, the term "Taxes" shall not include
any franchise, income, corporation, inheritance, succession, gift, estate,
realty transfer, capital or other tax which may be charged or assessed against
Lessor or any income, excess profit or revenue tax or any other tax which may be
assessed against or become a lien upon the Coker Complex Site or the rent
accruing therefrom.
"Total Crude Oil Volume" means, for any day, the total daily volume,
----------------------
stated in BPD, of crude oil processed by the Crude Unit.
"Transfer and Assignment Agreement" means the Transfer and Assignment
---------------------------------
Agreement, dated as of August 19, 1999, between Clark R&M and the Coker Company,
as amended, supplemented or otherwise modified from time to time.
"VGO" means vacuum gas oil.
---
"VTBs" means vacuum tower bottoms.
----
"Warranties" means the requirements of all warranties and guarantees
----------
applicable to equipment and structures constituting the Coker Complex or the
Ancillary Equipment provided by the Contractor, subcontractors, vendors,
suppliers or others.
<PAGE>
EXHIBIT A-1
Product: Wet Gas from AVU 146
- -------
Target Specification:
- --------------------
Component Typical Test Method
--------- ------- -----------
Methane and Ethane 11.00% LV ASTM D-2163
Propane 27.21% LV ASTM D-2163
Normal Butane 50.28% LV ASTM D-2163
Isobutane 11.51% LV ASTM D-2163
Pentanes and Heavier 0.00% LV ASTM D-2163
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the total output of this Product multiplied by the Coker Company Crude Oil
Volume divided by the Total Crude Oil Volume.
Price: For contained Methane: The weighted average delivered cost of natural
- -----
gas purchased by Clark converted into dollars per FOEB where 6.0 MMBTU is
equivalent to 1.0 FOEB less Fractionation Fee. The conversion of contained
methane to FOEB is as follows: Contained Methane (MSCF/D) * 0.0425 (LB/SCF) *
23,840 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB).
For contained Ethane: The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per FOEB where 6.0 MMBTU is equivalent
to 1.0 FOEB less Fractionation Fee. The conversion of contained ethane to FOEB
is as follows: Contained Ethane (MSCF/D) * 0.0800 (LB/SCF) * 22,169 (BTU/LB) /
1000 / 6.0 (MMBTU/FOEB).
For contained Propane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of propane in the delivered Product.
For contained Normal Butane delivered from October through February: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Normal Butane delivered from March through September: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day less 3.0 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Isobutane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu posting for spot purchases of isobutane for
each publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of isobutane in the delivered Product.
For contained Pentanes and Heavier: The arithmetic average of the high/low Oil
Price Information Service Mont Belvieu posting for spot purchases of natural
gasoline Non-Dynegy for each publication day less 1.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the
Product Purchase Agreement Page 1 August 3, 1999
<PAGE>
EXHIBIT A-1
Inflation Factor less Fractionation Fee multiplied by the quantity of the
Product delivered on that day weighted by the respective volume of pentanes and
heavier in the delivered Product.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per
MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FI-
- --------------------
500.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by gas chromatography.
Product Purchase Agreement Page 2 August 3, 1999
<PAGE>
EXHIBIT A-2
Product: Penhex from AVU 146
- -------
Target Specification:
- --------------------
Property Typical Test Method
-------- ------- -----------
IBP 90 degrees F ASTM D-86
5% 128 degrees F ASTM D-86
10% 140 degrees F ASTM D-86
30% 168 degrees F ASTM D-86
50% 189 degrees F ASTM D-86
70% 209 degrees F ASTM D-86
90% 235 degrees F ASTM D-86
95% 249 degrees F ASTM D-86
FBP 267 degrees F ASTM D-86
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the output of this Product boiling at or below 195 degrees F. The
Coker Company Share is defined as the output of this Product boiling at or below
195 (degrees)F multiplied by the Coker Company Crude Oil Volume divided by the
Total Crude Oil Volume.
Price: For material boiling at or below 195 degrees F: The arithmetic average
- -----
of the high/low Oil Price Information Service Mont Belvieu posting for spot
purchases of natural gasoline Non-Dynegy for each publication day less 1.5
cents/gallon less 0.10 cents/gallon marketing fee multiplied by the Inflation
Factor less 0.5 cents/gallon terminalling fee multiplied by the Inflation Factor
less Fractionation Fee. The marketing fee and terminalling fee shall only be
assessed if Penhex is sold to a 3/rd/ party.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per
MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FE-
- --------------------
461.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by distillation.
Product Purchase Agreement Page 3 August 3, 1999
<PAGE>
EXHIBIT A-3
Product: Unfinished Naphtha
- -------
Target Specification: Target specifications for each component are described in
- --------------------
Attachments I and II below.
Quantity: For days that Unfinished Naphtha is excessed to inventory, Coker
- --------
Company shall sell and Clark shall purchase the "Coker Company Share" of the
excessed Unfinished Naphtha. The Coker Company Share is defined as the excessed
Unfinished Naphtha multiplied by the Coker Company Crude Oil Volume divided by
the Total Crude Oil Volume.
The excessed Unfinished Naphtha is assumed to be composed of Light Naphtha from
AVU 146 boiling above 195 (degrees)F and Heavy Naphtha from AVU 146 in exact
proportion to the total production of each.
Price: The price is computed for each component as described in Attachments I
- -----
and II below.
Delivery Point/Risk of Loss: The delivery point and risk of loss for each
- ---------------------------
component are described in Attachments I and II below.
Quantity Measurement: Quantity measurements shall be calculated by changes in
- --------------------
Unfinished Naphtha inventory utilizing standard yield accounting methods.
Quality Measurement: Quality measurements for each component are described in
- -------------------
Attachments I and II below.
Attachment I
------------
Component: Light Naphtha from AVU 146
- ---------
Target Specification:
- --------------------
Property Typical Test Method
-------- ------- -----------
IBP 90 degrees F ASTM D-86
5% 128 degrees F ASTM D-86
10% 140 degrees F ASTM D-86
30% 168 degrees F ASTM D-86
50% 189 degrees F ASTM D-86
70% 209 degrees F ASTM D-86
90% 235 degrees F ASTM D-86
95% 249 degrees F ASTM D-86
FBP 267 degrees F ASTM D-86
N+A 27.7% LV ASTM D-5134 - Modified to C-15
Quantity: For days that Unfinished Naphtha is excessed to inventory, Coker
- --------
Company shall sell and Clark shall purchase the "Coker Company Share" of the
partial output of this Product boiling above 195 degrees F as defined above.
Price: For material boiling above 195 degrees F: The arithmetic average of the
- -----
high/low Oil Price Information Service posting for spot purchases of U.S. Gulf
Coast Naphtha (Domestic 40 N+A) for each publication day less 0.15
cents/gallon/N+A number below 40 N+A plus 0.15 cents/gallon/N+A number above 40
N+A less 2.5 cents/gallon less 0.10 cents/gallon marketing fee multiplied by the
Inflation Factor less 0.5 cents/gallon terminalling fee multiplied by the
Inflation Factor less Fractionation Fee. The marketing fee and terminalling fee
shall only be assessed if
Product Purchase Agreement Page 4 August 3, 1999
<PAGE>
EXHIBIT A-3
Unfinished Naphtha is sold to a 3/rd/ party.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per
MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FE-
- --------------------
461.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by gas chromatography and distillation.
Attachment II
-------------
Component: Heavy Naphtha from AVU 146
- ---------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
FBP 390 degrees F Maximum ASTM D-86
N+A 34.7% LV Typical ASTM D-5134 - Modified to C-15
Quantity: For days that Unfinished Naphtha is excessed to inventory, Coker
- --------
Company shall sell and Clark shall purchase the "Coker Company Share" of the
partial output of this Product as defined above.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U.S. Gulf Coast Naphtha (Domestic 40 N+A) for
each publication day less 0.15 cents/gallon/N+A number below 40 N+A day plus
0.15 cents/gallon/N+A number above 40 N+A less 2.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the Inflation Factor less 0.5
cents/gallon terminalling fee. The marketing fee and terminalling fee shall only
be assessed if Unfinished Naphtha is sold to a 3/rd/ party.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FI-
- --------------------
436.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by gas
Product Purchase Agreement Page 5 August 3, 1999
<PAGE>
EXHIBIT A-3
chromatography and distillation.
Product Purchase Agreement Page 6 August 3, 1999
<PAGE>
EXHIBIT A-4
Product: Unfinished Jet from AVU 146
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
API Gravity 37.0 Minimum ASTM D-1298, ASTM D-287,
or ASTM D-4052
API Gravity 51.0 Maximum ASTM D-1298, ASTM D-287,
or ASTM D-4052
Freezing Point -40 Degrees C Maximum ASTM D-2386 or ASTM D-5972
Flash Point 108 Degrees F Minimum ASTM D-56
10% 400 Degrees F Maximum ASTM D-86
FBP 572 Degrees F Maximum ASTM D-86
Target specifications are based on current fungible aviation fuel namely
Colonial 54 Grade Jet Fuel. To the extent the specifications change for
Colonial 54 Grade Jet Fuel the target specifications will be changed
accordingly.
Quantity: For days that Unfinished Jet is excessed to inventory, Coker Company
- --------
shall sell and Clark shall purchase the "Coker Company Share" of the excessed
Unfinished Jet. The Coker Company Share is defined as the excessed Unfinished
Jet multiplied by the Coker Company Crude Oil Volume divided by the Total Crude
Oil Volume.
Price: The arithmetic average of the high/low Platt's Oilgram Price Report U. S.
- -----
Gulf Coast Waterborne posting for spot purchases of No.2(0.2 wt% S diesel) for
each publication day less 1.5 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less 0.5 cents/gallon terminalling fee
multiplied by the quantity of the Product delivered on that day. The marketing
fee and terminalling fee shall only be assessed if Unfinished Jet is sold to a
3/rd/ party.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be calculated by changes in
- --------------------
Unfinished Jet inventory utilizing standard yield accounting methods.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by distillation, gravity, freeze point, and flash.
Product Purchase Agreement Page 7 August 3, 1999
<PAGE>
EXHIBIT A-5
Product: Unfinished Diesel
- -------
Target Specification: : Target specifications for each component are described
- --------------------
in Attachments I and II below.
Quantity: For days that Unfinished Diesel is excessed to inventory, Coker
- --------
Company shall sell and Clark shall purchase the "Coker Company Share" of the
excessed Unfinished Diesel only if the calculated Coker Company Share is a
positive volume. The Coker Company Share is defined as the excessed Unfinished
Diesel less the excessed Light Cycle Oil from FCCU 1241 multiplied by the Coker
Company Crude Oil Volume divided by the Total Crude Oil Volume.
The excessed Light Cycle Oil from FCCU 1241 is calculated as follows:
Total Light Cycle Oil from FCCU 1241 - Light Cycle Oil to Cutter - Light
Cycle Oil to HCU 942
The excessed Unfinished Diesel is composed of Diesel from AVU 146, Light Gas Oil
from DCU 843, and Light Cycle Oil from FCCU 1241. The Coker Company Share of the
Unfinished Diesel is composed only of Diesel from AVU 146 and Light Gas Oil from
DCU 843. The composition of the Coker Company Share of the Unfinished Diesel is
calculated as follows:
Fraction of Diesel from AVU 146 = ( Total volume of Diesel from AVU 146 -
Diesel charge volume to GFU
241 ) / (Total volume of
Diesel from AVU 146 - Diesel
charge volume to GFU 241 +
Total volume of Light Gas Oil
from DCU 843 )
Fraction of Light Gas Oil from DCU 843 = Total volume of Light Gas Oil
from DCU 843 / (Total volume
of Diesel from AVU 146 -
Diesel charge volume to GFU
241 + Total volume of Light
Gas Oil from DCU 843 )
Price: The price is computed for each component as described in Attachments I
- -----
and II below.
Delivery Point/Risk of Loss: The delivery point and risk of loss for each
- ---------------------------
component are described in Attachments I and II below.
Quantity Measurement: Quantity measurements shall be calculated by changes in
- --------------------
Unfinished Diesel inventory utilizing standard yield accounting methods. The
following meters shall be used as input to the above calculations:
Total Light Cycle Oil from FCCU 1241: FCCU 1241 FC-1247
Light Cycle Oil to Cutter: Pump St. 379 FRC-201
Light Cycle Oil to HCU 942: XX-XXXX
Diesel Charge to GFU 241: XX-XXXX
Diesel from AVU 146: See Attachment I
Light Gas Oil from DCU 843: See Attachment II
Quality Measurement: Quality measurements for each component is described in
- -------------------
Attachments I and II below.
Attachment I
------------
Component: Diesel from AVU 146
- ---------
Product Purchase Agreement Page 8 August 3, 1999
<PAGE>
EXHIBIT A-5
Target Specification:
- ---------------------
Property Specification Test Method
-------- ------------- -----------
90% 540 Degrees F Minimum ASTM D-86
90% 640 Degrees F Maximum ASTM D-86
FBP 690 Degrees F Maximum ASTM D-86
Flash Point 130 Degrees F Minimum ASTM D-93
Target specifications are based on current fungible transportation diesel
fuel namely Colonial 74 Grade Low Sulfur Diesel Fuel. To the extent the
specifications change for Colonial 74 Grade Low Sulfur Diesel Fuel the
target specifications will be changed accordingly.
Quantity: For days that Unfinished Diesel is excessed to inventory, Coker
- --------
Company shall sell and Clark shall purchase the "Coker Company Share" of the
partial output of this Product as defined above.
Price: The arithmetic average of the high/low Platt's Oilgram Price Report
- -----
U. S. Gulf Coast Waterborne posting for spot purchases of No.2(0.2 wt% S
diesel) for each publication day less 3.0 cents/gallon less 0.10 cents/gallon
marketing fee multiplied by the Inflation Factor less 0.5 cents/gallon
terminalling fee multiplied by the quantity of the Product delivered on that
day. The marketing fee and terminalling fee shall only be assessed if Unfinished
Diesel is sold to a 3/rd/ party.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FI-
- --------------------
448.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by distillation and flash.
Attachment II
-------------
Component: Light Gas Oil from DCU 843
- ---------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
90% 540 Degrees F Minimum ASTM D-86
90% 640 Degrees F Maximum ASTM D-86
FBP 690 Degrees F Maximum ASTM D-86
Flash Point 130 Degrees F Minimum ASTM D-93
Target specifications are based on current fungible transportation diesel
fuel namely Colonial 74 Grade Low Sulfur Diesel Fuel. To the extent the
specifications change for Colonial 74 Grade Low Sulfur Diesel Fuel the
target specifications will be changed accordingly.
Quantity: For days that Unfinished Diesel is excessed to inventory, Coker
- --------
Company shall sell and
Product Purchase Agreement Page 9 August 3, 1999
<PAGE>
EXHIBIT A-5
Clark shall purchase the "Coker Company Share" of the partial output of this
Product as defined above.
Price: The arithmetic average of the high/low Platt's Oilgram Price
- -----
Report U.S. Gulf Coast Waterborne posting for spot purchases of No.2(0.2 wt% S
diesel) for each publication day less 5.0 cents/gallon less 0.10 cents/gallon
marketing fee multiplied by the Inflation Factor less 0.5 cents/gallon
terminalling fee multiplied by the quantity of the Product delivered on that
day. The marketing fee and terminalling fee shall only be assessed if Unfinished
Diesel is sold to a 3/rd/ party.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: Quantity measurements shall be taken at DCU 843 meter FE-
- --------------------
3599.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by distillation and flash.
Product Purchase Agreement Page 10 August 3, 1999
<PAGE>
EXHIBIT A-6
Product: Atmospheric Gas Oil from AVU 146
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
Flash Point 165 Degrees F Minimum ASTM D-93
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast VGO (High Sulfur) Cargo for each
publication day less 2.0 cents/gallon multiplied by the quantity of the Product
delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FI-
- --------------------
451.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by flash.
Product Purchase Agreement Page 11 August 3, 1999
<PAGE>
EXHIBIT A-7
Product: Light Vacuum Gas Oil from AVU 146
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
Flash Point 165 Degrees F Minimum ASTM D-93
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U.S. Gulf Coast VGO (High Sulfur) Cargo for each
publication day less 2.0 cents/gallon multiplied by the quantity of the Product
delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FI-
- --------------------
697.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by flash.
Product Purchase Agreement Page 12 August 3, 1999
<PAGE>
EXHIBIT A-8
Product: Heavy Vacuum Gas Oil from AVU 146
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
Flash Point 165 Degrees F Minimum ASTM D-93
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the output of this Product which is not processed by HCU 942. The
Coker Company Share is defined as the total output of this product less the
volume processed by HCU 942 multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U.S. Gulf Coast VGO (High Sulfur) Cargo for each
publication day less 2.0 cents/gallon multiplied by the quantity of the Product
delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: The total quantity measurement of Heavy Vacuum Gas Oil
- --------------------
from AVU 146 shall be taken at AVU 146 meter FI-785. The quantity measurement
of Heavy Vacuum Gas Oil from AVU 146 processed by HCU 942 shall be taken as HCU
942 meter FQ-1020 less FCCU 1241 Light Cycle Oil meter XX-XXXX.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by flash.
Product Purchase Agreement Page 13 August 3, 1999
<PAGE>
EXHIBIT A-9
Product: Vacuum Tower Bottoms from AVU 146 to Clark Storage
- -------
Target Specification:
- -----------------------
Property Specification Test Method
-------- ------------- -----------
Flash Point 250 Degrees F Minimum ASTM D-93
API Gravity 0.0 Minimum ASTM D-1298, ASTM D-287,
or ASTM D-4052
Viscosity @ 210 Degrees F 230,000 cSt Maximum ASTM D-445
Viscosity @ 275 Degrees F 9,400 cSt Maximum ASTM D-445
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the total output of this product multiplied by the Coker Company Crude Oil
Volume divided by the Total Crude Oil Volume.
Price: The price is calculated by the following formula:
- -----
VTB = ( #6 Fuel - 0.75 - 0.363 * Jet ) / ( 1 - 0.363 ) - 0.042 marketing
fee
Where:
VTB - the price of Vacuum Tower Bottoms from AVU 146 to Clark Storage for
each publication day multiplied by the quantity of the
Product delivered on that day in dollars/barrel.
#6 Fuel - the arithmetic average of the high/low Platt's Oilgram Price
Report U.S. Gulf Coast Waterborne posting for spot
purchases of No.6, 3.5%S for each publication day in
dollars/barrel.
Jet - the arithmetic average of the high/low Platt's Oilgram Price Report
U.S. Gulf Coast Pipeline posting for spot purchases of
Jet/Kero 54 for each publication day in dollars/barrel.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of AVU 146.
Quantity Measurement: Quantity measurements shall be taken at AVU 146 meter FI-
- --------------------
844.
Quality Measurement: Grab samples shall be taken (3) times per week and
- -------------------
analyzed by flash, API gravity, and viscosity.
Product Purchase Agreement Page 14 August 3, 1999
<PAGE>
EXHIBIT A-10
Product: Absorber Gas to Refinery Fuel from DCU 843
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
H2S 50 ppmw Maximum Draeger
Higher Heating Value 1050 BTU/SCF Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the total output of this Product multiplied by the Coker Company Crude Oil
Volume divided by the Total Crude Oil Volume.
Price: The weighted average cost of natural gas purchased by Clark converted
- -----
into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0 FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: Quantity measurements shall be taken at DCU 843 meter FE-
- --------------------
3619.
Quality Measurement: Samples shall be taken at least (1) time per day and
- -------------------
analyzed by draeger and heating value.
Product Purchase Agreement Page 15 August 3, 1999
<PAGE>
EXHIBIT A-11
Product: Propane/Propylene Mix from DCU 843
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
H2S 100 ppmw Maximum Draeger
Ethane 5.0% LV Maximum ASTM D-2163
Butane and Heavier 5.0% LV Maximum ASTM D-2163
Propane 72.0% LV Typical ASTM D-2163
Propylene 28.0% LV Typical ASTM D-2163
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: For contained Propane: The arithmetic average of the high/low Oil Price
- -----
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the quantity of the Product delivered on that day weighted by
the respective volume of propane in the delivered Product.
For contained Propylene: The arithmetic average of the high/low prices paid by
Chevron Chemical Company (CCC) for propylene content in Propane/Propylene mix
(of equivalent volumes, specifications, freight costs, delivery periods and
other terms and conditions, but excluding purchases from CCC Affiliates or
distress purchases) during the calendar month of delivery, but only including
one-half of the actual pipeline tariff for comparable material from Mont Belvieu
to the Refinery less 0.10 cents/gallon marketing fee.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: Quantity measurements shall be taken at DCU 843 meter
- --------------------
FE-3271.
Quality Measurement: Grab samples shall be taken at least (1) time per day and
- -------------------
analyzed by draeger and at least (3) times per week and analyzed by gas
chromatography.
Product Purchase Agreement Page 16 August 3, 1999
<PAGE>
EXHIBIT A-12
Product: Butane/Butylene Mix from DCU 843
- -------
Component Specification Test Method
--------- ------------- -----------
H2S 5 ppmw Maximum Draeger
Sulfur 50 ppmw Maximum ASTM D-4045
Total Nitrogen 1 ppmw Maximum ASTM D-4629
Propane and Lighter 6.0% LV Maximum ASTM D-2163
Pentane and Heavier 5.0% LV Maximum ASTM D-2163
Hexane and Heavier 0.05% LV Maximum ASTM D-2163
Butadiene 0.35% LV Maximum ASTM D-2163
Isobutane 13.0% LV Typical ASTM D-2163
Normal Butane 47.0% LV Typical ASTM D-2163
Butylenes 40.0% LV Typical ASTM D-2163
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: For contained Propane and Lighter: The monthly quoted price for Texas
- -----
Eastern Natural Gas Spot Market Price as published by "Dynegy", in dollars/MMBTU
plus 0.15 dollars/MMBTU multiplied by 6.25 divided by 70.517 multiplied by 100
less 0.10 cents/gallon marketing fee multiplied by the quantity of the Product
delivered weighted by the respective volume of propane and lighter in the
delivered Product.
For contained Pentane and Heavier: The low Oil Price Information Service Mont
Belvieu, posting for spot purchases of Non-Dynegy Natural Gasoline for each
publication day less 4.0 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the quantity of the Product delivered on that day weighted by the
respective volume of pentane and heavier in the delivered Product.
For contained Isobutane: The low Oil Price Information Service Mont Belvieu,
posting for spot purchases of Isobutane for each publication day less 0.10
cents/gallon marketing fee multiplied by the quantity of the Product delivered
on that day weighted by the respective volume of isobutane in the delivered
Product.
For contained Normal Butane: The low Oil Price Information Service Mont Belvieu,
posting for spot purchases of Normal Butane for each publication day less 0.10
cents/gallon marketing fee multiplied by the quantity of the Product delivered
on that day weighted by the respective volume of Normal Butane in the delivered
Product.
For contained Butylenes: The price is calculated by the following formula:
Butylene = 1.75 * Premium - 1.15 * Isobutane - 10 cents/gallon - 0.10
cents/gallon marketing fee
Where:
Butylene - the price of contained butylenes for each publication day
multiplied by the quantity of the Product delivered on that
day weighted by the respective volume of Butylene in the
delivered Product.
Premium - the low Platt's Oilgram Price Report U. S. Gulf Coast
Pipeline posting for spot purchases of Premium Unleaded (93
Octane, prevailing (non-supplemental) RVP, non-Oxygenated,
non Reformulated) for each publication day.
Isobutane - the low Oil Price Information Service Mont Belvieu, posting
for spot purchases of Isobutane for each publication day.
Product Purchase Agreement Page 17 August 3, 1999
<PAGE>
EXHIBIT A-12
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: Quantity measurements shall be taken at DCU 843 meter
- --------------------
FE-3210.
Quality Measurement: Grab samples shall be taken at least (1) time per day and
- -------------------
analyzed by draeger and at least (3) times per week and analyzed by gas
chromatography, MDA Sulfur, and Antek Nitrogen.
Product Purchase Agreement Page 18 August 3, 1999
<PAGE>
EXHIBIT A-13
Product: Untreated Naphtha from DCU 843
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
FBP 390 degrees F Maximum ASTM D-86
N+A 25.5% LV Typical ASTM D-5134 - Modified to C-15
Existent Washed
Gums 1 mg/100 ml Maximum ASTM D-381
Oxygen Stability 360+ Minimum ASTM D-525
Silica 1.5 ppmw Maximum UOP-484
Quantity: For days that Naphtha from DCU 843 is not treated in the Naphtha
- --------
Hydrotreater 1344, Coker Company shall sell and Clark shall purchase the "Coker
Company Share" of the Untreated Naphtha from DCU 843 as defined below. The Coker
Company Share is defined as the Untreated Naphtha from DCU 843 multiplied by the
Coker Company Crude Oil Volume divided by the Total Crude Oil Volume.
Untreated Naphtha from DCU 843 = Total Naphtha from DCU 843 - Coker
Naphtha to Naphtha Hydrotreater 1344
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast Naphtha (Domestic 40 N+A) for
each publication day less 0.15 cents/gallon/N+A number below 40 N+A plus 0.15
cents/gallon/N+A number above 40 N+A less 4.0 cents/gallon.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: The Total Naphtha from DCU 843 shall be taken at DCU 843
- --------------------
meter FE-3755. The quantity measurement of Coker Naphtha to Naphtha Hydrotreater
1344 shall be taken as CCR 1344 meter FRC-601.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
for each specification.
Product Purchase Agreement Page 19 August 3, 1999
<PAGE>
EXHIBIT A-14
Product: Hydrogen to DCU 843 Naphtha Hydrotreater
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
H2S 10 ppmw Maximum Draeger
Hydrogen 84.36% Mole Typical UOP-539
Hydrogen 80.00% Mole Minimum UOP-539
Higher Heating Value 500 BTU/SCF Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the total Hydrogen
- --------
requirement necessary to process Clark feedstocks in DCU 843 Naphtha
Hydrotreater. Clark's Hydrogen requirement shall be calculated as a portion of
the Total Make-up Hydrogen to DCU 843 as follows:
Hydrogen
--------
Clark Hydrogen Portion = Total Make-up Hydrogen to DCU 843 Naphtha
Hydrotreater * (1 - Coker Company Crude Oil Volume
/ Total Crude Oil Volume )
Where:
Total Make-up Hydrogen
to DCU 843 Naphtha
Hydrotreater (FOEB/D) = Total Make-up Hydrogen to DCU 843 Naphtha
Hydrotreater (MSCF/D) * Mole Fraction Hydrogen *
0.0053 (LB/SCF) * 60,950 (BTU/LB) / 1000 / 6.0
(MMBTU/FOEB)
Non-Hydrogen
------------
Clark Non-Hydrogen Portion = Total Make-up Hydrogen to DCU 843 Naphtha
Hydrotreater * (1 - Coker Company Crude Oil
Volume / Total Crude Oil Volume ) - Clark
Hydrogen Portion
Where:
Total Make-up Hydrogen
to DCU 843 Naphtha
Hydrotreater (FOEB/D) = Total Make-up Hydrogen to DCU 843 Naphtha
Hydrotreater (MSCF/D) * Higher Heating Value
(BTU/SCF) / 1000 / 6.0 (MMBTU/FOEB)
Price: For Hydrogen: The weighted average delivered cost of hydrogen purchased
- -----
by Coker Company from Air Products converted into dollars per FOEB where 6.0
MMBTU is equivalent to 1.0 FOEB.
For Non-Hydrogen: The weighted average delivered cost of natural gas purchased
by Clark converted into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0
FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: Product quantity measurements shall be taken at DCU 843
- --------------------
FE-3675.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- -------------------
least (3)
Product Purchase Agreement Page 20 August 3, 1999
<PAGE>
EXHIBIT A-14
times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 21 August 3, 1999
<PAGE>
EXHIBIT A-15
Product: High Pressure Hydrogen Purge Gas from DCU 843 Naphtha Hydrotreater
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
H2S 80 ppmw Maximum Draeger
Hydrogen 77.70% Mole Typical UOP-539
Hydrogen 75.00% Mole Minimum UOP-539
Higher Heating Value 600 BTU/SCF Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the portion of the
- --------
components of this Product produced by Coker Company feedstocks in DCU 843.
That portion of each component is calculated as follows:
Hydrogen
--------
Coker Company Hydrogen Portion = Total Contained Hydrogen in High Pressure
Hydrogen Purge Gas * Coker Company Crude Oil Volume
/ Total Crude Oil Volume
Where:
Total Contained Hydrogen in
High Pressure Hydrogen
Purge Gas (FOEB/D) = Total High Pressure Hydrogen Purge Gas from DCU 843
(MSCF/D) * Mole Fraction Hydrogen * 0.0053 (LB/SCF)
* 60,950 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Non-Hydrogen
------------
Coker Company Non-Hydrogen Portion = Total High Pressure Hydrogen Purge
Gas * Coker Company Crude Oil Volume / Total
Crude Oil Volume - Coker Company Hydrogen
Portion
Where:
Total High Pressure
Hydrogen
Purge Gas (FOEB/D) = Total High Pressure Hydrogen Purge Gas from DCU 843
(MSCF/D) * Higher Heating Value (BTU/SCF) / 1000 / 6.0
(MMBTU/FOEB)
Price: For Hydrogen: The weighted average delivered cost of hydrogen purchased
- -----
by Coker Company from Air Products converted into dollars per FOEB where 6.0
MMBTU is equivalent to 1.0 FOEB.
For Non-Hydrogen: The weighted average delivered cost of natural gas purchased
- ----------------
by Clark converted into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0
FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: Product quantity measurements shall be taken at DCU 843
- --------------------
FQ-3735.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- -------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 22 August 3, 1999
<PAGE>
EXHIBIT A-16
Product: Heavy Gas Oil from DCU 843
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
Flash Point 165 degrees F Minimum ASTM D-93
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the output of this Product which is not processed by HCU 942. The
Coker Company Share is defined as the total output of this product less the
volume processed by HCU 942 multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast VGO (High Sulfur) Cargo for each
publication day less 6.0 cents/gallon multiplied by the quantity of the Product
delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of DCU 843.
Quantity Measurement: The total quantity measurement of Heavy Gas Oil from DCU
- --------------------
843 shall be taken at DCU 843 meter FE-1690. The quantity measurement of Heavy
Gas Oil from DCU 843 processed by HCU 942 shall be taken as DCU 843 meter FE-
1000.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
by flash.
<PAGE>
EXHIBIT A-17
Product: Petroleum Coke
- -------
Target Specification: None
- --------------------
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: Actual 3rd party sales price adjusted back to the custody transfer point
- -----
for transportation and storage cost less $0.05 per wet metric ton marketing fee.
Delivery Point/Risk of Loss: This product shall be delivered into railcar or
- ---------------------------
storage facility and risk of loss shall pass at the point of delivery.
Quantity Measurement / Metering Facilities: Based on invoiced quantity.
- ------------------------------------------
Quality Measurement: Based on invoiced quality.
- -------------------
Product Purchase Agreement Page 24 August 3, 1999
<PAGE>
EXHIBIT A-18
Product: Hydrogen to HCU 942
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
Hydrogen 99.9% Mole Minimum UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the total Hydrogen
- --------
requirement necessary to process Clark feedstocks in HCU 942. Clark's Hydrogen
requirement shall be calculated as a portion of the Total Make-up Hydrogen to
HCU 942 as follows:
Clark Hydrogen Requirement = Total Make-up Hydrogen to HCU 942 * Clark
Deemed Hydrogen / Total Deemed Hydrogen
Where:
Clark Deemed Hydrogen = Light Cycle Oil to HCU 942 * 2074 + Heavy
Gas Oil from DCU 843 to HCU 942 * ( 1 -
Coker Company Crude Oil Volume / Total
Crude Oil Volume ) * 2169 + ( Heavy Gas Oil
from AVU 146 to HCU 942 ) * ( 1 - Coker
Company Crude Oil Volume / Total Crude Oil
Volume ) * 2015
Total Deemed Hydrogen = Light Cycle Oil to HCU 942 * 2074 + Heavy
Gas Oil from DCU 843 to HCU 942 * 2169 +
( Heavy Gas Oil from AVU 146 to HCU 942 ) *
2015
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Heavy Gas Oil Heavy Gas Oil
Deemed Quantities Light Cycle Oil from DCU 843 from AVU 146
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Hydrogen
Consumption (SCF/B) 2074 2169 2015
-------------------------------------------------------------------------------------
</TABLE>
Price: The actual cost Coker Company pays for hydrogen under contract with Air
- -----
Products.
Delivery Point/Risk of Loss: This product shall be delivered by pipeline to the
- ---------------------------
battery limit of HCU 942 and risk of loss shall pass at the point of delivery.
Quantity Measurement: The following meters shall be used as input to the above
- --------------------
calculations:
<TABLE>
<S> <C>
Total Make-up Hydrogen to HCU 942: HCU 942 FQ-1700
Light Cycle Oil to HCU 942: XX-XXXX
Heavy Gas Oil from DCU 843 to HCU 942: DCU 843 FE-1000
Heavy Gas Oil from AVU 146 & Light Cycle Oil to HCU 942: HCU 942 FQ-1020
</TABLE>
Quality Measurement: Grab samples shall be taken at least (3) times per week and
- -------------------
analyzed by gas chromatography.
Product Purchase Agreement Page 25 August 3, 1999
<PAGE>
EXHIBIT A-19
Product: Stripper Off-Gas from HCU 942
Target Specification:
- ---------------------
Component Specification Test Method
--------- ------------- -----------
H2S 50 ppmw Maximum Draeger
Water 2.66% Mole Typical UOP-539
Hydrogen 45.76% Mole Typical UOP-539
Methane 4.00% Mole Typical UOP-539
Ethane 4.90% Mole Typical UOP-539
Propane 13.67% Mole Typical UOP-539
Isobutane 11.26% Mole Typical UOP-539
Normal Butane 7.83% Mole Typical UOP-539
Pentane and Heavier 9.92% Mole Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the portion of each
- --------
component of this Product produced by Coker Company feedstocks in HCU 942. That
portion for each component is calculated as follows:
Hydrogen
--------
Coker Company Hydrogen = Total Contained Hydrogen in Stripper Off-Gas *
( Heavy Gas Oil from AVU 146 to HCU 942 + Heavy Gas Oil from
DCU 843 to HCU 942 ) * Coker Company Crude Oil Volume /
Total Crude Oil Volume / ( Heavy Gas Oil from AVU 146 to HCU
942 + Heavy Gas Oil from DCU 843 to HCU 942 + Light Cycle
Oil to HCU 942 )
Where:
Total Contained Hydrogen in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D)
* Mole Fraction Hydrogen * 0.0053 (LB/SCF) *
60,950 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
Methane
-------
Coker Company Methane = Total Contained Methane in Stripper Off-Gas
* ( Heavy Gas Oil from AVU 146 to HCU 942 * 0.34 + Heavy Gas
Oil from DCU 843 to HCU 942 * 0.36 ) * Coker Company Crude
Oil Volume / Total Crude Oil Volume / ( Heavy Gas Oil from
AVU 146 to HCU 942 * 0.34 + Heavy Gas Oil from DCU 843 to
HCU 942 * 0.36 + Light Cycle Oil to HCU 942 * 0.18 )
Where:
Total Contained Methane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D)
* Mole Fraction Methane * 0.0425 (LB/SCF) *
23,840 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
Product Purchase Agreement Page 26 August 3, 1999
<PAGE>
EXHIBIT A-19
Ethane
------
Coker Company Ethane = Total Contained Ethane in Stripper Off-Gas
* ( Heavy Gas Oil from AVU 146 to HCU 942 * 0.28 + Heavy Gas
Oil from DCU 843 to HCU 942 * 0.31 ) * Coker Company Crude
Oil Volume / Total Crude Oil Volume / ( Heavy Gas Oil from
AVU 146 to HCU 942 * 0.28 + Heavy Gas Oil from DCU 843 to
HCU 942 * 0.31 + Light Cycle Oil to HCU 942 * 0.24 )
Where:
Total Contained Ethane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D) *
Mole Fraction Ethane * 0.0800 (LB/SCF) * 22,169 (BTU/LB) /
1000 / 6.0 (MMBTU/FOEB)
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 & Light
Cycle Oil to HCU 942 - Light Cycle
Oil to HCU 942
Propane
-------
Coker Company Propane = Total Contained Propane in Stripper Off-Gas *
( Heavy Gas Oil from AVU 146 to HCU 942 * 1.30 + Heavy Gas
Oil from DCU 843 to HCU 942 * 1.37 ) * Coker Company Crude
Oil Volume / Total Crude Oil Volume / ( Heavy Gas Oil from
AVU 146 to HCU 942 * 1.30 + Heavy Gas Oil from DCU 843 to
HCU 942 * 1.37 + Light Cycle Oil to HCU 942 * 0.87 )
Where:
Total Contained Propane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D) *
Mole Fraction Propane * 0.1187 (LB/SCF) /
177.7 (LB/BBL) * 1000
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 & Light
Cycle Oil to HCU 942 - Light Cycle
Oil to HCU 942
Isobutane
---------
Coker Company Propane = Total Contained Isobutane in Stripper Off-Gas
* ( Heavy Gas Oil from AVU 146 to HCU 942 * 1.93 + Heavy Gas
Oil from DCU 843 to HCU 942 * 2.03 ) * Coker Company Crude
Oil Volume / Total Crude Oil Volume / ( Heavy Gas Oil from
AVU 146 to HCU 942 * 1.93 + Heavy Gas Oil from DCU 843 to
HCU 942 * 2.03 + Light Cycle Oil to HCU 942 * 0.38 )
Where:
Total Contained Isobutane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D) *
Mole Fraction Isobutane * 0.1582 (LB/SCF) /
197.2 (LB/BBL) * 1000
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 & Light
Cycle Oil to HCU 942 - Light Cycle
Oil to HCU 942
Product Purchase Agreement Page 27 August 3, 1999
<PAGE>
EXHIBIT A-19
Normal Butane
-------------
Coker Company Normal Butane = Total Contained Normal Butane in Stripper
Off-Gas * ( Heavy Gas Oil from AVU 146 to HCU 942
* 0.93 + Heavy Gas Oil from DCU 843 to HCU 942 *
0.98 ) * Coker Company Crude Oil Volume / Total
Crude Oil Volume / ( Heavy Gas Oil from AVU 146 to
HCU 942 * 0.93 + Heavy Gas Oil from DCU 843 to HCU
942 * 0.98 + Light Cycle Oil to HCU 942 * 0.18 )
Where:
Total Contained Normal Butane
In Stripper Off-Gas (B/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D) *
Mole Fraction Normal Butane * 0.1585 (LB/SCF) /
204.6 (LB/BBL) * 1000
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -Light
Cycle Oil to HCU 942
Pentane and Heavier
-------------------
Coker Company Pentane
and Heavier = Total Contained Pentane and Heavier in Stripper Off-Gas *
( Heavy Gas Oil from AVU 146 to HCU 942 * 7.23 +
Heavy Gas Oil from DCU 843 to HCU 942 * 7.21 ) *
Coker Company Crude Oil Volume / Total Crude Oil
Volume / ( Heavy Gas Oil from AVU 146 to HCU 942 *
7.23 + Heavy Gas Oil from DCU 843 to HCU 942 *
7.21 + Light Cycle Oil to HCU 942 * 1.66 )
Where:
Total Contained Pentane
and Heavier In
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from HCU 942 (MSCF/D) *
Mole Fraction Pentane and Heavier * 0.1980
(LB/SCF) / 221.0 (LB/BBL) * 1000
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Deemed Quantities Heavy Gas Oil Heavy Gas Oil
(Volume % of Feed Type) Light Cycle Oil from DCU 843 from AVU 146
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Methane 0.18 0.36 0.34
---------------------------------------------------------------------------------------
Ethane 0.24 0.31 0.28
---------------------------------------------------------------------------------------
Propane 0.87 1.37 1.30
---------------------------------------------------------------------------------------
Isobutane 0.38 2.03 1.93
---------------------------------------------------------------------------------------
Normal Butane 0.18 0.98 0.93
---------------------------------------------------------------------------------------
Pentane & Heavier 1.66 7.21 7.23
---------------------------------------------------------------------------------------
</TABLE>
Price: For Hydrogen, Methane, and Ethane: The weighted average delivered cost of
- -----
natural gas purchased by Clark converted into dollars per FOEB where 6.0 MMBTU
is equivalent to 1.0 FOEB less Fractionation Fee.
Product Purchase Agreement Page 28 August 3, 1999
<PAGE>
EXHIBIT A-19
For contained Propane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of propane in the delivered Product.
For contained Isobutane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu posting for spot purchases of isobutane for
each publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of isobutane in the delivered Product.
For contained Normal Butane delivered from October through February: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Normal Butane delivered from March through September: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day less 3.0 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Pentanes and Heavier: The arithmetic average of the high/low Oil
Price Information Service Mont Belvieu posting for spot purchases of natural
gasoline Non-Dynegy for each publication day less 1.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the Inflation Factor less Fractionation
Fee multiplied by the quantity of the Product delivered on that day weighted by
the respective volume of pentanes and heavier in the delivered Product.
For all other contained components: All other components are transferred to
Clark at no cost.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of HCU 942.
Quantity Measurement: Quantity measurements shall be taken at HCU 942 meter
- --------------------
FQ-2251. The following meters shall be used as input to the above calculations:
Light Cycle Oil to HCU 942: XX-XXXX
Page purchase Agreement Page 29 August 3, 1999
<PAGE>
EXHIBIT A-19
Heavy Gas Oil from DCU 843 to HCU 942: DCU 843 FE-1000
Heavy Gas Oil from AVU 146 & Light Cycle Oil to HCU 942: HCU 942 FQ-1020
Quality Measurement: Grab samples shall be taken at least (1) time per day and
- -------------------
analyzed by draeger and at least (3) times per week and analyzed by gas
chromatography.
Product Purchase Agreement Page 30 August 3, 1999
<PAGE>
EXHIBIT A-20
Product: Light Naphtha from HCU 942
- -------
Target Specification:
- ---------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C>
Propane 0.17% LV Typical UOP-539
Isobutane 1.59% LV Typical UOP-539
Normal Butane 1.56% LV Typical UOP-539
Butane and Lighter 5.00% LV Maximum UOP-539
Reid Vapor Pressure @ 100 degrees F 13.5 PSIG Maximum ASTM D-5191 (Grabner)
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in HCU 942. That portion is
calculated as follows:
Coker Company Light Naphtha = Total Light Naphtha * ( Heavy Gas Oil
from AVU 146 to HCU 942 * 7.23 + Heavy Gas Oil from
DCU 843 to HCU 942 * 7.21 ) * Coker Company Crude
Oil Volume / Total Crude Oil Volume / ( Heavy Gas
Oil from AVU 146 to HCU 942 * 7.23 + Heavy Gas Oil
from DCU 843 to HCU 942 * 7.21 + Light Cycle Oil to
HCU 942 * 1.66 )
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Deemed Quantities Heavy Gas Oil Heavy Gas Oil
(Volume % of Feed Type) Light Cycle Oil from DCU 843 from AVU 146
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Light Naphtha 1.66 7.21 7.23
-------------------------------------------------------------------------------
</TABLE>
Price: The arithmetic average of the high/low Oil Price Information Service Mont
- -----
Belvieu posting for spot purchases of natural gasoline Non-Dynegy for each
publication day less 1.5 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per
MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of HCU 942.
Product Purchase Agreement Page 31 August 3, 1999
<PAGE>
EXHIBIT A-20
Quantity Measurement: Quantity measurements shall be taken at HCU 942 meter
- --------------------
FQ-2700. The following meters shall be used as input to the above calculations:
Light Cycle Oil to HCU 942: XX-XXXX
Heavy Gas Oil from DCU 843 to HCU 942: DCU 843 FE-1000
Heavy Gas Oil from AVU 146 & Light Cycle Oil to HCU 942: HCU 942 FQ-1020
Quality Measurement: Grab samples shall be taken at least (1) time per day and
- -------------------
analyzed by draeger and at least (3) times per week and analyzed by gas
chromatography, and Grabner vapor pressure.
Product Purchase Agreement Page 32 August 3, 1999
<PAGE>
EXHIBIT A-21
Product: Heavy Naphtha from HCU 942
- -------
Target Specification:
- ---------------------
Property Specification Test Method
-------- ------------- -----------
FBP 390 degrees F Maximum ASTM D-86
N+A 73.0% LV Typical ASTM D-5134 - Modified to C-15
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in HCU 942. That portion is
calculated as follows:
Coker Company Heavy Naphtha = Total Heavy Naphtha * ( Heavy Gas Oil
from AVU 146 to HCU 942 * 19.96 + Heavy Gas Oil from
DCU 843 to HCU 942 * 20.02 ) * Coker Company Crude Oil
Volume / Total Crude Oil Volume / ( Heavy Gas Oil from
AVU 146 to HCU 942 * 19.96 + Heavy Gas Oil from DCU 843
to HCU 942 * 20.02 + Light Cycle Oil to HCU 942 *
14.66 )
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Deemed Quantities Heavy Gas Oil Heavy Gas Oil
(Volume % of Feed Type) Light Cycle Oil from DCU 843 from AVU 146
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Heavy Naphtha 14.66 20.02 19.96
----------------------------------------------------------------------------------------
</TABLE>
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast Naphtha (Domestic 40 N+A) for
each publication day less 0.15 cents/gallon/N+A number below 40 N+A plus 0.15
cents/gallon/N+A number above 40 N+A less 1.0 cents/gallon.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of HCU 942.
Quantity Measurement: Quantity measurements shall be taken at HCU 942 meter
- --------------------
FQ-2600. The following meters shall be used as input to the above calculations:
Light Cycle Oil to HCU 942: XX-XXXX
Heavy Gas Oil from DCU 843 to HCU 942: DCU 843 FE-1000
Heavy Gas Oil from AVU 146 & Light Cycle Oil to HCU 942: HCU 942 FQ-1020
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
by gas chromatography and distillation.
Product Purchase Agreement Page 33 August 3, 1999
<PAGE>
EXHIBIT A-22
Product: Kerosene from HCU 942
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
API Gravity 37.0 Minimum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
API Gravity 51.0 Maximum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
Corrosion 2 hrs. @212 degrees F 1 Maximum ASTM D-130
MSEP 85 Minimum ASTM D-3948
Water Reaction Interface Rating 1b Maximum ASTM D-1094
Freezing Point -40 degrees C Maximum ASTM D-2386
or
ASTM D-5972
Viscosity @ -4 degrees F 8.0 cSt Maximum ASTM D-445
Flash Point 108 degrees F Minimum ASTM D-56
10% 400 degrees F Maximum ASTM D-86
FBP 572 degrees F Maximum ASTM D-86
Residue, % 1.5 Maximum ASTM D-86
Loss, % 1.5 Maximum ASTM D-86
Existent Gum 7 mg/100 ml Maximum ASTM D-381
Thermal Stability Pressure Drop 25 mm/Hg Maximum ASTM D-3241
Thermal Stability Tube Deposit 3 Code Maximum ASTM D-3241
Sulfur 0.30 wt% Maximum ASTM D-2622
Doctor Negative ASTM D-4952
Aromatics 25 vol% Maximum ASTM D-1319
Neutralization Number 0.1 mg KOH/g Maximum ASTM D-974
Smoke / Naphthalenes
Smoke Point 25 Minimum ASTM D-1322
OR
Smoke Point 18 Minimum ASTM D-1322
AND
Naphthalenes 3.0 Maximum ASTM D-1840
Target specifications are based on current fungible aviation fuel namely
Colonial 54 Grade Jet Fuel. To the extent the specifications change for
Colonial 54 Grade Jet Fuel the target specifications will be changed
accordingly.
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in HCU 942. That portion is
calculated as follows:
Coker Company Kerosene = Total Kerosene * ( Heavy Gas Oil from AVU 146
to HCU 942 * 21.64 + Heavy Gas Oil from DCU 843 to
HCU 942 * 22.16 ) * Coker Company Crude Oil Volume /
Total Crude Oil Volume / ( Heavy Gas Oil from AVU 146
to HCU 942 * 21.64 + Heavy Gas Oil from DCU 843 to
HCU 942 * 22.16 + Light Cycle Oil to HCU 942 *
65.67 )
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
Product Purchase Agreement Page 34 August 3, 1999
<PAGE>
EXHIBIT A-22
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Deemed Quantities Heavy Gas Oil Heavy Gas Oil
(Volume % of Feed Type) Light Cycle Oil from DCU 843 from AVU 146
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kerosene 65.67 22.16 21.64
------------------------------------------------------------------------------------
</TABLE>
Price: The arithmetic average of the high/low Platt's Oilgram Price Report U. S.
- -----
Gulf Coast Pipeline posting for spot purchases of Jet/Kero 54 for each
publication day less 1.0 cents/gallon less 0.05 cents/gallon marketing fee
multiplied by the quantity of the Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of HCU 942.
Quantity Measurement: Quantity measurements shall be taken at HCU 942 meter
- --------------------
FQ-2575. The following meters shall be used as input to the above calculations:
Light Cycle Oil to HCU 942: XX-XXXX
Heavy Gas Oil from DCU 843 to HCU 942: DCU 843 FE-1000
Heavy Gas Oil from AVU 146 & Light Cycle Oil to HCU 942: HCU 942 FQ-1020
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
for each specification.
Product Purchase Agreement Page 35 August 3, 1999
<PAGE>
EXHIBIT A-23
Product: Diesel from HCU 942
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
API Gravity 30.0 Minimum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
Corrosion 3 hrs. @ 212 degrees F 1 Maximum ASTM D-130
Viscosity @ 100 degrees F 2.0 cSt Minimum ASTM D-445
Viscosity @ 100 degrees F 3.6 cSt Maximum ASTM D-445
Flash Point 130 degrees F Minimum ASTM D-56
90% 540 degrees F Minimum ASTM D-86
90% 640 degrees F Maximum ASTM D-86
FBP 690 degrees F Maximum ASTM D-86
Color 2.5 Maximum ASTM D-1500
Cloud (September-March) 15 degrees F Maximum ASTM D-2500,
ASTM D-5771,
or
ASTM D-5773
Cloud (April-August) 20 degrees F Maximum ASTM D-2500,
ASTM D-5771,
or
ASTM D-5773
Pour (September-March) 0 degrees F Maximum ASTM D-97,
ASTM D-5949,
or
ASTM D-5950
Pour (April-August) 10 degrees F Maximum ASTM D-97,
ASTM D-5949,
or
ASTM D-5950
Sulfur 0.047 wt% Maximum ASTM D-2622
Cetane Index 42 Minimum ASTM D-976
Ash 0.01 wt% Maximum ASTM D-482
Carbon Residue
(Ramsbottom on 10% Bottom) 0.35 Maximum ASTM D-524
BS&W 0.05 Maximum ASTM D-1796
Haze Rating @ 77 degrees F (Procedure 2) 2 Maximum ASTM D-4176
Thermal Stability
90 Minutes 150 degrees C Pad Rating 7 Maximum Dupont Scale
OR
Oxidation Stability 2.5 mg/100 ml Maximum ASTM D-2274
</TABLE>
* Denotes less than
Target specifications are based on current fungible transportation
diesel fuel namely Colonial 74 Grade Low Sulfur Diesel Fuel. To the
extent the specifications change for Colonial 74 Grade Low Sulfur Diesel
Fuel the target specifications will be changed accordingly.
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in HCU 942. That portion is
calculated as follows:
Coker Company Diesel = Total Diesel * ( Heavy Gas Oil from AVU 146 to
HCU
Product Purchase Agreement Page 36 August 3, 1999
<PAGE>
EXHIBIT A-23
942 * 12.58 + Heavy Gas Oil from DCU 843 to HCU 942 * 13.11 )
* Coker Company Crude Oil Volume / Total Crude Oil Volume /
( Heavy Gas Oil from AVU 146 to HCU 942 * 12.58 + Heavy Gas
Oil from DCU 843 to HCU 942 * 13.11 + Light Cycle Oil to HCU
942 * 28.84 )
Heavy Gas Oil from AVU 146 to HCU 942 = Heavy Gas Oil from AVU 146 &
Light Cycle Oil to HCU 942 -
Light Cycle Oil to HCU 942
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Deemed Quantities Heavy Gas Oil Heavy Gas Oil
(Volume % of Feed Type) Light Cycle Oil from DCU 843 from AVU 146
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Diesel 28.84 13.11 12.58
--------------------------------------------------------------------------------------
</TABLE>
Price: The arithmetic average of the high/low Platt's Oilgram Price Report U. S.
- -----
Gulf Coast Pipeline posting for spot purchases of LS No. 2 for each publication
day less 0.05 cents/gallon marketing fee multiplied by the quantity of the
Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of HCU 942.
Quantity Measurement: Quantity measurements shall be taken at HCU 942 meter
- --------------------
FQ-2500. The following meters shall be used as input to the above calculations:
Light Cycle Oil to HCU 942: XX-XXXX
Heavy Gas Oil from DCU 843 to HCU 942: DCU 843 FE-1000
Heavy Gas Oil from AVU 146 & Light Cycle Oil to HCU 942: HCU 942 FQ-1020
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
for each specification.
Product Purchase Agreement Page 37 August 3, 1999
<PAGE>
EXHIBIT A-24
Product: Ultra Low Sulfur Gas Oil from HCU 942
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
Flash Point 165 degrees F Minimum ASTM D-56
Sulfur 0.05 wt% Maximum ASTM D-2622
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in HCU 942. That portion is
calculated as follows:
Coker Company Gas Oil = Total Gas Oil * Coker Company Crude Oil Volume /
Total Crude Oil Volume
Deemed quantities for Clark feedstock types that produce this Product will be
developed as needed to accommodate optimization opportunities.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast VGO (Low Sulfur) Cargo for each
publication day multiplied by the quantity of the Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of HCU 942.
Quantity Measurement: Quantity measurements shall be taken at HCU 942 meter
- --------------------
FQ-2426.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
for flash and sulfur specification.
Product Purchase Agreement Page 38 August 3, 1999
<PAGE>
EXHIBIT A-25
Product: Stripper Off Gas from Naphtha Hydrotreater 1344
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
H2S 3.7% Mole Typical UOP-539
Hydrogen 45.2% Mole Typical UOP-539
Nitrogen 0.9% Mole Typical UOP-539
Methane 5.1% Mole Typical UOP-539
Ethane 8.0% Mole Typical UOP-539
Propane 13.7% Mole Typical UOP-539
Isobutane 6.0% Mole Typical UOP-539
Normal Butane 13.8% Mole Typical UOP-539
Pentane and Heavier 3.6% Mole Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the portion of each
- --------
component of this Product produced by Coker Company feedstocks in Naphtha
Hydrotreater 1344. That portion for each component is calculated as follows:
H2S
---
Coker Company H2S = Total Contained H2S in Stripper Off-Gas * ( Coker
Naphtha to Naphtha Hydrotreater 1344 * 0.31 + ( Total Unfinished
Naphtha - Excessed Unfinished Naphtha ) * 0.11 ) * Coker Company
Crude Oil Volume / Total Crude Oil Volume / (( Coker Naphtha to
Naphtha Hydrotreater 1344 * 0.31 + ( Total Naphtha Hydrotreater
Feed - Coker Naphtha to Naphtha Hydrotreater 1344 ) * 0.11 )
Where:
Total Contained H2S in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from Naphtha
Hydrotreater 1344 (MSCF/D) * Mole Fraction H2S
* 0.0907 (LB/SCF) * 7,105 (BTU/LB) / 1000 / 6.0
(MMBTU/FOEB)
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146 as
defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Hydrogen
--------
Coker Company Hydrogen = Total Contained Hydrogen in Stripper Off-Gas
* ( Coker Naphtha to Naphtha Hydrotreater 1344 * 0.17 + ( Total
Unfinished Naphtha - Excessed Unfinished Naphtha ) * 1.01 ) *
Coker Company Crude Oil Volume / Total Crude Oil Volume /
(( Coker Naphtha to Naphtha Hydrotreater 1344 * 0.17 + ( Total
Naphtha Hydrotreater Feed - Coker Naphtha to Naphtha
Hydrotreater 1344 ) * 1.01 )
Where:
Total Contained Hydrogen in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from Naphtha
Hydrotreater 1344 (MSCF/D) * Mole Fraction
Hydrogen * 0.0053 (LB/SCF) * 60,950 (BTU/LB) /
1000 / 6.0 (MMBTU/FOEB)
Product Purchase Agreement Page 39 August 3, 1999
<PAGE>
EXHIBIT A-25
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146 as
defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Methane
-------
Coker Company Methane = Total Contained Methane in Stripper Off-Gas
* ( Coker Naphtha to Naphtha Hydrotreater 1344 * 0.17 +
( Total Unfinished Naphtha - Excessed Unfinished Naphtha ) *
1.01 ) * Coker Company Crude Oil Volume / Total Crude Oil
Volume / (( Coker Naphtha to Naphtha Hydrotreater 1344 *
0.17 + ( Total Naphtha Hydrotreater Feed - Coker Naphtha to
Naphtha Hydrotreater 1344 ) * 1.01 )
Where:
Total Contained Methane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from Naphtha
Hydrotreater 1344 (MSCF/D) * Mole Fraction
Methane * 0.0425 (LB/SCF) * 23,840 (BTU/LB) /
1000 / 6.0 (MMBTU/FOEB)
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146 as
defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Ethane
------
Coker Company Ethane = Total Contained Ethane in Stripper Off-Gas *
( Coker Naphtha to Naphtha Hydrotreater 1344 * 0.17 +
( Total Unfinished Naphtha - Excessed Unfinished Naphtha ) *
1.01 ) * Coker Company Crude Oil Volume / Total Crude Oil
Volume / (( Coker Naphtha to Naphtha Hydrotreater 1344 *
0.17 + ( Total Naphtha Hydrotreater Feed - Coker Naphtha to
Naphtha Hydrotreater 1344 ) * 1.01 )
Where:
Total Contained Ethane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from Naphtha
Hydrotreater 1344 (MSCF/D) * Mole Fraction
Ethane * 0.0800 (LB/SCF) * 22,169 (BTU/LB) /
1000 / 6.0 (MMBTU/FOEB)
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146 as
defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Propane
-------
Coker Company Propane = Total Contained Propane in Stripper Off-Gas
* ( Coker Naphtha to Naphtha Hydrotreater 1344 * 0.14 +
( Total Unfinished Naphtha - Excessed Unfinished Naphtha ) *
0.00 ) * Coker Company Crude Oil Volume / Total Crude Oil
Volume / (( Coker Naphtha to Naphtha Hydrotreater 1344 *
0.14 + ( Total Naphtha Hydrotreater Feed - Coker Naphtha to
Naphtha Hydrotreater 1344 ) * 0.00 )
Product Purchase Agreement Page 40 August 3, 1999
<PAGE>
EXHIBIT A-25
Where:
Total Contained Propane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from Naphtha Hydrotreater
1344 (MSCF/D) * Mole Fraction Propane *
0.1187 (LB/SCF) / 177.7 (LB/BBL) * 1000
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU
146 as defined in Exhibit A-3.
Isobutane
---------
Coker Company Isobutane = Total Contained Isobutane in Stripper
Off-Gas * ( Coker Naphtha to Naphtha Hydrotreater 1344 *
0.06 + ( Total Unfinished Naphtha - Excessed Unfinished
Naphtha ) * 0.00 ) * Coker Company Crude Oil Volume / Total
Crude Oil Volume / (( Coker Naphtha to Naphtha Hydrotreater
1344 * 0.06 + ( Total Naphtha Hydrotreater Feed - Coker
Naphtha to Naphtha Hydrotreater 1344 ) * 0.00 )
Where:
Total Contained Isobutane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from Naphtha Hydrotreater
1344 (MSCF/D) * Mole Fraction Isobutane *
0.1582 (LB/SCF) / 197.2 (LB/BBL) * 1000
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU
146 as defined in Exhibit A-3.
Normal Butane
-------------
Coker Company Normal Butane = Total Contained Normal Butane in
Stripper Off-Gas * ( Coker Naphtha to Naphtha
Hydrotreater 1344 * 0.12 + ( Total Unfinished
Naphtha -Excessed Unfinished Naphtha ) * 0.00 ) *
Coker Company Crude Oil Volume / Total Crude Oil
Volume / (( Coker Naphtha to Naphtha Hydrotreater 1344
* 0.12 + ( Total Naphtha Hydrotreater Feed - Coker
Naphtha to Naphtha Hydrotreater 1344 ) * 0.00 )
Where:
Total Contained Normal Butane
In Stripper Off-Gas (B/D) = Total Stripper Off-Gas from Naphtha
Hydrotreater 1344 (MSCF/D) * Mole Fraction
Normal Butane * 0.1585 (LB/SCF) / 204.6
(LB/BBL) * 1000
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146 as
defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU 146
as defined in Exhibit A-3.
Product Purchase Agreement Page 41 August 3, 1999
<PAGE>
EXHIBIT A-25
Pentane and Heavier
-------------------
Coker Company Pentane
and Heavier = Total Contained Pentane and Heavier in Stripper Off-Gas *
( Coker Naphtha to Naphtha Hydrotreater 1344 *
100.03 + ( Total Unfinished Naphtha - Excessed
Unfinished Naphtha ) * 99.00 ) * Coker Company
Crude Oil Volume / Total Crude Oil Volume /
(( Coker Naphtha to Naphtha Hydrotreater 1344 *
100.03 + ( Total Naphtha Hydrotreater Feed -Coker
Naphtha to Naphtha Hydrotreater 1344 ) * 99.00 )
Where:
Total Contained Pentane
and Heavier In
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from Naphtha Hydrotreater
1344 (MSCF/D) * Mole Fraction Pentane and
Heavier * 0.1980 (LB/SCF) / 221.0 (LB/BBL) *
1000
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Deemed Quantities Unfinished
(Volume % of Feed Type) Coker Naphtha Naphtha
----------------------------------------------------------------------
<S> <C> <C>
H2S 0.31 0.11
----------------------------------------------------------------------
Hydrogen 0.17 1.01
----------------------------------------------------------------------
Methane 0.17 1.01
----------------------------------------------------------------------
Ethane 0.17 1.01
----------------------------------------------------------------------
Propane 0.14 0.00
----------------------------------------------------------------------
Isobutane 0.06 0.00
----------------------------------------------------------------------
Normal Butane 0.12 0.00
----------------------------------------------------------------------
Pentane & Heavier 100.03 99.00
----------------------------------------------------------------------
</TABLE>
Price: For Hydrogen, Methane, and Ethane: The weighted average delivered cost of
- -----
natural gas purchased by Clark converted into dollars per FOEB where 6.0 MMBTU
is equivalent to 1.0 FOEB less Fractionation Fee.
For contained Propane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of propane in the delivered Product.
For contained Isobutane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu posting for spot purchases of isobutane for
each publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of isobutane in the delivered Product.
For contained Normal Butane delivered from October through February: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Normal Butane delivered from March through September: The
arithmetic average
Product Purchase Agreement Page 42 August 3, 1999
<PAGE>
EXHIBIT A-25
of the high/low Oil Price Information Service Mont Belvieu, Texas Eastern
Pipeline posting for spot purchases of normal butane for each publication day
less 3.0 cents/gallon less 0.10 cents/gallon marketing fee multiplied by the
Inflation Factor less Fractionation Fee multiplied by the quantity of the
Product delivered on that day weighted by the respective volume of normal butane
in the delivered Product.
For contained Pentanes and Heavier: The arithmetic average of the high/low Oil
Price Information Service Mont Belvieu posting for spot purchases of natural
gasoline Non-Dynegy for each publication day less 1.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the Inflation Factor less Fractionation
Fee multiplied by the quantity of the Product delivered on that day weighted by
the respective volume of pentanes and heavier in the delivered Product.
For all other contained components: All other components are transferred to
Clark at no cost.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of Naphtha Hydrotreater
1344.
Quantity Measurement: Quantity measurements of the Stripper Off Gas from Naphtha
- --------------------
Hydrotreater 1344 shall be taken at CCR 1344 meter FR-864.
The following meters shall be used as input to the above calculations:
Coker Naphtha to Naphtha Hydrotreater 1344: CCR FRC-601
Total Naphtha Hydrotreater Feed: CCR FR-677
Quality Measurement: Grab samples shall be taken at least (3) times per week and
- -------------------
analyzed by gas chromatography.
Product Purchase Agreement Page 43 August 3, 1999
<PAGE>
EXHIBIT A-26
Product: Treated Naphtha from Naphtha Hydrotreater 1344
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
Sulfur 0.5 ppmw ASTM D-4045
Nitrogen 0.5 ppmw ASTM D-4629
Doctor Negative ASTM D-4952
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in Naphtha Hydrotreater 1344. That
portion is calculated as follows:
Platformer Charge * ( Coker Naphtha to Naphtha Hydrotreater 1344 * 100.03
+ ( Total Unfinished Naphtha - Excessed Unfinished Naphtha ) * 99.00 ) *
Coker Company Crude Oil Volume / Total Crude Oil Volume / (( Coker
Naphtha to Naphtha Hydrotreater 1344 * 100.03 + ( Total Naphtha
Hydrotreater Feed - Coker Naphtha to Naphtha Hydrotreater 1344 ) *
99.00 )
Where:
Total Unfinished Naphtha = The Total Unfinished Naphtha from AVU 146as
defined in Exhibit A-3.
Excessed Unfinished Naphtha = The excessed Unfinished Naphtha from AVU
146 as defined in Exhibit A-3.
The above equations are based on the following deemed quantities. Deemed
quantities for other feedstock types will be developed as needed to accommodate
optimization opportunities.
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Deemed Quantities Unfinished
(Volume % of Feed Type) Coker Naphtha Naphtha
-------------------------------------------------------------------
<S> <C> <C>
Pentane & Heavier 100.03 99.00
-------------------------------------------------------------------
</TABLE>
Price: The price of Treated Naphtha from Naphtha Hydrotreater 1344 is calculated
- -----
as follows:
Treated Naphtha = ( Coker Naphtha to Naphtha Hydrotreater 1344 * 100.03
* ( Price of Untreated Naphtha from DCU 843 + 3.0 cents/
gallon ) + ( Total Unfinished Naphtha - Excessed Unfinished
Naphtha ) * 99.00 * ( Price of Unfinished Naphtha + 1.5
cents/gallon ) ) / ( Coker Naphtha to Naphtha Hydrotreater
1344 * 100.03 + ( Total Unfinished Naphtha - Excessed
Unfinished Naphtha ) * 99.00 )
Where:
Price of Untreated Naphtha from DCU 843 = The price as described in
Exhibit A-13.
Price of Unfinished Naphtha = The price as described in Exhibit A-3.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of Naphtha Hydrotreater
1344.
Quantity Measurement: The following meters shall be used as input to the above
- --------------------
calculations:
Coker Naphtha to Naphtha Hydrotreater 1344: CCR FRC-601
Product Purchase Agreement Page 44 August 3, 1999
<PAGE>
EXHIBIT A-26
Total Naphtha Hydrotreater Feed: CCR FR-677
Platformer Charge CCR FR-863
Quality Measurement: Grab samples shall be taken at least (3) times per week and
- -------------------
analyzed by sulfur, nitrogen, and doctor test.
Product Purchase Agreement Page 45 August 3, 1999
<PAGE>
EXHIBIT A-27
Product: Stripper Off Gas from GFU 241 in Kerosene or Diesel Service
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Component Specification Test Method
--------- ------------- -----------
<S> <C> <C>
H2S 13.58% Mole Typical UOP-539
Water 0.41% Mole Typical UOP-539
Hydrogen 28.81% Mole Typical UOP-539
Methane 13.99% Mole Typical UOP-539
Ethane 14.81% Mole Typical UOP-539
Propane 14.81% Mole Typical UOP-539
Isobutane 5.35% Mole Typical UOP-539
Normal Butane 3.70% Mole Typical UOP-539
Pentane and Heavier 4.12% Mole Typical UOP-539
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the portion of each
- --------
component of this Product produced by Coker Company feedstocks in GFU 241. That
portion for each component is calculated as follows:
H2S
---
Coker Company H2S = Total Contained H2S in Stripper Off-Gas * Total Feed
to GFU 241 * Coker Company Crude Oil Volume / Total Crude Oil
Volume
Where:
Total Contained H2S in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 241
(MSCF/D) * Mole Fraction H2S * 0.0907 (LB/SCF)
* 7,105 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Hydrogen
--------
Coker Company Hydrogen = Total Contained Hydrogen in Stripper Off-Gas
* Total Feed to GFU 241 * Coker Company Crude Oil Volume / Total
Crude Oil Volume
Where:
Total Contained Hydrogen in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D)
* Mole Fraction Hydrogen * 0.0053 (LB/SCF) *
60,950 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Methane
-------
Coker Company Methane = Total Contained Methane in Stripper Off-Gas
* Total Feed to GFU 241 * Coker Company Crude Oil Volume / Total
Crude Oil Volume
Where:
Total Contained Methane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D)
* Mole Fraction Methane * 0.0425 (LB/SCF) *
23,840 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Ethane
------
Product Purchase Agreement Page 46 August 3, 1999
<PAGE>
EXHIBIT A-27
Coker Company Ethane = Total Contained Ethane in Stripper Off-Gas * Total
Feed to GFU 241 * Coker Company Crude Oil Volume / Total Crude
Oil Volume
Where:
Total Contained Ethane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D)
* Mole Fraction Ethane * 0.0800 (LB/SCF) *
22,169 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Propane
-------
Coker Company Propane = Total Contained Propane in Stripper Off-Gas
* Total Feed to GFU 241 * Coker Company Crude Oil Volume / Total
Crude Oil Volume
Where:
Total Contained Propane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D) *
Mole Fraction Propane * 0.1187 (LB/SCF) / 177.7 (LB/BBL) *
1000
Isobutane
---------
Coker Company Isobutane = Total Contained Isobutane in Stripper Off-
Gas * Total Feed to GFU 241 * Coker Company Crude Oil Volume /
Total Crude Oil Volume
Where:
Total Contained Isobutane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D)
* Mole Fraction Isobutane * 0.1582 (LB/SCF) /
197.2 (LB/BBL) * 1000
Normal Butane
-------------
Coker Company Normal Butane = Total Contained Normal Butane in Stripper
Off-Gas * Total Feed to GFU 241 * Coker Company Crude Oil
Volume / Total Crude Oil Volume
Where:
Total Contained Normal Butane
In Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D)
* Mole Fraction Normal Butane * 0.1585
(LB/SCF) / 204.6 (LB/BBL) * 1000
Pentane and Heavier
-------------------
Coker Company Pentane
and Heavier = Total Contained Pentane and Heavier in Stripper Off-Gas *
Total Feed to GFU 241 * Coker Company Crude Oil Volume /
Total Crude Oil Volume
Where:
Total Contained Pentane
and Heavier In
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 241 (MSCF/D) *
Mole Fraction Pentane and Heavier * 0.1980
(LB/SCF) / 221.0 (LB/BBL) * 1000
Product Purchase Agreement Page 47 August 3, 1999
<PAGE>
EXHIBIT A-27
Price: For Hydrogen, Methane, and Ethane: The weighted average delivered cost
- -----
of natural gas purchased by Clark converted into dollars per FOEB where 6.0
MMBTU is equivalent to 1.0 FOEB less 0.84 dollars/FOEB.
For contained Propane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of propane in the delivered Product.
For contained Isobutane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu posting for spot purchases of isobutane for
each publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of isobutane in the delivered Product.
For contained Normal Butane delivered from October through February: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Normal Butane delivered from March through September: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day less 3.0 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Pentanes and Heavier: The arithmetic average of the high/low Oil
Price Information Service Mont Belvieu posting for spot purchases of natural
gasoline Non-Dynegy for each publication day less 1.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the Inflation Factor less Fractionation
Fee multiplied by the quantity of the Product delivered on that day weighted by
the respective volume of pentanes and heavier in the delivered Product.
For all other contained components: All other components are transferred to
Clark at no cost.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss
Product Purchase Agreement Page 48 August 3, 1999
<PAGE>
EXHIBIT A-27
shall pass at the battery limits of GFU 241.
Quantity Measurement: Quantity measurements shall be taken at GFU 241 meter
- --------------------
FI-104.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- --------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 49 August 3, 1999
<PAGE>
EXHIBIT A-28
Product: High Pressure Purge Gas from GFU 241
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
H2S 80 ppmw Maximum Draeger
Higher Heating Value 650 BTU/SCF Typical UOP-539
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Coker Company Share (FOEB/D) = Total High Pressure Purge Gas from GFU 241
(MSCF/D) * Higher Heating Value (BTU/SCF) / 1000 / 6.0
(MMBTU/FOEB)
Price: The weighted average delivered cost of natural gas purchased by Clark
- ------
converted into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0 FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 241.
Quantity Measurement: Product quantity measurements shall be taken at GFU 241
- --------------------
XX-XXXX.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- --------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 50 August 3, 1999
<PAGE>
EXHIBIT A-29
Product: Naphtha from GFU 241 in Kerosene or Diesel Service
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
FBP 390 degrees F Maximum ASTM D-86
N+A 60.0% LV Typical ASTM D-5134 - Modified to C-15
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast Naphtha (Domestic 40 N+A) for
each publication day less 0.15 cents/gallon/N+A number below 40 N+A plus 0.15
cents/gallon/N+A number above 40 N+A less 1.0 cents/gallon less Fractionation
Fee.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 241.
Quantity Measurement: Quantity measurements shall be taken at GFU 241 meter
- --------------------
FRCA-110.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
by gas chromatography and distillation.
Product Purchase Agreement Page 51 August 3, 1999
<PAGE>
EXHIBIT A-30
Product: Kerosene from GFU 241 in Kerosene Service
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
API Gravity 37.0 Minimum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
API Gravity 51.0 Maximum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
Corrosion 2 hrs. @212 F 1 Maximum ASTM D-130
MSEP 85 Minimum ASTM D-3948
Water Reaction Interface Rating 1b Maximum ASTM D-1094
Freezing Point -40 C Maximum ASTM D-2386
or
ASTM D-5972
Viscosity @ -4 F 8.0 cSt Maximum ASTM D-445
Flash Point 108 F Minimum ASTM D-56
10% 400 F Maximum ASTM D-86
FBP 572 F Maximum ASTM D-86
Residue, % 1.5 Maximum ASTM D-86
Loss, % 1.5 Maximum ASTM D-86
Existent Gum 7 mg/100 ml Maximum ASTM D-381
Thermal Stability Pressure Drop 25 mm/Hg Maximum ASTM D-3241
Thermal Stability Tube Deposit 3 Code Maximum ASTM D-3241
Sulfur 0.30 wt% Maximum ASTM D-2622
Doctor Negative ASTM D-4952
Aromatics 25 vol% Maximum ASTM D-1319
Neutralization Number 0.1 mg KOH/g Maximum ASTM D-974
Smoke / Naphthalenes
Smoke Point 25 Minimum ASTM D-1322
OR
Smoke Point 18 Minimum ASTM D-1322
AND
Naphthalenes 3.0 Maximum ASTM D-1840
</TABLE>
Target specifications are based on current fungible aviation fuel namely
Colonial 54 Grade Jet Fuel. To the extent the specifications change for
Colonial 54 Grade Jet Fuel the target specifications will be changed
accordingly.
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Platt's Oilgram Price Report
- -----
U.S. Gulf Coast Pipeline posting for spot purchases of Jet/Kero 54 for each
publication less 0.05 cents/gallon marketing fee multiplied by the quantity of
the Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss
Product Purchase Agreement Page 52 August 3, 1999
<PAGE>
EXHIBIT A-30
shall pass at the battery limits of GFU 241.
Quantity Measurement: Quantity measurements shall be taken at GFU 241 meter
- --------------------
FRA-105.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- -------------------
for each specification.
Product Purchase Agreement Page 53 August 3, 1999
<PAGE>
EXHIBIT A-31
Product: Diesel from GFU 241 in Diesel Service
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
Corrosion 3 hrs. @212 degrees F 1 Maximum ASTM D-130
Viscosity @ 100 degrees F 2.0 cSt Minimum
Viscosity @ 100 degrees F 3.6 cSt Maximum ASTM D-445
Flash Point 130 degrees F Minimum ASTM D-56
90% 540 degrees F Minimum ASTM D-86
90% 640 degrees F Maximum ASTM D-86
FBP 690 degrees F Maximum ASTM D-86
Color 2.5 Maximum ASTM D-1500
Sulfur 0.047 wt% Maximum ASTM D-2622
Ash 0.01 wt% Maximum ASTM D-482
Carbon Residue
(Ramsbottom on 10% Bottom) 0.35 Maximum ASTM D-524
BS&W Less than 0.5 Maximum ASTM D-1796
Haze Rating @77 degrees F (Procedure 2) 2 Maximum ASTM D-4176
Thermal Stability
90 Minutes 150 degrees C Pad Rating 7 Maximum Dupont Scale
OR
Oxidation Stability 2.5 mg/100 ml Maximum ASTM D-2274
</TABLE>
Target specifications are based on current fungible transportation diesel
fuel namely Colonial 74 Grade Low Sulfur Diesel Fuel. To the extent the
specifications change for Colonial 74 Grade Low Sulfur Diesel Fuel the
target specifications will be changed accordingly.
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product. The Coker Company Share is defined
as the output of this product multiplied by the Coker Company Crude Oil Volume
divided by the Total Crude Oil Volume.
Price: The arithmetic average of the high/low Platt's Oilgram Price Report
- -----
U.S. Gulf Coast Pipeline posting for spot purchases of LS No. 2 for each
publication day less 0.05 cents/gallon marketing fee multiplied by the quantity
of the Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 241.
Quantity Measurement: Quantity measurements shall be taken at GFU 241 meter
- --------------------
FRA-105.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- --------------------
for each specification.
Product Purchase Agreement Page 54 August 3, 1999
<PAGE>
EXHIBIT A-32
Product: Stripper Off Gas from GFU 242
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Component Specification Test Method
--------- ------------- -----------
<S> <C> <C>
H2S 9.52% Mole Typical UOP-539
Water 0.95% Mole Typical UOP-539
Hydrogen 44.76% Mole Typical UOP-539
Methane 16.67% Mole Typical UOP-539
Ethane 12.86% Mole Typical UOP-539
Propane 7.62% Mole Typical UOP-539
Isobutane 1.90% Mole Typical UOP-539
Normal Butane 1.43% Mole Typical UOP-539
Pentane and Heavier 4.29% Mole Typical UOP-539
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the portion of each
- --------
component of this Product produced by Coker Company Feedstock in GFU 242. Coker
Company Feedstock in GFU 242 is defined as the Total Feed to GFU 242 less the
Unfinished Jet from AVU 146 drawn from inventory as defined in Exhibit A-4
multiplied by the Coker Company Crude Oil Volume divided by the Total Crude Oil
Volume. The portion of each component of this Product produced by Coker Company
feedstock in GFU 242 is calculated as follows:
H2S
---
Coker Company H2S = Total Contained H2S in Stripper Off-Gas * Coker
Company Feedstock in GFU 242
Where:
Total Contained H2S in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 242
(MSCF/D) * Mole Fraction H2S * 0.0907 (LB/SCF)
* 7,105 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Hydrogen
Coker Company Hydrogen = Total Contained Hydrogen in Stripper Off-Gas
* Coker Company Feedstock in GFU 242
Where:
Total Contained Hydrogen in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Hydrogen * 0.0053 (LB/SCF) *
60,950 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Methane
-------
Coker Company Methane = Total Contained Methane in Stripper Off-Gas
* Coker Company Feedstock in GFU 242
Where:
Total Contained Methane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Methane * 0.0425 (LB/SCF) *
23,840 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Product Purchase Agreement Page 55 August 3, 1999
<PAGE>
EXHIBIT A-32
Ethane
------
Coker Company Ethane = Total Contained Ethane in Stripper Off-Gas
* Coker Company Feedstock in GFU 242
Where:
Total Contained Ethane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Ethane * 0.0800 (LB/SCF) *
22,169 (BTU/LB) / 1000 / 6.0 (MMBTU/FOEB)
Propane
-------
Coker Company Propane = Total Contained Propane in Stripper Off-Gas
* Coker Company Feedstock in GFU 242
Where:
Total Contained Propane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Propane * 0.1187 (LB/SCF) /
177.7 (LB/BBL) * 1000
Isobutane
---------
Coker Company Isobutane = Total Contained Isobutane in Stripper
Off-Gas * Coker Company Feedstock in GFU 242
Where:
Total Contained Isobutane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Isobutane * 0.1582 (LB/SCF) /
197.2 (LB/BBL) * 1000
Normal Butane
-------------
Coker Company Normal Butane = Total Contained Normal Butane in Stripper
Off-Gas * Coker Company Feedstock in GFU 242
Where:
Total Contained Normal Butane
In Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Normal Butane * 0.1585
(LB/SCF) / 204.6 (LB/BBL) * 1000
Pentane and Heavier
-------------------
Coker Company Pentane
and Heavier = Total Contained Pentane and Heavier in Stripper
Off-Gas * Coker Company Feedstock in GFU 242
Where:
Total Contained Pentane
and Heavier In
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 242 (MSCF/D)
* Mole Fraction Pentane and Heavier * 0.1980
(LB/SCF) / 221.0 (LB/BBL) * 1000
Product Purchase Agreement Page 56 August 3, 1999
<PAGE>
EXHIBIT A-32
Price: For Hydrogen, Methane, and Ethane: The weighted average delivered cost
- -----
of natural gas purchased by Clark converted into dollars per FOEB where 6.0
MMBTU is equivalent to 1.0 FOEB less Fractionation Fee.
For contained Propane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of propane in the delivered Product.
For contained Isobutane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu posting for spot purchases of isobutane for
each publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of isobutane in the delivered Product.
For contained Normal Butane delivered from October through February: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Normal Butane delivered from March through September: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day less 3.0 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Pentanes and Heavier: The arithmetic average of the high/low Oil
Price Information Service Mont Belvieu posting for spot purchases of natural
gasoline Non-Dynegy for each publication day less 1.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the Inflation Factor less Fractionation
Fee multiplied by the quantity of the Product delivered on that day weighted by
the respective volume of pentanes and heavier in the delivered Product.
For all other contained components: All other components are transferred to
Clark at no cost.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 242.
Quantity Measurement: Quantity measurements shall be taken at GFU 242 meter
- --------------------
FI-204.
Product Purchase Agreement Page 57 August 3, 1999
<PAGE>
EXHIBIT A-32
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- -------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 58 August 3, 1999
<PAGE>
EXHIBIT A-33
Product: High Pressure Purge Gas from GFU 242
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- ----------
<S> <C> <C>
H2S 80 ppmw Maximum Draeger
Higher Heating Value 650 BTU/SCF Typical UOP-539
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product produced by Coker Company Feedstock
in GFU 242. Coker Company Feedstock in GFU 242 is defined as the Total Feed to
GFU 242 less the Unfinished Jet from AVU 146 drawn from inventory as defined in
Exhibit A-4 multiplied by the Coker Company Crude Oil Volume divided by the
Total Crude Oil Volume.
Coker Company Share (FOEB/D) = Total High Pressure Purge Gas from GFU 242
(MSCF/D) * Higher Heating Value (BTU/SCF) / 1000 / 6.0
(MMBTU/FOEB)
Price: The weighted average delivered cost of natural gas purchased by Clark
- ------
converted into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0 FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 242.
Quantity Measurement: Product quantity measurements shall be taken at GFU 242
- --------------------
XX-XXXX.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- -------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 59 August 3, 1999
<PAGE>
EXHIBIT A-34
Product: Naphtha from GFU 242
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
FBP 390 F Maximum ASTM D-86
N+A 60.0% LV Typical ASTM D-5134 - Modified to C-15
</TABLE>
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product produced by Coker Company Feedstock
in GFU 242. Coker Company Feedstock in GFU 242 is defined as the Total Feed to
GFU 242 less the Unfinished Jet from AVU 146 drawn from inventory as defined in
Exhibit A-4 multiplied by the Coker Company Crude Oil Volume divided by the
Total Crude Oil Volume.
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast Naphtha (Domestic 40 N+A) for
each publication day less 0.15 cents/gallon/N+A number below 40 N+A plus 0.15
cents/gallon/N+A number above 40 N+A less 1.0 cents/gallon less Fractionation
Fee.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 242.
Quantity Measurement: Quantity measurements shall be taken at GFU 242 meter
- --------------------
FRCA-210.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- --------------------
by gas chromatography and distillation.
Product Purchase Agreement Page 60 August 3, 1999
<PAGE>
EXHIBIT A-35
Product: Kerosene from GFU 242
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C> <C>
API Gravity 37.0 Minimum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
API Gravity 51.0 Maximum ASTM D-1298,
ASTM D-287, or
ASTM D-4052
Corrosion 2 hrs. @212 F 1 Maximum ASTM D-130
MSEP 85 Minimum ASTM D-3948
Water Reaction Interface Rating 1b Maximum ASTM D-1094
Freezing Point -40 C Maximum ASTM D-2386
or
ASTM D-5972
Viscosity @ -4 degrees F 8.0 cSt Maximum ASTM D-445
Flash Point 108 F Minimum ASTM D-56
10% 400 F Maximum ASTM D-86
FBP 572 F Maximum ASTM D-86
Residue, % 1.5 Maximum ASTM D-86
Loss, % 1.5 Maximum ASTM D-86
Existent Gum 7 mg/100 ml Maximum ASTM D-381
Thermal Stability Pressure Drop 25 mm/Hg Maximum ASTM D-3241
Thermal Stability Tube Deposit 3 Code Maximum ASTM D-3241
Sulfur 0.30 wt% Maximum ASTM D-2622
Doctor Negative ASTM D-4952
Aromatics 25 vol% Maximum ASTM D-1319
Neutralization Number 0.1 mg KOH/g Maximum ASTM D-974
Smoke / Naphthalenes
Smoke Point 25 Minimum ASTM D-1322
OR
Smoke Point 18 Minimum ASTM D-1322
AND
Naphthalenes 3.0 Maximum ASTM D-1840
</TABLE>
Target specifications are based on current fungible aviation fuel namely
Colonial 54 Grade Jet Fuel. To the extent the specifications change for
Colonial 54 Grade Jet Fuel the target specifications will be changed
accordingly.
Quantity: Coker Company shall sell and Clark shall purchase the "Coker Company
- --------
Share" of the total output of this Product produced by Coker Company Feedstock
in GFU 242. Coker Company Feedstock in GFU 242 is defined as the Total Feed to
GFU 242 less the Unfinished Jet from AVU 146 drawn from inventory as defined in
Exhibit A-4 multiplied by the Coker Company Crude Oil Volume divided by the
Total Crude Oil Volume.
Price: The arithmetic average of the high/low Platt's Oilgram Price Report U.
- -----
S. Gulf Coast Pipeline posting for spot purchases of Jet/Kero 54 for each
publication less 0.05 cents/gallon marketing fee multiplied by the quantity of
the Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Product Purchase Agreement Page 61 August 3, 1999
<PAGE>
EXHIBIT A-35
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 242.
Quantity Measurement: Quantity measurements shall be taken at GFU 242 meter
- --------------------
FRA-205.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- --------------------
for each specification.
Product Purchase Agreement Page 62 August 3, 1999
<PAGE>
EXHIBIT A-36
Product: Stripper Off Gas from GFU 243
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
H2S 15.21% Mole Typical UOP-539
Water 5.16% Mole Typical UOP-539
Hydrogen 11.24% Mole Typical UOP-539
Methane 7.75% Mole Typical UOP-539
Ethane 18.13% Mole Typical UOP-539
Propane 23.05% Mole Typical UOP-539
Isobutane 7.99% Mole Typical UOP-539
Normal Butane 9.13% Mole Typical UOP-539
Pentane and Heavier 2.32% Mole Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the portion of each
- --------
component of this Product produced by Coker Company feedstocks in GFU 243. That
portion for each component is calculated as follows:
H2S
---
Coker Company H2S = Total Contained H2S in Stripper Off-Gas *
((Total volume of Diesel from AVU 146 - Diesel charge volume
to GFU 241 + Total volume of Light Gas Oil from DCU 843) *
Coker Company Crude Oil Volume / Total Crude Oil Volume -
Coker Company Share of the Excessed Unfinished Diesel) /
Total charge volume to GFU 243
Where:
Total Contained H2S in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 243
(MSCF/D) * Mole Fraction H2S * 0.0907
(LB/SCF) * 7,105 (BTU/LB) / 1000 / 6.0
(MMBTU/FOEB)
Excessed Unfinished Diesel = The volume of Unfinished Diesel as
defined in Exhibit A-5
Hydrogen
--------
Coker Company Hydrogen = Total Contained Hydrogen in Stripper Off-Gas
* ((Total volume of Diesel from AVU 146 - Diesel
charge volume to GFU 241 + Total volume of Light Gas
Oil from DCU 843 ) * Coker Company Crude Oil Volume
/ Total Crude Oil Volume - Coker Company Share of
the Excessed Unfinished Diesel) / Total charge
volume to GFU 243
Where:
Total Contained Hydrogen in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 243
(MSCF/D) * Mole Fraction Hydrogen * 0.0053
(LB/SCF) * 60,950 (BTU/LB) / 1000 / 6.0
(MMBTU/FOEB)
Excessed Unfinished Diesel = The volume of Unfinished Diesel as
defined in Exhibit A-5
Methane
-------
Product Purchase Agreement Page 63 August 3, 1999
<PAGE>
EXHIBIT A-36
Coker Company Methane = Total Contained Methane in Stripper Off-
Gas * ((Total volume of Diesel from AVU 146 - Diesel
charge volume to GFU 241 + Total volume of Light Gas
Oil from DCU 843) * Coker Company Crude Oil Volume /
Total Crude Oil Volume - Coker Company Share of the
Excessed Unfinished Diesel) / Total charge volume to
GFU 243
Where:
Total Contained Methane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 243
(MSCF/D) * Mole Fraction Methane * 0.0425
(LB/SCF) * 23,840 (BTU/LB) / 1000 / 6.0
(MMBTU/FOEB)
Excessed Unfinished Diesel = The volume of Unfinished Diesel as
defined in Exhibit A-5
Ethane
------
Coker Company Ethane = Total Contained Ethane in Stripper Off-
Gas * ((Total volume of Diesel from AVU 146 - Diesel
charge volume to GFU 241 + Total volume of Light Gas
Oil from DCU 843 ) * Coker Company Crude Oil Volume /
Total Crude Oil Volume - Coker Company Share of the
Excessed Unfinished Diesel) / Total charge volume to
GFU 243
Where:
Total Contained Ethane in
Stripper Off-Gas (FOEB/D) = Total Stripper Off-Gas from GFU 243
(MSCF/D) * Mole Fraction Ethane * 0.0800
(LB/SCF) * 22,169 (BTU/LB) / 1000 / 6.0
(MMBTU/FOEB)
Excessed Unfinished Diesel = The volume of Unfinished Diesel as
defined in Exhibit A-5
Propane
-------
Coker Company Propane = Total Contained Propane in Stripper Off-
Gas * ((Total volume of Diesel from AVU 146 - Diesel
charge volume to GFU 241 + Total volume of Light Gas
Oil from DCU 843 ) * Coker Company Crude Oil Volume /
Total Crude Oil Volume - Coker Company Share of the
Excessed Unfinished Diesel) / Total charge volume to
GFU 243
Where:
Total Contained Propane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 243 (MSCF/D)
* Mole Fraction Propane * 0.1187 (LB/SCF) /
177.7 (LB/BBL) * 1000
Excessed Unfinished Diesel = The volume of Unfinished Diesel as
defined in Exhibit A-5
Isobutane
---------
Coker Company Isobutane = Total Contained Isobutane in Stripper
Off-Gas * ((Total volume of Diesel from AVU 146 -
Diesel charge volume to GFU 241 + Total volume of Light
Gas Oil from DCU 843 ) * Coker Company Crude Oil Volume
/ Total Crude Oil Volume - Coker Company Share of the
Excessed Unfinished Diesel) / Total charge volume to
GFU 243
Product Purchase Agreement Page 64 August 3, 1999
<PAGE>
EXHIBIT A-36
Where:
Total Contained Isobutane in
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 243 (MSCF/D) *
Mole Fraction Isobutane * 0.1582 (LB/SCF) / 197.2
(LB/BBL) * 1000
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined
in Exhibit A-5
Normal Butane
-------------
Coker Company Normal Butane = Total Contained Normal Butane in
Stripper Off-Gas * ((Total volume of Diesel from
AVU 146 - Diesel charge volume to GFU 241 + Total
volume of Light Gas Oil from DCU 843 ) * Coker
Company Crude Oil Volume / Total Crude Oil Volume -
Coker Company Share of the Excessed Unfinished
Diesel) / Total charge volume to GFU 243
Where:
Total Contained Normal Butane
In Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 243 (MSCF/D)
* Mole Fraction Normal Butane * 0.1585 (LB/SCF)
/ 204.6 (LB/BBL) * 1000
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined
in Exhibit A-5
Pentane and Heavier
-------------------
Coker Company Pentane
and Heavier = Total Contained Pentane and Heavier in Stripper Off-Gas *
((Total volume of Diesel from AVU 146 -Diesel charge
volume to GFU 241 + Total volume of Light Gas Oil from DCU
843 ) * Coker Company Crude Oil Volume / Total Crude Oil
Volume - Coker Company Share of the Excessed Unfinished
Diesel) / Total charge volume to GFU 243
Where:
Total Contained Pentane
and Heavier In
Stripper Off-Gas (B/D) = Total Stripper Off-Gas from GFU 243 (MSCF/D) *
Mole Fraction Pentane and Heavier * 0.1980
(LB/SCF) / 221.0 (LB/BBL) * 1000
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined in
Exhibit A-5
Price: For Hydrogen, Methane, and Ethane: The weighted average delivered cost
- -----
of natural gas purchased by Clark converted into dollars per FOEB where 6.0
MMBTU is equivalent to 1.0 FOEB less Fractionation Fee.
For contained Propane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu, Texas Eastern Pipeline posting for spot
purchases of propane for each publication day less 0.10 cents/gallon marketing
fee multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of propane in the delivered Product.
Product Purchase Agreement Page 65 August 3, 1999
<PAGE>
EXHIBIT A-36
For contained Isobutane: The arithmetic average of the high/low Oil Price
Information Service Mont Belvieu posting for spot purchases of isobutane for
each publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of isobutane in the delivered Product.
For contained Normal Butane delivered from October through February: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day plus 1.25 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Normal Butane delivered from March through September: The
arithmetic average of the high/low Oil Price Information Service Mont Belvieu,
Texas Eastern Pipeline posting for spot purchases of normal butane for each
publication day less 3.0 cents/gallon less 0.10 cents/gallon marketing fee
multiplied by the Inflation Factor less Fractionation Fee multiplied by the
quantity of the Product delivered on that day weighted by the respective volume
of normal butane in the delivered Product.
For contained Pentanes and Heavier: The arithmetic average of the high/low Oil
Price Information Service Mont Belvieu posting for spot purchases of natural
gasoline Non-Dynegy for each publication day less 1.5 cents/gallon less 0.10
cents/gallon marketing fee multiplied by the Inflation Factor less Fractionation
Fee multiplied by the quantity of the Product delivered on that day weighted by
the respective volume of pentanes and heavier in the delivered Product.
For all other contained components: All other components are transferred to
Clark at no cost.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 243.
Quantity Measurement: Product quantity measurements shall be taken at GFU 243
- --------------------
meter FI-160. Total charge volume to GFU 243 shall be taken at GFU 243 meter
FIC-102.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- --------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 66 August 3, 1999
<PAGE>
EXHIBIT A-37
Product: Low Pressure Purge Gas from GFU 243
- -------
Target Specification:
- -----------------------
Property Specification Test Method
-------- ------------- -----------
H2S 80 ppmw Maximum Draeger
Higher Heating Value 750 BTU/SCF Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in GFU 243. That portion is
calculated as follows:
Coker Company Portion = Total Low Pressure Purge Gas * ((Total volume of
Diesel from AVU 146 - Diesel charge volume to GFU 241 +
Total volume of Light Gas Oil from DCU 843 ) * Coker Company
Crude Oil Volume / Total Crude Oil Volume - Coker Company
Share of the Excessed Unfinished Diesel) / Total charge
volume to GFU 243
Where:
Total Low Pressure
Purge Gas (FOEB/D) = Total Low Pressure Purge Gas from GFU
243 (MSCF/D) * Higher Heating Value (BTU/SCF) / 1000 /
6.0 (MMBTU/FOEB)
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined in
Exhibit A-5
Price: The weighted average delivered cost of natural gas purchased by Clark
- ------
converted into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0 FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 243.
Quantity Measurement: Product quantity measurements shall be taken at GFU 243
- --------------------
meter FIC-117. Total charge volume to GFU 243 shall be taken at GFU 243 meter
FIC-102.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- --------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 67 August 3, 1999
<PAGE>
EXHIBIT A-38
Product: High Pressure Purge Gas from GFU 243
- -------
Target Specification:
- -----------------------
Property Specification Test Method
-------- ------------- -----------
H2S 80 ppmw Maximum Draeger
Higher Heating Value 650 BTU/SCF Typical UOP-539
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in GFU 243. That portion is
calculated as follows:
Coker Company Portion = Total High Pressure Purge Gas * ((Total
volume of Diesel from AVU 146 - Diesel charge volume to GFU
241 + Total volume of Light Gas Oil from DCU 843) * Coker
Company Crude Oil Volume / Total Crude Oil Volume - Coker
Company Share of the Excessed Unfinished Diesel) / Total
charge volume to GFU 243
Where:
Total High Pressure
Purge Gas (FOEB/D) = Total High Pressure Purge Gas from GFU
243 (MSCF/D) * Higher Heating Value (BTU/SCF) / 1000
/ 6.0 (MMBTU/FOEB)
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined
in Exhibit A-5
Price: The weighted average delivered cost of natural gas purchased by Clark
- ------
converted into dollars per FOEB where 6.0 MMBTU is equivalent to 1.0 FOEB.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 243.
Quantity Measurement: Product quantity measurements shall be taken at GFU 243
- --------------------
meter FIC-110. Total charge volume to GFU 243 shall be taken at GFU 243 meter
FIC-102.
Quality Measurement: Grab samples shall be taken and analyzed by draeger and at
- --------------------
least (3) times per week and analyzed by gas chromatography.
Product Purchase Agreement Page 68 August 3, 1999
<PAGE>
EXHIBIT A-39
Product: Naphtha from GFU 243
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
FBP 390 F Maximum ASTM D-86
N+A 60.0% LV Typical ASTM D-5134 - Modified to C-15
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in GFU 243. That portion is
calculated as follows:
Coker Company Portion = Total Naphtha from GFU 243 * ((Total volume
of Diesel from AVU 146 - Diesel charge volume to GFU 241 +
Total volume of Light Gas Oil from DCU 843) * Coker Company
Crude Oil Volume / Total Crude Oil Volume - Coker Company
Share of the Excessed Unfinished Diesel) / Total charge
volume to GFU 243
Where:
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined in
Exhibit A-5
Price: The arithmetic average of the high/low Oil Price Information Service
- -----
posting for spot purchases of U. S. Gulf Coast Naphtha (Domestic 40 N+A) for
each publication day less 0.15 cents/gallon/N+A number below 40 N+A plus 0.15
cents/gallon/N+A number above 40 N+A less 1.0 cents/gallon less Fractionation
Fee.
The Fractionation Fee is calculated as the sum of a variable and fixed fee
component as follows:
Fractionation Fee = Base Variable Fee * Current Natural Gas / 2.236 +
Fixed Variable Fee * (1.02) (N-1998)
Where:
Base Variable Fee = 0.627 dollars per barrel
Current Natural Gas = The weighted average delivered cost of natural gas
purchased by Clark converted into dollars per MMBTU.
Fixed Variable Fee = 0.344 dollars per barrel
N = Current 4 digit year (i.e. 2002)
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 243.
Quantity Measurement: Product quantity measurements shall be taken at GFU 243
- --------------------
meter FIC-115. Total charge volume to GFU 243 shall be taken at GFU 243 meter
FIC-102.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- --------------------
by gas chromatography and distillation.
Product Purchase Agreement Page 69 August 3, 1999
<PAGE>
EXHIBIT A-40
Product: Diesel from GFU 243
- -------
Target Specification:
- --------------------
<TABLE>
<CAPTION>
Property Specification Test Method
-------- ------------- -----------
<S> <C>
Corrosion 3 hrs. @212 degrees F 1 Maximum ASTM D-130
Viscosity @ 100 degrees F 2.0 cSt Minimum ASTM D-445
Viscosity @ 100 degrees F 3.6 cSt Maximum ASTM D-445
Flash Point 130 degrees F Minimum ASTM D-56
90% 540 degrees F Minimum ASTM D-86
90% 640 degrees F Maximum ASTM D-86
FBP 690 degrees F Maximum ASTM D-86
Color 2.5 Maximum ASTM D-1500
Sulfur 0.047 wt% Maximum ASTM D-2622
Ash 0.01 wt% Maximum ASTM D-482
Carbon Residue
(Ramsbottom on 10% Bottom) 0.35 Maximum ASTM D-524
BS&W (less than)0.05 Maximum ASTM D-1796
Haze Rating @77 degrees F (Procedure 2) 2 Maximum ASTM D-4176
Thermal Stability
90 Minutes 150 degrees C Pad Rating 7 Maximum Dupont Scale
OR
Oxidation Stability 2.5 mg/100 ml Maximum ASTM D-2274
</TABLE>
Target specifications are based on current fungible transportation diesel
fuel namely Colonial 74 Grade Low Sulfur Diesel Fuel. To the extent the
specifications change for Colonial 74 Grade Low Sulfur Diesel Fuel the target
specifications will be changed accordingly.
Quantity: Coker Company shall sell and Clark shall purchase the portion of this
- --------
Product produced by Coker Company feedstocks in GFU 243. That portion is
calculated as follows:
Coker Company Portion = Total Diesel from GFU 243 * (( Total volume of
Diesel from AVU 146 - Diesel charge volume to GFU 241 + Total
volume of Light Gas Oil from DCU 843 ) * Coker Company Crude
Oil Volume / Total Crude Oil Volume - Coker Company Share of
the Excessed Unfinished Diesel ) / Total charge volume to GFU
243
Where:
Excessed Unfinished Diesel = The volume of Unfinished Diesel as defined in
Exhibit A-5
Price: The arithmetic average of the high/low Platt's Oilgram Price Report U.
- -----
S. Gulf Coast Pipeline posting for spot purchases of LS No. 2 for each
publication day less 0.05 cents/gallon marketing fee multiplied by the quantity
of the Product delivered on that day.
The price for non-publication day deliveries shall be the arithmetic average of
the prices for the last proceeding publication day and the next following
publication day.
Delivery Point/Risk of Loss: This Product shall be delivered by pipeline to
- ---------------------------
Clark and risk of loss shall pass at the battery limits of GFU 243.
Quantity Measurement: Product quantity measurements shall be taken at GFU 243
- --------------------
meter FIC-
Product Purchase Agreement Page 70 August 3, 1999
<PAGE>
EXHIBIT A-40
112. Total charge volume to GFU 243 shall be taken at GFU 243 meter
FIC-102.
Quality Measurement: Grab samples shall be taken (3) times per week and analyzed
- --------------------
for each specification.
Product Purchase Agreement Page 71 August 3, 1999
<PAGE>
EXHIBIT A-41
Product: Liquid Sulfur
- -------
Target Specification:
- --------------------
Property Specification Test Method
-------- ------------- -----------
H2S 100 ppmw Maximum Draeger
Quantity: Coker Company shall sell and Clark shall purchase the total output of
- --------
this product from SRU 545.
Price: Actual 3rd party sales price adjusted back to the custody transfer point
- -----
for transportation and storage cost less $1.00 per long ton marketing fee.
Delivery Point/Risk of Loss: This product shall be delivered into railcar,
- ---------------------------
truck, or storage facility suitable to load marine vessels and risk of loss
shall pass at the point of delivery.
Quantity Measurement / Metering Facilities: Based on invoiced quantity.
- ------------------------------------------
Quality Measurement: Grab samples shall be taken as needed by 3rd party sales
- -------------------
agreements.
Product Purchase Agreement Page 72 August 3, 1999
<PAGE>
EXHIBIT A-42
Product: Hydrogen to Clark Hydrogen Gathering System
- -------
Target Specification:
- --------------------
Component Specification Test Method
--------- ------------- -----------
Hydrogen 99.9% Mole Minimum UOP-539
Pressure 585 psig Minimum
Quantity: Coker Company shall sell and Clark shall purchase Hydrogen necessary
- --------
to supplement Clark internally produced hydrogen.
Price: The actual cost Coker Company pays for hydrogen under contract with Air
- -----
Products.
Delivery Point/Risk of Loss: This product shall be delivered by pipeline to the
- ---------------------------
Clark Hydrogen Gathering System.
Quantity Measurement: Product quantity measurements shall be taken at HGS meter
- --------------------
XX-XXXX.
Quality Measurement: Grab samples shall be taken at least (3) times per week
- -------------------
and analyzed by gas chromatography.
<PAGE>
Exhibit 10.10
HYDROGEN SUPPLY AGREEMENT
by and between
AIR PRODUCTS AND CHEMICALS, INC.
AND
PORT ARTHUR COKER COMPANY L.P.
1 AUGUST 1999
<PAGE>
TABLE OF CONTENTS
Page
----
1. FACILITY AND UTILITY ASSETS ...................................... 1
2. TERM ............................................................. 3
3. DELIVERY AND HYDROGEN AND UTILITY SPECIFICATIONS ................. 5
4. MEASUREMENT ...................................................... 7
5. QUANTITIES ....................................................... 14
6. FEED AND FUEL SUPPLY TO THE FACILITY ............................. 21
7. PRICE ............................................................ 22
8. PRICE ADJUSTMENT ................................................. 24
9. PERFORMANCE GUARANTEE ............................................ 27
10. TERMS OF PAYMENT ................................................. 29
11. GOVERNMENT REQUIREMENTS .......................................... 30
12. TAXES ............................................................ 34
13. FORCE MAJEURE .................................................... 36
14. WARRANTY ......................................................... 38
15. LIMITATION OF LIABILITY .......................................... 38
16. BUYER'S OBLIGATIONS .............................................. 40
17. TERMINATION ...................................................... 40
18. ASSIGNMENT ....................................................... 43
(i)
<PAGE>
TABLE OF CONTENTS
Page
19. NOTICE ........................................................... 44
20. INDEMNIFICATION .................................................. 46
21. CONFIDENTIALITY .................................................. 48
22. DISPUTE RESOLUTION ............................................... 50
23. GENERAL PROVISIONS ............................................... 51
24. REPRESENTATIONS .................................................. 54
25. DEFINITIONS ...................................................... 56
EXHIBITS
EXHIBIT A TECHNICAL DESCRIPTION
EXHIBIT B [INTENTIONALLY BLANK]
EXHIBIT C [INTENTIONALLY BLANK]
EXHIBIT D UTILITIES AND SERVICES TO BE SUPPLIED BY CLARK
EXHIBIT E DELIVERY POINTS
EXHIBIT F FACILITY PERFORMANCE CAPABILITIES
EXHIBIT G GAS TURBINE PLANNED MAINTENANCE SCHEDULE
EXHIBIT H HYDROGEN ON-STREAM FACTOR EXAMPLE
EXHIBIT I REFINERY FUEL GAS VOLUME ADJUSTMENT
EXHIBIT J BASE FACILITY CHARGE PREPAYMENT SCHEDULE
EXHIBIT K SITE HYDROGEN BALANCE
(ii)
<PAGE>
HYDROGEN SUPPLY AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of August 1999
(the "Effective Date") by and between AIR PRODUCTS AND CHEMICALS, INC., a
corporation organized and existing under the laws of the State of Delaware
(hereinafter called "Seller"), and PORT ARTHUR COKER COMPANY L.P., a limited
partnership organized and existing under the laws of the State of Delaware
(hereinafter called "Buyer").
WITNESSETH THAT:
WHEREAS, Buyer has requirements for hydrogen at its Port Arthur, Texas
plant (together with all additions and modifications to such plant, the "Buyer's
Plant") and desires to purchase such requirements of hydrogen from Seller; and
WHEREAS, in order for Seller to furnish such hydrogen to Buyer, it will be
necessary for Seller to design, fabricate and install a facility for the
manufacture of hydrogen at Clark's refinery in Port Arthur, Texas (the
"Facility");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, Seller agrees to sell to Buyer and Buyer agrees to purchase
from Seller such requirements of hydrogen, upon the following terms and
conditions:
1. FACILITY AND UTILITY ASSETS
1.1 Construction of the Facility. Seller shall design and construct the
Facility, which shall be generally as described in Exhibit A. Seller's
obligation to design and construct the
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Facility shall be relieved on a Day for Day (including the obligation to meet
the Start-up Date) basis in the event Clark fails to meet the obligations and
milestones set forth in Exhibit D and such failure is the proximate cause of
Seller failing to meet its obligations to design and construct the Facility.
Upon completion, the Facility shall be capable of producing hydrogen meeting the
specifications set forth in Section 3.2 in the quantities of hydrogen set forth
in Article 5, in each case, when supplied with Utilities in accordance with the
Product Supply Agreement. The prices set forth herein are predicated on the
scope of supply set forth in Exhibit A.
1.2 Right to Inspect. Buyer and the Independent Engineer shall have the
right upon reasonable written notice to Seller to inspect the on-going
construction of the Facility. For these purposes, the Buyer or Independent
Engineer, as the case may be, shall have reasonable access during normal
business hours to the Facility, storage and deposit areas, sources of materials,
equipment being assembled, already assembled or in operation, equipment being
tested and to any other places or areas occupied by Seller or its subcontractors
in connection with the design and construction of the Facility. Such right of
access shall be subject to the reasonable confidentiality, safety and security
requirements of Seller and the obligation of Buyer and the Independent Engineer
to not interfere with Seller's on-going construction of the Facility.
1.3 Spare Parts. Seller shall provide and maintain an adequate inventory
of spare parts consistent with Prudent Industry Standards. Seller shall ensure
that all such spare parts are delivered prior to the Commencement Date. Any
spare parts withdrawn from the Facility for start-up shall be replaced by Seller
at its own cost.
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2. TERM
2.1 Supply Period. This Agreement shall be effective as of the Effective
Date. The initial supply term of this Agreement shall commence on the date the
Facility is installed and "ready for commercial operation" (the "Commencement
Date"), and shall continue for 246 consecutive calendar months (the "Initial
Term") provided that if Buyer begins taking hydrogen after 6 October 2000 but
before 6 December 2000, the Initial Term shall be reduced by six (6) Days for
each Day after 6 October 2000 but before 6 December 2000 that Buyer has begun
taking hydrogen. Thereafter, this Agreement shall remain in force from year to
year unless terminated in accordance with Article 17. The Initial Term, together
with any extensions, shall be referred to as the "Supply Period". Written notice
of the Commencement Date shall be furnished to Buyer by Seller. For purposes of
this Agreement, "ready for commercial operation" shall mean that hydrogen is
available for supply to Buyer from the Facility at substantially the quantities
and specifications set forth herein. Notwithstanding anything to the contrary in
this Agreement or the Letter Agreement described below, any activities or
obligations related to the Facility will be conducted under and in accordance
with the Letter Agreement dated 7 July 1998 (as amended) between Seller and
Clark (including the obligation to pay termination payments and cancellation
charges) and the Interim Lease until such time as Port Arthur completes
financial closing under the Financing Documents, which will occur on or before
15 August 1999. In the event financial closing does not occur as described, the
provisions of the Letter Agreement shall continue to apply notwithstanding
anything in the Letter Agreement to the contrary. Buyer shall provide written
notice of financial closing to Seller. Upon such notice to Seller, the terms and
conditions in this Agreement shall take effect (other than the last four
sentences in this Section 2.1 which take effect now).
2.2 Start-up Date.
2.2.1 Seller shall cause the Commencement Date to occur on or before
the Startup Date. If Seller fails to achieve the Commencement Date on or before
the Start-up Date, then
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for each Day of delay of the Commencement Date beyond the Start-up Date due to
Seller's acts or omissions. Seller shall pay to Buyer, subject to the Start-up
Damages Cap, liquidated damages of Nineteen Thousand Two Hundred Fifty Dollars
($19,250) per Day for each Day of delay. For purposes of this Agreement.
Seller's acts or omissions shall not include the acts or omissions of Clark.
2.2.2 Buyer shall be ready and able to take the hydrogen on the
Start-up Date and shall not cause a delay in Seller's ability to cause the
Commencement Date to occur. If Buyer is unable to take the hydrogen on the
Start-up Date due to Buyer's acts or omissions or if Seller fails to achieve the
Commencement Date on or before the Start-up Date due to Buyer's or Clark's acts
or omissions, then for each Day of delay, Buyer shall pay to Seller, subject to
the Start-up Damages Cap, a liquidated damage payment of Thirty-eight Thousand
Five Hundred Dollars ($38,500) per Day for each Day of delay; provided, however,
that in no event shall the aggregate amount of Buyer's payment under this
Section 2.2.2 and Clark's payment under Section 2.2.2 of the Product Supply
Agreement exceed a liquidated damage payment of (i) Thirty-eight Thousand Five
Hundred Dollars ($38,500) per Day for each Day of delay or (ii) One Million One
Hundred Fifty-five Thousand Dollars ($1,155,000). Payments by Buyer under this
Section 2.2.2 for each Day of delay up to thirty (30) Days shall be in lieu of
the purchase of the Minimum Quantity of Hydrogen hereunder.
2.2.3 Each party shall provide prompt written notice to the other
party in the event it determines that it shall not meet its obligations set
forth in this Section 2.2. In no event shall one party owe any liquidated
damages payments to the other party during the period of time
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that the other party is also liable for liquidated damage payments under this
Section. In the event Buyer has not met its obligations set forth in Section
2.2.2, the Supply Period shall be automatically extended for three (3) Days for
each Day of delay by Buyer hereunder. In no event shall the Start-up Damage Cap
apply in situations in which either party is not meeting its obligations
hereunder due to a discretionary election by such party to not meet such
obligations.
3. DELIVERY AND HYDROGEN AND UTILITY SPECIFICATIONS
3.1 Delivery. Hydrogen shall be delivered by Seller to Buyer at the
Hydrogen Delivery Point, as set forth in Exhibit E, Title and risk of loss with
respect to hydrogen shall pass from Seller to Buyer at the Hydrogen Delivery
Point (the "Hydrogen Delivery Point").
3.2 Hydrogen Specification. Hydrogen delivered to Buyer shall conform to
the following specifications, provided that the Utilities meet the
specifications contained in Exhibit D.
Volume Basis
------------
H(2) 99.9% (vol) (minimum)
CO-CO(2) 1 ppm (vol) (maximum)
N(2) + Ar 509 ppmv (maximum)
CH(4) 0.1 mol% (max)
O(2) 10 ppmv (max)
NH(3) 10 ppmv (max)
S compounds 0.3 ppmv (max)
HCN 0.3 ppmv (max)
HCL 0.3 ppmv (max)
Hg 0.1 ppmv (max)
MEA 0.1 ppmv (max)
Oil 10 ppmv (max)
Dew Point -40 (degrees)F (max) (@ 1 atm.)
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CO and N2 will be continuously monitored. Analysis of Ar, CH4, O2, NH3 and Oil
will be performed on batch samples once each quarter, unless additional samples
are reasonably requested by Buyer and then as reasonably requested.
Delivery pressure:
Minimum Normal Maximum
------- ------ -------
850 psig 865 psig 910 psig
Delivery temperature:
Minimum Normal Maximum
------- ------ -------
56(degrees)F 100(degrees)F 120(degrees)F
3.3 Waiver of Hydrogen Specification. If the hydrogen does not conform to
the specification set forth in this Article 3 for any reason, Seller shall
promptly inform Buyer of the details of such nonconformance and the expected
duration thereof Buyer shall either reject the hydrogen as nonconforming or
waive the nonconformance, in which case Seller shall continue to produce and
deliver hydrogen and such hydrogen shall be deemed to be within specification
for all purposes of this Agreement. Buyer's failure to reject hydrogen not
meeting specifications will not constitute a waiver of Buyer's right in the
failure to reject subsequent deliveries of hydrogen not meeting specifications.
Should the hydrogen be rejected by Buyer, Seller shall promptly effect
modifications to bring the hydrogen within specification, including curtailing
hydrogen or shutting down the Facility, if necessary; provided, that such work
shall be conducted in a manner that minimizes outages at the Facility; and
provided, farther that such remedial action by Seller shall in no way limit
Seller's obligations or Buyer's rights and remedies as set forth in this
Agreement. To the extent Seller tenders hydrogen having a composition of less
than ninety-nine point nine percent (99.9%) (by volume) and such hydrogen is
accepted by Buyer, the
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price for such non-conforming hydrogen will be proportionately reduced by the
ratio of actual hydrogen composition divided by ninety-nine point nine percent
(99.9%).
4. MEASUREMENT
4.1 Fluid Measurement
4.1.1 Products To Be Measured. For purposes of this Agreement, the
product to be measured on a custody transfer basis is hydrogen.
4.1.2 Measurement Period. Volumes and mass flow will be calculated
and reported on a calendar month basis. The billing Day shall be calculated on a
2400-hour basis beginning at 00:00 each calendar Day.
4.1.3 Unit of Measurement. The unit of volume of hydrogen for all
purposes hereunder shall be a standard cubic foot ("SCF"), measured as one (1)
cubic foot of gas at a temperature of 60(degrees)F and at a pressure of 14.73
psia. Steam shall be measured in thousands of pounds ("Mlbs"). Water shall be
measured in thousand of gallons ("Mgal"). Gallon shall mean a unit of volume
equivalent to 231 cubic inches measured at 60(degrees)F. Feed and refinery fuel
gas shall be measured in millions of British Thermal Units ("MMBTU"), higher
heating value ("HHV").
4.1.4 Measurement System. Seller shall design, install, own, operate
and maintain at Seller's expense, metering systems that are capable of measuring
the quantity of hydrogen to be delivered hereunder and determining compliance
with the specifications set forth herein, in accordance with the applicable
industry standards referenced in this section. Such
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meters shall be connected to an electronic gas measurement ("EGM") system ("EGM
System") as defined in the American Petroleum Institute's MPMS, Chapter 21,
Section 1 "Electronic Gas Measurement."
4.1.5 System Design. The measurement systems for the measurement of
hydrogen, shall be designed in accordance with the current standards prescribed
in the most recent version of the American Petroleum Institute's Manual of
Petroleum Measurement Standards (MPMS) Chapter 14, Section 3, "Concentric,
Square-Edged Orifice Meters" (AGA Report No. 3).
4.1.6 Types of Meters.
Metering system components shall be as follows:
(a) Hydrogen meters (Tag Nos. FE-3040, FE-3000) - Orifice
measurement, Daniel's or equivalent meter tube, flow
conditioning, digital temperature and pressure
transmitters, RTD for temperature sensing, and an online
analytical device to measure hydrogen purity that is
technically acceptable to both parties.
(b) The above-mentioned meters shall have a commercial EGM
flow computer such as Bristol Babbcock, Daniel's, or
equivalent.
All meters shall operate within a .3 to .7 Beta Ratio range in conjunction with
an EGM device. These devices shall utilize transmitters installed in conjunction
with an orifice meter run whose orifice taps are in the vertical plane. The
distance between the orifice tap and the transmitter shall be minimized.
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4.1.7 Temperature Determination. The temperature of the fluid
flowing through each of the meters shall be measured with a temperature device
so installed as to provided an accurate measurement of the flowing temperature
at the primary device. These temperature devices shall be "Smart" RTD type
temperature transmitters, utilizing a 100-ohm platinum sensor. The temperature
device shall be capable of determining the temperature to the nearest 0.1
(degree)F.
4.1.8 Pressure Determination. The static and differential pressures
generated by the fluid flowing through each of the meters shall be measured with
a pressure device so installed as to provided an accurate measurement of the
flowing pressure at the primary device. These pressure devices shall be "Smart"
type pressure transmitters. The differential pressure measuring device's range
shall not exceed 200 inches of water. Dual range differential transmitters may
be considered if operating conditions demonstrate a need. The pressure device
shall be capable of determining the pressure to the nearest 1-lb/1 square inch.
4.1.9 Density Determination. The flowing density for hydrogen shall
be calculated using a modified Benedict-Webb-Rubin (MBWR) equation of state in
accordance with National Institute of Standards & Technology (NIST) standards,
(Journal of Physical & Chemical Reference Data, Volume 11 supplement No. 1,
Titled: "Thermophysical Properties Of Fluids, Argon, Ethylene, Parahydrogen,
Nitrogen, Nitrogentrifluoride, & Oxygen").
4.1.10 Sampling Systems. The hydrogen purity shall be determined by
on-line chromatograph or other mutually agreeable method. All samples shall be
analyzed using current Gas Processors Association (GPA 2261) standard. "Analysis
for Natural Gas and Similar
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Gaseous Mixtures by Gas Chromatography" or Gas Processors Association (GPA
2286) standard, "Tentative Method of Extended Analysis for Natural Gas and
Similar Gaseous Mixtures by Temperature Programmed Gas Chromatography". These
analytical results shall be applied to the volumes measured during the
collection period.
4.1.11 Meter Bypasses. Meter bypasses shall not be allowed.
4.1.12 Calculation/Volume Determination. The quantity of hydrogen
delivered shall be deemed conclusively to be the quantity indicated by the
meters and the EGM System; except when the EGM or meters have ceased to function
or are determined to be commercially inaccurate pursuant to Sections 4.1.18 and
4.1.21.
4.1.13 EGM System. The EGM System shall be capable of calculating
all volumes in accordance with the current standards prescribed in the API MPMS
Chapter 14, Section 3; and American Gas Association Report No. 3, "Orifice
Metering of Natural Gas and Other Hydrocarbon Fluids".
The EGM system shall be capable of establishing an audit trail by
compiling and retaining sufficient electronic data and information for the
purpose of verifying daily and hourly quantities, and shall comply with the
American Petroleum Institute MPMS, Chapter 21, Section 1-Electronic Gas
Measurement. Audit trail information shall be preserved for a minimum of three
(3) years.
The measurement data described in the above paragraph and calculated by
the EGM device (flow computer) shall be preserved and provided for auditing
purposes in a mutually agreeable standard format. Unless mutually agreed
otherwise by the parties, standard format
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shall mean the API Chapter 21, Section 1 compliant electronic format provided by
the manufacturer of the device. In addition, the final custody transfer volumes,
and a log of the changes made between the amounts calculated by the EGM device
and the settlement amounts, shall be available if requested by either party.
Unless a currently unresolved exception exists, all volumes shall be considered
final after two years.
4.1.14 Calibrations General. Seller shall calibrate analyzers and
flow meter instrumentation monthly, or on a mutually agreeable schedule, Seller
shall give Buyer at least two (2) Days prior notice of the dates of the
calibrations, or calibrations should occur per a mutually agreeable schedule.
Buyer shall be permitted to witness such calibrations. Buyer shall have the
right to have a representative present at the time of any installing, cleaning,
changing, repairing, inspecting, testing, calibrating or adjusting done in
connection with the equipment used in measuring deliveries.
4.1.15 Calibration of Chromatograph. Chromatograph calibration shall
be in accordance with the GPA Standard 2261 "Analysis for Natural Gas and
Similar Gaseous Mixtures by Gas Chromatography".
4.1.16 Calibration of EGM Devices. Seller shall calibrate EGM
devices used for custody transfer in accordance with API MPMS Chapter 21,
Section 1, and part 8.
4.1.17 Inspection of Orifice Meter Run. During Facility shutdown
periods for maintenance and repair, the hydrogen orifice plates shall be removed
and inspected to ensure compliance with the current API MPMS Chapter 14, Section
3, Part 2, Specification and Installation Requirements.
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4.1.18 Adjustments. An adjustment shall be in order if, upon any
test, the metering equipment in aggregate is found to be recording inaccurately
by plus or minus two percent (2.0%) or more of the reading at normal flowing
conditions. Registration thereof and payment based upon such registration shall
be corrected at the rate of such inaccuracy for any period of inaccuracy that is
definitely known and/or agreed upon. In the event such period of inaccuracy is
not definitely known and/or agreed upon, the adjustment will be made halfway
back to the preceding calibration. Adjustments shall not extend prior to one
hundred eighty (180) Days from the time the error is determined, unless such
error is a result of improper design or installation of the measuring equipment.
Under no circumstance shall an adjustment extend beyond two (2) years prior to
the date that the error was discovered. Following any test, any metering
equipment found to be inaccurate to any degree shall be adjusted immediately to
record accurately. The maximum zero-cutoff value, which may be programmed for
the differential transmitter reading, is .25 inches.
4.1.19 If for any reason the meter is out of service or repair so
that the quantity of Product deliveries through such meter cannot be ascertained
or computed from the readings thereof, the quantity of Product so delivered
during the period when the meter is out of service or repair shall be determined
on the basis of the first of the following methods which is feasible, as agreed
between the parties hereto.
(a) By using the cumulative volumes from any field "check"
measurement source adjusting for historical differences
between the field meters and custody meters. The Seller
agrees to allow the same provisions for Buyer to
witness and audit such measurement
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that the Seller allows on the custody transfer
measurement equipment:
(b) By correcting the error mathematically if the amount of
such error is ascertainable by calibration, test, or
calculation:
(c) By estimating the quantity from the amount of deliveries
during, preceding, and/or following periods where the
delivery condition were similar and the meters were
recording accurately or:
(d) By any other method which is mutually agreeable.
Any volume or energy revision made by the measurement party following
initial closeout shall not be made without a detailed written explanation of the
revision and such changes must be mutually agreed upon between the parties.
Also, the measurement party shall respond in writing within thirty (30) Days
following receipt of any adjustment request, either by making the requested
volume adjustment or by stating its reasons for not doing so.
4.1.20 Inspection of Records. In accordance with Seller's obligation
under Section 10.3, Seller shall preserve all its original test data, and other
records related to the measurements described in this Article 4 for a period of
at least three (3) years, Seller shall make such records available, together
with calculations therefrom, for inspection, copying or verification by Buyer.
All such records shall be the property of Seller.
4.1.21 Metering Accuracy Statement. Metering accuracy is considered
to be plus or minus 2% of reading at normal flowing conditions.
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To the extent that the requirements of this Section 4.1 result in
additional costs and expenses beyond that already provided by Seller, Buyer
shall compensate Seller for Seller's reasonable additional costs and expenses.
5. QUANTITIES
5.1 Hydrogen. During the Supply Period. Seller shall supply and Buyer
shall purchase all of Buyer's requirements for hydrogen for use by Buyer at
Buyer's Plant in excess of the Internal Hydrogen Production up to a maximum
quantity of 80 MMSCFD of hydrogen (the "Dedicated Hydrogen Quantity") at the
price set forth in Section 7.2. For avoidance of doubt, this supply and purchase
obligation will include without limitation Seller supplying and Buyer purchasing
all of Buyer's requirements for hydrogen up to the Dedicated Hydrogen Quantity
for use in Buyer's hydrocracker (Unit 942) excluding Spill Stream Hydrogen as
defined below. For purposes of this Agreement, "Internal Hydrogen Production"
shall mean (i) the 84.8 MMSCFD of hydrogen which may be produced by Buyer or
Clark from their internal sources at Buyer's Plant or Clark's Plant as set forth
in Cases 1 through 6 in Exhibit K and (ii) 6 MMSCFD (typical) of hydrogen
produced by the pressure swing adsorption unit and compressor owned and operated
by Seller within the battery limits of the Facility to recover such 6 MMSCFD of
hydrogen from Clark's hydrotreater spill streams (the "Spill Stream Hydrogen").
5.2 Additional Hydrogen. In the event Buyer has requirements for hydrogen
in excess of the Dedicated Hydrogen Quantity (the "Supplemental Hydrogen"),
Buyer may purchase such Supplemental Hydrogen from Seller at the prices set
forth in Section 7.3; provided hydrogen is available for delivery to Buyer from
the Facility (as reasonably determined by Seller). In the
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event Buyer wishes to increase the Dedicated Hydrogen Quantity, Buyer and Seller
will negotiate in good faith the price, terms and conditions for such increase
in the Dedicated Hydrogen Quantity. Seller shall have the right to supply any
hydrogen required by Buyer above the Dedicated Hydrogen Quantity by matching the
terms and conditions (including price) obtained by Buyer for such additional
hydrogen requirements from a bona fide third party supplier. In the event Seller
elects not to supply such additional hydrogen requirements to Buyer, Buyer may
purchase such additional hydrogen requirements from such third party supplier
upon such terms and conditions.
5.3 Minimum Hydrogen Purchase. During the Supply Period, Buyer shall pay
for a minimum quantity of hydrogen equal to 5,018.7 MMSCF per calendar quarter
(the "Minimum Quantity of Hydrogen"), regardless of the quantity of hydrogen
actually taken by Buyer. Buyer shall be invoiced at the end of each calendar
quarter a charge for the difference between the Minimum Quantity of Hydrogen and
the hydrogen delivered to Buyer hereunder in such calendar quarter at the price
set forth in Section 7.5. In the event the Dedicated Hydrogen Quantity set forth
herein is increased for any reason, the Minimum Quantity of Hydrogen shall be
increased on a proportional basis. To the extent the Supply Period does not
begin on a calendar quarter, the Minimum Quantity of Hydrogen shall be prorated
on a per Day basis over the Days remaining in such calendar quarter.
5.3.1 Suspension of Minimum Hydrogen Purchase. Buyer's obligation to
pay for the Minimum Quantity of Hydrogen shall be suspended during periods of
time in which Buyer and Seller have jointly scheduled maintenance activities at
their respective facilities;
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provided, however, that such period of suspension shall be limited to a maximum
of twenty-eight (28) consecutive Days (i) every twenty-four (24) months or (ii)
since the last jointly planned maintenance activity, whichever is longer,
beginning on the Commencement Date. For each Day of jointly scheduled
maintenance, the Minimum Quantity of Hydrogen for that quarter shall be reduced
by (5018.7 x 4)/365 MMSCF. Notwithstanding the foregoing, Buyer's right to
suspend the obligation to purchase the Minimum Quantity of Hydrogen shall not be
available and Buyer shall pay for such Minimum Quantity of Hydrogen in
accordance with the provisions of this Agreement if Buyer has not met the
Two-Year Minimum Purchase Obligation. For purposes of this Agreement, the
"Two-Year Minimum Purchase Obligation" shall mean Buyer's obligation to pay for
a quantity of hydrogen in the prior twenty-four (24) month period at the price
set forth in Section 7.2 equal to or greater than the Minimum Quantity of
Hydrogen times eight (8).
5.3.2 Turnback Hydrogen. During the Supply Period, in the event
Buyer will not be able to take all or any portion of the Minimum Quantity of
Hydrogen for a period of time in excess of thirty (30) consecutive Days (the
"Turnback Hydrogen"), Buyer shall give Seller no fewer than ten (10) business
Day's written notice of such event. Such notice shall set forth the quantity of
Turnback Hydrogen and the period of time that Turnback Hydrogen will not be
taken by Buyer and will be available for resale by Seller hereunder. Upon the
receipt of such notice, Seller shall use all reasonable efforts to resell the
Turnback Hydrogen to third party customers and reduce the Minimum Quantity of
Hydrogen hereunder by the volume of Turnback Hydrogen actually sold by Seller
for the period of time in question. In no event shall Seller be required to
resell Turnback Hydrogen on Buyer's behalf in lieu of or before selling Seller's
Hydrogen Volume. For purposes of this Agreement, "Seller's Hydrogen Volume"
shall mean a volume of
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hydrogen in MMSCFD equal to "A" plus "B," where "A" is the current production
capacity in MMSCFD of the facilities owned and/or operated by Seller and its
affiliates connected to the Pipeline Network (other than the Facility) and "B"
is the current production capacity of the Facility in MMSCFD minus 55 MMSCFD.
5.4 Pipeline Hydrogen.
5.4.1 During the Supply Period, in the event the Facility is not
operating or production therefrom is curtailed due to the acts or omissions of
Seller, Seller shall supply (or cause to be supplied) and Buyer shall purchase
Buyer's requirements for hydrogen up to the Dedicated Hydrogen Quantity;
provided hydrogen is available for delivery (as reasonably determined by Seller)
from the Pipeline Network (the "Pipeline Hydrogen"). The price for such hydrogen
shall be at the price set forth in Section 7.2.
5.4.2 During the Supply Period, in the event the Facility is not
operating or production therefrom is curtailed for any reason other than due to
the acts or omissions of Seller, Seller shall supply and Buyer shall purchase
Buyer's requirements for hydrogen up to the Dedicated Hydrogen Quantity;
provided hydrogen is available for delivery (as reasonably determined by Seller)
from the Pipeline Network (the "Pipeline Hydrogen") at the price set forth in
Section 7.4.
5.4.3 During the Supply Period, in the event Buyer has requirements
for hydrogen in excess of the capacity of the Facility, Buyer may purchase
Buyer's additional requirements for hydrogen as Pipeline Hydrogen. The price for
such hydrogen shall be set forth in Section 7.4.
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5.5 Hydrogen Order Rate. Seller shall operate the Facility to produce and
deliver hydrogen at a reasonably uniform rate of flow and at the approximate
rate of production ordered by an authorized representative of Buyer (the
"Hydrogen Order Rate") up to the Dedicated Hydrogen Quantity. Seller will record
in its operating records Hydrogen Order Rates and changes thereto requested by
Buyer's representative and the quantities delivered to Buyer. Seller shall
adjust the approximate rate of production and delivery of hydrogen as requested
by an authorized representative of Buyer to a different approximate rate of
production and delivery in a timely mailer. Rate changes, including start-ups
and shutdowns of the facility, will be performed in a safe and efficient manner
and in a fashion which will minimize thermal stresses to the Facility. Seller
shall use commercially reasonable efforts to achieve the typical elapsed time
for changes (from commencement by Seller of actions to make rate change to
completion of such change) as follows:
Type of Change Typical Elapsed
in Rate of Delivery Time for Change
------------------- ---------------
To change operating rate of Three (3) hours for rate
the Facility when in decreases of 40%.
operation. Four (4) hours for rate
increases of 40%
(smaller changes pro-rated).
To resume the flow of Twenty-four (24) hours.
hydrogen during a cold
restart of the Facility
To resume the flow of
hydrogen during a hot restart
of the Facility:
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To 50% of Dedicated Eight (8) hours.
Hydrogen Quantity'
To 100% of Dedicated Sixteen (16) hours.
Hydrogen Quantity
To reduce operating Six (6) hours.
rate of the Facility after
a total curtailment of
flow by Buyer.
5.5.1 With respect to this Section, Hydrogen Order Rate changes
which are more than five percent (5%) of the then current Hydrogen Order Rate
shall be limited to a total of fourteen (14) in any seven (7) Day period. In
addition, Buyer shall exercise commercially reasonable efforts to minimize
thermal cycling of the Facility through its Hydrogen Order Rate changes. Should
the number of Hydrogen Order Rate changes exceed the limits described above,
Seller shall determine the additional cost, if any, of such Hydrogen Order Rate
changes on Seller's labor and maintenance costs, and Buyer shall reimburse
Seller for such additional costs. Buyer shall have the right to audit at their
cost and at reasonable business hours, all available supporting documentation
associated with such reimbursement obligations prior to payment. Any quantities
of hydrogen ordered by Buyer under this Agreement but not taken by Buyer for any
reason shall be deemed to be delivered by Seller to Buyer for purposes of this
Agreement. It is understood that Seller may operate the Facility in excess of
the Hydrogen Order Rate for purposes of supplying hydrogen to the Pipeline
Network.
5.6 Capacity Curtailment. In the event that natural gas supply pressure to
the Facility falls below 500 psig (measured at the Facility's inlet flange),
Seller's steam methane reformer
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hydrogen production capacity will be reduced. By way of illustration, at 450
psig natural gas supply pressure, steam methane reformer hydrogen production
capacity is expected to be approximately 79 MMSCFD. In such event, Buyer's
Dedicated Hydrogen Quantity shall be reduced by an amount equal to eighty
percent (80%) of the amount of the shortfall in (i) the 100 MMSCFD capacity of
the steam methane reformer or (ii) the current utilized capacity, whichever is
less. Hydrogen supplied to Buyer in excess of the reduced Dedicated Hydrogen
Quantity shall be at the Pipeline Hydrogen Charge.
5.7 Scheduled Maintenance. The parties shall give each other as much
notice as is reasonably possible of scheduled maintenance periods at their
respective facilities that will affect the ability of the parties to deliver or
use hydrogen, but in no event shall such notice be less than sixty (60) Days.
The parties shall use commercially reasonable efforts to coordinate (i)
maintenance shutdowns at their respective facilities and (ii) any other
maintenance activities at such facilities that will affect the ability of either
party to operate its facilities. The parties acknowledge that the Facility will
require a scheduled maintenance period (i) no later than twelve (12) months
after the Commencement Date, lasting approximately ten (10) days in aggregate,
and (ii) at approximately twenty-four (24) month intervals thereafter lasting
approximately ten (10) days in aggregate for each outage. In addition, the
parties acknowledge that the gas turbine generator will undergo maintenance in
accordance with the schedule attached hereto as Exhibit G. Seller shall make all
reasonable efforts to coordinate scheduled downtime of the gas turbine generator
with scheduled downtime of the steam methane reformer.
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5.8 Operations Interface Meetings. The parties shall conduct, on at least
a quarterly basis, operations interface meetings to review (i) upcoming events
which may impact the parties, (ii) significant safety, operational and quality
changes, (iii) expected rate and feedstock changes and (iv) any other matters
related to this Agreement.
6. FEED AND FUEL SUPPLY TO THE FACILITY
6.1 Refinery Fuel Supply to the Facility. In each month during the Supply
Period, under the Product Supply Agreement, Clark may at Clark's option provide
refinery fuel gas to Seller for use at the Facility for the production of
hydrogen for Buyer and for Seller's requirements for delivery of hydrogen into
the Pipeline Network, in accordance with Section 10.2 of Exhibit D.
6.1.1 In determining the value of refinery fuel provided to the
Facility by Clark, the actual stream composition and heating value shall be
used.
6.1.2 Refinery fuel provided to the Facility by Clark, shall be
valued per MMBTU, higher heating value (HHV) where each MMBTU of refinery fuel
gas is multiplied by an efficiency factor which shall be calculated in
accordance with Exhibit I, the monthly sum of which hereinafter is referred to
as "Rfa". Rfa shall be valued on a monthly basis at the unit price for natural
gas for month n.
6.2 Natural Gas Supply to the Facility. Seller will supply or arrange for
the supply of natural gas to satisfy the requirements of the Facility. The price
for natural gas, "NG", shall be equal to the weighted average actual unit cost
of natural gas in dollars per MMBTU, HHV,
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delivered to the Facility's inlet flange, including all taxes, rounded off to
three decimal places. Upon request, Seller shall provide Buyer with access to
any and all information forming the basis for the calculation of Seller's price
for natural gas, NG, for the Facility.
6.3 Natural Gas Supply Agreements. Buyer reserves the right to review and
approve the natural gas supply agreement(s) that Seller enters into for the
Facility, such approval not to be unreasonably withheld.
7. PRICE
7.1 Base Facility Charges. During the Supply Period, Buyer shall pay
Seller monthly the following Base Facility Charges ("BFC"):
Hydrogen Compression $ 75,966/mo.
Condensate Snipper $ 5,873/mo.
The Base Facility Charges shall be payable beginning on the Commencement Date
and shall be paid regardless of the quantity of hydrogen taken by Buyer. The
Base Facility Charges shall be adjusted in accordance with Section 8.1. Buyer
may elect to pre-pay a lump sum for the capital related portion of the Base
Facility Charges in accordance with the provisions of Exhibit J.
7.2 Dedicated Hydrogen Charge. During the Supply Period, Buyer shall pay
Seller monthly a charge of $1.278/MSCF for all hydrogen delivered by Seller to
Buyer from the Facility up to the Dedicated Hydrogen Quantity (the "Dedicated
Hydrogen Charge").
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7.3 Supplemental Hydrogen Charge. During the Supply Period. Buyer shall
pay Seller monthly a charge of $1.585/MSCF for all Supplemental Hydrogen
delivered by Seller to Buyer (the "Supplemental Hydrogen Charge").
7.4 Pipeline Hydrogen Charge. During the Supply Period, Buyer shall pay
Seller monthly a charge of $1.585/MSCF for all Pipeline Hydrogen delivered by
Seller to Buyer (the "Pipeline Hydrogen Charge").
7.5 Hydrogen Non-Consumption Charge. During the Supply Period, for any
shortfall in Buyer's hydrogen purchase activity, Buyer shall pay Seller
quarterly a charge equal to the then current Dedicated Hydrogen Charge ("DHC")
minus the natural gas-related component of the DHC multiplied by such shortfall.
Such shortfall (if any) shall be equal to the difference between the Minimum
Quantity of Hydrogen and the volume of hydrogen delivered to Buyer hereunder in
such calendar quarter (but only if such difference is a positive number). In
addition, in respect of efficiency effects from operating the Facility at
reduced capacity, Buyer shall pay Seller a charge ("Efficiency Charge") based on
the actual quantity of hydrogen produced by the Facility in such calendar
quarter. Such charge shall be calculated as follows:
Efficiency Charge ($) = V x DE x NG(3) x days in the quarter
Where:
V= the actual daily volume of hydrogen produced by the steam methane
reformer within the Facility in such quarter, in MMSCFD, excluding
Facility outages.
DE is from the table below
NG(3) is the average cost of natural gas in ($/MMBtu) for such quarter
determined by taking the average of NG for each of the quarter's
three months.
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Where the actual daily volume, V, was: DE shall equal:
-------------------------------------- ---------------
less than 75MMSCFD and more than 3.3
or equal to 70MMSCFD
less than 70MMSCFD and more than 6.6
or equal to 65MMSCFD
less than 65MMSCFD and more than 10.0
or equal to 60MMSCFD
less than 60MMSCFD and more than 16.8
or equal to 55MMSCFD
less than 55MMSCFD and more than 23.5
or equal to 50MMSCFD
less than 50MMSCFD and more than 30.3
or equal to 45MMSCFD
less than 45MMSCFD 37.0
7.6 One Time Charges. No later than 1 September 2000, Buyer shall pay
Seller a lump sum for each of the following items:
Flare Stack $521,180
Control Building Protection $300,000 [Final price pending]
8. PRICE ADJUSTMENT
8.1 Base Facility Charges ("BFC"). The Base Facility Charges set forth in
Section 7.1 shall be adjusted each month after the Commencement Date as follows:
8.1.1 For Hydrogen Compression:
BFC(n) = BFC(0) x [0.71 + 0.29 x (0.25 x PPIn/PPIc + 0.75 x Ln/Lc]
Where:
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BFC(0) = $75.966/month
BFC(n) = Base Facility Charge for billing month n
L(n) = Employment Cost Index for billing month n
L(c) = Employment Cost Index at the Commencement Date
PPI(c) = PPI for billing month n
PPI(c) = PPI at the Commencement Date
8.1.2 For Condensate Stripper:
BFC(n) = BFC(0) x [0.70 + 0.30 x (0.25 x PPI(n)/PPI(c) + 0.75 x
L(n)/L(c))]
Where:
BFCo = $5,873/month
BFCn = Base Facility Charge for billing month n
Ln = Employment Cost Index for billing month n
Lc = Employment Cost Index at the Commencement Date
PPIn = PPI for billing month n
PPIc = PPI at the Commencement Date
8.2 Dedicated Hydrogen Charge ("DHC"). The Dedicated Hydrogen Charge set
forth in Section 7.2 shall be adjusted each month after the Commencement Date as
follows:
DHC(n) = DHC(o) x [0.2 + .71 x NG(n)/NG(0) + 0.09 x (08 x L(n)/L(c) + 0.2
x PPI(n)/PPI(c)]
Where:
DHC(0) = $l.278/MSCF
DHC(n) = Dedicated Hydrogen Charge for billing month n
L(n) = Employment Cost Index for billing month n
L(c) = Employment Cost Index at the Commencement Date
PPI(n) = PPI for billing month n
PPI(c) = PPI at the Commencement Date
NG(n) = Average cost of natural gas for the Facility in billing
month n
NG(o) = $2.25/MMBTU
8.3 Supplemental Hydrogen Charge ("SHC"). The Supplemental Hydrogen Charge
set forth in Section 7.3 shall be adjusted monthly as follows:
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SHC(n) = SHC(0) x [0.2 + .71 NG(n)/NG(0) + 0.09 x (0.8 x L(n)/L(c) + 0.2 x
PPI(n)/PPI(c))]
Where:
SHC(0) = $1.585/MSCF
SHC(n) = Supplemental Hydrogen Charge for billing month n
NG(n) = Average cost of natural gas for the Facility in billing
month n
NG(0) = $2.25/MMBTU
L(n) = Employment Cost Index for billing month n
L(c) = Employment Cost Index at the Commencement Date
PPI(n) = PPI for billing month n
PPI(c) = PPI at the Commencement Date
8.4 Pipeline Hydrogen Charge ("PHC"). The Pipeline Hydrogen Charge set
forth in Section 7.4 shall be adjusted monthly as follows:
PHC(n) = PHC(0) x ((.20 + .65 x NG(n)/NG(0) -- 0.10 x L(n)/L(0) +/-
0.05 x P(n)/P(0))
Where:
PHC(0) = $1.585/MSCF
PH(n) = Pipeline Hydrogen Charge for billing month n.
NG(0) = $2.25/MMBTU
NG(n) = Seller's average cost of natural gas for Pipeline
Plants during the preceding month in $/MMBTU.
L(0) = Employment Cost Index for August 1998
L(n) = Employment Cost Index for billing month n
P(0) = 50.035/KWH
P(n) = Seller's average cost of electricity for Pipeline
Plants during the preceding month in $/KWH
8.5 Indices. For purposes of Sections 8.1 through 8.4. the following
indices shall be used:
L = Employment Cost Index. Total Compensation, Private Industry
Workers, Professional Specialty and Technical, not seasonally
adjusted.
PPI = Producer Price Index. Chemical and Manufacturing Industries,
Machinery Equipment and Parts, Code 35591.
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P = Producer Price Index. Steel Mill Products, 10-17
LI = Average Weekly Earnings Index, SIC Code 3511 (Turbine)
8.6 Change of Indices. In the event any of the indices referred to in
Sections 8.1 through 8.5 cease to be published as constituted as of the
Effective Date hereof, the parties shall mutually agree upon a suitable
substitute index as required for purposes of this Article 8. In the event either
party believes an index no longer accurately reflects the intent of the parties
in choosing such index, such party may notify the other party of such belief and
the parties shall negotiate in good faith a substitute index. In no event shall
either party have the right to exercise such right more than one (1) time every
five (5) Contract Years. Seller shall use the most recently available value
(whether preliminary, estimated or final) for each index at the time Seller
prepares each invoice.
8.7 Estimated Natural Gas Costs. In the event that the average actual cost
of natural gas for billing month n is not available at the time of billing then
an estimated cost of natural gas may be used, such estimate to be based upon the
best natural gas volume and price information available at the time; provided,
however, if estimated costs are used then an adjustment for actual costs will be
made no later than the next billing cycle following the reasonable availability
of such actual cost information.
9. PERFORMANCE GUARANTEE
9.1 On-Stream Guarantee. Seller guarantees that Seller will produce and
deliver hydrogen within specification at the Hydrogen Order Rate requested by
Buyer with a minimum
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On-Stream Factor of ninety-eight percent (98%). As used herein, the term
"On-Stream Factor" means the following:
(X+Y)/N x 100% = "On-Stream Factor"
Where:
X = Hours during the Contract Year which hydrogen meeting the
specifications set forth herein was supplied by Seller as
adjusted for hydrogen curtailment as set forth below.
Y = Hours during the Contract Year which hydrogen could have
been supplied by Seller but for the occurrence of any of the
following: events of Force Majeure; scheduled maintenance
outages by Seller; provided, however, that in no event shall
the number of hours credited for such scheduled maintenance
outages in any Contract Year exceed the number of hours
allocated to such Contract Year set forth in Section 5.7;
direction from Buyer from time to time to cease operation;
acts by Buyer or third parties not within the control of
Seller to the extent such acts do not constitute Force
Majeure; or Buyer's failure to take hydrogen.
N = Total number of hours during the Contract Year
During any period in which Seller is supplying hydrogen at a curtailed rate, "X"
above shall be reduced by the percentage of curtailment caused by Seller
relative to the Hydrogen Order Rate which is in effect during such period of
curtailment. For example, if delivery to Buyer is curtailed by thirty percent
(30%) for a period of ten hours, "X" will be reduced by thirty percent (30%) of
the ten hours or three hours. In the event Seller curtails Buyer's Hydrogen
Order Rate to an extent which causes Buyer's hydrocracker to become
non-operational, "X" will be reduced to zero during such period of curtailment.
9.2 An account (hereinafter referred to as the "Bonus/Liquidated Damage
Account") will be established to record the on-stream performance on an annual
basis. If the On-Stream Factor
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is greater than 98%, the number of hours in excess of 98% will be credited to
the Bonus/Liquidated Damage Account: conversely, if the On-Stream Factor is less
than 98%, the number of hours less than 98% will be debited to the
Bonus/Liquidated Damage Account. The Bonus/Liquidated Damage Account shall be
reconciled after two complete Contract Years of On-Stream performance have been
recorded in the Bonus/Liquidated Damage Account, and annually thereafter based
on the On-Stream performance during the most recent two-year period as recorded
in the Bonus/Liquidated Damage Account, as follows: If a debit balance exists in
the Bonus/Liquidated Damage Account after such two-year period, Seller shall pay
Buyer a liquidated damage payment equal to the number of hours in the debit
balance multiplied by $5,200 per hour. If a credit balance exists in the
Bonus/Liquidated Damage Account after such two-year period, Buyer will pay
Seller a bonus payment equal to the number of hours in the credit balance
multiplied by $5,200 per hour. In no event shall Buyer's bonus payment exceed
$900,000 or Seller's liquidated damage payment exceed $1,800,000 in the
aggregate during any Contract Year. Attached hereto as Exhibit H is an example
of this calculation.
10. TERMS OF PAYMENT
10.1 Invoicing. During the Supply Period, Seller shall deliver an invoice
to Buyer on or before the tenth (10th) Day of each calendar month (i) for
quantities of hydrogen delivered or deemed to be delivered in the preceding
calendar month in accordance with Article 5, (ii) for the Base Facility Charges
for the current calendar month, and (iii) for other sums due hereunder and
related to the preceding calendar month (or calendar quarter, if appropriate).
Seller may deliver such invoice by mall, facsimile, electronic data interchange
or other mutually acceptable means.
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All payments due Seller hereunder shall be made to Seller by electronic transfer
at the location indicated on the invoice, payable within thirty (30) Days from
date of invoice. It is agreed that the timely payment by Buyer of all undisputed
amounts due and owing to Seller hereunder is an express condition to the
continued performance by Seller of its obligations hereunder.
10.2 Interest Rate for Late Payments. All amounts payable hereunder if not
paid when due will accrue interest daily at the annual rate of interest
announced from time to time by The Chase Manhattan Bank, N.A. at its offices
located in New York, New York as its prime commercial interest rate for U.S.
Dollar-denominated loans originated in the United States plus two percent (2%)
calculated from the due date of such payment until the date of payment. In the
event an amount is subject to a valid dispute, interest will not accrue on such
amount if the dispute is resolved in favor of Buyer.
10.3 Recordkeeping; Access to Books and Records. Seller shall, in
accordance with good business practices, keep and maintain such books, records,
accounts and other documents which are sufficient to reflect accurately and
completely all amounts which form the basis for any invoice submitted hereunder,
including, without limitation, records maintained pursuant to Section 4.1.20
hereof Buyer shall have the right to inspect and examine, during regular
business hours and on not less than ten (10) calendar Days notice to Seller all
records maintained pursuant to this Section.
11. GOVERNMENT REQUIREMENTS
11.1 Government Requirements. If the facilities producing hydrogen for
delivery to Buyer hereunder must be modified, additional equipment must be
installed, or tests, studies or
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any other action must be undertaken with respect to such facilities or their
operations to comply with any anticipated, proposed or final regulation, order,
law, decree or other requirement of any governmental authority ("Regulation")
which in Seller's reasonable judgment may require such modifications, tests or
other action, Seller (or the facility owner) will effectuate such modifications,
tests or other action following (i) in the case of a final Regulation,
consultation with Buyer concerning the anticipated costs and expenses thereof to
confirm that there is not a more cost effective manner to comply with such final
Regulation or (ii) in the case of an anticipated or proposed regulation, the
consent of Buyer (which consent shall not be unreasonably withheld); provided,
however, that Seller shall have given Buyer prompt notice of its knowledge of
any proposed Regulation. Notwithstanding the foregoing, in the event Buyer is
responsible for any obligation hereunder, Seller agrees (i) to refrain from
objecting or in any way opposing an application by Buyer to intervene before any
regulatory' body or judicial forum, in which the approval of such Regulation is
at issue, or otherwise fully participate before such body or forum, (ii) that if
Buyer is unable to intervene or participate on its own behalf before any
regulatory body or judicial forum in which the approval of such Regulation is at
issue, upon Buyer's request, Seller shall intervene on Buyer's behalf at Buyer's
expense, (iii) that Buyer shall have the right to pursue, or participate in, an
appeal of any final Regulation before the relevant legislative, judicial or
government authority of competent jurisdiction, and (iv) that if Buyer is unable
to pursue an appeal of any final Regulation on its own behalf, upon Buyer's
request, Seller shall pursue an appeal on Buyer's behalf at Buyer's expense,
except in each case (i) through (iv), any action which Seller reasonably
believes would have a material adverse impact on Seller or its business. The
parties agree to cooperate with one another in order to minimize
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any costs and expenses incurred pursuant to this Section. Buyer's Pro Rata Share
of the total costs and expenses of such modifications, tests or other action,
including both fixed and variable costs, additional operating costs, applicable
overheads, general and administrative expenses, financing charges and a
reasonable fee, all in accordance with Seller's normal accounting practices,
shall be promptly reimbursed to Seller by Buyer as such costs and expenses are
incurred; provided, however, that should the aggregate amount of Buyer's Pro
Rata Share of such costs and expenses related to any single Regulation exceed
$250,000, Buyer shall promptly reimburse Seller an amount equal to $250,000 and
thereafter Seller and Buyer shall establish a mechanism for reimbursement of the
balance of such costs and expenses by Buyer through periodic payments over the
remainder of the Supply Period. Buyer shall have the right to audit at its cost
and at reasonable business hours, all available supporting documentation
associated with such modifications prior to payment. Seller shall be responsible
for its share of any costs and expenses incurred pursuant to this Section.
11.2 Contaminants. It is understood and contemplated by the parties that
the Facility is designed to use Utilities and air containing only normal
contaminants, as more fully described in Exhibit D, and therefore if
contaminants in the Utilities or air, or changes in the construction or
operation of facilities in or about Buyer's Plant, justify the relocation,
repair, modification or removal of any equipment comprising the Facility or the
installation of additional equipment, Seller shall notify Buyer, and at Buyer's
election. Seller shall either (i) make such relocation, repair, modification, or
removal or (ii) install such additional equipment. Buyer shall reimburse Seller
for any extra costs incurred and a reasonable fee all in accordance with
Seller's normal accounting practices as such costs are incurred; provided,
however that should the aggregate
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amount of such extra costs exceed $250,000. Buyer shall promptly reimburse
Seller an amount equal to $250,000 and thereafter Seller and Buyer shall
establish a mechanism for reimbursement of the balance of such costs by Buyer
through periodic payments over the remainder of the Supply Period. Buyer shall
have the right to audit at its cost and at reasonable business hours, all
available supporting documentation associated with such reimbursement
obligations prior to payment.
11.3 Licensing, Permits and Approvals. Each party shall obtain, in a
timely fashion, and maintain in effect, including all renewals and updates
thereof any and all professional licenses, Permits or other government approvals
necessary for the performance of its obligations hereunder and any activities
related hereto, including, without limitation, air emissions permits from the
Texas Natural Resource Conservation Commission.
11.4 Compliance with Law and Prudent Industry Standards. Each party shall
perform its obligations hereunder and any activities related hereto in
compliance with all Applicable Laws and Permits and in accordance with Prudent
Industry Standards and shall not undertake any act or omission which will cause
the other party to fail to comply with Applicable Laws and Permits and in
accordance with Prudent Industry Standards. Without limiting the generality of
the foregoing, neither party shall undertake any act or omission which would
cause or be likely to cause it or the other party to be subject to regulation as
an "electric utility", "electric corporation", "electrical company", "public
utility", "retail electric utility", "retail electric provider", "power
generation company" or a "public utility holding company" (as such terms may be
revised from time to time) under any Applicable Laws (an "Electric Utility").
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12. TAXES
12.1 Seller shall bear and pay all federal, state, and local taxes based
upon or measured by its net income, and all franchise taxes based upon its
existence or its general right to transact business. The prices as stated herein
do not include any taxes, charges, or fees other than as stated in the prior
sentence. If any other taxes, charges or fees, now or hereafter imposed by or
under the authority of any federal, state or local law, rule or regulation
howsoever denominated and howsoever measured (including, but not limited to,
energy taxes, value added taxes, pollution or environmental taxes, taxes on
services, real estate taxes, sales and use taxes and ad valorem taxes), are
imposed on the Facility, the Facility Site, the inventory, or upon the operation
or maintenance of the Facility, or upon or measured by the production,
manufacture, storage, sale, transportation, delivery, use or consumption of
hydrogen. Buyer's Pro Rata Share of such taxes, charges, or fees shall be paid
directly by Buyer, or if paid by Seller shall be invoiced to Buyer as a separate
item and paid by Buyer to Seller. Seller shall be responsible for its share of
any taxes, charges, or fees incurred pursuant to this Section.
12.2 Property Taxes and Payment in-lieu-of Tax Agreements. The parties
understand and agree that Seller has not independently negotiated or obtained,
and does not intend to independently negotiate or obtain, directly with any
taxing authority having jurisdiction or potential jurisdiction over the Facility
or Facility Site, any property tax relief, property tax abatements or
incentives, or agreements in-lieu-of taxes, that would apply to the Facility,
the Facility Site or any of Seller's property to be located at the Facility
Site, it being understood by the parties hereto that Buyer has initiated such
matters directly and desires to continue such efforts. Buyer represents to
Seller that it has secured or is in the process of negotiating and
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obtaining agreements for payments in-lieu-of taxes or abatement of property
taxes ("Property Tax Agreements") with the City of Port Arthur, Jefferson
County, the Port Arthur Navigation Agency, Drainage District Number 7, and
perhaps other governmental authorities, which allow or will allow Seller (and
any assignee of Seller), Seller's Facility, the Facility Site and Seller's (or
an assignee's) property at the Facility Site, to be included (by assignment,
amendment or otherwise) under the terms of such Property Tax Agreements. Based
upon the foregoing, Buyer agrees that with respect to property taxes, ad valorem
taxes and any payments due under any Property Tax Agreements that are imposed
upon or arise in connection with the construction, ownership, possession,
operation or control of the Facility, the Facility Site or Seller's (or an
assignee's) property at the Facility Site, Buyer hereby agrees that it shall be
responsible for, as between Seller and Buyer. Buyer's Pro Rata Share of
property, ad valorem taxes and payments under the Property Tax Agreements, and
Buyer agrees to reimburse Seller therefore and indemnify, defend and hold
harmless Seller therefrom. Seller agrees to cooperate reasonably with Buyer and
Buyer agrees to cooperate reasonably with Seller in obtaining Property Tax
Agreements that will include or cover Seller (and any assignee of Seller), the
Facility, Facility Site and Seller's (or an assignee's) property at the Facility
Site provided that (i) such cooperation shall be at Buyer's expense with respect
to third party costs, if any, and (ii) such cooperation shall not have an
adverse impact upon Seller (taking into account Buyer's obligations set forth in
the preceding sentence). Seller shall cooperate with Buyer to the extent
commercially reasonable to hire local contractors who are deemed by Seller to be
qualified to provide the services required.
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13. FORCE MAJEURE
13.1 Definition. Neither party hereto shall be considered in default in
the performance of its obligations hereunder or be liable in damages for failure
or delay in performance which is due to Force Majeure, provided that the excuse
of performance shall be of no greater scope and no longer duration than is
reasonably required because of the Force Majeure. For purposes of this
Agreement, "Force Majeure" shall include any act or event that prevents or
delays the performance by either party of its obligations hereunder if and to
the extent (i) such act or event is beyond such party's reasonable control and
not the result of such party's fault or negligence, (ii) such party has been
unable to overcome the consequences of such act or event by the exercise of
reasonable commercial efforts, which may include the reasonable expenditure of
funds, and (iii) such party has given the other party notice within ten (10)
Days of such party's knowledge of the act or event giving rise to such Force
Majeure. Subject to the satisfaction of the foregoing conditions, Force Majeure
shall include, but not be limited to, the following acts or events, or any
similar and equally serious acts or events which prevent or delay the
performance by a party of its obligations hereunder: acts of God; acts of the
public enemy; acts by Seller, in the case of Buyer, or acts by Buyer or Clark,
in the case of Seller; wars; sabotage; insurrections; riots; strikes; boycotts
or lockouts (except any such strike, boycott or lockout that involves Seller's
or Buyer's employees (as the case may be) and is not national or industry-wide
or is not caused by the other party's employees); a determination that such
party is subject to regulation as an Electric Utility under Applicable Law
(regardless of whether delivery of power is prevented); vandalism; blockages;
labor disputes; boycotts; fires; explosions; vapor releases; natural disasters;
floods; perils of the sea; lightning; wind; ability to obtain or maintain any
easement.
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rights-of-way, permit or license; actions of a court or public authority
(including the denial, revocation or nonrenewal of a permit, certificate or
license); accidents or failure of equipment or machinery; or allocation or
failure of normal sources of supply of materials, transportation, energy or
utilities or other causes of a similar or dissimilar nature. Under no
circumstances will inability to pay monies or other economic difficulty on
behalf of Buyer or Seller be construed to constitute Force Majeure, frustration
or impossibility of performance.
13.2 Efforts to Remedy. The affected party shall use all commercially
reasonable efforts to remedy its inability to perform, except that neither parry
hereto shall be required to bring to an end any strike or other concerted act of
workers.
13.3 Notice. The party affected by an event described in Section 13.1
shall, promptly upon learning of such event and ascertaining that it has
affected or will affect such party's performance hereunder, give notice to the
other party and to the Financing Parties, stating the nature of the event, its
anticipated duration and any action being taken to avoid or minimize its effect.
13.4 Payment. Nothing contained in Section 13.1 above shall relieve Buyer
of its obligation to pay any charges due hereunder. Notwithstanding the
foregoing sentence, if during any Contract Year there is a period of Force
Majeure which prevents Seller from supplying hydrogen in accordance with the
terms and conditions contained herein, and such period exceeds thirty (30)
consecutive Days, then Buyer may elect to suspend payment of the charges due
hereunder for the Minimum Quantity of Hydrogen on the next Day of Force Majeure
until Seller's performance hereunder resumes; provided, however, that such
payment abatement shall
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not be available to Buyer if the Force Majeure event preventing Seller from
supplying hydrogen hereunder is caused by the acts or omissions of Buyer or
Clark. The Supply Period shall be extended for three (3) Days for each Day of
suspension of the charges in accordance with this Section at Seller's option.
14. WARRANTY
14.1 Conformance to Specification. Seller warrants that hydrogen delivered
to Buyer shall conform to the specification set forth in Section 3.2, and that
at the time of delivery Seller shall have good title and right to transfer the
same and that the same shall be delivered free and clear of any lien or other
encumbrances.
14.2 Limitations. THE WARRANTIES SET FORTH IN SECTION 14.1 ARE IN LIEU OF
ALL OTHER WARRANTIES BY SELLER, EXPRESS OR IMPLIED, IN FACT OR BY LAW,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
15. LIMITATION OF LIABILITY
15.1 Determination of the suitability of the hydrogen furnished hereunder
for the use contemplated by Buyer is the sole responsibility of Buyer, and
Seller shall have no responsibility in connection therewith.
15.2 Buyer acknowledges that there are hazards associated with the use of
hydrogen, that it understands such hazards, and that it is the responsibility of
Buyer to warn and protect its
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employees and others exposed to such hazards through Buyers use of hydrogen.
Seller will provide Buyer with copies of Material Safety Data Sheets relating to
hydrogen for Buyer to make such warnings, and Buyer shall hold harmless,
indemnify and defend Seller from and against any liability incurred by Seller
because such warnings were not made, Buyer assumes all risk and liability for
loss, damages or injury to persons or to property of Buyer or others arising out
of the presence or use of hydrogen or from the failure to make such warnings.
15.3 Buyer acknowledges that it can obtain and install devices to sample
hydrogen delivered to determine its compliance with specifications prior to use.
15.4 SELLER'S SOLE LIABILITY AND BUYER'S SOLE AND EXCLUSIVE REMEDY FOR THE
NON-DELIVERY OF HYDROGEN OR FOR THE DELIVERY OF HYDROGEN NOT CONFORMING TO
SPECIFICATIONS SHALL BE AS SET FORTH IN ARTICLE 9.
15.5 EXCEPT AS EXPRESSLY PROVIDED IN SECTION 15.4, SELLER SHALL NOT BE
LIABLE IN CONTRACT OR TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE OR STRICT
LIABILITY) FOR ANY OTHER DIRECT DAMAGES. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, BUT EXCEPT IN THE CASE OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SELLER, SELLER SHALL NOT BE LIABLE IN CONTRACT OR TORT (INCLUDING WITHOUT
LIMITATION NEGLIGENCE OR STRICT LIABILITY) FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING BY WAY OF ILLUSTRATION AND NOT
OF LIMITATION, LOSS OF USE, LOSS OF WORK IN
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PROCESS, DOWN TIME OR LOSS OF PROFITS, AND SUCH LIMITATION ON DAMAGES SHALL
SURVIVE FAILURE OF AN EXCLUSIVE REMEDY.
15.6 Claims for non-delivery of hydrogen or delivery of non-specification
hydrogen shall be void unless notification is given to Seller's operating
personnel promptly upon discovery and confirmed in writing by Buyer within five
(5) working Days thereafter.
16. BUYER'S OBLIGATIONS
16.1 Permits. Buyer agrees to assist Seller as reasonably requested in any
activity related to Sellers obligations under Section 11.3.
17. TERMINATION
17.1 Termination for Default. Subject to the rights of the Financing
Parties under Section 17.1.1, this Agreement may be terminated by either party
on account of any material default of the other in carrying out the terms
hereof; provided, however, that if the party so in default (or in the case of
Buyer, the Financing Parties as described in Section 17.1.1) shall, within sixty
(60) Days after written notice thereof from the other party, cure such default
or prepare a program to effect such cure and thereafter diligently pursue such
program to completion within a reasonable period of time, then in either case
the right of termination shall be nullified and shall be of no effect; provided
further, however, that the curing of any such default shall not affect the right
to terminate this Agreement as aforesaid in the event of subsequent material
defaults.
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17.1.1 Rights of Financing Parties. For so long as Buyer's
obligations under the Financing Documents are outstanding, Buyer and Seller
agree (i) to furnish the Financing Parties all notices of default delivered
pursuant to Section 17.1 concurrently with delivery to the defaulting party,
(ii) Seller shall not terminate this Agreement if the Financing Parties have
cured Buyer's default within twenty (20) Days of receipt by the Financing
Parties written notice to the Financing Parties that (x) Seller has a matured
right to terminate this Agreement and (y) Seller intends to so terminate this
Agreement, and (iii) Buyer shall not terminate this Agreement without the
consent of the requisite percentage of Financing Parties as set forth in the
Financing Documents.
17.2 Termination Following Initial Term. Either party may terminate this
Agreement as of the expiration of the Initial Term or the expiration of any
anniversary date thereafter by giving not less than thirty-six (36) months'
prior written notice to the other party.
17.3 Termination for Lack of Requirements. Buyer may terminate this
Agreement for lack of requirements for hydrogen following the later of (i)
Contract Year 10 and (ii) payment in full of all Senior Debt Obligations (as
defined in the Financing Documents) if Buyer's management reasonably determines
that Buyer's use of hydrogen at Buyer's Plant will permanently cease following
such determination and Clark concurrently terminates the Product Supply
Agreement in accordance with Section 16.3 thereof. Such right of termination
shall be exercisable at any time following the later of (i) Contract Year 10 and
(ii) payment in full of all Senior Debt Obligations (as defined in the Financing
Documents) by Buyer giving Seller twelve (12) months prior written notice
thereof, and paying to Seller on the date such termination
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becomes effective the applicable Termination Payment set forth in Section
17.3.1. The Termination Payment shall be made by Buyer on the effective date of
termination. If the effective date of termination does not occur at the start of
a Contract Year, the Termination Payment will be determined by a straight-line
interpolation between the Termination Payments for the applicable two (2)
Contract Years. In no event shall termination of this Agreement under this
Section limit or effect Buyers obligations under Section 18.1.
17.3.1 Schedule of Termination Payments.
Years Remaining in Supply Period Termination Payment ($)
-------------------------------- -----------------------
10 54,394,500
9 50,579,500
8 46,412,500
7 41,862,000
6 36,892,500
5 31,549,500
4 25,864,000
3 19,759,000
2 13,094,000
1 7,750,000
17.4 Certain Events Related to Termination.
17.4.1 In the event the Product Supply Agreement between Seller and
Clark is terminated or expires prior to its stated term, Buyer shall have the
right to assume each and every obligation of Clark under the Product Supply
Agreement (but excluding past due monies) upon twenty (20) Days prior written
notice to Seller; provided, however, that, with respect to Clark's obligation to
supply Utilities under the Product Supply Agreement (i) in the event Buyer has
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access to or the ability to supply such Utilities. Buyer shall supply such
Utilities to Seller and (ii) in cases where Buyer does not have access to or the
ability to supply such Utilities to Seller, Seller shall use commercially
reasonable efforts to obtain such Utilities from an alternate source and Buyer
shall pay to Seller the additional costs and expenses incurred by Seller to
obtain such Utilities through an increase in the prices herein for such
Utilities. In the event Buyer does not exercise its rights in this Section
17.4.1, Seller shall have the right to (i) terminate this Agreement if it is not
reasonably practical for Seller to continue to operate the Facility or if such
continued operations would cause Seller to violate any Applicable Laws or
Permits or (ii) increase the price of hydrogen to be paid by Buyer hereunder to
compensate fully Seller for any costs or expenses incurred by Seller to continue
to operate the Facility to supply hydrogen under this Agreement.
18. ASSIGNMENT
18.1 Upon notice to Buyer, any or all of the Seller's rights, title and
interest under this Agreement (including without limitation any payments by
Buyer hereunder) may be assigned by Seller to an affiliate, a joint venture
company in which Seller or its affiliate is general partner or in which Seller
owns at least fifty percent (50%) of any equity, or to any bank, trust company,
insurance company, financial institution or other entity or groups thereof under
the terms of financing arrangements. Upon notice to Seller, any or all of the
Buyer's rights, title and interest under this Agreement (including without
limitation any payments to Buyer hereunder) may be assigned by Buyer to an
affiliate, a joint venture company in which Buyer or its affiliate is a general
partner or in which Buyer owns at least fifty percent (50%) of any equity, or
to any bank,
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trust company, insurance company financial institution or other entity or groups
thereof under the terms of financing arrangements (including the Financing
Parties). In the event of an assignment in the prior two (2) sentences, the
assignor shall execute for the benefit of the other party hereunder a guarantee
or similar agreement guaranteeing the performance of the obligations hereunder
by the assignee. If any Financing Party (or any nominee or assignee thereof)
succeeds to the rights of Buyer hereunder as a result of an exercise of
foreclosure under any collateral assignment hereof, any consensual arrangement
in lieu thereof or any other right set forth in the Financing Documents, Seller
will attorn to and recognize such successor as Buyer hereunder and such
successor shall be bound by the terms and conditions hereof (and the parties
shall execute any documents required to evidence such event). This Agreement
shall not otherwise be assignable or transferable by either Buyer or Seller
without the prior written consent of the other, which consent will not be
unreasonably withheld, and any attempted assignment or transfer without such
consent shall be void. All covenants and provisions of this Agreement shall bind
and/or inure to the benefit of the respective successors and permitted assigns
of the parties. In the event of the sale, lease or transfer of all or any
portion of Buyers Plant which utilizes hydrogen, Buyer will assign its interest
in this Agreement to such other entity who will assume all of Buyer's
obligations hereunder, subject to the rights contained in this Section 18.1.
19. NOTICE
19.1 Manner of Giving Notice. Unless herein provided to the contrary, any
notice called for in this Agreement shall be in writing and shall be considered
as having been given when delivered to the U.S. Postal Service, properly
addressed and with all postage charges
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prepaid by registered or certified mail, when delivered to an overnight courier
with proof of delivery or when faxed with proof of transmission, with all
charges prepaid, to either party at the address designated, or by actual
delivery to either party. Unless changed in writing, the addresses of the
parties are as follows;
Air Products and Chemicals. Inc.,
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Attention: Corporate Secretary
FAX No. (610) 481-5765
Port Arthur Coker Company, L.P.
Building _____
1801 South Gulfway
Port Arthur, Texas 77640
Attention: Legal Department
FAX No. (314) 854-1455
with a copy to:
Financing Parties
[Address]
Attention: _____________________
FAX No. (__) ____________
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Legal Department
FAX No. (314) 854-1455
19.2 Other Communications. All communications given under this Agreement
other than those notices and other writings specifically governed by Section
19.1, shall be given in a manner such that the communication is likely to be
received in a timely manner by a responsible representative of the receiving
party.
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19.3 Change in Addressee. Either party shall have the right at any time to
notify the other in writing of a different addressee to whom a particular type
of notice or other writing is to be sent under this Article.
20. INDEMNIFICATION
20.1 BUYER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES SHALL RELEASE SELLER,
AND ITS AGENTS, EMPLOYEES, AND AFFILIATES FROM AND SHALL INDEMNIFY, DEFEND AND
HOLD SELLER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES HARMLESS AGAINST ANY
COSTS, LOSSES, LIABILITIES, CLAIMS, EXPENSES, DEMANDS, ACTS, SUITS AND CAUSES OF
ACTION OF EVERY KIND AND NATURE (WHETHER IN CONTRACT, TORT OR OTHERWISE),
INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY'S FEES, ARISING FROM OR
RELATED TO PERSONAL INJURY OR PROPERTY DAMAGE INCURRED BY BUYER, ITS AGENTS,
EMPLOYEES, AND AFFILIATES IN CONNECTION WITH ACTIVITIES ARISING FROM OR RELATED
TO THIS AGREEMENT. THE PRODUCT SUPPLY AGREEMENT OR THE LEASE AGREEMENT,
REGARDLESS OF WHETHER SUCH INJURY OR DAMAGE IS CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF SELLER, ITS AGENTS, EMPLOYEES, AND AFFILIATES BUT EXCLUDING,
HOWEVER, PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SELLER, ITS AGENTS, EMPLOYEES, AND AFFILIATES OR ARISING
OUT OF OR RELATED TO ANY ENVIRONMENTAL MATTER FOR WHICH SELLER IS OBLIGATED TO
INDEMNIFY BUYER PURSUANT
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TO THE LEASE AGREEMENT, THIS INDEMNIFICATION SHALL APPLY NOTWITHSTANDING ANY
LIMITATIONS ARISING OUT OF WORKERS' COMPENSATION OR OTHER LIKE STATUTES AND
SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
20.2 SELLER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES SHALL RELEASE BUYER
AND ITS AGENTS, EMPLOYEES, AND AFFILIATES FROM AND SHALL INDEMNIFY, DEFEND AND
HOLD BUYER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES HARMLESS AGAINST ANY COSTS,
LOSSES, CLAIMS, EXPENSES, DEMANDS, ACTS, SUITS AND CAUSES OF ACTION OF EVERY
KIND AND NATURE (WHETHER IN CONTRACT, TORT OR OTHERWISE), INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEY'S FEES, ARISING FROM OR RELATED TO PERSONAL
INJURY OR PROPERTY DAMAGE INCURRED BY SELLER, ITS AGENTS, EMPLOYEES, AND
AFFILIATES IN CONNECTION WITH ACTIVITIES ARISING FROM OR RELATED TO THIS
AGREEMENT, THE PRODUCT SUPPLY AGREEMENT OR THE LEASE AGREEMENT, REGARDLESS OF
WHETHER SUCH INJURY OR DAMAGE IS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF
BUYER, ITS AGENTS, EMPLOYEES, AND AFFILIATES BUT EXCLUDING, HOWEVER, PERSONAL
INJURY OR PROPERTY DAMAGE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF BUYER, ITS AGENTS, EMPLOYEES, AND AFFILIATES OR ARISING OUT OF OR RELATED TO
ANY ENVIRONMENTAL MATTER FOR WHICH BUYER IS OBLIGATED TO INDEMNIFY SELLER
PURSUANT TO THE LEASE AGREEMENT. THIS INDEMNIFICATION SHALL APPLY
NOTWITHSTANDING ANY LIMITATIONS
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ARISING OUT OF WORKERS' COMPENSATION OR OTHER LIKE STATUTES AND SHALL SURVIVE
TERMINATION OF THIS AGREEMENT.
20.3 At all times during the term of this Agreement, each party shall
obtain, at its own individual expense and with deductibles, casualty, public
liability, environmental liability, property damage and other types of insurance
which are normal and customary in such party's industry protecting such party
from liability arising out of operations in relation to this Agreement. Each
party shall cause such insurance policies to be endorsed to waive all express or
implied rights of subrogation against the other party and its agents, employees
and affiliates to effectuate the intent of this Article. Each party shall have
the right to self-insure, on a funded or unfunded basis, for all or any part of
the coverages required under this Section as it may solely determine, provided
(i) such levels of self insurance are consistent with good industry practice and
(ii) it maintains a net worth of at least $50 Million ($50,000,000) as
demonstrated by independently audited financial statements or other reasonably
verifiable means. For purposes of the foregoing net worth calculation, the net
worth of Air Products and Chemicals, Inc. shall be used in such calculation as
to Seller.
21. CONFIDENTIALITY
Each party (the "receiving party") shall hold in confidence and not
disclose to any third party (other than the Financing Parties all technical and
business information (the "Confidential Information") disclosed to the receiving
party from the other party (the "delivering party") or developed by the
delivering party for delivery to the receiving party, except (a) Confidential
Information which is in or becomes, without fault of receiving party, part of
the public domain;
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(b) Confidential Information which the receiving party can show was received by
it from an independent third party that is under no obligation to the
delivering party regarding the Confidential Information; (c) Confidential
Information which the receiving party can show was already in its possession at
the time the Confidential Information was made available to it, directly or
indirectly, from the delivering party; (d) Confidential Information required to
be disclosed by law or valid legal or regulatory process, following notice by
the receiving party to the delivering party of the requirement to disclose and
reasonable cooperation with any attempt by the delivering party to maintain the
confidentiality of such Confidential Information; or (e) Confidential
Information the disclosure of which is consented to by the other party. The
foregoing provisions shall continue in force and effect during the term of this
Agreement and for a period of five (5) years following any termination or
expiration of this Agreement. The parties agree that the terms and conditions
set forth in this Agreement shall be considered Confidential Information for
purposes of this Section. In the event any Confidential Information is disclosed
to a third party (including shareholders, direct and indirect providers of
equity capital, representatives, legal counsel, accountants, investment bankers,
commercial bankers or other professional consultants), in accordance with the
provisions hereof such third party shall agree in writing to be bound by the
provisions hereof and the receiving party and delivering party shall agree to
such other terms and conditions, including indemnification protection of the
delivering party, as reasonably requested by the delivering party.
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22. DISPUTE RESOLUTION
22.1 Arbitration. The parties shall endeavor to resolve any dispute
arising out of or relating to this Agreement by mediation under the rules and
guidelines of the American Arbitration Association. Any controversy or claim
arising out of or relating to this Agreement or the breach, termination or
validity thereof which remains unresolved forty-five (45) Days after appointment
of a mediator, shall be settled by arbitration by three arbitrators in
accordance with the rules and guidelines of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof.
22.2 Submission to Jurisdiction. Each of the parties hereto submits to the
jurisdiction of the courts of the State of New York and the courts of the United
States of America located in the State of New York over any suit, action or
proceeding with respect to this Agreement or the transactions contemplated
hereby or the enforcement of any arbitral award in connection therewith.
22.3 Forum Selection. Except for an arbitration proceeding under Section
22.1, any suit, action or proceeding with respect to this Agreement or the
transactions contemplated hereby, or the enforcement of any arbitral award in
connection therewith, may be brought only in the courts of the State of New York
or the courts of the United States of America located in the State of New York,
in each case located in the Borough of Manhattan, City of New York, State of New
York. Each of the parties hereto waives any objection that it may have to the
venue of such suit action or proceeding in any such court or that such suit,
action or proceeding in such court was brought in an inconvenient court and
agrees not to plead or claim the same.
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22.4 Appointment of Agent for Service of Process. Each parry shall take
any and all action as may be necessary to appoint and maintain an agent in the
State of New York for service of process so long as this Agreement is in effect.
In the event a party does not already maintain such an agent, such party hereto
irrevocably appoints CT Corporation, at 1633 Broadway, New York, New York 10019,
as its authorized agent in the State of New York upon which process may be
served in any suit, action or proceeding with respect to this Agreement or the
transactions contemplated hereby, and agrees that service of process upon such
agent, and written notice of said service to such party by the person serving
the same to the address provided in Article 19, shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
23. GENERAL PROVISIONS
23.1 Entire Agreement; etc. This Agreement, including all exhibits
incorporated herein by reference, constitutes the entire agreement between the
parties hereto, supersedes all previous agreements and understandings, whether
oral or written, relating to the subject matter hereof, and may not be changed
or modified orally.
23.2 Headings. The headings used in this Agreement are for reference
purposes only and do not constitute substantive matter to be considered in
construing the terms of this Agreement.
23.3 Governing Law. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of New York.
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23.4 Modification. This Agreement, including the Exhibits hereto, may be
amended or modified from time to time only by an instrument in writing signed by
both parties, and shall not be modified by any course of performance, course of
conduct or usage of trade.
23.5 Severability. In the event that any provision of this Agreement shall
be held invalid or unenforceable under the laws of the State of New York, or any
municipality or governmental entity whose substantive laws may apply to this
Agreement, or under any rules or regulations promulgated by any governmental
authority thereof, the remainder of this Agreement or the application of the
provisions hereof to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, The remedies set
forth herein are exclusive of any remedy available by operation of law or
equity.
23.6 Conflicts. In the event of any conflict between this Agreement and
any Exhibit or attachment hereto that is not reconcilable, the provisions of
this Agreement shall apply.
23.7 Waiver. No waiver by Buyer or Seller of any default of the other
party under this Agreement will operate as a waiver of any subsequent default,
whether of a like or different character.
23.8 Equitable Adjustment. If and to the extent that any court or
governmental authority of competent jurisdiction holds any part of provisions of
this Agreement to be invalid or unenforceable, the parties will equitably adjust
the provisions of this Agreement with a view toward effecting its purposes; such
holding will not affect the validity or effectiveness of the other provisions of
this Agreement, which will remain in full force and effect.
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23.9 Exhibits. Each Exhibit referred to in this Agreement is incorporated
into this Agreement and made a part hereof by such reference. All obligations of
any party under any such Exhibit will be considered as obligations under this
Agreement.
23.10 Preparation. Drafting and negotiations of this Agreement have been
participated in by each party hereto, and not by either party to the exclusion
of the other and for all purposes this Agreement shall be deemed to have been
drafted jointly by the parties.
23.11 Execution. This instrument may be executed in separate original
counterparts but which will constitute one and the same Agreement.
23.12 Liquidated Damages not a Penalty. The parties acknowledge and agree
that in each instance where liquidated damages are provided for as the remedy of
the non-defaulting party in this Agreement, such party's actual damages are
difficult to measure, such liquidated damages are reasonable compensation to the
non-defaulting party for its damages and such liquidated damages are not a
penalty. Nothing set forth in this Agreement shall limit or effect either
party's right to assert an action for price or payment for Utilities or hydrogen
described hereunder.
23.13 Cooperation for Financing. Each party agrees to cooperate with the
other party in its efforts to obtain financing by executing any consents or
similar agreements or providing information reasonably necessary by such party
to obtaining financings, subject to compliance with Article 21 hereof. Such
cooperation would include, to the extent necessary, a party's assignment to such
lenders of this Agreement and accommodation of lender's reasonable requests
regarding performance of any obligations hereunder.
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23.14 Relationship of the Parties. Noting in this Agreement shall be
deemed to constitute either parry hereto a partner, joint venturer, agent or
legal representative of the other party or to create any fiduciary relationship
between or among the parties. This Agreement is intended solely for the benefit
of Seller and Buyer and their respective affiliates and is not intended to
confer any benefits upon, or create any rights in favor of any other entity or
person, except that the Financing Rates shall have the rights specifically set
forth in Sections 13.3 and 17.1 and any assignee of either party shall have the
rights and obligations and be bound by the terms and conditions set forth herein
upon assignment in accordance with Article 18 hereof.
23.15 Interpretation of Certain Terms. In this Agreement, the singular
shall include the plural and the masculine shall include the feminine and
neuter, as the context requires, and "include," "includes" and "including" shall
mean "include[includes][including], without limitation.
24. REPRESENTATIONS
24.1 Representations by Buyer. Buyer represents and warrants to Seller as
of the Effective Date that:
24.1.1 Buyer is a limited partnership duly formed and validly
existing under the laws of the State of Delaware; Buyer has the power and
authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged in; and Buyer is duly qualified to do business
in each jurisdiction in which the character of the properties owned by it
therein or in which the transaction of its business makes such qualification
necessary.
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24.1.2 The execution, delivery and performance by Buyer of this
Agreement has been duly authorized by all necessary corporate action and does
not and will not: (i) require any further consent or approval of the management
of Sabine River Holding Corp., a Delaware corporation, or of Buyer's management
or Board of Directors; (ii) contravene Buyer's certificate of limited
partnership, agreement of limited partnership or other organizational or
governing documents of Buyer; (iii) violate any provision of any Applicable Law
presently in effect having applicability to Buyer; (iv) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any indenture or loan or credit agreement or any other agreement lease or
instrument to which Buyer is a party or by which it or its properties may be
bound or affected; or (v) result in, or require, the creation or imposition of
any lien, upon or with respect to any of the properties now owned by Buyer,
except, in each case, for such matters for which noncompliance with the
foregoing would not have a material adverse effect on Buyer and except in the
case of (v) for Permitted Liens as defined in the Financing Documents.
24.1.3 This Agreement is the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
moratorium, insolvency or other similar laws affecting creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
24.2 Representation by Seller. Seller represents and warrants to Buyer as
of the Effective Date that:
24.2.1 Seller is a corporation duly formed and validly existing
under the laws of Delaware; Seller has the power and authority to own its assets
and to transact the business in
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which it is now engaged or proposed to be engaged in; and Seller is duly
qualified to do business in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
24.2.2 The execution, delivery and performance by Seller of the
Agreement has been duly authorized by all necessary corporate action and does
not and will not: (i) require any further consent or approval of the management
or the Board of Directors of Seller; (ii) contravene Seller's certificate of
incorporation, by-laws or other organizational or governing documents of Seller;
(iii) violate any provision of any Applicable Law presently in effect having
applicability to Seller; (iv) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the Seller
is a party or by which it or its properties may be bound or affected; or (v)
result in, or require, the creation or imposition of any lien, upon or with
respect to any of the properties now owned by Seller, except, in each case, for
such matters for which non-compliance with the foregoing would not have a
material adverse effect on Seller.
24.2.3 This Agreement is the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
moratorium, insolvency, or other similar laws affecting creditors rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
25. DEFINITIONS
Except as otherwise herein provided, the following words and/or terms as
used hereunder shall have the following meaning:
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25.1 "Agreement" means this agreement dated the first date set forth
herein between Seller and Buyer, as may be amended from time to time.
25.2 "Applicable Law" means all laws, treaties, ordinances, judgments,
decrees, injunctions, writs, orders and stipulations of any court, arbitrator or
governmental agency or authority, and statutes, rules, regulations, orders and
interpretations thereof of any federal, state, county, municipal, regional,
environmental or other governmental body, instrumentality, agency, authority,
court or other body applicable from time to time to either parties' facilities,
or the operation or maintenance, or the performance of any obligations by either
party under this Agreement or any other agreement entered into in connection
herewith.
25.3 "Base Facility Charge" or "BFC" shall have the meaning given such
term in Section 7.1.
25.4 "Bonus/Liquidated Damage Account" shall have the meaning given such
term in Section 9.1.
25.5 "Buyer" shall have the meaning given such term in the introductory
paragraph of this Agreement.
25.6 "Buyer's Plant" shall have the meaning given in the first recital.
25.7 "Buyer's Pro Rata Share" shall mean one hundred percent (100%) of any
charge, expense, cost, fee or tax that is calculable or measurable, directly or
indirectly, by the hydrogen sold to Buyer, and in any other case, (81.13%) of
such charge, expense, cost, fee or tax.
25.8 "Clark" shall mean Clark Refining & Marketing, Inc., or its successor
and permitted assigns.
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25.9 "Clark's Plant" shall mean the facilities and equipment owned and
operated by Clark in Port Arthur, Texas.
25.10 "Commencement Date" shall have the meaning given such term in
Section 2.1.
25.11 "Confidential Information" shall have the meaning given such term in
Article 21.
25.12 "Contract Year" mean the period commencing on the Commencement Date
and ending twelve (12) months thereafter and each twelve (12) month period
thereafter.
25.13 "Day" means a twenty-four (24) hour period commencing at midnight
(12:00 am) local time on one day and ending at the same time on the following
day and such day shall bear the date of the day on which it commences.
25.14 "Dedicated Hydrogen Charge" shall have the meaning given such term
in Section 7.2.
25.15 "Dedicated Hydrogen Quantity" shall have the meaning given such term
in Section 5.1.
25.16 "delivering party" shall have the meaning given such term in Article
21.
25.17 "DHC" shall have the meaning given such term in Section 7.5.
25.18 "Effective Date" is defined as set forth in the introductory
paragraph of this Agreement.
25.19 "EGM" and "EGM System" shall have the meaning given such terms in
Section 4.1.4.
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25.20 "Facility." shall have the meaning given in the first WHEREAS
clause.
25.21 "Facility Site" shall have the meaning given such term in Section
1.1.
25.22 "Financing Documents" means all documents entered into by Buyer
evidencing or securing the financing of Buyer's Plant dated on or about 15
August 1999.
25.23 "Financing Parties" means any secured parties designated as such in
the Financing Documents and any trustee or agent acting on their behalf.
25.24 "Force Majeure" shall have the meaning given such term in Section
13.1.
25.25 "Hydrogen Delivery Point" shall have the meaning given to such term
in Section 3.1.
25.26 "Hydrogen Non-Consumption Charge" shall have the meaning given such
term in Section 7.5.
25.27 "Hydrogen Order Rate" shall have the meaning given such term in
Section 5.5.
25.28 "Independent Engineer" means Purvin & Gertz Inc., or a successor
thereto appointed pursuant to the Financing Documents.
25.29 "Initial Term" shall have the meaning given such term in Section
2.1.
25.30 "Internal Hydrogen Production" shall have the meaning given such
term in Section 5.1.
25.31 "Lease Agreement" shall mean that certain Lease Agreement between
Seller and Clark dated the date hereof, as it may be amended from time to time.
-59-
<PAGE>
23.32 "Minimum Quantity of Hydrogen shall have the meaning given such term
in Section 5.3.
25.33 "MSCF" means one thousand SCF.
25.34 "MMSCFD" means one million SCF per Day.
25.35 "On-Steam Factor" shall have the meaning given such term in Section
9.1.
25.36 "Permits" means any waiver, exemption, variance, franchise, permit,
authorization, license or similar order of or from any federal, state, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over either party's
facility, or the performance of either party of any obligation under this
Agreement or any other agreement in connection herewith.
25.37 "Pipeline Hydrogen" shall have the meaning given such term in
Section 5.4.
25.38 "Pipeline Hydrogen Charge" shall have the meaning given such term in
Section 7A.
25.39 "Pipeline Network" means the pipeline system connected to the
Facility and constructed, owned or operated by Seller or its affiliates, which
is used to transport hydrogen in Texas.
25.40 "Product Supply Agreement" shall mean that certain Product Supply
Agreement between Seller and Clark dated the date hereof as it may be amended
from time to time.
25.41 "Property Tax Agreements" shall have the meaning given such term in
Section 12.2.
-60-
<PAGE>
25.42 "Prudent Industry Standards" means those practices, methods,
equipment, specifications and standards of safety and performance, as the same
may change from time to time, as are commonly used in facilities in the United
States of a type and size similar to the facility in question.
25.43 "Psig" means pounds per square inch gauge.
25.44 "receiving party" shall have the meaning given such term in Article
21.
25.45 "Regulation" shall have the meaning given such term in Section 11.1.
25.46 "Rfa" shall have the meaning given such term in Exhibit I.
25.47 "SCF" shall have the meaning given such term in Section 4.1.3.
25.48 "SCFD" means an instantaneous rate of flow of a gas which would be
equivalent to one SCF of that gas if continued for a twenty-four (24) hour
period.
25.49 "Seller" shall have the meaning given such term in the introductory
paragraph of this Agreement.
25.50 "Seller's Hydrogen Volume" shall have the meaning given such term in
Section 5.3.2
25.51 "Spill Stream Hydrogen" shall have the meaning given such term in
Section 5.1.
25.52 "Start-up Damages Cap" shall mean an aggregate amount equal to One
Million One Hundred Fifty-five Thousand Dollars ($1,155,000).
25.53 "Start-up Date" shall mean 6 December 2000.
-61-
<PAGE>
25.54 "Supplemental Hydrogen" shall have the meaning given such term in
Section 5.2.
25.55 "Supplemental Hydrogen Charge" shall have the meaning given such
term in Section 7.3.
25.56 "Supply Period" shall have the meaning given such term in Section
2.1
25.57 "Turnback Hydrogen" shall have the meaning given such term in
Section 5.3.
25.58 "Two Contract Year Minimum Quantity of Hydrogen" shall have the
meaning given such term in Section 5.3.
25.59 "Two-Year Minimum Purchase Obligation" shall have the meaning given
such term in Section 5.3.
-62-
<PAGE>
25.60 "Utilities" shall have the meaning given such term in Section 12 of
the Product Supply Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the Effective Date.
AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ Joe E. McGilad
-----------------------------
Title: Vice President
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: /s/ Maura J. Clark
-----------------------------
Name: Maura J. Clark
Title: Executive Vice President
<PAGE>
EXHIBIT A
TECHNICAL DESCRIPTION
1.1 Facility Design Basis
Hydrogen shall be produced from the conversion of natural gas via a steam
methane reformer (SMR) and a high temperature shift (HTS) reactor.
Purification of the hydrogen shall be accomplished by a pressure swing
adsorption (SMR PSA) unit. In conjunction with the SMR, a spill gas stream
from Buyer's hydrotreaters will be purified in a separate H(2) PSA
(Hydrotreater Spillstream System).
Power shall be produced from a GE Frame 6B gas turbine. Steam will be
produced from waste heat generated in the SMR and the Frame 6B.
1.2 Production Basis
1.2.1 Product Hydrogen
The steam methane reformer will be capable of producing approximately 100
MMSCFD H(2) (80 MMSCFD dedicated to Buyer) when supplied with natural gas
at 500 psig minimum and approximately 79 MMSCFD when supplied with natural
gas at 450 psig. Up to an additional 6.0 MMSCFD H(2) (approximately) will
be produced from the purification of Buyer's Gulfining Units (GFU
241/242/243/244) hydrotreater spill gas in the Hydrotreater Spillstream
System.
Hydrogen from the SMR will be compressed via two identical compressors,
each sized to deliver 80 MMSCFD H(2) to 850 psig (minimum) at the
Facility's battery limits. Each compressor will be designed for two stages
with one cylinder per stage. Each compressor will be dedicated for
hydrogen service (i.e. not multiservice).
Hydrogen produced from the purification of Clark's hydrotreater spill
stream (via the Spill PSA) will be compressed to meet the HCU 942 pressure
requirements. When supplied with 8.9 MMSCFD of feed gas in accordance with
Exhibit D, the spill stream system will produce approximately 5.0 MMSCFD
of product hydrogen plus 3.9 MMSCFD of purge gas to be delivered to Clark
as fuel.
1.2.2 Steam
Steam from the Facility will be delivered to Clark's 650 psig high
pressure steam system. Steam production is a function of the gas turbine's
performance and the hydrogen production rate. Net steam export quantities
to Clark at the full hydrogen production rate are anticipated to be:
Turbine New(1) Average(2) Maximum(3)
Intake Temp. and Clean Degradation Degradation
------------ --------- ----------- -----------
32(degrees)F 470,000 lbs/hr 470,000 lbs/hr 463,000 lbs/hr
65(degrees)F 445,000 lbs/hr 440,000 lbs/hr 430,000 lbs/hr
93(degrees)F 460,000 lbs/hr 459,000 lbs/hr 455,000 lbs/br
(1) "New" denotes the first month of gas turbine operation following
major overhauls
(2) "Average" denotes the performance of the gas turbine averaged
over six years
(3) "Maximum" denotes the last month of gas turbine operation prior
to major overhauls
The steam export quantities shown above are based on installation of a
steam turbine generator. Clark may request additional steam from the
Facility, to the extent available, up to a maximum of 518,000 lbs/hr.
A-1
<PAGE>
Condensate from the Facility xviii not be delivered to Clark, nor will
Clark supply condensate to the Facility.
1 2.3 Product Power
Gross power production for Clark's consumption is anticipated to vary as a
function of ambient temperature and the turbine maintenance cycle as
follows:
Turbine New Average Maximum
Intake Temp. and Clean Degradation Degradation
------------ --------- ----------- -----------
32(degrees)F 43,600 kw 42,800 kw 41,730 kw
65(degrees)F 38,300 kw 37,200 kw 36,220 kw
93(degrees)F 34,630 kw 33,600 kw 32,570 kw
The combustion turbine generator (CTG) will be tied to Clark's No. 6 Power
Plant switchgear (PP6). The Facility will be comprised of a 13.8kVmain bus
system with a radial tie to Clark. This radial tie, about 4,000' in
length, will be accomplished via 9-11c 500 kcmil overhead insulated cable
and terminated at Clark's substation # 6. The cable will be installed and
provided for termination by Clark. Termination at the Facility will be by
Seller. The cable will transition from an overhead arrangement to cable
trays at the Facility boundary limit. The 13.8kV switchgear will be
comprised of three (3) circuit breakers, one for the tie line to Clark
(52I), the second for the 47MVA CTG (52G) and the third for the Facility
(52T). Power to the Facility, fed from the 13.8kV switchgear, will be
transformed from 13.8kV to 4.16kV via a 15MVA transformer.
If, while 52I is closed with Seller exporting power to Clark. Clark
separates from the utility (Entergy), an island would be created comprised
of Clark's Plant and the Facility. Clark will provide Seller with circuit
breaker contacts that indicate separation from the utility grid. Seller
will utilize this contact to switch the CTG from synchronous to
isochronous modes. Seller will continue to operate under the line VAR
control and isochronous mode.
The WATT and VAR controllers shall be resident in the DCS. These
controllers, in turn, will adjust the setpoint resident within the EX2000
by means of hardwired raise/lower pulse signals. The Facility would
normally operate at MW and MVAR setpoints for the intertie. MW and MVAR at
the intertie to Clark will be continuously monitored via transducers and
input to their respective DCS controllers. When the CTG is on line, any
changes within the Facility power factor-such as due to the operation of
the synchronous motor drives for the compressors-will result in changes to
the power factor at the intertie to Clark and will be compensated for by
excitation to the CTG.
Clark utilizes a load shedding scheme based on underfrequency relays.
Seller will not be subject to load shedding by Clark. During normal
operation, with the CTG on line, power will be exported to Clark at a
power factor greater than or equal to 0.9 lagging. In the event that the
CTG is off line, power may be imported to the Facility at a power factor
greater than or equal to 0.9 laaging. Seller shall operate the Facility to
produce and deliver power at reasonably uniform rates and shall not be
subject to dispatch and control by Clark.
1.2.4 Product Fuel
Purge gas produced from the purification of Clark's hydrotreater spill gas
will be exported to Clark as fuel to Clark's fuel gas system. Based on the
normal composition shown in Exhibit D, the process design purge gas flow,
pressure and temperature at the Facility's battery limits will be:
Min. Normal Max.
---- ------ ----
Flow 1.8 MMSCFD 3.9 MMSCFD 4.5 MMSCFD
Pressure -- 95 psig 110 psig
Temperature 56(degrees)F 100(degrees)F 120(degrees)F
A-2
<PAGE>
The design mechanical pressure and temperature will be 250 psig and
150(degrees)F.
1.3. Hydrogen Compression
In the event of an SMR outage, each compressor will have the ability to
take pipeline hydrogen and compress it to 850 psig (minimum) for supply to
Buyer. In the event of the HCU 942 outage, Seller may export hydrogen to
the pipeline.
1 .4 Turndown and Operability Scenarios
The normal turndown of the SMR is to 80% of hydrogen flow with some loss
in efficiency. The maximum turndown of the SMR is to approximately 40% of
hydrogen flow with reduced efficiency.
Hydrogen production from the Facility will be based on the order rate
requested by Buyer. The Facility will be designed to be pressure
controlled via "load-following" of Buyer's hydrogen needs within plus or
minus 5% of the order rate. Net steam export will be allowed to vary as a
function of hydrogen production without exceeding the maximum amount of
470,000 lbs/hr. In the event of a gas turbine outage, steam and hydrogen
production will turndown. Hydrogen production will be supplemented by the
hydrogen pipeline.
1.5 Meteorological Conditions
The table below summarizes the temperature basis:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Process Design Mechanical Design
-------------------------------------------------------------------------
Min.(degrees)F Min.(degrees)F Min.(degrees)F Min.(degrees)F
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Winterizing 20 --- 20 ---
---------------------------------------------------------------------------------------------
Ambient Average(3) 56 86 N/A N/A
---------------------------------------------------------------------------------------------
Equipment Data Sheets
Ambient Temp.(1) 20 104 20 104
Design Metal Spec.(2) -20 --- -20 ---
---------------------------------------------------------------------------------------------
Pipe Expansion 20 --- 20 104
---------------------------------------------------------------------------------------------
Air Cooler Design 20 l00(4) 20 104
---------------------------------------------------------------------------------------------
Cooling Tower
Wet Bulb 82.5 --- --- ---
Dry Bulb 95 --- --- ---
---------------------------------------------------------------------------------------------
Air Compressor 20 100 20 104
Relative Humidity 100 100 100 100
---------------------------------------------------------------------------------------------
</TABLE>
(1) Used for mechanical hardware, electronics, pump windings, etc.
(2) Minimum design metal temperatures for data sheets
(3) Used for process heat balance calculations
(4) Based on 95(degrees)F ambient and 5(degrees)F air recirculation margin
The normal atmospheric pressure is: 14.7 psia (760 mmHg)
True elevation for the Facility is: 5 ft above sea level
Seismic zone for Port Arthur: 0 per UBC 1997
The wind design shall be:
Prevailing Direction: SE
A-3
<PAGE>
Average Velocity, mph: 10
Dispersion or flare design velocity, mph: 17
Mechanical Design, mph: 120
The wind rose data shall be:
Direction: True N NE E SE S SW W NW
% of Time: 11 4 13 12 41 7 6 6
The basic wind speed to be used for structural design shall be based on
120 mph for 100 year recurrence per ASCE 7-95 using the exposure category
C and importance factor of 1.05
Wind pressure for various height zones shall be as specified in ASCE 7-95.
Rainfall for sewer sizing shall be:
One hour maximum, in: 3
24 hour maximum, in: 10
Fire zone rate, gpm 6,000
Water Run-off Design Factors:
Paved areas: F = 1.0
Unpaved areas: F = 0.6
1.6 Scope of Supply
Seller will design, procure, install, own, operate and maintain the
Facility. The Facility will include the equipment and services described herein,
although Seller retains the right to make design modifications as long as they
do not adversely affect the performance of the plant. The design of the Facility
will be in accordance with all applicable health, safety, design and fire codes.
Equipment List
Seller will furnish the equipment and materials for the Facility as
described below.
C-103 ID Fan
CM-103 Motor
C-105 Condensing Steam Turbine
CM-105 Condensing Steam Turbine Motor
CG-105 Condensing Steam Turbine Generator
Main Lube Oil Pump
Auxiliary Lube Oil Pump
Lube Oil Cooler
Gland Steam Condenser
Lube Oil Filter
E-130 Surface Condenser
X- 108 A/B/C Vacuum System
C-250 A/B Product H(2) Compressors
S-250-A1 Suction Volume Bottle
S-250-A2 Suction Volume Bottle
S-250-A3 Discharge Volume Bottle
S-250-A4 Discharge Volume Bottle
V-256A/B Lubricator Day Tanks
P-252A/B Lubricator Pumps
A-4
<PAGE>
CM-250A/B H(2) Product Comp. Motors
C-255/C-220 Spill Gas Product H(2) Compressor
(Stage 1 and Stage 2) and Purge Gas CO Compressor
S-255-1 H(2) 1st Stage Suction Bottle
S-255-2 H(2) 1st Stage Discharge Bottle
S-255-3 H(2) 2nd Stage Suction Bottle
S-255-4 H(2) 2nd Stage Discharge Bottle
F-221 Coolant Strainer for Stage 1
F-222 Coolant Strainer for Stage 2
C-220 Purge Gas Compressor Stage 1 and Stage 2
S-220-1 1st Stage Suction Bottle
S-220-2 1st Stage Discharge Bottle
S-220-3 2nd Stage Suction Bottle
S-220-4 2nd Stage Discharge Bottle
V-220 C-255/C-220 Lubricator Day Tank
P-220 C-255/C-220 Lube Pump
CM-220 Spill Gas MS Comp. Motor
C-500 Gas Turbine
CM-500 Gas Turbine Starting Motor
CG-500 Gas Turbine Generator
Gas Turbine Building Case
Strainers for G.T.
CC-l Steam Generation Coil #1
CC-2 Mixed Feed Preheat Coil
CC-3 Steam superheat Coil
CC-4 Steam Generation Coil #2
CC-5 Steam Generation Coil #3
CC-6 BFW Preheat Coil
E-103 Process Gas Boiler
E-104 Feed Preheater II
E-105 Kettle Boiler
E-106 BFW Preheater
E-107 Feed Preheater I
F-108 Deaerator Water Heater
E-110 A/B Process Gas Trim Cooler
E-129 Blowdown Cooler
E-220 Purge Gas Comp. Inter-Cooler
E-221 Purge Gas Comp. Discharge-Cooler
E-255 Spill Product H(2) Comp. Inter-Cooler
E-256 Spill Gas H(2)Comp. After Cooler
F-220 Purge Gas Comp. Inlet Filter
F-255 Spill Gas Product H(2) Comp. Suction Filter
F-256 Spill Gas Product H(2) Comp. After Filter
F-501 Gas Turbine Fuel Filter
H-101 Reformer
K-220 Purge Gas Comp. Discharge Coalescer
A-5
<PAGE>
P-101A/B/C BFW Pumps w/Motors
P-102A/B BFW Circulation Pumps w/Motors
P-121A/B Condensate Pumps w/Motors
E-149A/B Seal Flush Coolers
E-150A/B Seal Flush Coolers
E-151A/B Seal Flush Coolers
P-931A/B Demin Water Transfer Pumps
P-991A/B Sanitary Sewer Pumps
P-992A/B Dirty Water Sump Pumps
P-993A/B Dirty Water Sump Pumps
P-994A/B Dirty Water Sump Pumps
P-115A/B Aqueous Ammonia Pumps
V-101 Feed Gas Separator
V-104 Hydrogenator
V-105 Feed Desulfurizer
V-107 Continuous Blowdown Drum
V-108 Steam Drum
V-109 H.T. Shift Reactor
V-112 Process Condensate Separator
V-113A/B PSA Surge Drums
V-114 Deaerator
V-115 Spill Gas PSA Surge Drum
V-116 Spill Gas K.O. Drum
V-129 Intermittent Blowdown Drum
V-132 Fuel Gas Separator
V-133 Oil Blowdown Drum
V-135 Aqueous Ammonia Tank
V-920 Air Receiver
V-922 Instrument Air K.O. Drum
V-931 Make-up Water Storage Tank
X-l01 PSA Unit
X-102 SCR Unit
X-103 CEMS Package
X-105 Steam Silencer
V-106A/B/C Chemical Dosing Unit
P-106A Neutralizing Amine Pump
P-106B Oxygen Scavenging Pump
P-106C Internal Treatment Pump
V-106A Neutralizing Amine Tank
V-106B Oxygen Scavenger Tank
V-106C Internal Treatment Tank
X-107 Vent Stack Tip
X-110 Spill Gas PSA Unit
A-6
<PAGE>
X-135 NH, System Skid
V-136 Aqueous NH(3) Mixer
F-115A/B Aqueous Ammonia Filters
C-104A/B NH(3) Injection Blowers
E-119A/B Atomizing Air Heaters
X-901 Oil Removal Skid
K-251 H(2) Pipeline Common 2nd Coalescer
V-251 H(2) Pipeline Product Common Oil Absorber
F-251 H(2) Pipeline Product After Filter
X-902 Lube Oil Skid for C-255 /C-220
P-255 Main Oil Pump
P-256 Aux. Oil Pump
E-253 Lube Oil Exchanger
F-253 Lube Oil Filter
X-903 Lube Oil Skid for C-250A/B
P-250A/B Main Oil Pumps
P-251A/B Aux. Oil Pumps
E-252A/B Lube Oil Exchangers
F-252A/B Lube Oil Filters
X-904 Purge Panel for C-255 C-220
X-905 Unloader Panel for C-255/C-220
X-906 A/B Purge Panels for C-250A/B
X-907 A/B Unloader Panels for C-250A/B (By KTI)
X-921A/B Instrument Air Dryers
X-940 Flare
V-940 Flare K.O. Drum
X-950 Jacket Water Skid for C-250A/B
E-950 Jacket Coolant Exchanger
P-950 A/B Jacket Coolant Water Pumps
F-950A/B Jacket Coolant Water Supply Strainers
F-951 Jacket Coolant Water Side Stream Filter
V-950 Jacket Coolant Receiver
X-908 Accessory Skid for C-250A/B
E-250A Prod. H(2) Comp. Discharge Coolers
E-250B Prod. H(2) Comp. Discharge Coolers
F-250A/B Prod. H(2) Comp. Suction Filters
K-25OA/B Prod. H(2) Comp. Discharge Coalescers
A-7
<PAGE>
X-920 LIN System
E-920A/B/C/D Nitrogen Vaporizers
V-921 Liquid Nitrogen Tank
PBV Control Skid
PBU
Analyzers include but are not limited to the following:
Analyzer
O(2) in Flue Gas
Low 0(2) in Analyzer Building
CO in PSA Equalization Header
CO in Hydrogen product (redundant)
N(2) in Hydrogen product (redundant)
Specific Gravity of PSA tail gas
Conductivity of BFW make-up
CH(4) slip in reformer outlet
A regulatory agency approved safety PLC will be provided to perform Burner
Management System (BMS) and other critical safety functions. A BMS system
will be designed to monitor conditions associated with the fuel system,
flame and draft in the reformer. This system will be in compliance with
NFPA requirements.
The following detectors will be provided:
Carbon Monoxide detectors at the reformer penthouse
at the analyzer building
at the PSA skid
Ultraviolet detectors at the PSA skid
at the reformer penthouse
Combustible Gas detector at the reformer penthouse
at the analyzer building
A-8
<PAGE>
EXHIBIT B
[INTENTIONALLY BLANK]
B-1
<PAGE>
EXHIBIT C
[INTENTIONALLY BLANK]
C-1
<PAGE>
EXHIBIT D
UTILITIES AND SERVICES TO BE SUPPLIED BY CLARK
Unless otherwise stated, the following Utilities shall be supplied by Clark to
Seller at no cost to Seller for the commissioning, testing, start-up of the
Facility. Beginning on the Commencement Date of the Product Supply Agreement and
for the remainder of the Supply Period, Seller will purchase from Clark, unless
otherwise stated, the following Utilities at the prices defined herein and Buyer
shall reimburse Seller hereunder for the costs and expenses of such Utilities.
Utilities are to be supplied to the Delivery Points defined in Exhibit E herein
by Clark.
1.0 Cooling Water
Clark shall provide approximately 15,540 gpm of cooling water to the
Facility's battery limits. The cooling water typically has the following
constituents at 10 cycles of concentration:
===================================================================
Characteristics Minimum Normal Maximum
-------------------------------------------------------------------
Feed Water pH 7.2
-------------------------------------------------------------------
Temperature (degrees)F 93 93
-------------------------------------------------------------------
Calcium Hardness as CaCO(3) ppm 82
-------------------------------------------------------------------
Magnesium Hardness as CaCO(3) ppm 50
-------------------------------------------------------------------
Total Hardness as CaCO(3) ppm 115
-------------------------------------------------------------------
Sodium as Na ppm 78
-------------------------------------------------------------------
Potassium as K mg/L
-------------------------------------------------------------------
Iron as Fe ppm 6.0
-------------------------------------------------------------------
Manganese as Mn mg/L
-------------------------------------------------------------------
Copper as Cu ppm 0.23
-------------------------------------------------------------------
Aluminum as Al mg/L
-------------------------------------------------------------------
Zinc as Zn mg/L
-------------------------------------------------------------------
Ammonia and Ammonium Ion as
NH(3) mg/L
-------------------------------------------------------------------
Methyl Orange (M)
Alkalinity as CaCO(3) ppm 56
-------------------------------------------------------------------
Phenolphahalein (P)
Alkalinity as CaCO(3) ppm 0
-------------------------------------------------------------------
Chloride as Cl ppm 295
-------------------------------------------------------------------
Sulfate as SO(4) mg/L
-------------------------------------------------------------------
Nitrate as NO(4) mg/L
-------------------------------------------------------------------
Orthophosphate as PO(4) ppm 32
-------------------------------------------------------------------
Total Phosphate as P0(4) mg/L
-------------------------------------------------------------------
Silica as SiO(2) ppm 88
-------------------------------------------------------------------
Total Dissolved Solids, TDS mg/L
-------------------------------------------------------------------
Total Suspended Solids, TSS mg/L 25
-------------------------------------------------------------------
Turbidity as NTU mg/L
-------------------------------------------------------------------
Oil and Grease mg/L
-------------------------------------------------------------------
D-1
<PAGE>
===================================================================
Characteristics Minimum Normal Maximum
-------------------------------------------------------------------
Specific Conductance at
25(degrees)C uohms 802
-------------------------------------------------------------------
Langelier Index mg/L
-------------------------------------------------------------------
Chemical Oxygen Demand, COD mg/L
-------------------------------------------------------------------
Total Organic Carbon, TOC mg/L
-------------------------------------------------------------------
Free Chlorine Residual
as Cl(2) mg/L
-------------------------------------------------------------------
Total Sulfur as S0(4) ppm 140
-------------------------------------------------------------------
Tolyltriazole ppm 0.4
-------------------------------------------------------------------
Min. Normal Max.
---- ------ ----
Supply Pressure 60 psig 60 psig 80 psig
Temperature 56(degrees)F 88(degrees)F 93(degrees)F
The mechanical design pressure and temperature will be 80 psig and
150(degrees)F.
2.0 Boiler Feed Water Make-up
Clark shall provide boiler feed water make-up to the Facility in
accordance with the following:
==================================================================
Boiler Feed Water
------------------------------------------------------------------
pH 7.5-10
------------------------------------------------------------------
Nonvolatile TOC, mg/LC less than 0.5
------------------------------------------------------------------
Oily Matter, MG/L less than 0.5
------------------------------------------------------------------
Specific Conductance at 25(degrees)C, umhos less than 10
------------------------------------------------------------------
Alkalinity, ppm less than 0.15
------------------------------------------------------------------
Total Sulfur as SO(4), ppm less than 0.5
------------------------------------------------------------------
Chloride as Cl, ppm less than 0.5
------------------------------------------------------------------
Total Hardness as CaCO(3), ppm less than 0.1
------------------------------------------------------------------
Total Calcium Hardness as CaCO(3), ppm less than 0.05
------------------------------------------------------------------
Total Magnesium Hardness as CaCO(3), ppm less than 0.05
------------------------------------------------------------------
Total Copper as Cu, ppm less than 0.015
------------------------------------------------------------------
Total Iron as Fe, ppm less than 0.02
------------------------------------------------------------------
Sodium as Na, ppm less than 0.24
------------------------------------------------------------------
Silica as SiO(2), ppm less than 0.20
==================================================================
Conditions at the Facility's Battery Limits:
Min. Normal Max.
---- ------ ----
Pressure 54 psig 60 psig 85 psig
Temperature 56(degrees)F 100(degrees)F 104(degrees)F
Flowrate N/A 1,200 gpm 1,350 gpm
3.0 Filtered Water
Clark shall provide filtered water to the Facility for utility purposes.
D-2
<PAGE>
The water quality shall be as shown below:
Conditions at the Facility's Batter Limits:
Min. Normal Max.
---- ------ ----
Pressure 30 psig 60 psig 85 psig
Temperature 56(degrees)F 86(degrees)F 104(degrees)F
Flowrate N/A 0 gpm nominal
The mechanical design pressure and temperature will be 150(degrees)F and
150 psig.
4.0 Firewater
3000 gpm delivered at 121 psig. The mechanical design pressure will be 150
psig.
5.0 Potable Water
Clark will supply approximately 280 gpd of potable water to the Facility's
battery limit:
Min. Normal Max.
---- ------ ----
Pressure 30 psig 60 psig 80 psig
Temperature 56(degrees)F 86(degrees)F 86(degrees)F
The mechanical design temperature and pressure will be 150(degrees)F and
150 psig.
6.0 Nitrogen
Clark will provide gaseous nitrogen to the Facility's battery limit for
continuous purging and instrument air backup. Nitrogen shall meet 99.9%
purity (minimum) and -40(degrees)F dew point. Approximately 65 SCFM will
be required for normal continuous purge requirements. Seller will provide
nitrogen for startup, shutdown, and emergencies to the extent required
beyond the quantities listed below.
Min. Normal Max.
---- ------ ----
Flowrate 3900 SCFH 3900 SCFH 8000 SCFH
Pressure 190 psig 225 psig 600 psig
Temperature 56(degrees)F 71(degrees)F 100(degrees)F
The mechanical design temperature and pressure will be 150(degrees)F and
660 psig. A process meter will be provided by Seller.
7.0 Plant Air
Clark will provide water saturated, oil-free instrument air at the
Facility's battery limits.
Min. Normal Max.
---- ------ ----
Pressure 80 psig 80 psig 125 psig
Temperature 56(degrees)F 100(degrees)F 104(degrees)F
Flowrate 710 SCFM 710 SCFM 1100 SCFM
The mechanical design temperature and pressure will be 150(degrees)F and
150 psig. Seller will install equipment to dry the plant air.
D-3
<PAGE>
8.0 Wastewater
Compressor blowdowns, steam blowdowns, gas turbine water wash waste, plant
air knock-out drum and storm water runoffs from diked areas will be pumped
to Clark's dirty water system. An oil-water separator is not included.
Steam blowdowns will be cooled to 100(degrees)F via the blowdown cooler
(E129). The pressure and temperature of the wastewater shall be as
follows:
Min. Normal Max.
---- ------ ----
Pressure N/A 95 psig __ psig
Temperature 56(degrees)F 71(degrees)F 100(degrees)F
Stormwater runoff from non-diked areas will be gravity fed to Clark's
stormwater system. Trace liquids knocked out of the refinery fuel stream
will be directed to Clark's sourwater system. Sanitary wastes will be
pumped to Clark's dirty water system.
9.0 Back-up Power Supply
In the event of a gas turbine generator outage and during Facility
startup, Clark will supply to the Facility 13.8 kV, 60 Hz, 3 phase power.
Maximum voltage drop to be to 13.2 kV. Delivery rates shall be:
Normal Maximum
------ -------
8,000 KW 13,000 KW
10.0 Feed and Fuel Streams
10.1 Natural Gas
Natural gas will be supplied by Seller.
Natural gas will be used as feedstock and trim fuel for the Facility and
as fuel for the gas turbine generator. It is understood that the design
and performance of the Facility is based on the following:
Composition: 94.5 mol% CH(4)
2.4% C(2) H(6)
0.5% C(3)H(8)
0.1% i-C(4)H(10)
0.1% n-C(4)H(10)
0.5% n-C(6)H(14)
1.4% CO(2)
0.5% N(2)
4 ppmv H(2)S (max.)
4 ppmv Total Mercaptans (max.)
0 ppmv Olefins and Unsaturates
MW= 17.41
HHV = 1,039.5 Btu/SCF
Min. Normal Max.
---- ------ ----
Pressure 500 psig 525 psig 540 psig
Temperature 56(degrees)F 71(degrees)F 86(degrees)F
Flowrates
(MMBtu/hr,HHV) N/A 2208 2750
D-4
<PAGE>
The Facility will be capable of operating at reduced hydrogen production
rates at a natural gas supply pressure of 450 psig. The mechanical design
pressure and temperature will be 600 psig and 150(degrees)F. A process
meter will be provided by Seller.
10.2 Refinery Fuel
Refinery fuel gas will be supplied by Clark and purchased from Clark by
Seller.
Clark shall supply refinery fuel to be made available as fuel for the
Facility's burners. The refinery fuel composition, temperature and
pressure, supplied at Facility's battery limits will vary depending upon
the operation of Clark's refinery with typical composition to be as
follows:
Composition (typical):
Hydrogen 43.0 mol%
Methane 39.1 mol%
Ethane 6.5 mol%
Ethene 0.9 mol%
Propane 4.7 mol%
Propene 0.6 mol%
Butane 0.5 mol%
iso-Butane 0.8 mol%
1-Butene 0.1 mol%
n-Pentane 0.2 mol%
Hexane 0.2 mol%
Carbon Dioxide 0.3 mol%
Carbon Monoxide 0.3 mol%
Nitrogen 2.7 mol%
H(2)S 20 ppmv (min.)
40 ppmv (avg.)
80 ppmv (max.)
Min. Normal Max.
---- ------ ----
Pressure 50 psig 55 psig 80 psig
Temperature 56(degrees)F 71(degrees)F 104(degrees)F
HHV (Btu/SCF) 600 900 1,250
LHV (Btu/SCF) 774
Flow Rates
(MMBtu/hr,HHV) 143 228 461
The mechanical design pressure and temperature will be 105 psig and
150(degrees)F. A billing quality meter will be provided by Seller.
11.0 Hydrotreater Spill Stream
A single, combined spill stream from Clark's hydrotreater units (GFU
241/242/243/244) will be sent to a separate PSA for hydrogen purification.
The spill stream composition, temperature and pressure, supplied to the
Facility's battery limits shall be:
Min. Normal Max.
--- ------ ----
H(2)O 0.10 mol% 0.18 mol% 0.23 mol%
NH(3) 1 ppmv 8 ppmv 20 ppmv
N(2) 0.00 mol% 0.31 mol% 0.79 mol%
H(2)S 40 ppmv 123 ppmv 150 ppmv
H(2) 69.47 mol% 72.33 mol% 76.75 mol%
D-5
<PAGE>
CH(4) 12.00 mol% 15.15 mol% 18.00 mol%
C(2)H(6) 5.00 mol% 7.09 mol% 10.00 mol%
C(3)H(8) 2.00 mol% 3.46 mol% 4.00 mol%
n-C(4)H(10) 0.50 mol% 0.90 mol% 1.50 mol%
i-C(5)H(12) 0.03 mol% 0.28 mol% 0.49 mol%
n-C(5)H(12) 0.03 mol% 0.28 mol% 0.49 mol%
n-C(6)H(12) 0.01 mol% 0.01 mol% 0.02 mol%
Based on the normal composition shown above, the process design spill
stream feed flow, pressure and temperature at the Facility's battery
limits will be:
Min. Normal Max.
--- ------ ----
Flow 4.2 MMSCFD 8.9 MMSCFD 11.7 MMSCFD
Pressure 350 psig 425 psig 600 psig
Temperature 56(degrees)F 71(degrees)F 104(degrees)F
The mechanical design pressure and maximum temperature will be 720
psig and 120(degrees)F.
Seller reserves the right to install analytical equipment to verify
composition of the spill stream feed. Feed stream composition components
in excess of the maximum values listed will prematurely degrade the PSA
sieve material. Seller reserves the right to invoice Clark for cost of
sieve replacement in this event.
A process flow meter supplied by Seller shall be used for spill stream
feed to establish and monitor cycle times. A process meter will be
supplied by Seller for both product hydrogen and purge gas from this
system.
12.0 Other Services
12.1 Clark shall provide access to its existing construction parking.
12.2 Clark shall provide temporary power, 750 kVA capacity, one
distribution panel board with eight 100 amp, 480V, 3 phase circuit
breakers at the southwest corner of the Facility site during
construction of the Facility. Clark shall also provide potable water
and hydrotest water to the site during construction.
12.3 Clark shall provide its normal 24-hour security for the Facility
during construction as part of Clark's normal refinery security. Any
additional security shall be provided by Seller.
12.4 Clark shall provide two areas (320' x 500' south of Buyer's tank 78
and 250' x 340' east of Clark's tank 1802) for temporary storage and
material laydown.
PROJECT MILESTONE SCHEDULE
Sellers obligations under Section 2.2 hereunder are predicated on Clark
completing certain tasks in accordance with the following milestone schedule.
MILESTONE DATE REQUIRED
Utilities per Exhibit D made available to the Facility:
- -------------------------------------------------------
Firewater 25 May 2000
Refinery Fuel Gas 23 August 2000
Spill Gas Feed 23 August 2000
D-6
<PAGE>
MILESTONE DATE REQUIRED
Utilities per Exhibit D made available to the Facility:
- -------------------------------------------------------
Plant Air 15 April 2000
Permanent 13.8kV Power 30 May 2000
Filtered Water 15 April 2000
Boiler Feed Water (less than 500 gpm rate) 15 April 2000
Boiler Feed Water (full rate) 23 August 2000
Nitrogen 01 May 2000
Wastewater Service (Dirty and Sour Water) 15 April 2000
Cooling Water 01 May 2000
Steam Line Complete/Available to battery limit 06 September 2000
Spill Gas Purge Gas to Fuel Line 23 August 2000
Product Hydrogen Line Complete/Available to battery limits 23 August 2000
Seller shall invoice Buyer for the Utilities hereunder monthly for the previous
month's consumption of such Utilities based on the prices shown below. Such
Utilities are being billed to Seller by Clark under the Product Supply Agreement
and are being rebilled by Seller to Buyer hereunder. Seller shall pay Clark for
the Utilities as and when the costs and expenses for such Utilities are paid to
Seller by Buyer. Clark shall install metering equipment as necessary to
determine the quantities delivered to Seller each month during the Supply
Period.
Prices for the above utilities are as follows:
Cooling Water: $0.05 per 1000 gallons
Boiler Feed Water Make-up: $1.50 per 1000 gallons
Filtered Water: $0.75 per 1000 gallons
Potable Water: $1.50 per 1000 gallons
Nitrogen: Equal to the average price Buyer pays for purchase
from third parties.
Plant Air: $0.16 per MSCF
Wastewater
(Dirty water treating): $3.08 per 1000 gallons
Refinery Fuel Gas: Reference Section 6 of the Agreement.
The basis of the above prices is 1 January 1998. During the Supply Period these
prices shall be adjusted as of 1 January each calendar year at a fixed rate of
2% per year.
D-7
<PAGE>
EXHIBIT E
DELIVERY POINTS
1. The electrical delivery metering points are shown below:
Clark Refining
Electrical Distribution
System
[Diagram Omitted from Electronic Filing]
E-1
<PAGE>
2. Pipeline Delivery Points [insert KTI Dwg. No. 36914.01N-A-26-002, shts 1-5]
[Diagrams Omitted from Electronic Filing]
E-2
<PAGE>
EXHIBIT F
FACILITY PERFORMANCE CAPABILITIES
Performance figures based on:
1. Average ambient temperature
2. Gas turbine average degradation
3. Gas turbine at full output
======================================
SMR H(2) Production Export Steam Rate
MMSCFD pounds per hour
--------------------------------------
100 440,000
--------------------------------------
75 369,000
--------------------------------------
60 324,600
--------------------------------------
40 257,800
--------------------------------------
Performance figures based on:
1. Average ambient
2. Gas turbine off
======================================
SMR H(2) Production Export Steam Rate
MMSCFD pounds per hour
--------------------------------------
100 398,200
--------------------------------------
F-1
<PAGE>
EXHIBIT G
GAS TURBINE PLANNED MAINTENANCE SCHEDULE
The anticipated planned maintenance schedule for the gas turbine generator is as
shown below.
Event Hrs/Event Events/6yrs. Total
--------------------------------------------------------
Water Wash 24 18 432
8000 Hr. Inspection 192 4 768
24000 Hr. Inspection 336 1 336
48000 Hr. Inspection 504 1 504
G-1
<PAGE>
EXHIBIT H
HYDROGEN ON-STREAM FACTOR EXAMPLE
Reconciliation at the end of Contract Year 2:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 1 97% (88)
Year 2 98% 0
Penalty Total = (88) x $5200/hr = ($457,600)
Reconciliation at the end of Contract Year 3:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 2 98% 0
Year 3 98.5% 44
Bonus Total = 44 x $5200/hr = ($228,000)
Reconciliation at the end of Contract Year 4:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 3 98.5% 44
Year 4 99% 88
Bonus Total = 132 x $5200/hr = ($686,400)
Reconciliation at the end of Contract Year 5:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 4 99% 88
Year 5 96% (176)
Penalty Total = (88) x $5200/hr = ($457,600)
Reconciliation at the end of Contract Year 6:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 5 96% (176)
Year 6 98.3% 26
Penalty Total = (150) x $5200/hr = ($780,000)
H-1
<PAGE>
EXHIBIT I
REFINERY FUEL GAS VOLUME ADJUSTMENT
Refinery fuel gas volumes shall be determined monthly and adjusted in accordance
with the following calculation:
RFa = RFu x [(LHVrf/HHVrf)/(LHVng/HHVng)]
Where:
RFa = Adjusted refinery fuel gas volume for billing month n MMBtu, HHV
RFu = Refinery fuel gas volume for billing month n MMBtu, HHV
LHVrf = LHV for the refinery off-gas used for fuel Btu/SCF
HHVrf = HHV for the refinery off gas used for fuel Btu/SCF
LHVng = LHV of natural gas Btu/SCF
HHVng = HHV of natural gas Btu/SCF
LHVrf and HHVrf shall be as calculated monthly by Buyer based on averaging
Buyer's weekly gas chromatograph-based determination of the refinery fuel
heating values. LHVng and HHVng shall be calculated by averaging the daily gas
chromatograph analysis of the natural gas as provided monthly by the supplier(s)
of natural gas. The quantity of BTU's purchased by Seller from Clark shall be
determined by Seller's metering and densitometer on a BTU/month, HHV basis.
I-1
<PAGE>
EXHIBIT J
BASE FACILITY CHARGE PREPAYMENT SCHEDULE
Upon giving Seller twelve (12) months notice, Buyer may elect to prepay the
capital related portion of the Base Facility Charge set forth in Section 7.1 in
accordance with the following schedule. Following such prepayment the revised,
continuing Base Facility shall be the then current variable portion of the Base
Facility Charge as determined in Section 8.1.
============================
Hydrogen
Yrs. Compression
Remaining in Prepayment
Supply Period Amount
----------------------------
10 5,058,000
----------------------------
9 4,676,000
----------------------------
8 4,271,000
----------------------------
7 3,841,000
----------------------------
6 3,384,000
----------------------------
5 2,900,000
----------------------------
4 2,387,000
----------------------------
3 1,842,000
----------------------------
2 1,264,000
----------------------------
1 651,000
============================
J-1
<PAGE>
EXHIBIT K
SITE HYDROGEN BALANCES
[Insert here copy of Clark 4/14/99]
[H(2) balances spreadsheet]
<PAGE>
PORT ARTHUR REFINERY
HOUP PROJECT
HYDROGEN BALANCE (100% BASIS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
HOUP SPV HOUP SPV HOUP SPV
APRIL 1999 BASE MAX 2ND STAGE HCU MAX DISTILLATE HDS
--------------------------- --------------------------- -----------------------------
CHARGE CHARGE CHARGE
B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REFINERY SYSTEM
- --------------------------------------------------------------------------------------------------------------------------
585 PSIG
- --------------------------------------------------------------------------------------------------------------------------
Producers
- --------------------------------------------------------------------------------------------------------------------------
CCR 1344 51,000 60.9 1,193 51,000 60.9 1,193 51,000 60.9 1,193
- --------------------------------------------------------------------------------------------------------------------------
C 2 A&B 52.0 52.0 52.0
- --------------------------------------------------------------------------------------------------------------------------
1743 Spill -- -- --
- --------------------------------------------------------------------------------------------------------------------------
1344 Spill -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Compressed 52.0 52.0 52.0
- --------------------------------------------------------------------------------------------------------------------------
4544 -- -- --
- --------------------------------------------------------------------------------------------------------------------------
843 NHT PURGE 5.0 5.0 5.0
- --------------------------------------------------------------------------------------------------------------------------
H(2)P/L -- -- --
- --------------------------------------------------------------------------------------------------------------------------
57.0 57.0 57.0
- --------------------------------------------------------------------------------------------------------------------------
HIGH PURITY SPILL 19.0 19.0 26.7
- --------------------------------------------------------------------------------------------------------------------------
TOTAL 76.0 76.0 83.7
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Consumers
- --------------------------------------------------------------------------------------------------------------------------
GFU 241 24,000 8.5 356 24,000 8.5 356 24,000 8.5 356
- --------------------------------------------------------------------------------------------------------------------------
GFU 242 31,272 3.7 119 31,272 3.7 119 31,272 3.7 119
- --------------------------------------------------------------------------------------------------------------------------
GFU 243 33,262 17.0 512 33,262 17.0 512 43,000 24.7 575
- --------------------------------------------------------------------------------------------------------------------------
FCCICO -- -- 792 -- -- 792 9,738 -- 792
- --------------------------------------------------------------------------------------------------------------------------
COKER LGO 24,554 -- 527 24,554 -- 527 24,554 -- 527
- --------------------------------------------------------------------------------------------------------------------------
SR DIESEL 8,708 -- 469 8,708 -- 469 8,708 -- 469
- --------------------------------------------------------------------------------------------------------------------------
GFU 244 65,000 27.0 415 65,000 27.0 415 65,000 27.0 415
- --------------------------------------------------------------------------------------------------------------------------
HFAU 443 [alkylate] 0.5 0.5 0.5
- --------------------------------------------------------------------------------------------------------------------------
SRU 543 [tons S] 0.4 0.4 0.4
- --------------------------------------------------------------------------------------------------------------------------
SRU 544 [tons S] 0.8 0.8 0.8
- --------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
- --------------------------------------------------------------------------------------------------------------------------
NHT 1344 51,768 17.3 335 51,768 17.3 335 51,768 17.3 335
- --------------------------------------------------------------------------------------------------------------------------
SR NAPHTHA 39,483 -- 47 39,483 -- 47 39,483 -- 47
- --------------------------------------------------------------------------------------------------------------------------
99.3 107.0
- --------------------------------------------------------------------------------------------------------------------------
COKER NAPHTHA 12,285 -- 519 12,285 -- 519 12,285 -- 519
- --------------------------------------------------------------------------------------------------------------------------
76.0 76.0 83.7
- --------------------------------------------------------------------------------------------------------------------------
HYDROCRACKER SYSTEM 850 PSIG
- --------------------------------------------------------------------------------------------------------------------------
Producers
- --------------------------------------------------------------------------------------------------------------------------
SMR 94.7 99.3 107.0
- --------------------------------------------------------------------------------------------------------------------------
H(2)P/L -- -- --
- --------------------------------------------------------------------------------------------------------------------------
1544 --
- --------------------------------------------------------------------------------------------------------------------------
HGS -- -- --
- --------------------------------------------------------------------------------------------------------------------------
HT PSA 5.1 5.1 5.1
- --------------------------------------------------------------------------------------------------------------------------
99.8 104.4 112.1
- --------------------------------------------------------------------------------------------------------------------------
Consumers
- --------------------------------------------------------------------------------------------------------------------------
942 35,000 74.2 2,120 35,000 78.8 2,251 35,000 78.8 2,251
- --------------------------------------------------------------------------------------------------------------------------
VGO 6,162 10.1 1,641 6,162 10.1 1,641 6,162 10.1 1,641
- --------------------------------------------------------------------------------------------------------------------------
DCU GAS OIL 19,444 34.9 1,794 19,444 34.9 1,794 19,444 34.9 1,794
- --------------------------------------------------------------------------------------------------------------------------
FCC LCO 9,394 19.5 2,074 9,394 19.5 2,074 9,394 19.5 2,074
- --------------------------------------------------------------------------------------------------------------------------
2ND STAGE 10,217 9.7 953 15,000 14.3 953 15,000 14.3 953
- --------------------------------------------------------------------------------------------------------------------------
HGS 19.0 19.0 26.7
- --------------------------------------------------------------------------------------------------------------------------
843 NHT PURGE 5.0 5.0 5.0
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
843 NHT CONSUMED 12,285 1.0 79 12,285 1.0 79 12,285 1.0 79
- --------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
- --------------------------------------------------------------------------------------------------------------------------
99.8 104.4 112.1
- --------------------------------------------------------------------------------------------------------------------------
Total Prod 175.8 180.4 195.8
- --------------------------------------------------------------------------------------------------------------------------
Total Consumer 175.8 180.4 195.8
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
HOUP SPV HOUP SPV HOUP SPV
CCR COMPRESSOR CCR/CYCLO COMPRESSOR REFORMER @MAX
--------------------------- ------------------------------ ------------------------------
CHARGE CHARGE CHARGE
B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REFINERY SYSTEM
- ----------------------------------------------------------------------------------------------------------------------------------
585 PSIG
- ----------------------------------------------------------------------------------------------------------------------------------
Producers
- ----------------------------------------------------------------------------------------------------------------------------------
CCR 1344 51,000 60.9 1,193 51,000 60.9 1,193 56,000 66.8 1,193
- ----------------------------------------------------------------------------------------------------------------------------------
C 2 A&B 52.0 52.0 52.0
- ----------------------------------------------------------------------------------------------------------------------------------
1743 Spill -- 12.8 12.8
- ----------------------------------------------------------------------------------------------------------------------------------
1344 Spill 8.9 8.9 14.8
- ----------------------------------------------------------------------------------------------------------------------------------
Total Compressed 60.9 73.7 79.6
- ----------------------------------------------------------------------------------------------------------------------------------
4544 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
843 NHT PURGE 5.0 5.0 5.0
- ----------------------------------------------------------------------------------------------------------------------------------
H2P/L -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
65.9 78.7 84.6
- ----------------------------------------------------------------------------------------------------------------------------------
HIGH PURITY SPILL 17.8 5.0 0.2
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 83.7 83.7 84.8
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Cosumers
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 241 24,000 8.5 356 24,000 8.5 356 2,400 8.5 356
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 242 31,272 3.7 119 31,272 3.7 119 31,272 3.7 119
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 243 43,000 24.7 575 43,000 24.7 575 43,000 24.7 575
- ----------------------------------------------------------------------------------------------------------------------------------
FCCICO 9,738 -- 792 9,738 -- 792 9,738 -- 792
- ----------------------------------------------------------------------------------------------------------------------------------
COKER LGO 24,554 -- 527 24,554 -- 527 24,554 -- 527
- ----------------------------------------------------------------------------------------------------------------------------------
SR DIESEL 8,708 -- 469 8,708 -- 469 8,708 -- 469
- ----------------------------------------------------------------------------------------------------------------------------------
GFU 244 65,000 27.0 415 65,000 27.0 415 65,000 27.0 415
- ----------------------------------------------------------------------------------------------------------------------------
HFAU 443 [alkylate] 0.5 0.5 0.5
- ----------------------------------------------------------------------------------------------------------------------------------
SRU 543 [tons S] 0.4 0.4 0.4
- ----------------------------------------------------------------------------------------------------------------------------------
SRU 544 [tons S] 0.8 0.8 0.8
- ----------------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
- ----------------------------------------------------------------------------------------------------------------------------------
NHT 1344 51,768 17.3 335 51,768 17.3 335 56,843 18.5 325
- ----------------------------------------------------------------------------------------------------------------------------------
SR NAPHTHA 39,483 -- 47 39,483 -- 47 44,558 -- 47
- ----------------------------------------------------------------------------------------------------------------------------------
COKER NAPHTHA 12,285 -- 519 12,285 -- 519 12,285 -- 519
- ----------------------------------------------------------------------------------------------------------------------------------
83.7 83.7 84.8
- ----------------------------------------------------------------------------------------------------------------------------------
HYDROCRACKER SYSTEM 850 PSIG
- ----------------------------------------------------------------------------------------------------------------------------------
Producers
- ----------------------------------------------------------------------------------------------------------------------------------
SMR 90.1 85.3 80.5
- ----------------------------------------------------------------------------------------------------------------------------------
H2P/L -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
1544 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
HGS -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
HT PSA 5.1 5.1 5.1
- ----------------------------------------------------------------------------------------------------------------------------------
103.2 90.4 85.6
- ----------------------------------------------------------------------------------------------------------------------------------
Consumers
- ----------------------------------------------------------------------------------------------------------------------------------
942 35,000 78.8 2,251 35,000 78.8 2,251 35,000 78.8 2,251
- ----------------------------------------------------------------------------------------------------------------------------------
VGO 6,162 10.1 1,641 6,162 10.1 1,641 6,162 10.1 1,641
- ----------------------------------------------------------------------------------------------------------------------------------
DCU GAS OIL 19,444 34.9 1,794 19,444 34.9 1,794 19,444 34.9 1,794
- ----------------------------------------------------------------------------------------------------------------------------------
FCC LCO 9,394 19.5 2,074 9,394 19.5 2,074 9,394 19.5 2,074
- ----------------------------------------------------------------------------------------------------------------------------------
2ND STAGE 15,000 14.3 953 15,000 14.3 953 15,100 14.3 953
- ----------------------------------------------------------------------------------------------------------------------------------
HGS 17.8 5.0 0.2
- ----------------------------------------------------------------------------------------------------------------------------------
843 NHT PURGE 5.0 5.0 5.0
- ----------------------------------------------------------------------------------------------------------------------------------
843 NHT CONSUMED 12,285 1.0 79 12,285 1.0 79 12,285 1.0 79
- ----------------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
- ----------------------------------------------------------------------------------------------------------------------------------
103.2 90.4 85.6
- ----------------------------------------------------------------------------------------------------------------------------------
Total Prod 186.9 174.1 170.4
- ----------------------------------------------------------------------------------------------------------------------------------
Total Consumer 186.9 174.1 170.4
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------
HOUP SPV
1544 HYDROGEN
-------------------------------
CHARGE
B/SD MMSCFCD SCF/Bbl
- ----------------------------------------------------------------
<S> <C> <C> <C>
REFINERY SYSTEM
- ----------------------------------------------------------------
585 PSIG
- ----------------------------------------------------------------
Producers
- ----------------------------------------------------------------
CCR 1344 56,000 66.8 1,193
- ----------------------------------------------------------------
C 2 A&B 52.0
- ----------------------------------------------------------------
1743 Spill 12.8
- ----------------------------------------------------------------
1344 Spill 14.8
- ----------------------------------------------------------------
Total Compressed 79.6
- ----------------------------------------------------------------
4544 --
- ----------------------------------------------------------------
843 NHT PURGE 5.0
- ----------------------------------------------------------------
H(2)P/L 84.6
- ----------------------------------------------------------------
--
- ----------------------------------------------------------------
HIGH PURITY SPILL 0.2
- ----------------------------------------------------------------
TOTAL 84.8
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Consumers
- ----------------------------------------------------------------
GFU 241 24,000 8.5 356
- ----------------------------------------------------------------
GFU 242 31,272 3.7 119
- ----------------------------------------------------------------
GFU 243 43,000 24.7 575
- ----------------------------------------------------------------
FCCICO 9,738 -- 792
- ----------------------------------------------------------------
COKER LGO 24,554 -- 527
- ----------------------------------------------------------------
SR DIESEL 8,708 -- 469
- ----------------------------------------------------------------
GFU 244 65,000 27.0 415
- ----------------------------------------------------------------
HFAU 443 [alkylate] 0.5
- ----------------------------------------------------------------
SRU 543 [tons S] 0.4
- ----------------------------------------------------------------
SRU 544 [tons S] 0.8
- ----------------------------------------------------------------
SRU 545 [tons S] 0.7
- ----------------------------------------------------------------
NHT 1344 56,843 18.5 325
- ----------------------------------------------------------------
SR NAPHTHA 44,558 -- 47
- ----------------------------------------------------------------
COKER NAPHTHA 12,285 -- 518
- ----------------------------------------------------------------
84.8
- ----------------------------------------------------------------
HYDROCRACKER SYSTEM 850 PSIG
- ----------------------------------------------------------------
Producers
- ----------------------------------------------------------------
SMR 71.3
- ----------------------------------------------------------------
H2P/L --
- ----------------------------------------------------------------
1544 9.2
- ----------------------------------------------------------------
HGS --
- ----------------------------------------------------------------
HT PSA 5.1
- ----------------------------------------------------------------
85.6
- ----------------------------------------------------------------
Consumers
- ----------------------------------------------------------------
942 35,000 78.8 2,251
- ----------------------------------------------------------------
VGO 6,162 10.1 1,641
- ----------------------------------------------------------------
DCU GAS OIL 19,444 34.9 1,794
- ----------------------------------------------------------------
FCC LCO 9,394 19.5 2,074
- ----------------------------------------------------------------
2ND STAGE 15,000 14.3 953
- ----------------------------------------------------------------
HGS 0.2
- ----------------------------------------------------------------
843 NHT PURGE 5.0
- ----------------------------------------------------------------
843 NHT CONSUMED 12,825 1.0 79
- ----------------------------------------------------------------
SRU 545 [tons S] 0.7
- ----------------------------------------------------------------
85.6
- ----------------------------------------------------------------
Total Prod 170.4
- ----------------------------------------------------------------
Total Consumer 170.4
- ----------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.11
EXECUTION COPY
================================================================================
COKER COMPLEX GROUND LEASE
AND BLANKET EASEMENT AGREEMENT
dated as of August 19, 1999
between
CLARK REFINING & MARKETING, INC.
and
PORT ARTHUR COKER COMPANY L.P.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS........................................................1
SECTION 1.1 Definitions...........................................1
SECTION 1.2 Other Definitional Provisions.........................1
ARTICLE II
LEASE AND GRANT OF EASEMENTS.......................................1
SECTION 2.1 Lease.................................................1
SECTION 2.2 Grant of Easements....................................2
SECTION 2.3 Easements Appurtenant.................................3
SECTION 2.4 No Interference ......................................3
ARTICLE III
POSSESSION AND QUIET ENJOYMENT.....................................3
ARTICLE IV
TITLE..............................................................3
ARTICLE V
FIXTURES...........................................................4
ARTICLE VI
AUXILIARY FACILITIES...............................................4
ARTICLE VII
UNDERTAKINGS OF LESSOR; FURTHER ASSURANCES.........................5
ARTICLE VIII
RESERVATIONS AND RESTRICTIONS......................................6
SECTION 8.1 Reservations..........................................6
ARTICLE IX
MAINTENANCE; INSPECTION; COMPLIANCE WITH LAWS......................6
SECTION 9.1 Maintenance...........................................6
SECTION 9.2 Inspection............................................6
SECTION 9.3 Compliance with Laws..................................6
-1-
<PAGE>
Page
----
ARTICLE X
LIENS..............................................................7
SECTION 10.1 Lessee Liens.........................................7
SECTION 10.2 Lessor Liens ........................................8
ARTICLE XI
TAXES AND CHARGES..................................................8
SECTION 11.1 Taxes................................................8
SECTION 11.2 Apportionment .......................................8
ARTICLE XII
INSURANCE..........................................................9
SECTION 12.1 Lessee Insurance.....................................9
SECTION 12.2 Lessor Insurance ....................................9
ARTICLE XIII
RENT...............................................................9
SECTION 13.1 Initial Term.........................................9
SECTION 13.2 Renewal Term ........................................9
ARTICLE XIV
NONTERMINATION....................................................10
ARTICLE XV
CONDEMNATION......................................................11
ARTICLE XVI
BINDING EFFECT; SUCCESSORS AND ASSIGNS............................11
ARTICLE XVII
LESSEE'S OPTION TO REMOVE THE FACILITY............................11
ARTICLE XVIII
POSSESSION UPON TERMINATION.......................................12
ARTICLE XIX
INDEMNITY.........................................................12
SECTION 19.1 Lessee Indemnity....................................12
SECTION 19.2 Lessor Indemnity ...................................13
ARTICLE XX
TERM..............................................................13
SECTION 20.1 Coker Complex Ground Lease Term.....................13
SECTION 20.2 Renewal Term .......................................14
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<PAGE>
Page
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ARTICLE XXI
MINERAL RIGHTS....................................................14
ARTICLE XXII
MISCELLANEOUS.....................................................14
SECTION 22.1 Assignment as Security for Lessee's Obligations....14
SECTION 22.2 Memorandum of Lease................................15
SECTION 22.3 Relationship of the Parties........................15
SECTION 22.4 Time is of the Essence.............................15
SECTION 22.5 Notices ...........................................15
SECTION 22.6 Severability ......................................16
SECTION 22.7 Amendment .........................................16
SECTION 22.8 Headings, etc. ....................................16
SECTION 22.9 Counterparts ......................................17
SECTION 22.10 GOVERNING LAW......................................17
SECTION 22.11 WAIVER OF JURY TRIAL...............................17
ARTICLE XXIII
NO MERGER.........................................................17
SECTION 23.1 No Merger...........................................17
APPENDIX A -- DEFINITIONS
EXHIBITS
A Coker Site Description
B Blanket Easement Description
C Dock Easement Description
D Air Products Utilities
E Form of Assignment and Consent Agreement
F Auxiliary Facilities
G Form of Memorandum of Lease
SCHEDULES
I Coker Complex Site Permitted Liens
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<PAGE>
GROUND LEASE AND BLANKET EASEMENT AGREEMENT (the "Coker Complex Ground
--------------------
Lease"), dated as of August 19, 1999, between Clark Refining & Marketing, Inc.,
- -----
a Delaware corporation ("Lessor") and Port Arthur Coker Company L.P., a Delaware
------
Limited Partnership ("Lessee").
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WHEREAS, the Lessor is the owner of the Coker Complex Site;
WHEREAS, Lessee wishes to lease the Coker Complex Site from Lessor in order
to construct and operate the Coker Complex at the Coker Complex Site; and
WHEREAS, Lessor wishes to lease the Coker Complex Site to Lessee;
NOW THEREFORE, for and in consideration of the mutual covenants, premises
and agreements set forth herein, and good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Except as otherwise defined herein, the
-----------
capitalized terms used herein shall have the respective meanings assigned
thereto in Appendix A.
SECTION 1.2 Other Definitional Provisions.
-----------------------------
(a) The words "hereof", "herein", "hereto" and "hereunder" and words of
similar import when used in this Coker Complex Ground Lease shall refer to this
Coker Complex Ground Lease as a whole and not to any particular provision of
this Coker Complex Ground Lease, and Article, Section and Schedule references
are to this Coker Complex Ground Lease unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
ARTICLE II
LEASE AND GRANT OF EASEMENTS
SECTION 2.1 Lease. The Lessor hereby demises, leases and delivers to the
-----
Lessee and Lessee hereby leases and accepts from Lessor the following described
properties for a term of years equal to the Coker Complex Ground Lease Term,
subject to all Permitted Liens now or hereafter in existence, (such estates
being referred to herein as the "Coker Complex Leasehold"):
<PAGE>
2
(a) the property (the "Coker Complex Site") described in
Exhibit A; provided, however, that as to the portions of Avenue H and
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14th Street included in the description of the Coker Complex Site,
Lessee's use shall be non-exclusive and in common with Lessor and other
occupants of the Adjacent Refinery Property; and
(b) all equipment, buildings, structures, fixtures and
improvements located on the Coker Complex Site.
SECTION 2.2 Grant of Easements. Lessor does hereby grant and
------------------
convey to Lessee, for the Coker Complex Ground Lease Term, the following
easements (which, together with all other easements granted or to be granted by
or pursuant to this Coker Complex Ground Lease are referred to as "Easements")
appurtenant to the Coker Complex Leasehold:
(a) a nonexclusive easement on, over and under the Adjacent
Refinery Property, as more particularly described in Exhibit B, for the
purpose of ingress and egress, for the construction and maintenance of
interconnection pipes, wiring, other pipelines and communication and
utility lines and for any other purpose as may be necessary or
desirable in connection with the construction, ownership and operation
of the Coker Complex or the operation of the Heavy Oil Processing
Facility or any of the Auxiliary Facilities, including, without
limitation, the provision by Lessee to Air Products of any of the
utilities described on Exhibit D hereto pursuant to Section 17.4 of the
Hydrogen Supply Agreement;
(b) a nonexclusive easement on that portion of the dock
described in Exhibit C for the purpose of unloading cargoes of crude
oil and other feedstocks and loading products of the Coker Complex and
for the construction and maintenance of pipes, pumps, valves, gauges
and other equipment in connection with such loading and unloading; and
(c) a nonexclusive easement on, over and under all pipelines,
oil handling facilities and terminaling facilities (including, in each
case, any and all easements relating thereto) owned or otherwise
controlled by Lessor (i) for the purpose of transporting oil (A) from
the facilities of Sun Pipe Line Company in Nederland, Texas to and
through the facility commonly known as "Lucas Terminal" and (B) from
Lucas Terminal to the Adjacent Refinery Property, (ii) for the purpose
of transporting crude oil and the access to and maintenance of oil
pipelines, interconnection pipes, tanks, wiring, other pipelines and
communication and utility lines and (iii) for any other purpose as may
be necessary or desirable in connection with the transportation of
crude oil from the docking facilities of Sun Pipe Line Company in
Nederland, Texas to the Refinery. Lessor shall, at its sole cost and
expense and promptly upon notice from Lessee, take all such actions as
Lessee may reasonably request to further specify, document or reflect
in the public records the foregoing easement described in this clause
(c) or to obtain title insurance with respect to such easement.
<PAGE>
3
SECTION 2.3 Easements Appurtenant. The Easements shall be deemed to be
---------------------
appurtenant to the Coker Complex Leasehold and shall be for the benefit of the
Lessee and its permitted successors and assigns. Lessor agrees that it will not
make any use or permit any use of the land described in Exhibit B or Exhibit C
that would interfere with the use and enjoyment of the Easements or the
operation of the Coker Complex by the Lessee or its successors, assigns or
subtenants at any time during the Coker Complex Ground Lease Term, except to the
extent that such use would not impair (i) the ability of the Lessee or its
successors, assigns or subtenants to operate the Coker Complex in accordance
with the Base Case Financial Model or (ii) any of the security interests granted
or to be granted by the Coker Company to the Financing Parties pursuant to the
Financing Documents.
SECTION 2.4 No Interference. With respect to any nonexclusive easement
---------------
granted pursuant to this Coker Complex Ground Lease, the Lessor shall not grant
or convey any easement or other interest (other than a Permitted Lien) that, if
used or enjoyed in accordance with its terms, would interfere with the use and
enjoyment of the Coker Complex, Coker Complex Leasehold and Easements or the
operation of the Coker Complex by the Lessee or its permitted successors,
assigns or subtenants at any time during the Coker Complex Ground Lease Term,
except to the extent that such easement or interest would not impair (i) the
ability of the Lessee or its successors, assigns or subtenants to operate the
Coker Complex in accordance with the Base Case Financial Model or (ii) any of
the security interests granted or to be granted by the Coker Company to the
Financing Parties pursuant to the Financing Documents.
ARTICLE III
POSSESSION AND QUIET ENJOYMENT
The Lessor covenants with the Lessee that the Lessee will enjoy quiet
possession of the Coker Complex Leasehold and the right to utilize the
Easements, free from claims of persons in possession and third parties claiming
rights thereto.
ARTICLE IV
TITLE
The Lessor warrants and represents that it has (a) good and indefeasible
title to the Coker Complex Site and to all property covered by any Easement
(other than the Easement granted pursuant to clause (c) of Section 2.2, with
respect to which it has a valid and enforceable easement interest with the right
to grant such Easement), in fee simple absolute and (b) the right to convey the
Easements, in each case free and clear of all liens and encumbrances, except for
Permitted Liens. The Lessor further warrants and represents that Permitted Liens
in existence on the date hereof do not and will not adversely affect the use of
the Coker Complex Site, the Easements and the Auxiliary Facilities as
contemplated by the other Project Documents.
<PAGE>
4
ARTICLE V
FIXTURES
As a material part of this Coker Complex Ground Lease, the Lessor and the
Lessee agree and intend that each item representing part of the Coker Complex
(a) is attached, affixed and annexed to the Coker Complex Site or the Easements,
as the case may be, (b) shall remain attached, affixed and annexed to the Coker
Complex Site or the Easements, as the case may be, (c) shall be considered with
respect to the interests of the parties hereto as the real property of the
Lessee for the Coker Complex Ground Lease Term (subject to Lessor's reversionary
interest therein), (d) shall be considered to become fixtures to and a part of
the Coker Complex Site or the Easements, as the case may be, immediately upon
being installed or constructed on, or otherwise affixed or annexed to, the Coker
Complex Site, (e) is adaptable to the uses and purposes for which the Coker
Complex Site is being leased by Lessor to Lessee, and (f) cannot be removed from
the Coker Complex Site without doing substantial injury and/or material damage
to the Coker Complex Site.
ARTICLE VI
AUXILIARY FACILITIES
For purposes hereof, "Auxiliary Facilities" shall mean: the nonexclusive
use of any equipment or facilities owned by the Lessor and located on the
Easements and necessary to the operation of the Coker Complex, including,
without limitation, the facilities necessary for Lessee to provide Air Products
with any of the utilities described on Exhibit D hereto pursuant to Section 17.4
of the Hydrogen Supply Agreement. The Auxiliary Facilities include, without
limitation, the equipment and facilities described on Exhibit F.
The Lessor hereby grants to the Lessee the license to use the Auxiliary
Facilities during the Coker Complex Ground Lease Term. Such right shall be a
nonexclusive license in real property, irrevocable for the Coker Complex Ground
Lease Term, and such rights to use the Auxiliary Facilities are herein called
the "Auxiliary Rights". The Lessor may not grant a license to any other Person
to use any of the Auxiliary Facilities during the Ground Lease Term, except to
the extent that the granting of such license and the use of such Auxiliary
Facilities by such Person would not impair (i) the ability of the Lessee or its
successors, assigns or subtenants to operate the Coker Complex in accordance
with the Base Case Financial Model, (ii) the ability of Lessee to provide Air
Products with any of the utilities described on Exhibit D hereto pursuant to
Section 17.4 of the Hydrogen Supply Agreement or (iii) any of the security
interests granted or to be granted by the Lessee to the Financing Parties
pursuant to the Financing Documents.
<PAGE>
5
ARTICLE VII
UNDERTAKINGS OF LESSOR; FURTHER ASSURANCES
The Lessor covenants, represents and warrants to the Lessee that the Coker
Complex Leasehold, the Easements and the Auxiliary Rights are sufficient and
will, at all times during the Coker Complex Ground Lease Term, be sufficient or,
if the same shall cease to be so sufficient, the Lessor will at its expense take
such action, including the conveyance of easements and the grant of additional
Auxiliary Rights, as is reasonable or necessary, in order to provide the Lessee
with reasonable means of constructing, connecting, operating, maintaining,
replacing, renewing and repairing the Coker Complex including, but not limited
to (a) reasonable means of transporting materials to be processed to the Coker
Complex and shipping processed material from the Coker Complex, (b) reasonable
access subject to regulatory restrictions to communications networks and sources
of electric power, natural gas and other utilities for operation of the Coker
Complex, (c) reasonable access subject to regulatory restrictions to sources of
potable water, (d) reasonable access subject to regulatory restrictions to areas
for or means of disposing of waste materials generated by the operation of the
Coker Complex, (e) reasonable access on the Coker Complex Site to a supply of
hydrogen, by pipeline or other commercially reasonable alternative, sufficient
for the requirements of the Coker Complex, and (f) existing firewater systems,
as they may be modified, necessary to maintain, protect and preserve the Coker
Complex Site. At all times during the Coker Complex Ground Lease Term the
Lessor, at its expense, shall maintain the Easements and the Auxiliary
Facilities in good condition and repair and in accordance with Applicable Laws
so that they will be available for the operation of the Coker Complex,
including, without limitation, the maintenance of roads, equipment, pumps, and
pipelines located on Easements or constituting part of an Auxiliary Facility.
The agreement and obligation of Lessor to provide electric utilities and
electric service, natural gas and gas service, potable water and water service
and sanitary sewage service to the Coker Complex pursuant to the Services and
Supply Agreement is incident to, dependent upon and inseparable from the
landlord/tenant relationship established by this Coker Complex Ground Lease, and
such obligation shall continue only for the Coker Complex Ground Lease Term and
the existence of such landlord/tenant relationship. All charges for potable
water and sanitary sewer services to be provided by Lessor to Lessee pursuant to
the Services and Supply Agreement are included in the rent payable to Lessor
hereunder. The provisions of the Services and Supply Agreement are intended only
to provide a mechanism for Lessor to recover from Lessee the cost of providing
electricity and electric service, and natural gas and gas service, to the Coker
Complex, and it is not intended that Lessor shall make a profit by providing
such utilities. Lessee acknowledges, understands and agrees that none of such
utilities may be sold or resold by Lessee, and none of such utilities may be
used by any other party or for any other purpose other than in connection with
its tenancy hereunder.
<PAGE>
6
ARTICLE VIII
RESERVATIONS AND RESTRICTIONS
SECTION 8.1 Reservations. The grant and conveyance of the
------------
Easements and the Auxiliary Rights by the Lessor to the Lessee are subject to
the following reservations and understandings:
(a) The Lessor reserves the right to relocate all or any
portion of the Coker Complex or other property of the Lessee located on
the Adjacent Refinery Property provided that such relocation (i) does
not subject such property to any Liens, conditions or other
restrictions (other than Permitted Liens), (ii) is at the Lessor's
expense and (iii) does not deprive the Lessee of effective use of such
property or make the use of such property more expensive or burdensome
or adversely affect the operation of the Coker Complex, except to the
extent that such relocation would not impair (x) the ability of the
Lessee or its successors, assigns or subtenants to operate the Coker
Complex in accordance with the Base Case Financial Model or (y) any of
the security interests granted or to be granted by the Lessee to the
Financing Parties pursuant to the Financing Documents.
(b) Subject to Section 2.2 and clause (a) of this Section 8.1,
the Lessor reserves the right to use, permit the use of, or grant
easements or licenses to use, any part of the Adjacent Refinery
Property.
ARTICLE IX
MAINTENANCE; INSPECTION; COMPLIANCE WITH LAWS
SECTION 9.1 Maintenance. During the Coker Complex Ground
-----------
Lease Term, the Lessee shall take care of and maintain the Coker Complex Site.
So long as the Services and Supply Agreement is in effect, such performance with
respect to maintenance of the Coker Complex Site as rendered by Lessor
thereunder shall be deemed to fulfill Lessee's obligations under this Section.
SECTION 9.2 Inspection. During the Coker Complex Ground Lease
----------
Term, the Lessor and its authorized representatives may, at their own expense,
at reasonable times and by appointment on reasonable notice, inspect the Coker
Complex Site and the Coker Complex and any other property located on the Coker
Complex Site.
SECTION 9.3 Compliance with Laws. (a) During the Coker Complex
--------------------
Ground Lease Term, the Lessee, at its sole cost and expense, shall conform to,
comply with and take any and all action necessary to avoid or eliminate any
violation of any Applicable Laws applicable to the Coker Complex Site and the
Coker Complex, or the use, ownership or occupancy thereof, unless and to the
extent that (x) the Lessee shall be prosecuting in good faith a test, challenge,
appeal or proceeding for review of such Applicable Laws by appropriate
proceedings that do not involve any substantial risk of (i) foreclosure, sale,
forfeiture or loss of, or imposition of any Lien
<PAGE>
7
prohibited by Article X on the Coker Complex Site or any part thereof, (ii)
extending the ultimate imposition of such requirement beyond the termination of
the Coker Complex Ground Lease Term or (iii) any material claim against the
Lessor, the Coker Complex Site or any property of the Lessor or (y) such
violation relates to the presence of or any failure to remediate environmental
contamination existing on or under the Coker Complex Site prior to the date
hereof. So long as the Services and Supply Agreement is in effect, such
performance with respect to compliance with laws applicable to the Coker Complex
Site and the Coker Complex as may be rendered thereunder by the Lessor shall be
deemed to fulfill Lessee's obligations under this Section.
(b) During the Coker Complex Ground Lease Term, the Lessor, at its sole
cost and expense, shall conform to, comply with and take any and all action
necessary to avoid or eliminate any violation of any Applicable Laws applicable
to the Clark Refinery Property (other than the Coker Complex Site, except to the
extent that such violation relates to any environmental condition on or under
the Coker Complex Site prior to the date hereof), or the use or occupancy
thereof, unless and to the extent that (x) the Lessor shall be prosecuting in
good faith a test, challenge, appeal or proceeding for review of such Applicable
Laws by appropriate proceedings that do not involve any substantial risk of (i)
foreclosure, sale, forfeiture or loss of, or imposition of any Lien prohibited
by Article X on the Clark Refinery Property or any part thereof, (ii) extending
the ultimate imposition of such requirement beyond the termination of the Coker
Complex Ground Lease Term or (iii) any material claim against the Lessee, the
Clark Refinery Property or any property of the Lessee, or (y) such violation
could not reasonably be expected to have a material adverse effect on the Coker
Complex Site or the right of the Lessee to use and enjoy the Easements.
ARTICLE X
LIENS
SECTION 10.1 Lessee Liens. (a) During the Coker Complex Ground Lease Term,
------------
the Lessee shall not directly or indirectly create, assume or suffer to exist
any Lien by any Person claiming by, through or under the Lessee, on or with
respect to the Coker Complex Site, except Permitted Liens and any other Liens
against any part of the Coker Complex Site or the Easements (i) in favor of any
taxing authority by reason of the nonpayment by the Lessor of any Tax (other
than Taxes being diligently contested in good faith in appropriate proceedings),
(ii) resulting from any act of the Lessor, or failure by the Lessor to take any
action required hereunder, or (iii) arising in connection with claims against
the Lessor.
(b) If any Lien, other than a Lien excepted under clause (a) of this
Section 10.1, on any property of the Lessor arising in connection with the
Lessee's use or occupation of the Coker Complex Site or the Easements or work of
any character performed by or at the direction of the Lessee, shall arise at any
time during the Coker Complex Ground Lease Term, the Lessee shall promptly
discharge it at its own cost and expense and shall indemnify and hold harmless
the Lessor from and against any loss, damage, costs or expense (including legal
fees and expenses) as a result of the existence or enforcement of such Lien.
<PAGE>
8
SECTION 10.2 Lessor Liens. During the Coker Complex Ground Lease Term, the
------------
Lessor shall not directly or indirectly create, assume or suffer to exist any
Lien by any Person claiming by, through or under the Lessor, on or with respect
to the Clark Refinery Property, except Permitted Liens. If any Lien, other than
a Permitted Lien, on any property of the Lessee arising in connection with the
Lessor's use, ownership or occupation of the Clark Refinery Property or work of
any character performed by or at the direction of the Lessor, shall arise at any
time during the Coker Complex Ground Lease Term, the Lessor shall promptly
discharge it at its own cost and expense and shall indemnify and hold harmless
the Lessee from and against any loss, damage, costs or expense (including legal
fees and expenses) as a result of the existence or enforcement of such Lien.
ARTICLE XI
TAXES AND CHARGES
SECTION 11.1 Taxes. (a) During the Coker Complex Ground Lease Term, the
-----
Lessee shall pay or cause to be paid, before delinquency, any Tax assessed,
levied, imposed upon, or to become due and payable out of or in respect of the
use, ownership, possession, operation, control, maintenance or insurance of the
Coker Complex Site.
(b) The Lessee shall have the right to contest in good faith, at the
Lessee's sole cost and expense, the amount or validity, in whole or in part, of
any Tax by appropriate proceedings, so long as such contest and proceedings
shall not involve any material risk of sale, forfeiture or loss of the Coker
Complex Site, or any part thereof or the imposition of any Lien prohibited by
Article X. Notwithstanding anything herein to the contrary, during the Coker
Complex Ground Lease Term, the Lessor shall not contest or object to any Taxes
due and payable out of or in respect of the use, ownership, possession,
operation, control, maintenance or insurance of the Coker Complex Site without
the prior written consent of Lessee and the Financing Parties.
(c) During the Coker Complex Ground Lease Term, the Lessor shall pay or
cause to be paid, before delinquency, any tax assessed, levied, imposed upon, or
to become due and payable out of or in respect of the use, ownership,
possession, operation, control, maintenance or insurance of the Clark Refinery
Property (other than the Coker Complex Site), other than Taxes payable by Lessee
pursuant to clause (a) above.
(d) The Lessor shall have the right to contest in good faith, at the
Lessor's sole cost and expense, the amount or validity, in whole or in part, of
any Tax, due and payable out of or in respect of the use, ownership, possession,
operation, control, maintenance or insurance of the Clark Refinery Property by
appropriate proceedings, so long as such contest and proceedings shall not
involve any substantial risk of sale, forfeiture or loss of the Clark Refinery
Property, or any part thereof or the imposition of any Lien prohibited by
Article X.
SECTION 11.2 Apportionment. If during the Coker Complex Ground Lease Term
-------------
any one of the Coker Complex Site shall not be separately assessed but shall be
assessed as
<PAGE>
9
part of a larger tract of land, then Lessor and Lessee shall fairly and
equitably apportion any Tax resulting from such assessment based on (a) with
respect to any tax assessed on equipment, the relative value of the equipment
being leased hereunder and any other equipment included in such assessment, and
(b) with respect to any land, the relative acreage of the land comprising the
Ancillary Equipment Site and any other land being taxed.
ARTICLE XII
INSURANCE
SECTION 12.1 Lessee Insurance. During the Coker Complex Ground Lease Term,
----------------
the Lessee shall, without cost to the Lessor, maintain or cause to be maintained
in effect with insurers of good national or international repute, comprehensive
general liability insurance policies with respect to the Coker Complex Site, the
Coker Complex, and any other property located on the Coker Complex Site,
insuring against death and bodily injury, loss or damage to property of others
and such other risks as are customarily insured against in the petroleum
refining industry, all in such amounts as are reasonable under the
circumstances. Any insurance policies maintained in accordance with this Section
12.1 shall name (a) the Lessor and the Collateral Trustee as additional insured
parties and (b) the Collateral Trustee as sole loss payee thereunder. Copies or
certificates of such policies shall be delivered to the Lessor and the
Collateral Trustee by the Lessee.
SECTION 12.2 Lessor Insurance. During the Coker Complex Ground Lease Term,
----------------
the Lessor shall, without cost to the Lessee, maintain or cause to be maintained
in effect with insurers of good national or international repute, comprehensive
general liability insurance policies with respect to the Clark Refinery
Property, other than the Coker Complex Site, insuring against death and bodily
injury, loss or damage to property of others and such other risks as are
customarily insured against in the petroleum refining industry, all in such
amounts as are reasonable under the circumstances. Any insurance policies
maintained in accordance with this Section 12.2 shall name the Lessee and the
Collateral Trustee as additional insured parties thereunder. Copies or
certificates of such policies shall be delivered to the Lessee and the
Collateral Trustee by the Lessor.
ARTICLE XIII
RENT
SECTION 13.1 Initial Term. For the entire Coker Complex Initial Term the
------------
rent payable by the Lessee for the Coker Complex Leasehold, the Easements and
the Auxiliary Rights shall be $25,000, payable in advance in a lump sum upon
Financial Close.
SECTION 13.2 Renewal Term. If Lessee has provided notice of exercise of its
------------
option to extend the term hereof for a Coker Complex Renewal Term as provided in
Section 20.2 hereof, Lessor and Lessee shall consult for the purpose of
determining the Fair Market Rental Value of the Coker Complex Site (without
attributing any value to the Coker Complex) as of the
<PAGE>
10
end of the Coker Complex Initial Term or the applicable Coker Complex Renewal
Term, as the case may be, and any values agreed upon in writing shall constitute
such Fair Market Rental Value of the Coker Complex for purposes of this Section
13.2. If Lessor and Lessee fail to agree upon such values on or prior to the
date six months prior to the expiration of the Coker Complex Initial Term or a
Coker Complex Renewal Term, as the case may be, either party may request, by
written notice to the other, that such values be determined by the Appraisal
Procedure. During any Coker Complex Lease Renewal Term, rent determined in
accordance herewith shall be paid quarterly in arrears.
ARTICLE XIV
NONTERMINATION
Except as provided in Article XV, this Agreement shall not terminate, nor
shall any of the Easements or Auxiliary Rights or the Coker Complex Leasehold be
extinguished, lost, conveyed or otherwise impaired, or be merged into or with
any other interest or estate in the Coker Complex Site or any other property
interest, in whole or in part, by any cause or for any reason whatsoever,
including, without limitation, the following: (a) any damage to or destruction
of all or any part of the Coker Complex, or the taking of the Coker Complex or
any portion thereof by condemnation, requisition, eminent domain or otherwise,
(b) any prohibition, limitation or restriction of any party's use of all or any
part of the Coker Complex Site, the Coker Complex, the Easements, the Auxiliary
Rights or the interference of such use by any Person, or any eviction by
paramount title or otherwise, (c) the coincident ownership by any Person
(including the Lessee) of any estate or interest in the Easements or the
Auxiliary Facilities and other rights granted and conveyed pursuant to this
Agreement with any estate or interest in the Coker Complex Site, the Coker
Complex or the Auxiliary Facilities, (d) any inadequacy, incorrectness or
failure of the description of the Coker Complex Site, the Easements, the
Auxiliary Rights or any other property or rights intended to be granted or
conveyed by this Agreement, (e) any default in the performance or the observance
by any party of any of their respective covenants and agreements to be performed
and observed by the respective party under any of the Project Documents, (f) the
insolvency, bankruptcy, reorganization or similar proceedings by or against any
party hereto (and in the event of a bankruptcy proceeding involving Lessor, it
is expressly intended that Lessee shall have the rights and options provided in
(S) 365(h) of Title 11 of the United States Code), (g) any nonuse or excessive
use of any Easement or any Auxiliary Right, (h) any execution of the security
interest granted by the Lessee to the Collateral Trustee or subsequent transfer
or reassignment of the rights hereunder, or (i) any other reason whatsoever,
whether similar or dissimilar to any of the foregoing. It is intended and agreed
by the parties hereto that the Coker Complex Leasehold, the Easements, the
Auxiliary Rights and other rights granted and conveyed hereunder shall be
separate and independent covenants and agreements of the parties hereto and
that, except as provided in Article XV, no Coker Complex Leasehold, Easement,
Auxiliary Right or other right granted or conveyed pursuant to this Agreement
may be terminated without the express consent of the Collateral Trustee.
<PAGE>
11
Except as expressly provided in subparagraph (e) above, the provisions of
this Article XIV shall not limit or restrict the remedies available to Lessor or
Lessee in the event of a default by Lessee or Lessor under this Coker Complex
Ground Lease, and all such remedies are hereby reserved to Lessor or Lessee, as
the case may be, including (without limitation) an action for damages and/or an
action for specific performance.
ARTICLE XV
CONDEMNATION
If all or such a substantial portion of the Coker Complex Site is condemned
or transferred in lieu of condemnation and the remainder is not sufficient to
permit operation of the Coker Complex on a commercial basis, the Coker Complex
Ground Lease Term shall terminate at the time title vests in the condemning
authority, and the net proceeds of the condemnation shall be applied first to
pay off any amounts outstanding under the Financing Documents and the remainder,
if any, shall be divided between the Lessee and the Lessor in proportion to the
fair market sales value of their respective interests in the property condemned.
If an insubstantial portion of the Coker Complex Site is condemned at any time,
the Coker Complex Ground Lease Term shall not terminate and net proceeds of the
condemnation shall be used first to restore the Coker Complex Site, with the
balance divided between the Lessor and the Lessee in proportion to the fair
market sales value of their interests in the property condemned. For the
purposes of this Article XV, the net proceeds of a condemnation shall mean the
total condemnation proceeds less the costs and expenses incurred in connection
with the condemnation (including legal fees).
ARTICLE XVI
BINDING EFFECT; SUCCESSORS AND ASSIGNS
The terms and provisions of this Coker Complex Ground Lease, the
appurtenant easements and license in real property provided herein, and the
respective rights and obligations hereunder of the Lessee and the Lessor shall
be binding upon, and inure to the benefit of, their respective permitted
successors, assigns and sublessees, including without limitation the Collateral
Trustee, the Financing Parties and any subsequent transferee or assignee
thereof. Notwithstanding anything to the contrary herein, no assignment of the
rights of either party to this Coker Complex Ground Lease to any Person shall be
effective unless or until the rights of such party under the other Clark R&M
Agreements are assigned to such Person
ARTICLE XVII
LESSEE'S OPTION TO REMOVE THE FACILITY
It is understood by the parties hereto that the Lessee is constructing the
Coker Complex on the Coker Complex Site and the Coker Complex, and all other
improvements and structures constructed by Lessee on the Coker Complex Site
during the Coker Complex Ground
<PAGE>
12
Lease Term, are the property of, and are owned by, the Lessee. At the end of the
Coker Complex Ground Lease Term. Lessee shall have the right and option to
disannex, dismantle and remove the Coker Complex from the Coker Complex Site (in
which event such items shall again become the personal property of Lessee and
shall no longer be fixtures to real property), provided (i) Lessee is not then
--------
in default under the terms and provisions of this Coker Complex Ground Lease,
and (ii) Lessee provides Lessor written notice of its intention to remove the
Coker Complex from the Coker Complex Site at least sixty (60) days prior to the
scheduled expiration date of the Coker Complex Ground Lease Term (or any Coker
Complex Renewal Term, if applicable), (iii) Lessee commences such removal within
sixty (60) days following the end of the Coker Complex Ground Lease Term, and
thereafter diligently and continuously pursues such removal to completion within
a reasonable period of time, and (iv) Lessee repairs any and all damage to the
Coker Complex Site caused by such removal and restores the Coker Complex Site as
nearly as practicable to the condition in which such site existed prior to
construction of the Coker Complex. All terms and provisions of this Coker
Complex Ground Lease (except for the obligation of Lessee to pay rent) shall
continue in full force and effect for the period of Lessee's occupancy of the
Coker Complex Site for such removal. In the event Lessee elects not to or fails
to remove the Coker Complex as hereinabove provided, then the Coker Complex
shall become and be the property of Lessor, without compensation to Lessee and,
upon request of Lessor, Lessee promptly shall execute and deliver to Lessor a
recordable special warranty deed (deed to improvements on leasehold) conveying
the improvements installed or constructed on the Coker Complex Site by Lessee to
Lessor.
ARTICLE XVIII
POSSESSION UPON TERMINATION
The Lessee covenants and agrees that at the end of the Coker Complex Ground
Lease Term it will peaceably and quietly yield up and surrender possession of
the Coker Complex Site and any property thereon to the Lessor (subject to the
provisions of Article XVII hereof.
ARTICLE XIX
INDEMNITY
SECTION 19.1 Lessee Indemnity. During the Coker Complex Ground Lease Term,
----------------
the Lessee assumes liability for, and agrees to protect, defend, indemnify, save
and hold harmless and keep whole the Lessor from and against any and all
liabilities (including without limitation liabilities arising out of the
doctrine of strict liability), obligations, losses, claims, actions, suits,
causes of action, judgments, damages, penalties, costs, disbursements and
expenses (including without limitation counsel fees), whether founded or
unfounded, of whatsoever kind or nature, imposed on, incurred by or asserted
against the Lessor or any other Person, relating to or arising from (i) the
conduct, operation or management of, or any work, act or omission whatsoever
done in or on the Coker Complex, the Coker Complex Site or the Easements, (ii)
any breach or default on the part of the Lessee in the performance of any
covenant or obligation on
<PAGE>
13
the part of the Lessee to be performed pursuant to the terms of this Coker
Complex Ground Lease, (iii) any tortious act or negligence of the Lessee or any
of the Lessee's agents, contractors, servants, employees, invitees, licensees or
guests with respect to the Coker Complex, the Coker Complex Site or the
Easements or any other property of the Lessee on the Coker Complex Site, or (iv)
any accident, injury or damage whatsoever caused to any person or property in or
on the Coker Complex, the Coker Complex Site or the Easements or any other
property of the Lessee on the Coker Complex Site; provided, however, that the
Lessee shall not be required to indemnify the Lessor for any liability arising
out of acts or events occurring after the end of the Coker Complex Ground Lease
Term, and provided further, however, that the Lessee shall not be required to
indemnify the Lessor for any liability arising out of any work, act or omission
whatsoever done by the Lessor at any time (whether pursuant to the Services and
Supply Agreement or otherwise).
SECTION 19.2 Lessor Indemnity. During the Coker Complex Ground Lease Term,
----------------
the Lessor assumes liability for, and agrees to protect, defend, indemnify, save
and hold harmless and keep whole the Lessee from and against any and all
liabilities (including without limitation liabilities arising out of the
doctrine of strict liability), obligations, losses, claims, actions, suits,
causes of action, judgments, damages, penalties, costs, disbursements and
expenses (including without limitation counsel fees), whether founded or
unfounded, of whatsoever kind or nature, imposed on, incurred by or asserted
against the Lessee or any other Person, relating to or arising from (i) the
conduct, operation or management of, or any work, act or omission whatsoever
done in or on the Clark Refinery Property, other than in or on the Coker Complex
Site, (ii) any breach or default on the part of the Lessor in the performance of
any covenant or obligation on the part of the Lessor to be performed pursuant to
the terms of this Coker Complex Ground Lease, (iii) any tortious act or
negligence of the Lessor or any of the Lessor's agents, contractors, servants,
employees, invitees, licensees or guests with respect to the Clark Refinery
Property, (iv) any accident, injury or damage whatsoever caused to any person or
property in or on the Clark Refinery Property, other than the Coker Complex Site
(subject to the following subclause (v)), or (v) any liability arising out of
any work, act or omission whatsoever done by Lessor at any time (whether
pursuant to the Services and Supply Agreement or otherwise); provided, however,
that the Lessor shall not be required to indemnify the Lessee for any liability
arising out of acts or events occurring after the end of the Coker Complex
Ground Lease Term.
ARTICLE XX
TERM
SECTION 20.1 Coker Complex Ground Lease Term. The term of this Coker
-------------------------------
Complex Leasehold (the "Coker Complex Ground Lease Term") shall commence on the
-------------------------------
date hereof and, unless this Coker Complex Ground Lease is sooner terminated
pursuant to the provisions hereof, the Coker Complex Ground Lease Term shall end
on the last day of the Coker Complex Initial Term or, if this Coker Complex
Ground Lease is renewed pursuant to Section 20.2 hereof, on the last day of the
last Coker Complex Renewal Term. At the expiration of the Coker Complex Ground
Lease Term all Easements and Auxiliary Rights granted and conveyed herein shall
wholly terminate and revert to the Lessor.
<PAGE>
14
SECTION 20.2 Renewal Term. If this Coker Complex Ground Lease shall
------------
not have been earlier terminated, Lessee shall be entitled, at its option upon
irrevocable written notice to Lessor given at least twelve months prior to the
end of the then-current Coker Complex Ground Lease Term, at the end of the Coker
Complex Initial Term and each Coker Complex Renewal Term, to renew this Lease
for up to five (5) additional terms of five years each (each, an "Coker Complex
Renewal Term"). All of the provisions of this Lease shall be applicable during
each Coker Complex Renewal Term, except that rent shall be determined in
accordance with Section 13.2 hereof. If Lessee gives written notice to Lessor as
aforesaid exercising its option for a Coker Complex Renewal Term, then Lessor
and Lessee shall immediately begin the determination of Fair Market Rental Value
for such Coker Complex Renewal Term, as provided in Section 13.2. Rent during
each Coker Complex Renewal Term shall be payable quarterly in arrears.
ARTICLE XXI
MINERAL RIGHTS
Lessor hereby reserves all of the oil, gas and other minerals in and under
the Coker Complex Leasehold and that may be produced therefrom (including the
right to receive royalties under existing leases), waiving hereby, for the term
of the Coker Complex Leasehold and any extensions thereof, all its rights to use
the surface of the land included in the Coker Complex Leasehold for the purpose
of exploring for or producing the said oil, gas and other minerals.
ARTICLE XXII
MISCELLANEOUS
SECTION 22.1 Assignment as Security for Lessee's Obligations. To
-----------------------------------------------
secure the indebtedness evidenced by the Senior Debt, the Lessee will assign,
mortgage and convey pursuant to a deed of trust to the Collateral Trustee its
right, title and interest hereunder and in and to this Coker Complex Ground
Lease and the Coker Complex Leasehold, Easements and Auxiliary Rights pursuant
to the terms of the Financing Documents. The Lessor hereby consents to (i) such
assignment and mortgage and (ii) any further assignment or mortgage by (x) the
Collateral Trustee, any successors and assigns of the Collateral Trustee,
including, without limitation, any purchaser of the Coker Complex Leasehold at a
trustee's sale, foreclosure sale, deed in lieu of foreclosure or other transfer
in connection with the Indenture or (y) any successor or assign of any purchaser
described in the preceding clause (x). Lessor agrees, in connection with any
such assignment under this Section 22.1, to enter into the consent and
assignment agreement substantially in the form of Exhibit F, provided that such
consent and assignment agreement in no way alters or amends the respective
rights and obligation and Lessee as set out in this Coker Complex Ground Lease.
In the event of a termination of this Coker Complex Ground Lease pursuant to
Section 365 of the Bankruptcy Reform Act of 1984, as amended, or any other
present or future law permitting the termination of this Coker Complex Ground
Lease, Lessor
<PAGE>
15
hereby agrees to enter into a new lease, on the same terms as this Coker Complex
Ground Lease, with the Collateral Trustee or any other mortgagee of the Coker
Complex Leasehold or any designee of any thereof, provided that the Collateral
Trustee, such other mortgagee or such designee requests such a new lease within
60 days after receipt of notice from Lessor that such termination has occurred.
SECTION 22.2 Memorandum of Lease. Concurrently with the execution
-------------------
and delivery of this Coker Complex Ground Lease, Lessor and Lessee have executed
a Memorandum of this Coker Complex Ground Lease in the form of Exhibit G hereto,
which promptly shall be recorded in the Official Public Records of Real Property
of Jefferson County, Texas, by Lessee at its expense. Upon expiration or
termination of this Lease, the parties shall execute and deliver, and Lessee
shall record at its expense, a memorandum of expiration or termination of this
Coker Ground Lease. Such obligation shall survive the expiration or termination
of this Coker Ground Lease and shall be specifically enforceable.
SECTION 22.3 Relationship of the Parties. The only relationship
---------------------------
between Lessor and Lessee established and evidenced by this Coker Complex Ground
Lease is the relationship of landlord and tenant, and the only estates intended
to be conveyed to Lessee or otherwise evidenced hereby are the leasehold estate
of Lessee in and with respect to the Coker Complex Site, the appurtenant
easement estates and right of use (license in real property) as herein expressly
provided; and Lessee=s fee ownership of the improvements on and to the leasehold
estate for the Coker Complex Ground Lease Term (subject to Lessor=s reversionary
right with respect to such improvements). This Coker Complex Ground Lease is not
intended to grant, transfer, assign, convey or evidence any other estate in or
to Lessee, including (without limitation) any fee simple estate, determinable
fee estate, nor fee estate for years in or to the Coker Complex Site.
SECTION 22.4 Time is of the Essence. Time is of the essence of this
----------------------
Coker Complex Ground Lease.
SECTION 22.5 Notices. Any notice, request, consent, waiver or other
-------
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Lessor:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Richard A. Keffer
<PAGE>
16
If to Lessee:
Port Arthur Coker Company L.P.
Port Arthur Refinery
1801 S. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
Any such notice, request, consent, waiver or other communication required
or permitted hereunder, whether to Lessor or Lessee, shall also be personally
delivered by hand or by overnight courier or sent by certified or registered
mail, postage prepaid, return receipt requested, to the Collateral Trustee on
behalf of the Financing Parties, addressed as follows:
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4th Floor
New York, New York 10006
Attention: James McDonough
SECTION 22.6 Severability. Any provision of this Coker Complex
------------
Ground Lease that shall be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 22.7 Amendment. Neither this Coker Complex Ground Lease nor
---------
any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification shall be sought and, unless and until the Lessor shall have
received written notice from the Collateral Trustee that the Liens securing the
Senior Debt have been released, the Collateral Trustee.
SECTION 22.8 Headings, etc. Captions and headings in this Coker
-------------
Complex Ground Lease are for reference only and do not constitute a part of the
substance of this Coker Complex Ground Lease.
<PAGE>
17
SECTION 22.9 Counterparts. This Coker Complex Ground Lease may be
------------
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument. Delivery of an executed
signature page of this Coker Complex Ground Lease by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.
SECTION 22.10 GOVERNING LAW. THIS COKER COMPLEX GROUND LEASE HAS
-------------
BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 22.11 WAIVER OF JURY TRIAL. THE LESSOR AND LESSEE HEREBY
--------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS COKER COMPLEX GROUND LEASE OR ANY OTHER PROJECT
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
ARTICLE XXIII
NO MERGER
SECTION 23.1 No Merger. So long as the Senior Debt is outstanding, unless
---------
the Collateral Trustee shall otherwise expressly consent in writing, the fee
title to each of the Coker Complex Site shall remain separate and distinct from
and shall not be merged into the leasehold estate demised to the Lessee hereby.
<PAGE>
18
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused
this Coker Complex Ground Lease to be duly executed and delivered as of the day
and year first above written.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
General Partner
By: /s/ Maura J. Clark
--------------------------------
Title: Executive Vice President and
Chief Financial Officer
CLARK REFINING & MARKETING, INC.
By: /s/ Maura J. Clark
---------------------------------------
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
APPENDIX A - DEFINITIONS TO THE:
Services and Supply Agreement
Product Purchase Agreement
Coker Complex Ground Lease
Ancillary Equipment Site Lease
Transfer and Assignment Agreement
General Provisions
------------------
The following terms shall have the following meanings for all purposes of
the Services and Supply Agreement, the Product Purchase Agreement, Coker Complex
Ground Lease, the Ancillary Equipment Site Lease and the Transfer and Assignment
Agreement, each referred to below, unless otherwise defined in such agreements
or the context thereof shall otherwise require, and such meanings shall be
equally applicable to both the singular and the plural forms of the terms herein
defined. In the case of any conflict between the provisions of this Appendix A
and the provisions of the main body of any of the above agreements, the
provisions of the main body of such agreement shall control the construction of
such agreement.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreement (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the permitted successors and assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
"Actual Coker Capacity" means with respect to the Coker, its capacity, from
---------------------
time to time, to process feedstreams.
"Actual Crude Capacity" means with respect to the Ancillary Equipment, its
---------------------
capacity, from time to time, to process crude oil.
"Actual Hydrocracker Capacity" means with respect to the Hydrocracker, its
----------------------------
capacity, from time to time, to process gas oil.
"Adjacent Refinery Property" means the land described on Exhibit B to the
--------------------------
Coker Complex Ground Lease and also on Exhibit C to the Ancillary Equipment Site
Lease.
"Amine Treating Unit" means the amine treating unit to be constructed at
-------------------
the Refinery and designated ATU 7841.
"Ancillary Equipment" means, collectively, the Crude Unit and the other
-------------------
processing units described on Exhibit B to the Ancillary Equipment Site Lease.
"Ancillary Equipment Easement" has the meaning given such term in Section
----------------------------
2.2 of the Ancillary Equipment Site Lease.
<PAGE>
20
"Ancillary Equipment Operating Fee" has the meaning given such term in
---------------------------------
Section 13.2(b) of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site" has the meaning given such term in Section 2.1
------------------------
of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Initial Term" means the period commencing on the
-------------------------------------
August 19, 1999 and ending on August 19, 2029.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site Lease
------------------------------
and Easement Agreement, dated as of August 19, 1999, between Clark R&M and the
Coker Company.
"Ancillary Equipment Site Leasehold" has the meaning given such term in
----------------------------------
Section 2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Lease Term" has the meaning given such term in
-----------------------------------
Article XX of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Renewal Term" means each period following the end
-------------------------------------
of the Ancillary Equipment Initial Term with respect to which Lessee has the
option to renew the Ancillary Equipment Site Lease pursuant to Article XX of the
Ancillary Equipment Site Lease.
"Ancillary Equipment Upgrade Contract" means the Reimbursable Contract for
------------------------------------
Engineering, Procurement and Construction, dated as of March 24, 1998, between
Clark R&M and the Contractor, as amended by Amendment No. One, dated as of
August 19, 1999, as further amended, supplemented or otherwise modified from
time to time.
"Annual Budget and Operating Plan" means, for any Operating Year, the
--------------------------------
budget and operating plan in effect pursuant to Section 6 of the Services and
Supply Agreement.
"Applicable Law" means, collectively, (i) all Permits and (ii) all laws,
--------------
treaties, ordinances, judgments, decrees, injunctions, writs, orders and
stipulations of any court, arbitrator or governmental agency or authority and
statutes, rules, regulations, orders and interpretations thereof of any federal,
state, county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body applicable from time to
time to the Refinery, the operation or maintenance of the Refinery, or the
performance of any obligations under the Clark R&M Agreements, any other Project
Document or any other agreement entered into in connection therewith.
"Appraisal Procedure" with respect to any renewal option of any lease,
-------------------
means a procedure whereby two independent Qualified Appraisers, one appointed by
the lessor and one by the lessee, shall agree upon the value, period, amount or
determination then the subject of an appraisal, as follows: If either the lessor
or the lessee shall determine that a value, period or amount of determination to
be determined under such lease or any related document cannot
<PAGE>
21
timely be established by agreement, such party shall appoint its Qualified
Appraiser and give notice thereof to the other party, which shall appoint its
Qualified Appraiser within 10 days thereafter. If such other party does not
appoint its Qualified Appraiser within such ten day period, the determination of
the first Qualified Appraiser made within 20 days thereafter shall be conclusive
and binding on the lessor and the lessee. If within 20 days after appointment of
the second of the two Qualified Appraisers, such Qualified Appraisers are unable
to agree upon the value, period, amount or determination in question, they
jointly shall appoint a third Qualified Appraiser within 10 days thereafter, or,
if they do not do so, either the lessor or the lessee may request the American
Arbitration Association office in Houston, Texas (or if no such office exists at
such time, the American Arbitration Association office in New York, New York),
or any organization successor thereto, to appoint the third Qualified Appraiser
from a panel of arbitrators knowledgeable on the subject of refinery land and
asset valuations in the Texas Gulf Coast area. The decision of the third
Qualified Appraiser shall be given within 20 days after his appointment. If
three Qualified Appraisers shall be so appointed, the average of all three
determinations shall be conclusive and binding on the lessor and the lessee
unless the determination of one Qualified Appraiser is disparate from the middle
determination by more than twice the amount by which the third determination is
disparate from the middle determination, in which case the determination of the
most disparate Qualified Appraiser shall be excluded and the average of the
remaining two determinations shall be conclusive and binding on the lessor and
the lessee. The obligation to pay the fees and expenses of Qualified Appraisers
incurred in connection with any Appraisal Procedure shall be divided equally
between the lessor and the lessee.
"Auxiliary Facilities" has the meaning given such term in Article VI of the
--------------------
Coker Complex Ground Lease.
"Auxiliary Rights" has the meaning given such term in Article VI of the
----------------
Coker Complex Ground Lease.
"Available Coker Company Maya" means, for any day, the sum of (a) the
----------------------------
Contract Quantity for such day, plus (b) the extent, if any, that the Available
Coker Company Maya for the preceding day exceeds the Actual Crude Capacity for
such preceding day.
"Available Coker Company VTBs" means, for any day, the sum of (a) the Coker
----------------------------
Company VTBs produced by the Crude Unit on such day, plus (b) the extent, if any
that Available Coker Company VTBs for the preceding day exceeds Actual Coker
Capacity for such preceding day.
"Base Case Financial Model" shall mean the financial model described on
-------------------------
Exhibit A to the Services and Supply Agreement.
"BPD" has the meaning given such term in the Long-Term Oil Supply
---
Agreement.
"Business Day" means any day other than Saturday, Sunday or a legal holiday
------------
in the United States of America.
<PAGE>
22
"Clark Equipment" means all Clark Refinery Property other than the
---------------
Ancillary Equipment.
"Clark Hydrogen Supply Contract" means the Product Supply Agreement, dated
as of August 1, 1999, between Clark R&M and Air Products, Inc.
"Clark Maya" means Maya Crude Oil purchased by Clark R&M.
"Clark Processing Fee" means, for any monthly period, the total fees due
the Coker Company from Clark R&M for processing services provided pursuant to
Sections 3.5, 4.2 and 4.3.
"Clark R&M" means Clark Refining & Marketing, Inc., a Delaware corporation.
"Clark R&M Agreements" means, collectively, (i) the Services and Supply
Agreement, (ii) the Product Purchase Agreement, (ii) the Coker Complex Ground
Lease and (iv) the Ancillary Equipment Site Lease.
"Clark Refinery Property" means all real and personal property owned by
Clark R&M and located at the Refinery.
"Coker" means the delayed coker to be constructed at the Refinery and
designated DCU 843.
"Coker Company" means Port Arthur Coker Company L.P., a Delaware limited
partnership.
"Coker Company Crude Oil Volume" means, on any day, the volume, stated in
BPD, of Coker Company-owned crude oil processed through the Crude Unit.
"Coker Company Maya" means Maya Crude Oil purchased by the Coker Company.
"Coker Complex" means, collectively, the Coker, the Hydrocracker, the
Sulfur Plant, the Sour Water Stripper, the Amine Treating Unit and the Coker
Complex Offsites.
"Coker Complex Design Capacity" means with respect to the Coker Complex,
its nameplate capacity, stated in BPD, to process feedstocks.
"Coker Complex Ground Lease" means the Coker Complex Ground Lease and
Blanket Easement Agreement, dated as of August 19, 1999, between Clark R&M and
the Coker Company.
"Coker Complex Ground Lease Term" has the meaning given such term in
Article XX of the Coker Complex Ground Lease.
<PAGE>
23
"Coker Complex Initial Term" means the period commencing on August 19, 1999
and ending on August 19, 2029.
"Coker Complex Leasehold" has the meaning given such term in Section 2.1 of
the Coker Complex Ground Lease.
"Coker Complex Offsites" means, collectively, (a) the control room, flare,
cooling tower, sulfur loading facilities and power station no. 6 that are being
constructed pursuant to the EPC Contract and (b) the coker feed tank nos. 108
and 109 that are being modified pursuant to the EPC Contract.
"Coker Complex Renewal Term" means each period following the end of the
Initial Term with respect to which Lessee has the option to renew the Coker
Complex Ground Lease pursuant to Article XX of the Coker Complex Ground Lease.
"Coker Complex Site" has the meaning give such term in Section 2.1(a) of
the Coker Complex Ground Lease.
"Coker Design Capacity" means with respect to the Coker, its nameplate
capacity, stated in BPD, to process feedstocks.
"Collateral Trustee" means the collateral trustee granted a security
interest, on behalf of the Financing Parties, in the Senior Debt pursuant to the
Financing Documents and any successor collateral trustee thereunder.
"Common Security Agreement" means the Common Security Agreement, dated as
of August 19, 1999, among the Coker Company, the Funding Company, Sabine,
Neches, Bankers Trust Company, as Collateral Trustee and Depositary Bank,
Deutsche Bank AG, New York Branch, as Administrative Agent, Winterthur
International Insurance Company Limited, as Oil Payment Insurers Administrative
Agent and HSBC Bank USA, as Capital Markets Trustee,
"Contract Quantity" means (a) for any day when the Long-Term Oil Supply
Agreement is in effect and PMI has not reduced the volume of Maya available to
the Coker Company pursuant thereto, the "Contract Quantity" in effect on such
day pursuant to the Long-Term Oil Supply Agreement or such lesser amount of Maya
Crude Oil as may be purchased thereunder pursuant to Section 8.2 of the
Long-Term Oil Supply Agreement, and (b) for any other day, the amount of Maya
Crude Oil sufficient to operate the Coker at eighty percent of Actual Coker
Capacity.
"Contractor" means Foster Wheeler USA Corporation, a Delaware corporation.
"Crude Design Capacity" means with respect to the Ancillary Equipment, its
nameplate capacity, stated in BPD, to process heavy crude oil.
<PAGE>
24
"Crude Unit" means the crude unit and vacuum tower located at the Refinery
and collectively designated AVU-146.
"CRU 1344 Hydrotreater" means the naphtha hydrotreater located at the
Refinery and designated CRU 1344.
"Easements" has the meaning given such term in Section 2.2 of the Coker
Complex Ground Lease.
"EPC Contract" means the Contract for Engineering, Procurement and
Construction Services, dated as of July 12, 1999, between the Coker Company and
the Contractor, as amended, supplemented or otherwise modified from time to
time.
"Event of Force Majeure" means any event or circumstance if (i) such event
or circumstance is beyond the reasonable control of the affected party and (ii)
such event or circumstance is not the direct or indirect result of a party=s
negligence or the failure of such party to perform any of its obligations under
the applicable Clark R&M Agreement, including, without limitation:
1. any interruption or cessation in delivery of Coker Company Maya to the
Refinery, whether or not due to an event of force majeure under the
Long-Term Oil Supply Agreement;
2. acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, blight, famine, flood,
hurricane, or other extraordinary weather conditions more severe than
those experienced at any time in the last thirty (30) years for the
geographic area of the Refinery;
3. acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the power of eminent domain, police power, condemnation or
other taking by or on behalf of any public, quasi-public or private
entity;
4. laws, rules, regulations, orders, judgments or other acts of any
foreign, federal, state or local court, administrative agency,
governmental body or authority;
5. strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the
employees of Clark R&M; and
6. a partial or entire interruption or other failure of (a) the supply of
electricity, water, wastewater treatment, steam, hydrogen or other
utilities
<PAGE>
25
to the Refinery or any part thereof, or (b) pipeline service, ship or
barge service, dock access or usage or other transportation
facilities.
"Excess Coker Capacity" means, for any day, the extent that Actual Coker
Capacity for such day exceeds the capacity necessary for the Coker to process
the Available Coker Company VTBs for such day.
"Excess Coker Capacity Option" has the meaning given such term in Section
4.2(a) of the Services and Supply Agreement.
"Excess Crude Capacity" means, for any day, the extent that Actual Crude
Capacity for such day exceeds the capacity necessary for the Ancillary Equipment
to process the Available Coker Company Maya for such day and the light crude oil
necessary to process such Available Coker Company Maya.
"Excess Crude Capacity Option" has the meaning given such term in Section
3.5(b) of the Services and Supply Agreement.
"Excess Hydrocracker Capacity" means, for any day, the extent that Actual
Hydrocracker Capacity for such day exceeds the capacity necessary for the
Hydrocracker to process Coker Company VGO produced by the Coker on such day.
"Excess Hydrocracker Capacity Option" has the meaning given such term in
Section 4.3(a) of the Services and Supply Agreement.
"Fair Market Rental Value" shall mean, with respect to any land and/or
equipment to be leased pursuant to a lease, the value, which shall not in any
event be less than zero, that would be obtained in an arm's length transaction
for cash between an informed and willing lessee and an informed and willing
lessor, neither of whom is under any compulsion to lease, for the use of such
land and/or equipment for a given period, without regard, in the case of land,
(i) to the value of any equipment or improvements that are not included in such
lease but which are located on such land, (ii) to the value of any reversionary
interest of the lessor in any equipment or improvements located on such land,
whether or not included in such lease, or (iii) to the highest and best use of
such land.
"Final Completion" has the meaning given such term in the EPC Contract.
"Financial Close" means the date when the initial funding of the Senior
Debt has occurred.
"Financing Documents" has the meaning given such term in the Common
Security Agreement.
"Financing Parties" means any lender or note purchaser that may at any time
be party to the Financing Documents and any trustee or agent acting on their
behalf.
<PAGE>
26
"Funding Company" means Port Arthur Finance Corp., a Delaware corporation.
"GFU 241" means the distillate hydrotreater located at the Refinery and
designated GFU 241.
"GFU 242" means the distillate hydrotreater located at the Refinery and
designated GFU 242.
"GFU 243" means the distillate hydrotreater located at the Refinery and
designated GFU 243.
"Guaranteed Values" has the meaning given such term in the EPC Contract.
"Heavy Oil Processing Facility" means, collectively, the Coker Complex and
the Ancillary Equipment.
"Hydrocracker" or "HCU 942" means the hydrocracker to be constructed at the
Refinery and designated HCU 942.
"Hydrogen" means hydrogen purchased by the Coker Company pursuant to the
Hydrogen Supply Agreement.
"Hydrogen Supply Agreement" means the Supply Agreement, dated as of August
1, 1999, between the Coker Company and Air Products, Inc.
"Independent Engineer" means Purvin & Gertz, Inc., or successor thereto
appointed pursuant to the Financing Documents.
"Inflation Factor" shall mean, for any month, (a) the most current Producer
Price Index published by the U.S. Department of Labor, Bureau of Statistics,
divided by, (b) the Producer Price Index on August 19, 1999.
"Labor Costs" shall mean, with respect to any service provided by Clark
R&M, all reasonable direct labor costs of Clark R&M in performing such service
including wages, salaries, overtime charges, reasonable and customary bonuses,
payroll insurance and taxes and holidays, vacations, group medical, dental and
life insurance and other employee benefits.
"LCO" means light cycle oil.
"Lessor Ancillary Equipment Upgrade" shall have the meaning given such term
in Section 6.1 of the Ancillary Equipment Site Lease.
"Lien" any mortgage, security interest, pledge, hypothecation, encumbrance
or lien (statutory or other) of any kind or nature whatsoever.
<PAGE>
27
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sale Agreement,
dated as of March 10, 1998, between PMI and Clark R&M, as amended by the First
Amendment and Supplement to the Maya Crude Oil Sales Agreement, dated as of
August 19, 1999, and as assigned by Clark R&M to the Coker Company pursuant to
the Long-Term Oil Supply Agreement Assignment.
"Long-Term Oil Supply Agreement Assignment" means the Assignment of the
Long-Term Oil Supply Agreement, dated as of August 19, 1999, by Clark R&M to the
Coker Company.
"Maya Crude Oil" means Mexican crude oil of the "Maya" type, as more
particularly described in the Long-Term Oil Supply Agreement and, to the extent
necessary, such alternative crude oil(s) and/or other feedstock(s) that may be
used to produce the Required Product Mix.
"Neches" mean Neches River Holding Corp., a Delaware corporation.
"Operating Year" means (i) the period beginning on the Start-up Date and
ending on the last day of the calendar year in which the Start-up Date occurs
and (ii) each calendar year thereafter. All annual amounts set forth in the
Clark R&M Agreements shall be adjusted pro rata for the first Operating Year.
"Performance Test Standards" has the meaning given such term in the EPC
Contract.
"Permit" means any valid waiver, exemption, variance, franchise, permit,
authorization, license or similar order of or from any federal, state, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over the Refinery,
the Coker Complex or the Ancillary Equipment or the performance of any
obligation under any Clark R&M Agreement, any Project Document or any other
agreement in connection therewith.
"Permitted Liens" means (i) the respective rights and interests created by
or under the Financing Documents and the Project Documents, (ii) Liens for Taxes
that either are not delinquent or are being contested in good faith and by
appropriate proceedings diligently conducted, so long as such proceedings do not
(a) involve a substantial risk of foreclosure, forfeiture, loss or sale of any
portion of the Clark Refinery Property subject to the Ancillary Equipment Site
Lease or the Coker Complex Ground Lease or interest therein, (b) interfere with
the use, possession or disposition of any Clark Refinery Property subject to the
Ancillary Equipment Site Lease or the Coker Complex Ground Lease or interest
therein or (c) interfere with the payment of rent under the Ancillary Equipment
Site Lease or the Coker Complex Ground Lease; (iii) materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other like
Liens arising in the ordinary course of business for amounts that either are not
more than 30 days past due or are being contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of
<PAGE>
28
proceedings to contest Taxes set forth in clause (ii) above; (iv) Liens of any
of the types referred to in clauses (ii) and (iii) above that have been bonded
for the full amount in dispute (or as to which other security arrangements
reasonably satisfactory to the Collateral Trustee have been made); (v) Liens
securing judgments, decrees or orders of any court (i) that are not currently
dischargeable or (ii) that have been discharged or stayed or appealed within
thirty (30) days after the date of such judgment, decree or order (in the case
of a stay or appeal, during the period of such stay or appeal); (vi) other Liens
that would not impair (x) the ability of the Coker Company or its successors,
assigns or subtenants to operate the Coker Complex in accordance with the Base
Case Financial Model or (y) any of the security interests granted, or to be
granted, by the Coker Company to the Financing Parties pursuant to the Financing
Documents, (vii) with respect to the Ancillary Equipment Site Lease, the Liens
listed on Schedule I thereto; and (viii) with respect to the Coker Complex
Ground Lease, the Liens listed on Schedule I thereto.
"Permitted Reimbursable Expenses" shall mean, with respect to any service
provided by Clark R&M, any reasonable expense or expenditure incurred in
performance of such service including, without limitation, (i) Labor Costs, (ii)
purchases of spare parts, tools, equipment, consumables, materials and other
supplies necessary for performance of such service and (iii) direct cost of
subcontract labor or services needed to perform such service.
"Person" an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"PMI" means P.M.I. Comercio Internacional, S.A. de C.V., a corporation
organized under the laws of Mexico.
"Product Purchase Agreement" means the Product Purchase Agreement, dated as
of August 19, 1999, between Clark R&M and the Coker Company, as amended,
supplemented or otherwise modified from time to time.
"Products" means each product described under the heading "Product" on
Exhibits A-1 through A-42 to the Product Purchase Agreement.
"Project Documents" means, collectively, the Services and Supply Agreement,
the Product Purchase Agreement, the Long-Term Oil Supply Agreement, the EPC
Contract, the Coker Complex Ground Lease, the Ancillary Equipment Site Lease and
the Hydrogen Supply Agreement.
"Prudent Industry Practice" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used in refinery facilities in the United
States of a type and size similar to the Refinery.
"Qualified Appraiser" means an appraisal firm with a national reputation
and experience in appraising facilities of a nature and type similar to the
Refinery.
<PAGE>
29
"Reconciliation Statement" has the meaning given such term in Section
------------------------
7.2(a) of the Services and Supply Agreement.
"Refinery" means, collectively, the existing oil refinery owned by Clark
--------
R&M located in Port Arthur, Texas, the Ancillary Equipment and the Coker
Complex.
"Regulated Utilities" has the meaning given such term in Section 5.5(f) of
-------------------
the Services and Supply Agreement.
"Required Product Mix" means, from time to time, the quantity and quality
--------------------
specifications of products to be produced by the Heavy Oil Processing Facility
pursuant to Section 2.2 of the Product Purchase Agreement.
"Sabine" means Sabine River Holding Corp., a Delaware corporation.
------
"Senior Debt" has the meaning given such term in the Common Security
-----------
Agreement.
"Senior Debt Obligations" means the obligations to pay principal and
-----------------------
interest on the disbursed Senior Debt, and all commissions, fees, indemnitees,
prepayment premiums and other amounts payable to the senior lenders under the
Financing Documents.
"Services" has the meaning set forth in Section 2.1 of the Services and
--------
Supply Agreement.
"Services and Supply Agreement" means the Services and Supply Agreement,
-----------------------------
dated as of August 19, 1999, between Clark R&M and the Coker Company, as
amended, supplemented or otherwise modified from time to time.
"Sour Water Stripper" means the sour water stripper to be constructed at
-------------------
the Refinery and designated SWS-8747.
"Standards" means, in addition to any other standards set forth in the EPC
---------
Contract, the technical requirements of the Project Documents, generally
accepted standards of professional care, skill, diligence and competence
applicable to engineering and construction and project management practices,
good refinery and petrochemical industry practices for oil refineries of similar
size, type and design to the Refinery, manufacturer's specifications and
warranty requirements and all Applicable Laws.
"Start-up Date" means the date on which hydrocarbons are first introduced
-------------
into the Coker Complex for the processing of test runs under the EPC Contract.
"Start-up Period" means the period from the Start-up Date until Final
---------------
Completion.
<PAGE>
30
"Sulfur Plant" means the sulfur plant to be constructed at the Refinery and
------------
designated SRU 545.
"Supplies" has the meaning set forth in Section 2.1 of the Services and
--------
Supply Agreement.
"Tax" means, with respect to any site or parcel of land and the
---
improvements thereon, all real estate taxes and assessments, including
substitutes therefor or supplements thereto, assessed upon, levied against or
imposed on such land and improvements located thereon which accrue and are due
and payable during the term of the Coker Complex Ground Lease. Notwithstanding
anything to the contrary contained herein, the term "Taxes" shall not include
any franchise, income, corporation, inheritance, succession, gift, estate,
realty transfer, capital or other tax which may be charged or assessed against
Lessor or any income, excess profit or revenue tax or any other tax which may be
assessed against or become a lien upon the Coker Complex Site or the rent
accruing therefrom.
"Total Crude Oil Volume" means, for any day, the total daily volume, stated
----------------------
in BPD, of crude oil processed by the Crude Unit.
"Transfer and Assignment Agreement" means the Transfer and Assignment
---------------------------------
Agreement, dated as of August 19, 1999, between Clark R&M and the Coker Company,
as amended, supplemented or otherwise modified from time to time.
"VGO" means vacuum gas oil.
---
"VTBs" means vacuum tower bottoms.
---
"Warranties" means the requirements of all warranties and guarantees
----------
applicable to equipment and structures constituting the Coker Complex or the
Ancillary Equipment provided by the Contractor, subcontractors, vendors,
suppliers or others.
34
<PAGE>
Exhibit A
Coker Complex Ground Lease
COKER COMPLEX SITE DESCRIPTION*
46.2189 acres of land (being a 47.7267-acre tract less and except a 1.5078-acre
tract) out of the B.C. Arthur Survey, Abstract No. 61, Jefferson County, Texas,
and being all of Lots 1-4 of H.O.U.P. SUBDIVISION, a Subdivision of Jefferson
County, Texas, according to the map or plat thereof recorded in Volume 16, Page
169, of the Map Records of Jefferson County, Texas, and being also described by
metes and bounds on Pages 2 through 7 of this Exhibit A.
Page 1 of 7
- -----------------------
* Seven pages of metes and bounds descriptions accompanying this Exhibit have
been omitted from the filing of this registration statement and shall be
made available to the Commission upon request.
<PAGE>
Exhibit B
Coker Complex Ground Lease
ADJACENT REFINERY PROPERTY DESCRIPTION**
The Adjacent Refinery property is composed of eleven (11) Tracts of land
described by metes and bounds on Pages 2 through 30 of the Exhibit B; LESS AND
--------
EXCEPT the parcels of land (Parcels "A," "B," "C," "D," "E," "F," "G," "H,"
- ------
"12," "13", "0", "J-2," "0.519 Acre Tract," "L," "M," and "N1") described by
metes and bounds on Pages 31 through 70 of this Exhibit C.
Page 1 of 70
- -----------------------
** Sixty nine pages of metes and bounds descriptions accompanying this Exhibit
have been omitted from the filing of this registration statement and shall
be made available to the Commission upon request.
<PAGE>
Exhibit C
Coker Complex Ground Lease
DOCK EASEMENT DESCRIPTION
The easement described in Section 2.2(b) of this Coker Complex Ground Lease and
Blanket Easement Agreement is a nonexclusive, blanket easement covering the
docks (and related piers, pilings and mooring dolphins, if any) and dock
facilities owned, operated or otherwise controlled by Lessor that are situated
on the Adjacent Refinery Property and/.or on or within the waters of Taylor's
Bayou and/or the Port Arthur Turning Basin running along and adjacent to the
Adjacent Refinery Property.
<PAGE>
Exhibit D
Coker Complex Ground Lease
AIR PRODUCTS UTILITIES
24.0 Cooling Water
Approximately 15,540 gpm of cooling water to the battery limits of Air
Products' new hydrogen plant at the Refinery (the "Facility"). The cooling
water is expected to typically have the following constituents at 10
cycles of concentration:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Characteristics Minimum Normal Maximum
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Feed Water pH 7.2
- -------------------------------------------------------------------------------------------------------------------
Temperature *(F) 88 93
- -------------------------------------------------------------------------------------------------------------------
Calcium Hardness as CaCO3 ppm 82
- -------------------------------------------------------------------------------------------------------------------
Magnesium Hardness as CaCO3 ppm 50
- -------------------------------------------------------------------------------------------------------------------
Total Hardness as CaCO3 *ppm 115
- -------------------------------------------------------------------------------------------------------------------
Sodium as Na ppm 78
- -------------------------------------------------------------------------------------------------------------------
Potassium as K *mg/L
- -------------------------------------------------------------------------------------------------------------------
Iron as Fe ppm 6.0
- -------------------------------------------------------------------------------------------------------------------
Manganese as Mn mg/L
- -------------------------------------------------------------------------------------------------------------------
Copper as Cu ppm 0.23
- -------------------------------------------------------------------------------------------------------------------
Aluminum as Al mg/L
- -------------------------------------------------------------------------------------------------------------------
Zinc as Zn mg/L
- -------------------------------------------------------------------------------------------------------------------
Ammonia and Ammonium Ion as NH3 mg/L
- -------------------------------------------------------------------------------------------------------------------
Methyl Orange (M) Alkalinity as CaCO3 ppm 56
- -------------------------------------------------------------------------------------------------------------------
Phenolphthalein (P) Alkalinity as CaCO3 ppm 0
- -------------------------------------------------------------------------------------------------------------------
Chloride as Cl ppm 295
- -------------------------------------------------------------------------------------------------------------------
Sulfate as SO4 mg/L
- -------------------------------------------------------------------------------------------------------------------
Nitrate as NO4 mg/L
- -------------------------------------------------------------------------------------------------------------------
Orthophosphate as PO4 ppm 32
- -------------------------------------------------------------------------------------------------------------------
Total Phosphate as PO4 mg/L
- -------------------------------------------------------------------------------------------------------------------
Silica as SiO2 ppm 88
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Characteristics Minimum Normal Maximum
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Dissolved Solids, TDS *mg/L
- -------------------------------------------------------------------------------------------------------------------
Total Suspended Solids, TSS mg/L 25
- -------------------------------------------------------------------------------------------------------------------
Turbidity as NTU *mg/L
- -------------------------------------------------------------------------------------------------------------------
Oil and Grease mg/L
- -------------------------------------------------------------------------------------------------------------------
Specific Conductance at 251C Fohms 802
- -------------------------------------------------------------------------------------------------------------------
Langelier Index *mg/L
- -------------------------------------------------------------------------------------------------------------------
Chemical Oxygen Demand, COD *mg/L
- -------------------------------------------------------------------------------------------------------------------
Total Organic Carbon, TOC *mg/L
- -------------------------------------------------------------------------------------------------------------------
Free Chlorine Residual as Cl2 mg/L
- -------------------------------------------------------------------------------------------------------------------
Total Sulfur as SO4 ppm 140
- -------------------------------------------------------------------------------------------------------------------
Tolyltriazole ppm 0.4
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Min. Normal Max.
---- ------ ----
Supply Pressure 60 psig 60 psig 80 psig
Temperature 56(F) 88(F) 93(F)
The mechanical design pressure and temperature will be 80 psig and 150(F).
25.0 Boiler Feed Water Make-up
Boiler feed water make-up to the Facility in accordance with the following:
--------------------------------------------------------------------------
Boiler Feed Water
--------------------------------------------------------------------------
pH 7.5-10
--------------------------------------------------------------------------
Nonvolatile TOC, mg/LC Less than 0.5
--------------------------------------------------------------------------
Oily Matter, MG/L Less than 0.5
--------------------------------------------------------------------------
Specific Conductance at 251C, Fmhos Less than 10
--------------------------------------------------------------------------
Alkalinity, ppm Less than 0.15
--------------------------------------------------------------------------
Total Sulfur as SO4, ppm Less than 0.5
--------------------------------------------------------------------------
<PAGE>
5
--------------------------------------------------------------------------
Boiler Feed Water
--------------------------------------------------------------------------
Chloride as Cl, ppm Less than 0.5
--------------------------------------------------------------------------
Total Hardness as CaCO\\3\\, ppm Less than 0.1
--------------------------------------------------------------------------
Total Calcium Hardness as CaCO\\3\\, ppm Less than 0.05
--------------------------------------------------------------------------
Total Magnesium Hardness as CaCO\\3\\, ppm Less than 0.05
--------------------------------------------------------------------------
Total Copper as Cu, ppm Less than 0.015
--------------------------------------------------------------------------
Total Iron as Fe, ppm Less than 0.02
--------------------------------------------------------------------------
Sodium as Na, ppm Less than 0.24
--------------------------------------------------------------------------
Silica as SiO\\2\\, ppm Less than 0.20
--------------------------------------------------------------------------
Conditions at the Facility's Battery Limits:
Min. Normal Max.
---- ------ ----
Pressure 54 psig 60 psig 85 psig
Temperature 56(degrees)F 100(degrees)F 104(degrees)F
Flowrate N/A 1,200 gpm 1,350 gpm
26.0 Filtered Water
Filtered water to the Facility for utility purposes.
The water quality shall be as shown below:
Conditions at the Battery Limits of the Air Products; hydrogen plant:
Min. Normal Max.
---- ------ ----
Pressure 30 psig 60 psig 85 psig
Temperature 56(degrees)F 86(degrees)F 104(degrees)F
Flowrate N/A 0 gpm nominal
The mechanical design pressure and temperature will be 150(degrees)F and
150 psig.
40
<PAGE>
6
27.0 Firewater
3000 gpm delivered at 121 psig.
The mechanical design pressure will be 150 psig.
28.0 Potable Water
Approximately 280 gpd of potable water to the Facility's battery limit:
Min. Normal Max.
---- ------ ----
Pressure 30 psig 60 psig 80 psig
Temperature 56(degrees)F 86(degrees)F 86(degrees)F
The mechanical design temperature and pressure will be
150(degrees)F and 150 psig.
29.0 Nitrogen
Gaseous nitrogen to the Facility's battery limit for continuous purging
and instrument air backup. Nitrogen shall meet 99.9% purity (minimum)
and -40(degrees)F dew point. Approximately 65 SCFM will be required for
normal continuous purge requirements. Additional nitrogen for startup,
shutdown, and emergencies to the extent required beyond the quantities
listed below.
Min. Normal Max.
---- ------ ----
Flowrate 3900 SCFH 3900 SCFH 8000 SCFH
Pressure 190 psig 225 psig 600 psig
Temperature 56(degrees)F 71(degrees)F 100(degrees)F
The mechanical design temperature and pressure and temperature will be
150(degrees)F and 660 psig.
<PAGE>
7
30.0 Plant Air
Water saturated, oil-free instrument air at the Facility's battery
limits.
Min. Normal Max.
---- ------ ----
Pressure 80 psig 80 psig 125 psig
Temperature 56(F) 100(F) 104(F)
Flowrate 710 SCFM 710 SCFM 1100 SCFM
The mechanical design temperature and pressure will be 150(F) and 150
psig.
31.0 Wastewater
Compressor blowdowns, steam blowdowns, gas turbine water wash waste,
plant air knock-out drum and storm water runoffs from diked areas will be pumped
to the dirty water system at the Refinery. An oil-water separator is not
included. Steam blowdowns will be cooled to 100(F) via the blowdown cooler
(E129). The pressure and temperature of the wastewater shall be as follows:
Min. Normal Max.
---- ------ ----
Pressure N/A 95 psig ___ psig
Temperature 56(F) 71(F) 100(F)
Stormwater runoff from non-diked areas will be gravity fed to the
stormwater system at the Refinery. Trace liquids knocked out of the refinery
fuel stream will be directed to the sourwater system at the Refinery.
Sanitary wastes will be pumped to the dirty water system at the Refinery.
32.0 Back-up Power Supply
In the event of a gas turbine generator outage and during Facility
startup, supply to the Facility of 13.8 kV, 60Hz, 3 phase power. Maximum voltage
drop to be to 13.2kV. Delivery rates shall be:
<PAGE>
8
Normal Max.
------ ----
8,000 KW 13,000 KW
33. Feed and Fuel Streams
33.1 Natural Gas
Natural gas will be used as feedstock and trim fuel for the Facility
and as fuel for the gas turbine generator. It is understood that the
design and performance of the Facility is based on the following:
Composition: 94.5 mo1% CH\\4\\
2.4% C\\2\\H\\6\\
0.5% C\\3\\H\\8\\
0.1%i-C\\4\\H\\10\\
0.1%n-C\\4\\H\\10\\
0.5%n-C\\6\\H\\14\\
1.4% CO\\2\\
0.5% N\\2\\
4 ppmv H\\2\\S (max.)
4 ppmv Total Mercaptans (max.)
0 ppmv Olefins and Unsaturates
MW=17.41
HHV=1,039.5 Btu/SCF
Min. Normal Max.
---- ------ ----
Pressure 500 psig 525 psig 540 psig
Temperature 56(F) 71(F) 86(F)
Flowrates (MMBtu/hr,HHV) N/A 2208 2750
<PAGE>
9
The Facility will be capable of operating at reduced hydrogen
production rates at a natural gas supply pressure of 450 psig. The
mechanical design pressure and temperature will be 600 psig and 150(F).
33.2 Refinery Fuel
Refinery fuel to be made available as fuel for the Facility's burners.
The refinery fuel composition, temperature and pressure, supplied at Facility's
battery limits will vary depending upon the operation of the Refinery with
typical composition to be as follows:
Composition (typical):
Hydrogen 43.0 mol%
Methane 39.1 mol%
Ethane 6.5 mol%
Ethene 0.9 mol%
Propane 4.7 mol%
Propene 0.6 mol%
Butane 0.5 mol%
iso-Butane 0.8 mol%
l-Butene 0.1 mol%
n-Pentane 0.2 mol%
Hexane 0.2 mol%
Carbon Dioxide 0.3 mol%
Carbon Monoxide 0.3 mol%
Nitrogen 2.7 mol%
HsS 20 ppmv (min.)
40 ppmv (avg.)
80 ppmv (max.)
<PAGE>
10
Min. Normal Max.
---- ------ ----
Pressure 50 psig 55 psig 80 psig
Temperature 56 degree F 71 degree F 104 degree F
HHV (Btu/SCF) 600 900 1,250
LHV (Btu/SCF) 774
Flow Rates (MMBtu/hr,HHV) 143 228 461
The mechanical design pressure and temperature will be 105 psig and
150 degree F.
34.0 Hydrotreater Spill Stream
A single, combined spill stream from hydrotreater units (GFU
241/242/243/244) will be sent to a separate PSA for hydrogen purification. The
spill stream composition, temperature and pressure, supplied to the Facility's
battery limits shall be:
Min. Normal Max.
---- ------ ----
H\\2\\O 0.10 mol% 0.18 mol% 0.23 mol%
NH\\3\\ 1 ppmv 8 ppmv 20 ppmv
N\\2\\ 0.00 mol% 0.31 mol% 0.79 mol%
H\\2\\S 40 ppmv 123 ppmv 150 ppmv
H\\2\\ 69.47 mol% 72.33 mol% 76.75 mol%
CH\\4\\ 12.00 mol% 15.15 mol% 18.00 mol%
C\\2\\H\\6\\ 5.00 mol% 7.09 mol% 10.00 mol%
C\\3\\H\\8\\ 2.00 mol% 3.46 mol% 4.00 mol%
n-C\\4\\H\\10\\ 0.50 mol% 0.90 mol% 1.50 mol%
i-C\\5\\H\\12\\ 0.03 mol% 0.28 mol% 0.49 mol%
n-C\\5\\H\\12\\ 0.03 mol% 0.28 mol% 0.49 mol%
n-C\\6\\H\\14\\ 0.01 mol% 0.01 mol% 0.02 mol%
Based on the normal composition shown above, the process design spill
stream feed flow, pressure and temperature at the Facility's battery limits will
be:
<PAGE>
Min. Normal Max.
---- ------ ----
Flow 4.2 MMSCFD 8.9 MMSCFD 11.7 MMSCFD
Pressure 350 psig 425 psig 600 psig
Temperature 56(degrees)F 71(degrees)F 104(degrees)F
The mechanical design pressure and maximum temperature will be 720 psig
and 120(degrees)F.
<PAGE>
Exhibit E
Coker Complex Ground Lease
FORM OF ASSIGNMENT AND CONSENT AGREEMENT
CONSENT AND AGREEMENT, dated as of August 19, 1999, among CLARK REFINING &
MARKETING, INC., a Delaware corporation ("Clark R&M"), BANKERS TRUST COMPANY, a
---------
New York banking corporation, as Collateral Trustee for the benefit of the
Secured Parties (as hereinafter defined) (in such capacity, together with its
successors and assigns, the "Collateral Trustee"), and PORT ARTHUR COKER COMPANY
------------------
L.P., a Delaware limited partnership (the "Partnership").
-----------
WHEREAS, the Partnership is constructing and will own and operate a new
delayed coker facility and certain related refinery equipment, located at Clark
R&M's refinery in Port Arthur, Texas (the "Coker Complex");
-------------
WHEREAS, Clark R&M and the Partnership have entered into (i) the Services
and Supply Agreement (the "SSA"), (ii) the Product Purchase Agreement (the
---
"PPA"), (iii) the Coker Complex Ground Lease and Blanket Easement Agreement (the
---
"Ground Lease"), (iv) the Ancillary Equipment Site Lease and Easement Agreement
------------
(the "Site Lease") and (v) the Transfer and Assignment Agreement (the "Transfer
----------
and Assignment"), each of which is dated as of August 19, 1999 (all five
agreements, as amended, supplemented or otherwise modified from time to time,
collectively, the "Agreements"), in connection with the construction and
----------
operation of the Coker Complex;
WHEREAS, in order to finance the construction and operation of the Coker
Complex, the Partnership has entered into financing arrangements (as the same
may be amended, supplemented or otherwise modified, or extended or refinanced,
from time to time, the "Financing Arrangements") with the banks and other
----------------------
financial institutions from time to time parties thereto (together with their
respective successors and assigns, the "Financing Parties");
-----------------
WHEREAS, the Financing Arrangements provide, among other things, for the
making of the loans and other extensions of credit to the Partnership, the
proceeds of which are to be applied to finance the construction of the Coker
Complex;
WHEREAS, the loans, bonds and other obligations of the Partnership incurred
in connection with the Financing Arrangements will be secured by substantially
all of the assets of the Partnership pursuant to a Common Security Agreement,
dated as of August, 19, 1999, entered into by the Partnership in favor of the
Collateral Trustee, pursuant to which the Partnership has assigned to the
Collateral Trustee for the benefit of the Secured Parties, as collateral
security for the Senior Debt Obligations, all of the Partnership's right, title
and interest in, to and under among other things the Agreements;
WHEREAS, it is a condition to the obligations of the Financing Parties
under the Financing Arrangements that Clark R&M execute and deliver this
Consent;
<PAGE>
2
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. The following terms shall have the meanings indicated:
-------------
"Agreements" has the meaning specified in the recitals to this
----------
Consent.
"Coker Complex" has the meaning specified in the recitals.
-------------
"Collateral Trustee" has the meaning specified in the caption of this
------------------
Consent.
"Common Security Agreement" means the Common Security Agreement, dated
-------------------------
as of August 19, 1999, among the Partnership, the Collateral Trustee and
the other parties named therein, as the same may be amended, supplemented
or otherwise modified from time to time.
"Consent" means this Consent and Agreement, as the same may be
-------
amended, supplemented or otherwise modified from time to time.
"Clark R&M" has the meaning specified in the caption of this Consent.
---------
"Default Notice" has the meaning specified in Section 5(a).
--------------
"Event of Default" means any of the events listed in Section 10.1 of
----------------
the Common Security Agreement.
"Financing Arrangements" has the meaning specified in the recitals to
----------------------
this Consent.
"Financing Documents" means the Common Security Agreement and any
-------------------
other agreement or instrument entered into by the Partnership or any other
Person pursuant to the Financing Arrangements which secures, evidences or
governs payment or performance of any of the Senior Debt Obligations.
"Financing Parties" has the meaning specified in the recitals to this
-----------------
Consent.
"Ground Lease" has the meaning specified in the recitals to this
------------
Consent.
"Nominee" has the meaning specified in Section 5(b).
-------
"Notice" has the meaning specified in Section 5(a).
------
"Partnership" has the meaning specified in the caption of this
-----------
Consent.
<PAGE>
3
"Person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other legal entity of whatever nature.
"Project Revenue Account" has the meaning specified in the Common
-----------------------
Security Agreement.
"PPA" has the meaning specified in the recitals to this Consent.
---
"Refinancing" means any financing transaction or debt offering
-----------
transaction, or series of such transactions, all or part of the proceeds of
which are used to repay the Senior Debt Obligations or otherwise are used
to provide financing for the Coker Complex.
"Replacement Party" has the meaning specified in Section 5(c).
-----------------
"Secured Parties" has the meaning specified in the Common Security
---------------
Agreement.
"Senior Debt Obligations" has the meaning specified in the Common
-----------------------
Security Agreement.
"Site Lease" has the meaning specified in the recitals to this
----------
Consent.
"SSA" has the meaning specified in the recitals to this Consent.
---
"Transfer and Assignment" has the meaning specified in the recitals to
-----------------------
this Consent.
"Transferee" has the meaning specified in Section 5(b)(i).
----------
1.2 Other Definitional Provisions.
-----------------------------
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Consent shall refer to this Consent as a whole and not
to any particular provision of this Consent, and section and subsection
references are to this Consent unless otherwise specified.
(b) Each reference in this Consent to an agreement, instrument or
document shall be deemed to refer to such agreement, instrument or document as
the same may be amended, supplemented or otherwise modified from time to time.
(c) Any term defined by reference to an agreement, instrument or other
document shall have the meaning so assigned to it whether or not such agreement,
instrument or document is in effect.
(d) Each reference in this Consent to a Person shall be deemed to
include such Person's successors and assigns.
<PAGE>
4
SECTION 2. CONSENTS TO ASSIGNMENTS, ETC.
Clark R&M hereby:
2.1 acknowledges that the Secured Parties are entering into the
Financing Arrangements in reliance upon the performance by Clark R&M of its
obligations under the Agreements and this Consent, and irrevocably consents to
the assignment of the Agreements, pursuant to Section 12.5 of the SSA, Section
9.11 of the PPA, Section 22.1 of the Ground Lease, Section 22.1 of the Site
Lease and Section 5.5 of the Transfer and Assignment, to the Collateral Trustee
for the benefit of the Secured Parties as collateral security for the Senior
Debt Obligations of all of Partnership's right, title and interest, (whether now
existing or hereafter arising) in, to and arising under the Agreements;
2.2 irrevocably consents, pursuant to Section 12.5 of the SSA,
Section 9.11 of the PPA, Section 22.1 of the Ground Lease and Section 22.1 of
the Site Lease and Section 5.5 of the Transfer and Assignment, to any subsequent
assignment of any of the Agreements by the Collateral Trustee pursuant to
Section 5(b), upon and after receipt by Clark R&M of written notice from the
Collateral Trustee that it desires to exercise its rights and remedies as a
secured party, or as trustee for the benefit of the Secured Parties, in respect
of the Senior Debt Obligations (but without any right or obligation of Clark R&M
to know or confirm whether any such subsequent assignment is permitted under the
Financing Documents), including the acquisition of all of the Partnership's
existing and future rights under the Agreements by sale, foreclosure or
otherwise, or the construction and/or operation of the Coker Complex pending
sale or foreclosure through a receiver or otherwise, or the assignment of the
Agreements to any Person who is a Transferee; and Clark R&M will, at the request
of any such Transferee, enter into a consent and agreement in connection
therewith having terms the same as the terms of this Consent, except such terms
as may be inapplicable;
2.3 confirms that the assignment of the Partnership=s right, title
and interest in, to and arising under the Agreements pursuant to Section 6.06 of
the Common Security Agreement is in accordance with all applicable provisions of
the Agreements;
2.4 irrevocably agrees that the Collateral Trustee and the other
Secured Parties shall not be subject to any liability or obligation under any of
the Agreements nor shall the Collateral Trustee or any Secured Party be
obligated or required (A) to perform any of the Partnership=s obligations under
any of the Agreements or (B) to take any action to collect or enforce any claim
for payment assigned to it under the Common Security Agreement or otherwise;
2.5 acknowledges the right of the Collateral Trustee and the other
Secured Parties to cure defaults by the Partnership under any of the Agreements
pursuant to the terms of this Consent (notwithstanding anything to the contrary
contained in such Agreement), without assuming or being responsible for any of
the obligations of the Partnership thereunder;
2.6 acknowledges the right of the Collateral Trustee, following the
occurrence of an Event of Default under the Common Security Agreement, to
exercise its rights thereunder as a secured creditor and collateral assignee of
the Agreements to make all demands, give all notices,
<PAGE>
5
take all actions and exercise all rights of the Partnership under the Agreements
and to enforce the Agreements against Clark R&M, notwithstanding anything to the
contrary contained in any of the Agreements (but without any right or obligation
of Clark R&M to know or confirm whether any such subsequent assignment is
permitted under the Financing Documents);
2.7 acknowledges and irrevocably agrees, notwithstanding anything to
the contrary contained in any of the Agreements, but subject to the provisions
of this Consent, that none of the following shall constitute in and of itself,
as between Clark R&M and the Collateral Trustee or any other Secured Party, a
default or breach by Partnership under any of the Agreements:
(a) the collateral assignment of any of the Agreements to the
Collateral Trustee for the benefit of the Secured Parties;
(b) the sale, foreclosure or other enforcement by the Collateral
Trustee or any other Secured Party of secured creditor remedies;
(c) the acquisition of the rights of the Partnership under any of
the Agreements by the Collateral Trustee or any other Person as a result of sale
or foreclosure (or acceptance of an absolute assignment of the Agreements in
lieu of sale or foreclosure) or the exercise of other secured creditor remedies;
or
(d) the assignment of any of the Agreements by the Collateral
Trustee or any other Secured Party or a Nominee to any other Person, following
the acquisition of the Agreements by the Collateral Trustee or any other Secured
Party or Nominee in the exercise of rights and remedies as a secured creditor
(or in lieu of the exercise of such rights and remedies); and
2.8 irrevocably agrees at the request of the Partnership, to enter
into a consent and agreement in connection with a Refinancing having terms the
same as this Consent, except such terms as may be inapplicable or other
non-substantive change.
SECTION 3. PAYMENT OF ASSIGNED SUMS
Until notified in writing by the Collateral Trustee that the Senior
Debt Obligations have been paid in full, Clark R&M shall pay by wire transfer in
U.S. dollars of same day funds directly to the Project Revenue Account or as
otherwise instructed in writing by the Collateral Trustee any and all amounts,
if any, payable by Clark R&M to the Partnership under the Agreements or as a
result of a breach thereof. The making of such payment into the Project Revenue
Account, and the currency of such payment are of the essence of this Consent.
All amounts paid to the Collateral Trustee shall be accompanied by a notice
specifying the amount of such payment and the purpose for which such payment is
being made. After Clark R&M has been notified in writing by the Collateral
Trustee that the Senior Debt Obligations have been paid in full, Clark R&M shall
pay such amounts directly to Partnership.
<PAGE>
6
SECTION 4. REPRESENTATIONS AND WARRANTIES OF CLARK R&M
Clark R&M hereby represents and warrants that:
4.1 Organization. It is a corporation duly organized and existing
------------
under the laws of Delaware and has the legal capacity to enter into and perform
this Consent.
4.2 Government Authorizations. It has obtained all necessary
-------------------------
authorizations from the competent governmental authorities for the execution of
this Consent and the performance of its obligations hereunder.
4.3 Corporate Authority. The execution and performance by Clark R&M
-------------------
of this Consent has been duly authorized by all necessary corporate action. This
Consent has been duly executed by Clark R&M and, assuming the due authorization
and execution of this Consent by the Partnership and the Collateral Trustee,
constitutes the legal, valid and binding obligation of Clark R&M, enforceable
against Clark R&M in accordance with its terms.
4.4 No Conflict. Neither the execution of this Consent by Clark R&M
-----------
nor the performance by Clark R&M of its obligations hereunder will conflict with
or result in any breach of, or constitute a violation of or default under, any
applicable law or regulation, Clark R&M=s charter or by-laws, or any indenture,
mortgage, deed of trust, or other instrument or agreement (including, without
limitation, any negative pledge or similar clause), to which Clark R&M or any of
its affiliates is a party, or by which any of them may be bound, or to which any
of their respective property or assets may be subject.
4.5 No Litigation. No lawsuit or other proceeding is pending or, to
-------------
the knowledge of Clark R&M, threatened against Clark R&M which, if determined
adversely to Clark R&M, may materially and adversely affect its business or
financial condition or the consummation of the transactions contemplated by, or
the performance of its obligations under, this Consent or any of the Agreements.
No action or proceeding has been instituted and no order, decree, injunction or
judgment of any kind from any court or other governmental authority has been
issued to avoid, restrain or in any other manner prevent the consummation of the
transactions contemplated by this Consent or any of the Agreements.
4.6 Enforcement. The Agreements and this Consent are in proper legal
-----------
form to be enforced against Clark R&M, and it is not necessary to ensure the
legality, validity, enforceability or admissibility into evidence of the
Agreements or this Consent that they be filed, recorded or enrolled with any
governmental authority, or that any such document be stamped with any stamp,
registration or similar transaction tax.
4.7 Execution, Delivery; Binding Agreements. The Agreements are in
---------------------------------------
full force and effect and none of the Agreements have been assigned by Clark
R&M. Except for the assignments referred to in Section 2(a) hereof, Clark R&M
has not received any notice of transfer or assignment of any of the Agreements
by the Partnership.
4.8 No Default or Amendment. Neither Clark R&M nor, to its knowledge,
-----------------------
the Partnership is in default under any of the Agreements. Clark R&M has no
existing claims,
<PAGE>
7
counterclaims, offsets or defenses against the Partnership in respect of any of
the Agreements. None of the Agreements have been amended, modified or
supplemented in any manner.
SECTION 5. RIGHTS OF COLLATERAL TRUSTEE
Clark R&M agrees that the Collateral Trustee, for the benefit of the
Secured Parties, so long as any Senior Debt Obligations remain outstanding,
shall have the following rights with respect to the Agreements:
5.1 Notwithstanding anything to the contrary contained in any of the
Agreements, none of the Agreements shall be terminated or canceled by action of
Clark R&M as the result of any breach or default of the Partnership without
prior notice in writing to the Collateral Trustee, specifying the basis therefor
(hereinafter called a "Notice"). In the event of a default by Partnership under
------
any of the Agreements, Clark R&M (i) will give prompt written notice to the
Collateral Trustee (a "Default Notice") of such default and any cure period
--------------
pursuant to such Agreement (the "Partnership's Cure Period"), (ii) will allow
-------------------------
the Collateral Trustee and the other Secured Parties to cure such default during
the Partnership's Cure Period (whether or not the Partnership or any equity
investor in the Partnership also has the right to cure such default during such
period) and (iii) prior to the exercise by Clark R&M of any right to terminate
such Agreement, will afford the Collateral Trustee and the other Secured Parties
the longer of (A) 120 days after the receipt by the Collateral Trustee of the
Default Notice and (B) 60 days after the expiration of the Partnership's Cure
Period (the "Secured Parties' Cure Period") to cure such default, provided that
---------------------------- --------
the Secured Parties' Cure Period shall be extended for such longer period of
time as is necessary as long as the Collateral Trustee or any other Secured
Party shall be diligently acting in good faith to cure such default or to obtain
title to the Coker Complex; and provided, further, that notwithstanding the
-------- -------
foregoing, in no event shall the Secured Parties' Cure Period with respect to a
payment default by the Partnership exceed 90 days after the Default Notice from
Clark R&M. No curing of any defaults under such Agreement shall be construed as
an assumption by the Collateral Trustee or the Secured Party of any of the
obligations, covenants or agreements of the Partnership under such Agreement.
5.2 If the Collateral Trustee or any other Secured Party, or a
Nominee (as defined below), shall become the legal or beneficial owner of the
Coker Complex, or shall become entitled to cause the disposition of the Coker
Complex pursuant to the exercise of its rights and remedies as a secured
creditor, then:
(a) Such Person, at its election, may continue the Agreements
by delivering to Clark R&M a written notice of continuation. Such Person may
thereafter cause the Partnership's interest in the Agreements to be transferred
to itself or to a third party by delivering to Clark R&M a written notice of
such transfer and an agreement from such Person or such third party satisfying
the conditions of Section 5(b)(ii) hereof (such Person or such third party, as
the case may be, being herein called a "Transferee"), and in the event of any
----------
transfer and any successive transfers thereafter, (A) Clark R&M will continue to
perform, for the benefit of such Transferee, its obligations under the
Agreements pursuant to its terms as modified hereby, without regard to any
default by the Partnership thereunder, (B) the Partnership shall remain liable
to Clark R&M for all its obligations and duties under the Agreements, and (C)
any Transferee shall become
<PAGE>
8
liable, not personally but solely to the extent of its direct or indirect right,
title and interest in and to the Coker Complex and the operating contracts
relating thereto, to perform the duties and obligations of the Partnership under
the Agreements only as arise in respect of the period commencing on the date of
such Transferee's succession. Only the Transferee, and not the Person delivering
a notice of continuation, shall have liabilities and obligations under the
Agreements.
(b) Any agreement delivered pursuant to the second sentence of
subparagraph (i) of this Section 5(b) shall provide that the Transferee shall
(A) assume and agree to perform all future obligations of the Partnership under
the Agreements and agree to be bound by the terms of the Agreements in
connection therewith and (B) be bound by all actions taken and notices given by
the parties under the Agreements prior to any such transfer.
(c) As used in this Section 5, "Nominee" shall mean (A) any
Person or entity that is directly or indirectly owned and controlled by the
Collateral Trustee, the Collateral Trustee or any other Secured Party and (B)
which has acquired the Partnership's right, title and interest in the Coker
Complex.
5.3 If (i) the Partnership or a trustee or receiver or any Person
exercising the powers of a trustee or receiver in any bankruptcy, insolvency,
receivership, arrangement, liquidation or similar proceeding applicable to the
Partnership rejects any of the Agreements, or (ii) any of the Agreements is
terminated (x) by reason of any bankruptcy, insolvency, receivership,
arrangement, liquidation or similar proceeding applicable to the Partnership or
(y) by reason of any default by the Partnership under such Agreement, and if, in
any such case, within 90 days after such termination, the Collateral Trustee
shall so request, Clark R&M will execute and deliver to the Collateral Trustee,
one or more of the Secured Parties, a Nominee or a Transferee, as shall be
designated by the Collateral Trustee (herein called the "Replacement Party"), a
-----------------
new contract with the Replacement Party. The new contract shall contain
substantially the same terms and provisions as such Agreement for the balance of
the unexpired term thereof.
(d) If the Collateral Trustee, for the benefit of the Secured Parties,
or any Replacement Party is prohibited from curing any default by the
Partnership under any of the Agreements by any process, stay or injunctions
issued by any governmental authority or pursuant to any bankruptcy or insolvency
proceeding involving the Partnership, then the Secured Parties' Cure Period
shall be extended for the period of such prohibition.
SECTION 6. AGREEMENTS OF CLARK R&M
6.1 Continuation of Performance. Clark R&M agrees to continue the
---------------------------
performance of its obligations under each of the Agreements notwithstanding any
default by the Partnership under any Financing Document, or the exercise by any
Person of its rights under any Financing Document.
6.2 No Set-Offs, Deductions or Counterclaim. Clark R&M agrees that no
---------------------------------------
amounts due to the Partnership under any of the Agreements shall be subject to
any reduction for any set-off, deduction, counterclaim or otherwise based upon
any claim against the Partnership. Clark R&M
<PAGE>
9
shall not assert any claim it may have by reason of the Partnership's default
under any of the Agreements as a defense to performance of its obligations under
any other agreement with the Partnership or any affiliate of the Partnership or
under this Consent. Nothing contained in this paragraph (c) shall waive Clark
R&M's rights to enforce any such claim as a cause of action against the
Partnership.
6.3 Compliance with Instructions from Collateral Trustee. Clark R&M
----------------------------------------------------
hereby agrees that it shall (i) comply with any and all written instructions
received from the Collateral Trustee pursuant to the Financing Documents, (ii)
treat such instructions as coming directly from the Partnership, (iii) disregard
any contradictory instructions received from the Partnership and (iv) with
effect as of the date of receipt of such instructions, direct to the Collateral
Trustee (with a copy to the Partnership) all communications and correspondence
arising out of or in connection with any of the Agreements.
6.4 Notices. All notices or other communications to be delivered to
-------
the Collateral Trustee or any of the other Secured Parties pursuant to this
Consent or any of the Agreements shall be delivered to the Collateral Trustee at
the address specified in Section 8 below and, in the case of Clark R&M or the
Partnership, to each of these respective entities at the addresses specified in
Section 8 below.
6.5 Amendments of Agreements, Etc. Clark R&M will not agree to any
-----------------------------
amendment, cancellation or early termination of any of the Agreements, and will
not assign its rights or obligations under any of the Agreements to a third
party, without the prior written consent of the Collateral Trustee.
6.6 Reservation of Rights. Clark R&M expressly reserves all rights
---------------------
and remedies available at law or in equity under the Agreements, except to the
extent expressly modified in this Consent.
6.7 Copies of Notices to Partnership. Clark R&M will deliver to the
--------------------------------
Collateral Trustee a copy of each notice given by it to the Partnership
concurrently with delivery of such notice to the Partnership.
SECTION 7. FURTHER ASSURANCES
The parties hereto hereby agree to provide to each other such
documents and to take such other action as may be reasonably necessary to
effectuate fully the purposes of this Consent.
SECTION 8. NOTICES
All notices and other communication under or in connection
with this Consent shall be in writing, shall refer on their face to the
applicable Agreement(s) (although failure to so refer shall not render any such
notice or communication ineffective), shall be sent by first class
<PAGE>
10
registered or certified mail, by facsimile, by hand or by overnight courier
service and shall be addressed:
(a) if to Clark R&M, in accordance with the Agreements;
(b) if to the Collateral Trustee, to
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4th Floor
New York, New York 10006
Attention: James McDonough
(c) if to the Partnership, in accordance with the Agreements; or
(d) to such other address as Clark R&M, the Partnership or the
Collateral Trustee, as the case may be, may designated by prior written notice
to the other parties given pursuant hereto.
SECTION 9. MISCELLANEOUS
9.1 Separate Counterparts; Amendments, Waiver. This Consent may be
-----------------------------------------
executed in separate counterparts, each of which when so executed and delivered
shall be an original but all of such counterparts together shall constitute one
and the same instrument. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by Clark R&M, the Collateral Trustee and the Partnership.
9.2 Severability. Any provision of this Consent which is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.3 Successors and Assigns. This Consent shall be binding upon and
----------------------
inure to the benefit of Clark R&M, the Collateral Trustee, the other Secured
Parties, the Partnership and their respective successors and permitted assigns.
9.4 GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED
-------------
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9.5 Submission to Jurisdiction. Clark R&M hereby irrevocably and
--------------------------
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof or the enforcement of an award rendered pursuant to
Section 11.6 of the SSA and Section 9.7 of the PPA, to the non-exclusive general
jurisdiction of the courts of the State of New York located in the Borough of
Manhattan,
<PAGE>
11
City of New York and the Federal courts of the U.S. for the Southern District of
New York located in the Borough of Manhattan, City of New York; and, (ii)
notwithstanding anything to the contrary contained in the Agreements, consents
that any action or proceeding in connection with the Agreements may be brought
by the Collateral Trustee and the Financing Parties in such courts and waives
any objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same.
9.6 Enforcement of Judgments. Clark R&M agrees that a final judgment
------------------------
against it in any action, suit or proceeding brought in any New York State or
Federal court in accordance with paragraph (e) above shall be conclusive and may
be enforced in any jurisdiction by suit on the judgment, a certified copy of
which judgment shall be conclusive evidence thereof, or by any other means
provided by law.
9.7 No Implied Waiver. Failure or delay on the part of any party
-----------------
hereto to exercise a right under this Consent shall not operate as a waiver
thereof; nor shall any single or partial exercise of a right preclude any other
future exercise thereof.
9.8 Agent for Service of Process. Clark R&M hereby irrevocably and
----------------------------
unconditionally appoints CT Corporation, with an office on the date hereof at
1633 Broadway, 23rd Floor, New York, New York 10019, as its agent, which shall
be a commercial process agent (the "Process Administrative Agent") to receive on
----------------------------
behalf of Clark R&M and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding in such New York State or Federal court. In any such action or
proceeding, such service may be made on Clark R&M by delivering a copy of such
process to Clark R&M in care of the Process Administrative Agent at the Process
Administrative Agent's above address and by depositing a copy of such process in
the mails by certified or registered air mail, addressed to Clark R&M at its
address set forth beneath its signature hereto (such service to be effective
upon such receipt by the Process Administrative Agent and the depositing of such
process in the mails as aforesaid). Clark R&M hereby further irrevocably and
unconditionally authorizes and directs such Process Administrative Agent to
accept such service on its behalf. If for any reason the Process Administrative
Agent shall cease to be available to act as such, Clark R&M agrees to designate
a new agent in New York City on the terms and for the purposes of this provision
satisfactory to the Collateral Trustee. As an alternate method of service, Clark
R&M irrevocably and unconditionally consents to the service of any and all
process in any such action or proceeding in such New York State or Federal court
by mailing of copies of such process to Clark R&M by certified or registered air
mail at its address set forth in the Agreements, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction. Clark R&M hereby agrees that, to the
fullest extent permitted by applicable law, a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
<PAGE>
CLARK REFINING & MARKETING, INC.
By:
----------------------------------------
Name:
Title:
Acknowledged and agreed:
BANKERS TRUST COMPANY, as Collateral
Trustee for the benefit of the Secured
Parties
By:
------------------------------------
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit F
Coker Complex Ground Lease
AUXILIARY FACILITIES
Processing Unit/Facility Refinery Designation
------------------------ --------------------
Saturated Gas Recovery Unit SRGU 1242
C4 Mercaptan Removal Unit MRU 7542
Amine Treating Unit ATU 7845
Wastewater Treatment Unit WWTU-8742
Sulfur Recovery Unit SRU 543/544
Sour Water Stripper SWS-8746
Air Compressor House 70 ACH
Water Treatment Plant No. 2 WPT No.2
Lye Plant LP-8441
BB Treating BBT 7543/4
Boiler House 15 BH-15
Power Plant @ BH-15 PP-4
Boiler House 16 BH-16
Power Plant @ BH-16 PP-2
Cooling Towers C.T. 100, 136A/B, 233, 244,
314, 316, 354, 360, 366, 372
Refinery Docks Docks
Crude Feed Tanks Tank Nos. 110, 111, 106, 107,
283, 284, 285
Sabine Road Tank Farm SRTF
Pump House 41 PH-41
Port Arthur Products Station PAPS
Lucas Products Terminal Lucas Station
Pump House 138 (Butane Storage) PH-138
<PAGE>
Processing Unit/Facility Refinery Designation
------------------------ --------------------
Rail Transportation Facilities ALL
Crude Oil Pipelines:
Sun Terminal to Lucas Sun Docks
Lucas to Refinery Lucas Station
Fannett Terminal Fannett LPG Storage
Hydrogen Gathering System HGS
Flare Systems Flare Nos. 1, 5, 7, 8, 12, 13,
15, B103, 17, 18, 19, 20
Control Houses/Systems All related to AVU, GFUs,
HFAU, SRU, DCE, SGRU, FCCU,
CRU, WTU, SRTF, NSTF
Maintenance Facilities All
Storehouse Facilities All
Laboratories Main lab and Knockengine lab
Office Buildings Nos. 36, 47, 54, 100, 200
Security Buildings/Radio Communications ALL
Fire Station and Equipment ALL
Neches Pump Station NPS-P.S. 390
Nitrogen Distribution Systems ALL except to Chevron Chemical
Company ("CCC")
Fuel Gas Distribution Systems ALL except to CCC
Steam Distribution Systems ALL except to CCC
Electrical Distribution Systems ALL except to CCC
<PAGE>
Exhibit G
Coker Complex Ground Lease
FORM OF MEMORANDUM OF LEASE
MEMORANDUM OF COKER COMPLEX GROUND LEASE AND
BLANKET EASEMENT AGREEMENT
--------------------------
THE STATE OF TEXAS (S)
(S) KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JEFFERSON (S)
THAT, CLARK REFINING & MARKETING, INC., a Delaware corporation
("Lessor"), and PORT ARTHUR COKER COMPANY L.P., a Delaware limited partnership
("Lessee"), have made and entered into that certain Coker Complex Ground Lease
and Blanket Easement Agreement dated effective as of August 19, 1999 (the "Coker
Complex Ground Lease") with respect to the 46.2189-acre tract of land (being a
47.7267-acre tract less and except a 1.5078-acre tract) described on Exhibit A
---------
attached hereto and made a part hereof for all purposes (the "Coker Complex
Site").
1. Defined Terms. All defined terms used in this Memorandum shall have
-------------
the respective meanings provided for such defined terms in the Coker Complex
Ground Lease.
2. Lease. On and subject to the terms, provisions and conditions of
-----
the Coker Complex Ground Lease, Lessor has leased, let, demised and rented the
Coker Complex Site to Lessee, and Lessee has leased and accepted the Coker
Complex Site from Lessor, for an initial lease term (the "Coker Complex Initial
Term") commencing on the date hereof and ending on August 19, 2029.
3. Options to Renew. The Coker Complex Ground Lease provides that, on
----------------
and subject to the terms, provisions and conditions set forth therein, Lessee
shall have the right and option to extend the Coker Complex Initial Term for up
to five (5) additional terms of five (5) years each (each, a "Coker Complex
Renewal Term").
4. Appurtenant Easements. The grant by Lessor to Lessee under the
---------------------
Coker Complex Ground Lease includes certain specified, nonexclusive easements,
appurtenant to the Coker Complex Leasehold and for the Coker Complex Ground
Lease Term, more particularly described as follows:
4.1 a nonexclusive easement on, over and under the Adjacent
Refinery Property, as more particularly described in Exhibit B attached
---------
hereto and made a part hereof for all purposes, for the purpose of
ingress and egress to and from the Coker Complex Site, for the
construction and maintenance of interconnection pipes, wiring,
<PAGE>
2
other pipelines and communication and utility lines, and for any other
purpose as may be necessary or desirable in connection with the
construction, ownership and operation of the Coker Complex, or the
operation of the Heavy Oil Processing Facility or any of the Auxiliary
Facilities; and
4.2 a nonexclusive easement on that portion of the dock
described in Exhibit C attached hereto and made a part hereof for all
---------
purposes, for the purpose of unloading cargoes of crude oil and other
feedstocks and loading products of the Coker Complex and for the
construction and maintenance of pipes, pumps, valves, gauges and other
equipment in connection with such loading and unloading.
5. Controlling Document. This Memorandum has been executed by Lessor
--------------------
and Lessee pursuant to the provisions of the Coker Complex Ground Lease, for
recordation in the Official Public Records of Real Property of Jefferson County,
Texas, and it is the intent of this Memorandum to give record notice that Lessor
and Lessee have entered into the Coker Complex Ground Lease for the Coker
Complex. It is not the purpose of this Memorandum to amend, modify, eliminate,
or add to the provisions of such Coker Complex Ground Lease. In the event and to
the extent of any conflict between the terms of this Memorandum and the terms of
the Coker Complex Ground Lease, the terms of the Coker Complex Ground Lease
shall supersede and control.
6. Successors and Assigns. The rights and obligations of the parties
----------------------
to the Coker Complex Ground Lease shall be binding upon, and shall inure to the
benefit of, the respective permitted successors and assigns of the parties (but
without affecting any restrictions on assignment and subletting set forth in the
Coker Complex Ground Lease).
IN WITNESS WHEREOF, Lessor and Lessee have executed this Memorandum of
Coker Complex Ground Lease and Blanket Easement Agreement to be effective as of
the date first set forth above.
LESSEE: LESSOR:
PORT ARTHUR COKER COMPANY L.P., CLARK REFINING & MARKETING,
a Delaware limited partnership INC., a Delaware corporation
By: Sabine River Holding Corp., a
Delaware corporation, its sole By:
general partner Name:
Title:
By:
Name:
Title:
<PAGE>
3
STATE OF (S)
(S)
COUNTY OF (S)
This instrument was acknowledged before me on August ____, 1999, by
____________________________________________, the _________________________ of
CLARK REFINING & MARKETING, INC., a Delaware corporation, on behalf of said
corporation.
Notary Public, State of
STATE OF (S)
(S)
COUNTY OF (S)
This instrument was acknowledged before me on August ____, 1999, by
________________________________, the ___________________________ of Sabine
River Holding Corp., a Delaware corporation and the sole general partner of PORT
ARTHUR COKER COMPANY L.P., a Delaware limited partnership, on behalf of said
limited partnership.
Notary Public, State of
List of Exhibits:
- ----------------
Exhibit A - Description of the Coker Complex Site
---------
Exhibit B - Description of the Adjacent Refinery Property
---------
Exhibit C - Description of the Dock
---------
<PAGE>
4
EXHIBIT A
TO
MEMORANDUM OF COKER COMPLEX GROUND LEASE
AND BLANKET EASEMENT AGREEMENT
------------------------------
Description of the Coker Complex Site
46.2189 acres of land (being a 47.7267-acre tract less and except a 1.5078-acre
tract) out of the B. C. Arthur Survey, Abstract No. 61, Jefferson County, Texas,
and being all of Lots 1-4 of H.O.U.P SUBDIVISION, a Subdivision in Jefferson
County, Texas, according to the map or plat thereof recorded in Volume 16, Page
169, of the Map Records of Jefferson County, Texas.
<PAGE>
5
EXHIBIT B
TO
MEMORANDUM OF COKER COMPLEX GROUND LEASE
AND BLANKET EASEMENT AGREEMENT
------------------------------
Description of the Adjacent Refinery Property
<PAGE>
6
EXHIBIT C
TO
MEMORANDUM OF COKER COMPLEX GROUND LEASE
AND BLANKET EASEMENT AGREEMENT
------------------------------
Description of the Dock
<PAGE>
Exhibit 10.12
EXECUTION COPY
================================================================================
ANCILLARY EQUIPMENT SITE LEASE AND EASEMENT AGREEMENT
dated as of August 19, 1999
between
CLARK REFINING & MARKETING, INC.
and
PORT ARTHUR COKER COMPANY L.P.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.................................................... 1
SECTION 1.1 Definitions....................................... 1
SECTION 1.2 Other Definitional Provisions..................... 1
ARTICLE II
LEASE AND GRANT OF EASEMENT.................................... 2
SECTION 2.1 Lease............................................. 2
SECTION 2.2 Grant of Easement................................. 2
SECTION 2.3 Easements Appurtenant............................. 2
SECTION 2.4 No Interference................................... 2
ARTICLE III
POSSESSION AND QUIET ENJOYMENT................................. 3
ARTICLE IV
TITLE.......................................................... 3
ARTICLE V
FIXTURES....................................................... 3
ARTICLE VI
CONSTRUCTION OBLIGATION........................................ 4
SECTION 6.1 Lessor to Upgrade Ancillary Equipment............. 4
SECTION 6.2 Scope of Work..................................... 4
SECTION 6.3 Assignment of Construction Contract............... 4
SECTION 6.4 Ancillary Equipment Letter of Credit.............. 5
ARTICLE VII
UNDERTAKINGS OF LESSOR; FURTHER ASSURANCES..................... 5
ARTICLE VIII
RESERVATIONS AND RESTRICTIONS.................................. 6
SECTION 8.1 Reservations...................................... 6
ARTICLE IX
MAINTENANCE; INSPECTION; COMPLIANCE WITH LAWS.................. 6
SECTION 9.1 Maintenance....................................... 6
SECTION 9.2 Inspection........................................ 7
SECTION 9.3 Compliance with Laws.............................. 7
i
<PAGE>
ARTICLE X
LIENS.......................................................... 8
SECTION 10.1 Lessee Liens..................................... 8
SECTION 10.2 Lessor Liens..................................... 8
ARTICLE XI
TAXES AND CHARGES.............................................. 8
SECTION 11.1 Taxes............................................ 8
SECTION 11.2 Apportionment.................................... 9
ARTICLE XII
INSURANCE...................................................... 9
SECTION 12.1 Lessor Insurance................................. 9
ARTICLE XIII
RENT........................................................... 10
SECTION 13.1 Initial Term..................................... 10
SECTION 13.2 Renewal Term..................................... 10
SECTION 13.3 Early Termination................................ 11
ARTICLE XIV
NONTERMINATION................................................. 11
ARTICLE XV
CONDEMNATION................................................... 12
ARTICLE XVI
BINDING EFFECT; SUCCESSORS AND ASSIGNS......................... 12
ARTICLE XVII
NON-REMOVAL OF FACILITY........................................ 12
ARTICLE XVIII
POSSESSION UPON TERMINATION.................................... 13
ARTICLE XIX
INDEMNITY...................................................... 13
SECTION 19.1 Lessee Indemnity................................. 13
SECTION 19.2 Lessor Indemnity................................. 13
ARTICLE XX
TERM........................................................... 14
SECTION 20.1 Ancillary Equipment Site Lease Term.............. 14
SECTION 20.2 Renewal Term..................................... 14
ii
<PAGE>
ARTICLE XXI
MINERAL RIGHTS................................................. 15
ARTICLE XXII
MISCELLANEOUS.................................................. 15
SECTION 22.1 Assignment as Security for Lessee's Obligations.. 15
SECTION 22.2 Memorandum of Lease.............................. 15
SECTION 22.3 Relationship of the Parties...................... 16
SECTION 22.4 Time is of the Essence........................... 16
SECTION 22.5 Notices.......................................... 16
SECTION 22.6 Severability..................................... 17
SECTION 22.7 Amendment........................................ 17
SECTION 22.8 Headings, etc.................................... 17
SECTION 22.9 Counterparts..................................... 17
SECTION 22.10 GOVERNING LAW.................................... 17
SECTION 22.11 WAIVER OF JURY TRIAL............................. 17
ARTICLE XXIII
NO MERGER...................................................... 18
SECTION 23.1 No Merger........................................ 18
APPENDIX A -- DEFINITIONS
EXHIBITS
A Ancillary Equipment Site Description
B Ancillary Equipment Description
C Adjacent Refinery Property Description
D Lessor Ancillary Equipment Upgrade Description
E Turnarounds and Capital Maintenance Description
F Form of Consent and Assignment Agreement
G Form of Memorandum of Lease
H Ancillary Equipment Operating Fee Calculation
SCHEDULES
I Ancillary Equipment Site Permitted Liens
iii
<PAGE>
SITE AND EQUIPMENT LEASE AND EASEMENT AGREEMENT (the "Ancillary
Equipment Site Lease"), dated as of August 19, 1999, between Clark Refining &
Marketing, Inc., a Delaware corporation ("Lessor") and Port Arthur Coker Company
L.P., a Delaware limited partnership ("Lessee").
WHEREAS, the Lessor is the owner of the Ancillary Equipment Site and
the Ancillary Equipment;
WHEREAS, Lessee wishes to lease the Ancillary Equipment Site and the
Ancillary Equipment from Lessor and wishes Lessor to perform certain required
upgrades thereto in order for the Lessee to operate the Ancillary Equipment in
connection with the Coker Complex; and
WHEREAS, Lessor wishes to perform such upgrades to the Ancillary
Equipment and lease the Ancillary Equipment and Ancillary Equipment Site to
Lessee;
NOW THEREFORE, for and in consideration of the mutual covenants,
premises and agreements set forth herein, and good and valuable consideration,
the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Except as otherwise defined herein, the
capitalized terms used herein shall have the respective meanings assigned
thereto in Appendix A.
SECTION 1.2 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Ancillary Equipment Site Lease shall
refer to this Ancillary Equipment Site Lease as a whole and not to any
particular provision of this Ancillary Equipment Site Lease, and Article,
Section and Schedule references are to this Ancillary Equipment Site Lease
unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
<PAGE>
2
ARTICLE II
LEASE AND GRANT OF EASEMENT
SECTION 2.1 Lease. The Lessor hereby demises, leases and delivers to
the Lessee and Lessee hereby leases and accepts from Lessor the following
described properties for a term of years equal to the Ancillary Equipment Site
Lease Term, subject to all Permitted Liens now or hereafter in existence, the
following (such estates being referred to herein as the "Ancillary Equipment
Site Leasehold"):
(a) the real property (the "Ancillary Equipment Site") described
in Exhibit A; and
(b) all equipment, buildings, structures, fixtures and
improvements located on the Ancillary Equipment Site, including
without limitation those processing units described in Exhibit B.
SECTION 2.2 Grant of Easement. Lessor does hereby grant and convey
to Lessee a nonexclusive easement (the "Ancillary Equipment Easement") on, over
and under the Adjacent Refinery Property as more particularly described in
Exhibit C, for the purpose of ingress and egress, for the location and
maintenance of the Ancillary Equipment (including, without limitation, all
interconnection pipes, wiring, other pipelines and communication and utility
lines) and for any other purpose as may be necessary or desirable in connection
with the maintenance and operation of the Ancillary Equipment or the operation
of the Heavy Oil Processing Facility. The appurtenant non-exclusive easement
herein granted includes, without limitation, the right to use the twenty (20)
foot wide access easements described on Exhibit C hereto, connecting the
Ancillary Equipment Site to Texas Highway 870.
SECTION 2.3 Easements Appurtenant. The Ancillary Equipment Easement
shall be deemed to be appurtenant to the Ancillary Equipment Leasehold and shall
be for the benefit of the Lessee and its successors and assigns and any tenant
of the Ancillary Equipment Leasehold. Lessor agrees that it will not make any
use or permit any use of the land described in Exhibit C that would interfere
with the use and enjoyment of the Ancillary Equipment Easement or the operation
of the Ancillary Equipment Site in connection with the Coker Complex by the
Lessee or its successors, assigns or subtenants at any time during the Ancillary
Equipment Site Lease Term, except to the extent that such use would not impair
(i) the ability of the Lessee or its successors, assigns or subtenants to
operate the Coker Complex in accordance with the Base Case Financial Model or
(ii) any of the security interests granted or to be granted by the Coker Company
to the Financing Parties pursuant to the Financing Documents.
SECTION 2.4 No Interference. With respect to any nonexclusive
easement granted pursuant to this Ancillary Equipment Site Lease, the Lessor
shall not grant or convey any easement or other interest (other than a Permitted
Lien) that, if used or enjoyed in accordance with its terms, would interfere
with the use and enjoyment of the Coker Complex, the Ancillary Equipment
Leasehold or the Ancillary Equipment Easement or the operation of the Ancillary
Equipment or the Coker Complex by the Lessee or its permitted successors,
assigns or subtenants at any time during the Ancillary Equipment Site Lease
Term, except to the extent that such
<PAGE>
3
easement or interest would not or impair (i) the ability of the Lessee or its
successors, assigns or subtenants to operate the Coker Complex in accordance
with the Base Case Financial Model or (ii) any of the security interests granted
or to be granted by the Coker Company to the Financing Parties pursuant to the
Financing Documents.
ARTICLE III
POSSESSION AND QUIET ENJOYMENT
The Lessor covenants with the Lessee that the Lessee will enjoy quiet
possession of the Ancillary Equipment Leasehold and the right to utilize the
Ancillary Equipment Easement, free from claims of persons in possession and
third parties claiming rights thereto.
ARTICLE IV
TITLE
The Lessor warrants and represents that it has (a) good and
indefeasible title to the Ancillary Equipment, the Ancillary Equipment Site and
to all property covered by the Ancillary Equipment Easement, in fee simple
absolute and (b) the right to convey the Ancillary Equipment Easement, in each
case free and clear of all liens and encumbrances, except for Permitted Liens.
The Lessor further warrants and represents that Permitted Liens in existence on
the date hereof do not and will not adversely affect the use of the Ancillary
Equipment, the Ancillary Equipment Site and the Ancillary Equipment Easement as
contemplated by the other Project Documents.
ARTICLE V
FIXTURES
As a material part of this Ancillary Equipment Site Lease, the Lessor
and Lessee agree and intend that each item representing part of the Ancillary
Equipment (including the Ancillary Equipment Upgrade) (a) is attached, affixed
and annexed to the Ancillary Equipment Site or the Ancillary Equipment Easement,
as the case may be, by agreement and intention of the parties, (b) shall remain
affixed to the Ancillary Equipment Site or the Ancillary Equipment Easement, as
the case may be, (c) shall be considered with respect to the interests of the
parties hereto as the real property of the Lessor, (d) shall be considered to
become fixtures to and a part of the Ancillary Equipment Site or the Ancillary
Equipment Easement, as the case may be, immediately upon being installed or
constructed on, or otherwise affixed or annexed to, the Ancillary Equipment
Site, (e) is adaptable to the uses and purposes for which the Ancillary
Equipment Site is being leased by Lessor to Lessee, and (f) cannot be removed
from the Ancillary Equipment Site without doing substantial injury and/or
material damage to the Ancillary Equipment Site.
<PAGE>
4
ARTICLE VI
CONSTRUCTION OBLIGATION
SECTION 6.1 Lessor to Upgrade Ancillary Equipment. The Lessor
covenants to construct and substantially complete, on or before October 1, 2000,
at Lessor's sole cost and expense, the additions, betterments and upgrades to
the Ancillary Equipment described on Exhibit D (the "Lessor Ancillary Equipment
Upgrade") pursuant to the Ancillary Equipment Upgrade Contract or otherwise.
Should Lessor fail to complete the Lessor Ancillary Equipment Upgrade by October
1, 2000, Lessor hereby agrees that Lessee may engage its own contractor(s) to
complete the Lessor Ancillary Equipment Upgrade at Lessor's expense.
SECTION 6.2 Scope of Work. Lessor shall perform or shall cause to be
performed all of the Lessor Ancillary Equipment Upgrade in accordance with the
specifications set forth on Exhibit D. Without limiting the generality of the
foregoing:
(a) All components shall be new (except for used equipment (x)
expressly specified as used on Exhibit D, (y) not required, pursuant to the
Exhibit D, to be new equipment or (z) otherwise agreed in writing by
Lessee) and of good quality when installed; shall meet the generally
accepted standard of quality applicable to the design and engineering of
refinery installations of similar size, type and design; shall be designed
and manufactured in accordance with recognized refinery and petrochemical
industry standards for such components and in accordance with the
Standards; and shall be free from defects and deficiencies in design,
materials and workmanship or otherwise;
(b) The Lessor Ancillary Equipment Upgrade shall be performed
and installed in accordance with the standards set forth on Exhibit D and
in accordance with workmanlike and good engineering practices;
(c) The Lessor Ancillary Equipment Upgrade shall be designed and
built to integrate with the Coker Complex such that, upon completion, the
Heavy Oil Upgrade Project shall be capable of being operated (i) at the
Guaranteed Values as required by the Performance Test Standards; (ii) in
compliance with all Applicable Laws in effect on the date that the Lessee
issues a final completion certificate to the Contractor pursuant to the EPC
Contract; (iii) in accordance with the Standards; and (iv) free from
defects and deficiencies in design, materials and workmanship or otherwise;
and
(d) Lessor shall take all such actions, and shall direct the
Contractor to take all such actions, as may be required in connection with
the integration of the Ancillary Equipment with the Coker Complex.
SECTION 6.3 Assignment of Construction Contract. As security for its
obligation to perform the Lessor Ancillary Equipment Upgrade, Lessor hereby
collaterally assigns to Lessee, and hereby grants to Lessee a security interest
in, all of Lessor's right, title and interest in and to any and all
construction, design, engineering or procurement contracts entered
<PAGE>
5
into by or on behalf of Lessor for the purpose of performing the Lessor
Ancillary Equipment Upgrade, including, without limitation, the Ancillary
Equipment Upgrade Contract.
SECTION 6.4 Ancillary Equipment Letter of Credit. For so long as
the Ancillary Equipment Upgrade is not substantially complete, the Lessor shall
provide and maintain in effect, for the benefit of the Contractor, the standby
letter as required by, and on the terms and conditions set forth in, the
Ancillary Equipment Upgrade Contract.
ARTICLE VII
UNDERTAKINGS OF LESSOR; FURTHER ASSURANCES
The Lessor covenants, represents and warrants to the Lessee that the
Ancillary Equipment Site Leasehold and the Ancillary Equipment Easement are
sufficient and will, at all times during the Ancillary Equipment Site Lease
Term, be sufficient or, if the same shall cease to be so sufficient, the Lessor
will at its expense take such action, including the conveyance of additional
easements and the grant of additional rights, as is reasonable or necessary, in
order to provide the Lessee with reasonable means of constructing, connecting,
operating, maintaining, replacing, renewing and repairing the Ancillary
Equipment including, but not limited to (a) reasonable means of transporting
materials to be processed to the Ancillary Equipment and transporting processed
material from the Ancillary Equipment to the Coker Complex, (b) reasonable
access subject to regulatory restrictions to communications networks and sources
of electric power, natural gas and other utilities for operation of the
Ancillary Equipment, (c) reasonable access subject to regulatory restrictions to
sources of potable water, (d) reasonable access subject to regulatory
restrictions to areas for or means of disposing of waste materials generated by
the operation of the Ancillary Equipment, (e) reasonable access on the Ancillary
Equipment Site to a supply of hydrogen, by pipeline, by a hydrogen supply plant
commissioned by the Lessor and constructed by a hydrogen supplier on or near the
Ancillary Equipment Site or by another commercially reasonable alternative,
sufficient for the requirements of the Ancillary Equipment, and (f) existing
firewater systems, as they may be modified, necessary to maintain, protect and
preserve the Ancillary Equipment Site. At all times during the Ancillary
Equipment Site Lease Term the Lessor, at its expense, shall maintain the areas
covered by the Ancillary Equipment Easement in good condition and repair and in
accordance with Applicable Laws so that they will be available for the operation
of the Ancillary Equipment, including, without limitation, the maintenance of
roads, equipment, pumps, and pipelines located on areas covered by the Ancillary
Equipment Easement.
The agreement and obligation of Lessor to provide electric utilities
and electric service, natural gas and gas service, potable water and water
service, and sanitary sewage service to the Ancillary Equipment Site is incident
to, dependent upon and inseparable from the landlord/tenant relationship
established by this Ancillary Equipment Site Lease, and such obligation shall
continue only for the Ancillary Equipment Site Lease Term and the existence of
such landlord/tenant relationship. All charges for potable water and sanitary
sewer services to be provided by Lessor to Lessee pursuant to the Services and
Supply Agreement are included in the rent payable to Lessor hereunder. The
calculation of the Ancillary Equipment Operating Fee as it
<PAGE>
6
relates to the provision of electricity and electric service and natural gas and
gas service to the Ancillary Equipment is intended only to provide a mechanism
for Lessor to recover from Lessee the cost of providing electricity and electric
service, and natural gas and gas service, to the Ancillary Equipment, and it is
not intended that Lessor shall make a profit by providing such utilities).
Lessee acknowledges, understands and agrees that none of such utilities may be
sold or resold by Lessee, and none of such utilities may be used by any other
party or for any other purpose other than in connection with its tenancy
hereunder.
ARTICLE VIII
RESERVATIONS AND RESTRICTIONS
SECTION 8.1 Reservations. The grant and conveyance of the Ancillary
Equipment Easement by the Lessor to the Lessee are subject to the following
reservations and understandings:
(a) The Lessor reserves the right to relocate all or any portion of
the Ancillary Equipment or other property of the Lessee located on the
Adjacent Refinery Property provided that such relocation (i) does not
subject such property to any Liens, conditions or other restrictions (other
than Permitted Liens) that are more burdensome to the Lessee than before
such relocation, (ii) is at the Lessor's expense and (iii) does not deprive
the Lessee of effective use of such property or make the use of such
property more expensive or burdensome or adversely affect the operation of
the Ancillary Equipment or the Coker Complex, except to the extent that
such relocation would not impair (x) the ability of the Lessee or its
successors, assigns or subtenants to operate the Coker Complex in
accordance with the Base Case Financial Model or (y) any of the security
interests granted or to be granted by the Coker Company to the Financing
Parties pursuant to the Financing Documents.
(b) Subject to Section 2.2 and clause (a) of this Section 8.1, the
Lessor reserves the right to use, permit the use of, or grant easements or
licenses to use, any part of the Adjacent Refinery Property.
ARTICLE IX
MAINTENANCE; INSPECTION; COMPLIANCE WITH LAWS
SECTION 9.1 Maintenance. During the Ancillary Equipment Site Lease
Term, the Lessee shall take care of and maintain the Ancillary Equipment Site
and provide ordinary maintenance of the Ancillary Equipment, which shall not
include capital improvements. So long as the Services and Supply Agreement is in
effect, such performance with respect to maintenance of the Ancillary Equipment
Site as rendered by Lessor thereunder shall be deemed to fulfill Lessee's
obligations under this Section. Lessor shall be obligated to conduct scheduled
<PAGE>
7
turnarounds and capital maintenance on the Ancillary Equipment, in accordance
with Exhibit E hereto.
SECTION 9.2 Inspection. During the Ancillary Equipment Site Lease
Term, the Lessor and its authorized representatives may, at their own expense,
at reasonable times and by appointment on reasonable notice, inspect the
Ancillary Equipment Site and the Ancillary Equipment and any other property
located on the Ancillary Equipment Site.
SECTION 9.3 Compliance with Laws. (a) During the Ancillary Equipment
Site Lease Term, the Lessee, at its sole cost and expense, shall conform to,
comply with and take any and all action necessary to avoid or eliminate any
violation of any Applicable Laws applicable to the Ancillary Equipment Site and
the Ancillary Equipment, or the use or occupancy thereof, unless and to the
extent that (x) the Lessee shall be prosecuting in good faith a test, challenge,
appeal or proceeding for review of such Applicable Laws by appropriate
proceedings that do not involve any substantial risk of (i) foreclosure, sale,
forfeiture or loss of, or imposition of any Lien prohibited by Article X on the
Ancillary Equipment Site or any part thereof, (ii) extending the ultimate
imposition of such requirement beyond the termination of the Ancillary Equipment
Site Lease Term or (iii) any material claim against the Lessor, the Ancillary
Equipment Site or any property of the Lessor or (y) such violation relates to
the presence of or any failure to remediate environmental contamination existing
on or under the Ancillary Equipment Site prior to the date hereof. So long as
the Services and Supply Agreement is in effect, such performance with respect to
compliance with laws applicable to the Ancillary Equipment Site and the
Ancillary Equipment as may be rendered thereunder by the Lessor shall be deemed
to fulfill Lessee's obligations under this Section.
(b) During the Ancillary Equipment Site Lease Term, the Lessor,
at its sole cost and expense, shall conform to, comply with and take any and all
action necessary to avoid or eliminate any violation of any Applicable Laws
applicable to the Clark Refinery Property (other than the Ancillary Equipment or
the Ancillary Equipment Site, except to the extent that such violation relates
to any environmental condition on or under the Ancillary Equipment Site prior to
the date hereof), or the use, ownership or occupancy thereof, unless and to the
extent that (x) the Lessor shall be prosecuting in good faith a test, challenge,
appeal or proceeding for review of such Applicable Laws by appropriate
proceedings that do not involve any substantial risk of (i) foreclosure, sale,
forfeiture or loss of, or imposition of any Lien prohibited by Article X on the
Clark Refinery Property or any part thereof, (ii) extending the ultimate
imposition of such requirement beyond the termination of the Ancillary Equipment
Site Lease Term or (iii) any material claim against the Lessee, the Clark
Refinery Property or any property of the Lessee, or (y) such violation could not
reasonably be expected to have a material adverse effect on the Ancillary
Equipment Site or the right of Lessee to use and enjoy the Ancillary Equipment
Easement.
<PAGE>
8
ARTICLE X
LIENS
SECTION 10.1 Lessee Liens. (a) During the Ancillary Equipment Site
Lease Term, the Lessee shall not directly or indirectly create, assume or suffer
to exist any Lien by any Person claiming by, through or under the Lessee, on or
with respect to the Ancillary Equipment Site, except Permitted Liens or any
other Lien against Ancillary Equipment Site or the Ancillary Equipment Easement
(i) in favor of any taxing authority by reason of the nonpayment by Lessor of
any Tax (other than Taxes being diligently contested in good faith in
appropriate proceedings), (ii) resulting from any act of Lessor or failure by
Lessor to take any action required hereunder, or (iii) arising in connection
with claims against Lessor.
(b) If any Lien, other than a Lien excepted under clause (a) of this
Section 10.1, on any property of the Lessor arising in connection with the
Lessee's use or occupation of the Ancillary Equipment Site or the Ancillary
Equipment Easement or work of any character performed by or at the direction of
the Lessee, shall arise at any time during the Ancillary Equipment Site Lease
Term, the Lessee shall promptly discharge it at its own cost and expense and
shall indemnify and hold harmless the Lessor from and against any loss, damage,
costs or expense (including legal fees and expenses) as a result of the
existence or enforcement of such Lien.
SECTION 10.2 Lessor Liens. During the Ancillary Equipment Site Lease
Term, the Lessor shall not directly or indirectly create, assume or suffer to
exist any Lessor Lien or any other Lien by any Person claiming by, through or
under the Lessor, on or with respect to the Clark Refinery Property, except
Permitted Liens. If any Lien, other than a Permitted Lien, on any property of
the Lessee arising in connection with the Lessor's use, ownership or occupation
of the Clark Refinery Property or work of any character performed by or at the
direction of the Lessor, shall arise at any time during the Ancillary Equipment
Site Lease Term, the Lessor shall promptly discharge it at its own cost and
expense and shall indemnify and hold harmless the Lessee from and against any
loss, damage, costs or expense (including legal fees and expenses) as a result
of the existence or enforcement of such Lien.
ARTICLE XI
TAXES AND CHARGES
SECTION 11.1 Taxes. (a) During the Ancillary Equipment Site Lease
Term, the Lessee shall pay or cause to be paid, before delinquency, any Tax
assessed, levied, imposed upon, or to become due and payable out of or in
respect of the use, ownership, possession, operation, control, maintenance
or insurance of the Ancillary Equipment Site.
(b) The Lessee shall have the right to contest in good faith, at the
Lessee's sole cost and expense, the amount or validity, in whole or in
part, of any Tax by appropriate proceedings, so long as such contest and
proceedings shall not involve any material risk of sale,
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9
forfeiture or loss of the Ancillary Equipment Site, or any part thereof or the
imposition of any Lien prohibited by Article X.
(c) During the Ancillary Equipment Site Lease Term, the Lessor shall
pay or cause to be paid, before delinquency, any tax assessed, levied, imposed
upon, or to become due and payable out of or in respect of the use, ownership,
possession, operation, control, maintenance or insurance of the Clark Refinery
Property, other than Taxes payable by Lessee pursuant to clause (a) above.
(d) The Lessor shall have the right to contest in good faith, at the
Lessor's sole cost and expense, the amount or validity, in whole or in part, of
any tax, due and payable out of or in respect of the use, ownership, possession,
operation, control, maintenance or insurance of the Clark Refinery Property by
appropriate proceedings, so long as such contest and proceedings shall not
involve any substantial risk of sale, forfeiture or loss of the Clark Refinery
Property, or any part thereof or the imposition of any Lien prohibited by
Article X.
SECTION 11.2 Apportionment. If during the Ancillary Equipment Site
Lease Term the Ancillary Equipment Site shall not be separately assessed but
shall be assessed as part of a larger tract of land, then Lessor and Lessee
shall fairly and equitably apportion any Tax resulting from such assessment
based on (a) with respect to any tax assessed on equipment, the relative value
of the equipment being leased hereunder and any other equipment included in such
assessment, and (b) with respect to any land, the relative acreage of the land
comprising the Ancillary Equipment Site and any other land being taxed.
ARTICLE XII
INSURANCE
SECTION 12.1 Lessor Insurance. During the Ancillary Equipment Site
Lease Term, the Lessor shall, without cost to the Lessee, maintain or cause to
be maintained in effect with insurers of good national or international repute,
comprehensive general liability insurance policies with respect to the Clark
Refinery Property, including the Ancillary Equipment and the Ancillary Equipment
Site, insuring against death and bodily injury, loss or damage to property of
others and such other risks as are customarily insured against in the petroleum
refining industry, all in such amounts and on terms described under the headings
"Construction Phase -- Operator" and "Operational Phase -- Operator" on Exhibit
J to the Common Security Agreement. Any insurance policies maintained in
accordance with this Section 12.2 shall name the Lessee and the Collateral
Trustee as additional insured parties thereunder. Copies or certificates of such
policies shall be delivered to the Lessee and the Collateral Trustee by the
Lessor.
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10
ARTICLE XIII
RENT
SECTION 13.1 Initial Term. (a) For and during the Ancillary
Equipment Site Initial Term, the Lessee shall pay the Lessor the following base
rental for use and occupancy of the Ancillary Equipment Site Leasehold and the
Ancillary Equipment Easement: consecutive quarterly installments with respect to
each calendar quarter, in arrears, due and payable on the last day of April,
July, October, and January commencing with the first such month after the Start-
up Date until the expiration or earlier termination of the Ancillary Equipment
Site Initial Term in an amount each quarter equal to (x) seven million six
hundred ninety thousand dollars ($7,690,000), multiplied by (y) the Inflation
Factor in effect in the month such installment is due; provided, however, that
the amount of the first such payment shall be pro rated in proportion to the
number of days in such quarter after the Start-up Date. Notwithstanding the fact
that payment of rent by the Lessee does not commence until the Start-up Date,
the parties intend that all rights, duties and obligations of the Lessor and
Lessee hereunder shall be enforceable as of the date hereof.
(b) In addition to the base rent payable under clause (a) above or
Section 13.2 below, the Lessee shall pay the Lessor the fee calculated in
accordance with the formula set forth in Exhibit H hereto (the "Ancillary
Equipment Operating Fee") on the twentieth (20th) calendar day of each month
after the Start-up Date during the Ancillary Equipment Site Lease Term for so
long as the Services and Supply Agreement is in effect, as additional rent, for
all Services and Supplies provided by Lessor to the Lessee pursuant to the
Services and Supply Agreement and related to the on-going operation of the
Ancillary Equipment. If Clark R&M incurs increased costs for purchases of
catalysts or other consumable materials or other expenses related to its
operation the Ancillary Equipment which are intended to increase the net
revenues of the Coker Company, then upon the written request of Clark R&M the
parties shall meet to negotiate in good faith an equitable adjustment to the
calculation of the Ancillary Equipment Operating Fee to reflect such increased
costs; provided, however, that such adjustment shall not (i) have a material
adverse effect on the ability of the Coker Company to operate in accordance with
the Base Case Financial Model and (ii) become effective until approved by the
Independent Engineer.
SECTION 13.2 Renewal Term. If Lessee has provided notice of exercise
of its option to extend the term hereof for an Ancillary Equipment Site Renewal
Term as provided in Section 20.2 hereof, Lessor and Lessee shall consult for the
purpose of determining the Fair Market Rental Value of the Ancillary Equipment
Site and the Ancillary Equipment as of the end of the Ancillary Equipment Site
Initial Term or the applicable Ancillary Equipment Site Renewal Term, as the
case may be, and any values agreed upon in writing shall constitute such Fair
Market Rental Value of the Ancillary Equipment for purposes of this Section
13.2. If Lessor and Lessee fail to agree upon such values on or prior to the
date six months prior to the expiration of the Ancillary Equipment Site Initial
Term or an Ancillary Equipment Site Renewal Term, as the case may be, either
party may request, by written notice to the other, that such values be
determined by the Appraisal Procedure. During any Ancillary Equipment Site
Renewal Term, the Lessee shall pay Lessor base rent determined in accordance
herewith quarterly in arrears for
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11
use and occupancy of the Ancillary Equipment Site Leasehold and the Ancillary
Equipment Easement.
SECTION 13.3 Early Termination. Notwithstanding anything to the
contrary in Sections 13.1 or 13.2, the Ancillary Equipment Site Lease Term shall
end at such time as the Coker Complex Ground Lease Term shall have ended.
ARTICLE XIV
NONTERMINATION
Except as provided in Article XV and Section 13.3, this Agreement
shall not terminate, nor shall the Ancillary Equipment Easement or the Ancillary
Equipment Leasehold be extinguished, lost, conveyed or otherwise impaired, or be
merged into or with any other interest or estate in the Ancillary Equipment Site
or any other property interest, in whole or in part, by any cause or for any
reason whatsoever, including, without limitation, the following: any damage to
or destruction of all or any part of the Ancillary Equipment, or the taking of
the Ancillary Equipment or any portion thereof by condemnation, requisition,
eminent domain or otherwise, any prohibition, limitation or restriction of any
party's use of all or any part of the Ancillary Equipment Site, the Ancillary
Equipment, the Ancillary Equipment Easement, or the interference of such use by
any Person, or any eviction by paramount title or otherwise, the coincident
ownership by any Person (including the Lessee) of any estate or interest in the
Ancillary Equipment Easement and other rights granted and conveyed pursuant to
this Agreement with any estate or interest in the Ancillary Equipment Site or
the Ancillary Equipment, any inadequacy, incorrectness or failure of the
description of the Ancillary Equipment Site, the Ancillary Equipment Easement or
any other property or rights intended to be granted or conveyed by this
Agreement, any default in the performance or the observance by any party of any
of their respective covenants and agreements to be performed and observed by the
respective party under any of the Project Documents or the Financing Documents,
the insolvency, bankruptcy, reorganization or similar proceedings by or against
any party hereto (and in the event of a bankruptcy proceeding involving the
Lessor, it is expressly intended that Lessee shall have the rights and options
provided in (S) 365(h) of Title 11 of the United States Code), any nonuse or
excessive use of any Ancilla(i)abry Equipment Easement, any execution of the
security interest granted by the Lessee to the Collateral Trustee or subsequent
transfer or assignment of the rights hereunder, or any other reason whatsoever,
whether similar or dissimilar to any of the foregoing. It is intended and agreed
by the parties hereto that the Ancillary Equipment Leasehold, the Ancillary
Equipment Easement, and other rights granted and conveyed hereunder shall be
separate and independent covenants and agreements of the parties hereto and
that, except as provided in Article XV, no Ancillary Equipment Leasehold,
Ancillary Equipment Easement or other right granted or conveyed pursuant to this
Agreement may be terminated without the express consent of the Collateral
Trustee.
Except as expressly provided in subparagraph (e) above, the provisions
of this Article XIV shall not limit or restrict the remedies available to Lessor
or Lessee in the event of a default by Lessee or Lessor, as the case may be,
under this Ancillary Equipment Site Lease, and
<PAGE>
12
all such remedies are hereby reserved to Lessor or Lessee, as the case may be,
including (without limitation) an action for damages and/or an action for
specific performance.
ARTICLE XV
CONDEMNATION
If all or such a substantial portion of the Ancillary Equipment Site
is condemned or transferred in lieu of condemnation and the remainder is not
sufficient to permit operation of the Ancillary Equipment on a commercial basis,
the Ancillary Equipment Site Lease Term shall terminate at the time title vests
in the condemning authority, and the net proceeds of the condemnation shall be
applied first to pay off any amounts outstanding under the Financing Documents
and the remainder, if any, shall be divided between the Lessee and the Lessor in
proportion to the fair market sales value of their respective interests in the
property condemned. If an insubstantial portion of the Site is condemned at any
time, the Ancillary Equipment Site Lease Term shall not terminate and net
proceeds of the condemnation shall be used first to restore the Ancillary
Equipment Site, with the balance divided between the Lessor and the Lessee in
proportion to the fair market sales value of their interests in the property
condemned. For the purposes of this Article XV, the net proceeds of a
condemnation shall mean the total condemnation proceeds less the costs and
expenses incurred in connection with the condemnation (including legal fees).
ARTICLE XVI
BINDING EFFECT; SUCCESSORS AND ASSIGNS
The terms and provisions of this Ancillary Equipment Site Lease, the
appurtenant easements herein provided, and the respective rights and obligations
hereunder of the Lessee and the Lessor shall be binding upon, and inure to the
benefit of, their respective permitted successors, assigns and sublessors,
including without limitation the Collateral Trustee, the Financing Parties and
any subsequent transferee or assignee thereof. Notwithstanding anything to the
contrary herein, no assignment of the rights of either party to this Ancillary
Equipment Site Lease to any Person shall be effective unless or until the rights
of such party under the other Clark R&M Agreements are assigned to such Person
ARTICLE XVII
NON-REMOVAL OF FACILITY
It is understood by the parties hereto that the Lessor has constructed
and is conducting the improvements and betterments to the Ancillary Equipment
contemplated herein and the Ancillary Equipment Site and the Ancillary Equipment
is the property of, and is owned by, the Lessor. At the end of the Ancillary
Equipment Site Lease Term Lessee shall surrender the Ancillary Equipment to
Lessor in good order, subject to depreciation, ordinary wear and tear and
casualty loss, and lessee shall have no right or option to remove all or any
portion of the
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13
Ancillary Equipment upon expiration or termination of the Ancillary Equipment
Site Lease Term.
ARTICLE XVIII
POSSESSION UPON TERMINATION
The Lessee covenants and agrees that at the end of the Ancillary
Equipment Site Lease Term it will peaceably and quietly yield up and surrender
possession of the Ancillary Equipment Site and any property thereon to the
Lessor.
ARTICLE XIX
INDEMNITY
SECTION 19.1 Lessee Indemnity. During the Ancillary Equipment Site
Lease Term, the Lessee assumes liability for, and agrees to protect, defend,
indemnify, save and hold harmless and keep whole the Lessor from and against any
and all liabilities (including without limitation liabilities arising out of the
doctrine of strict liability), obligations, losses, claims, actions, suits,
causes of action, judgments, damages, penalties, costs, disbursements and
expenses (including without limitation counsel fees), whether founded or
unfounded, of whatsoever kind or nature, imposed on, incurred by or asserted
against the Lessor or any other Person, relating to or arising from (i) the
conduct, operation or management of, or any work, act or omission whatsoever
done in or on the Ancillary Equipment, the Ancillary Equipment Site or the
Ancillary Equipment Site Easement, (ii) any breach or default on the part of the
Lessee in the performance of any covenant or obligation on the part of the
Lessee to be performed pursuant to the terms of this Ancillary Equipment Site
Lease, (iii) any tortious act or negligence of the Lessee or any of the Lessee's
agents, contractors, servants, employees, invitees, licensees or guests with
respect to the Ancillary Equipment, the Ancillary Equipment Site or the
Ancillary Equipment Site Easement or any other property of the Lessee on the
Ancillary Equipment Site or (iv) any accident, injury or damage whatsoever
caused to any person or property in or on the Ancillary Equipment, the Ancillary
Equipment Site or the Ancillary Equipment Site Easement or any other property of
the Lessee on the Ancillary Equipment Site; provided, however, that the Lessee
shall not be required to indemnify the Lessor for any liability arising out of
acts or events occurring after the end of the Ancillary Equipment Site Lease
Term, and provided, further, however, that the Lessee shall not be required to
indemnify the Lessor for any liability arising out of any work, act or omission
whatsoever done by Lessor at any time (whether pursuant to the Services or
Supply Agreement or otherwise).
SECTION 19.2 Lessor Indemnity. During the Ancillary Equipment Site
Lease Term, the Lessor assumes liability for, and agrees to protect, defend,
indemnify, save and hold harmless and keep whole the Lessee from and against any
and all liabilities (including without limitation liabilities arising out of the
doctrine of strict liability), obligations, losses, claims, actions, suits,
causes of action, judgments, damages, penalties, costs, disbursements and
expenses (including without limitation counsel fees), whether founded or
unfounded, of whatsoever kind
<PAGE>
14
or nature, imposed on, incurred by or asserted against the Lessee or any other
Person, relating to or arising from (i) the conduct, operation or management of,
or any work, act or omission whatsoever done in or on the Clark Refinery
Property, other than in or on the Ancillary Equipment or the Ancillary Equipment
Site, (ii) any breach or default on the part of the Lessor in the performance of
any covenant or obligation on the part of the Lessor to be performed pursuant to
the terms of this Ancillary Equipment Site Lease, (iii) any tortious act or
negligence of the Lessor or any of the Lessor's agents, contractors, servants,
employees, invitees, licensees or guests with respect to the Clark Refinery
Property, (iv) any accident, injury or damage whatsoever caused to any person or
property in or on the Clark Refinery Property, other than the Ancillary
Equipment or the Ancillary Equipment Site (subject to the following subclause
(v)), or (v) any liability arising out of any work, act or omission whatsoever
done by Lessor at any time (whether pursuant to the Services and Supply
Agreement or otherwise); provided, however, that the Lessor shall not be
required to indemnify the Lessee for any liability arising out of acts or events
occurring after the end of the Ancillary Equipment Site Lease Term.
ARTICLE XX
TERM
SECTION 20.1 Ancillary Equipment Site Lease Term. The term of this
Ancillary Equipment Leasehold (the "Ancillary Equipment Site Lease Term") shall
commence on the date hereof and, unless this Ancillary Equipment Site Lease is
sooner terminated pursuant to the provisions hereof, the Ancillary Equipment
Site Lease Term shall end on the last day of the Ancillary Equipment Site
Initial Term or, if this Ancillary Equipment Site Lease is renewed pursuant to
Section 20.2 hereof, on the last day of the last Ancillary Equipment Site
Renewal Term. At the expiration of the Ancillary Equipment Site Lease Term the
Ancillary Equipment Easement granted and conveyed herein shall wholly terminate
and revert to the Lessor.
SECTION 20.2 Renewal Term. If this Ancillary Equipment Site Lease
shall not have been earlier terminated, Lessee shall be entitled, at its option
upon irrevocable written notice to Lessor given at least twelve months prior to
the end of the then-current Ancillary Equipment Site Lease Term, at the end of
the Ancillary Equipment Site Initial Term and each Ancillary Equipment Site
Renewal Term, to renew this Ancillary Equipment Site Lease for up to five (5)
additional terms of five years each (each, an "Ancillary Equipment Site Renewal
Term"). All of the provisions of this Lease shall be applicable during each
Ancillary Equipment Site Renewal Term, except that rent shall be determined in
accordance with Section 13.2 hereof. If Lessee gives written notice to Lessor as
aforesaid exercising its option for an Ancillary Equipment Site Renewal Term,
then Lessor and Lessee shall immediately begin the determination of Fair Market
Rental Value described in Section 13.2. Rent during each Ancillary Equipment
Site Renewal Term shall be payable quarterly in arrears.
<PAGE>
15
ARTICLE XXI
MINERAL RIGHTS
Lessor hereby reserves all of the oil, gas and other minerals in and
under the Ancillary Equipment Leasehold and that may be produced therefrom
(including the right to receive royalties under existing leases), waiving
hereby, for the term of the Ancillary Equipment Leasehold and any extensions
thereof, all its rights to use the surface of the land included in the Ancillary
Equipment Leasehold for the purpose of exploring for or producing the said oil,
gas and other minerals.
ARTICLE XXII
MISCELLANEOUS
22.1 SECTION Assignment as Security for Lessee's Obligations . To
secure the indebtedness evidenced by the Senior Debt, the Lessee will assign,
mortgage and convey pursuant to a deed of trust to the Collateral Trustee its
right, title and interest hereunder and in and to this Ancillary Equipment Site
Lease and the Ancillary Equipment Leasehold and Ancillary Equipment Easement
pursuant to the terms of the Financing Documents. The Lessor hereby consents to
(i) such assignment and mortgage and (ii) any further assignment or mortgage by
(x) the Collateral Trustee, any successors and assigns of the Collateral
Trustee, including, without limitation, any purchaser of the Ancillary Equipment
Leasehold at a trustee's sale, foreclosure sale, deed in lieu of foreclosure or
other transfer in connection with the Indenture or (y) any successor or assign
of any purchaser described in the preceding clause (x). Lessor agrees, in
connection with any such assignment under this Section 22.1, to enter into the
consent and assignment agreement substantially in the form of Exhibit F,
provided that such consent and assignment agreement in no way alters or amends
the respective rights and obligation and Lessee as set out in this Lease. In the
event of a termination of this Ancillary Equipment Site Lease pursuant to
Section 365 of the Bankruptcy Reform Act of 1984, as amended, or any other
present or future law permitting the termination of this Ancillary Equipment
Site Lease, Lessor hereby agrees to enter into a new lease, on the same terms as
this Ancillary Equipment Site Lease, with the Collateral Trustee or any other
mortgagee of the Ancillary Equipment Leasehold or any designee of any thereof,
provided that the Collateral Trustee, such other mortgagee or such designee
requests such a new lease within 60 days after receipt of notice from Lessor
that such termination has occurred.
SECTION 22.2 Memorandum of Lease . Lessee have executed a Memorandum
of this Ancillary Equipment Site Lease, in the form of Exhibit G hereto, which
promptly shall be recorded in the Official Public Records of Real Property of
Jefferson County, Texas, by Lessee at its expense. Upon expiration or
termination of this Ancillary Equipment Site Lease, the parties shall execute
and deliver, and Lessee shall record at its expense, a memorandum of expiration
or termination of this Ancillary Equipment Site Lease. Such obligation shall
survive the expiration or termination of this Ancillary Equipment Site Lease and
shall be specifically enforceable.
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16
SECTION 22.3 Relationship of the Parties. The only relationship
between Lessor and Lessee established and evidenced by this Ancillary Equipment
Site Lease is the relationship of landlord and tenant, and the only estates
intended to be conveyed to Lessee or otherwise evidenced hereby are the
leasehold estate of Lessee in and with respect to the Ancillary Equipment Site
and the Ancillary Equipment, and the appurtenant easement estates as herein
expressly provided. This Ancillary Equipment Site Lease is not intended to
grant, transfer, assign, convey or evidence any other estate in or to Lessee,
including (without limitation) any fee simple estate, determinable fee estate,
nor fee estate for years, in or to the Ancillary Equipment Site.
SECTION 22.4 Time is of the Essence. Time is of the essence of this
Ancillary Equipment Site Lease.
SECTION 22.5 Notices. Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered by hand or by overnight courier or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Lessor:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Richard A. Keffer
If to Lessee:
Port Arthur Coker Company L.P.
Port Arthur Refinery
1801 S. Gulfway Drive
Office Number 36
Port Arthur, Texas 77640
Attention: K.W. Isom
(or if sent by U.S. Mail:
Port Arthur Coker Company L.P.
P.O. Box 908
Port Arthur, Texas 77641-0908
Attention: K.W. Isom)
Any such notice, request, consent, waiver or other communication
required or permitted hereunder, whether to Lessor or Lessee, shall also be
personally delivered by hand or by overnight courier or sent by certified or
registered mail, postage prepaid, return receipt requested, to the Collateral
Trustee on behalf of the Financing Parties, addressed as follows:
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17
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4th Floor
New York, New York 10006
Attention: James McDonough
SECTION 22.6 Severability. Any provision of this Ancillary Equipment
Site Lease that shall be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 22.7 Amendment. Neither this Ancillary Equipment Site Lease
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification shall be sought and, unless and until the Lessor shall have
received written notice from the Collateral Trustee that the Liens securing the
Senior Debt have been released, the Collateral Trustee.
SECTION 22.8 Headings, etc. Captions and headings in this Ancillary
Equipment Site Lease are for reference only and do not constitute a part of the
substance of this Ancillary Equipment Site Lease.
SECTION 22.9 Counterparts. This Ancillary Equipment Site Lease may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument. Delivery of an executed
signature page of this Ancillary Equipment Site Lease by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.
SECTION 22.10 GOVERNING LAW. THIS ANCILLARY EQUIPMENT SITE LEASE HAS
BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 22.11 WAIVER OF JURY TRIAL. THE LESSOR AND LESSEE HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS ANCILLARY EQUIPMENT SITE LEASE OR ANY OTHER PROJECT
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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18
ARTICLE XXIII
NO MERGER
SECTION 23.1 No Merger. So long as the Senior Debt is outstanding,
unless the Collateral Trustee shall otherwise expressly consent in writing, the
fee title to the Ancillary Equipment Site shall remain separate and distinct
from and shall not be merged into the leasehold estate demised to the Lessee
hereby.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Ancillary Equipment Site Lease and to be duly executed and delivered as of the
day and year first above written.
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
General Partner
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
CLARK REFINING & MARKETING, INC.
By: /s/ Maura J. Clark
--------------------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
APPENDIX A -- DEFINITIONS TO THE:
Services and Supply Agreement
Product Purchase Agreement
Coker Complex Ground Lease
Ancillary Equipment Site Lease
Transfer and Assignment Agreement
General Provisions
------------------
The following terms shall have the following meanings for all purposes
of the Services and Supply Agreement, the Product Purchase Agreement, Coker
Complex Ground Lease, the Ancillary Equipment Site Lease and the Transfer and
Assignment Agreement, each referred to below, unless otherwise defined in such
agreements or the context thereof shall otherwise require, and such meanings
shall be equally applicable to both the singular and the plural forms of the
terms herein defined. In the case of any conflict between the provisions of
this Appendix A and the provisions of the main body of any of the above
agreements, the provisions of the main body of such agreement shall control the
construction of such agreement.
Unless the context otherwise requires, references to (i) agreements
shall include sections, schedules, exhibits and appendices thereto and shall be
deemed to mean and include such agreement (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the permitted successors and assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
"Actual Coker Capacity" means with respect to the Coker, its capacity,
from time to time, to process feedstreams.
"Actual Crude Capacity" means with respect to the Ancillary Equipment,
its capacity, from time to time, to process crude oil.
"Actual Hydrocracker Capacity" means with respect to the Hydrocracker,
its capacity, from time to time, to process gas oil.
"Adjacent Refinery Property" means the land described on Exhibit B to
the Coker Complex Ground Lease and also on Exhibit C to the Ancillary Equipment
Site Lease.
"Amine Treating Unit" means the amine treating unit constructed at the
Refinery and designated ATU 7841.
"Ancillary Equipment" means, collectively, the Crude Unit and the
other processing units described on Exhibit B to the Ancillary Equipment Site
Lease.
"Ancillary Equipment Easement" has the meaning given such term in
Section 2.2 of the Ancillary Equipment Site Lease.
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20
"Ancillary Equipment Operating Fee" has the meaning given such term in
Section 13.2(b) of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site" has the meaning given such term in Section
2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Initial Term" means the period commencing on
the August 19, 1999 and ending on August 19, 2029.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site
Lease and Easement Agreement, dated as of August 19, 1999, between Clark R&M and
the Coker Company.
"Ancillary Equipment Site Leasehold" has the meaning given such term
in Section 2.1 of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Lease Term" has the meaning given such term
in Article XX of the Ancillary Equipment Site Lease.
"Ancillary Equipment Site Renewal Term" means each period following
the end of the Ancillary Equipment Initial Term with respect to which Lessee has
the option to renew the Ancillary Equipment Site Lease pursuant to Article XX of
the Ancillary Equipment Site Lease.
"Ancillary Equipment Upgrade Contract" means the Reimbursable Contract
for Engineering, Procurement and Construction, dated as of March 24, 1998,
between Clark R&M and the Contractor, as amended by Amendment No. One, dated as
of August 19, 1999, as further amended, supplemented or otherwise modified from
time to time.
"Annual Budget and Operating Plan" means, for any Operating Year, the
budget and operating plan in effect pursuant to Section 6 of the Services and
Supply Agreement.
"Applicable Law" means, collectively, (i) all Permits and (ii) all
laws, treaties, ordinances, judgments, decrees, injunctions, writs, orders and
stipulations of any court, arbitrator or governmental agency or authority and
statutes, rules, regulations, orders and interpretations thereof of any federal,
state, county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body applicable from time to
time to the Refinery, the operation or maintenance of the Refinery, or the
performance of any obligations under the Clark R&M Agreements, any other Project
Document or any other agreement entered into in connection therewith.
"Appraisal Procedure" with respect to any renewal option of any lease,
means a procedure whereby two independent Qualified Appraisers, one appointed by
the lessor and one by the lessee, shall agree upon the value, period, amount or
determination then the subject of an appraisal, as follows: If either the
lessor or the lessee shall determine that a value, period or amount of
determination to be determined under such lease or any related document cannot
<PAGE>
21
timely be established by agreement, such party shall appoint its Qualified
Appraiser and give notice thereof to the other party, which shall appoint its
Qualified Appraiser within 10 days thereafter. If such other party does not
appoint its Qualified Appraiser within such ten day period, the determination of
the first Qualified Appraiser made within 20 days thereafter shall be conclusive
and binding on the lessor and the lessee. If within 20 days after appointment
of the second of the two Qualified Appraisers, such Qualified Appraisers are
unable to agree upon the value, period, amount or determination in question,
they jointly shall appoint a third Qualified Appraiser within 10 days
thereafter, or, if they do not do so, either the lessor or the lessee may
request the American Arbitration Association office in Houston, Texas (or if no
such office exists at such time, the American Arbitration Association office in
New York, New York), or any organization successor thereto, to appoint the third
Qualified Appraiser from a panel of arbitrators knowledgeable on the subject of
refinery land and asset valuations in the Texas Gulf Coast area. The decision
of the third Qualified Appraiser shall be given within 20 days after his
appointment. If three Qualified Appraisers shall be so appointed, the average
of all three determinations shall be conclusive and binding on the lessor and
the lessee unless the determination of one Qualified Appraiser is disparate from
the middle determination by more than twice the amount by which the third
determination is disparate from the middle determination, in which case the
determination of the most disparate Qualified Appraiser shall be excluded and
the average of the remaining two determinations shall be conclusive and binding
on the lessor and the lessee. The obligation to pay the fees and expenses of
Qualified Appraisers incurred in connection with any Appraisal Procedure shall
be divided equally between the lessor and the lessee.
"Auxiliary Facilities" has the meaning given such term in Article VI
of the Coker Complex Ground Lease. "Auxiliary Rights" has the meaning given such
term in Article VI of of the Coker Complex Ground Lease.
"Available Coker Company Maya" means, for any day, the sum of (a) the
Contract Quantity for such day, plus (b) the extent, if any, that the Available
Coker Company Maya for the preceding day exceeds the Actual Crude Capacity for
such preceding day.
"Available Coker Company VTBs" means, for any day, the sum of (a) the
Coker Company VTBs produced by the Crude Unit on such day, plus (b) the extent,
if any that Available Coker Company VTBs for the preceding day exceeds Actual
Coker Capacity for such preceding day.
"Base Case Financial Model" shall mean the financial model described
on Exhibit A to the Services and Supply Agreement.
"BPD" has the meaning given such term in the Long-Term Oil Supply
Agreement.
"Business Day" means any day other than Saturday, Sunday or a legal
holiday in the United States of America.
<PAGE>
22
"Clark Equipment" means all Clark Refinery Property other than the
Ancillary Equipment.
"Clark Hydrogen Supply Contract" means the Product Supply Agreement,
dated as of August 1, 1999, between Clark R&M and Air Products, Inc.
"Clark Maya" means Maya Crude Oil purchased by Clark R&M.
"Clark Processing Fee" means, for any monthly period, the total fees
due the Coker Company from Clark R&M for processing services provided pursuant
to Sections 3.5, 4.2 and 4.3.
"Clark R&M" means Clark Refining & Marketing, Inc., a Delaware
corporation.
"Clark R&M Agreements" means, collectively, (i) the Services and
Supply Agreement, (ii) the Product Purchase Agreement, (ii) the Coker Complex
Ground Lease and (iv) the Ancillary Equipment Site Lease.
"Clark Refinery Property" means all real and personal property owned
by Clark R&M and located at the Refinery.
"Coker" means the delayed coker to be constructed at the Refinery and
designated DCU 843.
"Coker Company" means Port Arthur Coker Company L.P., a Delaware
limited partnership.
"Coker Company Crude Oil Volume" means, on any day, the volume, stated
in BPD, of Coker Company-owned crude oil processed through the Crude Unit.
"Coker Company Maya" means Maya Crude Oil purchased by the Coker
Company.
"Coker Complex"means, collectively, the Coker, the Hydrocracker, the
Sulfur Plant, the Sour Water Stripper, the Amine Treating Unit and the Coker
Complex Offsites.
"Coker Complex Design Capacity" means with respect to the Coker
Complex, its nameplate capacity, stated in BPD, to process feedstocks.
"Coker Complex Ground Lease" means the Coker Complex Ground Lease and
Blanket Easement Agreement, dated as of August 19, 1999, between Clark R&M and
the Coker Company.
"Coker Complex Ground Lease Term" has the meaning given such term in
Article XX of the Coker Complex Ground Lease.
<PAGE>
23
"Coker Complex Initial Term" means the period commencing on August 19,
1999 and ending on August 19, 2029.
"Coker Complex Leasehold" has the meaning given such term in Section
2.1 of the Coker Complex Ground Lease.
"Coker Complex Offsites" means, collectively, (a) the control room,
flare, cooling tower, sulfur loading facilities and power station no. 6 that are
being constructed pursuant to the a Contract and (b) the coker feed tank nos.
108 and 109 that are being modified pursuant to the EPC Contract.
"Coker Complex Renewal Term" means each period following the end of
the Initial Term with respect to which Lessee has the option to renew the Coker
Complex Ground Lease pursuant to Article XX of the Coker Complex Ground Lease.
"Coker Complex Site" has the meaning give such term in Section 2.1(a)
of the Coker Complex Ground Lease.
"Coker Design Capacity" means with respect to the Coker, its nameplate
capacity, stated in BPD, to process feedstocks.
"Collateral Trustee" means the collateral trustee granted a security
interest, on behalf of the Financing Parties, in the Senior Debt pursuant to the
Financing Documents and any successor collateral trustee thereunder.
"Common Security Agreement" means the Common Security Agreement, dated
as of August 19, 1999, among the Coker Company, the Funding Company, Sabine,
Neches, Bankers Trust Company, as Collateral Trustee and Depositary Bank,
Deutsche Bank AG, New York Branch, as Administrative Agent, Winterthur
International Insurance Company Limited, as Oil Payment Insurers Administrative
Agent and HSBC Bank USA, as Capital Markets Trustee,
"Contract Quantity" means (a) for any day when the Long-Term Oil
Supply Agreement is in effect and PMI has not reduced the volume of Maya
available to the Coker Company pursuant thereto, the "Contract Quantity" in
effect on such day pursuant to the Long-Term Oil Supply Agreement or such lesser
amount of Maya Crude Oil as may be purchased thereunder pursuant to Section 8.2
of the Long-Term Oil Supply Agreement, and (b) for any other day, the amount of
Maya Crude Oil sufficient to operate the Coker at eighty percent of Actual Coker
Capacity.
"Contractor" means Foster Wheeler USA Corporation, a Delaware
corporation.
"Crude Design Capacity" means with respect to the Ancillary Equipment,
its nameplate capacity, stated in BPD, to process heavy crude oil.
<PAGE>
24
"Crude Unit" means the crude unit and vacuum tower located at the
Refinery and collectively designated AVU-146.
"CRU 1344 Hydrotreater" means the naphtha hydrotreater located at the
Refinery and designated CRU 1344.
"Easements" has the meaning given such term in Section 2.2 of the
Coker Complex Ground Lease.
"EPC Contract" means the Contract for Engineering, Procurement and
Construction Services, dated as of July 12, 1999, between the Coker Company and
the Contractor, as amended, supplemented or otherwise modified from time to
time.
"Event of Force Majeure" means any event or circumstance if (i) such
event or circumstance is beyond the reasonable control of the affected party and
(ii) such event or circumstance is not the direct or indirect result of a
party's negligence or the failure of such party to perform any of its
obligations under the applicable Clark R&M Agreement, including, without
limitation:
1. any interruption or cessation in delivery of Coker Company Maya
to the Refinery, whether or not due to an event of force majeure
under the Long-Term Oil Supply Agreement;
2. acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, blight, famine, flood,
hurricane, or other extraordinary weather conditions more severe
than those experienced at any time in the last thirty (30) years
for the geographic area of the Refinery;
3. acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or
any exercise of the power of eminent domain, police power,
condemnation or other taking by or on behalf of any public,
quasi-public or private entity;
4. laws, rules, regulations, orders, judgments or other acts of any
foreign, federal, state or local court, administrative agency,
governmental body or authority;
5. strikes, boycotts or lockouts, except any such strike, boycott or
lockout that is not national or industry-wide that involves the
employees of Clark R&M; and
6. a partial or entire interruption or other failure of (a) the
supply of electricity, water, wastewater treatment, steam,
hydrogen or other utilities
<PAGE>
25
to the Refinery or any part thereof, or (b) pipeline service,
ship or barge service, dock access or usage or other
transportation facilities.
"Excess Coker Capacity" means, for any day, the extent that Actual
Coker Capacity for such day exceeds the capacity necessary for the Coker to
process the Available Coker Company VTBs for such day.
"Excess Coker Capacity Option" has the meaning given such term in
Section 4.2(a) of the Services and Supply Agreement.
"Excess Crude Capacity" means, for any day, the extent that Actual
Crude Capacity for such day exceeds the capacity necessary for the Ancillary
Equipment to process the Available Coker Company Maya for such day and the light
crude oil necessary to process such Available Coker Company Maya.
"Excess Crude Capacity Option" has the meaning given such term in
Section 3.5(b) of the Services and Supply Agreement.
"Excess Hydrocracker Capacity" means, for any day, the extent that
Actual Hydrocracker Capacity for such day exceeds the capacity necessary for the
Hydrocracker to process Coker Company VGO produced by the Coker on such day.
"Excess Hydrocracker Capacity Option" has the meaning given such term
in Section 4.3(a) of the Services and Supply Agreement.
"Fair Market Rental Value" shall mean, with respect to any land and/or
equipment to be leased pursuant to a lease, the value, which shall not in any
event be less than zero, that would be obtained in an arm's length transaction
for cash between an informed and willing lessee and an informed and willing
lessor, neither of whom is under any compulsion to lease, for the use of such
land and/or equipment for a given period, without regard, in the case of land,
(i) to the value of any equipment or improvements that are not included in such
lease but which are located on such land, (ii) to the value of any reversionary
interest of the lessor in any equipment or improvements located on such land,
whether or not included in such lease, or (iii) to the highest and best use of
such land.
"Final Completion" has the meaning given such term in the EPC
Contract.
"Financial Close" means the date when the initial funding of the
Senior Debt has occurred.
"Financing Documents" has the meaning given such term in the Common
Security Agreement.
"Financing Parties" means any lender or note purchaser that may at any
time be party to the Financing Documents and any trustee or agent acting on
their behalf.
<PAGE>
26
"Funding Company" means Port Arthur Finance Corp., a Delaware
corporation.
"GFU 241" means the distillate hydrotreater located at the Refinery
and designated GFU 241.
"GFU 242" means the distillate hydrotreater located at the Refinery
and designated GFU 242.
"GFU 243" means the distillate hydrotreater located at the Refinery
and designated GFU 243.
"Guaranteed Values" has the meaning given such term in the EPC
Contract.
"Heavy Oil Processing Facility" means, collectively, the Coker Complex
and the Ancillary Equipment.
"Hydrocracker" or "HCU 942" means the hydrocracker to be constructed
at the Refinery and designated HCU 942.
"Hydrogen" means hydrogen purchased by the Coker Company pursuant to
the Hydrogen Supply Agreement.
"Hydrogen Supply Agreement" means the Supply Agreement, dated as of
August 1, 1999, between the Coker Company and Air Products, Inc.
"Independent Engineer" means Purvin & Gertz, Inc., or successor
thereto appointed pursuant to the Financing Documents.
"Inflation Factor" shall mean, for any month, (a) the most current
Producer Price Index published by the U.S. Department of Labor, Bureau of
Statistics, divided by, (b) the Producer Price Index on August 19, 1999.
"Labor Costs" shall mean, with respect to any service provided by
Clark R&M, all reasonable direct labor costs of Clark R&M in performing such
service including wages, salaries, overtime charges, reasonable and customary
bonuses, payroll insurance and taxes and holidays, vacations, group medical,
dental and life insurance and other employee benefits.
"LCO" means light cycle oil.
"Lessor Ancillary Equipment Upgrade" shall have the meaning given such
term in Section 6.1 of the Ancillary Equipment Site Lease.
"Lien" any mortgage, security interest, pledge, hypothecation,
encumbrance or lien (statutory or other) of any kind or nature whatsoever.
<PAGE>
27
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sale
Agreement, dated as of March 10, 1998, between PMI and Clark R&M, as amended by
the First Amendment and Supplement to the Maya Crude Oil Sales Agreement, dated
as of August 19, 1999, and as assigned by Clark R&M to the Coker Company
pursuant to the Long-Term Oil Supply Agreement Assignment.
"Long-Term Oil Supply Agreement Assignment" means the Assignment of
the Long-Term Oil Supply Agreement, dated as of August 19, 1999, by Clark R&M to
the Coker Company.
"Maya Crude Oil" means Mexican crude oil of the "Maya" type, as more
particularly described in the Long-Term Oil Supply Agreement and, to the extent
necessary, such alternative crude oil(s) and/or other feedstock(s) that may be
used to produce the Required Product Mix.
"Neches" mean Neches River Holding Corp., a Delaware corporation.
"Operating Year" means (i) the period beginning on the Start-up Date
and ending on the last day of the calendar year in which the Start-up Date
occurs and (ii) each calendar year thereafter. All annual amounts set forth in
the Clark R&M Agreements shall be adjusted pro rata for the first Operating
Year.
"Performance Test Standards" has the meaning given such term in the
EPC Contract.
"Permit" means any valid waiver, exemption, variance, franchise,
permit, authorization, license or similar order of or from any federal, state,
county, municipal, regional, environmental or other governmental body,
instrumentality, agency, authority, court or other body having jurisdiction over
the Refinery, the Coker Complex or the Ancillary Equipment or the performance of
any obligation under any Clark R&M Agreement, any Project Document or any other
agreement in connection therewith.
"Permitted Liens" means (i) the respective rights and interests
created by or under the Financing Documents and the Project Documents, (ii)
Liens for Taxes that either are not delinquent or are being contested in good
faith and by appropriate proceedings diligently conducted, so long as such
proceedings do not (a) involve a substantial risk of foreclosure, forfeiture,
loss or sale of any portion of the Clark Refinery Property subject to the
Ancillary Equipment Site Lease or the Coker Complex Ground Lease or interest
therein, (b) interfere with the use, possession or disposition of any Clark
Refinery Property subject to the Ancillary Equipment Site Lease or the Coker
Complex Ground Lease or interest therein or (c) interfere with the payment of
rent under the Ancillary Equipment Site Lease or the Coker Complex Ground Lease;
(iii) materialmen's, mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens arising in the ordinary course of business
for amounts that either are not more than 30 days past due or are being
contested in good faith by appropriate proceedings, so long as such proceedings
satisfy the conditions for the continuation of
<PAGE>
28
proceedings to contest Taxes set forth in clause (ii) above; (iv) Liens of any
of the types referred to in clauses (ii) and (iii) above that have been bonded
for the full amount in dispute (or as to which other security arrangements
reasonably satisfactory to the Collateral Trustee have been made); (v) Liens
securing judgments, decrees or orders of any court (i) that are not currently
dischargeable or (ii) that have been discharged or stayed or appealed within
thirty (30) days after the date of such judgment, decree or order (in the case
of a stay or appeal, during the period of such stay or appeal); (vi) other Liens
that would not impair (x) the ability of the Coker Company or its successors,
assigns or subtenants to operate the Coker Complex in accordance with the Base
Case Financial Model or (y) any of the security interests granted, or to be
granted, by the Coker Company to the Financing Parties pursuant to the Financing
Documents, (vii) with respect to the Ancillary Equipment Site Lease, the Liens
listed on Schedule I thereto; and (viii) with respect to the Coker Complex
Ground Lease, the Liens listed on Schedule I thereto.
"Permitted Reimbursable Expenses" shall mean, with respect to any
service provided by Clark R&M, any reasonable expense or expenditure incurred in
performance of such service including, without limitation, (i) Labor Costs, (ii)
purchases of spare parts, tools, equipment, consumables, materials and other
supplies necessary for performance of such service and (iii) direct cost of
subcontract labor or services needed to perform such service.
"Person" an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"PMI" means P.M.I. Comercio Internacional, S.A. de C.V., a corporation
organized under the laws of Mexico.
"Product Purchase Agreement" means the Product Purchase Agreement,
dated as of August 19, 1999, between Clark R&M and the Coker Company, as
amended, supplemented or otherwise modified from time to time.
"Products" means each product described under the heading "Product" on
Exhibits A-1 through A-42 to the Product Purchase Agreement.
"Project Documents" means, collectively, the Services and Supply
Agreement, the Product Purchase Agreement, the Long-Term Oil Supply Agreement,
the EPC Contract, the Coker Complex Ground Lease, the Ancillary Equipment Site
Lease and the Hydrogen Supply Agreement.
"Prudent Industry Practice" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used in refinery facilities in the United
States of a type and size similar to the Refinery.
"Qualified Appraiser" means an appraisal firm with a national
reputation and experience in appraising facilities of a nature and type similar
to the Refinery.
<PAGE>
29
"Reconciliation Statement" has the meaning given such term in Section
7.2(a) of the Services and Supply Agreement.
"Refinery" means, collectively, the existing oil refinery owned by
Clark R&M located in Port Arthur, Texas, the Ancillary Equipment and the Coker
Complex.
"Regulated Utilities" has the meaning given such term in Section
5.5(f) of the Services and Supply Agreement.
"Required Product Mix" means, from time to time, the quantity and
quality specifications of products to be produced by the Heavy Oil Processing
Facility pursuant to Section 2.2 of the Product Purchase Agreement.
"Sabine" means Sabine River Holding Corp., a Delaware corporation.
"Senior Debt" has the meaning given such term in the Common Security
Agreement.
"Senior Debt Obligations" means the obligations to pay principal and
interest on the disbursed Senior Debt, and all commissions, fees, indemnitees,
prepayment premiums and other amounts payable to the senior lenders under the
Financing Documents.
"Services" has the meaning set forth in Section 2.1 of the Services
and Supply Agreement.
"Services and Supply Agreement" means the Services and Supply
Agreement, dated as of August 19, 1999, between Clark R&M and the Coker Company,
as amended, supplemented or otherwise modified from time to time.
"Sour Water Stripper" means the sour water stripper to be constructed
at the Refinery and designated SWS-8747.
"Standards" means, in addition to any other standards set forth in the
EPC Contract, the technical requirements of the Project Documents, generally
accepted standards of professional care, skill, diligence and competence
applicable to engineering and construction and project management practices,
good refinery and petrochemical industry practices for oil refineries of similar
size, type and design to the Refinery, manufacturer's specifications and
warranty requirements and all Applicable Laws.
"Start-up Date" means the date on which hydrocarbons are first
introduced into the Coker Complex for the processing of test runs under the EPC
Contract.
"Start-up Period" means the period from the Start-up Date until Final
Completion.
<PAGE>
30
"Sulfur Plant" means the sulfur plant to be constructed at the
Refinery and designated SRU 545.
"Supplies" has the meaning set forth in Section 2.1 of the Services
and Supply Agreement.
"Tax" means, with respect to any site or parcel of land and the
improvements thereon, all real estate taxes and assessments, including
substitutes therefor or supplements thereto, assessed upon, levied against or
imposed on such land and improvements located thereon which accrue and are due
and payable during the term of the Coker Complex Ground Lease. Notwithstanding
anything to the contrary contained herein, the term "Taxes" shall not include
any franchise, income, corporation, inheritance, succession, gift, estate,
realty transfer, capital or other tax which may be charged or assessed against
Lessor or any income, excess profit or revenue tax or any other tax which may be
assessed against or become a lien upon the Coker Complex Site or the rent
accruing therefrom.
"Total Crude Oil Volume" means, for any day, the total daily volume,
stated in BPD, of crude oil processed by the Crude Unit.
"Transfer and Assignment Agreement" means the Transfer and Assignment
Agreement, dated as of August 19, 1999, between Clark R&M and the Coker Company,
as amended, supplemented or otherwise modified from time to time.
"VGO" means vacuum gas oil.
"VTBs" means vacuum tower bottoms.
"Warranties" means the requirements of all warranties and guarantees
applicable to equipment and structures constituting the Coker Complex or the
Ancillary Equipment provided by the Contractor, subcontractors, vendors,
suppliers or others.
<PAGE>
Exhibit A
Ancillary Equipment Site Lease
ANCILLARY EQUIPMENT SITE DESCRIPTION*
The Ancillary Equipment Site is composed of seven (7) Tracts of land described
by metes and bounds on Pages 2 though 12 of this Exhibit A. Tracts 8 through 14,
as described on pages 13 through 30 of this Exhibit A, are centerline
descriptions of twenty (20) foot wide access easements appurtenant to Lessee's
leasehold estate in and to Tracts 1 through 7.
Page 1 of 30
- --------------
* Twenty nine pages of metes and bounds descriptions accompanying this Exhibit
have been omitted from the filing of this registration statement and shall be
made available to the Commission upon request.
<PAGE>
Exhibit B
Ancillary Equipment Site Lease
ANCILLARY EQUIPMENT
Unit Refinery Designation
- ---- --------------------
Crude Unit and Vacuum Tower AVU 146
Distillate Hydrotreater (jet) GFU 242
and related Amine Regeneration
Unit and Compressor Equipment
Distillate Hydrotreater (diesel) GFU 243
Naptha Hydrotreater CRU 1344
<PAGE>
Exhibit C
Ancillary Equipment Site Lease
ADJACENT REFINERY PROPERTY DESCRIPTION**
The Adjacent Refinery property is composed of eleven (11) Tracts of land
described by metes and bounds on Pages 2 through 30 of the Exhibit B; LESS AND
EXCEPT the parcels of land (Parcels "A," "B," "C," "D," "E," "F," "G," "H,"
"12," "13", "0", "J-2," "0.519 Acre Tract," "L," "M," and "N1") described by
metes and bounds on Pages 31 through 70 of this Exhibit C.
Page 1 of 70
- ---------------
** Sixty nine pages of metes and bounds descriptions accompanying this Exhibit
have been omitted from the filing of this registration statement and shall
be made available to the Commission upon request.
<PAGE>
Exhibit D
Ancillary Equipment Site Lease
LESSOR ANCILLARY EQUIPMENT UPGRADE DESCRIPTION
A. AVU 146 CRUDE UNIT REVAMP
1.0 Project Description
Modification of the crude and vacuum unit will be required to process
250,000 BPSD of a Maya crude blend. To accomplish this, upgrading,
replacement, removal, and additions will be required for various pieces of
equipment and piping. Upgrading of process piping and exchanger shell
materials will be necessary for the higher temperature and pressure
operation. Modifications to the vacuum tower and H-101 Atmospheric
heater are also necessary. The internals of the desalters will be upgraded
and some of the existing steam turbine drivers will be replaced with motor
drivers. Some of the pumps, exchangers, piping and insulation also require
replacement. Modifications to instrumentation and electrical will be
needed. Some foundation work is also necessary.
2.0 Scope of Work
The following major changes, as depicted on the PFDs/PIDs for the Revamp
Study, are required for AVU-146 Crude Unit to process 250,000 BPSD
Maya/Arab light crude blend, plus up to 8,000 BPSD of slops:
2.1 New E-140A/B HDF Product/Crude to be installed in cold train.
2.2 Re-pipe the AGO/Crude Exchanger (E-109) to preheat raw crude in
parallel with HVGO/Crude Exchanger (E-129) before it is sent to the
desalters.
2.3 New E-141 VTB/crude to be installed in parallel with E-140 A/B.
2.4 Convert one back of the E-103'6 to LVGO/Laude service.
2.5 Modify the existing desalters (D-101 & D-102) to bielectric design,
as specified by the desalter vendor. This includes new internals,
transactors, and peripherals.
2.6 Re-pipe the desalted crude preheat train to heat crude in the
following sequence:
2.6.1 HDF Pumparound and Product/Crude Exchangers (E-107 A/B will be
new E-142 A/B HRF PA/Crude installed upstream of E-107's.
2.6.2 New E-144 A/B AGO/Crude installed upstream of E-131's.
2.6.3 Vacuum Tower Bottoms/Crude Exchangers (E-131 A/D) are to
remain in service with the addition of 5 new shells.
<PAGE>
Exhibit D
Ancillary Equipment Site Lease
2.7 Revamp existing H-101 Heater from an 8 pass design to 16 pass design.
2.8 Replace the ATU Bottoms Pumps (P-112 A/B) with larger pumps and 1
motor 1 turbine driver.
2.9 Install larger drivers on P-111-A/B AGO Product Pumps.
2.10 Install structured packing in T-108 vacuum tower wash bed.
2.11 Upgrade T-108 vacuum ejector system with new ejectors, new 2nd stage
vacuum condenser, and new vacuum off gas compressor to run in parallel
with existing.
2.12 Remove the demister pads in the Vacuum Tower (T-108) below the LVGO
and HVGO sections.
2.13 Reroute P-122 slop way from H-102 A/B inlet to T-101 atmos tower.
2.14 Replace the VTU Bottoms Pumps (P-123 A/B/C) with two new larger pumps
and motor, 1 turbine driver.
2.15 Replace the VTU Bottoms Booster Pumps (P-130 A/B/C) with two new
larger pumps and motor, 1 turbine driver.
2.16 Some foundation work will be required. Foundations will be needed for
the new exchangers and larger pumps. New support structure and
foundations may be needed. Existing foundations will be modified where
possible for other replacement equipment.
2.17 New electrical work will be needed for the larger pumps and desalter
internals. Existing electrical will be utilized for replacement
equipment where possible.
Numerous piping modifications are required to achieve these processing changes.
3
<PAGE>
Exhibit D
Ancillary Equipment Site Lease
B. GFU 242 JET HYDROTREATER REVAMP
1.0 Project Description
Modifications of existing GFU Jet Hydrotreater Unit will be necessary to
process approximately 30,000 bpd of Maya kerosene to produce Jet 55. Those
modifications include minor work on the effluent cold separator and
installing a new air cooler. Minor amounts of new piping, piping
replacements and insulation will be required. With the exception of
electrical to a new fair cooler, the instrumentation and electrical
basically remains unchanged.
2.0 Scope of Work
GFU 242 Jet Hydrotreater Unit will process approximately 30,000 B/D of
Kerosene range material for the Maya case producing Jet 55. The design
charge rate and operating conditions are basically the same as current feed
rates and conditions and therefore only a few modifications are required. A
cursory evaluation was performed to check hydraulics, etc. Based on that
evaluation, few changes are required. The primary changes involve
relocating a used reactor from GFU 243 due to the higher sulfur content in
the feed, improving the separation facilities downstream of the reactor,
and installing water wash facilities due to the higher levels of sulfur.
Modifications include:
2.1 New piping from condensate source to tie in before C-204.
2.2 Modify existing Reactor Effluent Cold Separator, F-208, to accommodate
a new F-208R water pot. Reuse all existing instrumentation associated
with the present external water boot. It will be reused for the new
connected boot.
2.3 Install new F-207 High Temperature Separator.
2.4 Install new water boot on F-210 Low Temperature Separator.
2.5 Re-rate F-203 Recycle Gas Compressor Dry Drum.
2.6 Install a new air cooler, C-214, Hot High Pressure Separator Vapor.
4
<PAGE>
Exhibit D
Ancillary Equipment Site Lease
2.7 New foundations will be required for the new air cooler (C-214).
Minimal foundation work will be required for the modified reactor
effluent cold separator (F-208R).
2.8 Install D-201 Reactor (Relocated from GFU 243).
2.9 With the exception of electrical to the new air cooler C-214, the
electrical remains unchanged.
2.10 Existing instrumentation will be utilized.
5
<PAGE>
Exhibit D
Ancillary Equipment Site Lease
C. GFU 243 DIESEL HYDROTREATER
1.0 Project Description
GFU 243 Diesel Hydrotreater will produce 37,000 BPSD of low sulfur
diesel. The unit will be treating a higher sulfur feedstock and the
existing reactor is too small to achieve acceptable space velocities. The
reactors are being replaced to achieve the higher space velocities which
improves catalyst life. Some of the piping in the reactor loop and amine
system is being replaced to reduce the pressure drop in those systems.
2.0 Scope of Work
2.1 Replace existing hydrotreating reactors with new reactors to
increase the space velocity through the reactor and thereby achieve
longer catalyst life.
2.2 Replace miscellaneous piping and equipment nozzles in the reactor
loop to reduce pressure drop in the system.
2.3 Replace the distributor in Product Stripper, E-303, to achieve
better steam stripping of the product diesel.
2.4 Install new amine regenerator cooler, C-309, to achieve better
cooling in the amine system.
2.5 Replace miscellaneous piping in the amine system to reduce pressure
drop.
6
<PAGE>
Exhibit D
Ancillary Equipment Site Lease
D. NHT 1344 NAPHTHA HYDROTREATER MODIFICATIONS
1.0 Project Description
Naphtha Hydrotreater NHT 1344 is the hydrotreater for the reformer. The
unit processes 51,000 bpd of naphtha. Because the naphtha from the Maya
crude contains more sulfur than current feedstocks, modifications are being
made to treat the higher nitrogen and sulfur while achieving acceptable
catalyst life, improve the water wash capability, and reduce pressure drop
in the reactor loop.
2.0 Scope of Work
Modifications include:
2.1 Modify the reactor piping system such that the existing guard bed
reactor operates as a hydrotreating reactor in series with the
existing hydrotreating reactor.
2.2 Replace existing E-49 Reactor feed-effluent exchanger to reduce
pressure drop in the reactor loop.
2.3 Replace the P-36 water wash pumps with larger pumps.
7
<PAGE>
Exhibit E
Ancillary Equipment Site Lease
AVU 146 Turnaround/Capital Maintenance
Turnaround Maintenance
1. Replace miscellaneous pipe details, remove dead legs, and install temporary
pump out piping.
2. Repair VOC leaks.
3. Renew flare grating on top four platforms
4. Replace flare tip/steam ring/pilots
5. Clean and/or renew tube bundles for the following exchangers: E-101,
E-102, E-103, E-107A, E-110, E-126, E-129A, and E-129B.
6. Perform miscellaneous repairs on furnaces: replace peep sight openings,
replace miscellaneous hanger supports, replace bent tubes, report door
sheet on air duct, and replace thermowells.
7. Install actuator on T-104.
8. Revise sample system for vacuum recycle on T-108 vacuum tower.
9. Repair P-122 A/B pump strainer.
10. Install nitrogen purge system.
11. Replace miscellaneous valves.
12. Replace miscellaneous pressure relief valves per PSV and Flare study.
13. Install pressure taps on T-101 Atmospheric Tower.
14. Tie vacuum off-gas into wet-gas system.
15. Pipe up cutting oil to pump discharge on P-122 A/B.
16. Clean cooling water system to remove deposits.
Capital Maintenance
1. Install new stripping trays in T-101 Atmospheric Tower
2. Install additional heavy distillate fuel/ago trays in T-101 Atmospheric
Tower
3. Upgrade the wash zone packing in T-108 Vacuum Tower from a Glitsch Grid to
structured packing.
<PAGE>
Exhibit E
Ancillary Equipment Site Lease
GFU-242 Turnaround/Capital Maintenance
Turnaround Maintenance
1. Install new channel head and bundle in C-201 Stripper Reboiler, replace the
bundles in C-203-1 and C-203-2, retube No. 9 Seal Oil Cooler, and replace
No. 10 Seal Oil Cooler channel head.
2. Repair cooling tower as necessary-to be determined during shutdown.
Capital Maintenance
3. Lo-Nox Burners
4. Renew or repair F-408 Fuel Gas K.O. Drum
2
<PAGE>
Exhibit E
Ancillary Equipment Site Lease
GFU 243 Turnaround/Capital Maintenance
Turnaround Maintenance
1. Change and repair Amine Regenerator tray damage, if needed.
2. Check and clean Cold High Pressure Separator and replace demister pad, if
needed.
3. Pull, clean, and test C-327 A/B, C-302 A/B, C-304, C-307 A/B exchangers;
retube C-305; externally clean all finned coolers. Repair or replace if
needed.
4. Check trays in E-303 Product Stripper and repair or replace as needed.
5. Check demister pad in F-302 Make-up Compressor Suction Drum and repair or
replace as needed.
6. Clean and replace demister pad in F-306 Low Pressure Hot Flash Drum, if
needed.
7. Clean and replace demister pad in F-307 Low Pressure Separator, if needed.
8. Clean and inspect F-308 Rich Amine Flash Drum and Low Pressure Contactor
and repair or replace as needed.
9. Check demister pad in F-314 Fuel Gas K.O. Drum, repair to renew or replace
as needed.
10. Check filter elements in F-333/333A Coalescers, replace if needed.
11. Check demister pad in F-305 Product Water Coalescer, replace or repair as
needed.
12. Inspect and miscellaneous mechanical and refractory repairs of furnace
13. Miscellaneous repairs on lube pumps and compressors
14. Clean, inspect, repair and reset all unit PSVs
15. Repair VOC leaks
16. Miscellaneous piping and other repairs.
Similar work was completed in early 1999.
3
<PAGE>
Exhibit E
Ancillary Equipment Site Lease
CRU 1344 Turnaround/Capital Maintenance
Turnaround Maintenance
1. Pull, clean, and test the E-34 exchangers
2. Change catalyst in R-31 Reactor
3. Change feed filter
4. Replace miscellaneous valves around filter.
4
<PAGE>
Exhibit F
Ancillary Equipment Site Lease
FORM OF ASSIGNMENT AND CONSENT AGREEMENT
CONSENT AND AGREEMENT, dated as of August 19, 1999, among CLARK REFINING &
MARKETING, INC., a Delaware corporation ("Clark R&M"), BANKERS TRUST COMPANY, a
New York banking corporation, as Collateral Trustee for the benefit of the
Secured Parties (as hereinafter defined) (in such capacity, together with its
successors and assigns, the "Collateral Trustee"), and PORT ARTHUR COKER COMPANY
L.P., a Delaware limited partnership (the "Partnership").
WHEREAS, the Partnership is constructing and will own and operate a new
delayed coker facility and certain related refinery equipment, located at Clark
R&M's refinery in Port Arthur, Texas (the "Coker Complex");
WHEREAS, Clark R&M and the Partnership have entered into (i) the Services
and Supply Agreement (the "SSA"), (ii) the Product Purchase Agreement (the
"PPA"), (iii) the Coker Complex Ground Lease and Blanket Easement Agreement (the
"Ground Lease"), (iv) the Ancillary Equipment Site Lease and Easement Agreement
(the "Site Lease") and (v) the Transfer and Assignment Agreement (the "Transfer
and Assignment"), each of which is dated as of August 19, 1999 (all five
agreements, as amended, supplemented or otherwise modified from time to time,
collectively, the "Agreements"), in connection with the construction and
operation of the Coker Complex;
WHEREAS, in order to finance the construction and operation of the Coker
Complex, the Partnership has entered into financing arrangements (as the same
may be amended, supplemented or otherwise modified, or extended or refinanced,
from time to time, the "Financing Arrangements") with the banks and other
financial institutions from time to time parties thereto (together with their
respective successors and assigns, the "Financing Parties");
WHEREAS, the Financing Arrangements provide, among other things, for the
making of the loans and other extensions of credit to the Partnership, the
proceeds of which are to be applied to finance the construction of the Coker
Complex;
WHEREAS, the loans, bonds and other obligations of the Partnership incurred
in connection with the Financing Arrangements will be secured by substantially
all of the assets of the Partnership pursuant to a Common Security Agreement,
dated as of August, 19, 1999, entered into by the Partnership in favor of the
Collateral Trustee, pursuant to which the Partnership has assigned to the
Collateral Trustee for the benefit of the Secured Parties, as collateral
security for the Senior Debt Obligations, all of the Partnership's right, title
and interest in, to and under among other things the Agreements;
WHEREAS, it is a condition to the obligations of the Financing Parties
under the Financing Arrangements that Clark R&M execute and deliver this
Consent;
<PAGE>
2
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
(a) Defined Terms. The following terms shall have the meanings indicated:
"Agreements" has the meaning specified in the recitals to this
Consent.
"Coker Complex" has the meaning specified in the recitals.
"Collateral Trustee" has the meaning specified in the caption of
this Consent.
"Common Security Agreement" means the Common Security Agreement,
dated as of August 19, 1999, among the Partnership, the Collateral
Trustee and the other parties named therein, as the same may be
amended, supplemented or otherwise modified from time to time.
"Consent" means this Consent and Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Clark R&M" has the meaning specified in the caption of this
Consent.
"Default Notice" has the meaning specified in Section 5(a).
"Event of Default" means any of the events listed in Section 10.1
of the Common Security Agreement.
"Financing Arrangements" has the meaning specified in the
recitals to this Consent.
"Financing Documents" means the Common Security Agreement and any
other agreement or instrument entered into by the Partnership or any
other Person pursuant to the Financing Arrangements which secures,
evidences or governs payment or performance of any of the Senior Debt
Obligations.
"Financing Parties" has the meaning specified in the recitals to
this Consent.
"Ground Lease" has the meaning specified in the recitals to this
Consent.
<PAGE>
3
"Nominee" has the meaning specified in Section 5(b).
"Notice" has the meaning specified in Section 5(a).
"Partnership" has the meaning specified in the caption of this
Consent.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other legal entity of whatever
nature.
"Project Revenue Account" has the meaning specified in the Common
Security Agreement.
"PPA" has the meaning specified in the recitals to this Consent.
"Refinancing" means any financing transaction or debt offering
transaction, or series of such transactions, all or part of the
proceeds of which are used to repay the Senior Debt Obligations or
otherwise are used to provide financing for the Coker Complex.
"Replacement Party" has the meaning specified in Section 5(c).
"Secured Parties" has the meaning specified in the Common
Security Agreement.
"Senior Debt Obligations" has the meaning specified in the Common
Security Agreement.
"Site Lease" has the meaning specified in the recitals to this
Consent.
"SSA" has the meaning specified in the recitals to this Consent.
"Transfer and Assignment" has the meaning specified in the
recitals to this Consent.
"Transferee" has the meaning specified in Section 5(b)(i).
(b) Other Definitional Provisions.
(i) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Consent shall refer to this Consent
as a whole and not to any particular provision of this Consent, and
section and subsection references are to this Consent unless otherwise
specified.
<PAGE>
4
(ii) Each reference in this Consent to an agreement, instrument
or document shall be deemed to refer to such agreement, instrument or
document as the same may be amended, supplemented or otherwise
modified from time to time.
(iii) Any term defined by reference to an agreement, instrument
or other document shall have the meaning so assigned to it whether or
not such agreement, instrument or document is in effect.
(iv) Each reference in this Consent to a Person shall be deemed
to include such Person's successors and assigns.
SECTION 2. CONSENTS TO ASSIGNMENTS, ETC.
Clark R&M hereby:
(a) acknowledges that the Secured Parties are entering into the
Financing Arrangements in reliance upon the performance by Clark R&M of its
obligations under the Agreements and this Consent, and irrevocably consents
to the assignment of the Agreements, pursuant to Section 12.5 of the SSA,
Section 9.11 of the PPA, Section 22.1 of the Ground Lease, Section 22.1 of
the Site Lease and Section 5.5 of the Transfer and Assignment, to the
Collateral Trustee for the benefit of the Secured Parties as collateral
security for the Senior Debt Obligations of all of Partnership's right,
title and interest, (whether now existing or hereafter arising) in, to and
arising under the Agreements;
(b) irrevocably consents, pursuant to Section 12.5 of the SSA,
Section 9.11 of the PPA, Section 22.1 of the Ground Lease and Section 22.1
of the Site Lease and Section 5.5 of the Transfer and Assignment, to any
subsequent assignment of any of the Agreements by the Collateral Trustee
pursuant to Section 5(b), upon and after receipt by Clark R&M of written
notice from the Collateral Trustee that it desires to exercise its rights
and remedies as a secured party, or as trustee for the benefit of the
Secured Parties, in respect of the Senior Debt Obligations (but without any
right or obligation of Clark R&M to know or confirm whether any such
subsequent assignment is permitted under the Financing Documents),
including the acquisition of all of the Partnership's existing and future
rights under the Agreements by sale, foreclosure or otherwise, or the
construction and/or operation of the Coker Complex pending sale or
foreclosure through a receiver or otherwise, or the assignment of the
Agreements to any Person who is a Transferee; and Clark R&M will, at the
request of any such Transferee, enter into a consent and agreement in
connection therewith having terms the same as the terms of this Consent,
except such terms as may be inapplicable;
<PAGE>
5
(c) confirms that the assignment of the Partnership's right, title
and interest in, to and arising under the Agreements pursuant to Section
6.06 of the Common Security Agreement is in accordance with all applicable
provisions of the Agreements;
(d) irrevocably agrees that the Collateral Trustee and the other
Secured Parties shall not be subject to any liability or obligation under
any of the Agreements nor shall the Collateral Trustee or any Secured Party
be obligated or required (A) to perform any of the Partnership's
obligations under any of the Agreements or (B) to take any action to
collect or enforce any claim for payment assigned to it under the Common
Security Agreement or otherwise;
(e) acknowledges the right of the Collateral Trustee and the other
Secured Parties to cure defaults by the Partnership under any of the
Agreements pursuant to the terms of this Consent (notwithstanding anything
to the contrary contained in such Agreement), without assuming or being
responsible for any of the obligations of the Partnership thereunder;
(f) acknowledges the right of the Collateral Trustee, following the
occurrence of an Event of Default under the Common Security Agreement, to
exercise its rights thereunder as a secured creditor and collateral
assignee of the Agreements to make all demands, give all notices, take all
actions and exercise all rights of the Partnership under the Agreements and
to enforce the Agreements against Clark R&M, notwithstanding anything to
the contrary contained in any of the Agreements (but without any right or
obligation of Clark R&M to know or confirm whether any such subsequent
assignment is permitted under the Financing Documents);
(g) acknowledges and irrevocably agrees, notwithstanding anything to
the contrary contained in any of the Agreements, but subject to the
provisions of this Consent, that none of the following shall constitute in
and of itself, as between Clark R&M and the Collateral Trustee or any other
Secured Party, a default or breach by Partnership under any of the
Agreements:
(i) the collateral assignment of any of the Agreements to the
Collateral Trustee for the benefit of the Secured Parties;
(ii) the sale, foreclosure or other enforcement by the Collateral
Trustee or any other Secured Party of secured creditor remedies;
(iii) the acquisition of the rights of the Partnership under any
of the Agreements by the Collateral Trustee or any other Person as a result
of sale or foreclosure (or acceptance of an absolute assignment of the
Agreements in lieu of sale or foreclosure) or the exercise of other secured
creditor remedies; or
<PAGE>
6
(iv) the assignment of any of the Agreements by the Collateral
Trustee or any other Secured Party or a Nominee to any other Person,
following the acquisition of the Agreements by the Collateral Trustee or
any other Secured Party or Nominee in the exercise of rights and remedies
as a secured creditor (or in lieu of the exercise of such rights and
remedies); and
(h) irrevocably agrees at the request of the Partnership, to enter
into a consent and agreement in connection with a Refinancing having terms
the same as this Consent, except such terms as may be inapplicable or other
non-substantive change.
SECTION 3. PAYMENT OF ASSIGNED SUMS
Until notified in writing by the Collateral Trustee that the Senior Debt
Obligations have been paid in full, Clark R&M shall pay by wire transfer in U.S.
dollars of same day funds directly to the Project Revenue Account or as
otherwise instructed in writing by the Collateral Trustee any and all amounts,
if any, payable by Clark R&M to the Partnership under the Agreements or as a
result of a breach thereof. The making of such payment into the Project Revenue
Account, and the currency of such payment are of the essence of this Consent.
All amounts paid to the Collateral Trustee shall be accompanied by a notice
specifying the amount of such payment and the purpose for which such payment is
being made. After Clark R&M has been notified in writing by the Collateral
Trustee that the Senior Debt Obligations have been paid in full, Clark R&M shall
pay such amounts directly to Partnership.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF CLARK R&M
Clark R&M hereby represents and warrants that:
(a) Organization. It is a corporation duly organized and existing
under the laws of Delaware and has the legal capacity to enter into and
perform this Consent.
(b) Government Authorizations. It has obtained all necessary
authorizations from the competent governmental authorities for the
execution of this Consent and the performance of its obligations hereunder.
(c) Corporate Authority. The execution and performance by Clark R&M
of this Consent has been duly authorized by all necessary corporate action.
This Consent has been duly executed by Clark R&M and, assuming the due
authorization and execution of this Consent by the Partnership and the
Collateral Trustee, constitutes the legal, valid and binding obligation of
Clark R&M, enforceable against Clark R&M in accordance with its terms.
<PAGE>
7
(d) No Conflict. Neither the execution of this Consent by Clark R&M
nor the performance by Clark R&M of its obligations hereunder will conflict
with or result in any breach of, or constitute a violation of or default
under, any applicable law or regulation, Clark R&M's charter or by-laws, or
any indenture, mortgage, deed of trust, or other instrument or agreement
(including, without limitation, any negative pledge or similar clause), to
which Clark R&M or any of its affiliates is a party, or by which any of
them may be bound, or to which any of their respective property or assets
may be subject.
(e) No Litigation. No lawsuit or other proceeding is pending or, to
the knowledge of Clark R&M, threatened against Clark R&M which, if
determined adversely to Clark R&M, may materially and adversely affect its
business or financial condition or the consummation of the transactions
contemplated by, or the performance of its obligations under, this Consent
or any of the Agreements. No action or proceeding has been instituted and
no order, decree, injunction or judgment of any kind from any court or
other governmental authority has been issued to avoid, restrain or in any
other manner prevent the consummation of the transactions contemplated by
this Consent or any of the Agreements.
(f) Enforcement. The Agreements and this Consent are in proper legal
form to be enforced against Clark R&M, and it is not necessary to ensure
the legality, validity, enforceability or admissibility into evidence of
the Agreements or this Consent that they be filed, recorded or enrolled
with any governmental authority, or that any such document be stamped with
any stamp, registration or similar transaction tax.
(g) Execution, Delivery; Binding Agreements. The Agreements are in
full force and effect and none of the Agreements have been assigned by
Clark R&M. Except for the assignments referred to in Section 2(a) hereof,
Clark R&M has not received any notice of transfer or assignment of any of
the Agreements by the Partnership.
(h) No Default or Amendment. Neither Clark R&M nor, to its knowledge,
the Partnership is in default under any of the Agreements. Clark R&M has no
existing claims, counterclaims, offsets or defenses against the Partnership
in respect of any of the Agreements. None of the Agreements have been
amended, modified or supplemented in any manner.
SECTION 5. RIGHTS OF COLLATERAL TRUSTEE
Clark R&M agrees that the Collateral Trustee, for the benefit of the
Secured Parties, so long as any Senior Debt Obligations remain outstanding,
shall have the following rights with respect to the Agreements:
(a) Notwithstanding anything to the contrary contained in any of the
Agreements, none of the Agreements shall be terminated or canceled by
action of Clark R&M as the
<PAGE>
8
result of any breach or default of the Partnership without prior notice in
writing to the Collateral Trustee, specifying the basis therefor
(hereinafter called a "Notice"). In the event of a default by Partnership
under any of the Agreements, Clark R&M (i) will give prompt written notice
to the Collateral Trustee (a "Default Notice") of such default and any cure
period pursuant to such Agreement (the "Partnership's Cure Period"), (ii)
will allow the Collateral Trustee and the other Secured Parties to cure
such default during the Partnership's Cure Period (whether or not the
Partnership or any equity investor in the Partnership also has the right to
cure such default during such period) and (iii) prior to the exercise by
Clark R&M of any right to terminate such Agreement, will afford the
Collateral Trustee and the other Secured Parties the longer of (A) 120 days
after the receipt by the Collateral Trustee of the Default Notice and (B)
60 days after the expiration of the Partnership's Cure Period (the "Secured
Parties' Cure Period") to cure such default, provided that the Secured
Parties' Cure Period shall be extended for such longer period of time as is
necessary as long as the Collateral Trustee or any other Secured Party
shall be diligently acting in good faith to cure such default or to obtain
title to the Coker Complex; and provided, further, that notwithstanding the
foregoing, in no event shall the Secured Parties' Cure Period with respect
to a payment default by the Partnership exceed 90 days after the Default
Notice from Clark R&M. No curing of any defaults under such Agreement shall
be construed as an assumption by the Collateral Trustee or the Secured
Party of any of the obligations, covenants or agreements of the Partnership
under such Agreement.
(b) If the Collateral Trustee or any other Secured Party, or a
Nominee (as defined below), shall become the legal or beneficial owner of
the Coker Complex, or shall become entitled to cause the disposition of the
Coker Complex pursuant to the exercise of its rights and remedies as a
secured creditor, then:
(i) Such Person, at its election, may continue the Agreements by
delivering to Clark R&M a written notice of continuation. Such Person may
thereafter cause the Partnership's interest in the Agreements to be
transferred to itself or to a third party by delivering to Clark R&M a
written notice of such transfer and an agreement from such Person or such
third party satisfying the conditions of Section 5(b)(ii) hereof (such
Person or such third party, as the case may be, being herein called a
"Transferee"), and in the event of any transfer and any successive
transfers thereafter, (A) Clark R&M will continue to perform, for the
benefit of such Transferee, its obligations under the Agreements pursuant
to its terms as modified hereby, without regard to any default by the
Partnership thereunder, (B) the Partnership shall remain liable to Clark
R&M for all its obligations and duties under the Agreements, and (C) any
Transferee shall become liable, not personally but solely to the extent of
its direct or indirect right, title and interest in and to the Coker
Complex and the operating contracts relating thereto, to perform the duties
and obligations of the Partnership under the Agreements only as arise in
respect of the period commencing on the date of such Transferee's
succession. Only the Transferee, and
<PAGE>
9
not the Person delivering a notice of continuation, shall have liabilities
and obligations under the Agreements.
(ii) Any agreement delivered pursuant to the second sentence of
subparagraph (i) of this Section 5(b) shall provide that the Transferee
shall (A) assume and agree to perform all future obligations of the
Partnership under the Agreements and agree to be bound by the terms of the
Agreements in connection therewith and (B) be bound by all actions taken
and notices given by the parties under the Agreements prior to any such
transfer.
(iii) As used in this Section 5, "Nominee" shall mean (A) any
Person or entity that is directly or indirectly owned and controlled by the
Collateral Trustee, the Collateral Trustee or any other Secured Party and
(B) which has acquired the Partnership's right, title and interest in the
Coker Complex.
(c) If (i) the Partnership or a trustee or receiver or any Person
exercising the powers of a trustee or receiver in any bankruptcy,
insolvency, receivership, arrangement, liquidation or similar proceeding
applicable to the Partnership rejects any of the Agreements, or (ii) any of
the Agreements is terminated (x) by reason of any bankruptcy, insolvency,
receivership, arrangement, liquidation or similar proceeding applicable to
the Partnership or (y) by reason of any default by the Partnership under
such Agreement, and if, in any such case, within 90 days after such
termination, the Collateral Trustee shall so request, Clark R&M will
execute and deliver to the Collateral Trustee, one or more of the Secured
Parties, a Nominee or a Transferee, as shall be designated by the
Collateral Trustee (herein called the "Replacement Party"), a new contract
with the Replacement Party. The new contract shall contain substantially
the same terms and provisions as such Agreement for the balance of the
unexpired term thereof.
(d) If the Collateral Trustee, for the benefit of the Secured
Parties, or any Replacement Party is prohibited from curing any default by
the Partnership under any of the Agreements by any process, stay or
injunctions issued by any governmental authority or pursuant to any
bankruptcy or insolvency proceeding involving the Partnership, then the
Secured Parties' Cure Period shall be extended for the period of such
prohibition.
SECTION 6. AGREEMENTS OF CLARK R&M
(a) Continuation of Performance. Clark R&M agrees to continue the
performance of its obligations under each of the Agreements notwithstanding
any default by the Partnership under any Financing Document, or the
exercise by any Person of its rights under any Financing Document.
<PAGE>
10
(b) No Set-Offs, Deductions or Counterclaim. Clark R&M agrees that no
amounts due to the Partnership under any of the Agreements shall be subject
to any reduction for any set-off, deduction, counterclaim or otherwise
based upon any claim against the Partnership. Clark R&M shall not assert
any claim it may have by reason of the Partnership's default under any of
the Agreements as a defense to performance of its obligations under any
other agreement with the Partnership or any affiliate of the Partnership or
under this Consent. Nothing contained in this paragraph (c) shall waive
Clark R&M's rights to enforce any such claim as a cause of action against
the Partnership.
(c) Compliance with Instructions from Collateral Trustee. Clark R&M
hereby agrees that it shall (i) comply with any and all written
instructions received from the Collateral Trustee pursuant to the Financing
Documents, (ii) treat such instructions as coming directly from the
Partnership, (iii) disregard any contradictory instructions received from
the Partnership and (iv) with effect as of the date of receipt of such
instructions, direct to the Collateral Trustee (with a copy to the
Partnership) all communications and correspondence arising out of or in
connection with any of the Agreements.
(d) Notices. All notices or other communications to be delivered to
the Collateral Trustee or any of the other Secured Parties pursuant to this
Consent or any of the Agreements shall be delivered to the Collateral
Trustee at the address specified in Section 8 below and, in the case of
Clark R&M or the Partnership, to each of these respective entities at the
addresses specified in Section 8 below.
(e) Amendments of Agreements, Etc. Clark R&M will not agree to any
amendment, cancellation or early termination of any of the Agreements, and
will not assign its rights or obligations under any of the Agreements to a
third party, without the prior written consent of the Collateral Trustee.
(f) Reservation of Rights. Clark R&M expressly reserves all rights
and remedies available at law or in equity under the Agreements, except to
the extent expressly modified in this Consent.
(g) Copies of Notices to Partnership. Clark R&M will deliver to the
Collateral Trustee a copy of each notice given by it to the Partnership
concurrently with delivery of such notice to the Partnership.
SECTION 7. FURTHER ASSURANCES
The parties hereto hereby agree to provide to each other such
documents and to take such other action as may be reasonably necessary to
effectuate fully the purposes of this Consent.
<PAGE>
11
SECTION 8. NOTICES
All notices and other communication under or in connection with this
Consent shall be in writing, shall refer on their face to the applicable
Agreement(s) (although failure to so refer shall not render any such notice or
communication ineffective), shall be sent by first class registered or certified
mail, by facsimile, by hand or by overnight courier service and shall be
addressed:
(i) if to Clark R&M, in accordance with the Agreements;
(ii) if to the Collateral Trustee, to
Bankers Trust Company
Corporate Trust & Agency Services
Four Albany Street, 4th Floor
New York, New York 10006
Attention: James McDonough
(iii) if to the Partnership, in accordance with the Agreements; or
(iv) to such other address as Clark R&M, the Partnership or the
Collateral Trustee, as the case may be, may designated by prior written
notice to the other parties given pursuant hereto.
SECTION 9. MISCELLANEOUS
(a) Separate Counterparts; Amendments, Waiver. This Consent may be
executed in separate counterparts, each of which when so executed and delivered
shall be an original but all of such counterparts together shall constitute one
and the same instrument. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by Clark R&M, the Collateral Trustee and the Partnership.
(b) Severability. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(c) Successors and Assigns. This Consent shall be binding upon and
inure to the benefit of Clark R&M, the Collateral Trustee, the other Secured
Parties, the Partnership and their respective successors and permitted assigns.
<PAGE>
12
(d) GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(e) Submission to Jurisdiction. Clark R&M hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof or the enforcement of an award rendered pursuant to
Section 11.6 of the SSA and Section 9.7 of the PPA, to the non-exclusive general
jurisdiction of the courts of the State of New York located in the Borough of
Manhattan, City of New York and the Federal courts of the U.S. for the Southern
District of New York located in the Borough of Manhattan, City of New York; and,
(ii) notwithstanding anything to the contrary contained in the Agreements,
consents that any action or proceeding in connection with the Agreements may be
brought by the Collateral Trustee and the Financing Parties in such courts and
waives any objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same.
(f) Enforcement of Judgments. Clark R&M agrees that a final judgment
against it in any action, suit or proceeding brought in any New York State or
Federal court in accordance with paragraph (e) above shall be conclusive and may
be enforced in any jurisdiction by suit on the judgment, a certified copy of
which judgment shall be conclusive evidence thereof, or by any other means
provided by law.
(g) No Implied Waiver. Failure or delay on the part of any party
hereto to exercise a right under this Consent shall not operate as a waiver
thereof; nor shall any single or partial exercise of a right preclude any other
future exercise thereof.
(h) Agent for Service of Process. Clark R&M hereby irrevocably and
unconditionally appoints CT Corporation, with an office on the date hereof at
1633 Broadway, 23rd Floor, New York, New York 10019, as its agent, which shall
be a commercial process agent (the "Process Administrative Agent") to receive on
behalf of Clark R&M and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding in such New York State or Federal court. In any such action or
proceeding, such service may be made on Clark R&M by delivering a copy of such
process to Clark R&M in care of the Process Administrative Agent at the Process
Administrative Agent's above address and by depositing a copy of such process in
the mails by certified or registered air mail, addressed to Clark R&M at its
address set forth beneath its signature hereto (such service to be effective
upon such receipt by the Process Administrative Agent and the depositing of such
process in the mails as aforesaid). Clark R&M hereby further irrevocably and
unconditionally authorizes and directs such Process Administrative Agent to
accept such service on its behalf. If for any reason the Process Administrative
Agent shall cease to be
<PAGE>
13
available to act as such, Clark R&M agrees to designate a new agent in New York
City on the terms and for the purposes of this provision satisfactory to the
Collateral Trustee. As an alternate method of service, Clark R&M irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding in such New York State or Federal court by mailing of
copies of such process to Clark R&M by certified or registered air mail at its
address set forth in the Agreements, such service to become effective 30 days
after such mailing. Nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction. Clark R&M hereby agrees that, to the fullest extent
permitted by applicable law, a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
<PAGE>
14
CLARK REFINING & MARKETING, INC.
By: ____________________________________
Name:
Title:
Acknowledged and agreed:
BANKERS TRUST COMPANY, as Collateral
Trustee for the benefit of the Secured
Parties
By: _________________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: _____________________________
Name:
Title:
<PAGE>
Exhibit G
Ancillary Equipment Site Lease
FORM OF MEMORANDUM OF LEASE
MEMORANDUM OF ANCILLARY EQUIPMENT SITE LEASE
AND EASEMENT AGREEMENT
----------------------
THE STATE OF TEXAS )
) KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JEFFERSON )
THAT, CLARK REFINING & MARKETING, INC., a Delaware corporation ("Lessor"),
and PORT ARTHUR COKER COMPANY L.P., a Delaware limited partnership ("Lessee"),
have made and entered into that certain Ancillary Equipment Site Lease and
Easement Agreement dated effective as of August 19, 1999 (the "Ancillary
Equipment Site Lease") with respect to the tracts of land described on Exhibit A
attached hereto and made a part hereof for all purposes (collectively, the
"Ancillary Equipment Site").
1 Defined Terms. All defined terms used in this Memorandum shall have
the respective meanings provided for such defined terms in the Ancillary
Equipment Site Lease.
2 Lease. On and subject to the terms, provisions and conditions of the
Ancillary Equipment Site Lease, Lessor has leased, let, demised and rented the
Ancillary Equipment Site and the Ancillary Equipment to Lessee, and Lessee has
leased and accepted the Ancillary Equipment Site and the Ancillary Equipment
from Lessor, for an initial lease term (the "Ancillary Equipment Site Initial
Term") commencing on the date hereof and ending on August 19, 2029.
3 Options to Renew. The Ancillary Equipment Site Lease provides that, on
and subject to the terms, provisions and conditions set forth therein, Lessee
shall have the right and option to extend the Ancillary Equipment Site Initial
Term for up to five (5) additional terms of five (5) years each (each, an
"Ancillary Equipment Site Renewal Term").
4 Appurtenant Easement. The grant by Lessor to Lessee under the Ancillary
Equipment Site Lease includes a nonexclusive easement, appurtenant to the
Ancillary Equipment Site Leasehold and for the Ancillary Equipment Site Lease
Term, on, over and under the Adjacent Refinery Property, as more particularly
described in Exhibit B attached hereto and made a part hereof for all purposes,
for the purpose of ingress and egress to and from the Ancillary Equipment Site,
for the location and maintenance of the Ancillary Equipment (including, without
limitation, all interconnection pipes, wiring, other pipelines and communication
and utility lines), and for any other purpose as may be necessary or desirable
in connection with the maintenance and operation of the Ancillary Equipment, or
the operation of the Heavy Oil Processing Facility.
<PAGE>
2
5 Controlling Document. This Memorandum has been executed by Lessor and
Lessee pursuant to the provisions of the Ancillary Equipment Site Lease, for
recordation in the Official Public Records of Real Property of Jefferson County,
Texas, and it is the intent of this Memorandum to give record notice that Lessor
and Lessee have entered into the Ancillary Equipment Site Lease for the
Ancillary Equipment Site and the Ancillary Equipment. It is not the purpose of
this Memorandum to amend, modify, eliminate, or add to the provisions of such
Ancillary Equipment Site Lease. In the event and to the extent of any conflict
between the terms of this Memorandum and the terms of the Ancillary Equipment
Site Lease, the terms of the Ancillary Equipment Site Lease shall supersede and
control.
6 Successors and Assigns. The rights and obligations of the parties to the
Ancillary Equipment Site Lease shall be binding upon, and shall inure to the
benefit of, the respective permitted successors and assigns of the parties (but
without affecting any restrictions on assignment and subletting set forth in the
Ancillary Equipment Site Lease).
IN WITNESS WHEREOF, Lessor and Lessee have executed this Memorandum of
Ancillary Equipment Site Lease and Easement Agreement to be effective as of the
date first set forth above.
LESSEE: LESSOR:
PORT ARTHUR COKER COMPANY L.P., a CLARK REFINING & MARKETING, INC., a
Delaware limited partnership Delaware corporation
By: Sabine River Holding Corp., a
Delaware corporation, its sole By:
general partner Name:
Title:
By:
Name:
Title:
<PAGE>
3
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me on August __, 1999, by
____________________________________________, the _________________________ of
CLARK REFINING & MARKETING, INC., a Delaware corporation, on behalf of said
corporation.
Notary Public, State of
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me on August __, 1999, by
________________________________, the ___________________________ of Sabine
River Holding Corp., a Delaware corporation and the sole general partner of PORT
ARTHUR COKER COMPANY L.P., a Delaware limited partnership, on behalf of said
limited partnership.
Notary Public, State of
List of Exhibits:
Exhibit A - Description of the Ancillary Equipment Site
Exhibit B - Description of the Adjacent Refinery Property
<PAGE>
Exhibit H
Ancillary Equipment Site Lease
ANCILLARY EQUIPMENT OPERATING FEE CALCULATION
The Coker Company shall pay Clark R&M for the processing of crude oil through
the Ancillary Equipment each day according to the following formula:
Crude Unit Fee + GFU 243 Fee + GFU 242 Fee + CRU 1344
Hydrotreater Fee
Where:
1. Crude Unit Fee Definitions
--------------------------
"Crude Unit Fee" means, for any day, the sum of
(i) Crude Unit Fixed, (ii) Crude Unit Non-Fuel Variable,
(iii) Crude Unit Fuel Variable and (iv) Crude Unit
Electricity Variable.
"Crude Unit Fixed" means, for any day, (i)
250,000, multiplied by (ii) $0.148, multiplied by (iii)
the Inflation Factor for such day.
"Crude Unit Non-Fuel Variable" means, for any
day, (i) Total Crude Oil Volume for such day, multiplied
by (ii) $0.005, multiplied by (iv) the Inflation Factor
for such day.
"Crude Unit Fuel Variable" means, for any day,
(i) Total Crude Oil Volume for such day, multiplied by
(ii) $0.239, multiplied by (iii) (x) the Current Period
Fuel, divided by (y) $2.24 Price.
"Crude Unit Electricity Variable" means, for any
day, (i) Total Crude Oil Volume for such day, multiplied
by (ii) $0.016, multiplied by (iii) (x) the Current
Period Electricity Price, divided by (y) $0.029.
2. GFU 243 Fee Definitions
-----------------------
"GFU 243 Fee" means, for any day, the sum of (i)
GFU 243 Fixed, (ii) GFU 243 Non-Fuel Variable, (iii) GFU
243 Fuel Variable and (iv) GFU 243 Electricity Variable.
<PAGE>
2
"GFU 243 Fixed" means, for any day, (i) 43,000,
multiplied by (ii) $0.238, multiplied by (iii) the
Inflation Factor for such day.
"GFU 243 Non-Fuel Variable" means, for any day,
(i) total number of barrels of feedstreams processed
through GFU 243 on such day, multiplied by (ii) $0.094,
multiplied by (iii) the Inflation Factor for such day.
"GFU 243 Fuel Variable" means, for any day, (i)
total number of barrels of feedstreams processed through
GFU 243 on such day, multiplied by (ii) $0.330,
multiplied by (iii) (x) the Current Period Fuel Price,
divided by (y) $2.24.
"GFU 243 Electricity Variable" means, for any
day, (i) total number of barrels of feedstreams processed
through GFU 243 on such day, multiplied by (ii) 0.042,
multiplied by (iii) (x) the Current Period Electricity
Price, divided by (y) $0.029.
3. GFU 242 Fee Definitions
-----------------------
"GFU 242 Fee" means, for any day, the sum of
(i) GFU 242 Fixed, (ii) GFU 242 Non-Fuel Variable, (iii)
GFU 242 Fuel Variable and (iv) GFU 242 Electricity
Variable.
"GFU 242 Fixed" means, for any day, (i) 32,000,
multiplied by (ii) $0.221, multiplied by (iii) the
Inflation Factor for such day.
"GFU 242 Non-Fuel Variable" means, for any day,
(i) total number of barrels of feedstreams processed
through GFU 242 on such day, multiplied by (ii) $0.017,
multiplied by (iii) the Inflation Factor for such day.
"GFU 242 Fuel Variable" means, for any day, (i)
total number of barrels of feedstreams processed through
GFU 242 on such day, multiplied by (ii) $ 0.342,
multiplied by (iii) (x) the Current Period Fuel Price,
divided by (y) $2.24.
"GFU 242 Electricity Variable" means, for any
day, (i) total number of barrels of feedstreams processed
through GFU 242 on such day, multiplied by (ii) $0.014,
<PAGE>
3
multiplied by (iii) (x) the Current Period Electricity
Price, divided by (y) $0.029.
4. CRU 1344 Hydrotreater Fee Definitions
-------------------------------------
"CRU 1344 Hydrotreater Fee" means, for any day,
the sum of (i) CRU 1344 Hydrotreater Fixed, (ii) CRU 1344
Hydrotreater Non-Fuel Variable, (iii) CRU 1344
Hydrotreater Fuel Variable and (iv) CRU 1344 Hydrotreater
Electricity Variable.
"CRU 1344 Hydrotreater Fixed" means, for any
day, (i) 51,500, multiplied by (ii) $0.139, multiplied by
(iii) the Inflation Factor for such day.
"CRU 1344 Hydrotreater Non-Fuel Variable" means,
for any day, (i) the number of barrels of feedstreams
processed through CRU 1344 Hydrotreater on such day,
multiplied by, (ii) $0.020, multiplied by (iii) the
Inflation Factor for such day.
"CRU 1344 Hydrotreater Fuel Variable" means, for
any day, (i) the number of barrels of feedstreams
processed through CRU 1344 Hydrotreater on such day,
multiplied by (ii) $0.159, multiplied by (iii) (x) the
Current Period Fuel Price, divided by (y) $2.24.
"CRU 1344 Hydrotreater Electricity Variable"
means, for any day, the number of barrels of feedstreams
processed through CRU 1344 Hydrotreater on such day,
multiplied by (ii) $0.012, multiplied by (iii) (x) the
Current Period Electricity Price, divided by (y) $0.029.
5. General Definitions
-------------------
"Current Period Fuel Price" means, for any day,
the MMBTU Price (as defined in Schedule 5.5.3) for month
in which such day occurs.
"Current Period Electricity Price" means, for
any day, the KWH Price (as defined in Schedule 5.5.1) for
the month in which such day occurs.
<PAGE>
Exhibit 10.13
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of August 19, 1999 (this
"Assignment and Assumption Agreement"), between Clark Refining & Marketing Inc.
(the "Assignor") and Port Arthur Coker Company L.P. (the "Assignee").
W I T N E S S E T H:
-------------------
WHEREAS, the Assignor entered into the Maya Crude Oil Sales Agreement,
dated as of March 10, 1998, with P.M.I. Comercio Internacional, S.A. de C.V.
("P.M.I."), as amended and supplemented by the First Amendment and Supplement to
the Maya Crude Oil Sales Agreement dated as of August 19, 1999 (as it may be
from time to time further amended, the "Supply Agreement");
WHEREAS, in connection with the Supply Agreement, Petroleos Mexicanos
("Pemex") issued the Pemex Performance Guarantee dated as of March 10, 1998 for
the benefit of Assignor (the "Pemex Performance Guarantee");
WHEREAS, the Assignor desires to sell and assign to the Assignee all of its
right, title and interest in, to and under each of the Supply Agreement and the
Pemex Performance Guarantee, and the Assignee desires to (i) purchase and accept
from the Assignor the assignment of all of the Assignor's right, title and
interest in, to and under each of the Supply Agreement and the Pemex Performance
Guarantee and (ii) assume the Assumed Obligations (as defined herein); and
WHEREAS, such assignment and assumption is contemplated in Article 29.5 of
the Supply Agreement and Section 14 of the Pemex Performance Guarantee.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties agree as follows:
1. Definitions. Capitalized terms used herein without definition and
which are defined in the Supply Agreement are used herein with the respective
meanings given such terms in the Supply Agreement.
2. Assignment. Effective as of the date hereof, the Assignor hereby
irrevocably sells, assigns, transfers, conveys and sets over to the Assignee all
of its right, title and interest in, to and under each of the Supply Agreement
and the Pemex Performance Guarantee.
3. Assumption. The Assignee hereby assumes all of the obligations,
liabilities and duties of the Assignor under the Supply Agreement, except such
terms and obligations for which the Assignor remains solely liable pursuant to
the Supply Agreement (the "Assumed Obligations") and confirms that it shall
become a party to the Supply Agreement and shall be bound by all the terms
thereof as if it were named as the Buyer therein.
4. Further Assurances. The Assignor shall, at any time and from time to
time, upon the request and at the expense of the Assignee, promptly and duly
execute and deliver any and all such further instruments and documents and take
all such further action as the Assignee
<PAGE>
may reasonably request to obtain the full benefits of this Assignment and of the
rights and powers herein granted.
5. Representations and Warranties. The Assignor hereby represents
and warrants to each of the Assignee, P.M.I. and Pemex that:
(a) Organization; Authority. The Assignor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business as presently conducted, to own, lease, sublease, or hold under
lease or sublease, its properties and to execute and deliver this
Assignment and Assumption Agreement.
(b) Due Authorization and Consent. The execution and delivery of this
Assignment and Assumption Agreement have been duly authorized by all
necessary corporate action on the part of the Assignor and do not require
approval or consent of, or notice to, any trustee or holders of any
indebtedness or obligations of the Assignor or any lessor under any lease
to the Assignor.
(c) Compliance with Other Instruments. The execution and delivery by
the Assignor of this Assignment and Assumption Agreement does not and will
not with or result in any violation of, constitute a default under, or
result in the creation of any Lien upon any property of the Assignor under,
any term of the charter documents or by-laws of the Assignor or any
agreement, mortgage, contract, indenture, lease or other instrument, or any
Applicable Law of the United States or any political subdivision thereof,
by which the Assignor is bound or to which the Assignor or any of its
properties or assets are subject.
(d) Government Consents. Neither the execution and delivery nor the
performance of this Assignment and Assumption Agreement by the Assignor
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of any
United States Federal, state or other governmental authority or agency,
including any judicial body in the United States or any political
subdivision thereof.
(e) Legal, Valid and Binding Obligations. This Assignment and
Assumption Agreement constitutes a legal, valid and binding obligation of
the Assignor enforceable against the Assignor in accordance with its terms
except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting the
rights of creditors generally and by general principles of equity,
regardless of whether enforcement is pursuant to a proceeding in equity or
at law.
(f) Litigation. There are no pending or, to the knowledge of the
Assignor, threatened actions or proceedings by or before any court or
administrative agency or arbitrator that involve this Assignment and
Assumption Agreement, the Supply Agreement or the transactions contemplated
thereby, the Pemex Performance Guarantee or the transactions contemplated
thereby or that, either individually or in the aggregate, are reasonably
likely to adversely affect the validity of this Assignment and Assumption
Agreement, the Assumed Obligations, the Supply Agreement or the Pemex
Performance Guarantee.
2
<PAGE>
6. Representations and Warranties. The Assignee hereby represents
and warrants to each of the Assignor, P.M.I. and Pemex that:
(a) Organization; Authority. The Assignee is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority to conduct its business
as presently conducted, to own, lease, sublease, or hold under lease or
sublease, its properties and to execute, deliver and perform this
Assignment and Assumption Agreement and to perform the Assumed Obligations
and the Supply Agreement to which it is or is to be a party.
(b) Due Authorization and Consent. The execution, delivery and
performance of this Assignment and Assumption Agreement and the performance
of the Assumed Obligations and the Supply Agreement have been duly
authorized by all necessary corporate action on the part of the Assignee
and do not require approval or consent of, or notice to, any trustee or
holders of any indebtedness or obligations of the Assignee or any lessor
under any lease to the Assignee.
(c) Compliance with Other Instruments. Neither the execution,
delivery or performance by the Assignee of this Assignment and Assumption
Agreement and the performance of the Assumed Obligations and the Supply
Agreement, nor the consummation or performance by the Assignee of the
transactions contemplated thereby, do not and will not conflict with or
result in any violation of, constitute a default under, or result (other
than pursuant to the Supply Agreement) in the creation of any Lien upon any
property of the Assignee under, any term of the charter documents or by-
laws of the Assignee or any agreement, mortgage, contract, indenture, lease
or other instrument, or any Applicable Law of the United States or any
political subdivision thereof, by which the Assignee is bound or to which
the Assignee or any of its properties or assets are subject.
(d) Government Consents. Neither the execution or delivery of this
Assignment and Assumption Agreement and the performance of the Assumed
Obligations and the Supply Agreement, nor the consummation of any of the
transactions contemplated thereby by the Assignee requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of any United States Federal, state or other
governmental authority or agency, including any judicial body in the United
States or any political subdivision thereof.
(e) Legal, Valid and Binding Obligations. The Assumed Obligations and
this Assignment and Assumption Agreement constitute, and the Supply
Agreement, when executed and delivered, will constitute, a legal, valid and
binding obligations of the Assignee enforceable against the Assignee in
accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting the rights of creditors generally and by general principles
of equity, regardless of whether enforcement is pursuant to a proceeding in
equity or at law.
(f) Litigation. There are no pending or, to the knowledge of the
Assignee, threatened actions or proceedings by or before any court or
administrative agency or arbitrator that involve the Supply Agreement or
the transactions contemplated thereby, the
3
<PAGE>
Pemex Performance Guarantee or the transactions contemplated thereby or
that, either individually or in the aggregate, are reasonably likely to
adversely affect the ability of the Assignee to perform its obligations
under this Assumption Agreement, the Assumed Obligations or the Supply
Agreement or the validity of this Assumption Agreement, the Assumed
Obligations or the Supply Agreement.
7. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the date first above written.
PORT ARTHUR COKER COMPANY L.P.,
as Assignee
By: SABINE RIVER HOLDING CORP., ITS
GENERAL PARTNER
By: /s/ Maura J. Clark
---------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
CLARK REFINING & MARKETING, INC.
as Assignor
By: /s/ Maura J. Clark
---------------------------
Name: Maura J. Clark
Title: Executive Vice President and
Chief Financial Officer
By signing in the respective spaces provided below,
each of the undersigned acknowledges and agrees that
this Assignment and Assumption Agreement satisfies
the criteria set forth in Article 29.5(a)(iii) of the Supply
Agreement
P.M.I. COMERCIO INTERNACIONAL,
S.A. de C.V.
By: /s/ Eduardo Martinez del Rio
--------------------------------------
Name: Eduardo Martinez del Rio
Title: General Director
PETROLEOS MEXICANOS
By: /s/ Alfredo Martinez
---------------------------------------
Name: Alfredo Martinez
Title: Managing Director
5
<PAGE>
Exhibit 10.14
MAYA CRUDE OIL SALES AGREEMENT
BETWEEN
P.M.I. COMERCIO INTERNACIONAL, S.A. DE C.V.
AND
CLARK REFINING & MARKETING, INC.
DATED AS OF MARCH 10, 1998
<PAGE>
MAYA CRUDE OIL SALES
AGREEMENT
MAYA CRUDE OIL SALES AGREEMENT, dated as of March 10, 1998 (the
"Agreement"), between P.M.I. COMERCIO INTERNACIONAL, S.A. DE C.V., a Mexican
corporation (together with in successors and assigns permitted hereunder,
"Seller"), and CLARK REFINING & MARKETING, INC., a Delaware corporation
(together with its successors and assigns permitted hereunder, "Buyer").
WITNESSETH
WHEREAS, Buyer is the owner of a fuels refinery located at Port Arthur,
Texas;
WHEREAS, the parties desire to enter into the Agreement in connection with
a major upgrading program to be undertaken by Buyer which will enable the Port
Arthur refinery to process certain quantities of Maya crude oil; and
WHEREAS, Buyer desires to purchase and receive from Seller and Seller is
willing to sell and deliver to Buyer, for processing at the Port Arthur
refinery, Maya crude oil on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
the mutual covenants and conditions hereinafter set forth, do hereby agree as
follows:
PART I: DEFINITIONS AND CONSTRUCTION;
REPRESENTATIONS AND WARRANTIES
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
----------------------------
1.1 Definitions. For purposes of the Agreement, the following terms shall
have the meanings indicated below:
"Abandonment" means the cessation of an activity relating to the
permitting, financing, engineering, procurement or construction of the Project,
it being understood that Abandonment shall not include the temporary suspension
of such activities.
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, is controlled by or is under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or otherwise, it being understood that, in the
case of Seller, Affiliate shall not include Mexico.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I: DEFINITIONS AND CONSTRUCTION; REPRESENTATIONS AND
WARRANTIES.......................................................... 2
ARTICLE 1
DEFINITIONS AND CONSTRUCTION........................ 2
1.1 Definitions......................................................... 2
1.2 Singular and Plural................................................. 10
1.3 Headings and References............................................. 10
ARTICLE 2
REPRESENTATIONS AND WARRANTIES....................... 11
2.1 Representations and Warranties of Buyer............................. 11
2.2 Representations and Warranties of Seller............................ 12
PART II: THE PROJECT
ARTICLE 3
OBLIGATION TO UNDERTAKE THE PROJECT.................... 15
ARTICLE 4
COMPLETION AND DELAY OF THE PROJECT.................... 17
4.1 Completion.......................................................... 17
4.2 Adjustment for Force Majeure........................................ 18
4.3 Force Majeure Events................................................ 18
4.4 Right to Extend Scheduled Completion Date........................... 19
ARTICLE 5
BUYER'S RIGHT TO TERMINATE.......................... 20
5.1 Right to Terminate.................................................. 20
5.2 Termination for Other Reasons....................................... 20
5.3 Project Reinitiation................................................ 21
PART III: PURCHASE AND SALE
ARTICLE 6
PURCHASE AND SALE OF MAYA......................... 23
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ARTICLE 7
QUANTITY...................................23
7.1 Contract Quantity....................................................23
7.2 Phase-out of Contract Quantity.......................................25
ARTICLE 8
UNDERLIFTING.................................25
8.1 Remedies.............................................................25
8.2 Operational Tolerance................................................26
8.3 Apportionment of Underlifting........................................27
8.4 Determination of Operational Tolerance...............................28
ARTICLE 9
UNDERDELIVERY................................28
ARTICLE 10
PRICE....................................29
10.1 Regular Price.......................................................29
10.2 Alternative Pricing.................................................29
10.3 Reinstatement of Regular Price......................................30
10.4 Certification by Seller.............................................30
ARTICLE 11
PAYMENT TERMS.................................31
11.1 Adjustments in Respect of Differential Guarantee....................31
11.2 Currency Time and Place of Payment; Overdue Payments................31
11.3 Payment Expenses....................................................32
11.4 Security for Payment................................................32
11.5 Suspension of Deliveries............................................35
11.6 Shipping Documents..................................................35
ARTICLE 12
NO SET-OFF..................................36
ARTICLE 13
NOTICE OF CLAIMS...............................36
ARTICLE 14
TERMINATION BY SELLER OR BUYER...........................36
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ARTICLE 15
EFFECT OF TERMINATION........................... 37
15.1 Termination Not to Relieve Obligations............................. 37
15.2 Acceleration....................................................... 37
ARTICLE 16
FORCE MAJEURE............................... 37
16.1 Relief from Liability.............................................. 37
16.2 Notice............................................................. 38
16.3 Payment for Mava Sold and Delivered................................ 38
16.4 Pro-rata Apportionment............................................. 38
16.5 Extension of Guarantee Period...................................... 38
16.6 Meaning of Force Majeure........................................... 39
PART IV: DIFFERENTIAL GUARANTEE.............................................. 40
ARTICLE 17
SHORTFALL IN DIFFERENTIALS......................... 40
ARTICLE 18
SURPLUS IN DIFFERENTIALS.......................... 42
ARTICLE 19
CALCULATION OF DIFFERENTIAL GUARANTEE................... 43
19.1 Time of Delivery................................................... 43
19.2 Examples of the Operation of Part IV............................... 43
19.3 Quarterly Calculation.............................................. 43
ARTICLE 20
DIFFERENTIAL FORMULA............................ 44
20.1 Alternative Differential Calculation............................... 44
20.2 Reinstatement of Differential Calculation.......................... 44
PART V: DELIVERY TERMS....................................................... 45
ARTICLE 21
ARRIVAL PROCEDURES AND LIFTING....................... 45
21.1 Lifting Program.................................................... 45
21.2 Substitution of Tankers............................................ 47
21.3 Advice of ETA...................................................... 48
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21.4 Notice of Readiness............................................... 48
21.5 Oil Pollution..................................................... 49
ARTICLE 22
LOADING CONDITIONS: DEMURRAGE....................... 50
22.1 Berthing of Tankers; Commencement of Laytime...................... 50
22.2 Shifting Loading Point of Tankers................................. 51
22.3 Allowed Laytime................................................... 51
22.4 Adjustments to Laytime............................................ 52
22.5 Demurrage......................................................... 53
22.6 Buyer's Liability for Delay and Damage............................ 54
ARTICLE 23
QUANTITY MEASUREMENTS........................... 55
23.1 Determination of Quantity......................................... 55
23.2 Volume Corrections for Temperature................................ 57
23.3 Conclusiveness of Measurements.................................... 58
ARTICLE 24
QUALITY.................................. 58
24.1 Determination of Quality.......................................... 58
24.2 Analysis of Samples............................................... 59
24.3 No Warranties..................................................... 59
ARTICLE 25
DELIVERY.................................. 59
25.1 Passing of Title.................................................. 59
25.2 Port and Loading Expenses......................................... 60
25.3 Loading Port Regulations.......................................... 60
25.4 Buyer's Knowledge of Loading Port Facilities; Standard Procedures. 60
PART VI: MISCELLANEOUS TERMS................................................ 61
ARTICLE 26
DURATION.................................. 61
ARTICLE 27
SATISFACTORY DOCUMENTATION......................... 61
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ARTICLE 28
CONFIDENTIALITY.............................. 61
28.1 General Confidentiality Obligation................................ 61
28.2 Confidentiality of Differential Information....................... 66
ARTICLE 29
NO THIRD PARTY BENEFICIARIES; ASSIGNMENT.................. 69
29.1 No Beneficiaries.................................................. 69
29.2 Successors and Assigns............................................ 69
29.3 General Prohibition on Assignments................................ 69
29.4 Permitted Assignments by Seller................................... 69
29.5 Permitted Assignments by Buyer.................................... 70
29.6 Assignment by Buyer in Connection with Financing.................. 75
29.7 Right to Terminate................................................ 76
ARTICLE 30
RELATIONSHIP OF THE PARTIES........................ 76
ARTICLE 31
DISPUTE RESOLUTION; GOVERNING LAW..................... 76
31.1 Amicable Resolution............................................... 76
31.2 Settlement by Arbitration......................................... 77
31.3 Governing Law..................................................... 78
31.4 Waiver of Immunity................................................ 78
ARTICLE 32
LIMITATION OF LIABILITY; LIQUIDATED DAMAGES................ 78
ARTICLE 33
NO RECOURSE................................ 79
ARTICLE 34
MERGER................................... 79
ARTICLE 35
NO WAIVER; CUMULATIVE REMEDIES....................... 80
ARTICLE 36
SEVERABILITY OF PROVISIONS......................... 80
ARTICLE 38
AMENDMENTS AND WAIVERS........................... 81
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ARTICLE 39
LANGUAGE OF THE AGREEMENT......................... 82
ARTICLE 40
RESTRUCTURING OF THE AGREEMENT....................... 82
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2
"AFRA" means Average Freight Rate Assessment as applied by the London
Tanker Brokers Panel.
"Agreed Laydays" means the three-Day range for the arrival of a tanker set
forth in an Agreed Lifting Program determined pursuant to Article 21.1.
"Agreed Lifting Program" means a final lifting program for a Month
determined pursuant to Article 21.1.
"Agreement" means this Maya Crude Oil Sales Agreement and all Annexes
attached hereto (which shall be integral parts of the Agreement), as the same
may be amended, modified or supplemented from time to time in accordance with
the terms hereof.
"Allowed Laytime" means the period of time which Seller shall be allowed,
in accordance with Article 22.3, to complete the loading of a tanker without
incurring demurrage.
"Alternative Supply Arrangement" means any contract, agreement or
arrangement (other than the Agreement) evidenced by a writing pursuant to which
Buyer, any purchaser of the Refinery or any part thereof, or any Affiliate of
either of them has the right to purchase, on a long-term basis, any substantial
portion of the Refinery's requirements for heavy crude oil attributable to the
Project or to any similar project designed to increase significantly the
Refinery's capacity to process heavy crude oil having characteristics similar to
Maya.
"API" means the American Petroleum Institute.
"ASTM" means the American Society for Testing and Materials.
"Barrel" means a quantity of crude oil equal to forty-two (42) Gallons.
"Base Heavy Crude" means crude oil having an API gravity of twenty-eight
(28) or less, but excluding Ecuadorean crude oil of the Oriente type, Argentine
crude oil of the Escalante type, Congolese crude oil of the Djeno type, and
Colombian crude oil of the Vasconia type.
"BPD" means Barrels per Day.
"Business Day" means any Day other than Saturday, Sunday or any Day on
which banking institutions in New York, New York or Mexico City, Mexico are
authorized or required by law to close.
"Buyer" has the meaning set forth in the caption to the Agreement, and
includes any assignee permitted under Articles 29.5 and 29.6, but does not
include Clark R&M following any permitted assignment by Clark R&M under Article
29.5.
<PAGE>
3
"Capacity Quotient" means the quotient of (i) the Design Capacity of the
Coker multiplied by the Coker Fraction, minus the capacity to process feedstocks
from a volume of heavy crude oil equal to the Current Capacity Decrease, divided
by (ii) 55,000 BPD.
"Cash Collateral Amount" has the meaning set forth in Article 29.5(c).
"Clark R&M" means, in the event of an assignment under Article 29.5, Clark
Refining & Marketing, Inc.
"Clark Performance Undertaking" means the performance undertaking executed
and delivered in the form of Annex 1 by Clark Refining & Marketing, Inc., or its
successors or permitted assigns, in the circumstances set out in Article 29.5.
"Coker" means the equipment comprising the delayed coker included within
the Project as described in Annex 5.
"Coker Fraction" means the fraction, if less than all, of the Design
Capacity of the Coker designated for the processing of feedstocks from heavy
crude oil as determined by the third party engineering firm responsible for the
basic engineering for the Coker and advised to Seller by Buyer pursuant to
Article 3(d).
"Compensating Collateral" has the meaning set forth in Article 29.5(c).
"Compensating Letter of Credit" has the meaning set forth in Article
29.5(c).
"Completion" has the meaning set forth in Article 4.1.
"Completion Date" means the first Day of the Month following the Month in
which Completion is achieved in accordance with Article 4.1.
"Confidential Information" has the meaning set forth in Article 28.
"Contract Quantity" means, with respect to any Month, the quantity of Maya
to be sold by Seller and purchased by Buyer hereunder in such Month in
accordance with Article 7.1.
"Credit Carryforward" has the meaning set forth in Article 17(c).
"Credit Interest" means, with respect to any Quarter, the amount of
interest calculated for such Quarter (other than any period during which
processing at the Refinery is curtailed resulting in an extension of the
Guarantee Period under Article 16.5) at LIBOR plus one percent on the sum (if
greater than zero) of (i) the aggregate of all credits calculated pursuant to
Article 17(a) for all prior Quarters, plus (ii) the aggregate amount of Credit
Interest for all prior Quarters, minus (iii) the aggregate of all premiums
calculated pursuant to Article 18(a) for all prior Quarters.
<PAGE>
4
"Current Capacity" means the average daily volume, stated in BPD, of Base
Heavy Crude which was processed through the Refinery to produce feedstocks for
processing through the cokers in service at the Refinery during the ten-Month
period beginning March 1, 1997 and ending December 31, 1997, excluding Days
during which operation of the Refinery was interrupted or curtailed due to force
majeure or for operational reasons, as determined by Buyer in good faith and
advised to Seller by Buyer pursuant to Article 3(d).
"Current Capacity Decrease" means the amount, if any, by which (i) the
Current Capacity exceeds (ii) the amount, stated in BPD, of Base Heavy Crude
which will be required to be processed through the Refinery commencing with the
first Month of the Start-up Period to produce feedstocks for processing through
the cokers in service at the Refinery on the date hereof, as determined by the
third party engineering firm responsible for the basic engineering for the
Project and advised to Seller by Buyer pursuant to Article 3(d), and as the same
may be revised in accordance with such Article 3(d).
"Day" means a calendar day.
"Design Capacity" has the following meaning:
(a) with respect to the Refinery, its design capacity, stated in BPD, to
process heavy crude oil following Completion as determined by the third party
engineering firm responsible for the basic engineering for the Project and
advised to Seller by Buyer pursuant to Article 3(d), which capacity shall not be
less than 150,000 BPD plus the Current Capacity; and
(b) with respect to the Coker, its nameplate capacity, stated in BPD, to
process feedstocks following Completion as determined by the third party
engineering firm responsible for the basic engineering for the Coker and advised
to Seller by Buyer pursuant to Article 3(d), which capacity, after being
multiplied by the Coker Fraction, shall not be less than the sum of (i) 55,000
BPD plus (ii) the capacity to process feedstocks from a volume of heavy crude
oil equal to the Current Capacity Decrease.
"Differential" has the meaning set forth in Annex 2.
"ETA" means estimated time of arrival.
"Five-Day Period" has the meaning given in Annex 6.
"F.O.B." means free on board, according to Incoterms 1990.
"Gallon" means a unit of volume, measured at 60 F (equivalent to 15.56 C),
equal to 231 cubic inches or 3.7853 liters.
"Guarantee Date" means July 1, 2001, as the same may be extended pursuant
to Article 4.2.
<PAGE>
5
"Guarantee Period" means the period beginning on the earliest of the
Completion Date, the Scheduled Completion Date and the Guarantee Date, and
ending eight Years after beginning, plus such additional period as may apply
pursuant to the terms of Article 16.5.
"ICC Rules" has the meaning set forth in Article 31.2.
"LIBOR" means, during any Quarter, the rate per annum equal to the offered
rate for three-month deposits in U.S. Dollars in the London interbank market as
published in the Money Rates column of The Wall Street Journal (based upon the
British Bankers' Association average for major banks or such other basis as may
be adopted by The Wall Street Journal from time to time) for contracts closing
two business Days after the first Day of such Quarter on which commercial banks
are open for international business in London.
"Loading Port" means one of the loading terminals customarily used by
Seller for export of Maya.
"Long Ton" means a unit of weight equal to 2,240 pounds (avoirdupois) or
1.01605 metric tons.
"Maya" means Mexican crude oil of the Maya type, typically having
characteristics within the ranges specified in Annex 3.
"Mexico" means the United Mexican States.
"Month" means a calendar month.
"Monthly Shortfall" means, for any Month all or part of which is within the
Guarantee Period, the amount equal to the product of (a) U.S.$15.00 less the
Differential for such Month (if greater than zero) multiplied by (b) thirty-six
and six tenths percent (36.6%) of the Contract Quantity delivered by Seller to
Buyer in such Month (prorated for any Month which is only partly within the
Guarantee Period); provided, however, that for purposes of determining any
Monthly Shortfall, in the event that Seller has underdelivered under Article 10,
then Buyer shall be deemed to have lifted the entire Contract Quantity for such
Month, less any volume the delivery of which is excused under Article 16 by
reason of force majeure.
"Monthly Surplus" means, for any Month all or part of which is within the
Guarantee Period, the amount equal to the product of (a) the Differential for
such Month less U.S.$15.00 (if greater than zero) multiplied by (b) thirty-six
and six tenths percent (36.6%) of the Contract Quantity delivered by Seller to
Buyer in such Month (prorated for any Month which is only partly within the
Guarantee Period); provided, however, that for purposes of determining any
Monthly Surplus, in the event that the Completion Date has not been achieved on
or before the Scheduled Completion Date or Buyer has underlifted under Article
8.1, then Seller shall be deemed to have delivered the entire Contract Quantity
for such Month, less any volume the lifting of which is excused under Article
8.2.
"Operating Capacity" has the meaning set forth in Article 7.1(c).
<PAGE>
6
"Pemex Performance Guarantee" means the guarantee by Petroleos Mexicanos of
Seller's obligations under the Agreement which is executed and delivered on the
date hereof in the form of Annex 4.
"Permits" means all permits, licenses, authorizations, consents,
exemptions, registrations, approvals or other authorizations of any kind which
are required to be obtained from or granted by any governmental authority for
the construction, operation or ownership of the Project or the Refinery.
"Person" means any individual, firm, corporation, stock company, limited
liability company, trust, partnership, association, joint venture, other
business entity or governmental authority.
"Premium Carryforward" has the meaning set forth in Article 18(c).
"Project" means the design, construction and integration into the Refinery
of the Coker and associated facilities, as described more specifically in Annex
5 having sufficient capacity to enable the Coker and the Refinery to process at
least their Design Capacities.
"Project Assets" means the Coker and, to the extent owned by Buyer, the
other facilities and equipment described in Annex 5 designed, constructed and
integrated into the Refinery as the result of the Project.
"Quarter" means any period of three consecutive Months commencing January
1, April 1, July 1 or October 1 of any Year.
"Quarterly Shortfall" means, with respect to any Quarter, the amount, if
any, by which (i) the sum of the Monthly Shortfalls in such Quarter exceeds (ii)
the sum of the Monthly Surpluses in such Quarter.
"Quarterly Surplus" means, with respect to any Quarter, the amount, if any,
by which (i) the sum of the Monthly Surpluses in such Quarter exceeds (ii) the
sum of the Monthly Shortfalls in such Quarter.
"Refinery" means Buyer's refinery located at Port Arthur, Texas.
"Regular Price" means the price determined in accordance with the pricing
formula set out in Annex 6, as the same may be adjusted by Seller from time to
time, generally in effect for Seller's F.O.B. export sales destined for ports in
the Gulf Coast region of the United States of America.
"S & W" means sediments and water.
"Scheduled Completion Date" means January 1, 2001, as the same may be
extended pursuant to Article 4.2 or Article 4.4.
<PAGE>
7
"Seller" has the meaning set forth in the caption to the Agreement, and
includes any assignee permitted under Article 29.4.
"Start-up Period" means the period beginning the first day of the Month in
which Buyer expects to first introduce feed into the Coker and ending on the
last Day of the Month in which Completion is achieved.
"Termination Fee" has the meaning set forth in Article 5.2.
"U.S. Dollars" or "U.S.$" means dollars of the United States of America.
"WORLDSCALE" means, at any time under the Agreement, the most recent
edition of the New Worldwide Tanker Nominal Freight Scale.
"Year" means any period of twelve consecutive Months.
1.2 Singular and Plural. Terms defined in this Article 1 may be used in
the Agreement in either their singular or plural forms as the context requires.
1.3 Headings and References. All headings herein are for convenience
only and shall not affect the construction or interpretation of the Agreement.
Unless otherwise specified, all references herein to Parts, Articles and Annexes
are to the Parts, Articles and Annexes of the Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that:
(a) Buyer is a corporation duly organized and validly existing under the
laws of the State of Delaware, as evidenced by its certificate of incorporation
and by-laws, each dated February 5, 1988, and has the legal capacity to enter
into and perform the Agreement.
(b) The execution and performance by Buyer of the Agreement has been duly
authorized by all necessary corporate action. The Agreement has been duly
executed by Buyer and, assuming the due authorization and execution of the
Agreement by Seller, constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
(c) Neither the execution of the Agreement by Buyer nor the performance by
Buyer of its respective obligations hereunder will conflict with or result in
any breach of, or
<PAGE>
8
constitute a violation of or default under, any applicable law, the charter or
by-laws of Buyer, or any indenture, mortgage, deed of trust, or other instrument
or agreement (including, without limitation, any negative pledge or similar
clause), to which Buyer or any of its Affiliates is a party, or by which any of
them may be bound, or to which any of their property or assets may be subject.
(d) No lawsuit or other proceeding is pending or, to the knowledge of
Buyer, threatened against Buyer which, if determined adversely thereto, may
materially and adversely affect its business or financial condition or the
consummation of the transactions contemplated by, or the performance of its
obligations under, the Agreement. No action or proceeding has been instituted
and no order, decree, injunction or judgment of any kind from any court or other
governmental authority has bees issued to avoid, restrain or in any other manner
prevent the consummation of the transactions contemplated by the Agreement.
(e) Buyer is purchasing Maya hereunder exclusively for processing by Buyer
or its Affiliates at the Refinery.
(f) Buyer has not been contacted by nor has it negotiated with any finder,
broker or other intermediary for the purchase of Maya hereunder who is entitled
to any compensation with respect to the Agreement or the sale of Maya hereunder.
(g) No director, employee or agent of Buyer has given or will give any
commission, fee, rebate, gift or entertainment of significant value in
connection with the Agreement.
2.2 Representations and Warranties of Seller. Seller represents and
warrants to Buyer that:
(a) It is a corporation duly organized and existing under the laws of
Mexico, as evidenced by Public Deed No. 1020, dated May 24, 1989, under the seal
of Luis de Angoitia y Gaxiola, Public Notary and of the Federal patrimony No.
109, and has the legal capacity to enter into and perform the Agreement.
(b) It has obtained all necessary authorizations from the competent
governmental authorities for the execution of the Agreement and the performance
of its obligations hereunder.
(c) The execution and performance by Seller of the Agreement has been duly
authorized by all necessary corporate action. The Agreement has been duly
executed by Seller and, assuming the due authorization and execution of the
Agreement by Buyer, constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(d) Neither the execution of the Agreement by Seller nor the performance
by Seller of its obligations hereunder will conflict with or result in any
breach of, or constitute a violation of or default under, any applicable law,
its charter or by-laws, or any indenture, mortgage, deed of trust, or other
instrument or agreement (including, without limitation, any
<PAGE>
9
negative pledge or similar clause), to which Seller or any of its Affiliates is
a party, or by which any of them may be bound, or to which any of their property
or assets may be subject.
(e) No lawsuit or other proceeding is pending or, to the knowledge of
Seller, threatened against Seller which, if determined adversely to Seller, may
materially and adversely affect its business or financial condition or the
consummation of the transactions contemplated by, or the performance of its
obligations under, the Agreement. No action or proceeding has been instituted
and no order, decree, injunction or judgment of any kind from any court or other
governmental authority has been issued to avoid, restrain or in any other manner
prevent the consummation of the transactions contemplated by the Agreement.
(f) The Agreement and the transactions contemplated hereby constitute
commercial activities of Seller, rather than public or governmental activities,
and Seller is subject to private commercial law with respect thereto. Seller is
not entitled to any immunity, whether on grounds of sovereign immunity or
otherwise, from any legal proceedings in Mexico, except that under the
applicable laws of Mexico, in particular Article 4 of the Codigo Federal de
Procedimientos Civiles, no attachment prior to judgment, attachment in aid of
execution of judgment, or execution of judgment may be ordered by Mexican courts
against any of the property or assets of Seller. Based upon the waiver set out
in Article 31.4, Seller is not entitled to immunity from any legal proceeding
brought outside of Mexico to enforce any arbitral award under the Agreement.
(g) There is no existing nor, to the knowledge of Seller, proposed or
pending, legal restriction under applicable Mexican law on Seller's ability to
sell Maya for export from Mexico.
(h) Seller reasonably believes, after due inquiry, that its Affiliate,
Pemex Exploracion y Produccion, will have the ability during the term of the
Agreement to produce Maya for export and deliver it to Buyer at the Loading
Ports in the quantities set forth in Article 7.
(i) Seller has the contractual right and financial capacity to purchase
and receive Maya from Pemex Exploracion y Produccion for sale and export from
Mexico, including, without limitation, under the terms of the Agreement. Seller
has the contractual right, subject to payment of the expenses referred to in
Article 25.2, by agreement with Pemex Exploracion y Produccion to utilize the
Loading Ports for the delivery of Maya to export customers of Seller, including,
without limitation, under the terms of the Agreement. Neither Seller nor Pemex
Exploracion y Produccion is in breach of either of the contracts referred to in
this clause (i), nor is Seller aware of any intent of either party to terminate
either such contract.
(j) Seller has not been contacted by nor has it negotiated with any
finder, broker or other intermediary for the sale of Maya hereunder, and no such
Person is entitled to any compensation with respect to the Agreement or the sale
of Maya hereunder.
<PAGE>
10
(k) Seller has delivered to Buyer on the date hereof the Pemex Performance
Guarantee, which has been duly authorized and executed by Petroleos Mexicanos,
and which is in full force and effect.
PART II: THE PROJECT
ARTICLE 3 OBLIGATION TO UNDERTAKE THE PROJECT
-----------------------------------
Buyer shall, subject to its rights under Article 5, undertake the Project
in accordance with the following:
(a) Buyer shall use all commercially reasonable efforts to timely obtain
and thereafter maintain in effect all Permits.
(b) Buyer shall use all commercially reasonable efforts to perform all
acts necessary for the engineering, procurement, construction and testing
required to achieve Completion at the earliest commercially reasonable date.
(c) Buyer shall bear all costs and expenses of the Project and shall be
solely responsible for obtaining any and all financing necessary for it to carry
out the Project, which financing shall be without recourse to Seller and its
Affiliates.
(d) Buyer shall provide Seller with an officer's certificate stating the
Design Capacity of the Refinery, the Design Capacity of the Coker, the Coker
Fraction, the Current Capacity and the Current Capacity Decrease. Such
certificate shall be delivered as soon as the information required is available
to Buyer, but in any event not later than June 15, 1998. Buyer shall have the
right to change the scope of the Project; provided that (i) the Refinery and the
Coker each will remain capable of processing, upon Completion, at least their
respective minimum Design Capacities, and (ii) any change in amount of Base
Heavy Crude which will be required to be processed through the Refinery
commencing with the first Month of the Start-up Period to produce feedstocks for
processing through the cokers in service at the Refinery on the date hereof
shall be reflected in the Current Capacity Decrease; it being understood that
Seller shall have no obligation to agree to any extension of the Scheduled
Completion Date or the Guarantee Date as a result of any such change in scope.
(e) Within thirty (30) Days following the end of each Quarter prior to
Completion, Buyer provide to Seller a written progress report (i) summarizing
the status of Buyer's progress toward and any significant delays in achieving
financial closing, including, upon the closing of any financing relating to the
Project, advice as to the final general terms and conditions of such financing,
(ii) identifying any delay in the progress of the Project (including the
permitting, engineering, procurement, construction and testing thereof) which
Buyer reasonably expects may result in Completion occurring after the Scheduled
Completion Date, the reasons for such delay and the expected duration thereof,
(iii) stating Buyer's most recent projection as to the Month in which the Start-
up Period can be expected to begin, and (iv)
<PAGE>
11
describing any material change in the scope of the Project in accordance with
(d) above from that which is described in Annex 5.
(f) During the Start-up Period, Seller's representative, who may be a
third party reasonably acceptable to Buyer, shall have the right to observe the
operation and testing of the Project and examine the records reflecting the
results thereof, it being understood that Seller's representative shall not
interfere with or have any responsibility concerning such operation and testing.
(g) It is expressly understood and agreed that Seller shall have no
obligation or responsibility whatsoever with respect to the carrying out of the
Project; it being understood, however, that Seller shall, upon request and
subject to the terms of Article 28, provide to Buyer, in connection with Buyer's
financing for the Project, such information relating to the financial status,
operations and prospects of Seller and its Affiliates as is generally made
available to their lenders or the public. Upon request of Buyer, Seller will
consider also the disclosure of such other similar information as may reasonably
be considered relevant to Buyer or its lenders, it being understood that Seller
will not disclose such other information which is confidential to Seller or any
of its Affiliates or the disclosure of which would be inconsistent with their
disclosure policies generally.
ARTICLE 4 COMPLETION AND DELAY OF THE PROJECT
-----------------------------------
4.1 Completion. The Project shall be deemed to have achieved
"Completion" when:
(a) all material aspects of the Project are mechanically complete in
substantial conformity with their design plans and specifications;
(b) commission testing of the processing units included within the Project
is complete in accordance with the terms of the applicable technology licensing
and/or engineering contracts; and
(c) either (i) both the Refinery and the Coker have proven capable of
processing at least eighty percent (80%) of their respective Design Capacities
on average over a period of thirty (30) consecutive Days, or (ii) Buyer has
commenced operation of the Project Assets and Buyer and its contractors have
ceased making material further efforts toward achieving such average processing
capacities.
4.2 Adjustment for Force Majeure.
(a) If an event of force majeure delays or prevents Completion of the
Project, then the Scheduled Completion Date and the Guarantee Date shall,
subject to the provisions of clause (b) below, be extended by the period of such
delay; provided, however, that such extension shall only be granted if Buyer
notifies Seller of its intention to request such extension within thirty (30)
Days after Buyer learns of the occurrence of the force majeure in question.
<PAGE>
12
(b) In the event the Project is delayed due to one or more events of force
majeure described in clause (vii) of Article 43 occurring prior to the beginning
of the Start-up Period, the aggregate period of extensions pursuant to clause
(a) above in respect of such events of force majeure under such clause (vii)
shall not exceed three hundred sixty-five (365) Days.
4.3 Force Majeure Events. For purposes of this Part II, force majeure
shall include any act or event that prevents or delays the Completion of the
Project by Buyer if and to the extent such act or event is beyond Buyer's
reasonable control, not the result of Buyer's fault or negligence, and Buyer has
been unable to overcome the consequences of such act or event by the exercise of
commercially reasonable efforts, which may include the expenditure of additional
funds. Subject to the satisfaction of the conditions established in the previous
sentence, force majeure shall include, but not be limited to, the following acts
or events, or any similar and equally serious acts or events, which prevent or
delay the Completion of the Project by Buyer (i) natural phenomena, such as
storms, floods, lightning and earthquakes; (ii) fires; (iii) wars, civil
disturbances, riots, insurrections and sabotage; (iv) transportation disasters,
whether by ocean, rail, air or land; (v) strikes or other labor disputes that
are not due to the breach of a labor contract by Buyer or any of its
contractors; (vi) actions of a governmental entity or agency, or national, port
or other local authority having jurisdiction, including, but not limited to, the
issuance or promulgation of any court order, statute, ordinance, rule,
regulation, directive or other law; and (vii) the inability of Buyer or its
contractors to obtain in a timely manner, or thereafter maintain in full force
and effect or reinstate, any Permit. It is expressly understood that force
majeure shall not include any of the following events: (1) economic hardship;
(2) changes in market conditions; (3) late delivery of machinery, equipment,
materials or spare parts except to the extent such late delivery is itself
caused by an event of force majeure (as defined in this Article 4.3); or (4)
breach of any contract entered into by Buyer in connection with the Project.
4.4 Right to Extend Scheduled Completion Date. In the event Buyer fails
to achieve Completion on or before the Scheduled Completion Date, then Buyer
shall have the right (without diminishing its obligations under clauses (a) and
(b) of Article 3) to extend the Scheduled Completion Date, on one or more
occasions, upon payment to Seller, within sixty (60) Days following the date on
which the Scheduled Completion Date would (absent such extension) otherwise
occur, of the amount equal to the product of four hundred thousand U.S. Dollars
(U.S.$400,000) multiplied by the Capacity Quotient in respect of each thirty-Day
extension of the Scheduled Completion Date (prorated in the case of extensions
for periods of other than thirty (30) Days or even multiple thereof) up to an
aggregate period of one hundred eighty (180) Days, and the amount equal to the
product of two hundred thousand U.S. Dollars (U.S.$200,000) multiplied by the
Capacity Quotient in respect of each further thirty-Day extension of the
Scheduled Completion Date (prorated in the case of extensions for periods of
other than thirty (30) Days or even multiple thereof); provided, however, that
if Buyer fails to so extend the Scheduled Completion Date within any sixty-Day
period following the date on which the Scheduled Completion Date would (absent
such extension) otherwise occur, Seller shall have the right, exercisable upon
notice to Buyer, to terminate the Agreement and, in the event of such
termination, Buyer shall be liable to Seller, subject to Article 32 and Buyer's
rights under Article 5, for Seller's damages resulting from such termination.
<PAGE>
13
ARTICLE 5 BUYER'S RIGHT TO TERMINATE
--------------------------
5.1 Right to Terminate. In the event that (i) an Abandonment occurs or
(ii) Buyer determines to continue with the Project but without the benefit of
the Agreement or of any Alternative Supply Arrangement, then Buyer shall have
the right, exercisable upon notice to Seller given at any time prior to the
commencement of the Start-Up Period, to terminate the Agreement; provided,
however, that in the event such notice is given after August 31, 1998, Buyer
shall pay to Seller the amount equal to the product of two hundred thousand U.S.
Dollars (U.S.$200,000) multiplied by the Capacity Quotient in respect of each
thirty-Day period (prorated in the case of a period of less than thirty (30)
Days) from August 31, 1998 to the Day on which Buyer notifies Seller of such
termination, such payment to be made within fifteen (15) Days from the Day on
which such notice is given.
5.2 Termination for Other Reasons. Buyer shall have the right,
exercisable upon notice to Seller given at any time prior to the commencement of
the Start-Up Period, to terminate the Agreement without Abandonment having
occurred and to enter into an Alternative Supply Arrangement; provided, however,
that:
(a) in the event that Buyer so terminates the Agreement prior to May 1,
1998, it shall pay to Seller the amount of fifteen million U.S. Dollars
(U.S.$15,000,000), such payment to be made on the Day Buyer notifies Seller of
such termination; or
(b) in the event that Buyer so terminates the Agreement on or after May 1,
1998, it shall pay to Seller, in addition to any amount payable under Article
5.1, a termination fee equal to the amount for which Buyer would be liable to
Seller, subject to Article 32, for Seller's damages resulting from a breach of
the Agreement in its entirety on the date of such termination (the "Termination
Fee"). Within forty-five (45) Days from receipt of notice of such termination,
Seller shall provide Buyer with a statement for the Termination Fee setting
out the amount of such damages and the components thereof with reasonable
detail, and the Termination Fee shall be paid within thirty (30) Days from
receipt of such statement. In the event the parties do not agree on the amount
of the Termination Fee, the dispute shall be resolved pursuant to the terms of
Article 31.
5.3 Project Reinitiation.
(a) In the event that Buyer terminates the Agreement under Article 5.1 and
thereafter, during the period ending thirty (30) Months after the Month in
which notice of termination was given, an Alternative Supply Arrangement is
entered into, then the following shall apply:
(i) in the event that Buyer terminated the Agreement prior to May 1,
1998, it shall pay to Seller the amount of fifteen million U.S. Dollars
(U.S.$15,000,000), such payment to be made on the Day such Alternative
Supply Arrangement is entered into, together with interest thereon from the
Day of termination; or
<PAGE>
14
(ii) in the event that Buyer terminated the Agreement on or after May
1, 1998, in addition to any amount payable under Article 5.1, it shall pay
to Seller, on the Day such Alternative Supply Arrangement is entered into,
the Termination Fee.
(b) In the event that (1) Buyer terminates the Agreement under Article
5.1, (2) Buyer or any Affiliate thereof sells or otherwise transfers the
Refinery or any part thereof or interest therein to a third party, and (3)
during the period ending thirty (30) Months after the Month in which notice of
termination was given, such third party or Affiliate thereof enters into an
Alternative Supply Arrangement or into a contract for any substantial part of
the engineering (other than preliminary feasibility studies), procurement or
construction of the Project or any similar project, then, at any time after the
condition set out in (1) above is met, promptly upon Seller's request or
otherwise at any time at Buyer's option, Buyer shall provide Seller with an
officer's certificate, together with reasonable supporting information and
documentation, establishing that the Abandonment was based upon Buyer's good
faith determination that, at the time of Abandonment, for commercial, technical
or economic reasons, it was unfeasible or unattractive (relative to Buyer's
assumptions and projections as of the date hereof) for Buyer to pursue the
Project. If Seller disputes the adequacy of or basis for such certification,
Seller may institute arbitration within ninety (90) Days from receipt of such
certificate; provided that no such arbitration may be instituted after such
ninety-Day period. In the event Seller prevails in such arbitration, and the
conditions set out in (2) and (3) above are met, then the following shall apply:
(i) in the event that Buyer terminated the Agreement prior to May 1,
1998, it shall pay to Seller the amount of fifteen million U.S. Dollars
(U.S.$15,000,000), such payment to be made on the Day the condition set out
in (3) above is met, together with interest thereon from the Day of
termination; or
(ii) in the event that Buyer terminated the Agreement on or after May
1, 1998, in addition to any amount payable under Article 5.1, it shall pay
to Seller, on the Day the condition (3) above is met, the Termination Fee,
together with interest thereon from the Day of termination.
5.4 Buyer's obligations under this Article 5.3 shall survive the
termination of the Agreement.
PART III: PURCHASE AND SALE
ARTICLE 6 PURCHASE AND SALE OF MAYA
-------------------------
Subject to the terms and conditions of the Agreement, beginning with the
first Month of the Start-up Period, Buyer shall purchase Maya from Seller and
Seller shall sell Maya to Buyer. All Maya purchased and sold under the Agreement
shall be purchased and sold exclusively for processing by Buyer or its
Affiliates at the Refinery.
<PAGE>
15
ARTICLE 7 QUANTITY
--------
7.1 Contract Quantity. The quantity of Maya to be sold by Seller and
purchased by Buyer hereunder in any Month (the "Contract Quantity") shall,
subject to Article 8.2 and Article 16, be determined in accordance with the
following provisions:
(a) In the case of any Month within the Start-up Period, the Contract
Quantity shall be the quantity, if any, of heavy crude oil determined by Buyer
to be required for the start-up and operation of the Project Assets in excess of
the Current Capacity Decrease.
(b) Subject to clause (d) below, in the case of any Month during the
Guarantee Period commencing on or after the Completion Date, the Contract
Quantity shall be equal to (i) the Operating Capacity (determined in accordance
with the provisions of clause (c) below), multiplied by the Coker Fraction, and
divided by 0.366, minus (ii) the Current Capacity Decrease, multiplied by (iii)
the number of Days in such Month.
(c) For purposes of clause (b) above, "Operating Capacity" shall be
determined in accordance with the following provisions of this clause (c): (i)
within ten (10) Days after the end of each six-Month period beginning on the
Completion Date, Buyer shall provide Seller with an officer's certificate
stating the average daily volume, determined in good faith, of feedstocks
processed through the Coker during the immediately preceding six Months,
excluding Days during which the operation of the Coker was interrupted or
curtailed due to force majeure or for operational reasons (the "Operating
Capacity"); (ii) the Operating Capacity stated in each such certificate shall,
absent manifest error, apply for purposes of clause (b) during the six-Month
period beginning with the Month following the Month in which such certificate
was required to be delivered; and (iii) prior to the six-Month period to which
the first such certificate applies, the Operating Capacity shall be deemed to be
the Design Capacity of the Coker.
(d) In the event that for any Month during the Guarantee Period commencing
on or after the Completion Date, Buyer's requirements for heavy crude oil for
processing at the Refinery through the Coker exceed the sum of (i) Contract
Quantity determined in accordance with the provisions of clauses (b) and (c)
above plus (ii) the Current Capacity Decrease, then Buyer shall have the right
to notify Seller of such excess together with Buyer's proposed lifting program
for such Month. Notwithstanding the provisions of clause (b) above, in the event
of any such notice by Buyer, the Contract Quantity for such Month shall be
increased by the amount of such excess requirements notified by Buyer to Seller,
and the Contract Quantity for each Month thereafter shall be the greater of (x)
the Contract Quantity for the first Month following such notice determined in
accordance with the preceding provisions of this sentence or (y) the Contract
Quantity determined pursuant to clauses (b) and (c) above.
(e) In the case of any Month commencing after the Guarantee Period, the
Contract Quantity shall be the Contract Quantity determined in accordance with
clause (b) or clause (d) above, as the case may be, for the last Month of the
Guarantee Period, as the same may be reduced pursuant to the terms of Article
7.2.
<PAGE>
16
7.2 Phase-out of Contract Quantity. Each party shall have the option,
exercisable upon not less than three Months' prior notice to the other party, to
reduce permanently the Contract Quantity subsequent to the end of the Guarantee
Period; provided, however, that (a) the Contract Quantity shall not be so
reduced in any three-Month period subsequent to the end of the Guarantee Period
by more than twenty-five percent (25%) of the Contract Quantity determined in
accordance with Article 7.1(b) or Article 7.1(d), as the case may be, for the
last Month of the Guarantee Period, and (b) the Contract Quantity shall not be
reduced to less than twenty-five percent (25%) of the Contract Quantity
determined in accordance with Article 7.1(b) or Article 7.1(d), as the case may
be, for the last Month of the Guarantee Period while any credit or premium
remains to be applied to purchases of Maya pursuant to Article 17(b) or 18(b).
ARTICLE 8 UNDERLIFTING
------------
8.1 Remedies. Buyer acknowledges that its commitment to purchase the
Contract Quantity for each Month is of the essence of the Agreement. Subject to
Article 8.2 and the following sentence of this Article 8.1, in the event that in
any Month Buyer lifts less than the Contract Quantity for such Month (including,
without limitation, as the result of any suspension of deliveries by Seller
under this Article 8.1 or Article 11.5), Buyer shall pay to Seller the amount of
fifteen percent (15%) of the Regular Price (calculated based upon the average of
the Platt's Prices during such Month, rather than during the Five-Day Period)
multiplied by the number of Barrels of Maya underlifted in such Month; provided,
however, that Seller has provided Buyer with a statement of such amount within
thirty (30) Days from the end of the Month in which such underlifting occurs;
such payment to be made within fifteen (15) Days of receipt of such statement.
In the event that such underlifting is the result of Buyer having entered into a
term contract or engaged in a program resulting in the purchase of crude oil in
substitution of Maya, Seller shall have the right to terminate the Agreement
upon notice to Buyer and, in the event of such termination, Buyer shall be
liable to Seller, subject to Article 32, for Seller's damages resulting from
such termination. Seller shall not have the right to terminate the Agreement for
underlifting other than pursuant to the preceding sentence of this Article 8.1
or, in the event Buyer fails to pay any amount required to be paid under this
Article 8.1, Article 14. In the event Buyer suspends or reduces its liftings of
Maya relative to the applicable Agreed Lifting Program, Seller shall have no
obligation to resume delivery of the Contract Quantity underlifted for a period
of time following such suspension or reduction equal to the shorter of the
period of such suspension or reduction and three Months; it being understood
that Seller shall use commercially reasonable efforts to resume such delivery
earlier.
8.2 Operational Tolerance. Notwithstanding the foregoing provisions of this
Article 8, and subject to the provisions of Article 8.4, Buyer shall not be
required to lift, nor be subject to any liability for lifting less than, the
Contract Quantity in any Month if and to the extent that:
(a) such underlifting is due to the operational inability of the
Refinery to process the Contract Quantity despite the exercise of
commercially reasonable efforts to overcome such operational inability;
<PAGE>
17
(b) such underlifting is due to demonstrated operational reasons
concerning only the Loading Ports or the tankers involved and does not in
any event exceed ten percent (10%) of the Contract Quantity for such Month;
(c) such underlifting comes as a consequence of Buyer performing
remedial work (whether planned or unplanned) or an annual turnaround at the
Refinery, provided that Buyer notifies Seller of any planned turnaround at
least ninety (90) Days prior to the Month in which the turnaround is
planned and of any planned remedial work as soon as reasonably possible;
(d) such underlifting is the result of Buyer decreasing inventories of
Maya at the Refinery, having previously increased such inventories by
lifting in excess of the Contract Quantity due to increased risk of
weather-related interruption of supply;
(e) such underlifting is the result of force majeure and excused
pursuant to Article 16; or
(f) such underlifting is due to an underdelivery by Seller, or due to
Buyer acting in response thereto in accordance with Article 9.
8.3 Apportionment of Underlifting. With respect to any Month in which Maya
is nominated for delivery under the Agreement and under any other crude oil
supply agreement between Seller and Buyer or any of its Affiliates where any
such deliveries are to be co-mingled in a single cargo pursuant to the
applicable Agreed Lifting Program, if an underlifting of the combined quantities
occurs, then the quantity underlifted shall be attributed first to the quantity
under such other crude oil supply agreement, subject to a showing by Buyer, to
the reasonable satisfaction of Seller, that such underlifting is attributable,
in whole or in part, to the Contract Quantity by reason of force majeure or
other events or circumstances affecting the Coker; except that, in the event the
underlifting is attributable solely to force majeure affecting the tankers or to
circumstances set out in Article 8.2(b), such volume underlifted shall be
attributed pro rata to the Contract Quantity and the quantity under such other
crude oil supply agreement.
8.4 Determination of Operational Tolerance. In determining whether
circumstances exist for relief under clause (a), (c) or (d) of Article 8.2,
Buyer shall first curtail processing and reduce purchases of heavy crude oil
other than Maya under the Agreement to the full extent Buyer is able to do so
operationally and pursuant to the terms of its other supply contracts without
material loss.
ARTICLE 9 UNDERDELIVERY
-------------
Throughout the term of the Agreement, Seller shall maintain the
contractual right to purchase Maya from Pemex Exploracion y Produccion for sale
to Buyer under the Agreement and the contractual right, by agreement with Pemex
Exploracion y Produccion, to utilize the Loading Ports for the delivery of Maya
to Buyer under the Agreement. Seller shall notify Buyer promptly of any event
which causes or, with the passage of time, will cause the loss of either
<PAGE>
18
such right. In the event Seller suspends or reduces its deliveries of Maya
relative to the applicable Agreed Lifting Program, Buyer shall have no
obligation to resume lifting of the Contract Quantity underdelivered for a
period of time following such suspension or reduction equal to the shorter of
the period of such suspension or reduction and three Months; it being understood
that Buyer shall use commercially reasonable efforts to resume such lifting
earlier.
ARTICLE 10 PRICE
-----
10.1 Regular Price. Subject to Article 10.2, the price of each Barrel of
Maya sold and delivered hereunder in any Month shall be the Regular Price.
10.2 Alternative Pricing. If, during any six-Month period during which the
Regular Price is in effect under this Article 10, the average volume of sales of
Maya at the Regular Price under contracts with non-Affiliated buyers (including
Buyer) pursuant to which such buyers have the right to terminate upon prior
notice to Seller of three Months or less is below 200,000 BPD, or if the average
number of such non-Affiliated buyers of Maya at the Regular Price has been less
than three per Month, then Seller shall so notify Buyer within fifteen (15) Days
following the end of such six-Month period, and the parties shall meet promptly
thereafter to discuss and agree on whether an alternative pricing formula which
meets the same objective that the price of Maya hereunder be market-related is
required and, if so, the specifics of such alternative pricing formula. It is
expressly understood and agreed in this regard that (i) it is not the intention
of the parties that Maya be the most competitive crude oil for the Refinery at
all times, that the pricing mechanism for Maya respond to short-term variations
in the price of other crudes, or that the profitability of the Refinery be
guaranteed in any way through the price of Maya (other than pursuant to Part IV)
and (ii) the parties shall apply the methodology set out in Annex 7 in
determining the need for and specifics of an alternative pricing formula. In the
event that the parties are unable to reach agreement within sixty (60) Days
following such six-Month period, then the parties shall, within thirty (30) Days
following such sixty-Day period, submit the matter to arbitration pursuant to
Article 31.2. In such arbitration, each party shall submit its proposed pricing
mechanism, and the arbitration panel shall select one or the other of the
parties' proposals. Any alternative pricing mechanism established pursuant to
this Article 10.2 shall be effective as of the beginning of the first Month of
such six-Month period referred to above. During any period necessary to
establish an alternative pricing mechanism, the price of Maya sold and delivered
hereunder shall remain the Regular Price. Any underpayment or overpayment in
respect of the six-Month period and the period necessary to establish an
alternative pricing mechanism, shall be settled through adjustment to the price
of Maya over the three Months following the Month in which the alternative
mechanism is established.
10.3 Reinstatement of Regular Price. In the event an alternative pricing
formula for Maya is established pursuant to Article 10.2 and, during any six-
Month period ending after the six-Month period referred to in Article 10.2, the
average volume of sales of Maya at the Regular Price under contracts with non-
Affiliated buyers pursuant to which such buyers have the right to terminate upon
prior notice to Seller of three Months or less is equal to or greater than
200,000 BPD, and the average number of such non-Affiliated buyers of Maya at the
Regular Price is equal to or more than three per Month, then the price of each
Barrel of Maya
<PAGE>
19
sold and delivered hereunder beginning in the Month following the six-Month
period to which this Article 10.3 applies shall be the Regular Price.
10.4 Certification by Seller. Seller shall provide to Buyer, within thirty
(30) Days following request by Buyer, which request shall not be made more often
than once in any six-Month period, an officer's certificate confirming that the
number of buyers of Maya referred to in Article 10.2 has been three or more in
each six-Month period ending within the preceding Year and that the average
volume of sales of Maya referred to in Article 10.2 has been greater than or
equal to 200,000 BPD in each six-Month period ending within such preceding Year.
ARTICLE 11 PAYMENT TERMS
-------------
11.1 Adjustments in Respect of Differential Guarantee. Buyer's payment
obligations in respect of Maya sold and delivered under the Agreement shall be
adjusted in accordance with the provisions of Part IV.
11.2 Currency Time and Place of Payment; Overdue Payments. Buyer shall make
all payments required to be made by it hereunder in immediately available U.S.
Dollars, without any discount or deduction whatsoever, by wire transfer to such
bank account at a bank branch located within the United States of America as may
be designated by Seller from time to time. Payments in respect of Maya sold and
delivered shall be made on or before the later of the Day which is thirty (30)
Days after the date of the bill of lading therefor or the Day which is five
Business Days after delivery to Buyer of the corresponding invoice pursuant to
Article 11.6. Except as otherwise expressly provided in the Agreement, all other
payments to Seller shall be made within thirty (30) Days after presentation by
Seller of a written demand setting forth the provisions of the Agreement giving
rise to the payment obligation, the nature of such obligation, and the amount
thereof. If any payment hereunder would be due on a Day, other than a Sunday or
Monday, which is not a Business Day, such payment shall be due on the
immediately preceding Business Day, and if any payment hereunder would be due on
a Sunday or Monday which is not a Business Day, such payment shall be due on the
immediately succeeding Business Day. In the event that Buyer fails to make any
payment under the Agreement when due, then, to the extent permitted by
applicable law and without prejudice to the application of any other provision
hereof or to any other remedy provided to Seller hereunder or otherwise
(including, without limitation, remedies provided pursuant to Articles 11.4 and
11.5), interest shall accrue daily on the amount of the overdue payment,
commencing on the date such payment was due, at a rate per annum equal to two
percent (2%) above the prime rate in effect from time to time as announced by
Citibank, N.A. at its offices in New York, New York, payable on demand.
11.3 Payment Expenses. Buyer shall bear all expenses and bank charges in
connection with any payments made to Seller under the Agreement, including,
without limitation, any costs of establishing and obtaining confirmation of any
letter of credit referred to in Article 11.4.
<PAGE>
20
11.4 Security for Payment.
--------------------
11.4.1 If at any time (a) Buyer fails to make any payment in an aggregate
amount of one hundred thousand U.S. Dollars (U.S.$100,000) or more, which is
required to be made by Buyer under the Agreement, or under any other crude oil
agreement between Buyer and Seller, when and as the same shall become due and
payable and such failure is not remedied within five Business Days, (b) the
Clark Performance Undertaking is required under Article 29.5 but fails to be in
full force and effect, or (c) either (1) senior unsecured long-term debt
securities of Buyer for which there is no recourse to or credit enhancement from
any party other than Buyer, or, on an indicative basis, Buyer's ability to pay
senior unsecured long-term obligations of U.S.$100,000,000 for which there is no
recourse to or credit enhancement from any party other than Buyer, or (2) in the
event the Clark Performance Undertaking is required pursuant to Article 29.5,
senior unsecured long-term debt securities of Clark R&M for which there is no
recourse to or credit enhancement from any party other than Clark R&M, or, on an
indicative basis, the Clark Performance Undertaking are (i) not rated at least
Baa3 by Moody's Investors Service, Inc. or BBB- by Standard & Poor's Rating
Services (or, if either such agency changes its rating system, the equivalent
successor rating applied by such agency at the time in question), (ii) placed on
credit watch for potential down-grading by either such rating agency while rated
Baa2 or lower in the case of Moody's Investors Service, Inc. or BBB or lower in
the case of Standard & Poor's Rating Services (or, if either such agency changes
its rating system, the equivalent successor rating applied by such agency at the
time in question), or (iii) not rated by at least one such rating agency, then
Seller shall have the right in its sole discretion to require Buyer to secure
its obligations to make payment for Maya under the Agreement by means of one or
more stand-by letters of credit conforming to the requirements of Article
11.4.2; provided, however, that any such letter of credit shall no longer be
required and, if outstanding, shall be returned by Seller when and if (x) in the
case of (a) above, such failure to pay has been cured in full and no other such
failure to pay has occurred during the period of three Months from such cure,
(y) in the case of (b) above, the Clark Performance Undertaking has come into
and remained in full force and effect for a period of three Months, and (z) in
the case of (c) above, the securities or obligations referred to therein become
rated Baa3 or higher by Moody's Investors Service, Inc. or BBB- or higher by
Standard & Poor's Rating Services (or, if either such agency changes its rating
system, the equivalent successor rating applied by such agency at the time in
question) or, if so rated and placed on credit watch, such ratings are
confirmed.
11.4.2 Each such stand-by letter of credit shall be: (i) irrevocable and
unconditional; (ii) established in favor of Seller; (iii) issued by Bankers
Trust Company, Bank of Boston, N.A., Toronto-Dominion Bank or such other bank,
and branch of such bank, having a net asset value of not less than two hundred
fifty million U.S. Dollars (U.S.$250,000,000) and outstanding senior debt
securities rated not less than A2 by Moody's Investors Service, Inc. and A by
Standard & Poor's Rating Services; (iv) in an amount of U.S. Dollars at all
times equal at least to the tool aggregate amount of all invoices outstanding
under the Agreement plus one hundred ten percent (110%) of the estimated invoice
value of Maya lifted by Buyer with respect to which an invoice has yet to be
issued by Seller; (v) payable, at Buyer's option, in New York, New York or
Mexico City, Mexico; (vi) in substantially the form of Annex 8 or other form
reasonably satisfactory to Seller; (vii) having an expiration which is not
sooner than sixty-two (62) Days, in the case of a letter of credit payable in
New York, or forty-two (42) Days, in the
<PAGE>
21
case of a letter of credit payable in Mexico City, from the last Day of the
Agreed Laydays for the most recent cargo to which it applies (it being
understood that, in the event the vessel in question fails to arrive within the
Agreed Laydays, the applicable letter of credit shall be extended prior to the
commencement of loading by the number of Days of delay resulting from such late
arrival); (viii) payable in whole or in part against the presentation by Seller
of a request for payment accompanied by an officer's certificate of Seller
stating that payment of the amount stated in such request is past due; and (ix)
notified to Seller not less than five Days prior to the first Day of the Agreed
Laydays for the most recent shipment to which the stand-by letter of credit
relates, unless the event referred to in Article 11.4.1 occurs within such five-
Day period, in which case the letter of credit shall be notified as soon as is
reasonably possible and, in any event, prior to the commencement of loading of
any cargo vessel.
11.5 Suspension of Deliveries. In the event that (a) Buyer fails to make
any payment in an aggregate amount of one hundred thousand U.S. Dollars
(U.S.$100,000) or more required to be made by Buyer under the Agreement, or
under any other crude oil agreement between Buyer and Seller, when and as the
same shall become due and payable, or (b) Buyer fails to establish and maintain
in accordance with Article 11.4.2 any stand-by letter of credit required by
Seller pursuant to Article 11.4.1, then (in addition to all other rights or
remedies provided to Seller hereunder or otherwise) Seller shall have the right
at its sole discretion to suspend further deliveries of Maya unless and until
Buyer makes the required payment referred to in (a) above together with any
accrued interest thereon or establishes the stand-by letter of credit required
pursuant to Article 11.4, as the case may be. In the event of such suspension by
Seller and subsequent cure by Buyer, Seller shall not be obligated to resume
delivery of Maya for a period of time following such cure equal to the shorter
of the period of suspension preceding such cure or three Months; it being
understood that Seller shall use all commercial reasonable efforts to resume
such delivery earlier.
11.6 Shipping Documents. Seller shall deliver to Buyer the shipping
documents specified in Annex 9 and an invoice, which may be sent by telex or
other electronic means, and in the event that the original bills of lading are
not delivered to Buyer on or before the due date for payment, Buyer undertakes
to pay Seller upon presentation of an invoice and a letter of indemnity sent by
telex or other electronic means, in the form of Annex 10, in lieu of the
original bills of lading until such bills of lading are delivered to Buyer.
ARTICLE 12 NO SET-OFF
----------
Without prejudice to Buyer's right subsequently to assert claims it may
have under the Agreement in arbitration proceedings pursuant to the provisions
of Article 31.2, all payments required to be made by Buyer hereunder shall be
made punctually and without set-off or deduction whatsoever (other than to the
extent of any credit memorandum issued by Seller in favor of Buyer in connection
with any quantity, quality or price dispute or of any arbitral award rendered
pursuant to Article 31.2) for any claims which Buyer or any other party may now
have or hereafter acquire against Seller.
<PAGE>
22
ARTICLE 13 NOTICE OF CLAIMS
----------------
Any claim which Buyer may have arising out of or relating to the Agreement
must be notified to Seller: (i) within sixty (60) Days after the date of the
bill of lading for the shipment involved if such claim is for demurrage (any
such claim must be accompanied by complete substantiation and a copy of the
charter party if any for the tanker); or (ii) within thirty (30) Days after the
date on which the loading of any shipment is completed, if such claim relates to
the quantity or quality of Maya in such shipment. Seller shall not be liable to
Buyer in respect of (and Buyer shall be deemed to have waived) any claim which
is not so notified to Seller, and Buyer shall reimburse Seller for any expenses,
including attorneys' fees, which Seller incurs in connection with the defense of
any such claim.
ARTICLE 14 TERMINATION BY SELLER OR BUYER
------------------------------
Anything herein to the contrary notwithstanding, either party shall have
the right (in addition to any other rights or remedies provided to such party
under the Agreement or otherwise) to terminate the Agreement in its entirety,
effective immediately upon notice to the other party, in the event that such
other party defaults in any of its material obligations under Part III, and such
default continues unremedied for a period of sixty (60) Days or, in the case of
default by Seller in its obligation to deliver Maya, such default continues for
a period of sixty (60) Days. It is expressly understood and agreed that neither
party shall have the right to terminate the Agreement based upon default of the
other party in any of its obligations under Parts II, V or VI, other than as
expressly provided in any such Part.
ARTICLE 15 EFFECT OF TERMINATION
---------------------
15.1 Termination Not to Relieve Obligations. No termination of the
Agreement, whether pursuant to Article 14 or otherwise, shall relieve either
party of its obligation to make any payment then required of it under the
Agreement or which becomes payable as the result of such termination. Any
termination of the Agreement shall not affect any right or liability of either
party that accrued during, or relates to, the period prior to such termination,
it being understood that nothing in this Article 15 shall be construed as
limiting either party's right to recover damages resulting from any such
termination.
15.2 Acceleration. In the event that Seller exercises its right to
terminate the Agreement pursuant to any provision hereof, then, anything herein
to the contrary notwithstanding, any obligation of Buyer to make any payment
hereunder for or in respect of Maya sold and delivered as of the date of
termination shall be accelerated and such payment shall become immediately due
and payable.
ARTICLE 16 FORCE MAJEURE
-------------
16.1 Relief from Liability. Neither party to the Agreement shall be
liable for demurrage, loss, damage, claims or demands of any nature arising out
of delays or defaults in performance under Parts III or V due to force majeure.
<PAGE>
23
16.2 Notice. Any party claiming force majeure shall promptly notify the
other of the occurrence of the event of force majeure relied upon. In addition,
each party shall give prompt notice to the other of the occurrence of any event
or the existence of any condition, whether the result of force majeure or
otherwise, known to it which is reasonably likely to materially and adversely
affect such party's ability to perform any of its material obligations under the
Agreement.
16.3 Payment for Mava Sold and Delivered. Nothing in this Article 16 shall
relieve Buyer of its obligation to pay in full for Maya sold and delivered
hereunder and for all other amounts due and payable to Seller from Buyer under
the Agreement.
16.4 Pro-rata Apportionment. If, as a result of force majeure, Seller at
any time does not have available a sufficient amount of Maya for export to
supply the aggregate amount of Maya to be sold by it hereunder to Buyer and
under such commitments as Seller may have with its other customers, Seller shall
not reduce the quantity of Maya sold to Buyer hereunder by a percentage greater
than the percentage by which Seller reduces the aggregate amount of its sales of
Maya to (i) other export customers under agreements to supply 50,000 BPD or more
of Maya, or (ii) in the event such agreements represent less than twenty percent
(20%) of Seller's exports of Maya, Seller's other export customers in general;
it being understood that the occurrence of an event of force majeure shall not
under any circumstances require Seller to purchase crude oil from any party to
sell to Buyer.
16.5 Extension of Guarantee Period. If an event of force majeure affecting
the delivery, lifting or processing of Maya results in a curtailment of
processing at the Refinery of more than twenty-five percent (25%) of the
Contract Quantity on average over any period of fifteen (15) consecutive Days or
more during the Guarantee Period, then the Guarantee Period shall be extended by
the number of Days necessary for the Refinery, assuming operation at Design
Capacity, to process the quantity of Maya not processed due to such curtailment;
provided, however, that the aggregate period of all such extensions shall not
exceed two hundred seventy (270) Days in respect of events of force majeure
affecting the production or delivery of Maya by Seller or the facilities at the
Loading Port, and three hundred sixty-five (365) Days in respect of events of
force majeure affecting the lifting, transportation, storage or processing of
Maya by Buyer; and, provided further, that Buyer, within thirty (30) Days
following the end of any such curtailment, shall notify Seller of the specific
event of force majeure which caused the curtailment, its duration and the number
of Barrels of Maya affected. Upon request from Seller, Buyer shall supply an
officer's certificate confirming the content of such notice.
16.6 Meaning of Force Majeure. For purposes of this Article 16, force
majeure shall include any act or event that prevents or delays the performance
by either party of its obligations under Part III and Part V if and to the
extent such act or event is beyond such party's reasonable control, not the
result of such party's fault or negligence, and such party has been unable to
overcome the consequences of such act or event by the exercise of commercially
reasonable effort, which may include the expenditure of funds. Subject to the
satisfaction of the conditions established in the previous sentence, force
majeure shall include, but not be limited to, the following acts or events, or
any similar and equally serious acts or events, which prevent or delay the
performance by a party of its obligations under Part III and Part V: acts of God
or of
<PAGE>
24
the public enemy; floods or fire; hostilities or war (whether declared or
undeclared); blockade; strikes or other labor disturbances that are not the
result of breach of a labor contract by the affected party; riots, insurrections
or civil commotion; quarantine restrictions or epidemics; electrical shortages
or blackouts; earthquakes; tides, storms or bad weather at the Loading Port;
accidents; breakdown or injury to producing or delivering facilities in Mexico
or to receiving or processing facilities at the Refinery; interruption, decline
or shortage of Seller's supply of Maya available for export from Mexico
(including, without limitation, shortage due to increased domestic demand); or
laws, change in laws, decrees, regulations, orders or other directives or
actions of either general or particular application (other than as may be
directed to aspects of the Agreement not common to long-term crude oil supply
agreements generally) of the government of Mexico or the government of the
United States of America or any agency thereof (which shall not include Seller,
Pemex Exploracion y Produccion, or any of Seller's other Affiliates) or of a
Person or authority purporting to act therefor.
PART IV: DIFFERENTIAL GUARANTEE
ARTICLE 17 SHORTFALL IN DIFFERENTIALS
--------------------------
(a) In the event that, as of the end of any Quarter all or part of which is
within the Guarantee Period, there is a Quarterly Shortfall for such Quarter,
Buyer shall receive a credit against the purchase price of Maya delivered
beginning in the succeeding Quarter (as illustrated in line M of Annex 11) equal
to the sum, if greater than zero, of the amount of such Quarterly Shortfall
minus the amount, if any, by which the aggregate of all Quarterly Surpluses for
prior Quarters exceeds the aggregate of all Quarterly Shortfalls and Credit
Interest for prior Quarters (as illustrated in line K of Annex 11).
(b) The sum, if greater than zero, of (i) such credit determined in
accordance with (a) above, plus (ii) any Credit Carryforward from such Quarter
(as illustrated in line Q of Annex 11), minus (iii) any Premium Carryforward
from such Quarter (as illustrated in line W of Annex 11), shall be applied at
the rate of U.S.$5.00 per Barrel of Maya beginning with the first Barrel
delivered in such succeeding Quarter up to a maximum aggregate amount in such
succeeding Quarter of thirty million U.S. Dollars (U.S.$30,000,000). In the
event the sum referred to in the preceding sentence hereof is less than zero,
then Buyer shall pay a premium on the purchase price of Maya delivered in the
succeeding Quarter equal to the positive value of such sum applied at the rate
of U.S.$5.00 per Barrel of Maya beginning with the first Barrel delivered in
such succeeding Quarter up to a maximum aggregate amount in such succeeding
Quarter of twenty million U.S. Dollars (U.S.$20,000,000).
(c) In the event that, as of the end of any such succeeding Quarter, there
remains an amount which has not been applied, pursuant to (b) above or the
second sentence of Article 18(b), to Maya delivered in such succeeding Quarter,
then such remaining amounts, together with interest on such remaining amount at
LIBOR plus one percent (1%) calculated for the period of such succeeding
Quarter, shall constitute a "Credit Carryforward" from such succeeding Quarter
(as illustrated in line R of Annex 11).
<PAGE>
25
(d) In the event that, as of the end of any Quarter all or part of which
is within the Guarantee Period, both the Quarterly Surplus and the Quarterly
Shortfall equal zero, and the sum of any Credit Carryforward minus any Premium
Carryforward is greater than zero, then Buyer shall receive a credit equal to
such sum, applied at the rate of U.S.$5.00 per Barrel of Maya, beginning with
the first Barrel of Maya delivered in such succeeding Quarter up to a maximum
aggregate amount in such succeeding Quarter of thirty million U.S. Dollars
(U.S.$30,000,000).
ARTICLE 18 SURPLUS IN DIFFERENTIALS
------------------------
(a) In the event that, as of the end of any Quarter all or part of which
is within the Guarantee Period, there is a Quarterly Surplus for such Quarter,
Buyer shall pay a premium on the purchase price of Maya delivered beginning in
the succeeding Quarter (as illustrated in line S of Annex 11) equal to the
lesser of (i) the amount of such Quarterly Surplus or (ii) the amount, if any,
by which the aggregate of all Quarterly Shortfalls and Credit Interest for prior
Quarters and such Quarter exceeds the aggregate of all Quarterly Surpluses for
prior Quarters (as illustrated in line L of Annex 11).
(b) The sum, if greater than zero, of (i) such premium determined in
accordance with (a) above, plus (ii) any Premium Carryforward from such Quarter
(as illustrated in line W of Annex 11), minus (iii) any Credit Carryforward from
such Quarter (as illustrated in line Q of Annex 11), shall be applied at the
rate of U.S.$5.00 per Barrel of Maya beginning with the first Barrel delivered
in such succeeding Quarter up to a maximum aggregate amount in such succeeding
Quarter of twenty million U.S. Dollars (U.S.$20,000,000). In the event the sum
referred to in the preceding sentence hereof is less than zero, then Buyer shall
receive a credit against the purchase price of Maya delivered in the succeeding
Quarter equal to the positive value of such sum applied at the rate of U.S.$5.00
per Barrel of Maya beginning with the first Barrel delivered in such succeeding
Quarter up to a maximum aggregate amount in such succeeding Quarter of thirty
million U.S. Dollars (U.S.$30,000,000).
(c) In the event that, as of the end of any such succeeding Quarter, there
remains an amount which has not been applied, pursuant to (b) above or the
second sentence of Article 17(b), to Maya delivered in such succeeding Quarter,
then such remaining amount, together with interest on such remaining amount at
LIBOR plus one percent (1%) calculated for the period of such succeeding
Quarter, shall constitute "Premium Carryforward" (as illustrated in line X of
Annex 11) from such succeeding Quarter.
(d) In the event that, as of the end of any Quarter all or part of which
is within the Guarantee Period, both the Quarterly Surplus and the Quarterly
Shortfall equal zero, and the sum of any Credit Carryforward is less than zero,
then Buyer shall pay a premium equal to the positive value of such sum, applied
at the rate of U.S.$5.00 per Barrel of Maya, beginning with the first Barrel of
Maya delivered in such succeeding Quarter up to a maximum aggregate amount in
such succeeding Quarter of twenty million U.S. Dollars (U.S.$20,000,000).
ARTICLE 19 CALCULATION OF DIFFERENTIAL GUARANTEE
-------------------------------------
<PAGE>
26
19.1 Time of Delivery. For purposes of calculating any Monthly Shortfall
or Monthly Surplus. as well as for purposes of applying any credit or premium
pursuant to Article 17 and 18, respectively, Maya shall be considered to have
been delivered on the Day on which the bill of lading for the cargo in question
was issued at the Loading Port, as reflected in such bill of lading.
19.2 Examples of the Operation of Part IV. For purposes of convenience in
interpreting the Agreement, set forth in Annex 11 are examples of the operation
of Part IV.
19.3 Quarterly Calculation. Within the first fifteen (15) Days of each
Quarter following any Quarter within the Guarantee Period, Seller shall provide
to Buyer a detailed report, substantially in the form of Annex 11, including (i)
the calculation of the Differential for the preceding Quarter, (ii) the
calculation of any Quarterly Shortfall or Quarterly Surplus for such preceding
Quarter, (iii) the application of any credit or premium to the purchase price of
Maya delivered during such preceding Quarter, (iv) any Premium Carryforward or
Credit Carryforward from such preceding Quarter, (v) the calculation of any
Credit Interest for the prior Quarter, and (vi) the amount of credits or
premiums to be applied during the current Quarter. Within ten (10) Days from
receipt of such report, Buyer shall notify Seller of any claimed discrepancy
therein and any proposed amendment thereto; it being understood that the parties
shall, in such event, undertake in good faith to resolve such discrepancy
promptly and in any event prior to the payment date of the first invoice for
Maya delivered in such Quarter. Pending the resolution of any claimed
discrepancy, Buyer shall make payment to Seller in accordance with Article 11.2
based on the calculations made by Seller pursuant to this Part IV as set out in
Seller's report.
ARTICLE 20 DIFFERENTIAL FORMULA
--------------------
20.1 Alternative Differential Calculation. In the event that (a) the
absolute value of the arithmetic average, for the immediately preceding twenty-
four (24) Month period, of the difference between (i) the Regular Price, and
(ii) the sum of (x) 0.679 multiplied by the price of No. 6 Oil (as determined
pursuant to Annex 2), plus (y) 0.185 multiplied by the sum of the price of RUL
and the price of No. 2 Oil (each as determined pursuant to Annex 2), minus (z)
2.874 (such sum, the "Maya Proxy") exceeds (b) U.S.$0.50 per Barrel for any
Month, then the price of No. 6 Oil to be used in calculating the Differential
beginning in the Month following such 24-Month period shall be equal to the sum
of (x) 1.473 multiplied by the Regular Price, plus (y) 4.233, minus (z) 0.272
multiplied by the sum of the price of RUL and the price of No. 2 Oil.
20.2 Reinstatement of Differential Calculation. In the event an
alternative Differential formula becomes applicable pursuant to Article 20.1 and
thereafter the absolute value of the arithmetic average, for the immediately
preceding twenty-four (24) Month period, of the difference between the Regular
Price and the Maya Proxy is equal to or less than U.S.$0.50 per Barrel, then the
price of No. 6 Oil to be used in calculating the Differential beginning in the
Month following such 24-Month period shall be as determined pursuant to Annex 2.
<PAGE>
27
PART V: DELIVERY TERMS
ARTICLE 21 ARRIVAL PROCEDURES AND LIFTING
------------------------------
21.1 Lifting Program.
---------------
21.1.1 At least fifteen (15) Days before the end of each Month, Buyer
shall furnish Seller with a lifting program for the following two Months and a
preliminary lifting program for the next Month thereafter. Such lifting programs
shall be integrated with any such programs for Maya under any other crude oil
agreement between Seller and Buyer or its Affiliates and, accordingly, the
Contract Quantity may be lifted in cargoes together with quantities of Maya so
nominated under such other crude oil supply agreement. Such lifting programs
shall specify the following:
(a) the quantity of Maya to be lifted in each such Month;
(b) a three-Day range for the arrival of each tanker;
(c) the quantity of Maya to be lifted by each tanker;
(d) the port of discharge of each cargo; and
(e) in the case of the lifting program for the following Month, (i) the
name, size and dimensions of tankers designated for lifting during such Month
and (ii) the names of the tanker's agent and Buyer's representative.
21.1.2 If the name of a tanker is not known at the time the lifting
program for the following Month is furnished to Seller, Buyer shall notify
Seller of such name and the other data referred to in Article 21.1.1(e) as soon
as possible, but in any event not later than three Business Days prior to the
first Day of the Agreed Laydays for the unspecified tanker. In no event shall
Seller be liable for deadfreight if Buyer provides a tanker larger than that
required to lift the quantity of Maya scheduled to be lifted hereunder. If Buyer
does not furnish Seller with a lifting program complying with the requirements
of Article 2.1.1 for the following Month within the period specified above,
Buyer shall be required to accept the lifting program for such Month established
by Seller.
21.1.3 Seller shall be deemed to have accepted Buyer's lifting program
for the following Month unless Seller has notified Buyer of alterations thereto
at least five Days prior to the beginning of such Month. Seller shall in any
event notify Buyer within such time period of the Loading Ports to be used by
Buyer's tankers (subject to adjustment as provided in Article 21.1.5) and the
name(s) of the independent inspector(s) nominated by Seller for purposes of
Article 23.1 and Article 24.1. If Seller timely so notifies Buyer of alterations
to the lifting program, Buyer shall be deemed to have agreed to those
alterations unless, within three Days after Buyer's receipt of Seller's notice,
Buyer requests Seller to reconsider such alterations. Seller's decision
following any such reconsideration shall be final and binding on both parties.
Buyer may also notify Seller within such three-Day period that it objects to an
independent
<PAGE>
28
inspector nominated by Seller. In such case, Seller shall select
another independent inspector. The lifting program as finally determined
pursuant to the provisions of Article 21.1.1 and this Article 21.1.3 for any
Month is referred to herein as the "Agreed Lifting Program" for such Month, and
the three-Day range for the arrival of any tanker contained in any Agreed
Lifting Program is referred to herein as the "Agreed Laydays" for such tanker.
21.1.4 In working toward each Agreed Lifting Program, the parties shall
cooperate with one another and exercise all commercially reasonable efforts to
ensure that each such Agreed Lifting Program provides that Seller will deliver
and Buyer will lift Maya ratably with the minimum objective that not less than
thirty-five percent (35%) of the Contract Quantity (subject to operational
tolerance pursuant to Article 8.2) for any Month be lifted in any period of
fifteen (15) Days within such Month.
21.1.5 Seller may notify Buyer that any tanker scheduled in an Agreed
Lifting Program shall load Maya at a Loading Port different from (but on the
same coast as) the Loading Port previously specified pursuant to Article 21.1.3
or shall load Maya at two Loading Ports (on the same coast), provided that such
notice is given by Seller (i) at least twenty-four (24) hours prior to the ETA
of such tanker, if Buyer has notified Seller of an ETA falling within or after
its Agreed Layday, or (ii) at least twenty-four (24) hours prior to the first
Day of the Agreed Laydays, if Buyer has notified Seller of an ETA which is
earlier than the first Day of the Agreed Laydays.
21.2 Substitution of Tankers. Buyer shall be entitled to substitute
another tanker for any tanker designated in an Agreed Lifting Program; provided,
however, that the substitute tanker shall have substantially the same
characteristics (including carrying capacity) as the tanker previously nominated
and accepted pursuant to Article 21.1 and shall meet the requirement for vessels
loading at the particular Loading Port involved; and provided, further, that
Buyer shall give Seller notice of the substitution not less than three Days
prior to the first Day of the Agreed Laydays for the substituted tanker. In the
event that Buyer substitutes a tanker other than in accordance with the
provisions of this Article 21.2, Seller may in its sole discretion refuse to
load such tanker, it may load such tanker at any Loading Port on any Day it may
specify, whether or not within the Agreed Laydays for such tanker; Seller shall
in no event be liable for demurrage, deadfreight or any other charges with
respect to the loading of any such tanker.
21.3 Advice of ETA. Buyer shall arrange for each tanker to advise the
Loading Port operator (through the communication frequencies listed in Annex 12)
and Seller of its ETA at each of the following times:
(a) immediately upon leaving its last port of call before the Loading
Port, if such departure is more than seventy-two (72) hours prior to ETA at the
Loading Port;
(b) seventy-two (72) hours before ETA;
(c) forty-eight (48) hours before ETA;
<PAGE>
29
(d) twenty-four (24) hours before ETA; and
(e) twelve (12) hours before ETA.
Seller shall not be liable for demurrage, deadfreight or any other charges in
respect of any delay in loading attributable to the failure of a tanker to give
notice of its ETA at any of the times enumerated above.
21.4 Notice of Readiness. The Buyer, its representative or the Master of
the tanker (who shall be deemed to be acting on Buyer's behalf) shall, during
the hours in which the Loading Port is open, give Seller or Seller's agent, and
the Loading Port operator, notice of the readiness of the tanker to load. Notice
of readiness shall not be given until the tanker (i) has anchored at the
customary area at the Loading Port, (ii) has been granted free pratique, (iii)
has received the necessary clearance by customs and all other governmental
authorities, and (iv) is ready in all other respects to load; provided, however,
that notice of readiness may be given before the conditions specified in clauses
(ii) and (iii) above have been satisfied if, in accordance with the practice at
the Loading Port, such conditions may be satisfied only after the tanker has
been brought to the loading point. If, notwithstanding having tendered notice of
readiness, the tanker is found not to be ready to load, such notice of readiness
will be disregarded and Buyer shall be obligated to give a new notice of
readiness when it is in fact ready to load.
21.5 Oil Pollution. Buyer shall ensure that each vessel used for loading
Maya under the Agreement (i) is owned by a member of the International Tanker
Owners Pollution Federation Limited, (ii) is covered, without expense to Seller,
by insurance protecting against any and all liabilities from pollution issued by
an internationally recognized Protection and Indemnity Association in an amount
not less than seven hundred million U.S. Dollars (U.S.$700,000,000), or such
greater amount as may become available in the insurance market and generally
obtained by prudent owners of similar vessels, and (iii) carries all
certificates required by applicable laws for the carriage of petroleum and
petroleum products in Mexican waters and in international ocean transportation
and for conducting cargo operations at the Loading Ports, including, without
limitation, as required under the Convention on Civil Liability for Oil
Pollution Damage of 1969. Buyer shall further ensure that each vessel used for
loading Maya is in full compliance with the requirements of the International
Management Code for the Safe Operation of Ships and for Pollution Prevention.
Seller may at its sole option place pollution control personnel on board Buyer's
vessels to observe cargo loading and related operations. Seller's representative
may render advice to Buyer, its representative or the Master (who shall be
deemed to be acting on Buyer's behalf), and may assist them in the avoidance of
any type of pollution; provided, however, that Buyer shall remain fully
responsible for any action taken by it or on its behalf.
ARTICLE 22 LOADING CONDITIONS: DEMURRAGE
-----------------------------
22.1 Berthing of Tankers; Commencement of Laytime.
--------------------------------------------
22.1.1 Subject to the provisions of Articles 22.1.2 and 22.1.3, Seller
shall provide a safe loading point at the Loading Port for each tanker
designated in accordance with
<PAGE>
30
the provisions of Article 21, which loading point may be a berth, dock,
anchorage, sea terminal, sea-buoy mooring, submarine loading line or other
place, including alongside lighters, any floating storage and offloading system
or other vessel. In the event that a tanker arrives within its Agreed Laydays,
then laytime shall commence at the earlier of (i) six hours after notice of
readiness is given or (ii) the commencement of loading; provided, however, that
in the event notice of readiness is given within the last two hours in which the
Loading Port is open or during the time the Loading Port is closed, then only
half of the time from the giving of notice to the time when the Loading Port
next opens shall be counted for purposes of (i) above and for purposes of
determining Allowed Laytime.
22.1.2 Seller shall not be obligated to provide a loading point for any
tanker arriving after the last Day of its Agreed Laydays. If such tanker is
permitted to berth, laytime shall commence at the commencement of loading.
Regardless of whether such tanker is permitted to berth, Seller shall in no
event be liable for demurrage, deadfreight or other charges in connection with
the loading thereof.
22.1.3 Seller shall not be obligated to provide any tanker arriving prior
to its Agreed Laydays with a loading point until the first Day of its Agreed
Laydays. Notwithstanding the time at which loading begins, if Seller provides
such tanker with a loading point prior to the first Day of its Agreed Laydays,
laytime shall commence at the earlier of (i) six hours after the Loading Port
opens on the first Day of the Agreed Laydays for such tanker or (ii) the
commencement of loading.
22.2 Shifting Loading Point of Tankers. Seller shall have the right to
shift tankers at the Loading Port from one loading point to another, provided
that all expenses incurred in connection therewith shall be borne by Seller and
all time expended in such shifting of tankers shall count as laytime.
Notwithstanding the provisions of the preceding sentence, the expenses incurred
in connection with a shifting of any tanker which is attributable to one of the
events referred to in Article 22.4 shall be borne by Buyer, the time consumed
during such shifting shall not count as laytime, and Seller shall not be
obligated to provide such tanker with a loading point until a loading point
becomes available.
22.3 Allowed Laytime. The Allowed Laytime for tankers loading up to
500,000 Barrels of Maya shall be thirty-six (36) hours. The Allowed Laytime for
tankers loading more than 500,000 Barrels of Maya shall be the number of hours
calculated as follows:
Step 1: subtract 500,000 from the number of Barrels to be loaded;
Step 2: multiply the amount calculated as provided in Step 1 by
0.0000272;
Step 3: add 36 to the amount calculated as provided in Step 2; and
Step 4: round the amount calculated as provided in Step 3 to the nearest
whole number.
<PAGE>
31
Allowed Laytime shall cease upon the disconnection of delivery hoses after the
completion of loading. In the event that Seller has agreed to load a tanker at a
single Loading Port with Maya for both Buyer and one or more other customers of
Seller, then (i) the Allowed Laytime for such loading shall be the Allowed
Laytime applicable to the aggregate amount of Barrels loaded for Buyer and such
other customer or customers and (ii) the time consumed in switching from loading
for Buyer to loading for Seller's other customer or customers, or vice versa,
shall not be counted as used laytime. In the event that an Agreed Lifting
Program provides for loading of Buyer's tanker at two Loading Ports, or Seller
notifies Buyer pursuant to Article 21.1 that loading shall be at two Loading
Ports, the Allowed Laytime shall be the Allowed Laytime applicable to the
aggregate amount of Maya to be loaded.
22.4 Adjustments to Laytime. In the event that the loading of any
tanker is delayed, directly or indirectly, for any of the following reasons,
whether occurring prior to, during, or after the berthing or commencement of
loading of the tanker:
(a) regulations or decisions of Buyer, or of the owner or operator of
the tanker, prohibiting or restricting loading at any time;
(b) lightering at Buyer's request;
(c) delay or suspension in loading due to failure of Buyer to comply
with any provision of the Agreement, including, without
limitation, the failure of Buyer to provide and notify Seller of
any letter of credit pursuant to Article 11.4 or Article 11.5;
(d) more than one stoppage in loading as a result of Buyer's
instructions as to distribution of the Maya in the tanker;
(e) discharge of ballast or slops;
(f) the condition or facilities of the tanker, or any other reason
attributable to or within the reasonable control of Buyer or the
tanker;
(g) regulations of the Loading Port operator, port authorities or the
Government of Mexico or any political subdivision or agency
thereof, including, but not limited to, regulations or decisions
closing the Loading Port, prohibiting night traffic or berth
maneuvering or prohibiting or restricting loading for any reason;
(h) customs or customs clearance procedures, or time required in
order to be granted free pratique;
(i) inspection, gauging and measurement of tanks or valves before,
during and after loading;
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32
(j) maneuvering of tanker from anchorage until all fast at the
loading point, beginning with the earlier of pilot on board or
anchor aweigh;
(k) bad weather, rough seas, fires or explosions; or
(l) any of the events listed in Article 16.6 and not specifically
listed above, or any other event of force majeure;
then the amount of time during which the loading of such tanker is so delayed
shall not count as laytime, except that, in the case of (i) above, one half the
amount of time during which the loading of such tanker is so delayed shall not
count as laytime.
22.5 Demurrage. Seller shall pay Buyer demurrage for any hour or
part of an hour of laytime in excess of the Allowed Laytime for the tanker
involved, at a rate equal to (a) in the case of a tanker under time charter, the
lower of (i) the rate determined by multiplying the AFRA for a hypothetical
tanker with a deadweight in metric tons equal to the weight in metric tons of
the Maya loaded times the WORLDSCALE rate for such hypothetical tanker and (ii)
the rate determined by multiplying the AFRA for the deadweight in metric tons of
the tanker times the WORLDSCALE rate for such deadweight, and (b) in the case of
a spot chartered or voyage chartered tanker, the rate specified in the charter
party for such tanker. For all loadings that commence during a particular Month,
the applicable AFRA shall be the one that is determined on the basis of freight
assessments for the period ended on the fifteenth Day of the preceding Month. In
the event that WORLDSCALE or AFRA is interrupted, or its structure changed so as
no longer to represent the relevant conditions under the Agreement, Seller and
Buyer shall consult and agree on another rate for the evaluation of the
demurrage in question. The right of Buyer to demurrage pursuant to this Article
22.5 shall constitute Buyer's exclusive remedy with respect to any failure of
Seller to complete the loading of any tanker within the Allowed Laytime.
22.6 Buyer's Liability for Delay and Damage.
22.6.1 Buyer shall pay Seller at the rate of U.S.$1,000 per hour for
each hour or part thereof that loading is delayed due to any of the reasons
specified in clause (a), (b), (c), (d), (e) (but only to the extent that more
than six hours are expended in discharging ballasts or slops) or (f) of Article
22.4.
22.6.2 Each tanker shall clear berth as soon as loading is completed
and the delivery hoses are disconnected. Buyer shall pay Seller at the rate of
U.S.$1,000 per hour for each hour or part thereof in excess of two hours that
the tanker remains in berth subsequent to completion of loading and
disconnection of the delivery hoses; provided, however, that such delay is
caused by Buyer or the tanker.
22.6.3 In the event that for any reason Buyer's tanker causes damage
to any facilities at the Loading Port, then (i) Buyer shall reimburse Seller for
the cost of repair or replacement of such facilities, (ii) any delay in loading
the tanker as a result of such damage shall not be counted as laytime for such
tanker, and (iii) Buyer shall pay Seller at the rate
<PAGE>
33
U.S.$1,000 per hour for each hour or part thereof that any loading point may not
be used as a result of such damage. Should any such damage occur, Buyer shall
post such security for the payments provided in the preceding sentence as Seller
may request, it being understood that Seller may detain the tanker at the
Loading Port until such security shall have been posted.
ARTICLE 23 QUANTITY MEASUREMENTS
---------------------
23.1 Determination of Quantity. The volume of each loading of Maya
shall be determined by an independent inspector selected as provided in Article
21.1.3, whose fees shall be shared equally by the parties. Measuring and gauging
shall be performed in accordance with one of the following measurement systems
in decreasing order of preference, depending on the operational conditions
prevailing at the Loading Port involved. Seller and Buyer or their respective
representatives may witness the taking of the measurements.
(a) Flow meters installed on loading lines: Such meter measurements
shall be taken immediately before, during and after loading. When measurements
are made with positive displacement meters, the meters and associated
measurement testers will be installed, maintained and calibrated according to
the latest revision of API-Manual of Petroleum Measurement Standards ("MPMS"),
Chapter 5.2 "Measurement of liquid hydrocarbons by displacement meters." If
turbine meters are used, gauging will follow the latest revision of API-MPMS,
Chapter 5.3 "Measurement of liquid hydrocarbons by turbine meters" for the
meters and measurement testers.
(b) Shore tanks: The shore tanks shall have been calibrated on a
periodic basis according to the latest revision of API-MPMS, Chapters 2 and 3,
by an independent inspector selected by Seller, who shall have certified the
calibration. Volume measurements shall follow the latest revision of API
procedure STD 2S4S or ASTM 1085, at Seller's choice.
(c) Volume measured on board: Volume measurement on board the vessel
shall be made in accordance with the latest edition of the API-MPMS, Chapter 17
"Marine Measurement," on the basis of at least three measurements for each tank.
The onboard quantity (including free water) measured prior to loading shall be
deducted from the total observed volume measured after loading. Volume
corrections in respect of temperature shall then be effected at 60 (degrees) F
(equivalent to 15.56 (degrees) C) in accordance with ASTM-1250 or API-MPMS,
Chapter 11.1, at Seller's choice, thereby arriving at the gross standard volume.
Such gross standard volume shall then be further corrected by multiplying it by
the current vessel experience factor for the vessel, determined as follows:
Step 1: for at least the last five (5) loading operations for crude oil,
divide (i) the total calculated volume loaded during each such
operation as measured on shore in static shore tanks or by flow
proportional meters in accordance with the API or ASTM procedures
described above by (ii) the corresponding total calculated volume
loaded as measured on board in accordance with such procedures
(it being understood that Seller may require verification of the
volume figures provided by Buyer);
<PAGE>
34
Step 2: shore/ship ratios calculated as provided in Step 1 shall be
accepted if they fall within the following ranges: (i) 1.000
(+/-) 0.0050 for tankers having a deadweight of up to 100,000
metric tons, and (ii) 1.000 (+/-) 0.0030 for tankers having a
greater deadweight; and
Step 3: calculate the arithmetic average of the figures produced in Step
1 that have been accepted in Step 2;
the average calculated in Step 3 being the vessel experience factor for the
vessel; provided, however, that (i) for purposes of Step 1 above, the first
voyage after any drydock, voyages before the last drydock which involved a
material change in the vessel tanks, and voyages involving lightering, on-carry
loadings, multiple loadings, or loadings of less than seventy-five percent (75%)
of total capacity, will not be considered, and (ii) if there are less than five
shore/ship ratios that are accepted pursuant to Step 2 above, the vessel
experience factor will be 1.000. S & W, determined in the manner provided in
Article 24, shall then be deducted from the volume determined above in order to
arrive at the volume for purposes of the bill of lading and the invoice.
23.2 Volume Corrections for Temperature. Except in the case that
quantity measurements are made pursuant to the provisions of Article 23.1(c), in
which case temperature corrections shall be made in the manner and at the time
specified in that Article, temperature readings shall be taken in accordance
with the methods listed below in decreasing order of preference, depending on
operational conditions prevailing at the Loading Port involved: (i) the average
of the temperatures taken at various times during loading at flow meters; and
(ii) the temperature taken in shore tanks. Temperature corrections at 60/o/ F
(equivalent to 15.56/o/ C) will then be effected for all volume determinations
in accordance with ASTM-1250 or API MPMS, Chapter 11.1, at Seller's choice,
provided that temperature corrections shall not be made in the case that volume
is determined by way of flow meters pursuant to Article 23.1(a) and temperature
compensators at 60/o/ F (equivalent to 15.56/o/ C) are integrated into the meter
system. S & W, determined in the manner provided in Article 24, shall be
deducted from the volume corrected for temperature as provided above in order to
arrive at the volume for purposes of the bill of lading and invoice.
23.3 Conclusiveness of Measurements. Quantity and temperature
measurements made by the independent inspector as provided in this Article 23
shall be final and binding on the parties, except in the case of manifest error.
In any event, without prejudice to the right of either party subsequently to
demonstrate manifest error in such measurements, the determination of the
independent inspector shall govern for purposes of the quantity stated in the
bill of lading and the obligation of Buyer to make payment in accordance with
the provisions of Article 11.
ARTICLE 24 QUALITY
-------
24.1 Determination of Quality. Sampling and testing of the Maya loaded
in each shipment for quality shall be done in accordance with the latest
revision of ASTM procedures D-4057-88 or D-4177, at Seller's choice, and
witnessed by an independent inspector
<PAGE>
35
selected as provided in Article 21.13, whose fees shall be shared equally by the
parties. Buyer and Seller or their representatives may witness the taking and
testing of samples. Quality shall be determined by using the methods listed
below in decreasing order of preference, depending on the operational conditions
prevailing at the Loading Port involved: (i) from samples drawn from automatic
samplers installed in the loading lines; (ii) from samples drawn from the
storage shore tanks delivering Maya; or (iii) from a composite sample obtained
in proportional parts from the vessel's tanks. The samples thus drawn shall be
mixed and equally filled in four containers of one Gallon each. Two of such
containers shall be sealed and handed over to the Master of the tanker and two
shall be kept by Seller for ninety (90) Days after the date of the bill of
lading.
24.2 Analysis of Samples. The independent inspector shall witness
quality tests for sulfur, salt and reid vapor pressure on the samples according
to the latest revision of ASTM or API procedures, at Seller's choice. Gravity
tests on all Maya shall be made in accordance with the latest revision of
API-MPMS, Chapter 9, Section 1 or ASTM procedures D-1298-80, at Seller's choice.
S & W shall be established in each case pursuant to the latest revision of
ASTM-D-4007 or API-MPMS, Chapter 10-3, at Seller's choice, in tests witnessed by
the independent inspector. Quality tests conducted in accordance with the above
provisions shall be final and binding upon the parties, except in the case of
manifest error.
24.3 No Warranties. Seller does not guarantee or warrant the
suitability of the Maya for any purpose whatsoever. Buyer hereby releases Seller
from any and all warranties whatsoever (except for Seller's warranty that the
Maya meets the typical characteristics contained in Annex 3), including, without
limitation, any implied warranties of merchantability or fitness for a
particular purpose.
ARTICLE 25 DELIVERY
--------
25.1 Passing of Title. Delivery of Maya shall be made in bulk to Buyer
F.O.B. the applicable Loading Port to tankers to be provided by Buyer. Delivery
shall be deemed completed when Maya passes the flange connection of the delivery
hose at the tanker's rail. At that point, Seller's responsibility with respect
to the Maya shall cease, and Buyer shall assume all risk of loss of or damage
to, and deterioration or evaporation of, Maya so delivered. Any loss of or
damage to Maya or any property of Seller or of any other Person during loading
which is in any way attributable to the tanker or its officers or crew shall be
borne by Buyer.
25.2 Port and Loading Expenses. All expenses ashore pertaining to the
pumping of Maya from shore tanks to tankers shall be borne by Seller, including,
but not limited to, wharfage, dockage and quay dues at the Loading Port. Seller
shall also pay all export taxes or duties imposed by Mexico or any political
subdivision or taxing authority thereof. All other expenses pertaining to the
loading of any tanker, including, without limitation, all tanker agency fees,
anchorage, tonnage, towage, pilotage, customs, consular, entrance, clearance and
quarantine fees, port dues and all charges and expenses relating to berthing and
unberthing of tankers, shall be borne by Buyer.
25.3 Loading Port Regulations. All laws, rules and regulations now or
hereafter in existence relating to operations at the Loading Ports (including
those referred to in
<PAGE>
36
Annex 13), shall apply to all tankers provided by Buyer, including, without
limitation, any regulations relating to (i) the prevention and control of fires
and water pollution, and (ii) lead-free and segregated or clean ballast. Buyer
shall reimburse Seller or its agent for any expenses they may incur as a result
of the noncompliance by any such tanker with any such applicable law, rule or
regulation, including, without limitation, any expenses incurred by Seller or
its agent in connection with the extinguishing of fires, the repair of damage
caused thereby, the cleaning up of water pollution and the payment of any
charges assessed by the Government of Mexico or any political subdivision or
agency thereof.
25.4 Buyer's Knowledge of Loading Port Facilities; Standard
Procedures. Buyer hereby acknowledges that it is fully familiar with the
facilities and conditions at the Loading Ports, including the loading conditions
and procedures and the facilities for the storage and delivery of the Maya.
Annex 13 contains certain information and current requirements relating to the
Loading Ports. The facilities and conditions at the Loading Ports may be changed
at any time. Buyer also acknowledges that standard procedures in effect at the
Loading Ports from time to time relating, inter alia, to quality and quantity
measurements, safety in loading, and inspection of vessel tanks, shall
supplement (but not conflict with) the procedure specified herein. Seller shall
supply Buyer with a copy of such procedures upon Buyer's request.
PART VI: MISCELLANEOUS TERMS
ARTICLE 26 DURATION
--------
Unless previously terminated pursuant to the termination provisions
contained herein, the Agreement shall continue in effect unless and until the
Contract Quantity is reduced to zero pursuant to Article 7.2.
ARTICLE 27 SATISFACTORY DOCUMENTATION
--------------------------
Each party shall deliver to the other, on the date hereof, each of the
following: (i) a list of those individuals authorized to represent such party in
its dealings with the other party; (ii) certificates of the Secretary or other
similar officer of the party certifying as to the incumbency of each officer
executing the Agreement on behalf of the party; and (iii) documentation
evidencing the authority of each officer executing the Agreement on behalf of
the party to act in such capacity. Each party shall at all times keep current
the list described in clause (i) of this Article 27 and promptly furnish to the
other party such other information or documentation concerning the financial and
corporate status of the party and its Affiliates as the other party may from
time to time reasonably request.
ARTICLE 28 CONFIDENTIALITY
---------------
28.1 General Confidentiality Obligation. The parties agree that the
terms of the Agreement and any other information with respect to the business
and operations of the parties related to the Agreement and disclosed by one
party to the other (such terms and information, subject to the exclusions stated
below, the "Confidential Information"), shall be treated
<PAGE>
37
confidentially as provided in this Article 28, it being understood that the
disclosure of such Confidential Information would threaten significant economic
harm to the Nondisclosing Party. The obligations of confidentiality under this
Article 28 shall be of a continuing nature and shall survive the assignment or
termination of the Agreement. Subject to Article 28.2 and the additional
provisions of this Article 28.1, Confidential Information shall not be disclosed
by either party or its respective Affiliates (a "Disclosing Party") without the
prior written consent of the other party (the "Nondisclosing Party"). Except as
otherwise provided with respect to Confidential Differential Information, the
obligation hereunder not to disclose Confidential Information shall not apply
to:
(i) information that is publicly known or publicly disclosed
other than by reason of a breach of this Article 28 by the Disclosing
Party;
(ii) the disclosure of Confidential Information that a Disclosing
Party determines in good faith and on the advice of counsel is
required to be disclosed by it or by any of its Affiliates by any
court of law or any law, rule, or regulation, or, if requested by such
agency, to an agency of any government having or asserting
jurisdiction over a Disclosing Party or an Affiliate of such
Disclosing Party and having or asserting authority to require such
disclosure in accordance with that authority, or pursuant to the rules
of any recognized stock exchange or agency established in connection
therewith, provided that the Disclosing Party uses good faith efforts
to assure, to the extent reasonably available in the circumstances,
the confidential treatment of such Confidential Information by the
party to which it is disclosed (including, without limitation, in the
case of the United States Securities and Exchange Commission (the
"Commission"), making requests for confidential treatment). In
connection with the filing of a confidential treatment request with
the Commission, Buyer shall provide Seller with reasonable opportunity
to review and comment upon such confidential treatment request prior
to the submission of such request or the Agreement to the Commission.
In the event that such confidential treatment request is rejected, or
if confidential treatment was granted pursuant to such confidential
treatment request but later challenged, Buyer shall inform and consult
with Seller immediately;
(iii) the disclosure, whether in any press release or otherwise,
of the existence of the Agreement and of the general terms hereof, it
being understood that the terms of Articles 4.4, 5 (other than the
fact that Buyer has certain rights to terminate the Agreement), 8,
10.2, 10.3, 10.4, 11.4, 11.5, 16, 21.1.4, 29.4, 29.5, 29.6 and Part
IV, and of the definitions and Annexes referred to therein and
essential thereto, shall not be so disclosed under this clause (iii);
(iv) the disclosure in the ordinary course of business of
Confidential Information to the Disclosing Party's legal counsel,
accountants, investment bankers, commercial bankers or other
professional consultants, in each case with such protections of
confidentiality as generally apply thereto or are customarily
available by agreement therewith;
<PAGE>
38
(v) the disclosure of Confidential Information to investment or
commercial bankers, underwriters, placement agents or other parties
engaged in connection with a securities offering or other financing by
any Disclosing Party or any Affiliate of any Disclosing Party, in any
offering memorandum or prospectus or similar document in connection
with any such offering of securities, and to any securities analyst
involved in research with respect to securities of the Disclosing
Party, in each case with such protections of confidentiality apply
thereto or are customarily available by agreement therewith;
(vi) the disclosure of Confidential Information to the purchasers
or prospective purchasers under any contracts for the sale of the
output of the Project or the further refined products derived from
such output to the extent reasonably necessary for purposes of such
sale, provided that such purchasers or prospective purchasers agree to
hold such Confidential Information under terms of confidentiality
equivalent to this Article 28 and to use such Confidential Information
only in connection with such sale;
(vii) the disclosure of Confidential Information to its
Affiliates, its shareholders, or its shareholders' Affiliates,
provided that such recipient agrees to hold such information or
documents under terms of confidentiality equivalent to this Article
28;
(viii) the disclosure of Confidential Information to any
purchaser or prospective purchaser of the Refinery or of a direct or
indirect interest therein (including, without limitation, an equity
interest in Buyer, Clark R&M or Clark U.S.A., Inc.), provided that
such purchaser or prospective purchaser agrees to hold such
Confidential Information under terms of confidentiality equivalent to
this Article 28;
(ix) the disclosure of Confidential Information to any
governmental authority or agency, to the extent such disclosure
assists Buyer in obtaining any Permits, provided the Disclosing Party
makes such authority or agency aware of the confidential nature of
such Confidential Information and uses good faith efforts to assure,
to the extent reasonably available in the circumstances, the
confidential treatment of such Confidential Information by such
authority or agency;
(x) the disclosure of Confidential Information to any credit
rating agency from whom a rating is sought with respect to any debt or
equity securities of Buyer, Clark U.S.A., Inc. or any successor
thereof, Clark R&M, or any of their respective direct or indirect
wholly-owned subsidiaries or any present or future parent entity
thereof, in each case with such protections of confidentiality as may
generally apply thereto or as may be available by agreement therewith;
(xi) the disclosure of Confidential Information to which the Non-
Disclosing Party consents, which consent shall not be unreasonably
withheld
<PAGE>
39
or delayed, it being understood that it shall not be unreasonable for a
Nondisclosing Party to refuse such consent based upon a good faith
determination that the disclosure could jeopardize such Nondisclosing
Party's legitimate business or commercial interests; or
(xii) the disclosure of Confidential Information occurring after the
later of the Day on which the Agreement terminates and the Day which is ten (10)
Years from the date hereof.
28.2 Confidentiality of Differential Information. (a) Except as
hereinafter provided, neither the formula for the Differential set out in Annex
2 nor the U.S.$15.00 amount contained in the definitions of Monthly Shortfall
and Monthly Surplus (such formula and amount, the "Confidential Differential
Information") may be communicated by Buyer or any of its Affiliates to any third
party at any time during the period commencing on the date hereof and ending on
September 1, 1998 (the "Blackout Period") without the prior written consent of
Seller. The foregoing notwithstanding, Buyer shall have the right to disclose
Confidential Differential Information during the Blackout Period without
obtaining the prior written consent of Seller in the following circumstances:
(i) in any of the circumstances set out in clauses (i), (iv), (vii),
(viii) or (x) of Article 28.1;
(ii) where Buyer determines in good faith that such Confidential
Differential Information is required to be disclosed by it or by any of its
Affiliates by any court of law or any law, rule, or regulation, or if
requested by such agency, to an agency of any government having or
asserting jurisdiction over Buyer or an Affiliate thereof and having or
asserting authority to require such disclosure in accordance with that
authority, or pursuant to the rules of any recognized stock exchange or
agency established in connection therewith; provided that (x) such
disclosure is mandatory for such Disclosing Party or such Disclosing Party
is advised in writing by counsel that disclosure is necessary or advisable
under a prudent interpretation of applicable law, (y) such Disclosing Party
gives Seller prompt and timely notice of the impending disclosure, and (z)
to the extent available under the laws, rules or regulations applicable to
the entity to which the disclosure is made, the Disclosing Party uses
reasonable good faith efforts to assure the confidential treatment of such
information by such entity (including, without limitation, in the case of
the Commission, making requests for confidential treatment). In connection
with the filing of any confidential treatment request with a governmental
entity, Buyer shall provide Seller with reasonable opportunity to review
and comment upon any such confidential treatment request prior to the
submission of Confidential Differential Information to any such entity. In
the event that such confidential treatment request is rejected, or if
confidential treatment was granted pursuant to such confidential treatment
request but later challenged, Buyer shall inform and consult with Seller
immediately;
<PAGE>
40
(iii) where such disclosure is (x) to the lead underwriters and co-
managers or lead placement agents and co-placement agents engaged in
connection with, or any credit rating agency from whom a rating is sought
with respect to, any debt or equity securities offering by Buyer, Clark
U.S.A., Inc., Clark R&M or any of their respective direct or indirect
wholly-owned subsidiaries, provided each such lead underwriters, co-
managers, lead placement agents, co-placement agents or rating agencies
execute confidentiality agreements with Buyer in a customary form with
respect to such Confidential Differential Information, or (y) to one or
more investment banks or securities firms, for use only in connection with
research, analysis or recommendations with respect to any debt or equity
securities of Buyer, Clark U.S.A., Inc., Clark R&M or any of their
respective subsidiaries, provided such investment banks or securities firms
execute confidentiality agreements with Buyer in a customary form with
respect to such Confidential Differential Information. Such lead
underwriters and co-managers or lead placement agents and co-placement
agents may incorporate the Confidential Differential Information into the
financial models and projections used in connection with such securities
offering (including in projections included in any prospectus or offering
memorandum) and may keep such Confidential Differential Information in
their files with respect to their due diligence investigation with respect
to such offering, but may not disclose such Confidential Differential
Information to the other syndicate underwriters or placement agents in
connection with such securities offering during the Blackout Period; or
(iv) to any commercial bank engaged in a financing by any Disclosing
Party or any Affiliate of any Disclosing Party, provided each such
commercial bank executes a confidentiality agreement with Buyer in a
customary form with respect to such Confidential Differential Information.
(b) Nothing contained in this Article 28.2 is intended to include within
the definition of Confidential Differential Information: (i) the fact that a
formula exists for the Differential, the fact that a mechanism exists for
adjusting the price of Maya if the Differential is above or below a set level,
(iii) any annual aggregate value projected to be received in connection with the
Differential, or (iv) any other information related to the Confidential
Differential Information other than the matters expressly included in the
definition thereof.
ARTICLE 29 NO THIRD PARTY BENEFICIARIES; ASSIGNMENT
----------------------------------------
29.1 No Beneficiaries. Nothing in the Agreement is intended or shall be
construed to confer upon or give to any Person any rights as a third party
beneficiary of the Agreement or any part thereof, except as may apply pursuant
to Article 29.6.
29.2 Successors and Assigns. The Agreement shall be binding upon and
inure to the benefit of Buyer and Seller and their respective successors and
permitted assigns.
29.3 General Prohibition on Assignments. Neither Buyer nor Seller may
assign or transfer any of its rights or obligations under the Agreement, except
as expressly
<PAGE>
41
permitted in Articles 29.4 and 29.6. For purposes of this Article 29, a merger,
consolidation or conveyance of substantially all of the assets of Buyer or
Seller shall not be deemed an assignment or transfer.
29.4 Permitted Assignments by Seller. Article 29.3 notwithstanding,
Seller may assign all (but not less than all) of its rights and obligations
under the Agreement if all of the following conditions are met: (i) such
assignment is to an Affiliate Seller having the legal right and operational and
financial ability to perform all of Seller's obligations under the Agreement;
(ii) the assignee shall have entered into an assumption agreement, in form and
substance reasonably satisfactory to Buyer, containing provisions whereby the
assignee confirms that it shall be deemed a party to the Agreement and agrees to
be bound by all of its terms and to undertake all of the obligations of Seller
contained in the Agreement, and in which the assignee makes representations and
warranties as to immunity substantially equivalent to those of Seller contained
herein; (iii) Buyer shall have been given thirty (30) Days written notice in
advance of such assignment; (iv) Seller delivers to Buyer on or prior to the
date of such assignment the certificate of a duly authorized officer of Seller
to the effect that each of the conditions set forth in clauses (i), (ii) and
(iii) of this Article 29.4 has been complied with as of the date of such
agreement; (v) the guarantor under the Pemex Performance Guarantee executes and
delivers a confirmation of the Pemex Performance Guarantee, in form and
substance reasonably satisfactory to Buyer, pursuant to which such guarantor
acknowledges and agrees that the Pemex Performance Guarantee remains in full
force and effect notwithstanding such assignment; (vi) Seller shall have
delivered to Buyer an opinion or opinions of counsel reasonably acceptable to
Buyer to the effect that the assumption agreement referred to in clause (ii) and
the guarantee confirmation referred to in Clause (v) have been duly authorized,
executed and delivered and are enforceable in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally or by
general principles of equity; and (vii) Seller agrees to reimburse Buyer for all
reasonable and documented out-of-pocket costs and expenses, including, without
limitation, attorneys' fees, incurred by it in connection with such assignment
by Seller.
29.5 Permitted Assignments by Buyer. (a) Seller agrees to waive the
restriction on assignment by Buyer in Article 29.3 with respect to an assignment
of all or any portion of Buyer's rights and obligations under the Agreement if
all of the following conditions are met:
(i) (x) such assignment is to an Affiliate of Buyer which carries out
the Project and owns the Project Assets (it being understood that transfer
of title for security purposes in connection with any sale-leaseback or
synthetic lease transaction shall not be a transfer of ownership for
purposes hereof), (y) such assignment is to a purchaser or transferee of
the Refinery or (z) such assignment is to an entity organized in order to
obtain financing for the Project and which will own the Project Assets;
(ii) Buyer shall have delivered written notice of such assignment to
Seller at least thirty (30) Days prior to such assignment and shall have
delivered to Seller the assignment and assumption agreement pursuant to
which such transfer is to be effected
<PAGE>
42
(the "Assignment Agreement") at least ten (10) Days prior to such
assignment becoming effective;
(iii) the assignee shall have entered into the Assignment Agreement,
in form and substance reasonably satisfactory benefit of Seller, such
agreement to contain provisions whereby the assignee confirms that it shall
be deemed a party to the Agreement and agrees to be bound by all of the
terms of, and to undertake all of the obligations of Buyer contained herein
(except such terms and obligations for which the assignor remains solely
liable);
(iv) Buyer shall have delivered to Seller on the date of such
assignment the certificate of an officer of Buyer to the effect that each
of the conditions set forth in clauses (i), (ii) and (iii) of this Article
29.5 has been complied with as of such date;
(v) except in the case of an assignment in connection with the
conveyance or transfer of the Refinery to a transferee having a credit
quality and capacity at least equal to Clark R&M, (x) Buyer shall have
delivered to Seller Compensating Collateral complying with Article 29.5(c)
or (y) if Compensating Collateral is in effect prior to the time of such
assignment, the obliger under the Compensating Collateral documents shall
have executed and delivered a confirmation thereof, in form and substance
reasonably satisfactory to Seller, pursuant to which such party
acknowledges and agrees that the Compensating Collateral documents remain
in full force and effect notwithstanding such assignment;
(vi) Buyer shall have delivered to Seller an opinion or opinions of
counsel reasonably acceptable to Seller that the Assignment Agreement and
the Compensating Collateral documents referred to in clause (v) have been
duly authorized, executed and delivered and are enforceable in accordance
with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the rights
of creditors generally or by general principles of equity; and
(vii) Buyer agrees to reimburse Seller for all reasonable and
documented out-of-pocket costs and expenses including, without limitation,
attorneys' fees, incurred by Seller in connection with such assignment by
Buyer.
Upon satisfaction of the foregoing conditions, Seller shall execute and deliver
to Buyer a written consent agreement (the "Consent") in form reasonably
satisfactory to Buyer with respect to such assignment whereby the assignor shall
be released from all further liability in connection with the Agreement for and
with respect to the period following the date of such assignment and release,
except with respect to any Compensating Collateral (including, without
limitation, the Clark Performance Undertaking) to which the assignor is a party
and except for liability for breach of the provisions of Article 29.5(b).
(b) Notwithstanding any assignment pursuant to this Article 29.5,
Clark R&M shall not permit any Alternative Supply Arrangement to be entered into
at any time during the term of the Agreement or, in the event the Agreement is
terminated pursuant to Article 5.3, at
<PAGE>
43
any time during the period of thirty (30) Months commencing on the date of such
termination. In the event of a breach of this Article 29.5(b), Seller shall have
the right to recover from Clark R&M the same U.S.$15,000,000 payment or
Termination Fee, as the case may be, for which Buyer would have been liable in
accordance with Article 5.3 had an Alternative Supply Arrangement been entered
into under the circumstances therein indicated.
(c) The parties agree that in exchange and in full compensation for
the Consent, Buyer shall provide to Seller one of the following forms of
additional collateral for Buyer's obligations hereunder (any such collateral,
"Compensating Collateral"): (i) the Clark Performance Undertaking; (ii) a
Compensating Letter of Credit in an amount equal to the Cash Collateral Amount;
(iii) a first perfected lien on cash or equivalent collateral in an amount equal
to the Cash Collateral Amount; or (iv) such other form of equivalent security
arrangement as may be satisfactory to Seller in its sole discretion. Buyer shall
maintain the Compensating Collateral provided under this Article 29.5(c) in
effect (or shall provide another form of Compensating Collateral and maintain it
in effect) for the period commencing on the date of the Consent and ending sixty
(60) Days after the latest of (x) the date of termination of the Agreement, (y)
the end of the 30th Month after the date of any Abandonment in accordance with
Article 5, or (z) if Seller has commenced an arbitration proceeding pursuant to
Article 31 prior to the date referred to in (x) or (y) above, the date of any
final decision issued pursuant to such arbitral proceeding or any settlement of
the dispute submitted thereto. As used herein, "Compensating Letter of Credit"
shall mean one or more irrevocable and unconditional stand-by letters of credit
issued in favor of and in form reasonably satisfactory to Seller by a bank
having at least U.S.$250,000,000 in assets and the outstanding senior unsecured
debt securities of which are rated not less than A2 by Moody's Investors
Service, Inc. and A by Standard & Poor's Ratings Services, and drawable in whole
or in part from time to time (A) upon presentation of a certificate of Seller
stating that Buyer is in breach of the Agreement and has agreed that it is
liable to Seller in an amount equal to or greater than the amount being drawn or
that Seller's liability to Buyer in an amount equal to or greater than the
amount being drawn has been determined in an arbitral award obtained pursuant to
Article 31.2 or (B) within thirty (30) Days prior to expiration of the then
existing Compensating Letter of Credit if not extended or replaced by a new
Compensating Letter of Credit having a term of not less than one Year. As used
herein, "Cash Collateral Amount" shall mean (1) prior to December 31, 1998,
U.S.$15,000,000, (2) during calendar year 1999, U.S.$20,000,000, (3) during
calendar year 2000, U.S.$25,000,000 and (4) during calendar year 2001 and
thereafter during the term of the Agreement, the sum of U.S.$40,000,000 plus any
amount determined in accordance with Article 18(b) and remaining to be applied
to the purchase of Maya under the Agreement (it being understood that for
purposes of this clause (4), the amount of any Compensating Letter of Credit
shall be adjusted on a Quarterly basis within fifteen (15) Days following
receipt of the report referred to in Article 19.3 to reflect such sum);
provided, however, that the cash collateral amount determined as above provided
shall be reduced by the amount of any drawing by Seller on a Compensating Letter
of Credit and any payment to Seller in application of other Compensating
Collateral. The parties further agree that, as an alternative to providing
Compensating Collateral in the form indicated above, Buyer may provide both (aa)
the Compensating Letter of Credit or the first perfected lien on cash or
equivalent collateral referred to above, except that in such case the Cash
Collateral Amount commencing January 1, 2001 shall be U.S.$40,000,000, without
any increase for any amount determined in accordance with Article 18(b), and
(bb) a perfected lien on the Project
<PAGE>
44
Assets, subordinated to the liens of the lenders providing financing for the
Project (but not to any other lien consensually granted by any party on the
Project Assets), securing any liability of Buyer to Seller hereunder up to a
maximum amount equal at all times to the amount determined in accordance with
Article 18(b) and remaining to be applied to the purchase of Maya under the
Agreement, provided that the terms of such second lien shall provide that Seller
may not, in its capacity as lienholder, commence a foreclosure, exercise a power
of sale or otherwise enforce such lien against any of the Project Assets unless
the Project lenders have been paid in full (it being understood that nothing
herein shall prevent Seller from exercising its right to bring a claim against
Buyer hereunder or exercising any rights as a judgment creditor in respect of
such claim).
29.6 Assignment by Buyer in Connection with Financing. In addition
to Buyer's right to assign the Agreement pursuant to Article 29.5, Buyer
(including any permitted assignee) may assign the Agreement to a lender,
indenture trustee, security agent or other similar Person in connection with any
financing, capital lease or other transaction the purpose of which is to obtain
funds for the construction of the Project or the Coker, or in connection with
the refinancing of any such construction financing (which refinancing need not
be limited to the amount of the original construction financing). Any further
assignment of the Agreement by any such assignee shall comply with the
requirements of Article 29.5; provided, however, that such assignee shall also
be permitted to assign the Agreement to a purchaser of the Project Assets.
Seller agrees, in connection with any such assignment under this Article 29.6,
to enter into such consent and assignment agreement with respect thereto as may
be reasonably required by such assignee, provided that such consent and
assignment agreement in no way alters or amends the respective rights and
obligations of Seller and Buyer as set out in the Agreement. The parties further
agree, to the fullest extent permitted by applicable law, that in the event
Buyer is the subject of a bankruptcy, liquidation or other similar insolvency
proceeding, the Agreement may be assigned in connection with such proceeding
only to an assignee and in such circumstances which meet the requirements of
Article 29.5; provided, however, that such assignee shall also be permitted to
assign the Agreement to a purchaser of the Project Assets.
29.7 Right to Terminate. In the event of any assignment of the
Agreement by Buyer or Seller contrary to this Article 29, the non-assigning
party shall have the right, without prejudice to any other rights or remedies it
may have hereunder or otherwise, to terminate the Agreement effective
immediately upon notice to the assigning party.
ARTICLE 30 RELATIONSHIP OF THE PARTIES
---------------------------
The relationship of the parties established by the Agreement is that
of supplier and purchaser, and nothing in the Agreement shall be construed to
constituted the parties as principal and agent, partners, joint venturers, co-
owners or otherwise as participants in a joint undertaking.
ARTICLE 31 DISPUTE RESOLUTION; GOVERNING LAW
---------------------------------
31.1 Amicable Resolution. In the event of any dispute arising out of
or in connection with the Agreement, Seller or Buyer may notify the other party
of the nature of the dispute and the parties shall, in good faith and using all
reasonable efforts, seek to settle the
<PAGE>
45
dispute amicably through negotiation between senior executives. Within twenty
(20) Days after delivery of such notice, such senior executives shall meet at a
mutually acceptable time and place, and thereafter as often as reasonably deemed
necessary, to exchange relevant information and to attempt to resolve the
dispute. All discussions pursuant to this Article 31.1 shall be confidential and
shall be treated as compromise and settlement negotiations for all purposes
including the admission of evidence in any subsequent arbitration. If the matter
has not been resolved within sixty (60) Days of the delivery of notice of the
dispute, or if the parties fail to meet within the twenty-Day period referred to
above, either party may initiate arbitration of the dispute pursuant to the
terms of Article 31.2.
31.2 Settlement by Arbitration. (a) All disputes arising out of or
in connection with the Agreement shall be settled finally by arbitration under
rules applicable to arbitrations of the Rules of Arbitration and Conciliation of
the International Chamber of Commerce (the "ICC Rules") in effect at such time.
The arbitration shall take place in New York City and shall be conducted in the
English language. Subject to the provisions of paragraph (b) below, the arbitral
tribunal shall consist of three arbitrators, one designated by each of the
parties and the third, who shall be the chairman of the tribunal, selected by
agreement of the two designated arbitrators. In the event the two arbitrators
fail to agree on the selection of the chairman, the chairman shall be selected
in accordance with ICC Rules. The substantive law applicable to the subject
matter of the arbitration shall be the law indicated in Article 31.3. Copies of
the request for arbitration and the answer thereto shall be served by a party on
the other party in accordance with Article 37. Subject to paragraph (b) below,
the award of the arbitral tribunal shall be rendered within one hundred eighty
(180) Days from signature or approval of the terms of reference, subject to
extension for good cause only. The award shall be final and binding on the
parties, and may be confirmed or embodied in any order or judgment of any court
of competent jurisdiction.
(b) In the case of any claim for damages in a principal amount of two
hundred fifty thousand U.S. Dollars (U.S.$250,000) or less, (i) the claim shall
be resolved by a sole arbitrator selected in accordance with ICC Rules, (ii) the
terms of reference shall be signed and any hearing of the matter shall be held
within one hundred twenty (120) Days following the later of service of the
answer and transmission of the file to the arbitrator, and (iii) the arbitrator
shall render the award within thirty (30) Days after the hearing or, in the
event a hearing is not held, signature or approval of the terms of reference,
subject extension for good cause only.
31.3 Governing Law. The place of execution, delivery or performance
of the Agreement or of the domicile of the parties notwithstanding, the
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York, it being understood and agreed that the United Nations
Convention on the International Sale of Goods shall not apply to the Agreement.
31.4 Waiver of Immunity. To the extent Seller or any of its assets
has or in the future may acquire any immunity (whether characterized as
sovereign immunity or otherwise) from any legal proceeding (including, without
limitation, immunity from service of process, immunity from jurisdiction,
immunity from attachment prior to judgment, immunity from attachment in
execution of judgment, and immunity from execution of judgment), Seller (except
<PAGE>
46
to the extent of the exception contained in Article 2.2(f)) hereby expressly and
irrevocably waives any such immunity in respect of its obligations under the
Agreement.
ARTICLE 32 LIMITATION OF LIABILITY; LIQUIDATED DAMAGES
-------------------------------------------
(a) Neither party to the Agreement shall be liable for any
consequential or punitive damages of any kind arising out of or in any way
connected with the performance of or failure to perform the Agreement,
including, but not limited to, losses or damages resulting from shutdown of
plants or inability to perform sales or any other contracts arising out of or in
connection with the performance or nonperformance of the Agreement; it being
understood that nothing in this Article 32(a) shall be construed as limiting
either party's right to recover its incidental damages or damages associated
with the mechanism for adjustment to Buyer's payment obligations set out in Part
IV.
(b) It is understood and agreed that each of the U.S. Dollar amounts
specified in Articles 4.4, 5, 8.1 and 22.6 as payable by one party to the other
in the circumstances set out therein represents liquidated damages which do not
exceed reasonable expectations of the actual damages which would be suffered in
such circumstances, and does not constitute, nor is intended to constitute, a
penalty.
ARTICLE 33 NO RECOURSE
-----------
Anything to the contrary herein notwithstanding, (a) no (i) employee,
agent, officer, director, Affiliate, member, shareholder or controlling Person
of either party hereto or (ii) employee, agent, officer, director, Affiliate,
member, shareholder or controlling Person of any of the Persons referred to in
clause (i) (such Persons referred to in (i) and (ii), the "Exculpated Persons"),
shall have any liability for any obligations of either party hereto and (b) no
judgment for payment of money or damage shall lie against any Exculpated Person;
provided, however, that nothing in this Article 33 shall impair the
enforceability of any express guarantee or other written undertaking or
representation of any Exculpated Person. Each party hereto, for itself and any
Person claiming by, through or under such party, hereby waives any right now or
hereafter available under applicable law to impose any liability on any
Exculpated Person in contravention of the terms of this Article 33.
ARTICLE 34 MERGER
------
The Agreement is a complete and exclusive statement of all terms and
conditions relating to the subject matter of the Agreement and supersedes all
prior agreements between Seller and its Affiliates and Buyer and its Affiliates,
written or oral, relating thereto. Nothing herein shall be construed as
affecting Crude Oil Sales Agreement entered into on January 1, 1990 between
Seller and Clark Oil & Refining Corporation, as amended and assigned, which
remains in full force and effect. Buyer affirms that no representations, other
than those expressly set out in Article 2.2 have been made by Seller or relied
on by Buyer in entering into the Agreement.
ARTICLE 35 NO WAIVER; CUMULATIVE REMEDIES
------------------------------
Except as specifically provided in the Agreement, no failure or delay
on the part of any party in exercising any right, power or remedy hereunder and
no course of dealing between the parties hereto shall operate as a waiver by any
party of any such right, power or
<PAGE>
47
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Without prejudice to Article 32, and except to the
extent otherwise expressly provided in the Agreement, all rights, powers and
remedies provided hereunder are cumulative and not exclusive of any rights,
powers or remedies provided by law or otherwise. Except as required by the
Agreement, no notice or demand upon any part in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances
or constitute a waiver of the right of any party to take any other or further
action in any such circumstances without notice or demand.
ARTICLE 36 SEVERABILITY OF PROVISIONS
--------------------------
The invalidity, illegality or unenforceability of any one or more of
the provisions of the Agreement shall in no way affect or impair the validity
and enforceability of the remaining provisions thereof.
ARTICLE 37 NOTICES
-------
All notices and other communications given under the Agreement shall
be in writing and shall be effective upon receipt by the addressee as provided
below or, in case of notice by telex or by confirmed facsimile, when sent as
provided below:
To Seller: P.M.I. Comercio Internacional, S.A. de C.V.
Torre Ejecutiva - Piso 20
Avenida Marina Nacional No. 329
11311 Mexico, D.F.
Mexico
Telex: 1773509 PMITME
Telecopier: (713) 567-0051 and (713) 567-0053
Attn.: Direccion Comercial de Petroleo Crudo
To Buyer: Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105-3721
Telex: 628-38123
Telecopier: (314) 854-9635
Attn.: Mr. Brad Aldrich
With copy to: Legal Department
Telecopier: (314) 854-1455
<PAGE>
48
or at such other address, facsimile or telex as may be communicated by either
party to the other party in the manner above provided.
ARTICLE 38 AMENDMENTS AND WAIVERS
----------------------
Any amendment of the Agreement must be made upon the express written
agreement of both parties, and any waiver of any provision of the Agreement by
any party must be upon the express written agreement of such party.
ARTICLE 39 LANGUAGE OF THE AGREEMENT
-------------------------
The language of the Agreement shall be the English language, which
shall control over any Spanish language translation thereof.
ARTICLE 40 RESTRUCTURING OF THE AGREEMENT
------------------------------
In the event that at any time during the period commencing the date
hereof and ending on December 31, 1999, Buyer notifies Seller that, to assist in
procuring financing for the Project, Buyer wishes to restructure this Agreement
by substituting for the Agreement one or more other agreements with Clark R&M
and an Affiliate thereof which carries out the Project and owns the Project
Assets, then the parties shall immediately meet to negotiate in good faith the
implementation of such restructuring; provided, however, that Seller shall not
be obligated to effect any restructuring that is not satisfactory to Seller in
its sole discretion.
<PAGE>
49
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
executed in Mexico City, Mexico, by their duly authorized officers or
representatives on the date first above written.
P.M.I. COMERICO INTERNACIONAL,
S.A. DE C.V.
By: /s/ Eduardo Martinez del Rio
- ------------------------------ --------------------------------------------
Witness Eduardo Martinez del Rio
General Director
Initialized by:
- ------------------------------
CLARK REFINING & MARKETING INC.
/s/ Maura J. Clark By: /s/ Bradley D. Aldrich
- ------------------------------ --------------------------------------------
Witness Bradley D. Aldrich
Executive Vice President of Refining
Initialized by:
/s/ Richard A. Keffer
- ------------------------------
<PAGE>
ANNEXES
ANNEX 1................FORM OF CLARK PERFORMANCE UNDERTAKING
ANNEX 2.........................................DIFFERENTIAL
ANNEX 3..................................MAYA.SPECIFICATIONS
ANNEX 4..................FORM OF PEMEX PERFORMANCE GUARANTEE
ANNEX 5..................................PROJECT DESCRIPTION
ANNEX 6........................................REGULAR PRICE
ANNEX 7......................ALTERNATIVE PRICING METHODOLOGY
ANNEX 8.............................FORM OF LETTER OF CREDIT
ANNEX 9...................................SHIPPING DOCUMENTS
ANNEX 10.........................FORM OF LETTER OF INDEMNITY
ANNEX 11...........EXAMPLES OF THE OPERATION OF DIFFERENTIAL
ANNEX 12...........................COMMUNICATION FREQUENCIES
ANNEX 13.......CONDITIONS RELATING TO OFFSHORE INSTALLATIONS
<PAGE>
ANNEX 1
FORM OF CLARK PERFORMANCE UNDERTAKING
This PERFORMANCE UNDERTAKING, dated as of ______________________,
(herein, as the same may be amended from time to time as permitted hereby, this
"Agreement"), between Clark Refining & Marketing, Inc., a Delaware corporation
("Clark"), and P.M.I. Comercio Internacional, S.A. de C.V., a Mexican
corporation ("PMI").
WHEREAS, Clark and PMI have entered into the Maya Crude Oil Sales
Agreement dated March , 1998 (the "Maya Agreement");
WHEREAS, capitalized terms used herein without definition shall have
the respective meanings given in the Maya Agreement;
WHEREAS, Clark desires to assign all or a portion [specify] of its
rights and obligations under the Maya Agreement to (the "Transferee"), pursuant
to an Assignment Agreement between Clark and PMI referred to in Article 29.5(a)
of the Maya Agreement (the "Assignment");
WHEREAS, the Transferee will be the entity to implement the Project
and own the Project Assets;
WHEREAS, Clark agrees to remain liable under and with respect to the
Maya Agreement as provided herein and desires to execute and deliver this
Agreement;
WHEREAS, under Article 29.5 of the Maya Agreement, Clark is not
permitted to make the Assignment except in consideration for the execution and
delivery of this Agreement, it being agreed that this Agreement is accepted by
PMI in exchange for its Consent to the Assignment and in consideration thereof;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Clark agrees as follows:
1. (a) Clark shall remain liable for all obligations of Buyer under
the Maya Agreement notwithstanding the Assignment. Clark shall be entitled to
exercise such rights under the Maya Agreement as are reserved to it pursuant to
the Assignment (including, without limitation, any right set forth therein to
purchase and receive Maya under the terms of the Maya Agreement).
(b) Clark's obligations under the Maya Agreement shall remain those
of a primary obliger, as opposed to a surety or a party only secondarily liable;
provided, however, that as a condition precedent to a demand for performance of
an obligation hereunder Clark shall be provided by PMI with written notice of
failure of the Transferee to perform its obligations in accordance with the
terms of the Maya Agreement. It is understood that to the extent that Clark
performs any obligation under the Maya Agreement, the Transferee shall not be
considered in breach of such obligation so performed by Clark.
(c) Clark's obligations under the Maya Agreement shall not be
released, discharged or otherwise affected by the existence of any claim, set-
off, defense or other right that Clark, Transferee, or any Affiliate of Clark or
Transferee may have at any time and from time to time against PMI, whether in
connection herewith or with any unrelated transactions; provided that in respect
of any obligation of Clark to PMI hereunder, Clark shall be entitled to assert
any claim, set-off, defense or other right of Clark or of the Transferee under
the Maya Agreement. Clark, by virtue of any payment to PMI hereunder, shall be
subrogated to PMI's claim relating thereto against Transferee. Clark agrees that
it shall not exercise any rights of subrogation which
<PAGE>
2
it may acquire due to any payment so made until all of the obligations of Buyer
under the Maya Agreement have been performed in full.
(d) Clark hereby unconditionally waives any requirement that, as a
condition precedent to the enforcement of the obligations of Clark hereunder,
Transferee be joined as a party in any proceedings for the enforcement of this
Agreement.
2. No amendment of or supplement to this Agreement, or waiver or
modification of, or consent under, the terms hereof, shall be effective unless
evidenced by an instrument in writing signed by Clark and PMI.
3. The provisions of Article 28, 29.1 through 29.4, 29.7, 30, 31,
32, 33 and 35 through 39 of the Maya Agreement are hereby made applicable to
this Agreement in the same manner as in the Maya Agreement.
4. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns;
provided, however, that Clark may not assign or transfer any of its obligations
under this Agreement, except for an assignment to a purchaser of the Refinery
which has a credit quality and capacity equal to or greater than that of Clark.
It shall be a condition to any such permitted assignment that the assignee have
entered into an agreement, in form and substance reasonably satisfactory to PMI,
for the benefit of PMI, whereby the assignee agrees to be bound by all of the
terms, and to undertake all of the obligations, of Clark contained herein, and
that Clark shall have delivered to PMI an opinion of counsel reasonably
acceptable to PMI that such agreement has been duly authorized, executed and
delivered and is enforceable in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally or by general principles of equity.
Clark agrees to reimburse PMI for all reasonable and documented out-of-pocket
costs and expenses, including, without limitation, attorneys' fees, incurred by
PMI in connection with such assignment by Clark. It is understood that in the
event of a permitted assignment of this Agreement by Clark in accordance with
this Section 4, Clark shall be released of any liability under the Maya
Agreement other than liabilities which may have arisen prior to the date of such
assignment. For purposes of this paragraph 4, a merger, consolidation or sale of
substantially all of the assets of Clark or any of its successors or permitted
assigns shall not be deemed an assignment or transfer.
5. This Agreement shall form an integral part of the Maya Agreement,
and nothing in this Agreement shall be construed to affect the rights and
obligations of all parties under the Maya Agreement, which shall remain in full
force and effect.
6. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
CLARK REFINING & MARKETING, INC.
By:_________________________________________
Name:
Title:
P.M.I. COMERCIO INTERNACIONAL,
S.A. DE C.V.
<PAGE>
3
By:__________________________________________
Name:
Title:
[ ]
By:__________________________________________
Name:
Title:
<PAGE>
ANNEX 2
DIFFERENTIAL
A. As used in the Agreement, the term "Differential" means, with
respect to any Month, the amount in U.S. Dollars calculated for such Month by
applying the formula set forth below:
(0.5 * RUL) + No. 2 Oil - (1.5 * No. 6 Oil)
where
(a) "RUL" means the average of the Platt's Prices for conventional,
non-RFG 87 octane unleaded gasoline for such Month;
(b) "No. 2 Oil" means the average of the Platt's Prices for 0.2%
sulfur No. 2 fuel oil for such Month; and
(c) "No. 6 Oil" means the average of the Platt's Prices for 3% sulfur
No. 6 fuel oil for such Month;
and where, for purposes of the above, the term "Platt's Prices" for any Day
means (i) the low spot prices for conventional, non-RFG 87 octane unleaded
gasoline or 0.2% sulfur No. 2 fuel oil, as the case may be, as quoted for such
Day in Platt's Oilgram Price Report (Spot Price Assessments, U.S. Gulf Section,
Pipeline Column) and converted to U.S. Dollars per Barrel, and (ii) in the case
of No. 6 Oil, the low spot prices in U.S. Dollars per Barrel for No. 6 fuel oil
having 3% sulfur content as quoted for such Day in Platt's Oilgram U.S.
Marketscan (U.S. Gulf Section, Waterborne Column).
B. In the event that a regular quotation for a particular product or
fuel oil referred to above is suspended or interrupted for any reason in the
relevant publication for less than ten of the Days in any Month, then such Days
for which such quotation is suspended or interrupted shall not be taken into
account in calculating the average of the Platt's Prices for such product or
fuel oil, and such average shall be calculated for only the number of Days in
such Month for which quotations were not suspended or interrupted. In the event
that a regular quotation for a particular product or fuel oil referred to above
is suspended or interrupted for any reason in the relevant publication for ten
or more Days in any Month, then the parties shall meet promptly to discuss and
agree upon an appropriate alternative reference price for calculation of the
Differential.
<PAGE>
ANNEX 3
MAYA SPECIFICATIONS
The oil to be sold by Seller and purchased by Buyer under the
Agreement shall be crude oil of the "Maya" type, having the typical
characteristics set forth below:
TYPICAL ANALYSIS "MAYA" CRUDE OIL
---------------------------------
/o/API (Gravity) 21.0 - 23.0
VISCOSITY (CST 100/o/F) 82.07
WATER AND SEDIMENT (% Vol.) 0.5
SULFUR (% wtg) 3.4
RVP (pound/in/2/) 6.0
POUR POINT (/o/F) -17
The foregoing typical analysis does not entail for Seller any
responsibility, guarantee or tacit or explicit assurance concerning the
marketability, fitness adaptability of Maya for any purpose or particular use by
Buyer.
<PAGE>
ANNEX 4
FORM OF PEMEX PERFORMANCE GUARANTEE
GUARANTEE AGREEMENT, executed as of March 10, 1998 (this
"Guarantee"), by PETROLEOS MEXICANOS, a decentralized public entity of the
Federal Government of the United Mexican States ("Pemex"), for the benefit of
Clark Refining & Marketing, Inc., a Delaware corporation (together with any
assignee permitted under the Maya Agreement, as defined below, "Beneficiary"),
pursuant to that certain Maya Crude Oil Sales Agreement, dated as of March 10,
1998 (the "Maya Agreement"), between P.M.I. Comercio Internacional, S.A. de
C.V., an affiliate of Pemex ("PMI"), and Beneficiary. Capitalized terms used but
not defined in this Guarantee shall have the meanings ascribed to them in the
Maya Agreement.
WHEREAS, Beneficiary and PMI have entered into the Maya
Agreement;
WHEREAS, Beneficiary has requested that PMI's obligations under
the Maya Agreement be guaranteed by Pemex; and
WHEREAS, Pemex is willing to guarantee the performance by PMI of
its obligations under the Maya Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, Pemex
hereby agrees as follows:
Section 1. Guarantee of Performance.
------------------------
(a) Pemex hereby acknowledges that it is fully aware of the terms
and conditions of the Maya Agreement and the transactions contemplated
thereby, and Pemex hereby unconditionally and irrevocably guarantees to
Beneficiary the performance by PMI when and as due of all of PMI's
obligations under the Maya Agreement, including, without limitation, the
payment of any damages of Beneficiary arising out of or based upon any
failure of PMI to perform any obligation required of it under the Maya
Agreement (the "Guaranteed Obligations").
(b) Subject to the provisions of Section 2 below, Pemex waives
notice of the acceptance of this Guarantee and of the performance or
nonperformance by PMI, demand for payment from PMI or any other Person and
notice of nonpayment or failure to perform on the part of PMI, diligence,
presentment, protest, dishonor (to the fullest extent permitted by law),
all other demands or notices whatsoever other than a demand or demands for
payment hereunder. The obligations of Pemex shall be absolute and
unconditional and shall remain in full force and effect until satisfaction
of all Guaranteed Obligations under this Section 1 and, without limiting
the generality of the foregoing, shall not be released, discharged or
otherwise affected by the existence of any claim, set-off, defense or other
right that Pemex, PMI, or any Affiliate of PMI may have at any time and
from time to time against Beneficiary or any of its Affiliates, whether in
connection herewith or with any unrelated transactions; provided, however,
that in respect of
<PAGE>
2
any amount owed to Beneficiary, Pemex shall be entitled to assert any claim,
set-off, defense or other right of PMI under the Maya Agreement in respect of
any of its obligations hereunder.
(c) Subject to the provisions of Section 2 below, the obligations
of Pemex under this Section 1 shall not be affected by the genuineness,
validity, regularity or enforceability of any of PMI's obligations under the
Maya Agreement, or any amendment, waiver or other modification thereof (except
to the extent of such amendment, waiver or modification), or substitution,
release or exchange of collateral for or other guarantee of any of the
Guaranteed Obligations (except to the extent of such substitution, release or
exchange) without the consent of Pemex, and priority or preference to which any
other obligations of PMI may be entitled over PMI's obligations under the Maya
Agreement or, to the fullest extent permitted by applicable law, any other
circumstance which might otherwise constitute a legal or equitable defense to or
discharge of the obligations of a surety or guarantor, including, without
limitation, any defense arising out of any laws of any jurisdiction which would
either exempt, modify or delay the due or punctual payment and performance of
the obligations of Pemex hereunder.
(d) Without limiting the generality of the foregoing and to the
fullest extent permitted by law, it is agreed, subject to the provisions of
Section 2 below, that the occurrence of any one or more of the following shall
not affect the liability of Pemex under this Section 1: (i) the extension of the
time for or waiver of, at any time or from time to time, without notice to
Pemex, PMI's performance of or compliance with any of its obligations under the
Maya Agreement, (except that such extension or waiver shall be given effect in
determining the obligations of Pemex, hereunder), (ii) any assignment, transfer
or other arrangement by which PMI transfers its right, under the Maya Agreement,
(iii) any merger or consolidation of PMI or Pemex into or with any other Person,
or (iv) and change in the ownership of any shares of capital stock of PMI or any
Affiliate thereof. This Guarantee is an absolute, present and continuing
guarantee and, except as provided in Section 2 hereof, is in no way conditional
or contingent upon any attempt to collect from PMI any unpaid amounts due or
otherwise to enforce performance by PMI.
Section 2. Condition Precedent to Enforcement. The provisions of
Section 1 hereof notwithstanding, it shall be a condition precedent to
Beneficiary's right to enforce this Guarantee that Beneficiary shall first have
obtained an arbitral award or judgment against PMI with respect to the
Guaranteed Obligations sought to be enforced against Pemex hereunder; provided,
however, that the obtaining of such arbitral award or judgment shall not be a
condition precedent to Beneficiary's right to enforce this Guarantee if for any
reason, including, without limitation, the bankruptcy or insolvency of PMI,
Beneficiary is prevented or stayed by applicable law from obtaining such
arbitral award or judgment. Nothing herein is intended to prevent Beneficiary
from joining Pemex in any arbitral proceeding against PMI under the Maya
Agreement for the purpose of establishing PMI's liability and the liability of
Pemex in the event any such arbitral award is not paid in full by PMI.
Section 3. Subrogation. Pemex shall be subrogated to all the
rights of Beneficiary against PMI in respect of any amounts paid by Pemex
pursuant to this Guarantee; provided, however, that Pemex shall not enforce any
right or receive any payment arising out of
<PAGE>
3
such subrogation until all amounts then due and payable from PMI in respect of
the Guaranteed Obligations have been paid in full.
Section 4. Return of Payments. Pemex agrees that, if at any time
Beneficiary is required by law to rescind or return all or any part of any
payment made by Pemex or PMI in respect of any of the Guaranteed Obligations for
any reason whatsoever (including, without limitation, the reorganization,
liquidation, dissolution, arrangement or winding-up of, or similar relief with
respect to, PMI), the obligation of Pemex to guarantee such payment shall, to
the extent that such payment is rescinded or returned, be deemed to have
continued in existence, and this Guarantee shall continue to be effective or be
reinstated, as the case may be, as to such Guarantee Obligation, all as though
such payment had not been made.
Section 5. Expenses. Pemex agrees to pay all reasonable and duly
documented fees and out-of-pocket expenses (including the reasonable and duly
documented fees and expenses of the Beneficiary's counsel) incurred in
connection with the enforcement or protection of the rights of Beneficiary under
this Guarantee; provided, however, that Pemex shall not be liable for any
expense incurred in connection with any such enforcement or protection if it is
determined that no payment under this Guarantee is due with respect thereto.
Section 6. Withholding Taxes. All payments hereunder shall be
made free and clear of, and without deduction or withholding for or an account
of, any taxes, levies, fees, imposts, duties, expenses, commissions,
withholdings, assessments or other charges, together with all penalties, fines,
additions to tax and interest thereon assessed or imposed by any Mexican
governmental authority (collectively, "Mexican Taxes"), except to the extent
that Pemex is required by law to make payment subject to any taxes. If any
Mexican Taxes shall be required by law to be deducted or withheld from any
payment to Beneficiary or any other Person entitled thereto hereunder, Pemex
shall pay such additional amounts as may be necessary to ensure that the
Beneficiary or such Person receives a net amount equal to the full amount which
it would have otherwise received had payment not been made subject to
withholding or other deduction.
Section 7. Judgment Currency. Payment obligations of Pemex under
this Guarantee shall be in U.S. Dollars and shall be made in the manner and at
the place specified pursuant to the Maya Agreement, and shall not be discharged
by an amount paid in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on conversion to
U.S. Dollars and transferred to the designated place of payment under normal
banking procedures does not yield the amount of U.S. Dollars due hereunder. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder in U.S. Dollars into another currency (the "Judgment
Currency"), the rate of exchange which shall be applied shall be that at which,
in accordance with normal banking procedures, the party entitled thereto could
purchase U.S. Dollars with the Judgment Currency at New York, New York at or
about 11:00 a.m. (New York City time) on the Business Day immediately preceding
the Day on which final judgment is given. The obligation of Pemex in respect of
any sum due to Beneficiary shall, to the extent permitted by applicable law,
notwithstanding any judgment in a currency other than U.S. Dollars, be
discharged only to the extent that, on the Business Day following receipt of any
sum adjudged to be so due in the Judgment Currency, Beneficiary may
<PAGE>
4
in accordance with normal banking procedures purchase U.S. Dollars with the
Judgment Currency. If the amount of U.S. Dollars so purchased is less than the
unpaid amounts then due to Beneficiary, Pemex agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify Beneficiary against the
resulting loss; and if the amount of U.S. Dollars so purchased is greater than
the unpaid amounts then due to Beneficiary agrees promptly to repay to Pemex
such excess.
Section 8. Representations and Warranties. Pemex hereby
represents and warrants to Beneficiary that:
(a) It is a decentralized public entity of the Federal Government
of Mexico endowed with legal status and its own patrimony and has the legal
capacity to enter into this Guarantee in accordance with the Ley Org-nica de
Petroleos Mexicanos y Organismos Subsidiarios, published in the Diario Oficial
de la Federaci-n on July 16, 1992.
(b) No authorization from any Mexican governmental authority is
required under existing applicable laws for the authorization, execution and
performance of this Guarantee by Pemex, or for the legality, validity, binding
effect or enforceability hereof, except for the authorization of Pemex's Board
of Directors, which has been duly obtained and is in full force and effect.
(c) Neither the execution of this Guarantee by Pemex, nor the
performance of its obligations hereunder will (i) conflict with or result in any
breach of, or constitute a violation of or a default under, any applicable law
(including, without limitation, the Ley Organica de Petr-leos Mexicanos y
Organismos Subsidiarios) or any indenture, mortgage, deed of trust, or other
instrument or agreement (including, without limitation, any negative pledge or
similar clause) to which Pemex is a party or by which it may be bound or to
which any of its assets may be subject, or (ii) result in the creation or
imposition of any lien upon any of its assets.
(d) The execution and performance by Pemex of this Guarantee has
been duly authorized by all necessary corporate action. This Guarantee has been
duly executed by Pemex and constitutes the legal, valid and binding obligation
of Pemex, enforceable in accordance with its terms, subject, regarding
enforceability, to the limitations set forth in Section 8(f) below.
(e) No lawsuits or proceedings are pending or, to Pemex's
knowledge, threatened against it which either individually or in the aggregate,
if determined adversely to Pemex, may materially and adversely affect the
ability of Pemex to perform its obligations under this Guarantee.
(f) This Guarantee and the transactions contemplated herein
constitute commercial activities of Pemex, and Pemex is subject to private
commercial law with respect thereto. Pemex is not entitled to any immunity,
whether on grounds of sovereign immunity, act of state or otherwise, from any
legal proceedings in Mexico and, based upon Section 9 below, in the
jurisdictions referred to therein, except that under applicable laws of Mexico,
and in particular in accordance with Article 27 of the Political Constitution of
the United Mexican
<PAGE>
5
States (the "Political Constitution"), Articles 1, 2, 3 and 4 (and related
articles) of the Regulatory Law to Article 27 of the Political Constitution
concerning Petroleum Affairs (the "Regulatory Law"), Articles 15, 16 and 19 of
the Regulations to the Regulatory Law, Articles 16 and 60 (and other related
articles) of the General Law on National Patrimony, Articles l, 2, 3 and 4 (and
other related articles) of the Organic Law of Petroleos Mexicanos and Subsidiary
Entities (the "Organic Law") and Article 4 of the Federal Code of Civil
Procedure of the United Mexican States set forth, inter alia, that: (i)
attachment prior to judgment, attachment in aid of execution and execution of a
final judgment may not be ordered by Mexican courts against property of Pemex,
(ii) all domestic petroleum and hydrocarbon resources (whether solid, liquid or
in gas form) are permanently and inalienably vested in the United Mexican States
(and, to that extent, subject to immunity); (iii) (a) the exploration,
exploitation, refining, transportation, storage, distribution and first-hand
sale of crude oil, (b) the exploration, exploitation, production and first-hand
sale of natural gas, as well as the transportation and storage inextricably
linked with such exploitation and production, and (c) the production,
transportation, storage, distribution and first-hand sale of the petroleum
derivatives (including petroleum products) used as basic industrial raw
materials and the derivatives of natural gas which are considered "basic
petrochemicals" (the "Petroleum Industry") are reserved exclusively to the
United Mexican States (and, to that extent, assets related thereto are entitled
to immunity); and (iv) the public entities created and appointed by the Federal
Congress of the United Mexican States to conduct, control, develop and operate
the Petroleum Industry of the United Mexican States are Pemex and the subsidiary
entities (and therefore, entitled to immunity in respect to such exclusive
rights and power).
Section 9. Governing Law; Submission to Jurisdiction; Waivers.
-------------------------------------------------------------
(a) THE PLACE OF EXECUTION AND DELIVERY HEREOF NOTWITHSTANDING, THIS
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) Pemex hereby appoints the Consul General of Mexico in The City of New
York and its successors as its authorized agent ("Process Agent") upon which
process may be served in any action by Beneficiary arising out of or based upon
this Guarantee which may be instituted in any federal court sitting in The City
of New York or, absent jurisdiction in such federal courts, in any state court
sitting in The City of New York, and Pemex irrevocably submits to the
jurisdiction of any such court, and the appellate courts therefrom, and to the
jurisdiction of the Federal courts sitting in Mexico City, Mexico, in respect of
any such action, and irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any such action in any such court, and
waives any right to which it may be entitled on account of residence or
domicile. The appointment made by Pemex shall be irrevocable so long as any
obligation of PMI under the Maya Agreement remains to be satisfied or the
satisfaction of which is disputed by Beneficiary under the terms thereof, unless
and until a successor agent shall have been appointed to act as the Process
Agent on behalf of Pemex, and such successor agent shall have accepted such
appointment. Pemex will take any and all action, including the filing of any and
all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Process Agent for Pemex at 8 East 41st Street, New York, New York 10017, and
written notice of such service mailed or delivered to Pemex at
<PAGE>
6
its address set forth in Section 3 hereof shall be deemed, in every respect,
effective service of process upon Pemex.
(c) To the extent Pemex or any of its assets has or in the future may
acquire any immunity (whether characterized as sovereign immunity or otherwise)
from any proceeding to enforce this Guarantee (including, without limitation,
immunity from service of process, immunity from jurisdiction, immunity from
attachment prior to judgment, immunity from attachment in execution of judgment,
and immunity from execution of judgment), Pemex (except to the extent of the
exception contained in Section 8(f) above) hereby expressly and irrevocably
waives any such immunity.
(d) PEMEX HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES TRIAL BY JURY IN
ANY PROCEEDING BROUGHT TO ENFORCE THIS GUARANTEE.
Section 10. No Implied Waiver. No failure on the part of Beneficiary to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other further
exercise of any other right or remedy.
Section 11. Survival of Representations. All representations and warranties
contained herein shall survive the execution and delivery of this Guarantee
regardless of any investigation made by Beneficiary or any other Person.
Section 12. Severable Provisions. To the fullest extent permitted by
applicable law, any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or of any provision in the Maya Agreement, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 13. Integration. This Guarantee and the Maya Agreement represent
the agreement of Pemex, Beneficiary and their respective Affiliates with respect
to the subject matter hereof, and there are no premises, undertakings,
representations or warranties by Pemex or Beneficiary relative to the subject
matter hereof not expressly set forth or referred to herein or in such other
documents.
Section 14. No Third-Party Beneficiaries. This Guarantee shall be binding
upon the successors and assigns of Pemex and shall inure to the benefit of, and
shall be enforceable by, Beneficiary to the fullest extent permitted by
applicable laws. This Guarantee shall not be deemed to create any right in any
Person except Beneficiary, its successors and assigns and shall not be construed
in any respect to be a contract in whole or in part for the benefit of any other
Person; provided, however, that this Guarantee may be assigned in connection
with any assignment of the Maya Agreement permitted therein.
<PAGE>
7
Section 15. Amendments Only in Writing. No amendment of or supplement to
this Guarantee, or waiver or modification of, or consent under, the terms
hereof, shall be effective unless evidenced by an instrument in writing signed
by Pemex and Beneficiary.
Section 16. Notices. Any notice or other communication to Pemex hereunder
must be in writing and may be given by hand, courier, or registered or certified
mail (or a substantially similar form of mail), or by facsimile transmission
addressed as follows:
Petroleos Mexicanos
Avendia Marina Nacional 329
Torre Ejecutiva, Piso 38
Col. Huastecas
11311 Mexico, D.F., Mexico
Attn: Finance Manager
Fax No. 525-545-5247
Pemex may, by written notice to Beneficiary, change the address to which
notices to it shall be directed. Any notice or other communication hereunder
shall be deemed to have been given when received by the addressee.
Section 17. Counterparts; Language. This Guarantee may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Guarantee is
executed in English and in the event of any conflict between the English version
and any translation hereof, the English version shall control.
<PAGE>
8
IN WITNESS WHEREOF, Pemex has executed this Guarantee as of the date
first above written.
PETROLEOS MEXICANOS
By:
------------------------------
Name:
Title:
AGREED AND ACCEPTED:
CLARK REFINING & MARKETING, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
ANNEX 5
PROJECT DESCRIPTION
The description provided herein represents the intended scope of the
Project. The primary purpose of the Project will be to make physical
modifications and additions to the Refinery to enable it to process the Design
Capacity with respect to heavy crude rate and coking rate.
Delayed Coking Unit
- -------------------
A new delayed coking unit will be constructed using "off the shelf, designs
and low-pressure technology. The coking unit will be a 4-drum or 6-drum unit,
with size determined by economic return associated with each option. As a
result, new capacity is estimated at 59,000 to 79,000 bpsd. Existing delayed
coking units will be modified as necessary to provide the capability to process
feedstock produced from predominantly Maya crude oil. These modifications
include a significant revamp of the coke drum deheading operation to handle the
production of shot coke. (Clark will provide a mere detailed Project description
with respect to delayed coking, including an indication of which of these
options will be pursued, together with its determination of Design Capacity
pursuant to Article 3(d).)
Crude and Vacuum Unit
- ---------------------
The crude and vacuum unit will be revamped to increase crude processing
capability from 225,000 bpsd to 250,000 bpsd. Modifications to these units will
also be made in consideration of the yield and corrosion effects associated with
a heavier crude slate.
Distillate Hydrotreating Units
- ------------------------------
The distillate hydrotreating units will be modified to upgrade unfinished
distillate stocks to low sulfur diesel specifications (0.05 wt% sulfur). These
modifications will be made primarily in consideration of the higher level of
sulfur and nitrogen in distillate feedstocks associated with the transition to a
heavier, more sour, crude state.
Gasoil Processing Units
- -----------------------
Gasoil processing capability will be expanded by either (1) constructing a
new gasoil hydrotreater and increasing the capacity of the Refinery's existing
FCC unit to its practical maximum, or (2) constructing a new gasoil hydrocracker
with minor debottlenecking of the Refinery's existing FCC unit. Both of these
alternatives will be considered with respect to the additional gasoil production
related to additional crude rate and expanded coking capacity also associated
with the Project. (Clark will provide a more detailed Project description with
respect to gasoil processing, including an indication of which of these options
will be pursued, together with its determination of Design Capacity pursuant to
Article 3(d).)
<PAGE>
2
Naphtha Hydrotreating Unit
- --------------------------
The naphtha hydrotreater unit will be modified to enable it to process
lower quality feedstocks in consideration of the higher levels of sulfur,
nitrogen, non-paraffinic material associated with the transition to a more sour
crude slate and expanded Coker capacities. Design capacity of the naphtha
hydrotreater will not change.
Sulfur Plants
- -------------
Additional sulfur recovery required as a result of the transition to a more
sour crude slate will be accomplished with the construction of new sulfur
recovery units, modifications to existing units, or some combination of both.
(Clark will provide a more detailed Project description with respect to sulfur
recovery together with its determination of Design Capacity pursuant to Article
3(d).)
Offsites
- --------
The Project will include necessary support facilities to allow for
efficient operation of new or modified units. These facilities will include, but
not be limited to, interconnecting piping, electrical distribution, steam
distribution, fuel gas distribution, cooling water requirements, and flaring
facilities.
<PAGE>
3
Summary Table
- -------------
The following table summarizes the differences between the existing unit
capacities and post-Project unit capacities. The table reflects, to the best of
Clark's knowledge, the capabilities of each unit.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Capacity (bpsd of feed, unless Current Capacity Post Project Capacity
otherwise noted)
- ---------------------------------------------------------------------------------
<S> <C> <C>
Crude/Vaccum unit 225,000 250,000
Coker Units (existing) 37,500 37,500
Coker Unit (new) 79,000
FCC Unit 68,000 75,000
Gasoil Hydrotreating Unit 60,000 65,000
Gas Oil Hydrocracking Unit 24,100
HF Alkylation Unit 19,800 19,800
Distillate Hydrotreating Units 92,000 94,900
Naphtha Hydrotreater Unit 50,000 50,000
Reformer Unit 50,000 50,000
Saturate Gas Plant 34,800 34,800
Sulfur Recovery Units (long 425 810
tons per day)
- ---------------------------------------------------------------------------------
</TABLE>
Note: Clark will provide an updated unit capacity summary table together with
its determination of Design Capacity pursuant to Article 3(d).
<PAGE>
ANNEX 6
REGULAR PRICE
A. The price of Maya to be sold and purchased hereunder shall be
calculated with respect to each delivery in accordance with the formula set
forth below:
P=0.40(WTS+FO No.6 3%S) + 0.10(LLS + BRENT DTD) - U.S.$3.50/1/
Where:
(1) "P" Means the price per barrel in U.S. Dollars, rounded to the
nearest cent;
(2) "WTS" Means the average of the Platt's prices for West Texas Sour
Crude Oil for the Five-Day Period;
(3) "LLS" Means the average of the Platt's prices for Light Louisiana
Sweet Crude Oil for the Five-Day period;
(4) "BRENT DTD" Means the average of the Platt's prices for Brent
Crude Oil for the Five-Day Period;
(5) "FO No.6 3% S" means the average of the Platt's prices for Fuel
Oil having 3% Sulfur content for the Five-Day Period;
And where, for purposes of (2) through (5) above:
(a) The "Platt's Price" for any Day means (i) in the case of West
Texas Sour and Light Louisiana Sweet Crude Oils, the average of the high and low
spot prices for such Crude Oils as quoted for such Day in Platt's Crude Oil
Marketwire (Spot Assessment Section); (ii) in the case of Brent Crude Oil, the
average of the high and low spot prices for such Crude Oil as quoted for such
Day in Platt's Crude Oil Marketwire (Spot Assessment Section) (The Quotation to
be used shall be the Dated Brent Assessment); (iii) in the case of Fuel Oil No.
6 having 3% Sulfur content, the average of the high and low spot prices for such
Fuel Oil as quoted for such Day in Platt's Oilgram U.S. Marketscan (U.S. Gulf
Section, Waterborne Column); and
(b) "Five-Day Period" means, with respect to the price determination
for any delivery, the following Five Days:
(i) the Day on which the bill of lading is issued in the case of
tankers the loading of which commences within the Agreed Laydays, or, the middle
Day of the Agreed Laydays in the case of tankers the loading of which commences
before the first Day of the Agreed Laydays and tankers the loading of which
commences after the last Day of the Agreed Laydays; provided, however, that if
any such Day is a Day for which the relevant quotations do not regularly appear
in the publications referred to above, then in determining the Day applicable
pursuant to this clause (i), reference in each case shall be made to the
succeeding Day for which such quotations are regularly published, except that in
the case of Saturdays or Fridays for which such quotations
- -------------------
/1/ The pricing constant on the date hereof, which is subject to adjustment by
Seller from time to time.
<PAGE>
2
are not so published, reference shall be made to the preceding Day for which
such quotations are regularly published;
(ii) the two Days (other than Saturdays, Sundays or other Days for
which the relevant quotations do not regularly appear in the publications
referred to above) preceding the Day determined pursuant to clause (i) above;
and
(iii) the two Days (other than Saturdays, Sundays or other Days for
which the relevant quotations do not regularly appear in the publications
referred to above) succeeding the Day determined pursuant to clause (i) above.
B. In the event that a regular quotation for a particular crude oil
or fuel oil referred to above is suspended or interrupted for any reason in the
relevant publication for less than three of the Days in any Five-Day Period,
then such Days for which such quotation is suspended or interrupted shall not be
taken into account in calculating the average of the Platt's prices for such
Five-Day Period for such crude oil or fuel oil, and such average shall be
calculated for only the number of Days in such Five-Day Period for which
quotations were not suspended or interrupted. In the event that a regular
quotation for a particular crude oil or fuel oil referred to above is suspended
or interrupted for any reason in the relevant publication for more than two of
the Days in any Five-Day Period, then the formula for the pricing of Maya shall
be temporarily adjusted by Seller for the affected delivery or deliveries in
such manner as to fairly reflect the assumptions underlying the formula or
similar assumptions; it being understood that Buyer's obligation to purchase
Maya hereunder shall not be suspended or interrupted pending such adjustment.
<PAGE>
ANNEX 7
ALTERNATIVE PRICING METHODOLOGY
In determining pursuant to Article 10.2 the need for and the specifics of
an alternative pricing formula, the methodology to be employed by the parties
shall be the following:
A. Determination of a Marker Crude. The parties shall identify and agree
on a type of crude oil from which a correlation among crude oil and product
prices can be drawn. In so doing, the parties shall identify the crude oil (the
"Marker Crude") which most closely resembles Maya in terms of API gravity and
sulfur content/2/ which has (i) a transparent and discoverable price, (ii)
significant short-term and spot USGC market depth and (iii) available market
data which, in each case, is sufficient in the estimation of the parties to
afford a robust correlation among prices for such Marker Crude, RUL and No. 2
Oil ("Light Products"), and No. 6 Oil ("Heavy Products").
B. Correlation by Regression Analysis. The parties shall determine, by
regression analysis as defined by the following equation/3/ Maya price =
constant + x(Marker Crude) + y(0.5*RUL + No. 2 oil) + z(1.5*No. 6 oil)--the
correlation between the Regular Price of Maya and the prices of the Marker
Crude, Light Products, and Heavy Products over a period not exceeding ten Years
based on data captured Monthly. The parties shall then determine, using the
regression equation above and the actual prices for the Marker Crude, Light
Products and Heavy Products, a Monthly predicted price for Maya (the "Predicted
Price"). Using the Predicted Price, the parties shall arrive at an average
predicted price over the six-Month period referred to in Article 10.2 (the
"Average Predicted Price"). Finally, the parties shall determine whether the
average of the Regular Price over such six-Month period is outside 1.5 standard
deviations (as determined by the regression analysis) of the Average Predicted
Price.
C. Determination Whether Adjustment is Required. If the average of the
Regular Price over the six-Month period is outside 1.5 standard deviations of
the Average Predicted Price for such period, then the price of Maya, effective
as of the beginning of the six-Month period, shall be the Predicted Price. If
the average of the Regular Price over the six-Month period is within 1.5
standard deviations of the Average Predicted Price for such period, then the
price of Maya shall remain the Regular Price.
- ---------------
/2/ The Marker Crude need not, however, be a heavy sour crude.
/3/ Where x, y, and z represent coefficients predicted by the regression
equation.
<PAGE>
ANNEX 8
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT
------------------------------------
Date:___________________
ISSUING BANK CONFIRMING OUR CABLE OF TODAY
_________________________
_________________________ Credit Number:_________________________
_________________________
Opener's Reference
No.______________________
Dear Sir or Madam:
BY ORDER OF:
[SPC BUYER]
_____________________________
_____________________________
We hereby open in favor of:
P.M.I. COMERCIO INTERNACIONAL S.A.
DE C.V. ("PMI")
MARINA NACIONAL NUM. 329
TORRE EJECUTIVA, PISO 20
MEXICO, D.F., MEXICO
our Irrevocable Standby Letter of Credit ("Letter of Credit") for the
account of CLARK REFINING & MARKETING, INC. ("Openers") for a sum of UP TO
A MAXIMUM OF US DOLLARS _______________ (________ _______________ (AND
NO/100 US DOLLARS) available by your draft(s) at SIGHT on [ISSUING OR
ADVISING BANK] effective __________ and expiring, subject to force majeure
as set forth below, at [NEW YORK, NEW YORK] [MEXICO CITY, MEXICO] on _____,
________ [62 DAYS] [42 DAYS IF A MEXICO BANK] AFTER LAST DAY OF THE AGREED
LAYDAYS AS SHOWN ON THE AGREED LIFTING PROGRAM].
AVAILABLE BY BENEFICIARY'S DRAFTS DRAWN AT SIGHT ON [ISSUING OR ADVISING
BANK] ACCOMPANIED BY THE FOLLOWING DOCUMENT:
A STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER OF PMI STATING THAT
(A) "ALTHOUGH THE INVOICE(S) PRESENTED UNDER THIS LETTER OF CREDIT WAS DUE
ACCORDING TO CONTRACT
<PAGE>
2
TERMS, AND PMI PRESENTED NORMAL SHIPPING DOCUMENTS AS REQUESTED BY [BUYER]
COVERING THE SHIPMENT OF MAYA CRUDE OIL, [BUYER] FAILED TO MAKE PAYMENT AS
AND WHEN DUE, I.E., 30 (THIRTY) DAYS AFTER BILL OF LADING DATE, PAYMENT
REMAINS OUTSTANDING AT TIME OF DRAWING, AND FUNDS DRAWN UNDER THIS LETTER
OF CREDIT WILL BE EXCLUSIVELY UTILIZED AS PAYMENT FOR THE ACCOMPANYING
INVOICE(S)," AND (B) "THE AMOUNT BEING DRAWN HEREUNDER IS EQUAL TO THE
AGGREGATE AMOUNT UNPAID OF INVOICES PAST DUE."
SPECIAL CONDITIONS:
PARTIAL AND MULTIPLE DRAWING IS AUTHORIZED.
ALL BANKING CHARGES, INCLUDING NEGOTIATION, TELEX, ETC., ARE FOR THE ACCOUNT OF
OPENERS.
THE AMOUNT AVAILABLE FOR DRAWING UNDER THIS LETTER OF CREDIT WILL BE
AUTOMATICALLY REDUCED IN AN AMOUNT CORRESPONDING TO: (1) THE AMOUNT OF ANY
PAYMENTS MADE OUTSIDE OF THIS CREDIT TO THE BENEFICIARY IF SUCH PAYMENTS ARE
EFFECTED BY THE ISSUING BANK AND MAKE REFERENCE TO THIS CREDIT AND THE
BENEFICIARY'S ORDER NUMBER FOR THE SHIPMENT COVERED BY THIS CREDIT, AND (2) ANY
PAYMENT MADE UNDER THIS LETTER OF CREDIT.
BENEFICIARY'S DRAFTS AND ACCOMPANYING DOCUMENTS MUST BE SUBMITTED TO
_____________ [THE ISSUING OR ADVISING BANK] AT ITS OFFICES IN [MEXICO CITY/NEW
YORK CITY] DURING SUCH BANK'S BUSINESS HOURS. IN THE EVENT PMI SUBMITS ITS
DRAFTS AND ACCOMPANYING DOCUMENTS BEFORE/[MEXICO CITY/NEW YORK CITY] TIME, SUCH
BANK SHALL DELIVER THE CORRESPONDING FUNDS TO PMI NO LATER THAN __________
[MEXICO CITY/NEW YORK CITY] TIME ON THE BUSINESS DAY IMMEDIATELY FOLLOWING THE
BUSINESS DAY ON WHICH SUCH DRAFTS AND ACCOMPANYING DOCUMENTS WERE SUBMITTED,
PROVIDED THAT THE DOCUMENTATION INCLUDED MEETS THE REQUIREMENTS CONTAINED IN
THIS LETTER OF CREDIT. IN THE EVENT PMI SUBMITS ITS DRAFTS AND ACCOMPANYING
DOCUMENTS AFTER __________ [MEXICO CITY/NEW YORK CITY] TIME, SUCH BANK SHALL
DELIVER THE CORRESPONDING FUNDS TO PMI NO LATER THAN [MEXICO CITY/NEW YORK CITY]
TIME ON THE SECOND BUSINESS DAY IMMEDIATELY FOLLOWING THE BUSINESS DAY ON WHICH
SUCH DRAFTS AND ACCOMPANYING DOCUMENTS WERE SUBMITTED, PROVIDED THAT THE
DOCUMENTATION INCLUDED MEETS THE REQUIREMENTS CONTAINED IN THIS LETTER OF
CREDIT.
<PAGE>
3
THE EXPIRATION DATE SET FORTH AT THE BEGINNING OF THIS LETTER OF CREDIT SHALL
AUTOMATICALLY BE EXTENDED BY AND TO THE EXTENT OF THE OCCURRENCE OF ANY EVENT OF
FORCE MAJEURE (AS SET FORTH IN THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500
("UCP 500"), ARTICLE 17) APPLICABLE TO THE ISSUING OR ADVISING BANK WHICH IN ANY
WAY PREVENTS OR INTERFERES WITH THE RECEIPT OR HONORING OF ANY PAYMENT REQUESTS
HEREUNDER. PMI MAY NOT SUBMIT ANY PAYMENT REQUEST, NOR SHALL THE ISSUING BANK BE
OBLIGATED TO MAKE ANY PAYMENT HEREUNDER, ONCE THIS LETTER OF CREDIT HAS EXPIRED.
THE ISSUING BANK SHALL MAKE ALL PAYMENTS UNDER THIS LETTER OF CREDIT WITH ITS
OWN FUNDS. IF THE PAYMENT REQUEST FAILS TO COMPLY WITH ANY OF THE REQUIREMENTS
ESTABLISHED IN THIS LETTER OF CREDIT, THE ISSUING BANK WILL IMMEDIATELY NOTIFY
PMI AT THE ADDRESS LISTED HEREIN OR AT SUCH OTHER ADDRESS AS PMI HAS SUPPLIED TO
THE ISSUING BANK FOR SUCH PURPOSE. THE ISSUING BANK SHALL EXPLAIN IN SUCH NOTICE
WHY IT REJECTED THE PAYMENT REQUEST AND SHALL RETURN TO PMI THE DOCUMENTS
INCLUDED WITH THE PAYMENT REQUEST. PMI MAY SUBMIT ANOTHER PAYMENT REQUEST THAT
CONFORMS TO THIS LETTER OF CREDIT. ALL PAYMENTS THAT THE ISSUING BANK MAKES TO
PMI HEREUNDER SHALL BE MADE BY WIRE TRANSFER TO THE BANK ACCOUNT PMI HAS
SPECIFIED IN THE CORRESPONDING PAYMENT REQUEST. TO THE EXTENT THAT, AT THE TIME
OF THE RECEIPT OF DRAFTS AND ACCOMPANYING DOCUMENTS, THERE ARE INSUFFICIENT
FUNDS REMAINING TO BE DRAWN UNDER THIS LETTER OF CREDIT TO SATISFY ANY PAYMENT
REQUESTED BY SUCH DRAFTS AND ACCOMPANYING DOCUMENTS IN FULL, SUCH PAYMENT
REQUESTED SHALL BE HONORED TO THE EXTENT FUNDS ARE AVAILABLE.
MATTERS NOT ADDRESSED IN THIS LETTER OF CREDIT SHALL BE GOVERNED BY UCP 500;
PROVIDED, HOWEVER, THAT THE PROVISIONS OF ARTICLE 17 THEREOF ARE SPECIFICALLY
EXCLUDED AND, TO THE EXTENT NOT INCONSISTENT WITH UCP 500, THIS LETTER OF CREDIT
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. ANY
CONTROVERSY ARISING FROM THIS LETTER OF CREDIT SHALL BE RESOLVED EXCLUSIVELY IN
THE FEDERAL COURTS IN THE STATE OF [NEW YORK]. ANY COMMUNICATION MADE BY PMI
WITH THE ISSUING BANK WITH RESPECT TO THIS LETTER OF CREDIT SHALL BE IN WRITING
AND SENT BY HAND DELIVERY, WITH CONFIRMED RECEIPT, TO THE ADDRESS AT WHICH
PAYMENT REQUEST IS TO BE DELIVERED.
<PAGE>
4
THIS TELEX IS THE OPERATIVE INSTRUMENT AND WILL NOT BE FOLLOWED BY A WRITTEN
CONFIRMATION.
KINDLY ADDRESS ALL CORRESPONDENCE REGARDING THIS LETTER OF CREDIT TO THE
ATTENTION OF __________________________, MENTIONING OUR REFERENCE NUMBER AS IT
APPEARS ABOVE. TELEPHONE INQUIRIES CAN BE MADE TO ___________, AT
____________________.
VERY TRULY YOURS,
______________________
AUTHORIZED OFFICIAL
<PAGE>
ANNEX 9
SHIPPING DOCUMENTS
<TABLE>
<CAPTION>
DOCUMENTATION REQUIRED: ORIGINAL COPIES
- ----------------------- -------- ------
<S> <C> <C>
1. BILL OF LADING 3/3 5
Note: For bill of lading date purposes, cargo completion time shall be applied
2. CARGO MANIFEST 1 3
3. STATEMENTS OF FACT 1 3
4. NOTICE OF READINESS 1 3
5. MASTER'S RECEIPT OF DOCUMENTS 1 3
6. COMMERCIAL INVOICE (TELEX ACCEPTABLE
BUT ORIGINALS TO BE PROVIDED LATER)
- ISSUED TO _____________
- PRODUCT UNITS, SHOULD BE THE SAME AS
PURCHASE'S ORDER
7. CERTIFICATE OF ORIGIN 1 3
DOCUMENTATION REQUIRED: ORIGINAL COPIES
- ----------------------- -------- ------
1. DOCUMENTS WILL BE HANDED OVER VSL'S
MASTER FOR HIS USE:
BILL OF LADING 2
CARGO MANIFEST 1
STATEMENT OF FACTS 1
2. DOCUMENTS FOR PAYMENT: ORIGINAL COPIES
-------- ------
COMMERCIAL INVOICE 1 3
(TELEX ACCEPTABLE)
BILL OF LADING 3/3 1
</TABLE>
<PAGE>
ANNEX 10
FORM OF LETTER OF INDEMNITY
P.M.I. COMERCIO INTERNACIONAL, S.A. DE C.V.
-------------------------------------------
______, ___200__
_____________________________
Attn:________________________
Re: Payment for cargo without producing the relevant bills of lading.
M/T ___________, PMI Re:________________________________________
LETTER OF INDEMNITY
-------------------
Dear sirs:
Goods:___________barrels of Maya crude oil loaded in the M/T________.
The above goods were shipped on the above vessel by P.M.I. Comercio
International, S.A. de C.V. ("PMI") at (name the port and date of loading) and
consigned to the order of______("Buyer") but the relevant bills of lading will
not be delivered to Buyer before payment due date.
Due to the above, we hereby request you to make payment for such goods to
PMI without the presentation of the original bills of lading.
In consideration of your complying with our above request we hereby agree
as follows:
1. To indemnify you from and against, and to hold you harmless in respect
of, any and all liability, loss or damage of whatsoever nature which you sustain
by reason of making payment for such goods to the order of PMI in accordance
with our request.
2. In the event of any proceeding being commenced against you in
connection with such payment, to provide you from time to time with sufficient
funds to defend the same.
3. The liability under this indemnity shall expire one Year after the date
hereof, or when the original bills of lading are delivered to you, whichever
occurs first.
<PAGE>
ANNEX 11
EXAMPLES OF THE OPERATION OF THE DIFFERENTIAL
EXAMPLE 1
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
- ----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
A Quarterly Shortfall 0.00 0.00 75.00 0.00 50.00
B Quarterly Surplus 20.00 40.00 0.00 10.00 0.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 0.00 0.00 75.00 75.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 20.00 60.00 60.00 70.00
E Aggregate of 17(a) credits for prior Quarters 0.00 0.00 0.00 15.00 15.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 0.00 0.00 15.00 15.38
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 0.00 10.00
H Credit Interest for Quarter 0.00 0.00 0.00 0.38 0.13
I Aggregate Credit Interest 0.00 0.00 0.00 0.38 0.51
J Aggregate of Quarterly Shortfalls and Credit Interest 0.00 0.00 75.00 75.38 125.51
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 20.00 60.00 0.00 0.00
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 0.00 0.00 15.00 15.38 55.51
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 0.00 0.00 15.00 0.00 50.00
N 17(b) sum 0.00 0.00 15.00 0.00 50.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 0.00 0.00 15.00 0.00 30.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 20.00
S 18(a) premium 0.00 0.00 0.00 10.00 0.00
T 18(b) sum 0.00 0.00 0.00 10.00 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 0.00 10.00 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXAMPLE 2
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
<TABLE>
<CAPTION>
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
- ----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
A Quarterly Shortfall 10.00 20.00 0.00 0.00 50.00
B Quarterly Surplus 0.00 0.00 75.00 10.00 0.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 10.00 30.00 30.00 30.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 0.00 0.00 75.00 85.00
E Aggregate of 17(a) credits for prior Quarters 0.00 10.00 30.00 30.00 30.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 10.00 30.25 31.01 31.01
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 31.01 31.01
H Credit Interest for Quarter 0.00 .25 .76 0.00 0.00
I Aggregate Credit Interest 0.00 .25 1.01 1.01 1.01
J Aggregate of Quarterly Shortfalls and Credit Interest 10.00 30.25 31.01 31.01 81.01
K Aggregate of Quarterly Surpluses for prior Quarters minus 0.00 0.00 0.00 43.99 53.99
Aggregate of Quarterly Shortfalls and Credit Interest for
prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 10.00 30.25 31.01 0.00 0.00
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 10.00 20.00 0.00 0.00 0.00
N 17(b) sum 10.00 20.00 0.00 0.00 0.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 10.00 20.00 0.00 0.00 0.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
S 18(a) premium 0.00 0.00 31.01 0.00 0.00
T 18(b) sum 0.00 0.00 31.01 11.28 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 20.00 11.28 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 11.28 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 11.01 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXAMPLE 3
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
<TABLE>
<CAPTION>
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
A Quarterly Shortfall 25.00 65.00 0.00 40.00 0.00
B Quarterly Surplus 0.00 0.00 50.00 0.00 50.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 25.00 90.00 90.00 130.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 0.00 0.00 50.00 50.00
E Aggregate of 17(a) credits for prior Quarters 0.00 25.00 90.00 90.00 130.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 25.00 90.63 92.89 133.96
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 50.00 50.00
H Credit Interest for Quarter 0.00 0.63 2.27 1.07 2.10
I Aggregate Credit Interest 0.00 0.63 2.89 3.96 6.06
J Aggregate of Quarterly Shortfalls and Credit Interest 25.00 90.63 92.89 133.96 136.06
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 0.00 0.00 0.00 0.00
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 25.00 90.63 92.89 83.96 86.06
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 25.00 65.00 0.00 40.00 0.00
N 17(b) sum 25.00 65.00 0.00 40.00 0.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 25.00 30.00 0.00 30.00 0.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 35.88 0.00 10.25
R Credit Carryforwards (succeeding Quarter) 0.00 35.00 0.00 10.00 0.00
S 18(a) premium 0.00 0.00 0.00 0.00 50.00
T 18(b) sum 0.00 0.00 14.13 0.00 39.75
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 14.13 0.00 20.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 19.75
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXAMPLE 4
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
<TABLE>
<CAPTION>
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
A Quarterly Shortfall 0.00 0.00 25.00 0.00 50.00
B Quarterly Surplus 20.00 40.00 0.00 10.00 0.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 0.00 0.00 25.00 25.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 20.00 60.00 60.00 70.00
E Aggregate of 17(a) credits for prior Quarters 0.00 0.00 0.00 0.00 0.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 0.00 0.00 0.00 0.00
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 0.00 0.00
H Credit Interest for Quarter 0.00 0.00 0.00 0.00 0.00
I Aggregate Credit Interest 0.00 0.00 0.00 0.00 0.00
J Aggregate of Quarterly Shortfalls and Credit Interest 0.00 0.00 25.00 25.00 75.00
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 20.00 60.00 35.00 45.00
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 0.00 0.00 0.00 0.00 0.00
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 0.00 0.00 0.00 0.00 5.00
N 17(b) sum 0.00 0.00 0.00 0.00 5.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 0.00 0.00 0.00 0.00 5.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
S 18(a) premium 0.00 0.00 0.00 0.00 0.00
T 18(b) sum 0.00 0.00 0.00 0.00 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 0.00 0.00 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXAMPLE 5
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
<TABLE>
<CAPTION>
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
A Quarterly Shortfall 0.00 65.00 0.00 100.00 0.00
B Quarterly Surplus 30.00 0.00 150.00 0.00 100.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 0.00 65.00 65.00 165.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 30.00 30.00 180.00 180.00
E Aggregate of 17(a) credits for prior Quarters 0.00 0.00 35.00 35.00 35.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 0.00 35.00 35.88 35.88
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 35.88 35.88
H Credit Interest for Quarter 0.00 0.00 0.88 0.00 0.00
I Aggregate Credit Interest 0.00 0.00 0.88 0.88 0.88
J Aggregate of Quarterly Shortfalls and Credit Interest 0.00 65.00 65.88 165.88 165.88
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 30.00 0.00 114.13 14.13
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 0.00 35.00 35.88 0.00 0.00
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 0.00 35.00 0.00 0.00 0.00
N 17(b) sum 0.00 35.00 0.00 0.00 0.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 0.00 30.00 0.00 0.00 0.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 5.13 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 5.00 0.00 0.00 0.00
S 18(a) premium 0.00 0.00 35.88 0.00 0.00
T 18(b) sum 0.00 0.00 30.75 0.00 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 11.02 0.00
V Premium applied during succeeding Quarter 0.00 0.00 20.00 11.02 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 11.02 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 10.75 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.15
FIRST AMENDMENT AND SUPPLEMENT TO THE
MAYA CRUDE OIL SALES AGREEMENT
AGREEMENT (this "Agreement") made and entered into as of August 19th
1999, by and between P.M.I. COMERCIO INTERNACIONAL, S.A. de C.V., a Mexican
corporation ("Seller") and CLARK REFINING AND MARKETING, INC., a Delaware
corporation ("Buyer").
W I T N E S S E T H
WHEREAS, Seller and Buyer entered into that certain Maya Crude Oil
Sales Agreement, dated as of March 10, 1998 (the "Maya Agreement"); and
WHEREAS, Buyer and Seller wish to amend and supplement certain
provisions of the Maya Agreement;
NOW THEREFORE, the parties hereto, in consideration of the premises
and the mutual covenants and conditions herein set forth, do hereby agree as
follows:
1. Amendments to Article 1 of the Maya Agreement.
(a) The definition of "Monthly Surplus" set out in Article 1 of the
Maya Agreement is hereby amended to read in its entirety as follows:
"Monthly Surplus" means, for any Month all or part of which is
within the Guarantee Period, the amount equal to the product of (a) the
Differential for such Month less U.S.$15.00 (if greater than zero)
multiplied by (b) thirty-six and six tenths percent (36.6%) of the
Contract Quantity delivered by Seller to Buyer in such Month (prorated for
any Month which is only partly within the Guarantee Period); provided,
however, that for purposes of determining any Monthly Surplus, (i) in the
event that the Completion Date has not been achieved on or before the
Guarantee Date, then Seller shall be deemed to have delivered the Contract
Quantity determined in accordance with Article 7.1(b) as though Completion
had been achieved, and (ii) in the event Buyer, on or after the Completion
Date, has underlifted under Article 8.1, then Seller shall be deemed to
have delivered the entire Contract Quantity for such Month less any volume
the lifting of which is excused under Article 8.2.
(b) There is hereby added to Article 1 a new defined term
"Governmental Force Majeure," which shall read in its entirety as follows:
"Governmental Force Majeure" means the reduction by Seller of Maya
deliveries under Seller's contractual commitments to its export customers
in general as the result of a direction from the federal government
<PAGE>
of Mexico to curtail crude oil exports despite the availability of Maya
for export.
(a) The definition of "Refinery" set out in Article 1 of the Maya
Agreement is hereby amended to read in its entirety as follows:
"Refinery" means the refinery located at Port Arthur, Texas and
owned, as of the date of the Agreement, by Clark Refining & Marketing,
Inc., as modified and expanded by the Project.
2. Amendments and Supplement to Article 11 of the Maya Agreement.
(a) Article 11.4.1 of the Maya Agreement is hereby amended to read
in its entirety as follows:
11.4.1 If at any time (a) Buyer fails to make any payment in an
aggregate amount of one hundred thousand U.S. Dollars (U.S.$100,000) or
more, which is required to be made by Buyer under the Agreement, or under
any other crude oil agreement between Buyer and Seller, when and as the
same shall become due and payable and such failure is not remedied within
five Business Days, (b) the Clark Performance Undertaking is required
under Article 29.5 but fails to be in full force and effect, or (c) either
(1) senior unsecured long-term debt securities of Buyer for which there is
no recourse to or credit enhancement from any party other than Buyer, or,
on an indicative basis, Buyer's ability to pay senior unsecured long-term
obligations of U.S.$100,000,000 for which there is no recourse to or
credit enhancement from any party other than Buyer, or (2) in the event
the Clark Performance Undertaking is required pursuant to Article 29.5,
senior unsecured long-term debt securities of Clark R&M for which there is
no recourse to or credit enhancement from any party other than Clark R&M,
or, on an indicative basis, the Clark Performance Undertaking are (i) not
rated at least Baa3 by Moody's Investors Service, Inc. or BBB- by Standard
& Poor's Rating Services (or, if either such agency changes its rating
system, the equivalent successor rating applied by such agency at the time
in question), (ii) placed on credit watch for potential down-grading by
either such rating agency while rated Baa2 or lower in the case of Moody's
Investors Service, Inc. or BBB or lower in the case of Standard & Poor's
Rating Services (or, if either such agency changes its rating system, the
equivalent successor rating applied by such agency at the time in
question), or (iii) not rated by at least one such rating agency, then
Seller shall have the right in its sole discretion to require Buyer to
secure its obligations to make payment for Maya under the Agreement
either, at Buyer's option, by means of one or more stand-by letters of
credit conforming to the requirements of Article 11.4.2 or by means of a
financial guarantee insurance policy conforming to the requirements of
Article 11.4.3; provided, however, that any such letter of credit or
insurance shall no longer be required and, if outstanding, any such letter
of credit shall be returned by Seller and any
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<PAGE>
such insurance coverage shall be allowed to lapse or be cancelled in
accordance with its terms, when and if (x) in the case of (a) above, such
failure to pay has been cured in full and no other such failure to pay has
occurred during the period of three Months from such cure, (y) in the case
of (b) above, the Clark Performance Undertaking has come into and remained
in full force and effect for a period of three Months, and (z) in the case
of (c) above, the securities or obligations referred to therein become
rated Baa3 or higher by Moody's Investors Service, Inc. or BBB- or higher
by Standard & Poor's Rating Services (or, if either such agency changes
its rating system, the equivalent successor rating applied by such agency
at the time in question) or, if so rated and placed on credit watch, such
ratings are confirmed.
(b) There is hereby added to the Maya Agreement a new Article
11.4.3, reading in its entirety as follows:
11.4.3 Any financial guarantee insurance policy shall:
(i) be issued by Winterthur International Insurance Company
Limited, or such other insurance company as may be proposed by Buyer
and acceptable to Seller in its sole discretion exercised based upon
its generally applicable credit criteria; provided that Winterthur
International Insurance Company Limited or such other insurer
maintains, at all times while the policy is required to be in
effect, insurer financial strength and long-term counterparty credit
ratings of at least "A" (not including "A minus") assigned by
Standard & Poor's Ratings Services (or, if such agency changes its
rating system, the equivalent successor ratings applied by such
agency at the time in question) and is not on credit watch for
potential downgrading by such agency;
(ii) provide coverage which, on any Day, is available in an
amount equal at least to the total aggregate amount of (A) all
unpaid invoices for Maya delivered under the Agreement plus (B) one
hundred ten percent (110%) of Seller's estimated invoice value of
any Maya cargo with respect to which an invoice has yet to be issued
but which either has been lifted by Buyer, or the Agreed Laydays for
which have commenced or will commence within three Days from the Day
on which such calculation is made; and
(iii) be issued in the form of Annex 14A and accompanied when
issued and delivered to Seller by an opinion of the insurer's
English counsel addressed to Seller in substantially the form of
Annex 14B.
(c) Article 11.5 is hereby amended to read in its entirety as
follows:
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<PAGE>
11.5 Suspension of Deliveries. In the event that (a) Buyer fails to
make any payment in an aggregate amount of one hundred thousand U.S.
Dollars (U.S.$100,000) or more required to be made by Buyer under the
Agreement, or under any other crude oil agreement between Buyer and
Seller, when and as the same shall become due and payable, or (b) Buyer
fails to establish and maintain in accordance with Article 11.4.2 or
11.4.3 any stand-by letter of credit or financial guarantee insurance
required by Seller pursuant to Article 11.4.1, then (in addition to all
other rights or remedies provided to Seller hereunder or otherwise) Seller
shall have the right at its sole discretion to suspend further deliveries
of Maya unless and until Buyer makes the required payment referred to in
(a) above together with any accrued interest thereon or establishes the
stand-by letter of credit or insurance required pursuant to Article 11.4,
as the case may be. In the event of such suspension by Seller and
subsequent cure by Buyer, Seller shall not be obligated to resume delivery
of Maya for a period of time following such cure equal to the shorter of
the period of suspension preceding such cure or three Months; it being
understood that Seller shall use all commercially reasonable efforts to
resume such delivery earlier.
(d) There is hereby added to the Maya Agreement a new Annex 14A,
Form of Financial Guarantee Insurance Policy, and a new Annex 14B, Form of
Opinion of Insurance Counsel, reading in their entirety as set out in the
attachments hereto.
3. Amendments to Article 16 of the Maya Agreement. Article 16 of the Maya
Agreement is hereby amended to read in its entirety as follows:
ARTICLE 16 FORCE MAJEURE
16.1 Relief from Liability. Subject to the following terms of
this Article 16, neither party to the Agreement shall be liable for
demurrage, loss, damage, claims or demands of any nature arising out of
delays or defaults in performance under Parts III or V due to force
majeure.
16.2 Notice. Any party claiming force majeure shall promptly
notify the other of the occurrence of the event of force majeure relied
upon. In addition, each party shall give prompt notice to the other of the
occurrence of any event or the existence of any condition, whether the
result of force majeure or otherwise, known to it which is reasonably
likely to materially and adversely affect such party's ability to perform
any of its material obligations under the Agreement.
16.3 Payment for Maya Sold and Delivered. Nothing in this
Article 16 shall relieve Buyer of its obligation to pay in full for Maya
sold and delivered hereunder and for all other amounts due and payable to
Seller from Buyer under the Agreement.
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<PAGE>
16.4 Pro-rata Apportionment. If, as a result of force majeure,
Seller at any time does not have available a sufficient amount of Maya for
export to supply the aggregate amount of Maya to be sold by it hereunder
to Buyer and under such commitments as Seller may have with its other
customers, then Seller (a) shall not reduce the quantity of Maya sold to
Buyer hereunder by a percentage greater than the percentage by which
Seller reduces the aggregate amount of its sales of Maya to (i) other
export customers under agreements to supply 50,000 BPD or more of Maya, or
(ii) in the event such agreements represent less than twenty percent (20%)
of Seller's exports of Maya, Seller's other export customers in general,
and (b) in the event such force majeure is a Governmental Force Majeure,
the amount by which the quantity of Maya sold and delivered to Buyer
hereunder would otherwise be reduced due to such Governmental Force
Majeure shall be applied by Seller first against any quantity of Maya
nominated for sale and delivery to the Refinery under any other crude oil
supply agreement between Seller and Buyer or any of its Affiliates to the
full extent such quantity is not otherwise reduced due to force majeure
under the terms of such other agreement. It is expressly understood and
agreed that the occurrence of an event of force majeure shall not under
any circumstances require Seller to purchase crude oil from any party to
sell to Buyer.
16.5 Extension of Guarantee Period. If an event of force
majeure affecting the delivery, lifting or processing of Maya results in a
curtailment of processing at the Refinery of more than twenty-five percent
(25%) of the Contract Quantity on average over any period of fifteen (15)
consecutive Days or more during the Guarantee Period, then the Guarantee
Period shall be extended by the number of Days necessary for the Refinery,
assuming operation at Design Capacity, to process the quantity of Maya not
processed due to such curtailment; provided, however, that: (a) in the
event (i) such force majeure is a Governmental Force Majeure and (ii) no
quantity of Maya the sale and delivery of which would otherwise be reduced
under this Agreement is applied instead, pursuant to the terms of Article
16.4(b), against Maya nominated under another agreement, then the
above-mentioned threshold of twenty-five percent on average over fifteen
Days shall not apply as a condition to such extension of the Guarantee
Period; (b) the aggregate period of all extensions under this Article 16.5
shall not exceed two hundred seventy (270) Days in respect of events of
force majeure affecting the production or delivery of Maya by Seller or
the facilities at the Loading Port, and three hundred sixty-five (365)
Days in respect of events of force majeure affecting the lifting,
transportation, storage or processing of Maya by Buyer; and (c) Buyer,
within thirty (30) Days following the end of any such curtailment, shall
notify Seller of the specific event of force majeure which caused the
curtailment, its duration and the number of Barrels of Maya affected. Upon
request from Seller, Buyer shall supply an officer's certificate
confirming the content of such notice.
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<PAGE>
16.6 Meaning of Force Majeure. For purposes of this Article
16, force majeure shall include any act or event that prevents or delays
the performance by either party of its obligations under Part III and Part
V if and to the extent such act or event is beyond such party's reasonable
control, not the result of such party's fault or negligence, and such
party has been unable to overcome the consequences of such act or event by
the exercise of commercially reasonable efforts, which may include the
expenditure of funds. Subject to the satisfaction of the conditions
established in the previous sentence, force majeure shall include, but not
be limited to, the following acts or events, or any similar and equally
serious acts or events, which prevent or delay the performance by a party
of its obligations under Part III and Part V: acts of God or of the public
enemy; floods or fire; hostilities or war (whether declared or
undeclared); blockade; strikes or other labor disturbances that are not
the result of breach of a labor contract by the affected party; riots,
insurrections or civil commotion; quarantine restrictions or epidemics;
electrical shortages or blackouts; earthquakes; tides, storms or bad
weather at the Loading Port; accidents; breakdown or injury to producing
or delivering facilities in Mexico or to receiving or processing
facilities at the Refinery; interruption, decline or shortage of Seller's
supply of Maya available for export from Mexico (including, without
limitation, shortage due to increased domestic demand); or laws, change in
laws, decrees, regulations, orders or other directives or actions of
either general or particular application (other than as may be directed to
aspects of the Agreement not common to long-term crude oil supply
agreements generally) of the government of Mexico (including, without
limitation, Governmental Force Majeure) or the government of the United
States of America or any agency thereof (which shall not include Seller,
Pemex Exploracion y Produccion, or any of Seller's other Affiliates) or of
a Person or authority purporting to act therefor.
4. Amendments and Supplement to Article 29 of the Maya Agreement.
(a) Clause A of the definition of Compensating Collateral set out in
Article 29.5(c) of the Maya Agreement is hereby amended to read in its entirety
as follows:
(A) upon presentation of a certificate of Seller stating that Buyer is in
breach of the Agreement and has agreed that it is liable to Seller in an
amount equal to or greater than the amount being drawn or that Buyer's
liability to Seller in an amount equal to or greater than the amount being
drawn has been determined in an arbitral award obtained pursuant to
Article 31.2.
(b) Article 29.7 of the Maya Agreement is hereby amended to read in
its entirety as follows:
29.7 Right to Terminate. In the event of any assignment of the
Agreement by Buyer or Seller contrary to this Article 29, the
non-assigning party shall have the right, without prejudice to any other
rights or remedies
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<PAGE>
it may have hereunder or otherwise, to terminate the Agreement effective
immediately upon notice to the assigning party. In the event that Buyer
fails to maintain Compensating Collateral in effect to the extent required
under Article 29.5(c), then Seller shall have the right in its sole
discretion (without prejudice to any other rights or remedies it may have
hereunder or otherwise) (i) to suspend further deliveries of Maya under
the Agreement until such failure is remedied, and (ii) in the event that
such failure to maintain the required Compensating Collateral continues
unremedied for a period of (60) Days, to terminate the Agreement effective
immediately upon notice to Buyer.
(c) It is hereby agreed that any subordinated lien on the Project
Assets provided by Buyer as a part of Compensating Collateral shall be
substantially in a form to be agreed mutually by the parties.
5. Certain Clarifications.
For the avoidance of any doubt, it is agreed that, in connection
with Part IV of the Maya Agreement, (i) a "succeeding Quarter" referred to in
Articles 17 and 18 of the Maya Agreement may include a Quarter beginning after
the end of the Guarantee Period, (ii) any Credit Carryforward from a Quarter
beginning after the end of the Guarantee Period shall be applied in the manner
specified in the first sentence of Article 17(b) of the Maya Agreement as a
credit against the purchase price of Maya delivered in the succeeding Quarter,
and (iii) any Premium Carryforward from a Quarter beginning after the end of the
Guarantee Period shall be applied in the manner specified in the first sentence
of Article 18(b) of the Maya Agreement as a premium on the purchase price of
Maya delivered in the succeeding Quarter.
5. Miscellaneous Terms.
(a) This Agreement is effective as of the date hereof and, except as
amended hereby, all other terms and conditions of the Maya Agreement shall
continue to be in full force and effect.
(b) The place of execution, delivery or performance of this
Agreement or of the domicile of the parties notwithstanding, this Agreement
shall be governed by and interpreted in accordance with the laws of the State of
New York, it being understood and agreed that the United Nations Convention on
Contracts for the International Sale of Goods shall not apply to this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers or representatives as of the date
first above written.
P.M.I. COMERCIO INTERNACIONAL,
S.A. DE C.V.
[ILLEGIBLE] By: /s/ Eduardo Martinez del Rio
- -------------------------- -----------------------------
Witness Eduardo Martinez del Rio
General Director
CLARK REFINING & MARKETING,
INC.
[ILLEGIBLE] By: /s/ Maura J. Clark
- -------------------------- -----------------------------
Witness
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<PAGE>
ANNEX 14A
FORM OF GUARANTEE INSURANCE POLICY
<PAGE>
ANNEX 14B
FORM OF OPINION OF ENGLISH COUNSEL TO THE INSURER
<PAGE>
Exhibit 10.16
PEMEX PERFORMANCE GUARANTEE
GUARANTEE AGREEMENT, executed as of March 10, 1998 (this "Guarantee"), by
PETROLEOS MEXICANOS, a decentralized public entity of the Federal Government of
the United Mexican States ("Pemex"), for the benefit of Clark Refining &
Marketing, Inc., a Delaware corporation (together with any assignee permitted
under the Maya Agreement, as defined below, "Beneficiary"), pursuant to that
certain Maya Crude Oil Sales Agreement, dated as of March 10, 1998 (the "Maya
Agreement"), between P.M.I. Comercio Internacional, S.A. de C.V., an affiliate
of Pemex ("PMI"), and Beneficiary. Capitalized terms used but not defined in
this Guarantee shall have the meanings ascribed to them in the Maya Agreement.
WHEREAS, Beneficiary and PMI have entered into the Maya Agreement;
WHEREAS, Beneficiary has requested that PMI's obligations under the Maya
Agreement be guaranteed by Pemex; and
WHEREAS, Pemex is willing to guarantee the performance by PMI of its
obligations under the Maya Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, Pemex hereby
agrees as follows:
Section 1. Guarantee of Performance.
(a) Pemex hereby acknowledges that it is fully aware of the terms and
conditions of the Maya Agreement and the transactions contemplated thereby, and
Pemex hereby unconditionally and irrevocably guarantees to Beneficiary the
performance by PMI when and as due of all of PMI's obligations under the Maya
Agreement, including, without limitation, the payment of any damages of
Beneficiary arising out of or based upon any failure of PMI to perform any
obligation required of it under the Maya Agreement (the "Guaranteed
Obligations").
(b) Subject to the provisions of Section 2 below, Pemex waives notice of
the acceptance of this Guarantee and of the performance or nonperformance by
PMI, demand for payment from PMI or any other Person and notice of nonpayment or
failure to perform on the part of PMI, diligence, presentment, protest, dishonor
(to the fullest extent permitted by law), all other demands or notices
whatsoever other than a demand or demands for payment hereunder. The obligations
of Pemex shall be absolute and unconditional and shall remain in full force and
effect until satisfaction of all Guaranteed Obligations under this Section 1
and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by the existence of any claim, set-off, defense
or other right that Pemex, PMI, or any Affiliate of PMI
<PAGE>
may have at any time and from time to time against Beneficiary or any of its
Affiliates, whether in connection herewith or with any unrelated transactions;
provided, however, that in respect of any amount owed to Beneficiary, Pemex
shall be entitled to assert any claim, set-off, defense or other right of PMI
under the Maya Agreement in respect of any of its obligations hereunder.
(c) Subject to the provisions of Section 2 below, the obligations of Pemex
under this Section 1 shall not be affected by the genuineness, validity,
regularity or enforceability of any of PMI's obligations under the Maya
Agreement, or any amendment, waiver or other modification thereof (except to the
extent of such amendment, waiver or modification), or substitution, release or
exchange of collateral for or other guarantee of any of the Guaranteed
Obligations (except to the extent of such substitution, release or exchange)
without the consent of Pemex, and priority or preference to which any other
obligations of PMI may be entitled over PMI's obligations under the Maya
Agreement or, to the fullest extent permitted by applicable law, any other
circumstance which might otherwise constitute a legal or equitable defense to or
discharge of the obligations of a surety or guarantor, including, without
limitation, any defense arising out of any laws of any jurisdiction which would
either exempt, modify or delay the due or punctual payment and performance of
the obligations of Pemex hereunder.
(d) Without limiting the generality of the foregoing and to the fullest
extent permitted by law, it is agreed, subject to the provisions of Section 2
below, that the occurrence of any one or more of the following shall not affect
the liability of Pemex under this Section 1: (i) the extension of the time for
or waiver of, at any time or from time to time, without notice to Pemex, PMI's
performance of or compliance with any of its obligations under the Maya
Agreement, (except that such extension or waiver shall be given effect in
determining the obligations of Pemex, hereunder), (ii) any assignment, transfer
or other arrangement by which PMI transfers its right, under the Maya Agreement,
(iii) any merger or consolidation of PMI or Pemex into or with any other Person,
or (iv) and change in the ownership of any shares of capital stock of PMI or any
Affiliate thereof. This Guarantee is an absolute, present and continuing
guarantee and, except as provided in Section 2 hereof, is in no way conditional
or contingent upon any attempt to collect from PMI any unpaid amounts due or
otherwise to enforce performance by PMI.
Section 2. Condition Precedent to Enforcement. The provisions of Section
1 hereof notwithstanding, it shall be a condition precedent to Beneficiary's
right to enforce this Guarantee that Beneficiary shall first have obtained an
arbitral award or judgment against PMI with respect to the Guaranteed
Obligations sought to be enforced against Pemex hereunder; provided, however,
that the obtaining of such arbitral award or judgment shall not be a condition
precedent to Beneficiary's right to enforce this Guarantee if for any reason,
including, without limitation, the bankruptcy or insolvency of PMI, Beneficiary
is prevented or stayed by applicable law from obtaining such arbitral award or
judgment. Nothing herein is intended to prevent Beneficiary from joining Pemex
in any arbitral proceeding against PMI under the Maya Agreement for the purpose
of establishing PMI's liability and the liability of Pemex in the event any such
arbitral award is not paid in full by PMI.
<PAGE>
Section 3. Subrogation. Pemex shall be subrogated to all the rights of
Beneficiary against PMI in respect of any amounts paid by Pemex pursuant to this
Guarantee; provided, however, that Pemex shall not enforce any right or receive
any payment arising out of such subrogation until all amounts then due and
payable from PMI in respect of the Guaranteed Obligations have been paid in
full.
Section 4. Return of Payments. Pemex agrees that, if at any time
Beneficiary is required by law to rescind or return all or any part of any
payment made by Pemex or PMI in respect of any of the Guaranteed Obligations for
any reason whatsoever (including, without limitation, the reorganization,
liquidation, dissolution, arrangement or winding-up of, or similar relief with
respect to, PMI), the obligation of Pemex to guarantee such payment shall, to
the extent that such payment is rescinded or returned, be deemed to have
continued in existence, and this Guarantee shall continue to be effective or be
reinstated, as the case may be, as to such Guarantee Obligation, all as though
such payment had not been made.
Section 5. Expenses. Pemex agrees to pay all reasonable and duly
documented fees and out-of-pocket expenses (including the reasonable and duly
documented fees and expenses of the Beneficiary's counsel) incurred in
connection with the enforcement or protection of the rights of Beneficiary under
this Guarantee; provided, however, that Pemex shall not be liable for any
expense incurred in connection with any such enforcement or protection if it is
determined that no payment under this Guarantee is due with respect thereto.
Section 6. Withholding Taxes. All payments hereunder shall be made free
and clear of, and without deduction or withholding for or an account of, any
taxes, levies, fees, imposts, duties, expenses, commissions, withholdings,
assessments or other charges, together with all penalties, fines, additions to
tax and interest thereon assessed or imposed by any Mexican governmental
authority (collectively, "Mexican Taxes"), except to the extent that Pemex is
required by law to make payment subject to any taxes. If any Mexican Taxes shall
be required by law to be deducted or withheld from any payment to Beneficiary or
any other Person entitled thereto hereunder, Pemex shall pay such additional
amounts as may be necessary to ensure that the Beneficiary or such Person
receives a net amount equal to the full amount which it would have otherwise
received had payment not been made subject to withholding or other deduction.
Section 7. Judgment Currency. Payment obligations of Pemex under this
Guarantee shall be in U.S. Dollars and shall be made in the manner and at the
place specified pursuant to the Maya Agreement, and shall not be discharged by
an amount paid in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on conversion to
U.S. Dollars and transferred to the designated place of payment under normal
banking procedures does not yield the amount of U.S. Dollars due hereunder. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder in U.S. Dollars into another currency (the "Judgment
Currency"), the rate of exchange which shall be applied shall be that at which,
in accordance with normal banking procedures, the party entitled thereto could
purchase U.S. Dollars with the Judgment Currency at New York, New
<PAGE>
York at or about 11:00 a.m. (New York City time) on the Business Day immediately
preceding the Day on which final judgment is given. The obligation of Pemex in
respect of any sum due to Beneficiary shall, to the extent permitted by
applicable law, notwithstanding any judgment in a currency other than U.S.
Dollars, be discharged only to the extent that, on the Business Day following
receipt of any sum adjudged to be so due in the Judgment Currency, Beneficiary
may in accordance with normal banking procedures purchase U.S. Dollars with the
Judgment Currency. If the amount of U.S. Dollars so purchased is less than the
unpaid amounts then due to Beneficiary, Pemex agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify Beneficiary against the
resulting loss; and if the amount of U.S. Dollars so purchased is greater than
the unpaid amounts then due to Beneficiary agrees promptly to repay to Pemex
such excess.
Section 8. Representations and Warranties. Pemex hereby represents and
warrants to Beneficiary that:
(a) It is a decentralized public entity of the Federal Government of
Mexico endowed with legal status and its own patrimony and has the legal
capacity to enter into this Guarantee in accordance with the Ley Org-nica de
Petroleos Mexicanos y Organismos Subsidiarios, published in the Diario Oficial
de la Federaci-n on July 16, 1992.
(b) No authorization from any Mexican governmental authority is required
under existing applicable laws for the authorization, execution and performance
of this Guarantee by Pemex, or for the legality, validity, binding effect or
enforceability hereof, except for the authorization of Pemex's Board of
Directors, which has been duly obtained and is in full force and effect.
(c) Neither the execution of this Guarantee by Pemex, nor the performance
of its obligations hereunder will (i) conflict with or result in any breach of,
or constitute a violation of or a default under, any applicable law (including,
without limitation, the Ley Organica de Petr-leos Mexicanos y Organismos
Subsidiarios) or any indenture, mortgage, deed of trust, or other instrument or
agreement (including, without limitation, any negative pledge or similar clause)
to which Pemex is a party or by which it may be bound or to which any of its
assets may be subject, or (ii) result in the creation or imposition of any lien
upon any of its assets.
(d) The execution and performance by Pemex of this Guarantee has been duly
authorized by all necessary corporate action. This Guarantee has been duly
executed by Pemex and constitutes the legal, valid and binding obligation of
Pemex, enforceable in accordance with its terms, subject, regarding
enforceability, to the limitations set forth in Section 8(f) below.
(e) No lawsuits or proceedings are pending or, to Pemex's knowledge,
threatened against it which either individually or in the aggregate, if
determined adversely to Pemex, may materially and adversely affect the ability
of Pemex to perform its obligations under this Guarantee.
<PAGE>
(f) This Guarantee and the transactions contemplated herein constitute
activities of Pemex, and Pemex is subject to private commercial law with respect
thereto. Pemex is not entitled to any immunity, whether on grounds of sovereign
immunity, act of state or otherwise, from any legal proceedings in Mexico and,
based upon Section 9 below, in the jurisdictions referred to therein, except
that under applicable laws of Mexico, and in particular in accordance with
Article 27 of the Political Constitution of the United Mexican States (the
"Political Constitution"), Articles 1, 2, 3 and 4 (and related articles) of the
Regulatory Law to Article 27 of the Political Constitution concerning Petroleum
Affairs (the "Regulatory Law"), Articles 15, 16 and 19 of the Regulations to the
Regulatory Law, Articles 16 and 60 (and other related articles) of the General
Law on National Patrimony, Articles l, 2, 3 and 4 (and other related articles)
of the Organic Law of Petroleos Mexicanos and Subsidiary Entities (the "Organic
Law") and Article 4 of the Federal Code of Civil Procedure of the United Mexican
Sates set forth, inter alia, that: (i) attachment prior to judgment, attachment
in aid of execution and execution of a final judgment may not be ordered by
Mexican courts against property of Pemex, (ii) all domestic petroleum and
hydrocarbon resources (whether solid, liquid or in gas form) are permanently and
inalienably vested in the United Mexican States (and, to that extent, subject to
immunity); (iii) (a) the exploration, exploitation, refining, transportation,
storage, distribution and first-hand sale of crude oil, (b) the exploration,
exploitation, production and first-hand sale of natural gas, as well as the
transportation and storage inextricably linked with such exploitation and
production, and (c) the production, transportation, storage, distribution and
first-hand sale of the petroleum derivatives (including petroleum products) used
as basic industrial raw materials and the derivatives of natural gas which are
considered "basic petrochemicals" (the "Petroleum Industry") are reserved
exclusively to the United Mexican States (and, to that extent, assets related
thereto are entitled to immunity); and (iv) the public entities created and
appointed by the Federal Congress of the United Mexican States to conduct,
control, develop and operate the Petroleum Industry of the United Mexican States
are Pemex and the subsidiary entities (and therefore, entitled to immunity in
respect to such exclusive rights and power).
Section 9. Governing Law; Submission to Jurisdiction; Waivers.
(a) THE PLACE OF EXECUTION AND DELIVERY HEREOF NOTWITHSTANDING, THIS
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) Pemex hereby appoints the Consul General of Mexico in The City of New
York and its successors as its authorized agent ("Process Agent") upon which
process may be served in any action by Beneficiary arising out of or based upon
this Guarantee which may be instituted in any federal court sitting in The City
of New York or, absent jurisdiction in such federal courts, in any state court
sitting in The City of New York, and Pemex irrevocably submits to the
jurisdiction of any such court, and the appellate courts therefrom, and to the
jurisdiction of the Federal courts sitting in Mexico City, Mexico, in respect of
any such action, and irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any such action in any such court, and
waives any right to which it may be entitled on account of residence
<PAGE>
or domicile. The appointment made by Pemex shall be irrevocable so long as any
obligation of PMI under the Maya Agreement remains to be satisfied or the
satisfaction of which is disputed by Beneficiary under the terms thereof, unless
and until a successor agent shall have been appointed to act as the Process
Agent on behalf of Pemex, and such successor agent shall have accepted such
appointment. Pemex will take any and all action, including the filing of any and
all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Process Agent for Pemex at 8 East 41st Street, New York, New York 10017, and
written notice of such service mailed or delivered to Pemex at its address set
forth in Section 3 hereof shall be deemed, in every respect, effective service
of process upon Pemex.
(c) To the extent Pemex or any of its assets has or in the future may
acquire any immunity (whether characterized as sovereign immunity or otherwise)
from any proceeding to enforce this Guarantee (including, without limitation,
immunity from service of process, immunity from jurisdiction, immunity from
attachment prior to judgment, immunity from attachment in execution of judgment,
and immunity from execution of judgment), Pemex (except to the extent of the
exception contained in Section 8(f) above) hereby expressly and irrevocably
waives any such immunity.
(d) PEMEX HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES TRIAL BY JURY IN
ANY PROCEEDING BROUGHT TO ENFORCE THIS GUARANTEE.
Section 10. No Implied Waiver. No failure on the part of Beneficiary to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other further
exercise of any other right or remedy.
Section 11. Survival of Representations. All representations and
warranties contained herein shall survive the execution and delivery of this
Guarantee regardless of any investigation made by Beneficiary or any other
Person.
Section 12. Severable Provisions. To the fullest extent permitted by
applicable law, any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or of any provision in the Maya Agreement, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 13. Integration. This Guarantee and the Maya Agreement represent
the agreement of Pemex, Beneficiary and their respective Affiliates with respect
to the subject matter hereof, and there are no premises, undertakings,
representations or warranties by Pemex or Beneficiary relative to the subject
matter hereof not expressly set forth or referred to herein or in such other
documents.
<PAGE>
Section 14. No Third-Party Beneficiaries. This Guarantee shall be
binding upon the successors and assigns of Pemex and shall inure to the benefit
of, and shall be enforceable by, Beneficiary to the fullest extent permitted by
applicable laws. This Guarantee shall not be deemed to create any right in any
Person except Beneficiary, its successors and assigns and shall not be construed
in any respect to be a contract in whole or in part for the benefit of any other
Person; provided, however, that this Guarantee may be assigned in connection
with any assignment of the Maya Agreement permitted therein.
Section 15. Amendments Only in Writing. No amendment of or
supplement to this Guarantee, or waiver or modification of, or consent under,
the terms hereof, shall be effective unless evidenced by an instrument in
writing signed by Pemex and Beneficiary.
Section 16. Notices. Any notice or other communication to Pemex
hereunder must be in writing and may be given by hand, courier, or registered or
certified mail (or a substantially similar form of mail), or by facsimile
transmission addressed as follows:
Petroleos Mexicanos
Avendia Marina Nacional 329
Torre Ejecutiva, Piso 38
Col. Huastecas
11311 Mexico, D.F., Mexico
Attn: Finance Manager
Fax No. 525-545-5247
Pemex may, by written notice to Beneficiary, change the address to
which notices to it shall be directed. Any notice or other communication
hereunder shall be deemed to have been given when received by the addressee.
Section 17. Counterparts; Language. This Guarantee may be executed
in several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Guarantee is
executed in English and in the event of any conflict between the English version
and any translation hereof, the English version shall control.
<PAGE>
IN WITNESS WHEREOF, Pemex has executed this Guarantee as of the date
first above written.
PETROLEOS MEXICANOS
By: Mat. Enrique Roman Enrique
-----------------------------------
Name: Mat. Enrique Roman Enrique
Title: Subdirector de Financiamiento
y Tesoreria
AGREED AND ACCEPTED:
CLARK REFINING & MARKETING, INC.
By: /s/ Bradley D. Aldrich
----------------------------------
Name: Bradley D. Aldrich
Title: Executive Vice President
<PAGE>
Exhibit 15
December 15, 1999
Port Arthur Finance Corp.
1801 S. Gulfway Drive
Port Arthur, Texas 77640
Dear Sirs/Madams:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Port Arthur Coker Company L.P. and subsidiary as of September 30,
1999, as indicated in our report dated December 10, 1999, because we did not
perform an audit, we expressed no opinion on that information.
We have also a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Clark Refining & Marketing, Inc. and subsidiaries for the nine
month periods ended September 30, 1999 and 1998, as indicated in our report
dated November 9, 1999; because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our reports referred to above, are being used in this
Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
Deloitte & Touche LLP
<PAGE>
Exhibit 21
Subsidiaries of the Registrants
Sabine River Holding Corp.
Neches River Holding Corp. -- Delaware
Port Arthur Coker Company L.P. -- Delaware
Port Arthur Finance Corp. -- Delaware
Neches River Holding Corp.
None
Port Arthur Coker Company L.P.
Port Arthur Finance Corp. -- Delaware
Port Arthur Finance Corp.
None
<PAGE>
Exhibit 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement on Form S-4 of our report
dated August 5, 1999, appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the use of our report dated February 6, 1999 (July 8, 1999 as
to the discontinued operations described in Note 3) relating to the consolidated
financial statements of Clark Refining & Marketing, Inc. and Subsidiaries.
We also consent to the reference to us under the headings "Selected Consolidated
Financial Data" and "Experts" in such Prospectus.
St. Louis, Missouri
December 15, 1999
<PAGE>
Exhibit 23.03
[PURVIN & GERTZ, INC. LETTERHEAD OF KEN E. NOACK, SENIOR PRINCIPAL]
CONSENT OF PURVIN & GERTZ, INC.
We hereby consent to the use in the Prospectus constituting part of
the Registration Statement on Form S-4 of Port Arthur Finance Corp. of our
Independent Engineer's Report on the Port Arthur Coker Company Project in
its entirety, dated August 10, 1999, and our Crude Oil and Refined Market
Forecast in its entirety, prepared for Port Arthur Coker Company L.P.,
dated July 13, 1999, which appear in such Prospectus and to the references
to our firm in such Prospectus.
PURVIN & GERTZ, INC.
/s/ Ken E. Noack
Ken E. Noack
<PAGE>
Exhibit 23.04
To the Board of Directors of
Sabine River Holding Corp.,
as General Partner of
Port Arthur Coker Company L.P.
We consent to the inclusion in this registration statement on Form S-4 of our
report dated February 4, 1997, except for Note 3 as it relates to discontinued
operations, for which the date is July 8, 1999, on our audit of the consolidated
financial statements of Clark Refining & Marketing, Inc.
PricewaterhouseCoopers LLP
December 15, 1999
<PAGE>
EXHIBIT 25
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
HSBC Bank USA
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, NY 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Warren L. Tischler
Senior Vice President
HSBC Bank USA
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-5167
(Name, address and telephone number of agent for service)
Port Arthur Finance Corp.
(Exact name of obligor as specified in its charter)
Delaware 36-4308506
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1801 S. Gulfway Drive, Office No. 36
P. O. Box 908
Port Arthur, Texas 70908
(409) 982-7491 (Zip Code)
(Address of principal executive offices)
12.5% Senior Secured Notes due 2009
Guarantees of 12.5% Senior Secured Notes due 2009
(Title of Indenture Securities)
(Additional Obligors listed on page 2)
<PAGE>
ADDITIONAL OBLIGORS
Port Arthur Coker Company L.P.
(Exact name of obligor as specified in its charter)
DELAWARE 6411 43-1857413
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
Sabine River Holding Corp.
(Exact name of obligor as specified in its charter)
DELAWARE 6411 43-1857408
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
Neches River Holding Corp.
(Exact name of obligor as specified in its charter)
DELAWARE 6411 43-1857411
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
<PAGE>
General
Item 1. General Information.
--------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
--------------------------
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None
<PAGE>
Item 16. List of Exhibits
----------------
Exhibit
- -------
T1A(i) (1) Copy of the Organization Certificate of HSBC
Bank USA.
T1A(ii) (1) Certificate of the State of New York Banking
Department dated December 31, 1993 as to the
authority of HSBC Bank USA to commence
business as amended effective on March 29,
1999.
T1A(iii) Not applicable.
T1A(iv) (1) Copy of the existing By-Laws of HSBC Bank USA
as adopted on January 20, 1994 as amended on
October 23, 1997.
T1A(v) Not applicable.
T1A(vi) (2) Consent of HSBC Bank USA required by Section
321(b) of the Trust Indenture Act of 1939.
T1A(vii) Copy of the latest report of condition of the
trustee (September 30, 1999), published
pursuant to law or the requirement of its
supervisory or examining authority.
T1A(viii) Not applicable.
T1A(ix) Not applicable.
(1) Exhibits previously filed with the Securities and Exchange Commission
with registration No. 022-22429 and incorporated herein by reference
thereto.
(2) Exhibit previously filed with the Securities and Exchange Commission
with Registration No. 33-53693 and incorporated herein by reference
thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HSBC Bank USA, a banking corporation and trust company organized under the laws
of the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York on the 8/th/ day of December, 1999.
HSBC BANK USA
By: /s/ James M. Foley
________________________________
James M. Foley
Assistant Vice President
<PAGE>
Exhibit T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Please refer to page 1,
Table of Contents, for -
the required disclosure 1
of estimated burden. -
- ------------------------------------------------------------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices--FFIEC 031
Report at the close of business September 30, 1999 (19980930)
----------
(RCRI 9999)
This report is required by law; 12 U.S.C. (S)324 (State member banks); This report form is to be filed by banks with branches
12 U.S.C. (S) 1817 (State nonmember banks); and 12 U.S.C. (S)161 and consolidated subsidiaries in U.S. territories and
(National banks). possessions, Edge or Agreement subsidiaries, foreign
branches, consolidated foreign subsidiaries, or
International Banking Facilities.
NOTE: The Reports of Condition and Income must be signed by an The Reports of Condition and Income are to be prepared in
authorized officer and the Report of Condition must be attested accordance with Federal regulatory authority instructions.
to by not less than two directors (trustees) for State nonmember
banks and three directors for State member and National Banks. We, the undersigned directors (trustees), attest to the
correctness of this Report of Condition (including the
I, Gerald A. Ronning, Executive VP & Controller supporting schedules) and declare that it has been
---------------------------------------------- examined by us and to the best of our knowledge and
Name and Title of Officer Authorized to Sign Report belief has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory
of the named bank do hereby declare that these Reports of Condition regulatory authority and is true and correct.
and Income (including the supporting schedules) have been prepared in
conformance with the instructions issued by the appropriate Federal
regulatory authority and are true to the best of my knowledge and
believe. /s/ Malcolm Burnett
-----------------------------------------------------
/s/ Gerald A. Ronning Director (Trustee)
- ----------------------------------------------------
Signature of Officer Authorized to Sign Report /s/ Bernard J. Kennedy
------------------------------------------------------
10/25/99 Director (Trustee)
- -----------------------------------------------------
Date of Signature /s/ Sal H. Alfieri
-------------------------------------------------------
Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Submission of Reports
Each Bank must prepare its Reports of Condition and Income either: For electronic filing assistance, contact EDS Call report
Services, 2150 N. Prospect Ave., Milwaukee, WI 53202,
(a) in electronic form and then file the computer data file directly telephone (800)255-1571.
with the banking agencies' collection agent, Electronic Data
System Corporation (EDS), by modem or computer diskette; or To fulfill the signature and attestation requirement for
the Reports of Condition and Income for this report date,
b) in hard-copy (paper) form and arrange for another party attach this signature page to the hard-copy of the
to convert the paper report to automated for. completed report that the bank places in its files.
That party (if other than EDS) must transmit the
bank's computer data file to EDS.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number 0 0 5 8 9
-------------------------
(BCBI 9030)
http://WWW.BANKING.US.HSBC.COM HSBC Bank USA
- ------------------------------------------------------------ -------------------------------------------------------
Primary Internet Web Address of Bank (Home Page), if any Legal Title of Bank (TEXT 9010)
(TEXT 4087)
(Example: www.examplebank.com) Buffalo
-------------------------------------------------------
City (TEXT 9130)
N.Y. 14203
--------------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
Exhibit 99.01
FORM OF LETTER OF TRANSMITTAL
for
Tender of All Outstanding
12.50% Senior Secured Notes due 2009
in Exchange for
New 12.50% Senior Secured Notes due 2009
of
PORT ARTHUR FINANCE CORP.
---------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M. ,
NEW YORK CITY TIME, ON _________________ (THE "EXPIRATION DATE")
UNLESS EXTENDED BY PORT ARTHUR FINANCE CORP.
---------------------------------------------------------------------------
The Exchange Agent is:
HSBC BANK USA
By Registered or Certified Mail: By Hand Delivery:
HSBC Bank USA HSBC Bank USA
140 Broadway -- Level A 140 Broadway -- Level A
New York, New York 10005-1080 New York, New York 10005-1080
Attn: Paulette Shaw Attn: Paulette Shaw
Telephone No. (212) 658-5931 Telephone No. (212) 658-5931
By Overnight Delivery: By Facsimile:
HSBC Bank USA HSBC Bank USA
140 Broadway -- Level A Facsimile No. (212) 658-2292
New York, New York 10005-1080 Attn: Paulette Shaw
Telephone No. (212) 658-5931 Telephone No. (212) 658-5931
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission via a facsimile transmission to a number other than
as set forth above will not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus dated ___ __, 1999
(the "Prospectus") of Port Arthur Finance Corp. (the "Company"), and this Letter
of Transmittal (the "Letter of Transmittal"), which together describe the
Company's offer (the "Exchange Offer") to exchange its 12.50% Senior Secured
Notes due 2009, which have been registered under the Securities Act of 1933, as
amended (the "Securities Act") (the "Exchange Notes") for each of its
outstanding 12.50% Senior Secured Notes due 2009 (the "Outstanding Notes" and,
together with the Exchange Notes, the "Notes") from the holders thereof.
The terms of the Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the
Outstanding Notes for which they may be exchanged pursuant to the Exchange
Offer, except that the Exchange Notes are freely transferable by holders thereof
(except as provided herein or in the Prospectus).
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
<PAGE>
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE
LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
aggregate principal amounts should be listed on a separate signed schedule
affixed hereto.
- -------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREWITH
- -------------------------------------------------------------------------------
Aggregate
Principal Amount
Name(s) and Address(es) Represented by Principal
of Registered Holder(s) Certificate Outstanding Amount
(Please fill in) Number(s)* Notes* Tendered**
- -------------------------------------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Total
- -------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Outstanding Notes.
See instruction 2.
Holders of Outstanding Notes whose Outstanding Notes are not immediately
available or who cannot deliver all other required documents to the Exchange
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis, must tender their Outstanding Notes
according to the guaranteed delivery procedures set forth in the Prospectus.
Unless the context otherwise requires, the term "holder" for purposes of
this Letter of Transmittal means any person in whose name Outstanding Notes are
registered or any other person who has obtained a properly completed bond power
from the registered holder or any person whose Outstanding Notes are held of
record by The Depository Trust Company ("DTC").
[_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)_____________________________________________
Name of Eligible Guarantor Institution that Guaranteed Delivery _________
Date of Execution of Notice of Guaranteed Delivery ______________________
If Delivered by Book-Entry Transfer:
2
<PAGE>
Name of Tendering Institution __________________________
Account Number _________________________________________
Transaction Code Number ________________________________
[_] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN
PERSON SIGNING THIS LETTER OF TRANSMITTAL:
Name ______________________________________________________
Address ___________________________________________________
[_] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT
FROM THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:
Name ______________________________________________________
Address ____________________________________________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES
AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF
ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ___________________________________________________________________
Address: ________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Outstanding Notes that were acquired
as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. A broker-dealer may not
participate in the Exchange Offer with respect to Outstanding Notes acquired
other than as a result of market-making activities or other trading activities.
Any holder who is an "affiliate" of the Company or who has an arrangement or
understanding with respect to the distribution of the Exchange Notes to be
acquired pursuant to the Exchange Offer, or any broker-dealer who purchased
Outstanding Notes from the Company to resell pursuant to Rule 144A under the
Securities Act or any other available exemption under the Securities Act must
comply with the registration and prospectus delivery requirements under the
Securities Act.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the
Outstanding Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of all or any portion of the Outstanding Notes tendered
herewith in accordance with the terms and conditions of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms and
conditions of any such extension or amendment), the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Outstanding Notes as are being tendered
herewith. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as its true and lawful agent and attorney-in-fact of the
undersigned (with full knowledge that the Exchange Agent also acts as the agent
of the Company, in connection with the Exchange Offer) to cause the Outstanding
Notes to be assigned, transferred and exchanged.
3
<PAGE>
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Outstanding Notes and to
acquire Exchange Notes issuable upon the exchange of such tendered Outstanding
Notes, and that, when the same are accepted for exchange, the Company will
acquire good and unencumbered title to the tendered Outstanding Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of the tendered Outstanding Notes or transfer ownership of such
Outstanding Notes on the account books maintained by the book-entry transfer
facility. The undersigned further agrees that acceptance of any and all validly
tendered Outstanding Notes by the Company and the issuance of Exchange Notes in
exchange therefor shall constitute performance in full by the Company of its
obligations under the Registration Rights Agreement dated August 19, 1999, among
the Company, Port Arthur Coker Company L.P., Sabine River Holding Corp., Neches
River Holding Corp., Credit Suisse First Boston Corporation, Goldman, Sachs &
Co. and Deutsche Bank Securities Inc. (the "Registration Rights Agreement"), and
that the Company shall have no further obligations or liabilities thereunder
except as provided in the first paragraph of Section 2 of such agreement. The
undersigned will comply with its obligations under the Registration Rights
Agreement. The undersigned has read and agrees to all terms of the Exchange
Offer.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer--Certain Conditions to the
Exchange Offer." The undersigned recognizes that as a result of these conditions
(which may be waived, in whole or in part, by the Company), as more particularly
set forth in the Prospectus, the Company may not be required to exchange any of
the Outstanding Notes tendered hereby and, in such event, the Outstanding Notes
not exchanged will be returned to the undersigned at the address shown above,
promptly following the expiration or termination of the Exchange Offer. In
addition, the Company may amend the Exchange Offer at any time prior to the
Expiration Date if any of the conditions set forth under "The Exchange
Offer--Certain Conditions to the Exchange Offer" occur.
The undersigned understands that tenders of Outstanding Notes pursuant to
any one of the procedures described in the Prospectus and in the instructions
attached hereto will, upon the Company's acceptance for exchange of such
tendered Outstanding Notes, constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Exchange Offer. The undersigned recognizes that, under circumstances set forth
in the Prospectus, the Company may not be required to accept for exchange any of
the Outstanding Notes.
By tendering shares of Outstanding Notes and executing this Letter of
Transmittal, the undersigned represents that Exchange Notes acquired in the
exchange will be obtained in the ordinary course of business of the undersigned,
that the undersigned has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Notes, that the undersigned is not an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act and that if the undersigned or
the person receiving such Exchange Notes, whether or not such person is the
undersigned, is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes.
If the undersigned or the person receiving such Exchange Notes, whether or not
such person is the undersigned, is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Outstanding Notes that were acquired
as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. If the undersigned is a
person in the United Kingdom, the undersigned represents that its ordinary
activities involve it in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of its business.
Any holder of Outstanding Notes using the Exchange Offer to participate in
a distribution of the Exchange Notes (i) cannot rely on the position of the
staff of the Securities and Exchange Commission enunciated in its interpretive
letter with respect to Exxon Capital Holdings Corporation (available April 13,
1989) or similar interpretive letters and (ii) must comply with the registration
and prospectus requirements of the Securities Act in connection with a secondary
resale transaction.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Outstanding Notes may be withdrawn at
any time prior to the Expiration Date in accordance with the terms of this
Letter of Transmittal. Except as stated in the Prospectus, this tender is
irrevocable.
Certificates for all Exchange Notes delivered in exchange for tendered
Outstanding Notes and any Outstanding Notes delivered herewith but not
exchanged, and registered in the name of the undersigned, shall be delivered to
the undersigned at the address shown below the signature of the undersigned.
4
<PAGE>
The undersigned, by completing the box entitled "Description of Outstanding
Notes Tendered Herewith" above and signing this letter, will be deemed to have
tendered the Outstanding Notes as set forth in such box.
TENDERING HOLDER(S) SIGN HERE
(Complete accompanying substitute Form W-9)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Outstanding Notes hereby tendered or in whose name
Outstanding Notes are registered on the books of DTC or one of its participants,
or by any person(s) authorized to become the registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
the full title of such person. See Instruction 3.
______________________________________________________________________________
______________________________________________________________________________
(Signature(s) of Holder(s))
Date _________________________________________________________________________
Name(s) ______________________________________________________________________
______________________________________________________________________________
(Please Print)
Capacity (full title) ________________________________________________________
Address ______________________________________________________________________
______________________________________________________________________________
(Including Zip Code)
Daytime Area Code and Telephone No. __________________________________________
Taxpayer Identification No. __________________________________________________
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instruction 3)
Authorized Signature _________________________________________________________
Dated ________________________________________________________________________
Name _________________________________________________________________________
Title ________________________________________________________________________
Name of Firm _________________________________________________________________
Address ______________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. __________________________________________________
5
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to
be issued in the name of someone other than the registered holder of the
Outstanding Notes whose name(s) appear(s) above.
Issue
[ ] Outstanding Notes not tendered to:
[ ] Exchange Notes to:
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Daytime Area Code and Telephone No._____________________________________________
Tax Identification No.__________________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to
be sent to someone other than the registered holder of the Outstanding Notes
whose name(s) appear(s) above, or such registered holder(s) at an address other
than that shown above.
Mail
[ ] Outstanding Notes not tendered to:
[ ] Exchange Notes to:
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.______________________________________
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures.
A holder of Outstanding Notes may tender the same by (i) properly
completing and signing this Letter of Transmittal or a facsimile hereof (all
references in the Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with the
certificate or certificates, if applicable, representing the Outstanding Notes
being tendered and any required signature guarantees and any other documents
required by this Letter of Transmittal, to the Exchange Agent at its address set
forth above on or prior to the Expiration Date, or (ii) complying with the
procedure for book-entry transfer described below, or (iii) complying with the
guaranteed delivery procedures described below.
6
<PAGE>
Holders of Outstanding Notes may tender Outstanding Notes by book-entry
transfer by crediting the Outstanding Notes to the Exchange Agent's account at
DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with respect to the Exchange Offer.
DTC participants that are accepting the Exchange Offer should transmit their
acceptance to DTC, which will edit and verify the acceptance and execute a book-
entry delivery to the Exchange Agent's account at DTC. DTC will then send a
computer-generated message (an "Agent's Message") to the Exchange Agent for its
acceptance in which the holder of the Outstanding Notes acknowledges and agrees
to be bound by the terms of, and makes the representations and warranties
contained in, this Letter of Transmittal, the DTC participant confirms on behalf
of itself and the beneficial owners of such Outstanding Notes all provisions of
this Letter of Transmittal (including any representations and warranties)
applicable to it and such beneficial owner as fully as if it had completed the
information required herein and executed and transmitted this Letter of
Transmittal to the Exchange Agent. Delivery of the Agent's Message by DTC will
satisfy the terms of the Exchange Offer as to execution and delivery of a Letter
of Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the Exchange Offer by submitting a Notice of
Guaranteed Delivery through ATOP.
The method of delivery of this Letter of Transmittal, the Outstanding Notes
and any other required documents is at the election and risk of the holder, and
except as otherwise provided below, the delivery will be deemed made only when
actually received or confirmed by the Exchange Agent. If such delivery is by
mail, it is suggested that registered mail with return receipt requested,
properly insured, be used. In all cases sufficient time should be allowed to
permit timely delivery. No Outstanding Notes or Letters of Transmittal should be
sent to the Company.
Holders whose Outstanding Notes are not immediately available or who cannot
deliver their Outstanding Notes and all other required documents to the Exchange
Agent on or prior to the Expiration Date or comply with book-entry transfer
procedures on a timely basis must tender their Outstanding Notes pursuant to the
guaranteed delivery procedure set forth in the Prospectus. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Guarantor
Institution (as defined below); (ii) prior to the Expiration Date, the Exchange
Agent must have received from such Eligible Guarantor Institution a letter,
telegram or facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight courier) setting forth the name and
address of the tendering holder, the names in which such Outstanding Notes are
registered, and, if applicable, the certificate numbers of the Outstanding Notes
to be tendered; and (iii) all tendered Outstanding Notes (or a confirmation of
any book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at a book-entry transfer facility) as well as this Letter of Transmittal
and all other documents required by this Letter of Transmittal, must be received
by the Exchange Agent within three New York Stock Exchange trading days after
the date of execution of such letter, telegram or facsimile transmission, all as
provided in the Prospectus.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Outstanding Notes for exchange.
2. Partial Tenders; Withdrawals.
If less than the entire principal amount of Outstanding Notes evidenced by
a submitted certificate is tendered, the tendering holder must fill in the
aggregate principal amount of Outstanding Notes tendered in the box entitled
"Description of Outstanding Notes Tendered Herewith". A newly issued certificate
for the Outstanding Notes submitted but not tendered will be sent to such holder
as soon as practicable after the Expiration Date. All Outstanding Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise clearly indicated.
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to the Expiration Date.
To be effective with respect to the tender of Outstanding Notes, a written
notice of withdrawal must: (i) be received by the Exchange Agent at one of the
addresses for the Exchange Agent set forth above before the Company notifies the
Exchange Agent that it has accepted the tender of Outstanding Notes pursuant to
the Exchange Offer; (ii) specify the name of the person who tendered the
Outstanding Notes to be withdrawn; (iii) identify the Outstanding Notes to be
withdrawn (including the principal amount of such Outstanding Notes, or, if
applicable, the certificate numbers shown on the particular certificates
evidencing such Outstanding Notes and the principal amount of Outstanding Notes
represented by such certificates); (iv) include a statement that such holder is
withdrawing its election to have such Outstanding Notes exchanged; and (v) be
signed by the holder in the same manner as the original signature on this Letter
of Transmittal (including any required signature guarantee). The Exchange Agent
7
<PAGE>
will return the properly withdrawn Outstanding Notes promptly following receipt
of notice of withdrawal. If Outstanding Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Outstanding Notes or otherwise comply with the book-
entry transfer facility's procedures. All questions as to the validity of
notices of withdrawals, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Any Outstanding Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Outstanding Notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Outstanding Notes tendered by book-entry transfer into the Exchange
Agent's account at the book entry transfer facility pursuant to the book-entry
transfer procedures described above, such Outstanding Notes will be credited to
an account with such book-entry transfer facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by
following one of the procedures described under the caption "The Exchange
Offer--Procedures for Tendering" in the Prospectus at any time prior to the
Expiration Date.
3. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the registered holder(s) of the
Outstanding Notes tendered hereby, the signature must correspond with the
name(s) as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Outstanding Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Outstanding Notes.
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include the
book-entry transfer facility whose name appears on a security listing as the
owner of the Outstanding Notes) of Outstanding Notes listed and tendered hereby,
no endorsements of certificates or separate written instruments of transfer or
exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Outstanding Notes listed, such Outstanding
Notes must be endorsed or accompanied by separate written instruments of
transfer or exchange in form satisfactory to the Company and duly executed by
the registered holder, in either case signed exactly as the name or names of the
registered holder or holders appear(s) on the Outstanding Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Guarantor Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Guarantor Institution, unless Outstanding Notes are tendered: (i) by a holder
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on this Letter of Transmittal; or (ii) for the
account of an Eligible Guarantor Institution (as defined below). In the event
that the signatures in this Letter of Transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantees must be by an
eligible guarantor institution which is a member of a firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or another "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (an "Eligible Guarantor Institution"). If Outstanding Notes are
registered in the name of a person other than the signer of this Letter of
Transmittal, the Outstanding Notes surrendered for exchange must be endorsed by,
or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Company, in its sole
discretion, duly executed by the registered holder with the signature thereon
guaranteed by an Eligible Guarantor Institution.
8
<PAGE>
4. Special Issuance and Delivery Instructions.
Tendering holders should indicate, as applicable, the name and address to
which the Exchange Notes or certificates for Outstanding Notes not exchanged are
to be issued or sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the tax identification number of the person named must also be indicated.
Holders tendering Outstanding Notes by book-entry transfer may request that
Outstanding Notes not exchanged be credited to such account maintained at the
book-entry transfer facility as such holder may designate. 5. Transfer Taxes.
5. Transfer Taxes.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Outstanding Notes to it or its order pursuant to the
Exchange Offer. If a transfer tax is imposed for any reason other than the
transfer and exchange of Outstanding Notes to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith the amount of such transfer taxes will be billed
directly to such tendering holder.
6. Waiver of Conditions.
The Company reserves the absolute right to waive, in whole or in part, any
of the conditions to the Exchange Offer set forth in the Prospectus.
7. Mutilated, Lost, Stolen or Destroyed Securities.
Any holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed, should contact the Exchange Agent at the address indicated below for
further instructions.
8. Substitute Form W-9
Each holder of Outstanding Notes whose Outstanding Notes are accepted for
exchange (or other payee) is required to provide a correct taxpayer
identification number ("TIN"), generally the holder's Social Security or federal
employer identification number, and certain other information, on Substitute
Form W-9, which is provided under "Important Tax Information" below, and to
certify that the holder (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
holder (or other payee) to a $50 penalty imposed by the Internal Revenue Service
and 31% federal income tax backup withholding on payments made in connection
with the Outstanding Notes. The box in Part 3 of the Substitute Form W-9 may be
checked if the holder (or other payee) has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the box in Part 3
is checked and a TIN is not provided by the time any payment is made in
connection with the Outstanding Notes, 31% of all such payments will be withheld
until a TIN is provided.
9. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Exchange Agent at the address and
telephone number indicated above.
9
<PAGE>
IMPORTANT: This Letter of Transmittal or a facsimile or copy thereof
(together with certificates of Outstanding Notes or confirmation of book-entry
transfer and all other required documents) or a Notice of Guaranteed Delivery
must be received by the Exchange Agent on or prior to the Expiration Date.
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder of Outstanding Notes whose
Outstanding Notes are accepted for exchange may be subject to backup withholding
unless the holder provides HSBC Bank USA, as Paying Agent (the "Paying Agent"),
through the Exchange Agent, with either (i) such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 attached hereto, certifying
that the TIN provided on Substitute Form W-9 is correct (or that such holder of
Outstanding Notes is awaiting a TIN) and that (A) the holder of Outstanding
Notes has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of a failure to report all interest or
dividends or (B) the Internal Revenue Service has notified the holder of
Outstanding Notes that he or she is no longer subject to backup withholding; or
(ii) an adequate basis for exemption from backup withholding. If such holder of
Outstanding Notes is an individual, the TIN is such holder's social security
number. If the Paying Agent is not provided with the correct TIN, the holder of
Outstanding Notes may be subject to certain penalties imposed by the Internal
Revenue Service.
Certain holders of Outstanding Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. However, exempt holders of Outstanding
Notes should indicate their exempt status on Substitute Form W-9. For example, a
corporation must complete the Substitute Form W-9, providing its TIN and
indicating that it is exempt from backup withholding. In order for a foreign
individual to qualify as an exempt recipient, the holder must submit a Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
A Form W-8 can be obtained from the Paying Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Paying Agent is required to withhold 31%
of any such payments made to the holder of Outstanding Notes or other payee.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
surrendering holder of Outstanding Notes has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is checked, the holder of Outstanding Notes or other payee must also
complete the Certificate of Awaiting Taxpayer Identification Number below in
order to avoid backup withholding. Notwithstanding that the box in Part 3 is
checked and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Paying Agent will withhold 31% of all payments made prior to the
time a properly certified TIN is provided to the Paying Agent.
The holder of Outstanding Notes is required to give the Paying Agent the
TIN (e.g., social security number or employer identification number) of the
record owner of the Outstanding Notes. If the Outstanding Notes are in more than
one name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
10
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number for the Payee (You)
to Give the Payer.--Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<CAPTION>
- --------------------------------------------------------- ------------------------------------------------------------
Give the SOCIAL Give the SOCIAL
SECURITY SECURITY
For this type of account: number of-- For this type of account: number of--
- --------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 6. Sole proprietorship The owner/3/
------------------------------------------------------------
2. Two or more The actual owner of the 7. A valid trust, estate, The legal entity/4/
individuals (joint account or, if combined or pension trust
account) fund, the first individual
on the account./1/
3. Custodian account of The minor/2/ 8. Corporate The corporation
a minor (Uniform
Gift to Minors Act)
4. a. The usual The grantor-trustee/1/ 9. Association, club, The organization
revocable savings religious, charitable,
trust account educational, or other
(grantor is also tax-exempt
trustee) organization account
b. So-called trust The actual owner/1/ 10. Partnership The partnership
that is not a legal
or valid trust
under state law
5. Sole proprietorship The owner/3/ 11. A broker or The broker or nominee
registered nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a state
or local government,
school district, or
prison) that receives
agricultural program
payments
- --------------------------------------------------------- ------------------------------------------------------------
</TABLE>
1 List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
2 Circle the minor's name and furnish the minor's social security number.
3 You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
4 List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated in
the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
11
<PAGE>
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from withholding include:
. An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7),
if the account satisfies the requirements of Section 401(f)(2).
. The United States or a state thereof, the District of Columbia, a
possession of the United States, or a political subdivision or wholly-owned
agency or instrumentality of any one or more of the foregoing.
. An international organization or any agency or instrumentality thereof.
. A foreign government and any political subdivision, agency or
instrumentality thereof.
. Payees that may be exempt from backup withholding include:
. A corporation.
. A financial institution.
. A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
. A futures commission merchant registered with the Commodity Futures Trading
Commission.
. A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and you have
not provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041, 6041A,
6042, 6044, 6045, 6049, 6050A and 6050N.
Exempt payees described above must file Form W-9 or a substitute Form W-9 to
avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Privacy Act Notice. -- Section 6109 requires you to provide your correct
taxpayer identification number to payers, who must report the payments to the
IRS. The IRS uses the number for identification purposes and may also provide
this information to various government agencies for tax enforcement or
litigation purposes. Payers must be given the numbers whether or not recipients
are required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to payer. Certain penalties may also apply.
Penalties
(1) Failure to Furnish Taxpayer Identification Number. -- If you fail to
furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
12
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME:
- ----------------------------- ------------------------------------------------------------------ ---------------------------------
<S> <C> <C>
SUBSTITUTE FORM W-9 Part 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND DATING BELOW. _______________________________
Department of the Treasury Social Security Number
Internal Revenue Service
OR
_______________________________
Employer Identification Number
------------------------------------------------------------------ ---------------------------------
Payer's Request for PART 2 Part 3--
Taxpayer Certification--Under the penalties of perjury, I certify that:
Identification (1) The number shown on this form is my correct Taxpayer [_] Awaiting TIN
Number (TIN) Identification Number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
----------------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that
you are currently subject to backup withholding because of under-reporting interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to backup
withholding, do not cross out such item (2).
----------------------------------------------------------------------------------------------------
Sign Here * SIGNATURE
DATE
- ----------------------------- ----------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER,
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be withheld.
Signature ___________________________________________ Date________, ______
- -------------------------------------------------------------------------------
13
<PAGE>
Exhibit 99.02
FORM OF NOTICE OF GUARANTEED DELIVERY
for
Tender of All Outstanding
12.50% Senior Secured Notes due 2009
in Exchange for
New 12.50% Senior Secured Notes due 2009
of
PORT ARTHUR FINANCE CORP.
Registered holders of outstanding 12.50% Senior Secured Notes due 2009 (the
"Outstanding Notes") who wish to tender their Outstanding Notes in exchange for
a like principal amount of new 12.50% Senior Secured Notes due 2009 (the
"Exchange Notes") and whose Outstanding Notes are not immediately available or
who cannot deliver their Outstanding Notes and Letter of Transmittal (and any
other documents required by the Letter of Transmittal) to HSBC Bank USA (the
"Exchange Agent") prior to the Expiration Date, may use this Notice of
Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight courier) or mail to the Exchange Agent. See "The Exchange
Offer" Procedures for Tendering" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
HSBC BANK USA
By Hand Delivery: By Mail:
HSBC Bank USA (insured or registered recommended)
140 Broadway - Level A HSBC Bank USA
New York, New York 10005-1080 140 Broadway - Level A
Attn: Paulette Shaw New York, New York 10005-1080
Telephone No. (212) 658-5931 Attn: Paulette Shaw
Telephone No. (212) 658-5931
By Overnight Courier: By Facsimile:
HSBC Bank USA (212) 658-2292
140 Broadway - Level A Attn: Paulette Shaw
New York, New York 10005-1080
Attn: Paulette Shaw Confirm by Telephone:
Telephone No. (212) 658-5931 (212) 658-5931
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission via a facsimile transmission to a number other
than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Guarantor Institution (as defined in the Prospectus),
such signature guarantee must appear in the applicable space provided on the
Letter of Transmittal for Guarantee of Signatures.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Outstanding Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated _______ ____, _____ of Port Arthur Finance Corp. (the
"Prospectus"), receipt of which is hereby acknowledged.
DESCRIPTION OF OUTSTANDING NOTES TENDERED
<TABLE>
<CAPTION>
Name and address of Certificate Number(s)
registered holder as it of Outstanding Notes
appears on the Tendered (or Account Principal Amount of
Name of Tendering Outstanding Notes Number at Book- Outstanding Notes
Holder (Please Print) Entry Facility) Tendered
<S> <C> <C> <C>
- ------------------------ ------------------------- ---------------------- --------------------
- ------------------------ ------------------------- ---------------------- --------------------
- ------------------------ ------------------------- ---------------------- --------------------
- ------------------------ ------------------------- ---------------------- --------------------
</TABLE>
SIGN HERE
Name of Registered or Acting Holder: ___________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print): ________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
Telephone Number: ______________________________________________________________
Date: __________________________________________________________________________
If Outstanding Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number:__________________________________
Date:________________________________________________
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Exchange Agent at one of
its addresses set forth on the reverse hereof, the certificates representing the
Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at the book-entry transfer facility),
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, and any other
documents required by the Letter of Transmittal within three New York Stock
Exchange trading days after the Expiration Date (as defined in the Letter of
Transmittal).
Name of Firm:__________________________ _____________________________________
(Authorized Signature)
Address:_______________________________
Title:_______________________________
_______________________________________
(Zip Code) Name:________________________________
(Please type or print)
Area Code and Telephone No.:
_______________________________________ Date:________________________________
NOTE: DO NOT SEND OUTSTANDING NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. OUTSTANDING NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
