CLARK REFINING & MARKETING INC, PRE 14A, 1994-09-20

CLARK REFINING & MARKETING INC
PRE 14A, 1994-09-20
PETROLEUM REFINING

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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Materials Pursuant to (S)240.14a-11(c) or (S)240.14a-12

CLARK REFINING & MARKETING, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

CLARK REFINING & MARKETING, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(3).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rule 14a-5(i)(4) and 0-11.

(1) Title of each class of securities to which transactions applies:

(2) Aggregate number of securities to which transactions applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule -11.

(4) Proposed maximum aggregate value of transaction:

[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, Schedule or Registration Statement No.:

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

(3) Filing Party:

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

(4) Date Filed:
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CONSENT SOLICITATION STATEMENT

CLARK REFINING & MARKETING, INC.
(FORMERLY CLARK OIL & REFINING CORPORATION)

SOLICITATION OF CONSENTS TO AMENDMENT OF
THE INDENTURES GOVERNING ITS
9 1/2% SENIOR NOTES DUE 2004
AND
10 1/2% SENIOR NOTES DUE 2001

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Clark Refining & Marketing, Inc. (formerly Clark Oil & Refining Corporation)
(the "Company" or "Clark") is soliciting (the "Solicitation") the consents (the
"Consents") of (i) registered holders of its 9 1/2% Senior Notes due 2004 (the
"9 1/2% Notes") to amendments to the Indenture, dated as of September 15, 1992
(the "9 1/2% Notes Indenture"), between the Company and NationsBank of
Virginia, N.A., as trustee (in such capacity, the "9 1/2% Notes Trustee") and
(ii) registered holders of its 10 1/2% Senior Notes due 2001 (the "10 1/2%
Notes" and, together with the 9 1/2% Notes, the "Notes"), to amendments to the
Indenture, dated as of December 1, 1991 (the "10 1/2% Notes Indenture," and,
together with the 9 1/2% Notes Indenture, the "Indentures"), between the
Company and NationsBank of Virginia, N.A. (formerly Sovran Bank, N.A.), as
trustee (in such capacity, the "10 1/2% Notes Trustee," and, in its capacity as
the 9 1/2% Notes Trustee and the 10 1/2% Notes Trustee, the "Trustees"). The
proposed amendments to the Indentures are herein referred to as the "Proposed
Amendments." Concurrently with the Solicitation, Clark USA, Inc. (formerly
Clark R & M Holdings, Inc.) (the "Parent") is soliciting (the "Parent
Solicitation," together with the Solicitation, the "Solicitations") the
consents of registered holders of its Senior Secured Zero Coupon Notes due
2000, Series A (the "Zero Coupon Notes") to amendments to the indenture (the
"Parent Indenture") governing the Zero Coupon Notes similar to the Proposed
Amendments as well as to permit the Parent to issue $100 million aggregate
principal amount of its Senior Notes due 2004 (the "Parent Senior Notes").
Satisfactory completion of each of the Solicitations is conditional upon
satisfactory completion of the other Solicitations and on the consummation of
certain other transactions described herein. As more fully described herein,
the purpose of the Solicitations and the Proposed Amendments is, among other
things, to permit the Company to increase the amount of its authorized working
capital facility in connection with its proposed acquisition of Chevron U.S.A.
Inc.'s Port Arthur, Texas refinery and related assets (the "Port Arthur
Refinery"), to permit the Company to incur additional industrial development
bond indebtedness to finance certain capital expenditures for "Qualifying
Projects" (as defined below), and in the case of the Parent Solicitation, to
permit the Parent to issue the Parent Senior Notes.

UPON THE EFFECTIVENESS OF THE PROPOSED AMENDMENTS, THE COMPANY WILL MAKE A
PAYMENT (A "CONSENT PAYMENT") TO EACH REGISTERED HOLDER OF NOTES AS OF THE
RECORD DATE (AS DEFINED BELOW) WHOSE DULY EXECUTED CONSENT IS RECEIVED AND NOT
REVOKED PRIOR TO THE EXECUTION TIME (AS DEFINED BELOW). THE CONSENT PAYMENT
WILL BE $ IN CASH FOR EACH $1,000 IN PRINCIPAL AMOUNT OF NOTES WITH
RESPECT TO WHICH A CONSENT IS RECEIVED AND NOT REVOKED AS AFORESAID AND WILL BE
PAID AS SOON AS PRACTICABLE AFTER THE EFFECTIVE TIME. SEE "THE SOLICITATION--
CONSENT PAYMENTS."

The Solicitation is being made upon the terms and subject to the conditions
in this Consent Solicitation Statement and the accompanying form of Consent.
Adoption of the Proposed Amendments requires the consent of the registered
holders of a majority in aggregate principal amount of the 9 1/2% Notes
outstanding and not owned by the Company or any of its affiliates and of a
majority in aggregate principal amount of the 10 1/2% Notes outstanding and not
owned by the Company or any of its affiliates (collectively, the "Requisite
Consents"). Only those persons in whose name Notes are registered in the
registries maintained by the Trustees under the Indentures, as of the Record
Date or persons who hold valid proxies from such registered

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holders, will be eligible to consent to the Proposed Amendments. ANY BENEFICIAL
OWNER OF NOTES HELD OF RECORD BY THE DEPOSITORY TRUST COMPANY ("DTC") OR ITS
NOMINEE, THROUGH AUTHORITY GRANTED BY DTC, MAY DIRECT THE PARTICIPANT IN DTC
(THE "DTC PARTICIPANT") THROUGH WHICH SUCH BENEFICIAL OWNER'S NOTES ARE HELD IN
DTC TO EXECUTE, ON SUCH BENEFICIAL OWNER'S BEHALF, OR MAY OBTAIN A PROXY FROM
SUCH DTC PARTICIPANT AND EXECUTE DIRECTLY, AS IF SUCH BENEFICIAL OWNER WERE A
REGISTERED HOLDER, A CONSENT WITH RESPECT TO NOTES BENEFICIALLY OWNED BY SUCH
BENEFICIAL OWNER ON THE DATE OF EXECUTION.

If the Company delivers the Requisite Consents to the Trustees, then the
Company and the respective Trustees will execute supplemental indentures (the
"Supplemental Indentures") to the respective Indentures effecting the Proposed
Amendments and, upon satisfaction of the conditions precedent to the
effectiveness of the Proposed Amendments, the Proposed Amendments will be
binding upon each holder of Notes, whether or not such holder delivered its
Consent.

This Consent Solicitation Statement is being furnished on or about [MONTH]
[DAY] to registered holders ("Registered Holders") of Notes as of the close of
business on [MONTH] [DAY], 1994 (the "Record Date"). The Solicitation will
expire at 5:00 P.M., New York City time, on [MONTH] [DAY], 1994, unless
extended with respect to one or both Series of Notes for a specified period or
on a daily basis until the Requisite Consents have been received (the
"Expiration Date"). Consents may be revoked at any time up to, but will become
irrevocable upon, the execution of the applicable Supplemental Indentures (the
"Execution Time"), which will not be prior to the Expiration Date. CONSENTS
SHOULD BE SENT TO NATIONSBANK OF VIRGINIA, N.A., AS TRUSTEE, NOT TO THE
COMPANY. IN NO EVENT SHOULD A REGISTERED HOLDER TENDER OR DELIVER NOTES.

[MONTH] [DAY], 1994

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AVAILABLE INFORMATION

The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports and other information with the
Commission. Such reports and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission
located at Seven World Trade Center, New York, New York 10048 and 500 West
Madison Street, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The 9 1/2% Notes are
listed on the New York Stock Exchange, Inc. (the "NYSE"), and information
concerning the Company can also be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005.

Statements made in this Consent Solicitation Statement concerning the
provisions of any contract, agreement or other document referred to herein are
not necessarily complete. With respect to each such statement concerning a
contract, agreement or other document filed with the Commission, reference is
made to such filing for a more complete description of the matter involved, and
each such statement is qualified in its entirety by such reference.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED IN THIS CONSENT
SOLICITATION STATEMENT. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
CANNOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE
SOLICITATION AGENTS OR THE INFORMATION AGENT. THE COMPANY IS NOT AWARE OF ANY
JURISDICTION IN WHICH THE MAKING OF THE SOLICITATION IS NOT IN COMPLIANCE WITH
APPLICABLE LAW. IF THE COMPANY BECOMES AWARE OF ANY JURISDICTION IN WHICH THE
MAKING OF THE SOLICITATION WOULD NOT BE IN COMPLIANCE WITH APPLICABLE LAW, IT
WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH LAW. IF, AFTER SUCH GOOD
FAITH EFFORT, IT CANNOT COMPLY WITH ANY SUCH LAW, CONSENTS WILL NOT BE
SOLICITED FROM HOLDERS OF NOTES RESIDING IN SUCH JURISDICTIONS. IN ANY
JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE
SOLICITATION TO BE MADE BY A LICENSED BROKER OR DEALER, THE SOLICITATION WILL
BE DEEMED TO BE MADE ON BEHALF OF THE COMPANY BY THE SOLICITATION AGENTS OR ONE
OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.

THE DELIVERY OF THIS CONSENT SOLICITATION STATEMENT SHALL NOT UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Summary................................................................... 5
Background and Purpose of the Solicitation................................ 12
Proposed Amendments....................................................... 14
Beneficial Ownership of Notes............................................. 16
The Solicitation.......................................................... 16
The Company............................................................... 21
The Port Arthur Acquisition............................................... 25
Summary of Company Estimates Regarding the Acquisition.................... 29
The Financing............................................................. 34
Capitalization............................................................ 36
Selected Financial Data................................................... 37
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 39
Business.................................................................. 51
Federal Income Tax Consequences........................................... 67
Index to Financial Statements............................................. F-1
Annex A--Text of Proposed Supplemental Indentures......................... A-1
</TABLE>

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SUMMARY

The following summary is qualified in its entirety by the detailed
information and Consolidated Financial Statements and notes thereto included
elsewhere in this Consent Solicitation Statement or in the Annex hereto.
Capitalized terms used herein and not defined shall have the respective
meanings given such terms in the Indentures.

THE COMPANY

The Company is a leading independent refiner and marketer of petroleum
products in the Midwestern United States. The Company's principal activities
include crude oil refining, wholesale marketing of refined petroleum products
and retail marketing of gasoline and convenience products through its company-
operated retail network. These operations have been conducted under the Clark
name for over 60 years.

Business Strategy

The Company operates in a commodity-based industry in which the market prices
for crude oil and refined products are largely beyond its control. Accordingly,
the Company's business strategy focuses on maximizing productivity, minimizing
operating costs and optimizing capital expenditures in both its refining and
marketing divisions to enhance stockholder returns. Key elements of this
strategy include:

. Improving productivity. The Company implements relatively low cost
productivity projects in its refining and marketing operations designed
to increase production, sales volumes and production yields and to
improve sales mix while reducing input costs and operating expenses. As a
result of these projects, the Company's refining margins improved in 1993
and the first six months of 1994, and outperformed industry margin
indicators over the period. The Company's sour crude and deep cut
projects at its Illinois refineries and its retail reimaging program are
examples of these types of projects. The Company estimates substantial
productivity gains to pre-tax earnings have been achieved relative to the
baseline year of 1992 during the year ended December 31, 1993 and during
the six months ended June 30, 1994. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Results of
Operations--Outlook."

. Optimizing capital investment. The Company optimizes capital investments
by linking capital spending to cash flow generated within each of Clark's
divisions. The refining division's 1994 capital program budgeted
discretionary capital primarily for projects that are estimated to yield
payback periods ranging from three months to 18 months. The Company has
also implemented a program within its retail store network to incorporate
its new On The Go(TM) theme at a cost per store that the Company believes
is less than that incurred by competitors for upgrades of retail
facilities.

. Promoting entrepreneurial culture. The Company emphasizes an
entrepreneurial management approach which uses employee incentives to
enhance financial performance and safety. All of the Company's employees
participate in either its performance management, profit sharing or other
incentive plans. In addition, the Company expects to adopt a stock
incentive plan and a stock purchase plan for its key employees.

. Growing through acquisitions. The Company will continue to expand its
refining and marketing operations through opportunistic acquisitions
which can benefit from its business strategy, create critical mass,
increase market share and access new markets. Clark is more than doubling
its refining capacity by acquiring the Port Arthur Refinery and
strengthening its Chicago presence by adding 35 retail stores in a core
market. The Acquisition positions the Company as one of the four largest
independent refiners in the United States.

Refining

The Company currently operates two refineries in Illinois with a combined
rated throughput capacity of approximately 130,000 barrels of crude oil per
day. The acquisition of the Port Arthur Refinery will increase

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the Company's refining capacity to approximately 330,000 barrels per day,
positioning the Company as one of the four largest independent refiners in the
United States. The Company's two Illinois refineries are strategically located
with access to both domestic and foreign crude oil supplies. These refineries
are supplied by crude oil pipelines and are also located on inland waterways
with barge access. The two Illinois refineries are connected by refined product
pipelines, increasing flexibility relative to stand-alone operations. The
refineries further benefit from the ability to process different grades of
crude oil, enhancing the Company's ability to select the most economic source
of supply.

The Company currently owns and operates 14 product terminals in its market
area. In addition to cost efficiencies in supplying its retail network, the
terminals allow efficient distribution of refinery production through readily
accessible pipeline systems. Most of the Company's terminals are capable of
handling and blending ethanol, one of two viable renewable oxygenates required
for reformulated gasoline. The Company is an experienced ethanol user, having
used ethanol since the early 1980s. The Company also owns minority interests in
three crude oil and two product pipelines in the Midwest which transport a
portion of its crude oil requirements and refined products.

Marketing

As of June 30, 1994, the Company's retail network consisted of 840 stores
with sales volumes representing approximately 75% of the Company's gasoline
production. Over 98% of the stores are company-operated, enabling the Company
to respond more quickly and uniformly to changing market conditions than major
oil companies that have most of their stores operated by independent dealers or
jobbers. In 1993, the Company's monthly gasoline sales per store averaged
approximately 98,600 gallons, which exceeded the national industry average of
76,100 gallons. Virtually all of the stores are self-service and all sell
convenience merchandise. The Company has developed plans to achieve its
strategic goals by focusing on a market segment philosophy designed to increase
sales volumes, profits and return on investment by positioning the Company as
the premier value-oriented marketer of gasoline and On The Go(TM) items in the
Midwestern United States.

The Company sells gasoline and diesel fuel through unbranded wholesale
markets in the Midwest, representing approximately 34% and 65%, respectively,
of its gasoline and diesel fuel refining production during the first half of
1994. To meet marketing requirements that at times exceed the Company's own
refining production, and to benefit from economic and logistical advantages
which may occur, the Company also supplies its retail and wholesale networks
through exchanges and purchases of refined product from other suppliers. The
Company sells its gasoline and diesel fuel on an unbranded basis to
approximately 600 distributors and chain retailers. The Company believes these
sales offer higher profitability than spot market alternatives. Railroads,
barge lines and other industrial end-users represent the largest share of other
wholesale customers. The Company believes that a branded distributor program
and further focus on the transportation industry offer significant opportunity
for incremental sales volumes and earnings in the future.

THE PORT ARTHUR ACQUISITION

On August 18, 1994, Clark entered into an asset purchase agreement (the
"Purchase Agreement") for the purchase of Chevron's Port Arthur, Texas refinery
and certain related terminals, pipelines and other assets for $74 million, plus
approximately $140 million for inventory and spare parts (depending upon
prevailing market prices for inventory at closing). The Purchase Agreement also
provides for a potential contingent payment by Clark to Chevron. See "The Port
Arthur Acquisition--The Purchase Agreement--Purchase Price." Chevron will
retain primary responsibility for required remediation of most pre-closing
contamination.

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oil, and has coking capability. The configuration of the Port Arthur Refinery
complements the Company's existing refineries with its ability to produce jet
fuel, 100% low sulfur diesel fuel, 55% summer reformulated gasoline and 75%
winter reformulated gasoline. The 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 the mid-continent and eastern U.S. as well as
export markets. The Company believes that the Port Arthur Refinery has the
potential for significant productivity gains with minimal capital investment,
and that it will offer an opportunity for improved results of operations and
cash flow. See "The Port Arthur Acquisition."

The Company has made estimates which are included in this Prospectus of
operating results at the Port Arthur Refinery, including the Company's planned
productivity improvements, as if the Company had purchased the Port Arthur
Refinery on January 1, 1993 and operated these assets from January 1, 1993
through December 31, 1993. The estimates and the assumptions underlying the
estimates have been reviewed by The Pace Consultants, Inc., an independent
energy consulting firm, whose opinion and summary report is contained herein.
Coopers & Lybrand L.L.P., the Company's independent accountants, has neither
examined, reviewed nor compiled the estimates and accordingly does not express
an opinion or provide any other form of assurance with respect thereto. The
assumptions upon which the estimates are based are described in "Summary of
Company Estimates Regarding the Acquisition." Some of these assumptions
inevitably would not have materialized. Other assumptions may have materialized
but in a period subsequent to 1993. Unanticipated events may have occurred
which could have affected the Port Arthur Refinery's results of operations. The
Port Arthur Refinery's actual results after the Acquisition will vary from the
estimates and these variations may be material. Prospective investors are
cautioned not to place any reliance on the estimates. See "Investment
Considerations--Company Estimates Regarding the Acquisition."

INDUSTRY OVERVIEW

The Company believes that it is well positioned to benefit from anticipated
improvements in refining industry profitability. These improvements are
expected to result from increased demand for refined products at a time when
domestic refinery utilization is nearing its maximum crude oil processing
limits and industry capital expenditures are expected to decrease. Since 1982,
U.S. gasoline demand has grown by an average of 1% to 2% annually, and industry
studies anticipate this demand will continue to track economic growth. Over the
last decade, the refining industry's domestic crude oil processing capacity has
been reduced by approximately 13% to 15.2 million barrels per day in 1993 and
current capacity utilization is approximately 91.6%. The Company believes that
maximum sustainable crude oil processing capacity utilization for the refining
industry is approximately 93.0% due to the requirements for regular
maintenance. Industry studies indicate that planned 1994 capital expenditures
will be significantly lower than the peak expenditures during 1992 which were
made to comply with then recently adopted environmental regulations. These
studies also indicate that capital expenditures to increase capacity are
expected to continue to decline through 1997.

Industry studies attribute the prospect for improving refining industry
profitability to, among other things: (i) the high utilization rates of U.S.
refineries; (ii) continued economic-related growth in U.S. demand for gasoline;
(iii) the decreasing level of planned capital expenditures for additional
refining capacity capable of producing higher-value light petroleum products,
such as gasoline and diesel fuel; and (iv) the objective of those refiners that
have invested significant capital in environmental-related projects to obtain
returns on these investments through higher product margins. Based on its
experience and industry studies, the Company believes that the U.S. refining
industry may evidence gradual margin improvement through the end of the decade.

The retail markets have historically been highly competitive with a number of
well capitalized major oil companies and both large and small independent
competitors. Industry studies indicate that over the last several years, the
retail markets have been characterized by several significant trends including
(i) increased store rationalization to fewer geographic regions and (ii)
increased consumer emphasis on convenience.

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During the past several years, the retail market has experienced increasing
concentration of market share in selected and fewer geographic regions as major
oil companies have divested non-strategic locations and have focused efforts on
targeted areas, many of which are near strategic supply sources. Additionally,
smaller operators have closed marginal and unprofitable locations as a result
of increasing environmental regulations requiring replacement of underground
storage tanks. The lack of additional favorable sites in existing markets and
the high cost of construction of new facilities are also believed to be a
barrier to new competition. Industry studies indicate that consumer buying
behavior continues to reflect the effect of increasing demands on consumer
time. Convenience and the time required to make a purchase are increasingly
important considerations in the buying decision. The Company believes these two
trends may result in decreased competition and a corresponding increase in
market share in the Company's core markets.

THE FINANCING

The Company expects to obtain financing for the purchase of the Port Arthur
Refinery and related working capital through a series of transactions described
below (the "Financing"). The closing of the Acquisition will occur
simultaneously with the closing of the financing transactions. The closing of
the Parent's Common Stock Offering (as defined) and the Parent's Note Offering
(as defined) are conditioned upon the closing of each other and upon the
completion of the Consent Solicitations and upon the closing of the
Acquisition. See "The Financing."

Common Stock Offering

The Parent is offering 7,500,000 shares of its Common Stock (the "Common
Stock") at an estimated initial public offering price of $20.00 per share (the
"Common Stock Offering").

Note Offering

The Parent is offering $100 million principal amount of % Senior Notes (the
"Notes") due 2004 (the "Note Offering"). The terms of the Notes and the related
indenture are described under "The Financing--Note Offering."

Clark Credit Agreement

Clark is currently negotiating with a group of banks to enter into a credit
agreement (the "Clark Credit Agreement") which will provide for borrowings or
letters of credit to finance its working capital requirements. The amount of
the facility will initially be the lesser of $220 million or the amount
available under a defined borrowing base. Upon consummation of the Common Stock
Offering, the Note Offering and the Acquisition, and the satisfaction of
certain other conditions, the facility will increase to the lesser of $450
million or the amount available under the borrowing base. Clark's obligations
under the Clark Credit Agreement will be collateralized by, among other things,
security interests in Clark's inventory, receivables, marketable securities and
cash and other current or intangible assets (to the extent permitted under the
Company's indentures). See "Clark Credit Agreement."

THE SOLICITATION

The Company is soliciting the Consent of Registered Holders of its 9 1/2%
Notes and of Registered Holders of its 10 1/2% Notes to the Proposed
Amendments. Concurrently with the Solicitation, the Parent is soliciting the
consents of registered holders of its Zero Coupon Notes to amendments to the
Parent Indenture similar to the Proposed Amendments and to permit the Parent to
issue the Parent Senior Notes. Satisfactory completion of each of such
solicitations is conditional upon satisfactory completion of the other of such
solicitations and on satisfaction of the other conditions described below. The
purpose of the Solicitation and

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the Proposed Amendments are, among other things, to permit the Company to
increase the amount of its authorized working capital facility in connection
with its acquisition of the Port Arthur Refinery (see "The Port Arthur
Acquisition"), and to permit the Company to incur additional indebtedness for
capital expenditures related to certain "Qualifying Projects" (as defined
below).

UPON THE EFFECTIVENESS OF THE PROPOSED AMENDMENTS, THE COMPANY WILL MAKE A
CONSENT PAYMENT TO EACH REGISTERED HOLDER WHOSE DULY EXECUTED CONSENT IS
RECEIVED AND NOT REVOKED PRIOR TO THE EXECUTION TIME. THE CONSENT PAYMENT WILL
BE $ IN CASH FOR EACH $1,000 IN PRINCIPAL AMOUNT OF NOTES WITH RESPECT TO
WHICH A CONSENT IS RECEIVED AND NOT REVOKED AS AFORESAID AND WILL BE PAID AS
SOON AS PRACTICABLE AFTER THE EFFECTIVE TIME.

THE PROPOSED AMENDMENTS

The Proposed Amendments would (i) amend the definition of "Permitted
Indebtedness" to permit Indebtedness to finance working capital requirements in
an amount not to exceed the greater of (x) $450 million and (y) an amount based
upon the levels of the Company's eligible cash and cash equivalents,
investments, receivables and petroleum inventories, (ii) amend the definition
of "Permitted Indebtedness" to permit the incurrence of an additional $75
million of Indebtedness in connection with capital expenditures for projects
("Qualifying Projects") qualifying under Section 142(a) (or any successor
provision) of the Internal Revenue Code of 1986, as amended (the "Code") to be
financed through the issuance of tax-exempt industrial development bonds, (iii)
add a provision to the definition of "Indebtedness" excepting the Contingent
Payments (as defined) obligation to Chevron U.S.A. Inc. ("Chevron") under the
Purchase Agreement from the definition of "Indebtedness" under the Indentures,
and (iv) amend the provisions relating to asset dispositions to the uses to
which the Company may apply the proceeds of certain sales.

The principal effect of the Proposed Amendments, resulting from the
amendments of the definition of "Permitted Indebtedness," would be to permit
the Company to incur certain additional indebtedness regardless of its
Consolidated Operating Cash Flow Ratio at the time of such incurrence. Such
indebtedness would include (a) an increased working capital facility, in an
amount up to the greater of (x) $450 million and (y) an amount based upon the
levels of the Company's eligible cash and cash equivalents, investments,
receivables and petroleum inventories, which is expected to provide for cash
borrowings and issuances of letters of credit to secure purchases of crude oil,
other feedstocks and refined products; (b) up to $75 million of additional
Indebtedness for Qualifying Projects; and (c) any Contingent Payments.

The Proposed Amendments would also expand the Company's ability to invest the
proceeds of asset sales in new assets.

REQUISITE CONSENTS

Adoption of the Proposed Amendments requires the receipt of the Requisite
Consents, consisting of the Consents of the Registered Holders of a majority in
aggregate principal amount of the 9 1/2% Notes outstanding and not owned by the
Company or any of its affiliates and of a majority in aggregate principal
amount of the 10 1/2% Notes outstanding and not owned by the Company or any of
its affiliates. As of the date of this Consent Solicitation Statement, $175
million and $225 million aggregate principal amount of 9 1/2% Notes and 10 1/2%
Notes, respectively, were outstanding.

The failure of a holder of Notes to deliver a Consent will have the same
effect as if such holder had voted "Against" the Proposed Amendment.

EXPIRATION DATE AND EXECUTION TIME; EXTENSIONS

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which the Solicitation is so extended. The Company reserves the right to extend
the Solicitation with respect to one or both of the Series of Notes at any time
and from time to time, whether or not the Requisite Consents have been
received, by giving oral or written notice to the appropriate Trustee no later
than 5:00 P.M., New York City time, on the next business day after the
previously announced Expiration Date. Any such extension will be followed as
promptly as practicable by notice thereof by press release or other public
announcement (or by written notice to the Registered Holders of the affected
Series of Notes). Such announcement or notice may state that the Company is
extending the Solicitation with respect to one or both of the series of Notes
for a specified period of time or on a daily basis until 5:00 P.M., New York
City time, on the date on which the Requisite Consents have been received.

Consents with respect to a Series of Notes will become irrevocable at the
applicable Execution Time (the time that the Company and the applicable Trustee
execute the applicable Supplemental Indenture, which will not be prior to the
Expiration Date with respect to such Series of Notes). See "The Solicitation--
Revocation of Consents". Subject to the satisfaction of certain conditions (see
"The Solicitation--Conditions of the Solicitation"), promptly after the receipt
of the Requisite Consents with respect to a Series of Notes the Company and the
applicable Trustee will execute the applicable Supplemental Indenture. The
effectiveness of the Supplemental Indentures is subject to, among other things,
consummation of the Acquisition and the Offerings. See "Annex A." After the
effectiveness of the Proposed Amendments (the "Effective Time"), all then
current holders of Notes, including non-consenting holders, and all subsequent
holders of Notes will be bound by the Proposed Amendments.

CONSENT PAYMENTS

Registered Holders whose properly executed Consents are received prior to the
applicable Execution Time and not revoked will be eligible to receive Consent
Payments. HOLDERS OF NOTES WHO DO NOT TIMELY CONSENT TO THE PROPOSED AMENDMENTS
WILL NOT BE ELIGIBLE TO RECEIVE CONSENT PAYMENTS EVEN THOUGH THE PROPOSED
AMENDMENTS, IF APPROVED THROUGH THE RECEIPT OF THE REQUISITE CONSENTS, WILL BE
BINDING ON THEM. Payment of the Consent Payment will be made as promptly as
practicable after the Effective Time.

CONSENT PROCEDURES

Only those persons who are Registered Holders may execute and deliver a
Consent. A beneficial owner of Notes who is not the registered holder of such
Notes (e.g., a beneficial holder whose Notes are registered in the name of a
nominee, such as a brokerage firm) at the Record Date must (i) arrange for the
Registered Holder to execute a Consent and deliver it either to the Trustee on
such beneficial owner's behalf or to such beneficial owner for forwarding to
the Trustee by such beneficial owner or (ii) obtain a duly executed proxy from
the Registered Holder authorizing the beneficial holder to execute and deliver
a Consent with respect to the Notes on behalf of such Registered Holder. A form
of proxy that may be used for such purpose is included in the form of Consent.

ANY BENEFICIAL OWNER OF NOTES HELD OF RECORD BY DTC OR ITS NOMINEE, THROUGH
AUTHORITY GRANTED BY DTC, MAY DIRECT THE DTC PARTICIPANT THROUGH WHICH SUCH
BENEFICIAL OWNER'S NOTES ARE HELD IN DTC TO EXECUTE, ON SUCH BENEFICIAL OWNER'S
BEHALF, OR MAY OBTAIN A PROXY FROM SUCH DTC PARTICIPANT AND EXECUTE DIRECTLY,
AS IF SUCH BENEFICIAL OWNER WERE A REGISTERED HOLDER, A CONSENT WITH RESPECT TO
NOTES BENEFICIALLY OWNED BY SUCH BENEFICIAL OWNER ON THE DATE OF EXECUTION. FOR
PURPOSES OF THIS CONSENT SOLICITATION STATEMENT, THE TERM "RECORD HOLDER" OR
"REGISTERED HOLDER" SHALL BE DEEMED TO INCLUDE DTC PARTICIPANTS.

Giving a Consent will not affect a Registered Holder's right to sell or
transfer Notes or to receive the Consent Payment if such Registered Holder has
not revoked its consent prior to the Execution Time, the Required Consents are
received and the Proposed Amendments become effective.

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HOLDERS OF NOTES WHO WISH TO CONSENT SHOULD MAIL, HAND DELIVER, SEND BY
OVERNIGHT COURIER OR FAX (CONFIRMED BY THE EXECUTION TIME BY PHYSICAL DELIVERY)
THEIR PROPERLY COMPLETED AND EXECUTED CONSENTS TO THE TRUSTEE AT THE ADDRESS
SET FORTH ON THE BACK COVER PAGE HEREOF AND ON THE CONSENT IN ACCORDANCE WITH
THE INSTRUCTIONS SET FORTH HEREIN AND THEREIN. CONSENTS SHOULD BE DELIVERED TO
THE TRUSTEE, NOT TO THE COMPANY, THE SOLICITATION AGENTS OR THE INFORMATION
AGENT. HOWEVER, THE COMPANY RESERVES THE RIGHT TO ACCEPT ANY CONSENT RECEIVED
BY THE COMPANY, THE SOLICITATION AGENTS OR THE INFORMATION AGENT;

IN NO EVENT SHOULD A REGISTERED HOLDER TENDER OR DELIVER NOTES.

The registered ownership of Notes shall be proved by the respective
registrars of the Notes. All questions as to the validity, form, eligibility
(including time of receipt) for Consent Payments and revocation of Consents
with respect to Notes will be determined by the Company in its sole discretion,
which determination will be conclusive and binding subject only to such final
review as may be prescribed by the respective Trustees concerning proof of
execution and ownership. The Company reserves the absolute right to reject any
or all Consents that are not in proper form or the acceptance of which could,
in the opinion of the Company or its counsel, be unlawful. None of the Company,
any of its affiliates, the Solicitation Agents, the Information Agent, the
Trustee or any other person shall be under any duty to give any notification of
any defects or irregularities in connection with deliveries of particular
Consents, nor shall any of them incur any liability for failure to give such
notification.

REVOCATION OF CONSENTS

Prior to the applicable Execution Time, any Registered Holder may revoke any
Consent given as to its Notes or any portion of such Notes (in integral
multiples of $1,000). A Registered Holder desiring to revoke a Consent must,
prior to the applicable Execution Time, deliver to the Trustee with respect to
its Note at the address set forth on the back cover page of this Consent
Solicitation Statement and on the Consent a written revocation of such Consent
(which may be in the form of a subsequent Consent marked with a specification,
i.e., "For" or "Against", different than that set forth on the Consent as to
which the revocation is being given) containing the name of such Registered
Holder, the serial numbers of the Notes to which such revocation relates, the
principal amount of Notes to which such revocation relates and the signature of
such Registered Holder. See "The Solicitation--Revocation of Consents."

CONDITIONS OF THE SOLICITATION

Consents will become irrevocable at the applicable Execution Time, which will
not be prior to the applicable Expiration Date. Promptly after the receipt of
the Requisite Consents and the Expiration Date, the respective Trustees and the
Company will execute the Supplemental Indentures. The effectiveness of the
Supplemental Indentures is conditioned upon (i) receipt of the Requisite
Consents, (ii) completion of the Parent Solicitation, (iii) the consummation of
the Offerings, (iv) the contribution to the capital of the Company by the
Parent of an amount not less than $120,000,000, (v) the concurrent consummation
of the Acquisition and (vi) subject to waiver by the Company, the absence of
any law or regulation which would, and the absence of any injunction or action
or other proceeding (pending or threatened) which (in the case of any action or
proceeding, if adversely determined) would, make unlawful or invalid or enjoin
the implementation of the Proposed Amendments, the entering into of the
Supplemental Indentures or the making of the Consent Payments or question the
legality or validity thereof or otherwise adversely affect the Acquisition or
the Offerings. See "Annex A." The Solicitation may be abandoned by the Company
at any time prior to the execution of the Supplemental Indentures, for any
reason, in which case all Consents will be voided and no Consent Payments will
be made. In addition, the Acquisition or the Offerings may be modified or
abandoned for any reason, either before or after the execution of the
Supplemental Indentures, in which case the Supplemental Indentures will not
become effective.

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FEDERAL INCOME TAX CONSEQUENCES

For a summary of the material United States Federal income tax consequences
to holders of Notes of the Proposed Amendments and the Consent Payments, see
"Federal Income Tax Consequences."

SOLICITATION AGENTS AND INFORMATION AGENT

The Company has retained Kidder, Peabody & Co. Incorporated, BT Securities
Corporation and Goldman Sachs & Co. as Solicitation Agents in connection with
the Solicitation. The Solicitation Agent will solicit Consents, will attempt to
respond to inquiries of holders of Notes and will receive a customary fee for
such services.

The Company has retained Morrow & Co. Inc. as Information Agent in connection
with the Solicitation. The Information Agent will solicit Consents, will be
responsible for collecting Consents and will receive a customary fee for such
services.

Requests for additional copies of this Consent Solicitation Statement or the
form of Consent may be directed to the Information Agent at 1-800-662-5200.

BACKGROUND AND PURPOSE OF THE SOLICITATION

INCREASED WORKING CAPITAL FINANCING

As described below under "The Port Arthur Acquisition," the Company has
agreed to purchase Chevron's Port Arthur, Texas refinery and certain related
terminals, pipelines and other assets. As a result of its purchase of the Port
Arthur Refinery, the Company will more than double its refining capacity from
approximately 130,000 barrels per day to approximately 330,000 barrels per day.
This increased capacity will significantly increase the Company's working
capital requirements as its inventories of crude oil, other feedstocks, refined
products and other working capital items will increase substantially. While
such inventories vary from time to time based upon market and other conditions,
the value of the inventory at the Port Arthur Refinery is expected to be at the
time of closing between $125 million and $140 million. The purchase of this
initial inventory will be financed from the proceeds of the Offerings and
available cash. However, in-transit inventories related to the Port Arthur
Refinery are anticipated to be substantial and in excess of the initial
inventory, and will require support in the form of letters of credit to be
issued under an increased working capital facility.

Under the terms of the Indentures, the Company is restricted from incurring
Indebtedness, other than Permitted Indebtedness, unless after giving effect to
the incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Company's Consolidated Operating Cash Flow Ratio is
greater than 2.00 to 1.00. Under the definition of "Permitted Indebtedness,"
the Company is permitted to borrow up to $220 million to finance working
capital requirements. This working capital facility limit was determined when
the Company owned only two refineries with an aggregate capacity of 130,000
barrels per day. However, as a result of the Company's acquisition of the Port
Arthur Refinery, the Company believes that it will require working capital
financing in excess of the $220 million limitation. The Company is proposing
that it be permitted, regardless of its Consolidated Operating Cash Flow Ratio,
to incur Indebtedness to finance working capital requirements in an amount not
to exceed the greater of (x) $450 million and (y) an amount based upon the
levels of the Company's eligible cash and cash equivalents, investments,
receivables and petroleum inventories.

Conforming changes will also be made to, among other provisions, the
definition of "Credit Agreement" in the Indentures to reference the new credit
agreement. One effect of this conforming change is to except from the covenants
in the Indentures limiting liens, any liens granted pursuant to the new credit
agreement. The covenants in the Indentures limiting liens currently except,
among other things, liens under the Company's "Credit Agreement" and
refinancings thereof and liens on current assets in connection with extensions
of credit to finance working capital requirements. The Company currently
anticipates that the new credit agreement will be secured by substantially all
of the Company's current assets and by an assignment of

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certain intangibles and contract rights. The Company's current credit agreement
is secured by substantially similar assets. The Company believes that the
security interests to be granted pursuant to the new credit agreement should be
excepted from the covenants limiting liens because the new credit agreement is
a refinancing of the Company's existing credit agreement and that the change of
the definition of "Credit Agreement" will not materially affect the rights of
holders of Notes.

ADDITIONAL INDUSTRIAL DEVELOPMENT BOND FINANCINGS

As mentioned in the preceding paragraph, under the terms of the Indentures,
the Company is restricted from incurring Indebtedness, other than Permitted
Indebtedness, unless after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds therefrom, the Company's
Consolidated Operating Cash Flow Ratio is greater than 2.00 to 1.00. Under the
definition of "Permitted Indebtedness," the Company is permitted to borrow,
regardless of its Consolidated Operating Cash Flow Ratio, in addition to all
other "Permitted Indebtedness," up to the greater of (a) $25 million and (b) a
dollar amount based on the price of 1.25 million barrels of West Texas
Intermediate crude oil. The Company has designated substantially all of this
amount to be borrowed pursuant to an industrial development bond in connection
with Qualifying Projects at the Company's Hartford, Illinois refinery. The
Company expects that it will in the future undertake similar capital projects.
As a result, the Company is proposing that it be permitted to incur up to an
additional $75 million of Indebtedness, regardless of its Consolidated
Operating Cash Flow Ratio, in connection with capital expenditures for
Qualifying Projects.

CONTINGENT PAYMENTS

As described under "The Port Arthur Acquisition," the base cash purchase
price for the Port Arthur Refinery is $74 million. In addition, the Company
will also purchase crude oil, other feedstocks and refined product inventories
in pipelines and tanks after the date of closing. The Company is also obligated
under certain circumstances to pay to Chevron contingent payments (the
"Contingent Payments") based on refining industry margin indicators and the
volume of product produced at the Port Arthur Refinery over a five-year period.
Based on the prevailing average refining industry margin indicators during 1993
and the first six months of 1994, the Company would not have been obligated to
make any Contingent Payments had the Contingent Payments obligations been in
place during such periods. The maximum total amount of the Contingent Payments
is $125 million. The Company is proposing to add a provision to the definition
of "Indebtedness" in the Indentures to specifically exclude the Contingent
Payments from the definition of "Indebtedness." The Company believes that even
if the Contingent Payments would be required to be made, they would not have an
adverse effect on the Company's financial condition as the Company would also
benefit from half of the impact of such increased margins.

ASSET SALES

The Company may from time to time sell certain of its assets or interests
therein, and under the terms of the Indentures, such sales could be deemed
"Asset Dispositions." As described more fully below, if such sales were deemed
"Asset Dispositions," the Company would be required to, among other things,
either invest the net proceeds in assets related to the business of the Company
that are necessary for the maintenance of the Company's business or offer to
purchase outstanding Notes with such net proceeds. The Company believes that
the phrase "assets related to the business of the Company that are necessary
for the maintenance of the Company's business" could be interpreted narrowly to
not include acquisitions of new companies or assets, or interests therein,
consistent with the Company's strategic plan of growth through acquisitions.
The Company is therefor proposing to clarify this provision by deleting the
words "that are necessary for the maintenance of the Company's business" so
that the Company is required only to invest the net proceeds of Asset
Dispositions in assets related to the business of the Company. The Company
believes that the reinvestment of the proceeds of Asset Dispositions in
additional assets which may not necessarily be "necessary for the maintenance
of the Company's business," would be beneficial to the long-term interests of
the Company and the holders of the Notes.

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PROPOSED AMENDMENTS

Set forth below is a description of certain provisions of the Indentures and
of the Supplemental Indentures. The following statements are subject to, and
qualified in their entirety by reference to, the applicable provisions of the
Indentures, a copy of each of which has been filed by the Company with the
Commission, and the form of Supplemental Indenture attached hereto as Annex A.

AMENDMENT TO ALLOW INCREASED WORKING CAPITAL FINANCING

Under the terms of the Indentures, the Company may not, and may not permit
any of its Subsidiaries other than Unrestricted Subsidiaries to, directly or
indirectly, create, issue, incur, assume, guarantee or become liable for in any
other manner, contingently or otherwise, or extend the maturity of or become
responsible for the payment of any Indebtedness other than Permitted
Indebtedness unless after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds therefrom the Company's
Consolidated Operating Cash Flow Ratio is greater than 2.00 to 1.00. Under the
current definition of "Permitted Indebtedness" contained in the Indentures, the
Company and its Subsidiaries may incur certain Indebtedness even if this test
is not satisfied, including Indebtedness which arises pursuant to extensions of
credit to finance working capital requirements in an amount not to exceed $220
million (being the maximum amount available for borrowings and letters of
credit under the Company's working capital facility in place at the time of the
execution of the Indentures plus $70 million).

As discussed above, the Company proposes to amend the definition of
"Permitted Indebtedness" to include extensions of credit to finance working
capital requirements in an amount not to exceed the greater of (x) $450 million
and (y) an amount equal to the sum of (a) 100% of eligible cash and cash
equivalents and certain investments plus (b) 95% of accounts receivable plus
(c) 90% of inventory, in each case as such amounts appear on the consolidated
balance sheet of the Company and its Subsidiaries, as of the end of the most
recently completed Quarter, prepared in accordance with generally accepted
accounting principles. See "Annex A." Under this formulation, the Company would
be permitted to incur not less than an additional $230 million for working
capital purposes regardless of its Consolidated Operating Cash Flow Ratio at
the time such Indebtedness is incurred. Any amount in excess of $450 million
would be based upon a percentage of the Company's current assets. This formula
approach would allow for increases in working capital financing based upon
objective standards and without requiring subsequent action by holders of
Notes. Under the terms of the Indentures, the Company is required to provide to
the Trustees on a quarterly basis a calculation of the amount of Permitted
Indebtedness which the Company could incur.

If the Proposed Amendments are not approved, the Company will have to seek to
finance its increased working capital requirements as a result of the
acquisition of the Port Arthur Refinery in a manner consistent with the
limitations of the Indentures. Unless the Proposed Amendments are approved,
there can be no assurance that the Company will be able to obtain additional
working capital financing consistent with the limitations of the Indentures, or
that if it is able to obtain such additional financing, that such additional
working capital financing will be on terms as advantageous to the Company as
the terms that would be obtainable if the Proposed Amendments are approved. If
the Company is unable to arrange such alternate working capital financing, the
Offerings and the Acquisition may be abandoned.

Conforming changes will also be made to (i) the definition of "Credit
Agreement" to reference the new credit agreement to be entered into by the
Company (see "The Financing") and (ii) clause (iii) of Section 801(6)
(limitations on mergers etc.) which currently references a maximum Permitted
Indebtedness for working capital requirements of $220 million. One effect of
this conforming change is to except from the covenants in the Indentures
limiting liens, any liens granted pursuant to the new credit agreement. The
covenants in the Indentures limiting liens currently except, among other
things, liens under the Company's "Credit Agreement" and refinancings thereof
and liens on current assets in connection with extensions of credit to finance
working capital requirements. The Company currently anticipates that the new
credit

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<PAGE>

agreement will be secured by substantially all of the Company's current assets
and by an assignment of certain intangibles and contract rights. The Company's
current credit agreement is secured by substantially similar assets. The
Company believes that the security interests to be granted pursuant to the new
credit agreement should be excepted from the covenants limiting liens because
the new credit agreement is a refinancing of the Company's existing credit
agreement and that the change of the definition of "Credit Agreement" will not
materially affect the rights of holders of Notes.

AMENDMENT TO ALLOW ADDITIONAL INDUSTRIAL DEVELOPMENT BOND FINANCINGS

Under the terms of the Indentures, the Company is restricted from incurring
Indebtedness, other than Permitted Indebtedness, unless after giving effect to
the incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Company's Consolidated Operating Cash Flow Ratio is
greater than 2.00 to 1.00. Under the definition of "Permitted Indebtedness,"
the Company is permitted to borrow, in addition to all other "Permitted
Indebtedness," up to the greater of (a) $25 million and (b) a dollar amount
based on the price of 1.25 million barrels of West Texas Intermediate crude
oil. The Company has designated substantially all of the foregoing amount to be
borrowed pursuant to an industrial development bond in connection with a solid
waste disposal facility at the Company's Hartford, Illinois refinery.

The Company expects that it will in the future undertake similar capital
projects. As a result, the Company is proposing to amend the definition of
"Permitted Indebtedness" to provide that, regardless of its Consolidated
Operating Cash Flow Ratio, the Company may incur, directly or indirectly, up to
an additional $75 million of Indebtedness in connection with capital
expenditures for Qualifying Projects. Qualifying Projects include capital
projects relating to, among other things, facilities for the furnishing of
water, sewage facilities, solid waste disposal facilities and certain hazardous
waste facilities.

If the Proposed Amendments are not approved, the Company will only be able to
incur Indebtedness to finance capital projects if such Indebtedness is
otherwise "Permitted Indebtedness" or the Company's Consolidated Operating Cash
Flow Ratio is greater than 2.00 to 1.00.

AMENDMENT REGARDING CONTINGENT PAYMENTS

As discussed above, under the terms of the Indentures, the Company's ability
to incur Indebtedness, other than Permitted Indebtedness, is limited unless,
after giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Company's Consolidated Operating
Cash Flow Ratio is greater than 2.00 to 1.00. Under the Indentures, the term
"Indebtedness" is generally defined to mean any indebtedness, whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid
of the purchase price of any property, except any such balance that constitutes
a trade payable in the ordinary course of business that is not overdue by more
than 90 days from the invoice date or is being contested in good faith, if and
to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such Person prepared on a consolidated basis in
accordance with generally accepted accounting principles.

As discussed in more detail under "The Port Arthur Acquisition," the Company
has agreed to pay under certain circumstances to Chevron as part of the
purchase price for the Port Arthur Refinery contingent payments based on
refining industry margin indicators and the volume of product produced at the
Port Arthur Refinery over a five-year period. Based on the prevailing average
refining industry margin indicators during 1993 and the first six months of
1994, the Company would not have been obligated to make any Contingent Payments
had the Contingent Payments obligations been in place during such periods. The
maximum total amount of the Contingent Payments is $125 million. The Company is
proposing to supplement the definition of "Indebtedness" in the Indentures to
provide that "payments to be made by the Company pursuant to Section 3.1(d) of
the Asset Sale Agreement, dated as of August 16, 1994, between the Company and
Chevron U.S.A. Inc. shall not be deemed to be "Indebtedness" within the
definition of Indebtedness.

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<PAGE>

The Company believes that the Contingent Payment would not be recognized on
the Company's balance sheet as a liability until the amount thereof becomes
reasonably estimable. As a result, the Contingent Payment should not initially
be deemed Indebtedness within the meaning of the Indentures. However, when the
amount of any Contingent Payment becomes reasonably estimable, such amount
could be deemed to be Indebtedness within the meaning of the Indentures. If the
Company's Consolidated Operating Cash Flow Ratio at such time, after giving
effect to such Contingent Payment, is less than 2.00 to 1.00, the Company could
be in default under the Indentures. In order to avoid the possibility of
defaults under the Indentures, the Company has proposed the foregoing amendment
to the Indentures. If the Proposed Amendments are not approved, the Company
believes that its agreement to pay to Chevron the Contingent Payment is not
inconsistent with its obligations and agreements under the Indentures.

AMENDMENTS RELATING TO PROCEEDS OF ASSET SALES

Under the terms of the Indentures, the Company may not, and may not permit
any Subsidiary of the Company to, make certain Asset Dispositions unless (i)
the Company (or a Subsidiary of the Company, as the case may be) receives
consideration at the time of such disposition at least equal to the fair market
value of the shares or assets disposed of, (ii) the consideration for such
disposition consists of cash or readily marketable cash equivalents or the
assumption of Indebtedness of the Company or other obligations relating to such
assets and the release of the Company from all liability associated with the
Indebtedness or other obligations assumed, and (iii) 100% of the Net Available
Proceeds, less any amounts invested within one year of such disposition in
assets related to the business of the Company that are necessary for the
maintenance of such business, from such disposition are applied by the Company
(or the Subsidiary, as the case may be) to either (A) within 90 days of such
disposition, repayment (in whole or in part) of secured Indebtedness then
outstanding under any agreements or instruments; or (B) purchases of
Outstanding Notes pursuant to an Offer at a purchase price equal to the
Redemption Price in effect at the time of such Offer.

The Company believes that clause (iii) of the foregoing provision could be
interpreted narrowly so as not to include expansion of the Company's business.
The Company is proposing to amend such provision to delete the reference to
"necessary for the maintenance of such business," so that the Company is
required only to invest the net proceeds of Asset Dispositions in assets
related to the business of the Company.

BENEFICIAL OWNERSHIP OF NOTES

None of the executive officers or directors of the Company or the executive
officers and directors of the Company as a group owns more than five percent of
either of the 9 1/2% Notes or the 10% Notes.

THE SOLICITATION

GENERAL

Consents with respect to a Series of Notes will become irrevocable at the
Execution Time applicable to such Series of Notes, which will not be prior to
the Expiration Date applicable to such Series of Notes. Promptly after the
receipt of the Requisite Consents with respect to a Series of Notes the Trustee
with respect to such Series of Notes and the Company will execute the
Supplemental Indenture applicable to such Series of Notes, the effectiveness of
which will be subject to the satisfaction of certain conditions (see
"Conditions of the Solicitation" below). The effectiveness of the Supplemental
Indentures is subject to, among other things, consummation of the Acquisition
and the Offerings. See "Annex A." After the Effective Time, all then current
holders of Notes, including non-consenting holders, and all subsequent holders
of Notes will be bound by the Proposed Amendments. If the Solicitation is
terminated for any reason before the Effective Time, the Consents will be
voided, no Consent Payments will be made, and the Proposed Amendments will not
be effected.

The Consents are being solicited by the Company. THE COMPANY RECOMMENDS THAT
HOLDERS OF NOTES CONSENT TO THE PROPOSED AMENDMENTS. All costs of the
Solicitation,

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<PAGE>

including the Consent Payments, will be paid by the Company. In addition to the
use of the mail, Consents may be solicited by officers and other employees of
the Company without additional remuneration, in person, or by telephone,
telegraph or facsimile transmission. The Company has retained Kidder, Peabody &
Co. Incorporated, BT Securities Corporation and Goldman, Sachs & Co. (the
"Solicitation Agents") and Morrow & Co. Inc. (the "Information Agent") to aid
in the solicitation of Consents, including soliciting Consents from brokerage
firms, banks, nominees, custodians and fiduciaries.

REQUISITE CONSENTS

Adoption of the Proposed Amendments requires the receipt without revocation
of the Requisite Consents, consisting of the Consents of the Registered Holders
of a majority in aggregate principal amount of the 9 1/2% Notes outstanding and
not owned by the Company or any of its affiliates and of a majority in
aggregate principal amount of the 10 1/2% Notes outstanding and not owned by
the Company or any of its affiliates. As of the date of this Consent
Solicitation Statement, $175 million and $225 million aggregate principal
amount of 9 1/2% Notes and 10 1/2% Notes, respectively, were so outstanding.

The failure of a holder of Notes to deliver a Consent will have the same
effect as if such holder had voted "Against" the Proposed Amendment.

EXPIRATION DATE; EXTENSIONS; AMENDMENT

The term "Expiration Date" means 5:00 P.M., New York City time, on [MONTH]
[DAY], 1994, unless the Company, in its sole discretion, extends the period
during which the Solicitation with respect to a Series of Notes is open, in
which event the term "Expiration Date" with respect to such Series of Notes
means the latest time and date to which such Solicitation is so extended. The
Company reserves the right to extend the Solicitation with respect to a Series
of Notes at any time and from time to time, whether or not the Requisite
Consents have been received, by giving oral or written notice to the applicable
Trustee no later than 5:00 P.M., New York City time, on the next business day
after the previously announced Expiration Date. Any such extension will be
followed as promptly as practicable by notice thereof by press release or other
public announcement (or by written notice to the holders of Notes). Such
announcement or notice may state that the Company is extending the Solicitation
with respect to a Series of Notes for a specified period of time or on a daily
basis until 5:00 P.M., New York City time, on the date on which the Requisite
Consents have been received.

The Company expressly reserves the right for any reason (i) to terminate the
Solicitation at any time prior to the execution of the Supplemental Indentures
(whether or not the Requisite Consents have been received) by giving oral or
written notice of such termination to the Trustee and (ii) not to extend the
Solicitation beyond the Expiration Date whether or not the Requisite Consents
have been received by such date. Any such action by the Company will be
followed as promptly as practicable by notice thereof by press release or other
public announcement (or by written notice to the Registered Holders). In
addition, the Acquisition or the Offerings may be modified or abandoned for any
reason, either before or after the execution of the Supplemental Indentures.

The Company expressly reserves the right to modify, at any time or from time
to time, the terms of the Solicitation (including, without limiting the
generality of the foregoing, by modifying the amount or form of consideration
to be paid to holders delivering Consents generally or to consenting holders of
one series of Notes but not the other and/or (ii) by defeasing one series of
Notes pursuant to the terms of the applicable Indenture and continuing the
Solicitation with respect to the other series of Notes) and/or the Proposed
Amendments in any manner it deems necessary or advisable to facilitate the
Acquisition and the Offerings. In addition, the Company may modify the
Acquisition or the Offerings. If the Company delivers an officer's certificate
to the Trustees certifying that such modifications are not, in the aggregate,
materially adverse to holders of Notes (compared to the terms of the
Solicitation, the Proposed Amendments and the terms of the Acquisition and the
Offerings described in this Consent Solicitation Statement), Consents given
prior to such

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<PAGE>

modifications will remain valid and effective and will constitute Consents to
the Proposed Amendments, as so modified. The Company will not be obligated to
deliver notice of such amendments to the holders of Notes prior to executing
the Supplemental Indentures. Notwithstanding the foregoing, no reduction of the
Consent Payment will be made without at least five business days' notice
thereof by press release or other public announcement (or by written notice to
the Registered Holders).

CONSENT PAYMENTS

In the event the Requisite Consents are received, the Supplemental Indentures
are executed by the Company and the respective Trustees and the Proposed
Amendments become effective, the Company will make a consent payment to each
Registered Holder whose duly executed consent is received and not revoked prior
to the Execution Time, in the amount of $ in cash for each $1,000 in
principal amount of Notes with respect to which such Consent was received and
not revoked. No accrued interest will be paid on the Consent Payments.

Any Registered Holders whose properly executed Consents have been received
prior to the Execution Time will be eligible to receive Consent Payments.
HOLDERS OF NOTES WHO DO NOT TIMELY CONSENT TO THE PROPOSED AMENDMENTS WILL NOT
BE ELIGIBLE TO RECEIVE CONSENT PAYMENTS EVEN THOUGH THE PROPOSED AMENDMENT, IF
APPROVED THROUGH THE RECEIPT OF THE REQUISITE CONSENTS, WILL BE BINDING ON
THEM.

The Company's obligation to make Consent Payments is contingent upon receipt
of the Requisite Consents, the execution of the Supplemental Indentures and
effectiveness of the Proposed Amendments. Consent Payments will be made as soon
as practicable after the satisfaction of such conditions by check mailed to the
respective addresses of the holders of Notes entitled to receive Consent
Payments as such addresses appear on the record books of the Trustee as of the
Record Date.

FAILURE TO OBTAIN REQUISITE CONSENTS

In the event the Requisite Consents are not obtained and the Solicitation is
terminated, no Consent Payments will be made and the Proposed Amendments will
not be effected. In addition, the Acquisition and the Company's plans for
financing the Acquisition may be (i) effected after defeasance of the Notes of
either or both series pursuant to the terms of the Indenture, (ii) modified
such that they will not, pursuant to the terms of the Indentures, require any
amendment of the Indentures or the consent of holders of the Notes or (iii)
abandoned.

CONSENT PROCEDURES

This Consent Solicitation Statement is being sent to all Registered Holders.
Only those persons who are Registered Holders of the Notes as of the Record
Date may execute and deliver a Consent. A beneficial owner of Notes who is not
the registered holder of such Notes on the Record Date (e.g., a beneficial
holder whose Notes are registered in the name of a nominee such as a brokerage
firm) must (i) arrange for the Registered Holder to execute a Consent and
deliver it either to the Trustee on such beneficial owner's behalf or to such
beneficial owner for forwarding to the Trustee by such beneficial owner or (ii)
obtain a duly executed proxy from the Registered Holder authorizing the
beneficial holder to execute and deliver to the Trustee a Consent with respect
to the Notes on behalf of such Registered Holder. A form of proxy that may be
used for such purpose is included in the form of Consent.

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<PAGE>

HOLDERS OF NOTES WHO WISH TO CONSENT SHOULD MAIL, HAND DELIVER, SEND BY
OVERNIGHT COURIER OR FAX (CONFIRMED BY THE EXECUTION TIME BY PHYSICAL DELIVERY)
THEIR PROPERLY COMPLETED AND EXECUTED CONSENTS TO THE TRUSTEE AT THE ADDRESS
SET FORTH ON THE BACK COVER PAGE HEREOF AND ON THE CONSENT IN ACCORDANCE WITH
THE INSTRUCTIONS SET FORTH HEREIN AND THEREIN. CONSENTS SHOULD BE DELIVERED TO
THE TRUSTEE, NOT TO THE COMPANY, THE INFORMATION AGENT OR THE SOLICITATION
AGENTS. HOWEVER, THE COMPANY RESERVES THE RIGHT TO ACCEPT ANY CONSENT RECEIVED
BY IT, THE INFORMATION AGENT OR THE SOLICITATION AGENTS.

IN NO EVENT SHOULD A REGISTERED HOLDER TENDER OR DELIVER NOTES.

All Consents that are properly completed, signed and delivered to the
Trustee, and not revoked prior to the Execution Time, will be given effect in
accordance with the specifications thereof. Holders who desire to consent to
the Proposed Amendments should mark the "For" box on, and complete, sign and
date, the Consent included herewith and mail, hand deliver, send by overnight
courier or fax (confirmed by the Execution Time by physical delivery) the
signed Consent to the Trustee at the address listed on the back cover page of
this Consent Solicitation Statement and on the Consent, all in accordance with
the instructions contained herein and therein. If none of the boxes on the
Consent is marked, but the Consent is otherwise properly completed and signed,
the Registered Holder will be deemed to have consented to the Proposed
Amendment.

Consents by the Registered Holder(s) of Notes must be executed in exactly the
same manner as such Registered Holder(s) name(s) appear(s) on the Notes. If
Notes to which a Consent relates are held of record by two or more joint
holders, all such holders must sign the Consent. If a Consent is signed by a
trustee, partner, executor, administrator, guardian, attorney-in-fact, officer
of a corporation or other person acting in a fiduciary or representative
capacity, such person must so indicate when signing and must submit with the
Consent form appropriate evidence of authority to execute the Consent. In
addition, if a Consent relates to less than the total principal amount of Notes
registered in the name of such Registered Holder, the Registered Holder must
list the serial numbers and principal amount of Notes registered in the name of
such holder to which the Consent relates. If Notes are registered in different
names, separate Consents must be executed covering each form of registration.
If a Consent is executed by a person other than the Registered Holder, then it
must be accompanied by the proxy set forth on the form of Consent duly executed
by the Registered Holder.

The registered ownership of a Note shall be proved by the applicable Trustee,
as registrar of the Notes. All questions as to the validity, form, eligibility
(including time of receipt) for Consent Payments and revocation of Consents
with respect to Notes will be determined by the Company in its sole discretion,
which determination will be conclusive and binding subject to such final review
as may be prescribed by the Trustee concerning proof of execution and
ownership. The Company reserves the absolute right to reject any or all
Consents that are not in proper form or the acceptance of which could, in the
opinion of the Company or its counsel, be unlawful. The Company also reserves
the right, subject to such final review as the Trustee prescribes for proof of
execution and ownership, to waive any defects or irregularities in connection
with deliveries of particular Consents. Unless waived, any defects or
irregularities in connection with deliveries of Consents must be cured within
such time as the Company determines. None of the Company, any of its
affiliates, the Solicitation Agents, the Information Agent, the Trustee or any
other person shall be under any duty to give any notification of any such
defects, irregularities or waiver, nor shall any of them incur any liability
for failure to give such notification. Deliveries of Consents will not be
deemed to have been made

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<PAGE>

until any irregularities or defects therein have been cured or waived. The
Company's interpretation of the terms and conditions of this Solicitation shall
be conclusive and binding.

REVOCATION OF CONSENTS

Each properly completed and executed Consent will be counted, notwithstanding
any transfer of the Notes to which such Consent relates, unless the procedure
for revoking Consents described below has been followed. The purchaser of a
Note with respect to which a Consent has been delivered by the Registered
Holder thereof will be bound by such Consent.

Prior to the Execution Time, any Registered Holder of Notes may revoke any
Consent given by it with respect to such Notes or any portion of such Notes (in
integral multiples of $1,000). A Registered Holder of Notes desiring to revoke
a Consent must, prior to the Execution Time, deliver to the Trustee at the
address set forth on the back cover page of this Consent Solicitation Statement
and on the Consent a written revocation of such Consent (which may be in the
form of a subsequent Consent marked with a specification, i.e., "For" or
"Against," different than that set forth on the Consent as to which the
revocation is being given) containing the name of such Registered Holder, the
serial numbers of the Notes to which such revocation relates, the principal
amount of Notes to which such revocation relates and the signature of such
Registered Holder.

The revocation must be executed by such Registered Holder in the same manner
as the Registered Holder's name appears on the Consent to which the revocation
relates or otherwise has the power to revoke such Consent. If a revocation is
signed by a trustee, partner, executor, administrator, guardian, attorney-in-
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, such person must so indicate when signing and must
submit with the revocation appropriate evidence of authority to execute the
revocation. A revocation of the Consent shall be effective only as to the Notes
listed on the revocation and only if such revocation complies with the
provisions of this Consent Solicitation Statement. Only a Registered Holder is
entitled to revoke a Consent previously given by it. A beneficial owner of
Notes who is not the Registered Holder of such Notes must (i) arrange with the
Registered Holder to execute and deliver either to the Information Agent on
such beneficial owner's behalf, or to such beneficial owner for forwarding to
the Trustee by such beneficial owner, a revocation of any Consent already given
with respect to such Notes, (ii) obtain a duly executed proxy from the
Registered Holder authorizing such beneficial holder to act on behalf of the
Registered Holder as to such Consent, or (iii) become a Registered Holder and
revoke such Consent in accordance with the procedures described therein.

A revocation of a Consent may only be rescinded by the execution and delivery
of a new Consent. A Registered Holder who has delivered a revocation may
thereafter deliver a new Consent by following one of the described procedures
at any time prior to the Execution Time.

The Company reserves the right to contest the validity of any revocation and
all questions as to validity (including time of receipt) of any revocation will
be determined by the Company in its sole discretion, which determination will
be conclusive and binding subject only to such final review as may be
prescribed by the Trustee concerning proof of execution and ownership. None of
the Company, any of its affiliates, the Solicitation Agents, the Information
Agent, the Trustee or any other person will be under any duty to give
notification of any defects or irregularities with respect to any revocation
nor shall any of them incur any liability for failure to give such
notification.

CONDITIONS OF THE SOLICITATION

Consents with respect to a Series of Notes will become irrevocable at the
Execution Time with respect to such Series of Notes, which will not be prior to
the Expiration Date with respect to such Series of Notes. Promptly after the
receipt of the Requisite Consents with respect to a Series of Notes, the
Trustee and the

20
<PAGE>

Company will execute the Supplemental Indenture with respect to such Series of
Notes, the effectiveness of which will be subject to the satisfaction of
certain conditions described below. The effectiveness of the Supplemental
Indentures is conditioned upon (i) receipt of the Requisite Consents, (ii)
completion of the Parent Solicitation, (iii) the consummation of the Offerings,
(iv) the contribution to the capital of the Company by the Parent of an amount
not less than $120,000,000, (v) the concurrent consummation of the Acquisition
and (vi) subject to waiver by the Company, the absence of any law or regulation
which would, and the absence of any injunction or action or other proceeding
(pending or threatened) which (in the case of any action or proceeding, if
adversely determined) would, make unlawful or invalid or enjoin the
implementation of the Proposed Amendments, the entering into of the
Supplemental Indentures or the making of the Consent Payments or question the
legality or validity thereof or otherwise adversely affect the Acquisition or
the Offerings. See "Annex A." The Solicitation may be abandoned by the Company
at any time prior to the execution of the Supplemental Indentures, for any
reason, in which case all Consents will be voided and no Consent Payments will
be made.

LISTING OF THE 9 1/2% NOTES

The 9 1/2% Notes are currently listed on the NYSE; the 10 1/2% Notes are not
listed on any national securities exchange or quoted on any interdealer
quotation system. The Company does not believe that the Proposed Amendments
will affect the listing of the 9 1/2% Notes on the NYSE. The Company does not
currently intend to list the 10 1/2% Notes on any national securities exchange
or apply to have such Notes quoted on any interdealer quotation system.

SOLICITATION AGENTS AND INFORMATION AGENT

The Company has retained Kidder, Peabody & Co. Incorporated, BT Securities
Corporation and Goldman, Sachs & Co. as Solicitation Agents in connection with
the Solicitation. The Solicitation Agents will solicit Consents, will attempt
to respond to inquiries of holders of Notes and will receive a customary fee
for such services and reimbursement for reasonable out-of-pocket expenses. The
Company has agreed to indemnify the Solicitation Agents against certain
liabilities and expenses, including liabilities under the securities laws in
connection with the Solicitation.

The Company has retained Morrow & Co. Inc. as Information Agent in connection
with the Solicitation. The Information Agent will solicit Consents, will answer
questions regarding the Solicitation and will receive a customary fee for such
services and reimbursement for reasonable out-of-pocket expenses.

Requests for additional copies of this Consent Solicitation Statement or the
form of Consent may be directed to the Information Agent at 1-800-622-5200.

THE COMPANY

Company History

In November 1988, the Company was formed by Horsham and AOC Limited
Partnership ("AOC L.P.") to acquire all of the capital stock of Clark and
certain other assets. Pursuant to a stockholder agreement (the "Stockholder
Agreement") among AOC L.P., Horsham, the Company and Clark, Horsham purchased
60% of the equity capital of the Company and AOC L.P. purchased the remaining
40% interest. On December 30, 1992, Horsham and the Company purchased all of
the outstanding shares and options of the Company owned by AOC L.P. (the
"Minority Interest"), resulting in Horsham owning 100% of the outstanding
equity of the Company.

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<PAGE>

The assets related to the Company's business were acquired on November 22,
1988 out of bankruptcy proceedings. The assets acquired consisted of (i)
substantially all of the assets of Apex Oil Company, Inc., a Wisconsin
corporation (formerly OC Oil & Refining Corporation and prior thereto Clark Oil
& Refining Corporation, a Wisconsin corporation ("Old Clark")) and its
subsidiaries and (ii) certain other assets and liabilities of the
Novelly/Goldstein Partnership (formerly Apex Oil Company), a Missouri general
partnership ("Apex"), the indirect owner of Old Clark and an affiliate of AOC
L.P.

The Company was incorporated in Delaware in 1988. The Company's principal
executive offices are located at 8182 Maryland Avenue, St. Louis, Missouri
63105, and its telephone number is (314) 854-9696.

Business Strategy

. Improving productivity. The Company implements relatively low cost
productivity projects in its refining and marketing operations designed
to increase production, sales volumes and production yields and to
improve sales mix while reducing input costs and operating expenses. As a
result of these projects, the Company's refining margins improved in 1993
and in the first six months of 1994, and outperformed industry margin
indicators over the period. The Company's sour crude and deep cut
projects at its Illinois refineries and its retail reimaging program are
examples of these types of projects. The Company estimates substantial
productivity gains to pre-tax earnings have been achieved relative to the
baseline year of 1992 during the year ended December 31, 1993 and during
the six months ended June 30, 1994.

. Promoting entrepreneurial culture. The Company emphasizes an
entrepreneurial management approach which uses employee incentives to
enhance financial performance and safety. All of the Company's employees
participate in either its performance management, profit sharing or other
incentive plans. In addition, the Company intends to adopt a stock
incentive plan and a stock purchase plan for its key employees.

Productivity Projects

In early 1993, the Company initiated activities to improve productivity in
its business divisions. Productivity changes are measured by the Company by
comparing results and expenses incurred by the Company to 1992 baseline levels.
Productivity is measured in terms of, among other things, refinery production
rates, feedstock costs, refinery production yields, retail gasoline and
convenience product margins, and operating and general and administrative
expenses. These activities consist of numerous relatively low cost projects,
the aggregate result of which was an improvement in the Company's margins in
1993 and the first six months of 1994. Examples of these projects are described
below.

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<PAGE>

. Sour crude charge. Since it began operation, the Blue Island refinery had
processed sweet crude oil because of its availability. As a result, the
sulfur content of the refinery's distillate product was significantly
better than market specifications, but the Company did not receive any
premium to higher sulfur but on-specification product. Therefore, the
Company was not taking advantage of the differential between sour and
sweet crude oil with similar yields which in 1993 was approximately $1.50
per barrel. In order to address this opportunity, the Company made minor
modifications to its operations in 1993 and 1994 to process some amount
of lower cost sour crude oil. This operating change resulted in the
refinery's 1994 crude slate consisting of 25% sour crude oil.

. Crude charge. Historically, the Blue Island refinery operated using a
crude oil throughput limit of approximately 70,000 barrels per day.
Following studies by consultants and Company engineers, it was determined
that the equipment could safely process higher rates of crude oil with
minor unit investments of approximately $0.5 million. Crude oil
throughput rates of approximately 80,000 barrels per day have been
achieved for the six months ended June 30, 1994. Following additional
planned debottlenecking projects, crude oil throughput rates are
anticipated to increase by an additional amount in 1995.

. Deep cut project. The operating parameters for the Hartford refinery's
crude vacuum unit were changed to yield higher production of gas oil and
reduced coker charge amounts. Gas oil is a higher value product than
coker charge.

. Reformer guard bed and reactor. This Hartford refinery project included
installing reactor modifications constructed from an existing spare tower
to eliminate undesirable feed constituents prior to processing through
the primary catalyst beds. As a result, the improved operating efficiency
of the reformer yielded decreased production of less desirable light end
products, produced more hydrogen and decreased the amount of scheduled
downtime necessary for catalyst regeneration.

. Retail reimaging program. As a result of a market study conducted in
1992, the Company developed a reimaging plan for its retail network to
modernize stores and convert to Clark's new logo and color scheme. The
Company began implementing this program in March 1994 in Toledo, one of
its core markets. The Company completed the reimaging of these 26 stores
in May 1994. The Company estimates that, for these stores, gross gasoline
volumes have increased 14% and convenience product sales have increased
16% for the first seven months of 1994 compared with the prior year
period. The Company attributes most of this increase to the reimaging
program, noting that the stores were reimaged during only part of 1994.
The Company completed reimaging 87 stores by June 30, 1994, and expects
to complete 417 stores in 1994 and all stores in 1995. There can be no
assurance, however, that the performance of the Toledo reimaged stores
can be sustained or duplicated in its other markets.

Refining

The Company currently operates two refineries in Illinois with a combined
rated throughput capacity of approximately 130,000 barrels of crude oil per
day. During the six month period ended June 30, 1994, the two refineries have
averaged combined crude oil throughput in excess of 140,000 barrels per day.
The acquisition of the Port Arthur Refinery will increase the Company's
refining capacity to approximately 330,000 barrels per day, positioning the
Company as one of the four largest independent refiners in the United States.
The Company's two Illinois refineries are strategically located with access to
both domestic and foreign crude oil supplies. These refineries are supplied by
crude oil pipelines and are also located on inland waterways with barge access.
The two Illinois refineries are connected by refined product pipelines,
increasing flexibility relative to stand-alone operations. The refineries
further benefit from the ability to process different grades of crude oil,
enhancing the Company's ability to select the most economic source of supply.

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<PAGE>

through readily accessible pipeline systems. Most of the Company's terminals
are capable of handling and blending ethanol, one of two viable renewable
oxygenates required for reformulated gasoline. The Company is an experienced
ethanol user, having used ethanol since the early 1980s. The Company also owns
minority interests in three crude oil and two product pipelines in the Midwest
which transport a portion of its crude oil requirements and refined products.

Marketing

The Company sells gasoline and diesel fuel through wholesale markets in the
Midwest, representing approximately 34% and 65%, respectively, of its gasoline
and diesel fuel refining production during the first half of 1994. To meet
marketing requirements that at times exceed the Company's own refining
production, and to benefit from economic and logistical advantages which may
occur, the Company also supplies its retail and wholesale networks through
exchanges and purchases of refined product from other suppliers. The Company
sells its gasoline and diesel fuel on an unbranded basis to approximately 600
distributors and chain retailers. The Company believes these sales offer higher
profitability than spot market alternatives. Railroads, barge lines and other
industrial end-users represent the largest share of other wholesale customers.
The Company believes that a branded distributor program and further focus on
the transportation industry offer significant opportunity for incremental sales
volumes and earnings in the future.

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<PAGE>

THE PORT ARTHUR ACQUISITION

THE PORT ARTHUR REFINERY

On August 18, 1994, Clark entered into the Purchase Agreement for the
purchase of Chevron's Port Arthur, Texas refinery and certain related
terminals, pipelines and other assets for $74 million, plus approximately $140
million for inventory and spare parts (depending upon prevailing market prices
for inventory at closing). The Purchase Agreement also provides for a potential
contingent payment by Clark to Chevron. The closings of the Common Stock
Offering and the Note Offering are conditioned upon the closing of the
Acquisition.

The Acquisition will more than double the Company's refining capacity, and
will provide the Company with a sour crude oil refinery with a technical
complexity rating in the top third of all U.S. Gulf Coast refineries. The
refinery has ability to process 100% sour crude oil, including up to 20% heavy
sour crude oil, and has coking capability. The configuration of the Port Arthur
Refinery complements the Company's existing refineries with its ability to
produce jet fuel, 100% low sulfur diesel fuel, 55% summer reformulated gasoline
and 75% winter reformulated gasoline. The 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 the mid-continent and eastern U.S. as
well as export markets. The Company believes that the Port Arthur Refinery has
the potential for significant productivity gains with minimal capital
investment, and that it will offer an opportunity for improved results of
operations and cash flow.

The Port Arthur Refinery was operated by Gulf Oil Corporation ("Gulf") prior
to Chevron's acquisition of Gulf in 1984. Although the original refinery on
this site began operating in 1904, the refinery has been the subject of
substantial capital expenditures. Gulf invested approximately $400 million in a
major conversion to sour crude in 1980-1982 and Chevron invested approximately
$450 million from 1989 through 1994. Converted by Chevron from a dual train to
a single train operation in 1992 in order to achieve a substantial reduction in
operating costs, the refinery's rated crude oil design capacity was reduced
from what had previously been over 400,000 barrels per day to approximately
178,500 barrels per day. The Company believes the refinery's capacity can be
increased (subject to receipt of required regulatory permits and approvals) to
approximately 200,000 barrels per day. The Company does not intend to proceed
with the Acquisition without a commitment from regulatory authorities on
permits necessary to increase the Port Arthur Refinery to at least 200,000
barrels per day.

The Port Arthur Refinery includes approximately 4,000 acres, of which
approximately 70 acres are occupied by active operating units. These units
include a crude unit, catalytic reformer, fluid catalytic cracking unit,
hydrotreaters, cogeneration units, sulfur recovery units, gas recovery units,
an HF alkylation unit and delayed cokers. The average age of operating units at
the refinery is 16 years, which the Company believes is significantly below the
industry average.

THE PURCHASE AGREEMENT

The Purchase Agreement provides for the purchase by Clark of Chevron's Port
Arthur, Texas refinery and certain related terminals, pipelines and other
assets. The Company will also acquire legal title to Chevron's chemicals
facility (the "Chemicals Facility") and lube oil distribution facility (the
"PADC Facility"), which are integrated with the Port Arthur Refinery. The
Chemicals Facility and the PADC Facility will be leased to and operated by
Chevron under long-term leases providing for a nominal rental and containing a
purchase option in favor of Chevron at a nominal purchase price. Clark will
also enter into agreements with Chevron and its affiliates providing for, among
other things, the provision of various services and the sale and purchase of
various products and commodities. Some of these ancillary agreements may be
material to the Company.

The following summary of the Purchase Agreement and related agreements is
subject to, and is qualified in its entirety by reference to, the applicable
provisions of the Purchase Agreement and the other agreements

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<PAGE>

described below, copies of which have been filed as exhibits to the
Registration Statement and are incorporated by reference herein.

Included Assets

The assets to be acquired by Clark include Chevron's Port Arthur refinery,
together with the affiliated Lucas crude oil storage terminal, the Fannett LPG
storage terminal, the Beaumont marketing terminal, Chevron's one-third interest
in the Port Arthur Products Station and certain pipelines related to these
interconnected facilities. The Company will also acquire Chevron's inventories
of crude oil, other feedstocks and refined products and spare parts associated
with the Port Arthur Refinery. Chevron may exclude certain lube oil
manufacturing equipment from the sale, with a corresponding reduction in the
purchase price.

Leaseback Assets

Clark will also acquire legal title to the Chemical Facility, the PADC
Facility and certain related assets (collectively, the "Leaseback Assets").
Clark will then lease the Chemical Facility and the PADC Facility to Chevron
under the leases described below.

Purchase Price

The purchase price for the Port Arthur Refinery is $74 million. Clark paid a
deposit of $5 million upon execution of the Purchase Agreement, and is
obligated to pay the remaining $69 million at closing. If Chevron exercises its
option to exclude the lube oil manufacturing equipment from the sale, the base
cash purchase price will be reduced by $10 million.

Clark will also purchase all crude oil, other feedstocks and refined product
inventories in major pipelines and tanks on the date of closing, at formula
prices based on market prices for such items over a measurement period after
the closing date. The purchase price for such inventory is estimated to be
approximately $134 million (depending upon prevailing market prices for
inventory at closing). Clark is also obligated to pay Chevron an amount equal
to Chevron's cost of certain spare parts, supplies, catalyst inventories and
other non-hydrocarbon inventories, currently estimated at approximately $6
million.

The Purchase Agreement provides for contingent payments to Chevron of up to
$125 million over a five year period from the closing date of the Acquisition
in the event that refining industry margin indicators exceed certain escalating
levels. The Company believes that even if such contingent payments would be
required to be made, they would not have a material adverse effect on the
Company's results of operations as the Company would also benefit from half of
the impact of such increased margins. Such payments, if any, will be due on
November 1 of each year from 1995 through 1999.

Employees

Clark is obligated to make offers of employment to at least 810 of the over
950 Chevron employees currently employed at the Port Arthur Refinery. If Clark
makes at least 810 but fewer than 855 such offers, then Clark is obligated to
pay to Chevron $33,333 for each offer less than 855. Substantially all of the
Chevron employees to be hired by Clark are represented by unions. Clark will
not assume Chevron's collective bargaining agreements with such unions, but
expects to agree upon the forms of collective bargaining agreements with those
unions prior to the closing under the Purchase Agreement.

Clark will recognize service with Chevron for any Clark employee benefits to
which the new employees may become entitled. In addition to on-going cash
costs, this will also require the Company to accrue approximately $10-15
million in accumulated retiree medical liability for the new employees. Clark
will also pay two weeks of severance pay per year of service up to 35 years
(including service with Chevron) to any

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<PAGE>

new employee it terminates without cause in the first year after closing or who
resigns as a result of a wage decrease or a job transfer to a location more
than 50 miles from the current location.

Environmental Matters

With respect to portions of the Port Arthur Refinery other than the soil
beneath and within 100 feet of active operating units (the "Excluded Areas"),
Chevron has retained responsibility for, and will control, the remediation of
most pre-closing contamination identified by Clark prior to the second
anniversary of the closing date. Chevron will be obligated to remediate such
contamination as and when required by law, in accordance with remediation plans
negotiated by Chevron and the applicable federal or state agencies. Clark has
agreed to take no action with the intention of accelerating or increasing
Chevron's remediation obligations, and the time period for such remediation is
indefinite. Subject to certain exceptions, Clark will generally assume
liability for future action (including action required as a result of a
subsequent change in law) with respect to each of over 20 geographic areas at
the refinery when Chevron's remediation of that area is complete and upon
acceptance by the appropriate regulatory authority. Clark will be responsible
for all contamination not identified during the two-year investigation period,
and for all contamination arising after the closing (unless caused by Chevron).

With respect to the Excluded Areas, Chevron will be responsible only for
groundwater (including free-phase hydrocarbons on groundwater) contamination
and contamination in pipe trenches, as identified by Clark prior to the
closing. Clark will be responsible for all soil contamination in the Excluded
Areas. Chevron will also be responsible for all contamination, whether arising
before or after closing, at the Chemicals Facility and the PADC Facility. The
party responsible for corrective action with respect to any particular
contamination will also be responsible for any contamination in other areas
caused by migration of such particular contamination.

Clark intends to conduct substantial environmental testing of the site prior
to and over the two-year period following the closing, in order to establish
the responsibilities of Chevron and Clark for environmental remediation. Since
this investigation has not yet been completed, it is not possible to estimate
the degree of contamination or the magnitude of required clean-up costs.
Moreover, the cost of remediation will depend on the nature of the remediation
plans ultimately negotiated with the applicable federal or state agencies
having jurisdiction. Chevron will be primarily responsible for negotiating
these plans, and the Company cannot predict the requirements of any plan that
may eventually be adopted. Although the Company believes that contamination is
extensive, Chevron will retain primary responsibility for remediation of most
pre-closing contamination.

SUPPLY AGREEMENTS

Clark will enter into supply agreements (the "Supply Agreements") with
Chevron (with respect to the PADC Facility) and with Chevron Chemical Company,
a subsidiary of Chevron ("CCC") (with respect to the Chemicals Facility),
providing for the purchase and sale by Clark of various quantities of products
and commodities. Quantities to be purchased and sold may vary, being determined
in some cases by the output or requirements of a party and in some cases by
periodic negotiation. Prices will also vary, and in general will be determined
by reference to market indices, specific transactions involving third parties,
actual costs or periodic negotiation. Accordingly, it is not possible to
predict the dollar amount of such transactions or their impact on the Company.
However, the Company expects that the dollar amounts involved will be
significant. For example, if the Supply Agreements had been in effect for 1993,
the Company estimates that Clark's total sales to Chevron and CCC would have
been approximately $440 million, and Clark's total purchases from Chevron and
CCC would have been approximately $370 million, resulting in a net payment to
Clark of approximately $70 million. The actual amounts payable or receivable by
Clark may be greater or less than such amounts.

27
<PAGE>

THE LEASES

Clark will lease the Chemicals Facility and the PADC Facility (the "Leased
Facilities") to Chevron under two 99-year leases (the "Leases"), with nominal
rental which will be pre-paid at closing. Each Lease provides that Chevron may
purchase a Leased Facility at the expiration of the lease period or at any time
during the lease term for a purchase price of $99. Chevron also has the option
to terminate either or both of the Leases at any time. On termination, Clark
may elect to convey the Leased Facility to Chevron.

Under the Chemicals Facility Lease, Clark has agreed to pay to Chevron a fee
of $1 million per year. This fee is designed as partial compensation to Chevron
for Chevron's operation of the UDEX splitter and related units which are
beneficial to the Port Arthur Refinery and which CCC, the sublessee of the
Chemicals Facility, has agreed to operate under the Supply Agreement for the
Chemicals Facility.

The Leases are net leases, under which Chevron is obligated to pay all taxes,
utilities and other costs of operating the Leased Facilities and for obtaining
all required permits. Chevron has agreed to indemnify Clark against all losses,
damages and claims arising from Clark's ownership of the Leased Facilities or
Chevron's operation thereof, except to the extent that any such loss, damage or
claim arises from the gross negligence or willful misconduct of Clark or its
contractors or a breach by Clark of any express warranty or agreement in the
Lease or in the related Supply Agreement or Services Agreement (as defined
below). Chevron is responsible for all environmental liabilities associated
with the Leased Facilities.

Chevron may use the Leased Facilities for any lawful purpose not inconsistent
with its obligations under the Supply Agreements and the Services Agreements.
Chevron is permitted to make additions and to alter, modify, remove or demolish
any improvements, so long as any changes are consistent with the Purchase
Agreement, the Supply Agreements and the Services Agreements. Chevron is not
obligated to restore or replace any improvements following a condemnation or
casualty, and may retain any related insurance or condemnation proceeds.
Chevron is not obligated to return the Leased Facilities in any specified
condition at the end of the lease term.

Chevron must provide only such insurance as is substantially similar to that
maintained at its other similar facilities in the United States, and so long as
Chevron maintains a consolidated net worth of $300 million or more (indexed for
inflation), such insurance may consist of self-insurance.

In general, any assignment or sublease by Chevron (other than to an affiliate
of Chevron) of the Leased Facilities is subject to the rights of first refusal
described below and to the prior consent of Clark. Clark's consent will not be
unreasonably withheld. Clark has agreed in the Purchase Agreement to similar
restrictions with respect to transfers of the Port Arthur Refinery, as
described below.

In connection with the Leases, Chevron and Clark will enter into Reciprocal
Easement Agreements burdening the Port Arthur Refinery, the Chemicals Facility
and the PADC Facility, and providing for use by each party of the property
operated by the other for purposes of ingress and egress, installation,
inspection, and repair of utilities, and other similar matters.

FIRST REFUSAL AGREEMENTS; RESTRICTIONS ON TRANSFER

At closing, Clark and Chevron will enter into Agreements for Rights of First
Refusal (the "First Refusal Agreements") with respect to the Port Arthur
Refinery, the Chemicals Facility and the PADC Facility. The First Refusal
Agreements will grant to each party the right to acquire any interest in the
Port Arthur Refinery, the Chemicals Facility or the PADC Facility on the terms
of any third party offer that the transferor desires to accept.

The First Refusal Agreements also provide that if at any time either Chevron
or Clark intends to abandon or permanently cease all or any part of its
operations at the Port Arthur Refinery, the Chemicals Facility or the PADC
Facility, such party shall first offer the facilities to be shut down or
abandoned to the

28
<PAGE>

other party for $100. The party receiving an offer with respect to any
abandonment or shutdown may elect to acquire the relevant assets within 18
months of the offer, but must assume all environmental liabilities associated
with such assets (subject to certain exceptions in the case of certain
identified units at the Chemicals Facility).

In general, any transfer by Clark (other than to an affiliate of Clark) of
the Port Arthur Refinery is also subject to the prior consent of Chevron.
Chevron's consent will not be unreasonably withheld, and must be granted if the
transferee is organized under the laws of the United States or any State, has a
consolidated net worth of $300 million or more, has a good reputation for
integrity, competence and compliance with laws, and owns and operates a
refinery in the United States of reasonably similar complexity to the Port
Arthur Refinery. (Chevron has agreed in the Leases to similar restrictions with
respect to transfers of the Chemicals Facility and the PADC Facility.)

For purposes of the First Refusal Agreements and the Purchase Agreement, a
"transfer" includes a direct or indirect change of control of any entity
(including the Company) that directly or indirectly controls the Port Arthur
Refinery, the Chemicals Facility or the PADC Facility, if at the time of such
change of control the book value of the Port Arthur Refinery, the Chemicals
Facility or the PADC Facility, as the case may be, represents 70% or more of
the total consolidated book value of the property, plant and equipment of the
entity subject to the change of control. A "change of control" under the First
Refusal Agreements means the acquisition by any person or group of 50% or more
of the common stock of any entity.

SERVICES AGREEMENTS

Clark will enter into services agreements (the "Services Agreements") with
Chevron (with respect to the PADC Facility) and with CCC (with respect to the
Chemicals Facility). The Services Agreements will govern the provision by Clark
and CCC of various services related to the operation of the Chemicals Facility,
the PADC Facility and the Port Arthur Refinery, including electric, water,
waste treatment, gas, steam, communication, emergency response, security and
other services, all in accordance with standards specified in, and at rates
determined in accordance with, schedules to the Services Agreements. Quantities
to be provided may vary, being determined in most cases by the output or
requirements of a party. Prices will also vary, although in most cases price
will be determined on the basis of the cost incurred by the party providing the
service. Accordingly, it is not possible to predict the dollar amount of such
transactions or their impact on Clark. However, since in most cases the price
will be determined based on the cost of providing the service, the Company does
not expect that the aggregate impact of the Services Agreements on the Company
will be material.

OTHER ANCILLARY AGREEMENTS

Clark and Chevron will also enter into various ancillary agreements to be
negotiated prior to the closing of the Acquisition. These will include, among
others, an agreement regarding the use by Clark of certain pipelines owned by
affiliates of Chevron, an agreement between Clark and an affiliate of Chevron
for post-closing technology support services and an agreement for the purchase
by Chevron from Clark of specified quantities of refined products for an agreed
period after the closing.

SUMMARY OF COMPANY ESTIMATES REGARDING THE ACQUISITION

INTRODUCTION

Chevron historically operated the Port Arthur Refinery as part of its
worldwide production, refining and marketing system. As a result, operating
decisions for the Port Arthur Refinery may have been made to optimize the
performance of Chevron as a whole, taking into account Chevron's upstream
assets (oil exploration and production) and downstream assets (oil refining,
marketing and petrochemical operations). The Company's business is crude oil
refining, wholesale marketing of refined petroleum products and retail

29
<PAGE>

marketing of gasoline and convenience products through its company-owned retail
network. The Company has no upstream operations. Historical financial
information covering Chevron's ownership of these assets would not be
meaningful to an understanding of the Company's proposed operation of the Port
Arthur Refinery due to the significant differences between Chevron and the
Company in management philosophy, refinery operations, personnel, supply,
marketing and distribution, and other activities anticipated by the Company.

The Acquisition represents the purchase of assets rather than a business. The
Port Arthur Refinery will be operated as an integral part of Clark's refining
division which includes two other refineries and 14 distribution terminals.
Clark is not acquiring those attributes typically associated with a business,
such as the refinery's sources of crude oil and other feedstocks, sales force,
customer base or trade names. Clark is acquiring only the assets utilized in
the manufacture of petroleum products at the Port Arthur Refinery and is not
acquiring other operations of Chevron contiguous to the refinery, including the
petrochemical complex and lube oil distribution center. These operations and
the refinery have common utility and service facilities which will continue to
be shared by the Company and Chevron following the Acquisition.

COMPANY ESTIMATES

The Company believes the Acquisition provides the opportunity to improve the
Company's operating results and cash flows. The Company and The Pace
Consultants, Inc. ("Pace"), an independent energy consulting firm, have
identified several operational and other productivity improvements which are
anticipated to be made with only limited capital investment and which would
bring the refinery up to comparable industry processing rates and yields. The
Company believes such productivity improvements, if attained, will result in
increased refining margins and decreased operating expenses at the Port Arthur
Refinery in the first year of the Company's operation. The Company's estimates
represent the operating results of the refinery as if the Company had acquired
the assets as of January 1, 1993 and operated it throughout the year assuming
the improvements which the Company plans to implement in 1995 were implemented
during 1993 and realized 1993 average market feedstock costs and refined
product prices. The Company believes 1993 is appropriate for comparison since
it was the last full year for which operating information is available, and
operations and expenses were not distorted by the impact of a major maintenance
turnaround that occurred in 1994. In addition, the Company believes that
information prior to 1993 is not meaningful since the refinery was converted in
late 1992 from a dual train to a single train operation in order to achieve a
substantial reduction in operating costs, reducing the rated crude oil design
capacity from what had previously been over 400,000 barrels per day to
approximately 178,500 barrels per day.

The Company's estimates, set forth below, were made using a linear
programming model of the refinery's operating unit capabilities. This model
determines the optimum crude oil feedstocks and operating configurations given
the relative refined product and feedstock prices and will be the basis for the
Company's operation of the Port Arthur Refinery after the Acquisition. Sales
prices for refined products were calculated using pipeline mean averages.
Estimates of operating expenses were made on the basis of 1993 information and
adjusted to reflect significant differences in the operations expected by the
Company.

The Company estimates for the Port Arthur Refinery included in this
Prospectus were not prepared with a view toward compliance with published
guidelines of the American Institute of Certified Public Accountants or
generally accepted accounting principles and have neither been examined,
reviewed nor
compiled by the Company's independent accountants and, accordingly, such
independent accountants do not express an opinion or any other form of
assurance with respect thereto. These figures represent the Company's best
estimates of the operating and financial results of the Port Arthur Refinery
had the Company operated it in 1993 and assuming that the Company had been
successful in implementing its planned productivity increases described below
(the "Productivity Plan"). The Company's estimates and underlying assumptions
including the Productivity Plan were reviewed by Pace. In Pace's opinion, the
assumptions underlying the Company's estimates provide a reasonable basis for
the Company's estimates, and the Company's estimates are reasonable. Pace's
opinion and summary report is included as Annex A to this Prospectus. Pace has
noted

30
<PAGE>

that the Company's estimates are based on feedstock costs and refined product
prices which existed on average during 1993.

The success of the Company's Productivity Plan is subject to uncertainties
and contingencies beyond the Company's control, including obtaining the
necessary environmental air emissions permits, and no assurance can be given
that the Productivity Plan will be effective or that the anticipated benefits
from the Productivity Plan would have been realized had the Company operated
the Port Arthur Refinery in 1993. The gross margin and operating expense
estimates are based on various assumptions including the Productivity Plan.
Some of these assumptions inevitably will not materialize. Other assumptions
may materialize but in a subsequent period. Unanticipated events and
circumstances may occur subsequent to the date of this Prospectus. The actual
results achieved by the Company at the Port Arthur Refinery will vary from
those set forth below and the variations may be material. Consequently, the
inclusion of the estimates herein should not be regarded as a representation by
the Company or any other person that the estimates would have been achieved in
1993 or will be achieved in the future. Prospective investors are cautioned not
to place any reliance on these estimates.

ESTIMATED 1993 PORT ARTHUR REFINERY OPERATING CASH FLOW

The Company estimates that the combined refinery and terminal operation in
1993 could have generated approximately $36 million of operating cash flow
without the benefit of any assumed improvements in processing rates, yields and
operating expenses. This estimate is based on (i) 1993 Gulf Coast spot market
prices for crude oil and refined products, (ii) actual 1993 production and
yields and (iii) actual 1993 operating expenses excluding certain unusual
items.

In addition, the Company estimates the Productivity Plan could have reduced
1993 operating expenses by approximately $27 million. This reduction, combined
with other processing rate and yield benefits, in addition to the $36 million
of estimated operating cash flow before such improvements, could have resulted
in approximately $81 million in estimated 1993 operating cash flow from the
Port Arthur Refinery.

Pace independently reviewed the Company's estimates for the refinery and
terminal operations and Productivity Plans utilizing a linear programming model
based on standard industry processing rates and yields for a refinery with the
size and complexity comparable to the Port Arthur Refinery and their own
estimate of market prices for 1993. The Pace analysis indicated that the
Company's underlying assumptions and the Company's estimates of operating cash
flow for the Port Arthur Refinery and related terminal operations are
reasonable.

The Company and Pace believe that the estimated improvements in the operation
of the Port Arthur Refinery will make it comparable with that of other
refineries of similar size and complexity in the Gulf Coast.

<TABLE>
<CAPTION>
1993
ESTIMATE (A)
------------
(IN MILLIONS,
EXCEPT
PER BARREL AMOUNTS)
<S> <C>
Crude oil throughput (m bbls/day)..................... 189,700
Production (m bbls/day)............................... 208,500
Refinery gross margin ($/bbl)......................... $ 3.03
Refinery operating expenses ($/bbl)................... 2.11
Refinery gross margin................................. $ 230.4
Refinery operating expenses........................... 160.5
-------
Refinery operating cash flow.......................... 69.9
Pipeline and terminal operating cash flow (b)......... 11.2
-------
Total operating cash flow............................. $ 81.1
=======
</TABLE>
- - - --------
(a) A $0.10 per barrel change in the realized gross margin or operating
expenses could have increased or decreased estimated operating cash flow by
$7.6 million. A 1,000 barrel per day change in refinery

31
<PAGE>

production could have increased or decreased estimated operating cash flow
by $1.2 million assuming gross margin stays the same.
(b) Principally from the interest in the Port Arthur Products Station. See
"Business--Refining".

SUMMARY OF COMPANY ESTIMATE ASSUMPTIONS

The assumptions underlying the anticipated improvements in processing rates,
yields and operating expenses are described below. The estimates assume that
(i) the Acquisition occurred at January 1, 1993; (ii) the Company successfully
implemented the planned improvements in processing rates, yields and operating
expenses; (iii) Chevron had assumed (pursuant to the Purchasing Agreement)
principal responsibility for environmental remediation except under the active
operating units; and (iv) the Company invested approximately $20 million during
1993 for various projects to improve processing rates and yields.

In 1993 and 1994, Chevron invested approximately $160 million to convert the
refinery to a single train operation, improve operating practices and repair
operating problems during a scheduled maintenance turnaround and to construct a
waste water treatment facility. The benefits from these changes were not fully
realized in the Company's 1993 estimate.

The Company believes that the 1993 actual crude oil throughput rate averaged
only 176,300 barrels per day due to limitations in the environmental permits.
The Company expects to have the ability to operate at a minimum of 200,000
barrels per day under new authority from Texas regulators. The Company does not
intend to proceed with the Acquisition without a commitment from the Texas
regulators on permits necessary to implement the Productivity Plan.

The Company's 1993 estimate assumed Gulf Coast spot market refined product
prices. Other markets which can be accessed by the Port Arthur Refinery may
from time to time have higher spot market refined product prices, net of
transportation costs. The Company intends to take advantage of such product
price differentials when available.

PRODUCTIVITY PLAN

The Company intends to increase processing rates, effect yield improvements
and reduce operating expenses and feedstock costs as compared to the estimated
1993 operating results. The improvements consist of operating expense
reductions of approximately $27 million and other increases in processing rates
and yields. In this regard, the Company has assumed (i) unit downtime would
have been in line with industry standards; (ii) necessary environmental
permitting had been received and the required capital expenditures had been
made throughout the year; (iii) no benefit for the refinery's ability to
produce reformulated gasoline; (iv) low sulfur diesel was a mandated product
for on-road use for all of 1993.

Processing Rate and Yield Increases

Crude unit. The Port Arthur Refinery's average crude oil throughput rate in
1993 was 176,300 barrels per day. The 1993 fourth quarter average was 188,000
barrels per day with the highest 1993 rate at 199,000 barrels per day in
September 1993. However, the Company believes the processing rate was limited
due to environmental permit limitations. In May 1994, the Port Arthur Refinery
reached a processing rate of 207,000 barrels per day for several days following
the maintenance turnaround. The Company estimates that it could have achieved
an average operating rate of at least 189,700 barrels per day in 1993 if
permitting had been obtained. Since May 1994, throughput rates have averaged
187,000 barrels per day with June throughput averaging more than 195,000
barrels per day.

FCC unit. The Port Arthur Refinery's average FCC unit throughput rate in 1993
was 58,200 barrels per day. However, excluding August 1993 when the unit
experienced unusual downtime, the average rate was 61,600 barrels per day. The
design capacity for the FCC is 70,000 barrels per day. Since June of 1994,
throughput rates have averaged higher than the Company's estimated rate of
61,700 barrels per day. The completion of a project (with an estimated cost of
$2.5 million) to hydrotreat the coker gas oil prior to processing in the FCC
unit should enhance gasoline yield.

32
<PAGE>

Continuous catalytic reformer ("CCR") unit. The Port Arthur Refinery's
average CCR throughput rate in 1993 was 39,000 barrels per day; however, during
the last half of the year it was operated with deactivated catalyst which
caused unscheduled downtime and reduced processing rates. The rated capacity of
the unit is 48,000 barrels per day and normal industry operation of a CCR is
commonly at or in excess of the rated capacity. The catalyst was replaced
during the 1994 maintenance turnaround to address the operating problems. Since
the 1994 turnaround, rates have averaged 43,400 barrels per day compared to the
Company estimate rate of of 45,000 barrels per day. During the first half of
September 1994, throughput rates have averaged over the Company's estimated
rate of 49,000 barrels per day.

Coker unit. The coker units averaged a total throughput rate of 28,000
barrels per day in 1993 due to unscheduled downtime which reduced capacity by
an estimated 3,000 barrels per day. Turnover of one-half of the experienced
personnel at the coker units contributed to this performance. During 1992, the
cokers were run at an average rate of 31,000 barrels per day. Approximately
$1.2 million was spent during the 1994 turnaround to improve coker unit
reliability. In the second quarter of 1995, the Company intends to spend an
additional $6 million to install a coke deheading device and improve
instrumentation which is designed to improve unit reliability and safety, and
increase the Company's ability to run heavy sour crude oil. The Company
estimates it could have achieved an average operating rate of 34,200 barrels
per day had the intended improvements been effected during 1993. During the
first half of September 1994, actual throughput rates have exceeded the
Company's estimated rate of 34,200 barrels per day.

Low sulfur diesel production. Since the October 1, 1993 implementation date
requiring low sulfur diesel for on-road use, the Port Arthur Refinery has
produced approximately 50,000 barrels per day of low sulfur diesel fuel (100%
of diesel production). The Company therefore estimates that if such regulations
were in place for the entire year it could have achieved an average operating
rate of 50,000 barrels per day in 1993.

Reformulated gasoline production. While the refinery will be able to produce
up to 55% summer and 75% winter southern grade reformulated gasoline with a
capital investment of $0.5 million to improve blending and logistics
capabilities, no benefit for this ability was included in the Company's
estimates.

Decreased feedstock costs. The Port Arthur Refinery has the present
capability to process 25,000 barrels per day of typically lower cost, heavy
sour crude oil. With limited capital investment, the Company estimates it can
increase the ability to process heavy sour crude oil from 25,000 to 35,000
barrels per day.

Yields

As a result of these projects and the use of MTBE to manufacture reformulated
gasoline, the Company estimates the yield of refined products, as a percentage
of total, will be as follows:

<TABLE>
<CAPTION>
1993 1993
ACTUAL ESTIMATE
------ --------
<S> <C> <C>
Gasoline.................................................. 39% 43%
Diesel fuel............................................... 20 24
Jet fuel.................................................. 12 10
Petrochemical products.................................... 17 15
Other..................................................... 12 8
--- ---
Total................................................... 100% 100%
=== ===
</TABLE>

33
<PAGE>

Reduced Operating Expenses

Since 1990, the Port Arthur Refinery has made improvements in key industry
measurements of operating expense performance. The Company believes, and
industry studies indicate, that based on six month data through June 1993 as
compared to data included in 1992 and 1990 industry studies, the refinery had
improved an average of two quartiles in the four key operating expense
measurements related to maintenance costs, personnel, energy use and overall
operating expenses. The Company intends to make further reductions in operating
costs, including staff and contract labor reductions, maintenance and
environmental expense, lower corporate overhead, reduced property taxes and
other costs with an annual estimated impact of $27 million. The Company
believes that the costs used in its 1993 estimates are at a level comparable
with other U.S. refineries with similar process units and facilities.

Optimize Capital Investment

From 1989 to 1994, Chevron invested approximately $450 million in capital
improvements at the Port Arthur Refinery. In addition, a major maintenance
turnaround of $25 million was completed in 1994. As a result of such
investments by Chevron, Clark does not anticipate making major maintenance
expenditures or capital expenditures in the near term. The Company estimates
that during the period from 1995 to 1998, capital expenditures at the Port
Arthur Refinery should average approximately $50 million per year, including
wastewater and safety projects required to be completed under the Purchase
Agreement. The Company intends to optimize capital investments made at the Port
Arthur Refinery by linking capital spending to cash flow generated by the
refinery. This is consistent with the Company's business strategy. See "The
Company--Business Strategy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operating--Liquidity and Capital Resources."

Other

Although the Company believes that the assumptions are reasonably based, no
assurance can be given that such assumptions will occur. The Company does not
intend to update or otherwise revise the estimates to reflect circumstances
existing after the date hereof to reflect the occurrence of unanticipated
events, even in the event that any or all of the assumptions are shown to be in
error. Furthermore, the Company does not intend to update or revise the
estimates to reflect changes in general economic or industry conditions. The
Company's regular quarterly and annual financial statements will be included in
the Company's Quarterly Reports and Form 10-Q and Annual Reports on Form 10-K,
which will be filed with the Commission. Information contained in such
financial statements will be deemed to supersede the estimates. See "Additional
Information."

The estimates with respect to the Port Arthur Refinery are inherently subject
to significant business, economic, regulatory and competitive uncertainties and
contingencies beyond the Company's control, including significant dependence on
industry market conditions in the refining and marketing business. No assurance
can be given that the estimates would have been realized in 1993 or that any of
the assumptions will be realized in the future.

THE FINANCING

The Company expects to obtain financing for the purchase of the Port Arthur
Refinery and related working capital through a series of transactions described
below. The closing of the Acquisition will occur simultaneously with the
closing of the financing transactions. The closings of the Common Stock
Offering and the Note Offering are conditioned upon the closing of each other
and upon the completion of the Solicitations and the closing of the
Acquisition. See "Summary of Company's Estimates Regarding the Acquisition."

Common Stock Offering

The Parent is offering 7,500,000 shares of its Common Stock at an estimated
initial public offering price of $20.00 per share.

34
<PAGE>

Note Offering

Concurrently with the Common Stock Offering, the Parent is offering $100
million principal amount of the Notes. The closings of the Common Stock
Offering and the Note Offering are conditioned upon each other and the
completion of the Consent Solicitations and the closing of the Acquisition. It
is anticipated that the Note Offering will be completed at the time of the
delivery of the Common Stock under the Common Stock Offering.

The Notes will be unsecured obligations of the Parent rank pari passu with
all other senior unsecured indebtedness of the Parent. The Notes will also be
structurally subordinated to indebtedness and other obligations of the Parent's
subsidiaries. Interest on the Notes will accrue at the rate of % per annum and
will be payable on and of each year, commencing on
, 1995.

The Notes will be redeemable, in whole at any time or in part from time to
time, at the option of the Parent at any time on or after , 1999,
at various redemption prices (expressed as percentages of the principal amount)
ranging from % for Notes redeemed during the twelve month period beginning on
, 1999 to 100% for Notes redeemed after , 2001. At any
time prior to , 1997, the Parent may redeem up to % in aggregate
principal amount of the Notes originally issued under the Indenture with the
net proceeds of one or more public offerings of common stock of the Company at
a redemption price of % of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of redemption, provided that
at least % of the principal amount of Notes originally issued remain
outstanding immediately after the redemption. Upon a Change of Control (as
defined in the Indenture), holders of the Notes will have the right to require
the Parent to repurchase all or any part of their Notes at 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, provided that the Parent has sufficient funds to
repurchase the Notes and that certain provisions of the Parent's other debt
agreements permit such repurchases. The Notes will not be subject to any
mandatory redemption.

The Indenture governing the Notes will restrict, among other things, (i) the
incurrence of certain additional indebtedness by the Parent and its
subsidiaries, (ii) the payment of dividends on and redemptions of capital stock
by the Parent and its subsidiaries, (iii) the sale of assets and capital stock
by the Parent and its subsidiaries, (iv) transactions with affiliates, (v) the
creation of liens and (vi) the Parent's and its subsidiaries' ability to
consolidate or merge with or into, or to transfer all or substantially all of
their respective assets to, another person. These restrictions are subject to a
number of qualifications and exceptions.

Clark Credit Agreement

In connection with the Financing and the Acquisition, Clark proposes to enter
into the Clark Credit Agreement with Bank of America NT&SA, The First National
Bank of Boston, and The Toronto-Dominion Bank (collectively, the "Lead Banks").
The Clark Credit Agreement will provide for a revolving credit facility,
secured by all of Clark's current assets and certain intangibles, which will
terminate on the third anniversary of the Closing Date. The amount of the
facility will initially be the lesser of $220 million or the amount available
under a Borrowing Base, as defined in the Clark Credit Agreement, representing
specified percentages of cash, investments, receivables, inventory and other
working capital items. Upon consummation of the Common Stock Offering, the Note
Offering and the Acquisition and the satisfaction of certain other conditions,
the facility will increase to the lesser of $450 million or the amount
available under the Borrowing Base.

The facility available under the Clark Credit Agreement will be used for
working capital purposes for the purchase of inventory and the financing of
receivables, including inventory and receivables associated with the Port
Arthur Refinery. The credit facility will initially be provided by the Lead
Banks, but may later be syndicated to a group of financial institutions (the
"Lenders").

Interest on principal drawn down under the Clark Credit Agreement will be at
a floating rate based, at Clark's option, either on the London Interbank
Offered Rate ("LIBOR") or on a "Base Rate" equal to the higher of Bank of
America NT&SA's reference rate or the Federal Funds rate plus one-half percent.
The Clark Credit Agreement also provides for various financing fees, commitment
fees, letter of credit fees and other similar payments.

35
<PAGE>

The Clark Credit Agreement will contain covenants and conditions which, among
other things, will limit dividends, indebtedness, liens, investments,
contingent obligations and capital expenditures, and will require Clark 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. In addition, Clark will be required to comply with certain
financial covenants, including: (i) maintenance of working capital of at least
$175 million; (ii) maintenance of a tangible net worth, as defined, of $270
million after the closing of the Acquisition, and as adjusted quarterly to give
effect to a portion of future earnings or capital contributions by the Parent
to Clark; (iii) a maximum indebtedness to tangible net worth ratio, as defined,
of 3.0 to 1.0, decreasing to a ratio of 2.75 to 1.0 on July 1, 1996 and 2.5 to
1.0 on January 1, 1996; and (iv) a minimum adjusted cash flow, as defined, to
debt service coverage, as defined, of 2.0 to 1.0.

The following table illustrates the anticipated sources and uses of funds
related to the Financing.

<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
SOURCES OF FUNDS:
Net Proceeds of Common Stock Offering.................... $141.0
Net Proceeds of Note Offering............................ 97.5
Available cash........................................... 86.3
------
Total.................................................. $324.8
======
APPLICATIONS OF FUNDS:
Purchase of Port Arthur assets........................... $ 74.0
Purchase of Port Arthur inventory (a).................... 140.0
Redemption of Zero Coupon Notes.......................... 82.8
Clark Credit Agreement, environmental due diligence and
other transaction costs................................. 28.0
------
Total.................................................. $324.8
======
</TABLE>
- - - --------
(a) Depending upon prevailing market prices for inventory at closing.

CAPITALIZATION

The following table sets forth the unaudited consolidated cash, cash
equivalents and short-term investments and capitalization of the Company at
June 30, 1994, and as adjusted to give effect to the Financing (to the extent
applicable to the Company) and the application of the net proceeds therefrom,
as if such transactions had occurred on June 30, 1994. The table should be read
in conjunction with the Consolidated Financial Statements of the Company, and
related notes thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

<TABLE>
<CAPTION>
JUNE 30, 1994
------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Cash, cash equivalents and short-term investments..... $180.8 $100.8
Long-term debt (a):
10 1/2% Notes....................................... $225.0 $225.0
9 1/2% Notes........................................ 175.0 175.0
Other notes and mortgages........................... 0.5 0.5
------ ------
Total long-term debt.............................. 400.5 400.5
Stockholders' equity:
Common Stock, $.01 par value per share.............. -- --
Additional paid-in-capital.......................... 30.0 190.3
Retained earnings................................... 134.7 134.7
------ ------
Total stockholders' equity........................ $164.7 $325.0
====== ======
Total capitalization.................................. $565.2 $725.5
====== ======
</TABLE>
- - - --------
(a) Does not reflect the utilization of $76.6 million at June 30, 1994 under
the Clark Credit Agreement to support outstanding letters of credit.

36
<PAGE>

SELECTED FINANCIAL DATA

The following table sets forth, for the periods and dates indicated,
selected financial data derived from the Financial Statements of the Company
for the five-year period ended December 31, 1993. The selected financial data
for the six months ended June 30, 1993 and 1994 are unaudited and, in the
opinion of management, include all adjustments which are of a normal recurring
nature necessary for a fair presentation. The information for interim periods
may not be indicative of a full year's results. The interim period information
has been reviewed by Coopers & Lybrand L.L.P., independent accountants. The
Financial Statements of the Company for all years were audited. The Financial
Statements of the Company for the four-year period ended December 31, 1993
were audited by Coopers & Lybrand L.L.P. The reports of Coopers & Lybrand
L.L.P. appear elsewhere in this Prospectus. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and related notes.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT RATIOS, PER SHARE, AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales and operating
revenues.............. $2,023.2 $2,745.7 $2,426.1 $2,253.0 $2,263.4 $1,170.0 $1,152.9
Cost of sales.......... 1,678.0 2,383.9 2,092.7 1,952.4 1,936.6 1,026.1 977.4
Operating expenses..... 181.7 195.4 199.7 224.4 218.1 105.8 115.8
General and
administrative
expenses.............. 21.3 23.3 20.8 31.1 27.5 12.7 15.4
Inventory write-down
(reversal) to market.. -- -- -- -- 26.5 -- (26.5)
Depreciation and
amortization (a)...... 15.4 19.3 26.4 30.4 35.3 16.9 18.8
-------- -------- -------- -------- -------- -------- --------
Operating income....... 126.8 123.8 86.5 14.7 19.4 8.5 52.1
Interest and financing
costs, net (b)........ 45.8 29.3 27.2 26.4 29.9 13.1 17.0
Other income (expense)
(c)................... -- (22.3) -- 14.7 11.4 11.4 --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before taxes,
extraordinary items
and cumulative effect
of changes in
accounting principles. 81.0 72.2 59.3 3.0 0.9 6.8 35.1
Income tax provision
(benefit)............. 26.6 26.1 22.0 (0.3) (0.5) 2.6 13.1
-------- -------- -------- -------- -------- -------- --------
Earnings from
continuing operations
before extraordinary
items and cumulative
effect of changes in
accounting principles. $ 54.4 $ 46.1 $ 37.3 $ 3.3 $ 1.4 $ 4.2 $ 22.0
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Cash, cash equivalents
and short-term
investments........... $ 101.3 $ 174.1 $ 267.0 $ 206.1 $ 194.5 $ 172.8 $ 180.8
Total assets........... 540.8 638.8 809.5 787.8 811.5 822.5 827.7
Long-term debt......... 302.2 301.9 426.6 401.5 401.0 401.6 400.5
Stockholders' equity... 93.4 135.3 172.6 154.2 146.0 148.8 164.7
OPERATING DATA:
Refining Division:
Production (m
bbls/day)............. 135.4 131.7 129.4 142.4 134.7 125.3 142.1
Utilization (d)........ 104.2% 101.3% 99.5% 109.5% 103.6% 96.4% 109.3%
Gross margin (per bbl). $ 4.17 $ 4.20 $ 3.88 $ 3.03 $ 3.24 $ 3.00 $ 3.66
Operating expenses (per
bbl).................. 1.86 2.15 2.38 2.22 2.20 2.28 2.25
Retail Division:
Number of stores (at
period end)........... 942 937 889 873 846 852 840
Gasoline volume (mm
gals)................. 970.5 978.2 966.2 956.7 1,014.8 512.4 510.0
Gasoline volume (m gals
pmps)................. 86.0 87.2 86.9 90.1 98.6 98.5 101.2
Gasoline gross margin
(c/gal)............... 10.1c 11.7c 10.9c 10.0c 11.1c 9.4c 10.5c

Convenience product
sales (mm)............ $ 195.5 $ 187.0 $ 186.9 $ 203.4 $ 218.0 $ 108.0 $ 113.4
Convenience product
sales (pmps).......... 17,333 16,666 16,804 19,154 21,171 20,761 22,501
Convenience product
gross margin (mm)..... 41.4 45.2 45.1 47.7 54.8 27.6 27.7
Convenience product
gross margin (% of
sales)................ 21.2% 24.2% 24.1% 23.4% 25.2% 25.6% 24.5%
Convenience product
gross margin (pmps)... $ 3,670 $ 4,028 $ 4,004 $ 4,488 $ 5,320 $ 5,416 $ 5,504
Operating expenses
(mm).................. 89.6 94.0 94.3 106.3 109.9 54.0 57.9
OTHER DATA:
EBITDA (e)............. $ 142.2 $ 143.1 $ 112.9 $ 45.1 $ 54.7 $ 25.4 $ 70.8
Adjusted EBITDA (f).... (f) (f) 112.9 68.8 81.2 25.4 44.3
Turnaround
expenditures.......... $ -- $ 9.0 $ 17.2 $ 2.7 $ 20.6 $ 18.3 $ 1.6
Capital expenditures... 28.9 34.6 58.0 59.5 68.1 42.9 28.1
-------- -------- -------- -------- -------- -------- --------
Total expenditures..... $ 28.9 $ 43.6 $ 75.2 $ 62.2 $ 88.7 $ 61.2 $ 29.7
======== ======== ======== ======== ======== ======== ========
SELECTED FINANCIAL DATA:
Pro forma interest and
financing costs, net
(g)................... -- -- -- -- $35.8 -- $19.9
Pro forma cash interest
and financing costs,
net (g)............... -- -- -- -- 34.2 -- 18.5
Pro forma ratio of ad-
justed EBITDA to in-
terest and financing
costs, net (f) (g)
(h)................... -- -- -- -- 2.27x -- 2.23x
Pro forma ratio of ad-
justed EBITDA to cash
interest and financing
costs, net (f) (g)
(h)................... -- -- -- -- 2.38x -- 2.39x
Ratio of earnings to
fixed charges (i)..... 2.47x 2.54x 2.37x (j) (j) (j) 2.54x
</TABLE>

See notes on following page.

37
<PAGE>

- - - --------
(a) Amortization includes amortization of turnaround costs and organizational
costs.
(b) Interest and financing costs, net, includes amortization of debt issuance
costs of $0.6 million and $0.6 million for the six months ended June 30,
1993 and 1994, respectively, and $9.1 million, $3.1 million, $6.0 million,
$2.9 million and $1.2 million for the years ended December 31, 1989, 1990,
1991, 1992 and 1993 respectively. Interest and financing costs, net, also
includes interest on all indebtedness, net of capitalized interest and
interest income.
(c) Other income in 1993 includes the final settlement of litigation with
Drexel Burnham Lambert Incorporated ("Drexel") of $8.5 million and a gain
from the sale of non-core stores of $2.9 million. Other income in 1992
includes the settlement of litigation with Apex and Drexel of $9.2 million
and $5.5 million, respectively. Other expense in 1990 included a loss
provision for $11.6 million representing the full amount of an overnight
deposit held by Drexel. An additional 1990 loss provision of $10.0 million
represents estimated costs of mitigation and recovery efforts resulting
from alleged responsibility for ground water contamination in the town of
Hartford, Illinois, adjacent to the Hartford refinery. A 1990 loss
provision of $0.7 million reflected the inability of a former affiliate to
repay its note due Clark.
(d) Utilization is the ratio of total refinery production to the rated crude
oil capacity of the refinery. Refinery production yield may be greater than
the rated capacity of the refinery because other feedstocks (including
partially refined products and liquified petroleum gases) which add to the
refinery's output are used in the refining process.
(e) Earnings before interest, taxes, depreciation and amortization. EBITDA is
presented here to provide additional information about the Company's
ability to meet future debt service, capital expenditures and working
capital requirements. EBITDA should not be considered as an alternative to
net income as an indicator of operating performance, or as an alternative
to cash flows as a measure of liquidity, as such measures would be
determined pursuant to generally accepted accounting principles.
(f) EBITDA, adjusted for "unusual items." This information was not available
for 1989 and 1990. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(g) Pro forma interest and financing costs, net and pro forma cash interest and
financing costs, net have been adjusted to reflect the Financing, which
consists of (i) the Note Offering at an assumed interest rate of 11.0%,
(ii) the Common Stock Offering, (iii) the mandatory redemption of half of
the outstanding Zero Coupon Notes, and (iv) the adoption of the Clark
Credit Agreement as if they had occurred at the beginning of fiscal 1993.
(h) Pro forma ratios reflect the Financing of the Port Arthur acquisition, but
do not reflect any EBITDA contribution from Port Arthur. As such, interest
and financing costs, net and cash interest and financing costs, net have
been adjusted to reflect only the Financing, which consists of (i) the Note
Offering at an assumed interest rate of 11.0%, (ii) the Common Stock
Offering, (iii) the mandatory redemption of half of the outstanding Zero
Coupon Notes, and (iv) the adoption of the Clark Credit Agreement as if
they had occurred at the beginning of fiscal 1993.
(i) The ratio of earnings to fixed charges is computed by dividing (i) earnings
before income taxes (adjusted to recognize only distributed earnings from
less than 50% owned persons accounted for under the equity method) plus
fixed charges by (ii) fixed charges. Fixed charges consist of interest on
indebtedness, including amortization of discount and debt issuance costs
and the estimated interest components (one-third) of rental and lease
expense.
(j) As a result of the losses for the years ended December 31, 1992 and 1993
and for the six months ended June 30, 1993, earnings were insufficient to
cover fixed charges by $20.7 million, $17.3 million and $11.6 million,
respectively.

38
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Selected
Financial Data and the Financial Statements and notes thereto appearing
elsewhere in this Prospectus.

RESULTS OF OPERATIONS

Overview

The Company's results 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, domestic and foreign
political affairs and production levels, the availability of imports, the
marketing of competitive fuels and the extent of government regulation.
Although margins are significantly affected by industry and regional factors,
the Company can influence its margins through the efficiency of its operations.
While the Company's net sales and operating revenues fluctuate significantly
with movements in industry crude oil prices, such prices do not have a direct
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 believes that,
in general, low crude oil prices indirectly benefit operating results over the
longer term due to increased demand and decreased working capital requirements.
Conversely, the Company believes that high crude oil prices generally result in
decreased demand and increased working capital requirements over the long term.
Increased refinery production is typically associated with improved results of
operations, while reduced production, which generally occurs during scheduled
refinery maintenance turnarounds, negatively affects results of operations.

The following table sets forth the approximate pre-tax earnings impact based
on historical operating rates estimated by the Company on the Company's
operating results due to changes in: (i) refining margins--the spread between
wholesale and spot market product prices and input (e.g. crude oil) costs, and
(ii) retail margins--the spread between product prices at the retail level and
wholesale product costs.

<TABLE>
<CAPTION>
PRE-TAX EARNINGS IMPACT ON THE
COMPANY
-------------------------------
AFTER PORT ARTHUR
EARNINGS SENSITIVITY CHANGE CURRENTLY ACQUISITION
-------------------- ------ --------- -----------------
<S> <C> <C> <C>
Refining margin $0.25 per barrel $12 million $30 million
Retail margin $0.01 per gallon $10 million $10 million
</TABLE>

Six months ended June 30, 1993 compared to six months ended June 30, 1994:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------
1993 1994
-------- --------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL RESULTS:
Net sales and operating revenues.................... $1,170.0 $1,152.9
Cost of sales....................................... 1,026.1 977.4
Operating expenses.................................. 105.8 115.8
General and administrative expenses................. 12.7 15.4
-------- --------
Adjusted EBITDA (a)................................. 25.4 44.3
Depreciation and amortization....................... 16.9 18.8
Interest and financing costs, net................... 13.1 17.0
-------- --------
Earnings before income taxes (b).................... (4.6) 8.5
Income tax provision (benefit) (b).................. 1.6 (2.9)
-------- --------
Earnings before unusual items (b)................... (3.0) 5.6
Unusual items, after taxes (b)...................... (2.4) 16.4
-------- --------
Net earnings (loss)............................... $ (5.4) $ 22.0
======== ========
</TABLE>
- - - --------
(a) Earnings before interest, taxes, depreciation and amortization, adjusted
for "unusual items."
(b) The Company considers certain items for the six months ended June 30, 1993
and 1994 as "unusual." Detail on these items is presented below.

39
<PAGE>

Net earnings, excluding "unusual items" for the first six months of 1994,
improved compared to the six months ended June 30, 1993. Improved refining
productivity and general market conditions in the first quarter of 1994
contributed to the increased earnings. In addition, refining production was
reduced in the first half of 1993 when the Blue Island refinery underwent a
scheduled maintenance turnaround. A maintenance turnaround is scheduled for the
Hartford refinery in two stages, late in 1994 and early 1995. Net sales and
operating revenues in the first half of 1994 were relatively flat compared to
the prior year period as weak industry crude oil and refined product prices in
the first quarter of 1994 recovered in the second quarter and impacted both
selling prices and costs of goods sold. EBITDA improved to $44.3 million for
the first half of 1994 from $25.4 million in the first half of 1993.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
30,
-------------
1993 1994
------ -----
(IN
MILLIONS)
<S> <C> <C>
UNUSUAL ITEMS:
Reversal of inventory write-down to market............... $ -- $26.5
------ -----
Impact on operating income............................... -- 26.5
Gain on sale of stores................................... 2.9 --
Litigation settlements................................... 8.5 --
Change in accounting principle........................... (15.6) --
------ -----
Total.................................................. $ (4.2) $26.5
====== =====
Net of taxes........................................... $ (2.4) $16.4
====== =====
</TABLE>

Several items which are considered by management as unusual are excluded
throughout this discussion of the Company's results of operations. A non-cash
write-down of $26.5 million was taken in the fourth quarter of 1993 to reflect
the decline in the value of petroleum inventories below carrying value caused
by a substantial drop in petroleum prices. Crude oil and related refined
product prices rose substantially in the first half of 1994 allowing the
Company to recover the original charge. Accordingly, a reversal of the
inventory write-down to market was recorded in the first half of 1994. A return
to lower prices could result in future charges. Effective January 1, 1993, the
Company adopted SFAS No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions," reflected as a change in accounting principle, and SFAS
No. 109 "Accounting for Income Taxes," which was accounted for by restating
prior periods. An unusual credit was recorded in the first quarter of 1993
related to the favorable settlement of litigation. Second quarter 1993 earnings
benefited from the sale of certain retail stores in non-core markets.

REFINING
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
30,
--------------
1993 1994
------ ------
(IN MILLIONS,
EXCEPT
OPERATING
DATA)
<S> <C> <C>
OPERATING STATISTICS:
Crude oil throughput (m bbls/day)....................... 113.9 138.3
Production (m bbls/day)................................. 125.3 142.1
Utilization............................................. 96.4% 109.3%
Gross margin ($/bbl).................................... $ 3.00 $ 3.66
Gross margin............................................ $ 68.1 $ 94.2
Operating expenses...................................... 51.8 57.9
Divisional general and administrative expenses.......... 4.0 5.4
------ ------
Contribution to operating income...................... $ 12.3 $ 30.9
====== ======
</TABLE>

The refining division contributed $30.9 million in the first six months of
1994 (1993--$12.3 million) to the Company's operating income. In addition to
the 1993 maintenance turnaround and the impact of market

40
<PAGE>

conditions mentioned above, earnings for the first half of 1994 improved over
the prior year period due to increased refining productivity. These
productivity improvements resulted from the processing of lower cost sour crude
oil and an increased crude oil processing rate at the Blue Island refinery, the
implementation of several yield improvement projects at the Hartford refinery
and record wholesale marketing volumes.

Earnings were negatively impacted by market factors largely beyond the
Company's control, principally the narrowing price benefit of using heavy sour
crude oil (the predominant input at the Hartford refinery) versus sweet crude
oil and the decreased availability of Canadian light sweet crude oil (the
predominant input at the Blue Island refinery) in the first half of 1994.
Additionally, refining margins weakened in the second quarter of 1994 as
product prices did not keep pace with rising crude oil costs. The Company does
not view these factors as long-term trends. Operating and divisional general
and administrative expenses were higher in the first half of 1994 compared to
the prior period. These expenses increased due to increased labor hours to meet
operating needs related to colder than normal weather, new labor and sulfur
processing contracts and enhanced refinery planning and operations support
services.

RETAIL
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
----------------
1993 1994
------- -------
(IN MILLIONS,
EXCEPT PER
STORE DATA)
<S> <C> <C>
Operating Statistics:
Company operated stores (at period end)............... 842 830
Dealer operated stores (at period end)................ 10 10
Gasoline volume (mm gals)............................. 512.4 510.0
Gasoline volume (m gals pmps)......................... 98.5 101.2
Gasoline gross margin (c/gal)......................... 9.4c 10.5c
Gasoline gross margin................................. $ 48.1 $ 53.6
Convenience product sales............................. $ 108.0 $ 113.4
Convenience product sales (pmps)...................... 20,761 22,501
Convenience product gross margin...................... $ 27.6 $ 27.7
Convenience product gross margin (% of sales)......... 25.6% 24.5%
Convenience product gross margin (pmps)............... 5,416 5,504
Operating expenses.................................... $ 54.0 $ 57.9
Divisional general and administrative expenses........ 2.2 3.2
Contribution to operating income.................... 19.5 20.2
</TABLE>

The retail division contributed $20.2 million in the first six months of 1994
(1993--$19.5 million) to the Company's operating income. Average monthly
gasoline volumes and convenience product margins per store for the first half
of 1994 increased compared to the prior year period, but gross margins were
negatively impacted by a decrease in the average number of stores in operation
and lower convenience product unit margins in 1994. Results for the first six
months of 1994 were strengthened by favorable first quarter retail market
conditions and the repeat of a three-week promotion (also run in 1993) which
offered all grades of gasoline for the same price as regular unleaded gasoline.
These improvements were partially offset by increased operating and divisional
general and administrative expenses in the first half of 1994 related to
increased store hours, marketing support for training, merchandising and
advertising, and information services.

Other Financial Highlights

Depreciation and amortization expenses in the first half of 1994 increased
compared to the prior year period, principally due to higher levels of
property, plant and equipment and the amortization of the Blue

41
<PAGE>

Island refinery maintenance turnaround completed in the second quarter of 1993,
partially offset by the effect of the postponement of the Hartford maintenance
turnaround to late in 1994 and early in 1995.

Net interest and financing costs increased in the first six months of 1994
compared to the prior year period primarily due to decreased capitalization of
interest costs related to capital projects and lower returns on funds invested.

1993 compared with 1992 and 1991:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1991 1992 1993
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
FINANCIAL RESULTS:
Net sales and operating revenues............. $2,426.1 $2,253.0 $2,263.4
Cost of sales................................ 2,092.7 1,952.4 1,936.6
Operating expenses........................... 199.7 207.0 218.1
General and administrative expenses.......... 20.8 24.8 27.5
-------- -------- --------
Adjusted EBITDA (a).......................... 112.9 68.8 81.2
Depreciation and amortization................ 26.4 30.5 35.3
Interest and financing costs, net............ 27.2 28.4 29.9
-------- -------- --------
Earnings before income taxes (b)............. 59.3 9.9 16.0
Income tax provision (b)..................... 22.0 4.7 5.4
-------- -------- --------
Earnings before unusual items (b)............ 37.3 5.2 10.6
Unusual items, after taxes (b)............... -- (13.4) (18.8)
-------- -------- --------
Net earnings (loss)........................ $ 37.3 $ (8.2) $ (8.2)
======== ======== ========
</TABLE>
- - - --------
(a) Earnings before interest, taxes, depreciation and amortization, adjusted
for "unusual items."
(b) The Company considers certain items in 1991, 1992 and 1993 to be "unusual."
Detail on these items is presented below.

The Company reported a net loss of $8.2 million in 1993 compared with a net
loss of $8.2 million in 1992 and net earnings of $37.3 million in 1991.
Industry refining margins and the Company's resulting refining margins
decreased in 1993 and 1992 from 1991. In addition, significant unusual items
discussed below decreased both 1993 and 1992 earnings. Net earnings, excluding
"unusual" items was flat in 1993 compared to 1992, despite a decline in
industry refining margins and reduced production associated with the scheduled
maintenance turnaround at the Blue Island refinery. The gain was due to the
combination of improved retail and refinery productivity and retail market
conditions which became significant in 1993. Earnings before depreciation,
amortization, interest, taxes and "unusual" items for the year ended December
31, 1993, was $81.2 million, $12.4 million greater than 1992 but $31.7 million
under 1991.

Declining crude oil and product prices reduced 1993 and 1992 net sales and
operating revenues, while improved unit volumes partially offset this
reduction. Crude oil and product prices declined in 1992 and 1993 from the
levels reached during the 1990 Persian Gulf conflict and the 1991 Soviet coup
which were viewed as potential threats to supply. Net sales and operating
revenues were also affected by retail and wholesale volumes. Retail gasoline
volumes increased 6% in 1993 from 1992 and decreased 1% in 1992 from 1991, and
wholesale volumes increased 21% in 1993 from 1992 and increased 122% in 1992
from 1991.

42
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1992 1993
------ ------
(IN MILLIONS)
<S> <C> <C>
UNUSUAL ITEMS:
Inventory write-down to market......................... $ -- $(26.5)
Provision for environmental remediation cost........... (9.6) --
Provision for store closure............................ (4.4) --
Retirement and severance packages...................... (5.0) --
Other.................................................. (4.7) --
------ ------
Impact on operating income........................... (23.7) (26.5)
Change in accounting principle....................... -- (15.6)
Early retirement of debt............................. (18.7) --
Litigation settlements............................... 14.7 8.5
Sale of non-core stores.............................. -- 2.9
Other................................................ 2.0 --
------ ------
Total................................................ $(25.7) $(30.7)
====== ======
Net of taxes......................................... $(13.4) $(18.8)
====== ======
</TABLE>

Several items which are considered by management as "unusual" are excluded
throughout this discussion of the Company's results of operations. A non-cash
accounting charge was taken in the fourth quarter of 1993 to reflect the
decline in the value of petroleum inventories below carrying value caused by a
substantial decline in prices. Effective January 1, 1993, the Company adopted
the provisions of SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (see Note 13 "Postretirement Benefits Other Than
Pensions" to the Financial Statements), and SFAS No. 109 "Accounting for Income
Taxes" which was accounted for by restating prior periods. See Note 14 "Income
Taxes" to the Financial Statements. Unusual credits included a 1993 gain
related to the sale of 21 retail stores located in non-core markets and the
favorable settlement of litigation. See Note 12 "Other Income" to the Financial
Statements. Unusual charges in 1992 included the early retirement of Clark's 12
1/4% First Mortgage Fixed Rate Notes due 1996 and provisions related to the
environmental remediation of the storm water basin at the Hartford refinery and
closures of under-performing retail stores. See "Business." In addition,
"unusual" expenses were incurred in 1992 related to the early retirement of
approximately 50 employees and a severance program as well as costs associated
with an initial public offering that was canceled due to a delay caused by a
lawsuit by AOC L.P. prior to the acquisition of the Minority Interest.

REFINING
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-------------------------
1991 1992 1993
------ ------ ------
(IN MILLIONS, EXCEPT
OPERATING DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
Crude oil throughput (m
bbls/day)................ 119.3 126.8 123.8
Production (m bbls/day)... 129.4 142.4 134.7
Utilization............... 99.5% 109.5% 103.6%
Gross margin ($/bbl)...... $ 3.88 $ 3.03 $ 3.24
Gross margin.............. $183.2 $157.7 $159.3
Operating expenses........ 105.4 106.5 (a) 108.2
Divisional general and ad-
ministrative expenses.... 3.9 4.4 6.4
------ ------ ------
Contribution to operat-
ing income............. $ 73.9 $ 46.8 (a) $ 44.7
====== ====== ======
</TABLE>
- - - --------
(a) Excludes unusual charges totaling $11.5 million, primarily related to a
provision for environmental remediation and restructuring.

43
<PAGE>

Excluding unusual items, the Company's refining division contributed $44.7
million to operating income in 1993, relatively flat with the $46.8 million
contributed in 1992 and a $29.2 million decrease from the $73.9 million
contributed in 1991. The division's results in 1993 and 1992 were negatively
affected by industry factors. In 1993, industry refining margins continued the
decline experienced in 1992, and declined further from the levels reached
following the 1990 Persian Gulf conflict and the 1991 Soviet coup. This
downward industry trend occurred despite increasing demand during this period
for gasoline and distillate products. As reported by the American Petroleum
Institute, U.S. gasoline deliveries in 1993 rose by 1.5% versus a 1.1% increase
in 1992, while distillates showed an increase of 2.1%. However, demand was more
than offset by high domestic refinery runs which reached a crude oil throughput
utilization rate of 91.5%, the highest level in 20 years. In addition, industry
yield of light products (as a percentage of crude oil runs) increased in 1993,
with gasoline and distillate output rising 2.7% and 5.0% respectively, further
increasing the supply of these typically higher-margin products. This changing
industry yield pattern is a result of a 10% increase in upgraded light-product
production capability that has occurred over the past five years.

The Company's refining margins improved in 1993, especially in the second
half of 1993 despite a decline in industry refining margin indicators. Refining
division results for the second half of 1993 improved due to productivity
initiatives, improved heavy oil and wholesale margins, and market profit
opportunities presented by the mandated transition to low sulfur No. 2 oil for
on-road use. This refining division improvement occurred despite third quarter
losses related to declines in crude and product prices, flooding in the Midwest
which impacted retail demand, and a significant decrease in Midwest No. 2 oil
prices. Refinery production for 1993 declined from 1992 due to a maintenance
turnaround in 1993 at the Blue Island refinery. Production during 1992 exceeded
1991 due to a turnaround at the Hartford refinery in 1991. Another turnaround
is scheduled for the Hartford refinery in two stages, late in 1994 and early in
1995. Refining operating expenses of $108.2 million in 1993 narrowly exceeded
1992 operating expenses excluding unusual items of $106.5 million and 1991
expenses of $105.4 million.

RETAIL
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1991 1992 1993
------- ------- --------
(IN MILLIONS, EXCEPT
OPERATING DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
Company operated stores (at period end).... 876 862 836
Dealer operated stores (at period end)..... 13 11 10
Gasoline volume (mm gals).................. 966.2 956.7 1,014.8
Gasoline volume (m gals pmps).............. 86.9 90.1 98.6
Gasoline gross margin (c/gal).............. 10.9c 10.0c 11.1c
Gasoline gross margin...................... $ 105.1 $ 95.2 $ 112.7
Convenience product sales.................. $ 186.9 $ 203.4 $ 218.0
Convenience product sales (pmps)........... 16,804 19,154 21,171
Convenience product gross margin........... $ 45.1 $ 47.7 $ 54.8
Convenience product gross margin (% of
sales)..................................... 24.1% 23.4% 25.2%
Convenience product gross margin (pmps).... $ 4,004 $ 4,488 $ 5,320
Operating expenses......................... $ 94.3 $ 100.5 (a) $ 109.9
Divisional general and administrative
expenses................................... 2.4 3.4 4.1
Contribution to operating income......... 53.5 39.0 (a) 53.5
</TABLE>
- - - --------
(a) Excludes unusual charges totaling $5.8 million, primarily related to
restructuring and store closures.

Excluding unusual items, the Company's retail division contributed $53.5
million in 1993 to operating income, an increase from $39.0 million in 1992 and
flat with the $53.5 million in 1991. The 1993 improvement is due to improved
sales volumes and industry margins, while the decline in 1992 compared to 1991
was due

44
<PAGE>

to decreased industry margins and the closure in late 1991 of 45 stores
representing approximately 2% of 1991 volume. Average monthly volumes per store
in 1993 increased 9% over 1992 and 4% in 1992 over 1991 as a result of
increased promotional activity, improved productivity and the closure of under-
performing stores. During selected periods of 1993 and in selected markets, the
Company ran promotions, including one that offered premium gasoline at the same
price as regular unleaded gasoline. Margins per gallon improved in 1993 over
the prior two years due to increased sales of higher margin premium gasoline,
stronger retail market conditions and decreased competitive pricing pressures
coupled with more responsive pricing strategies.

The 1993 gross margin from convenience product sales rose 15% from 1992 to
1993, and increased 6% from 1991 to 1992. The average monthly contribution from
convenience product sales per store for 1993 increased 19% compared to 1992 and
increased 12% in 1992 as compared to 1991. These improvements were principally
due to improved vendor allowances, increased promotional activity, enhanced
store merchandising and manager training, and store incentive plans.

The increase in 1993 operating and divisional general and administrative
expenses compared to 1992 and 1991 is related to costs incurred to implement
the Company's business strategy to rework the Company's organizational
structure to more fully involve the general workforce in the operation of the
business. These increased costs included higher labor, training, promotion and
systems-related expenses. The increased promotional activity was designed to
strengthen the Clark brand name through advertising and point of sale
materials. Adding to the increase from 1991 to 1992 were expenses related to
additional underground storage tank testing, employee incentive programs and
increased participation in the store health insurance program.

OTHER FINANCIAL MATTERS

General and Administrative Expense

Excluding unusual items, general and administrative expenses equaled $27.5
million in 1993, compared to $24.8 million in 1992 and $20.8 million in 1991.
Expenses increased in 1993 and 1992 as compared to 1991 principally due to
higher labor and related costs, as the Company made significant changes in its
management, systems and procedures. The Company realized estimated productivity
gains to pre-tax earnings relative to the base line year of 1992 of $20 million
and $25, respectively for the year ended December 31, 1993 and the six months
ended June 30, 1994.

Depreciation and Amortization

Depreciation and amortization expenses increased in the past three years due
to the completion of higher cost maintenance turnarounds in 1991 and 1993 and
the higher levels of capital expenditures.

Net Interest and Financing Costs

The Company's capital structure changed significantly over the past three
years. The Company's net interest and financing cost increase in 1993 was
principally due to lower interest income as a result of less average funds
invested and lower interest rates. See Note 8 "Long-Term Debt" to the Financial
Statements.

Other Income (Expenses)

See Note 11 "Other Income" to the Financial Statements for the items that
comprise other income.

OUTLOOK

The Company believes the demand for refined products will experience flat to
modest growth over the next several years. The Company anticipates that
regulatory requirements and costs of entry will limit the domestic industry's
ability to meet demand. High current industry refinery capacity utilization,
the closure

45
<PAGE>

of marginal refineries and the limited potential for new incremental capacity
due to increasing capital investments to comply with regulatory requirements
may result in a more positive long-term outlook for the refining and marketing
industry.

In early 1993, the Company initiated activities to improve productivity in
its business divisions. Productivity changes are measured by the Company by
comparing results and expenses incurred by the Company to 1992 baseline levels.
In assessing productivity, the cost of feedstocks and prices for refined
products and their relative values are assumed to remain unchanged from 1992.
Any changes in these values compared to the current period is considered a
market impact and consequently excluded from the calculation of productivity
gains or losses. Productivity is measured in term of, among other things,
refinery production rates; refinery production yields, retail gasoline and
convenience product sales per store per month; and general and administrative
expenses. As one result of these activities, the Company's refining margins
improved in 1993 and the first six months of 1994 and outperformed industry
margin indicators over the period. Three examples of these projects are
described below. Due to the substantial impact that market conditions may have
on the refining and retail margins, the Company's productivity changes may not
be directly evident in the Company's net earnings. The Company's goal is to
improve pre-tax productivity compared to its 1992 baseline by $75 million, and
anticipates reaching this goal during the first half of 1995. The Company
estimates substantial productivity gains to pre-tax earnings have been achieved
relative to the baseline year of 1992 during the year ended December 31, 1993
and during the six months ended June 30, 1994.

LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS
31, ENDED JUNE 30,
-------------------- --------------
1991 1992 1993 1994
------ ------ ------ --------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
FINANCIAL POSITION:
Cash and short-term investments........ $267.0 $206.1 $194.5 $180.8
Working capital........................ 304.1 245.1 203.8 214.2
Property, plant and equipment.......... 284.3 320.9 360.9 374.1
Long-term debt......................... 426.6 401.5 401.0 400.5
Stockholders' equity................... 172.6 154.2 146.0 164.7
Operating cash flow.................... 89.9 36.9 62.2 32.6
</TABLE>

Operating cash flow (net cash generated from operating activities before
working capital changes) improved to $32.6 million in the first six months of
1994 from $25.0 million in the prior year comparable period. Cash generated by
operating activities before working capital changes for the year ended December
31, 1993, was $62.2 million, $25.3 million greater than 1992 but $27.7 million
less than 1991. Cash flow was impacted by the fluctuation in the Company's net
earnings in the first half of 1994 and over the past three years. Working
capital at June 30, 1994 equaled $214.2 million, a 2.03 to 1 current ratio,
versus working capital at December 31, 1993 of $203.8 million, a 1.96 to 1
current ratio, working capital at December 31, 1992, of $245.1 million, a 2.31
to 1 current ratio, and working capital at December 31, 1991, of $304.1
million, a 2.82 to 1 current ratio. The decline in 1992 principally resulted
from cash outflows for capital expenditures and the retirement of debt. See
Note 9, "Long-Term Debt," to the Financial Statements. The increased earnings
in the first half of 1994 along with decreased inventory levels, increased
accounts receivable balances and decreased accounts payable balances, all of
which fluctuate with market opportunities and operational needs, combined to
increase working capital in the first half of 1994. However, pipeline movement
restrictions and unfavorable refinery crude oil supply economics in recent
months versus traditional operating norms negatively affected working capital
at June 30, 1994.

In general, 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
Company has a committed revolving line of credit for short-term cash borrowings
and for the issuance of letters of credit primarily for purchases of crude oil,
other feedstocks and refined products. The

46
<PAGE>

existing line of credit was increased from $100 million to $120 million in the
first half of 1994. The facility will be refinanced in connection with the
Financing and the Acquisition. See "The Clark Credit Facility." At June 30,
1994, $76.6 million of the facility was used for letters of credit. There were
no direct borrowings under the Company's line of credit at June 30, 1994,
December 31, 1993 or December 31, 1992.

Cash flows from investing activities (excluding short-term investment
activities which the Company manages similar to cash and cash equivalents) are
primarily affected by capital expenditures including maintenance turnarounds.
The reduction in cash used in investing activities in the first six months of
1994 compared to the prior year period resulted from lower capital expenditures
and the absence of major maintenance turnaround expenditures (1994--$1.6
million; 1993--$18.3 million) during the six months ended June 30, 1994. Total
capital expenditures equaled $28.1 million during the first half of 1994
(1993--$42.9 million). Refining division capital expenditures totaled $17.2
million in the first half of 1994 (1993--$27.7 million). Two-thirds of the
refining capital expenditures were directed towards discretionary productivity
improvement projects and the balance were related to regulatory compliance.
Retail division capital expenditures of $9.8 million in the first half of 1994
(1993--$13.1 million) were related to store re-imaging and upgrades,
installation of store security packages and regulatory compliance.

During 1993, total capital expenditures of $67.9 million compared with $59.5
million in 1992 and $58.0 million in 1991. Refining division capital
expenditures were $39.2 million in 1993 compared with $49.2 million in 1992 and
$33.4 million in 1991. In addition, $20.6 million, $2.7 million and $17.2
million were spent for maintenance turnaround expenditures in 1993, 1992 and
1991, respectively. The increased spending in the refining division over the
past three years has been primarily related to environmental projects. In 1993,
projects included Stretford, crude and fluid catalytic cracking ("FCC") unit
upgrades at the Blue Island refinery, while in 1992 projects at the Hartford
refinery included the low sulfur diesel fuel project (subsequently delayed),
modifications to achieve vapor reduction and a new flare. Retail division
capital expenditures equaled $26.5 million, $8.8 million and $23.6 million in
1993, 1992 and 1991, respectively. In 1993, nearly half of retail division
capital expenditures were environmental projects related to tanks, lines, vapor
recovery and soil remediation. The balance of 1993 retail division capital
expenditures included discretionary projects such as store interior remodeling,
systems automation and the On The Go(TM) store concept development. Retail
division capital spending declined in 1992 and was limited primarily to
environmental projects while management developed the business strategy.

The Company's 1994 capital expenditure budget excluding the Port Arthur
Refinery is approximately $104 million, of which $28.1 million was expended in
the first six months. The 1994 capital budget includes $9 million for a
maintenance turnaround at the Hartford refinery. Estimated refining division
capital expenditures in 1994 of $55 million ($20 million of which may be
financed through operating leases) include $15 million for various
environmental and regulatory projects and $40 million of discretionary
projects, such as improvements to Hartford's crude, FCC and coker units. Retail
division capital expenditures in 1994 are estimated to be $40 million including
$20 million for environmental projects and $20 million for discretionary
projects such as the addition of canopies and new gasoline dispensers to
existing sites, the expansion of store interior selling space and re-imaging
locations using Clark's new logo and updated color scheme. Discretionary
spending in each division is generally linked to its operating cash flow.

Environmental and regulatory expenditures consist of two major categories--
mandatory projects to comply with regulations pertaining to ground, water and
air contamination and occupational, safety and health issues, and discretionary
projects which primarily involve the reformulation of refined fuel for sale
into certain defined markets. The Company estimates that excluding the Port
Arthur Refinery, total mandatory expenditures for environmental and regulatory
compliance from 1994 through 1998 will be approximately $160 million, two
thirds related to the refining division and one third related to the retail
division. Costs to comply with future regulations can not be estimated.

The expenditures required to comply with the Clean Air Act Amendments of 1990
(the "Clean Air Act") are mandated but those to comply with reformulated fuels
regulations are primarily discretionary, subject to

47
<PAGE>

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, oxygenate 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. Modifications being implemented in
1994 in the refining division to meet the requirements of the Clean Air Act and
to produce 50% reformulated gasoline ("RFG") at the Blue Island refinery are
estimated to cost approximately $10 to $12 million.

The Company has invested $23 million in a project initiated to produce low
sulfur diesel fuel at the Hartford refinery which was delayed in 1992 based on
internal and third party analyses that indicated an oversupply of low sulfur
diesel fuel capacity in the Company's marketplace. These analyses projected
relatively narrow price differentials between low and high sulfur diesel
products which have thus far been borne out after the initial transition to the
low sulfur regulations. High sulfur diesel fuel is utilized by the railroad,
marine and farm industries. If price differentials widen sufficiently to
justify investment, the Company could install this equipment over a 14 to 16
month period at an estimated additional cost of $40 million. The Company
believes there may be potential for improved future economic returns related to
the production of low sulfur diesel fuel, but is presently still deferring
further construction on this project. The Company believes it would not recover
its entire investment in this project should the project not be completed.

The Company is currently considering plans to build a sulfur plant at the
Hartford refinery to replace its processing arrangement with a neighboring
refinery. This project could be completed in 18 to 24 months at an estimated
cost of $35 to $45 million. The Company is pursuing tax-exempt financing to
fund the sulfur plant project. If the Company decides to install equipment
necessary to produce RFG at the Hartford refinery, the FCC gasoline
desulfurizer and related equipment are estimated to cost $55 to $65 million.
These estimated costs have declined from 1993 as the Company has determined
more cost-effective methods to comply with regulations.

The Company's cash flow used in financing activities was $1.1 million in 1993
and $38.7 million in 1992, while $119.1 million was provided in 1991. In 1991
and 1992, long-term debt was retired early and new debt was issued principally
to increase available cash and extend maturities. See Note 9 "Long-Term Debt"
to the Financial Statements. In 1993, Clark entered into several operating
leases related to retail store automation equipment, coolers and beverage
dispensers, office equipment, refinery lab equipment and filter press.

In August 1994, Clark entered into the Purchase Agreement to acquire the Port
Arthur Refinery from Chevron for $74 million plus inventory and spare parts of
approximately $140 million, ($5.0 million of which has been paid as a deposit).
The Purchase Agreement provides for contingent payments to Chevron of up to
$125 million over a five year period from the closing date of the Acquisition
in the event that refining industry margin indicators exceed certain escalating
levels. The Company believes that even if such contingent payments would be
required to be made, they would not have a material adverse effect on the
Company's results of operations as the Company would also benefit by receiving
one half of such increased margins. Such contingent payments would not be
payable based on these industry margin indicators through August 31, 1994. See
"The Port Arthur Acquisition--The Purchase Agreement--Purchase Price." The
Acquisition is expected to close in late 1994. The Company expects to incur
additional costs of approximately $12 million related to business and
environmental due diligence and capital expenditures during the two years
following the Acquisition.

Clark and Clark USA plan to finance the Acquisition with existing cash and
short term investments, the net proceeds of the Common Stock Offering and the
Note Offering. See "The Financing." The Common Stock Offering for Clark USA
would result in the mandatory redemption of one-half of its outstanding Zero
Coupon Notes at 110% of accreted value (estimated at approximately $83 million)
and an estimated payment of $ million of the contingent consideration due
AOC L.P. related to its December 1992 purchase of the Minority Interest. Based
on initial due diligence, the Company estimates that during the period 1995-
1998, capital and turnaround expenditures at the Port Arthur Refinery should
average approximately $50 million per year, including wastewater and safety
projects required to be completed under the Purchase Agreement. The Port

48
<PAGE>

Arthur Refinery completed a major maintenance turnaround in May 1994. The
Company expects that the cash flow from the Port Arthur Refinery will be
sufficient to cover capital expenditures and any potential contingent payments
to Chevron.

The Company is refinancing Clark's existing working capital facility. The new
working capital facility is expected to provide the Company with sufficient
liquidity to support the expanded letter of credit needs related to the
acquisition of the Port Arthur Refinery. It is currently expected that the new
credit agreement will contain covenants that are customary for agreements of
this type. See "The Clark Credit Agreement."

Funds generated from operating activities and the Financing, 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, including those relating to the Port Arthur Refinery, for
the next year. Future working capital, discretionary capital expenditures,
environmentally-mandated spending and acquisitions may require additional debt
or equity capital.

49
<PAGE>

CLARK REFINING & MARKETING, INC.

CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES

(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ----------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR
FIXED CHARGES
Pretax earnings (a)... $ 81,003 $ 72,233 $ 59,287 $(15,781) $(14,732) $(8,778) $35,081
Fixed charges (b)..... 55,115 44,591 40,584 45,403 40,429 18,631 21,376
Other (c)............. (227) (489) 1,254 182 197 (93) (457)
-------- -------- -------- -------- -------- ------- -------
$135,891 $116,335 $101,125 $ 29,804 $ 25,894 $ 9,760 $56,000
======== ======== ======== ======== ======== ======= =======
FIXED CHARGES
Gross interest expense
(d).................. $ 54,045 $ 44,672 $ 41,581 $ 49,277 $ 42,072 $20,966 $21,021
Interest factor
attributable to real
expense.............. 1,070 1,077 1,124 1,234 1,133 430 1,060
-------- -------- -------- -------- -------- ------- -------
$ 55,115 $ 45,749 $ 42,705 $ 50,511 $ 43,205 $21,396 $22,081
======== ======== ======== ======== ======== ======= =======
RATIO OF EARNINGS TO
FIXED CHARGES 2.47 2.54 2.37 0.59 0.60 0.46 2.54
======== ======== ======== ======== ======== ======= =======
</TABLE>
- - - --------
(a) 1993 pretax earnings includes a pretax charge of $15,587 for the cumulative
effect of change in accounting principle and 1992 pretax earning includes a
pretax charge of $18,730 for the early extinguishment of debt.
(b) As adjusted for capitalized interest.
(c) Represents the total of adjustments to recognize only distributed earnings
for less than 50% owned companies accounted for under the equity method.
(d) Represents interest expense on long-term and short-term debt and
amortization of debt discount and debt issue costs.

50
<PAGE>

BUSINESS

COMPANY OVERVIEW

Substantially all of the operations of the Company are conducted through
Clark. Clark operates its business on a decentralized basis through three
divisions--refining, marketing and corporate services. The refining division
currently consists of two Illinois refineries, 14 product distribution
terminals and pipeline interests. The marketing division currently consists of
approximately 840 gasoline and convenience product stores in twelve Midwestern
states and wholesale marketing of gasoline, diesel fuel, and other petroleum
products on an unbranded basis. Corporate services consists of centralized
administrative, business, financial and human resource support systems for the
refining and marketing divisions.

REFINING

Overview

The refining division currently includes two refineries in Illinois with a
combined throughput capacity of approximately 130,000 barrels per day, 14
product terminals located throughout Clark's Midwest market area, crude and
product pipeline interests, and integrated supply, distribution, planning, and
support operations/services. Clark has entered into the Purchase Agreement to
acquire from Chevron the 200,000 barrels per day Port Arthur Refinery and
related assets, including a crude oil terminal, two products terminals, an LPG
terminal and associated pipelines all located in the Port Arthur, Texas area.
The Acquisition will increase the Company's refining capacity to approximately
330,000 barrels per day, positioning the Company as one of the four largest
independent refiners in the United States. See "The Port Arthur Acquisition."

The Company's existing refineries, Blue Island near Chicago and Hartford near
St. Louis, are supplied by crude oil pipelines and are also located on inland
waterways with barge access. The refineries not only have access to multiple
sources of foreign and domestic crude oil supply, but also benefit from crude
oil input flexibility. The Company believes that the Midwest location of these
refineries provides a competitive advantage since that region has historically
benefitted from relatively higher refining margins and less volatility than
comparable operations located in other regions of the United States principally
because, in the past, demand for refined products has exceeded supply in the
region. This excess demand has historically been satisfied by imports from
other regions, providing these Midwest refineries with a transportation cost
advantage.

The Hartford refinery is capable of processing a variety of grades of crude
oil, including heavy sour crude at a rated capacity of 60,000 barrels per day.
The Hartford refinery has the capability to process approximately 45,000
barrels per day of heavy sour crude oil such as Maya crude oil. The Company
currently receives 35,000 barrels per day of Maya crude oil under term contract
from Mexico. Heavy sour crude oil has historically been available at
substantially lower cost compared to light sweet crude oil such as WTI. The
Blue Island refinery also can process various grades of crude oil, including
light sour crude oil at a rated capacity of 70,000 barrels per day. The two
refineries are connected by product pipelines, increasing flexibility relative
to stand-alone operations. The Company's product terminals allow efficient
distribution of refinery production through pipeline systems.

The Blue Island and Hartford refineries processed 79,200 barrels per day and
62,900 barrels per day of crude oil, respectively, for the six months ended
June 30, 1994. The Company's strategy is to continue increasing the effective
capacity of refinery processing rates through productivity initiatives. For
example, in 1995, the Company anticipates the Blue Island crude oil throughput
rate to increase as a result of crude oil slate optimizations and minor
debottlenecking projects. The Company anticipates that the upgrade of the
Hartford FCC unit in the second half of 1994 will increase the 1995 gas oil
throughput rate above 1994 levels. The scheduled turnaround of the Hartford
crude unit during the first six months of 1995 is also expected to result in an
increase in that unit's capability to process crude oil.

51
<PAGE>

Blue Island Refinery

The Blue Island refinery is located in Blue Island, Illinois, approximately
17 miles south of Chicago. The refinery is situated on a 170 acre site, bounded
by the town of Blue Island and the Calumet-Sag Canal. The facility was
initially constructed in 1945 and, through a series of improvements and
expansions, has reached a crude oil capacity of 70,000 barrels per day although
the actual throughput rates have been sustained at levels in excess of rated
capacity. The Blue Island refinery has a Nelson Complexity Rating of 8.7 versus
an average rating of 9.3 for all Petroleum Administration for Defense District
("PADD") II refineries. The Nelson Complexity Rating is an industry measure of
a refinery's ability to produce high value-added products. Blue Island has
among the highest capabilities to produce gasoline relative to the other
refineries in its market area and through productivity initiatives has achieved
a flexibility to produce low sulfur diesel when the market warrants. During
most of the year, gasoline is the most profitable refinery product.

The production of the Blue Island refinery for the years ended December 31,
1991, 1992 and 1993 and the six months ended June 30, 1993 and 1994 were as
follows:

BLUE ISLAND REFINERY PRODUCTION YIELD
(BARRELS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------------------- ------------------------------
1991 1992 1993 1993 1994
------------ ------------ ---------------- ---------------- ------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gasoline
Unleaded............... 14,270 52.8% 13,423 48.6% 9,701 38.3% 4,915 47.1% 5,864 40.9%
Premium Unleaded....... 4,151 15.4 4,795 17.4 5,232 20.6 1,957 18.8 2,977 20.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
18,421 68.2 18,218 66.0 14,933 58.9 6,872 65.9 8,841 61.7
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Other Products
Diesel Fuel............ 4,042 15.0 3,863 14.0 5,329 21.0 2,163 20.7 3,333 23.3
Others................. 4,540 16.8 5,522 20.0 5,091 20.1 1,395 13.4 2,158 15.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
8,582 31.8 9,385 34.0 10,420 41.1 3,558 34.1 5,491 38.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total................... 27,003 100.0% 27,603 100.0% 25,353 100.0% 10,430 100.0% 14,332 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day.............. 74.0 75.4 69.5 (a) 57.6 (a) 79.2
Refinery Utilization
(a).................... 105.7% 107.7% 99.3% 82.3% 113.1%
</TABLE>
- - - --------
(a) Refinery utilization reflects 1993 maintenance turnaround downtime of
approximately two months on selected units. During a turnaround, refinery
production is reduced significantly.

Hartford Refinery

The Hartford refinery is located in Hartford, Illinois, approximately 17
miles northeast of St. Louis, Missouri. The refinery is situated on a 400 acre
site. The facility was initially constructed in 1941 and, through a series of
improvements and expansions, has reached a crude oil refining capacity of
approximately 60,000 barrels per day. The Hartford refinery includes a coker
unit and consequently has a Nelson Complexity Rating of 9.6 versus an average
of 9.3 for all PADD II refineries. The Hartford refinery has the ability to
process lower cost, heavy sour crude oil into higher value products such as
gasoline and diesel fuel. This upgrading capability allows the refinery to
produce a high percentage of premium products and permits the Company to
benefit from higher margins when heavy sour crude oil, such as Maya crude oil,
is at a significant discount to other crude oil.

52
<PAGE>

The production of the Hartford refinery for the years ended December 31,
1991, 1992 and 1993 and the six months ended June 30, 1993 and 1994 were as
follows:

HARTFORD REFINERY PRODUCTION YIELD
(BARRELS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------------------- --------------------------
1991 1992 1993 1993 1994
---------------- ------------ ------------ ------------ ------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gasoline
Unleaded............... 9,413 46.6% 11,487 46.9% 10,394 43.6% 5,086 41.5% 4,904 43.1%
Premium Unleaded....... 891 4.4 1,855 7.6 1,892 8.0 1,219 10.0 900 7.9
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
10,304 51.0 13,342 54.5 12,286 51.6 6,305 51.5 5,804 51.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Other Products
Diesel Fuel............ 6,200 30.6 7,281 29.7 7,979 33.5 4,025 32.8 3,746 32.9
Others................. 3,728 18.4 3,878 15.8 3,557 14.9 1,923 15.7 1,831 16.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
9,928 49.0 11,159 45.5 11,536 48.4 5,948 48.5 5,577 49.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total................... 20,232 100.0% 24,501 100.0% 23,822 100.0% 12,253 100.0% 11,381 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day.............. 55.4 (a) 66.9 65.3 67.7 62.9
Refinery Utilization
(a).................... 92.3% 111.6% 108.8% 112.8% 104.8%
</TABLE>
- - - --------
(a) Refinery utilization reflects 1991 maintenance turnaround downtime of
approximately two months on selected units.

The Port Arthur Acquisition

The Acquisition will more than double the Company's refining capacity and
will provide the Company with a sour crude oil refinery with a technical
complexity rating in the top third of all U.S. Gulf Coast refineries. The
refinery has the ability to process 100% sour crude oil, including up to 20%
heavy sour crude oil, and has coking capabilities. The configuration of the
Port Arthur Refinery complements the Company's existing refineries with its
ability to produce jet fuel, 100% low sulfur diesel fuel, 55% summer
reformulated gasoline and 75% winter reformulated gasoline. The 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 the mid-
continent and eastern U.S. as well as export markets. The Company believes that
the Port Arthur Refinery has the potential for significant productivity gains
with minimal capital investment, and that it will offer an opportunity for
improved results of operations and cash flow. See "The Port Arthur
Acquisition."

Terminals and Pipelines

Refined products are distributed primarily through the Company's terminals,
company-owned and common carrier product pipelines and by leased barges over
the Mississippi, Illinois and Ohio Rivers. The Company owns and operates 14
product terminals in its Midwest market area, most of which have product
blending capabilities. Most of the Company's terminals are capable of handling
and blending ethanol, one of two viable renewable oxygenates required for
reformulated gasoline. The Company is an experienced ethanol user, having used
ethanol since the early 1980s. In addition to cost efficiencies in supplying
its retail network, the terminal distribution system allows efficient
distribution of refinery production.

The Company enters into refined product exchange agreements with unaffiliated
companies to broaden its geographical distribution capabilities, and products
are also received through 29 exchange terminals and distribution points
throughout the Midwest.

53
<PAGE>

The Company's terminals and respective capacities, as of June 30, 1994, were
as follows:

<TABLE>
<CAPTION>
TERMINAL CAPACITY
-------- --------
(M BBLS)
<S> <C>
Blue Island, IL.................................................. 86.6
Brecksville, OH.................................................. 252.4
Clermont, IN..................................................... 272.0
Columbus, OH..................................................... 132.2
Taylor, MI....................................................... 287.9
Granville, WI.................................................... 323.6
Green Bay, WI.................................................... 269.0
Hammond, IN...................................................... 816.9
Hartford, IL..................................................... 567.0
Marshall, MI..................................................... 248.3
Peoria, IL....................................................... 163.2
Rockford, IL..................................................... 143.2
St. Louis, MO.................................................... 471.3
Toledo, OH....................................................... 195.4
-------
Total capacity............................................... 4,229.0
=======
</TABLE>

The Company is also acquiring a crude oil terminal, two products terminals
and an LPG terminal with associated pipelines as a part of the Port Arthur
Acquisition. The Port Arthur Refinery's terminals and respective capacities, as
of June 30, 1994, were as follows:

<TABLE>
<CAPTION>
TERMINAL CAPACITY
-------- --------
(M BBLS)
<S> <C>
Beaumont, TX (crude oil and refined products).................... 3,220.0
Fannett, TX (LPG)................................................ 2,500.0
Port Arthur Products Station (approximately 33% interest)........ 1,831.5
-------
Total capacity............................................... 7,551.5
=======
</TABLE>

The Company's pipeline interests, as of June 30, 1994, were as follows:

<TABLE>
<CAPTION>
PIPELINE TYPE INTEREST ROUTE
-------- ---- -------- -----
<S> <C> <C> <C>
Southcap Crude 36.0% St. James, LA to Patoka, IL
Chicap Crude 22.7 Patoka, IL to Mokena, IL
Wolverine Products 9.5 Chicago, IL to Toledo, OH
West Shore Products 11.1 Chicago, IL to Green Bay, WI
</TABLE>

These pipelines operate as common carriers pursuant to published pipeline
tariffs, which also apply to use by the Company. Clark also owns a dedicated
pipeline from the Blue Island refinery to a company-owned terminal in Hammond,
Indiana. Clark Pipe Line owns a 33.1% interest in the Capwood Pipeline and
leases space of approximately 15,000 barrels per day on the ARCO Pipeline. Each
of these pipelines transports crude oil to the Hartford refinery.

Supply

The Company's integrated refining and marketing assets are strategically
located in the Midwest in close proximity to a variety of supply and
distribution channels. As a result, the Company has the flexibility to acquire
the most economic domestic or foreign crude oil and the ability to distribute
its products to its own system and to most domestic wholesale markets.

54
<PAGE>

The Company's Illinois refineries are located on major inland water
transportation routes and are connected to various regional, national and
Canadian common carrier pipelines. The Company has a minority interest in
several of these pipelines. 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 Hartford refinery has
access to foreign and domestic crude oil supplies through the Capline/Capwood
Pipeline systems and access to West Texas, Oklahoma and Rocky Mountain crude
oil through the Platte Pipeline system. Both refineries are situated on major
water transportation routes which provide flexibility to receive crude oil or
intermediate feedstocks by barge when economical. In addition, Port Arthur's
Texas Gulf Coast location will provide access to additional crude oil sources.

The Company has a sour crude oil supply contract with P.M.I. Comercio
Internacional, S.A. de C.V. ("PMI"), an affiliate of Petroleos Mexicanos, S.A.
de C.V. This contract is cancelable upon three months' notice by either party,
but it is intended to remain in place for the foreseeable future. The volume is
currently 35,000 barrels per day of Maya crude oil, with price determination
based on a market-related formula applicable to all PMI U.S. customers. Other
term crude oil supply agreements primarily consist of Canadian crude oil
delivered to Blue Island. Approximately 23,000 barrels per day are currently
under contract with two Canadian suppliers, cancelable with two months' notice
by either party with another 10,000 barrels per day under contract through
December 1994 without provision for cancellation. These contracts provide
approximately one-half of the Company's crude oil requirements prior to the
Acquisition.

In addition to gasoline, the Company's refineries produce other types of
refined products. No. 2 diesel fuel is used mainly as a fuel for diesel burning
engines. No. 2 diesel fuel production is moved via pipeline or barge to the
Company's 14 product terminals and is sold over the Company's terminal truck
racks or through refinery pipeline or barge movement. Other production includes
residual oils (slurry oil and vacuum tower bottoms) which are used mainly for
heavy industrial fuel (e.g., power generation) and in the manufacturing of
roofing flux or for asphalt used in highway paving. The Port Arthur Refinery
will also enable the Company to offer jet fuel.

The Company supplies marketing requirements for gasoline and diesel fuel
first, then distributes products to its wholesale operations based on the
highest average market returns before being sold into the spot market.

Planning and Economics

The Company employs sophisticated linear programming models to optimize
refinery operations. These models enable the Company to predict the yield
structure of given crude oils and feedstocks, facilitating optimal feedstock
combinations and production of the most advantageous refined product mix for a
given set of market conditions. In this manner, the Company is able to take
advantage of lower cost crude oils and adjust the output mix in response to
changing market prices at any given time.

Inventory Management

The Company employs several strategies to minimize the impact on
profitability due to the volatility in feedstock costs and refined product
prices. These strategies involve the purchase and sale of futures and options
contracts on the New York Mercantile Exchange 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, balanced daily and subject to internally established
risk standards and covenants contained in the Clark Credit Agreement. The
results of these existing hedging activities affect refining costs of sales and
inventory costs.

55
<PAGE>

Clark manages its total inventory position in a manner consistent with a
hedging policy which states that a normal operating inventory level (base load)
will not be hedged, while material builds or draws from this level will be
offset by appropriate hedging strategies to protect against an adverse impact
due to unfavorable price moves. With the acquisition of the Port Arthur
Refinery and its associated inventory, this base load level will approximately
double. The Company's retail network also reduces risk by providing market
sales representing approximately 75% of the refineries' gasoline production. In
addition, the retail network benefits from a reliable and cost effective source
of supply.

Capital Investment

The Company continually strives to increase its refineries' efficiency and
competitive position to meet changing market and regulatory demands. The
Company believes that its current strategic capital expenditure plan to comply
with mandatory environmental and other regulatory requirements should continue
to position the Company to compete effectively. The business strategy evaluates
the costs and benefits of complying with environmental regulations, especially
those capital projects which are primarily discretionary. The Company evaluates
these primarily discretionary environmental compliance expenditures with the
goal of incurring such expenditures only when satisfactory returns are
expected. The Company plans to optimize capital investments by linking capital
spending to cash flow generated within each of Clark's operations.

Clean Air Act/Reformulated Fuels

Under the Clean Air Act, the U.S. Environmental Protection Agency ("EPA")
promulgated regulations mandating maximum sulfur content for diesel fuel
offered for sale for on-road consumption, which became effective in October
1993. Additional EPA regulations include guidelines for reformulated gasoline
to be effective by 1995 for nine regions in the U.S., including Chicago and
Milwaukee, the only two currently affected metropolitan areas in Clark's
existing markets. The Company, and virtually all other domestic refineries
producing gasoline, may be required to make significant capital expenditures to
comply with these new requirements.

The Company has preliminary plans to complete a number of environmental and
other regulatory capital expenditure programs over the period 1994 to 1998.
Environmental and regulatory expenditures consist of two major categories:
mandatory projects to comply with regulations pertaining to ground, water and
air contamination and occupational, safety and health issues, and discretionary
projects which primarily involve the reformulation of refined fuel for sale
into certain defined markets. The Company estimates that excluding the Port
Arthur Refinery, total mandatory refining expenditures for environmental and
regulatory compliance from 1994 through 1998 will be approximately $100
million. Costs to comply with future regulations can not be estimated.

Company expenditures required to comply with 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. Modifications being implemented in 1994 in the refining division to
meet the requirements of the Clean Air Act and to produce 50% RFG at the Blue
Island refinery are estimated to cost from $10 to $12 million.

56
<PAGE>

million. The Company believes there may be potential for improved future
economic returns related to the production of low sulfur diesel fuel, but is
presently deferring further construction on this project. The Company believes
that it would not recover its entire investment in this project should the
project not be completed.

The Company is currently evaluating the installation of a sulfur plant at the
Hartford refinery to replace its processing arrangement with a neighboring
refinery. This project would be completed in 1996 and is currently estimated to
cost $35 to $45 million. The Company is pursuing tax-exempt financing to fund
the sulfur plant project. If the Company decides to install equipment necessary
to produce RFG at the Hartford refinery, the FCC gasoline desulfurizer and
related equipment are estimated to cost $55 to $65 million. These estimated
costs have declined from 1993 as the Company has determined more cost-effective
methods to comply with regulations.

Market Environment

Industry studies attribute the prospect for improving refining industry
profitability to, among other things: (i) the high utilization rates of U.S.
refineries; (ii) continued economic-related growth in the demand for gasoline
in the United States; (iii) the decreasing level of planned capital
expenditures for additional refining capacity capable of producing higher-value
light petroleum products, such as gasoline and diesel fuel; and (iv) the
objective of those refiners that have invested significant capital in
environmental-related projects to obtain returns on these investments through
higher product prices. Based on its experience and several industry studies,
the Company believes that the U.S. refining industry may evidence gradual
margin improvement through the end of the decade.

The Company believes that significant additional domestic grass roots
construction is unlikely because of high capital costs and stringent
environmental regulations. The last grass roots refinery in the United States
was built in the mid 1970s. The only significant increase in refining crude oil
processing capacity that the Company anticipates in the next few years is the
planned restart of up to 200,000 barrels per day of capacity at the Good Hope
refinery in Louisiana by year-end 1995 which is subject to financing.

During the last three years, several United States refiners have announced
plans to sell or close refineries as a result of the high capital expenditures
required to produce reformulated gasoline and to comply with the Clean Air Act
and other environmental regulations. While much of this capacity has been
closed, industry sources estimate that an incremental 200,000 barrels per day
of capacity could be closed by 2000. These reductions in capacity will
partially offset the addition of oxygenates (ethanol, MTBE and ETBE) which will
be added to the gasoline pool to meet the RFG specifications which will go into
effect in non-attainment areas on January 1, 1995.

United States gasoline demand has increased by an average of 1% to 2% over
the last decade. Industry studies anticipate this demand to continue to track
economic growth as measured by statistics such as gross domestic product. In
addition, the demand for gasoline in Europe and Asia is expected to increase as
these areas emerge from recession, reducing the incentive for foreign refiners
to export gasoline to the U.S. The more restrictive RFG specifications and
conventional gasoline regulations may also reduce the ability of foreign
refiners to supply imported product.

57
<PAGE>

Refining industry capital expenditure budgets in the United States in the
past five years have been high relative to historic levels and have primarily
focused on compliance with current and proposed environmental regulations, such
as those mandated by the Clean Air Act which provide, among other things, that
(i) as of November 1992, 39 cities which had failed to attain mandated carbon
monoxide air quality standards were required to use oxygenated gasoline for
four to twelve months of each year depending upon each area's historical
noncompliance period, and (ii) beginning in 1995, the nine cities which have
the worst ozone quality, including the Chicago and Milwaukee metropolitan areas
which are key Clark markets, will be required to use RFG throughout the year in
order to decrease the emission of hydrocarbons and toxic pollutants. Another 87
areas which have failed to attain ozone air quality standards may elect to use
RFG throughout the year.

Industry studies also indicate that planned 1994 capital expenditures for the
domestic refining industry will be significantly lower than the peak
expenditures made during 1992 to comply with then recently adopted
environmental regulations. These studies also indicate that capital
expenditures to increase capacity are expected to continue to decline through
1997. Although some refineries increased light production capabilities in
conjunction with recent environmental project capital spending, the current
reduction in capital spending and increased environmental regulations should
limit the addition of incremental light petroleum product production capacity
at refineries in the United States. Much of this decline in capital spending
has occurred in the regions which include the Company's Illinois refineries and
the Port Arthur Refinery.

The differential in the cost of light crude oil versus heavy crude oil has
narrowed in recent years due to construction of additional coking capacity as
well as an increased percentage of light crude oil availability in the
marketplace. Industry studies anticipate this differential to widen in the
future due to the reduction in capital spending for new residual oil conversion
capacity. Additionally, the differential is anticipated to widen with increased
demand for light products that result in utilization of existing conversion
capacity requiring incremental crude oil throughput to be lighter, thus
increasing its demand and the relative cost. Since the Hartford and Port Arthur
refineries have coking capability which enables the processing of heavy crude
oil when this differential becomes attractive, the Company believes this
development could have a favorable impact on the Company's cash flow and
earnings.

Strategy

The refining division has developed a strategy consistent with the Company's
overall business strategy that focuses on improving productivity, changing
culture, optimizing capital investments and growth. This strategy is described
in more detail with respect to productivity and culture as follows:

Productivity. The refining division operates in a commodity-based market
environment in which market prices for crude oil and refined products are
largely beyond its control. Accordingly, the refining division focuses on
improving productivity by increasing production, enhancing yields and
minimizing operating costs.

Over the past two years, the refining division has identified and implemented,
or is in the process of implementing, numerous productivity improvement
initiatives. The Company anticipates that additional productivity improvements
will be identified and implemented in future periods. To date, the refining
division has been implementing productivity projects with payouts estimated by
the Company to be less than 18 months. Examples of some of the productivity
improvements at the Blue Island and Hartford refineries follow:

Blue Island

. FCC unit charge. A review by independent consultants and Company personnel
of the FCC unit resulted in the development of an operating plan to optimize
the operation of the unit and increase its effective throughput limits while
maintaining carefully determined operational, environmental, and safety
guidelines. As a result of implementing this plan, the capacity of the FCC
unit was increased from approximately 25,000 barrels per day to a nominal
rate of 31,000 barrels per day in 1994.

58
<PAGE>

. Sour crude charge. Since it began operation, the refinery has processed
sweet crude oil because of its availability. As a result, the sulfur content
of the refinery's distillate product was significantly better than market
specifications, but the Company did not receive any premium to other high
sulfur but on-specification product. Therefore, the Company was not taking
advantage of the differential between sour and sweet crude oil with similar
yields. In order to address this opportunity, the Company made minor
modifications to its operations in 1993 to process some amount of lower cost
sour crude oil. This operating change resulted in the refinery's 1994 crude
slate consisting of 25% sour crude oil.

. Crude charge. Historically, the refinery operated using a crude oil
throughput limit of approximately 70,000 barrels per day. Following studies
by consultants and Company engineers, it was determined that the equipment
could safely process higher rates of crude oil with minor unit investments
of approximately $0.5 million. Crude oil throughput rates of approximately
80,000 barrels per day have been achieved for the six months ended June 30,
1994. Following additional planned debottlenecking projects, crude oil
throughput rates are anticipated to increase by an additional amount in
1995.

Hartford

. Deep cut project. The operating parameters for the crude vacuum unit were
changed to yield higher production of gas oil and reduced coker charge
amounts. Gas oil is a higher value product than coker charge.

. FCC fractionation. The operation of the FCC unit fractionation tower was
modified to enable the recovery of a greater amount of light cycle gas oil
from the slurry bottoms. Light cycle gas oil is a higher value products than
slurry bottoms.

. Reformer guard bed and reactor. This project included installing reactor
modifications constructed from an existing spare tower to eliminate
undesirable feed constituents prior to processing through the primary
catalyst beds. As a result, the improved operating efficiency of the
reformer yielded decreased production of less desirable light end products,
produced more hydrogen and decreased the amount of scheduled downtime
necessary for catalyst regeneration.

. LVGO versus crude preheat. By using light vacuum gas oil ("LVGO") waste heat
and a spare exchanger to preheat crude oil, this project resulted in
increased crude unit throughput of approximately 2,000 barrels per day.

. Well water cooler. The temperature in the coker trim cooler was lowered by
using 58(degrees)F well water rather than 90(degrees)F cooling tower water.
The lower temperature resulted in additional condensation and enabled
recovery of hydrocarbon products that were previously flared.

Refining Culture. The refining division emphasizes an entrepreneurial approach
which uses employee incentives to enhance financial performance through
productivity, regulatory compliance and safety. All refining division employees
participate in a variety of incentive programs. The Company believes that these
incentive programs encourage employees to operate in a safe and productive
manner and promotes innovation.

MARKETING

The Company markets gasoline and convenience products in twelve Midwestern
states through a retail network of 840 company-operated stores at June 30,
1994. The Company also markets refined petroleum products through a wholesale
program to distributors, chain retailers and industrial consumers.

59
<PAGE>

Retail Overview

The Company's retail system began operations during the 1930s with the
opening of Old Clark's first store in Milwaukee, Wisconsin. Old Clark then
expanded throughout the Midwest. At its peak in the early 1970s, Old Clark
operated more than 1,800 retail stores and had established a strong market
reputation for high octane gasoline at discount prices. In subsequent years,
Old Clark, in line with the general industry trends, rationalized its operating
stores by closing down marginal locations. During the 1970s, the majority of
Old Clark's stores were dealer-operated. To ensure more direct control of its
marketing and distribution network, Old Clark assumed operation of most of its
stores from 1973 through 1983.

As of June 30, 1994, the Company had 840 retail stores, all of which operated
under the Clark brand name. Of these 840 stores (751 owned and 89 leased), the
Company directly operated 830 and the remainder were dealer-operated. The
Company believes that the high proportion of company-operated stores enables
Clark to respond more quickly and uniformly to changing market conditions than
major oil companies which generally have most of their stores operated by
dealers or jobbers. Virtually all stores are self-service and all sell
convenience products.

More than half of the Company's stores are in major metropolitan areas. The
Company's three highest volume core metropolitan markets are Chicago, Detroit
and Cleveland. The Company's core markets are markets in which the Company
believes it can maintain or develop market share of 8% to 15% in order to
leverage brand recognition, promotions and other marketing and operating
activities. The geographic distribution of retail stores by state, as of June
30, 1994, was as follows:

GEOGRAPHICAL DISTRIBUTION OF RETAIL STORES

<TABLE>
<CAPTION>
COMPANY DEALER TOTAL
OPERATED OPERATED STORES
-------- -------- ------
<S> <C> <C> <C>
Illinois......................................... 210 -- 210
Ohio............................................. 181 3 184
Michigan......................................... 167 2 169
Indiana.......................................... 106 -- 106
Wisconsin........................................ 77 4 81
Missouri......................................... 49 1 50
Other states (a)................................. 40 -- 40
--- --- ---
Total.......................................... 830 10 840
=== === ===
</TABLE>
- - - --------
(a) Iowa, Kansas, Kentucky, Minnesota, Pennsylvania and West Virginia

To improve gasoline sales volumes and margins, in 1989 the Company began
introducing special blending dispenser pumps to market three grades of gasoline
and is presently installing canopies at its stores. The Company believes the
blending pumps improve volumes and margins by enabling the Company to market a
more profitable mid-grade gasoline without the installation of costly
additional underground storage tanks. In addition, the Company believes that
the installation of canopies will improve gasoline sales volumes due to better
lighting and shelter from adverse weather conditions. At June 30, 1994,
approximately one-half of the Company's stores had blending pumps and over one-
half had canopies. The Company expects that by the end of 1995 approximately
75% of its stores will have blending dispensers, and virtually all stores will
have canopies.

Until 1989, retail sales were primarily for cash as customers were charged a
premium for credit card purchases. In 1989, the Company upgraded its credit
processing system, enabling it to receive payments for credit card sales within
48 hours. Simultaneously, the Company revised its pricing policy to charge the
same

60
<PAGE>

price for cash and credit card purchases in order to remain competitive with
other gasoline retailers. Also in 1989, a business fleet card program was
initiated to attract a new segment of customers. Fleet customers are provided
with a proprietary credit card and detailed vehicle statistical information
which is included on a convenient monthly invoice.

The Company has implemented a number of environmental projects at its retail
stores. These projects include the ongoing Company response to the September
1988 regulations that provided for a 10 year transition period through 1998,
and are related to the design, construction, installation, repair and testing
of underground storage tanks and the requirement of the Clean Air Act to
install Stage II vapor recovery systems at certain retail stores. The Company
has underground storage tank leak detection devices installed at nearly all
retail locations and has underground storage tanks and lines at approximately
one-half of all locations that meet the September 1998 federal underground
storage tank compliance deadline. The Company estimates that mandatory retail
capital expenditures for environmental and regulatory compliance from 1994
through 1998 will be approximately $50 million. Costs to comply with future
regulations cannot be estimated.

Market Environment

. Rationalization. During the past several years, the retail market has
experienced increasing concentration of market share in selected and fewer
geographic regions as major oil companies have divested non-strategic
locations and have focused efforts on targeted areas, many of which are near
strategic supply sources. Additionally, smaller operators have closed
marginal and unprofitable locations as a result of increasing environmental
regulations requiring replacement of underground storage tanks. The lack of
additional favorable sites in existing markets and the high cost of
construction of new facilities are also believed to be a barrier to new
competition.

. Consumer Emphasis on Convenience. Industry studies indicate that consumer
buying behavior continues to reflect the effect of increasing demands on
consumer time. Convenience and the time required to make a purchase are
increasingly important considerations in the buying decision.

The Company believes these two trends may result in decreased competition and
a corresponding increase in market share in the Company's core markets.

Since 1982, United States gasoline demand has grown by an average of 1% to 2%
annually and industry studies anticipate this demand will continue to track
economic growth. Other factors which contribute to the modest growth outlook
for gasoline include: (i) the lower energy content of oxygenated gasoline
compared with conventional gasoline and the resultant lower miles per gallon of
this fuel when used in the existing automobile fleet, (ii) the declining
differential between the fuel efficiency of the existing and retiring
automobile fleet and (iii) the anticipation of relatively small increases in
fuel economy of new car models.

Strategy

The Company's retail network is over 98% company-operated. Market research
conducted in 1992 indicated that Clark was the third most recognized gasoline
brand in its market area. The Company believes that its control over its retail
operations combined with its established brand name in its market are
competitive advantages. In addition, the Company believes it can add to these
advantages by implementing programs to optimize capital expenditures,
strengthen brand reputation, grow through acquisitions and

61
<PAGE>

maximize customer satisfaction. The Company has developed plans to achieve its
strategic goals by focusing on a market segment philosophy designed to increase
sales volumes, profits and return on investment by positioning the Company as
the premier value-oriented marketer of gasoline and On The Go(TM) items in the
Midwestern United States.

. Marketing focus. The Company believes its retail market focus--high quality
products and fast delivery of services at competitive prices--has not been
fully captured in the retail gasoline industry. The Company also believes it
can exploit this opportunity by consistently providing fast service and
selected convenience products that satisfy immediate consumption demand (the
Company's On the Go(TM) theme). The Company has developed the On The Go(TM)
theme to capture this opportunity, strengthen the brand image and
differentiate Clark from (i) the major oil companies, which typically invest
more in their locations and price gasoline at a higher level, (ii) the
convenience store companies, which offer a full range of grocery items in
addition to gasoline and have a large investment in inventory and square
footage and (iii) the unbranded independents, whose gasoline quality may be
perceived to be inferior.

. Core markets focus. Market business planning is a management tool that was
adopted by the Company in 1992 as the principal method to define preferred
gasoline markets. This method utilizes economic, demographic and market data
to develop market specific plans for both asset and operational strategies.
The Company focuses on core markets where it has, or can develop, a
competitive advantage with targeted market share of between 8% and 15%. In
those markets where the Company already has a competitive strength on which
to build or where similar opportunities have been identified, the Company
will consider expanding through development and acquisition of stores and a
branded jobber program. The Company has contracted to acquire through an
operating lease 35 stores in the Chicago market. In those market areas where
the Clark brand name is not strong and the Company has a lower market
ranking, the Company will divest retail locations if favorable sale
opportunities arise. The Company has recently exited the Louisville,
Kentucky and Evansville, Indiana markets and has identified the Minnesota,
Kansas and Western Missouri for potential store divestitures.

The retail division has developed a strategy consistent with the Company's
overall business strategy. Key elements of this strategy include:

. Improving productivity. The retail division's goal is to achieve $25 million
of productivity gains to pre-tax earnings by the end of the first half of
1995 compared to the results of the 1992 baseline year. These productivity
measurements assume constant margins equivalent to 1992 levels. Planning and
key initiatives are based on this constant margin philosophy to focus the
organization on earnings separate from those which reflect only a market
impact. Towards this goal, the Company believes it has achieved significant
productivity gains through June 30, 1994. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation."

. Optimizing capital investments. Capital investments are linked to marketing
division earnings. Capital is budgeted for projects to achieve the retail
division's environmental goals, productivity improvements and acquisitions.
Funds are also allocated for investments such as the reimage program
(approximately $18,000 per location) and store expansion project
(approximately $45,000 to $55,000 per location) which the Company believes
are significantly below investments made by its key competitors for upgrades
of retail facilities.

. Promoting entrepreneurial culture. The retail division employs a
decentralized team-oriented culture with training programs and employee
incentives to deliver service that exceeds customer expectations. The
Company believes that customer satisfaction is linked to employee
satisfaction and that its incentive systems and feedback processes will
contribute to the performance and motivation of its focused workforce.

. Growing through acquisitions. The Company has a target of 8% to 15% market
share in core markets. Plans have been established to attain the market
share target by improving volumes at existing facilities, building new
facilities and acquiring competitors' stores.

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Implementation and Results

Implementation of the On The Go(TM) theme began in 1993. This program
involves many changes in the Company's human resource development, marketing
programs and facilities. The Company believes the implementation of this theme
has produced improved retail division results in both 1993 and during the first
six months of 1994.

. Human resources development. The Company believes that much of the
improvement in retail division results can be attributed to employee
development programs that have been fully implemented. Many management and
skilled position personnel have been hired from successful competitors and
from other highly regarded corporations and retailers with similar market
and customer characteristics. Employee performance is monitored versus
aggressive goals and this measurement provides the basis for the division's
incentive program. Clark's store managers have the flexibility to price
gasoline and to select and price convenience products, but also the
responsibility to achieve acceptable gross margin results. Other areas of
the organization are responsible for supporting the stores' efforts to
provide value and service to existing customers as well as to attract new
customers. The Company has committed significant resources to employee
training and development. The Company believes this effort has resulted in
improved operations, gasoline pricing, customer service and convenience
product merchandising.

. Marketing programs. Marketing programs have been implemented to attract new
customers as well as create a new consumer image for Clark. Clark's annual
"signature" promotion in 1993 and 1994 offered all grades of gasoline for
the same price as regular gasoline. This program resulted in significant
increases in total gallons during the three week promotional period. In
addition, the Company believes that the promotion has largely been
responsible for the approximate 50% improvement in the sale of higher margin
mid-grade and premium gasoline from the six month period ended June 30, 1992
to the comparable period in 1994. Additional programs have included system-
wide monthly convenience product promotions with attractive point of sale
materials, and managers' specials which are targeted to local demographics
and customer preferences.

. Facility development. The Company is implementing a four-phase approach to
its facilities strategy. This approach is designed to improve productivity
and profitability while creating a sustainable competitive position in the
marketplace.

Phase I: This phase was designed to change the convenience product offering
to an On The Go(TM) mix while decreasing the reliance on tobacco products.
Store interior remodeling was completed in late 1993 which added fountain
machines, three door coolers and attractive and functional wall display
systems that increased the available sales area in substantially all of
Clark's stores. The Company believes that this program contributed to the
increase in convenience product revenue for non-tobacco products from 32% of
total convenience product sales for the six months ended June 30, 1992 to over
38% for the six months ended June 30, 1994. The Company believes this program
has also contributed to the improvement of convenience product gross margins
from approximately $4,300 per month per store for the six months ended June
30, 1992 to $5,500 per month per store for the six months ended June 30, 1994.

Phase II: In this phase, the Company developed a reimaging plan for its
retail network to modernize stores and convert to Clark's new logo and
vibrant color scheme. The Company began implementing this program in March
1994 in Toledo, Ohio, one of its core markets. The Company completed the
reimaging of these 26 stores in May 1994. The Company estimates that, for
these stores, gross gasoline volumes increased 14% and convenience product
sales increased 16% for the first seven months of 1994 compared with the
prior year period. The Company attributes most of this increase to the
reimaging program, noting that the stores were reimaged during only part of
1994. The Company had reimaged 87 stores by June 30, 1994 and expects to
complete a total of 417 stores by the end of 1994 and the remainder in
1995. No assurance can be given that the results realized in the Toledo
stores will be sustained or duplicated in the Company's other markets.

63
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Phase III: In this phase, the Company developed optimization projects which
resulted from the Company's market business planning process. This phase
involves adding canopies, enlarging selected stores, and providing new
gasoline dispensers and islands and more visible signage. The Company's
results indicate that the addition of canopies increased gasoline gallons
by 15% and convenience product revenues by 16% after one year of operation.
The Company's goal is to have a canopy at every store by December 31, 1995.
The implementation of Clark's S.M.A.R.T. (Smart Merchandising And Rapid
Turns) program to modestly enlarge the store sales area to approximately
400 square feet has contributed to gasoline sales increases at these stores
of 10% and convenience product revenue increases of 18% for the six months
ended June 30, 1994 compared to the comparable period in 1992.

Phase IV: In this phase, the Company will add new stores and product
offerings such as car washes, branded fast food, dispenser credit card
readers and private label products. The Company has conducted extensive
research for all of these concepts and has developed aggressive plans for
Phase IV implementation.

Wholesale Overview

Clark's wholesale marketing program consists of direct petroleum product
sales to profitable truck rack customers as an alternative to spot market
sales. In 1992, the Company began to develop this channel and broaden its
wholesale customer base by increasing the number of sales representatives and
becoming a more consistent supplier. In addition, in anticipation of the
October 1993 deadline for low sulfur on-road diesel fuel, the Company focused
efforts on building market presence and customer relationships with off-road
diesel fuel users. In the first half of 1994, the Company's sales of gasoline
and diesel fuel to wholesale markets in the Midwest represented approximately
34% and 65%, respectively, of its gasoline and diesel fuel refining production.

To meet marketing requirements that at times exceed the Company's own
refining production, and to benefit from economic and logistical advantages
which may occur, the Company also supplies its retail and wholesale networks
through exchanges and purchases of refined product from other suppliers. The
Company sells its gasoline and diesel fuel on an unbranded basis to
approximately 600 distributors and chain retailers. The Company believes these
sales offer higher profitability than spot market alternatives. Railroads,
barge lines and other industrial end-users represent the largest share of other
wholesale customers. The Company believes that a branded distributor program
and further focus on the transportation industry offers significant opportunity
for incremental sales volumes and earnings in the future.

COMPETITION

The refining and marketing 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 the diversity, integration of operations, larger capitalization and
greater resources, these major oil companies may be better able to withstand
volatile market conditions, 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 division
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 high margins per barrel of throughput. The
Company has no crude oil reserves and is not engaged in exploration. The
Company obtains all of its crude oil requirements 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 retail marketing
division are locations of stores, product price and quality, appearance and
cleanliness of stores and brand identification. Competition from large,
integrated oil and gas companies, as well as convenience stores which sell
motor fuel, is expected

64
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to continue. The principal competitive factors affecting the Company's
wholesale marketing business 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 wastewaters and storm waters, and the handling and disposal of non-hazardous
and hazardous waste. Many of these laws authorize the imposition of civil and
criminal sanctions upon companies that fail to comply with applicable statutory
or regulatory requirements. The Company believes that, in all material
respects, its existing operations are in compliance with such laws and
regulations.

However, the Company's existing operations are large and complex. The
numerous environmental regulations to which they are subject are complicated,
sometimes ambiguous, and often changing. It is therefore possible that there
are areas in which the Company's existing operations are not currently in
compliance with all environmental laws and regulations. Accordingly, the
Company may be required to make additional expenditures to comply with existing
requirements.

The Company anticipates that, in addition to expenditures to comply with
existing environmental requirements, it will incur additional costs in the
future to comply with new regulatory requirements arising from recently enacted
statutes (such as the Clean Air Act requirements for operating permits and
control of hazardous air pollutants) and possibly with new statutory
requirements.

Federal, state and local laws and regulations establishing various health and
environmental quality standards and providing penalties for violations thereof
affect nearly all of the operations of the Company. Included among such
statutes are the Clean Air Act, the Resource Conservation and Recovery Act of
1977, as amended ("RCRA") 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 ("OSHA").

The Clean Air Act requires the Company to meet certain air emission standards
and to obtain and comply with the terms of emission permits. The RCRA empowers
the EPA to regulate the treatment and disposal of industrial wastes and to
regulate the use and operation of underground storage tanks. CERCLA requires
notification to the National Response Center of releases of hazardous materials
and provides a program to remediate hazardous releases at uncontrolled or
abandoned hazardous waste sites. The Superfund Amendments and Reauthorization
Act of 1986 ("SARA") is a five year extension of the CERCLA cleanup program.
Title III of SARA, the Emergency Planning and Community Right to Know Act of
1986, relates to planning for hazardous material emergencies and provides for a
community's right to know about the hazards of chemicals used or manufactured
at industrial facilities. The OSHA rules and regulations call for the
protection of workers and provide for a worker's right to know about the
hazards of chemicals used or produced at facilities.

Regulations issued by the EPA in 1988 with respect to underground storage
tanks require the Company, over a period of up to ten years, to install, where
not already in place, detection devices and corrosion protection on all
underground tanks and piping at retail gasoline outlets. The regulations also
require periodic tightness testing of underground tanks and piping. Commencing
in 1998, operators will be required under these regulations to install
continuous monitoring systems for underground tanks.

In March 1989, the EPA issued Phase I of regulations under authority of the
Clean Air Act requiring a reduction for summer months in 1989 in the volatility
of gasoline ("RVP") (the measure of the amount of light hydrocarbons contained
in gasoline, such as normal butane, an octane booster). In June 1990, Phase II

65
<PAGE>

regulations were issued by the EPA which required further reduction in RVP
beginning in May 1992. The Clean Air Act also established nationwide RVP
standards effective May 1992, but these do not exceed the EPA's Phase II
standards.

The Clean Air Act will impact the Company primarily in the following areas:
(i) beginning in 1995, a "reformulated" gasoline (which would include content
standards for oxygen, benzenes and aromatics) is mandated for gasoline sold in
the nine worst ozone polluting cities, including Chicago and Milwaukee in the
Company's market area; (ii) Stage II hose and nozzle controls on gas pumps to
capture fuel vapors in nonattainment areas, including 400 company stores; (iii)
more stringent refinery permitting requirements; and (iv) stricter refinery
waste disposal requirements as a broader group of wastes are classified as
hazardous. In addition, EPA regulations required that after October 1, 1993 the
sulfur contained in on-road diesel fuel produced in the U.S. must be reduced.

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 on-going
operations, Clark'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 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, 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.

The release or discharge of petroleum and hazardous materials can occur at
refineries, terminals and stores. The Company has identified a variety of
potential environmental issues at its refineries, terminals and stores. In
addition, each refinery has areas on-site which 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.

The Company believes that there is also extensive contamination at the site
on which the Port Arthur Refinery is located. However, as indicated under "The
Port Arthur Acquisition," Chevron will retain primary responsibility for
required remediation of most pre-closing contamination, with Clark retaining
responsibility for the soil under the active operating units.

In 1988 and 1989, Clark received correspondence from the EPA inquiring into
the nature of Clark's involvement with respect to certain off-site disposal
locations known as the 9th Avenue Site (Gary, Indiana), the U.S. Scrap Site
(Chicago, Illinois) and the Tex-Tin Site (Texas City, Texas), and indicating
that the EPA

66
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believes Clark to be a PRP with respect to such sites. Information contained in
such correspondence indicates that these sites were closed and no longer in
operation prior to the time Clark commenced operations in November, 1988. Clark
believes that any connection with these sites would have been on the part of
Old Clark and, as such, believes it has no liability for these sites because of
the terms of the Asset Purchase Agreement with Old Clark which provided that
Clark would not assume environmental liabilities arising prior to the date of
closing. Clark has notified the EPA of its position with respect to each of
these sites and has had no subsequent contact from the EPA since that
notification.

The Company does not believe that it is a proper party to any of the above-
described EPA claims. The Company cannot estimate costs for which it may
ultimately be liable with respect to these three sites, but, in the opinion of
the management of the Company, these costs should not have a material adverse
effect on the Company's operations or financial condition. There can be no
assurance that the Company will not be named as a PRP at additional sites in
the future or that the costs associated with those sites would not be
substantial.

In late 1990, Clark received a letter from the Illinois Attorney General
Environmental Control Division which included a report prepared by the Illinois
Environmental Protection Agency ("IEPA") on its investigation of the Village of
Hartford, Illinois ground water contamination. The report cited the history of
the ground water contamination in the area including the installation by Old
Clark in 1978 of recovery systems in Hartford for the removal of hydrocarbons
from the surface of the ground water. The report identified Clark or Old Clark
and two other oil companies as potential contributors to the contamination. In
particular, it contended that Clark or Old Clark is the party primarily
responsible for the hydrocarbon contamination and demanded that more aggressive
and encompassing efforts be immediately initiated by Clark. Clark submitted its
response to the letter and the report on January 15, 1991. In its response
Clark indicated, without admission of legal liability, that it would continue
to cooperate with the Illinois Attorney General and the IEPA by performing a
remediation program meeting the objectives defined by the IEPA in its report.
The response also contained data which disputed many of the contentions made by
the IEPA. Clark's remediation plan was approved by the IEPA and the IEPA has
issued all necessary permits to implement the remediation plan. The IEPA is
provided with monthly progress reports. Clark successfully completed a major
portion of the remediation work under an implementation plan that was submitted
to the IEPA in August 1991. The necessity of future remediation work is being
evaluated. Based upon the estimates of an independent environmental engineering
firm, the Company established a $10 million provision for the estimated costs
of its mitigation and recovery efforts in 1991, of which $3.6 million has been
spent through June 30, 1994.

Clark received an Administrative Complaint from the EPA on June 12, 1992
alleging record keeping violations of the RCRA concerning 22 stores in
Michigan, Indiana and Wisconsin and seeking civil penalties of $600,000. On
March 18, 1993, Clark received an Amended Complaint from the EPA involving
similar allegations but reducing the amount of civil penalties sought to
$100,000. Clark received an Administrative Complaint from the EPA on January 5,
1993 alleging record keeping and related violations of the Clean Air Act
concerning the Hartford refinery and seeking civil penalties of $100,000. On
July 11, 1994, the EPA filed an Amended Complaint alleging additional
violations and increasing the amount of the total penalty sought to $200,000.
The case was tried to an Administrative Law Judge on August 23-24, 1994, and is
awaiting decision.

An impoundment at the Hartford refinery contains hazardous wastes that were
produced as the result of past operations. The Company has been evaluating
remedial options with respect to that waste since 1992 and has been in
discussions with the IEPA concerning those options. In April 1993 an employee
of the IEPA told Clark that the presence of those hazardous wastes may require
a permit under the RCRA and that in turn may require corrective action with
respect to the entire refinery. Clark has received no formal notice or
complaint with respect to these issues from the IEPA. Clark has begun an
investigation with respect to the need for a permit and consequent corrective
action. Based upon the estimates of an independent engineering firm, the
Company established a $9.0 million provision for the estimated costs of site
clean-up in 1992, of which $5.6 million has been spent through June 30, 1994 on
remedial activities performed after notice to and comments from the IEPA.

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On May 5, 1993, Clark received correspondence from the Michigan Department of
Natural Resources ("MDNR") indicating that the MDNR believes Clark may be a PRP
in connection with groundwater contamination in the vicinity of one of its
retail stores in the Sashabaw Road area north of Woodhull Lake and Lake
Oakland, Oakland County Michigan. Clark has begun an initial investigation into
the matters raised by the MDNR. On July 22, 1994, MDNR commenced suit against
Clark and Chevron U.S.A. Products Co. seeking $300,000 for past response
activity costs incurred by MDNR in connection with this site. Clark is still
assessing the allegations contained in the Complaint, but believes it has good
defenses to the allegations.

LEGAL PROCEEDINGS

Forty-one civil suits by residents of Hartford, Illinois have been filed
against Clark in Madison County Illinois, alleging damage from ground water
contamination. The relief sought in each of these cases is an unspecified
dollar amount. The litigation proceedings are in the initial stages. Discovery,
which could be lengthy and complex, is only beginning. Clark moved to dismiss
thirty-four cases filed in December 1991 on the ground that Clark is not liable
for alleged activity of Old Clark. On September 4, 1992, the trial court
granted Clark's motions to dismiss. The plaintiffs were given leave to re-file
their complaints but based only on alleged activity of Clark occurring since
November 8, 1988, the date on which the bankruptcy court with jurisdiction over
Old Clark's bankruptcy proceedings issued its "free and clear" order. In
November 1992, the plaintiffs filed thirty-three amended complaints, and nine
other plaintiffs filed additional complaints. While it is not possible to
determine whether or to what extent the Company will have any liability to
other individuals arising from the ground water contamination, the Company
believes that the outcome of these complaints will not have a material adverse
effect on the Company's financial position.

On May 4, 1994, the United States Equal Employment Opportunity Commission
("EEOC") filed a class action lawsuit against Clark in the United States
District Court for the Northern District of Illinois alleging that Clark had
engaged in a pattern of practice of unlawful discrimination against certain
employees over the age of forty. The relief sought by the EEOC includes
reinstatement or reassignment of the individuals allegedly affected, payment of
back wages, an injunction prohibiting employment practices which discriminate
on the basis of age and institution of policies to eradicate the effects of any
past discriminatory practices. The Company believes the allegations to be
without merit and intends to vigorously defend this action. It is too early to
predict whether this case will go to trial, and, if so, what the risk of
exposure to Clark would be at trial.

Clark 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.

EMPLOYEES

As of June 30, 1994, the Company employed approximately 5,700 people,
approximately 450 of whom were covered by collective bargaining agreements at
the Hartford and Blue Island refineries. The Hartford refinery contract expires
on February 28, 1996, and the Blue Island refinery contract expires on August
31, 1996. In addition, Clark has a union contract for certain employees at its
Hammond, Indiana terminal which expires March 31, 1995. Historically,
relationships with the unions have been good and neither Old Clark nor Clark
has ever experienced a work stoppage as a result of labor disagreements. In
connection with the Acquisition, Clark is obligated to make offers of
employment to at least 810 of the Chevron employees currently employed at the
Port Arthur Refinery, substantially all of whom will be covered by collective
bargaining agreements. See "The Port Arthur Acquisition--The Purchase
Agreement--Employees."

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FEDERAL INCOME TAX CONSEQUENCES

Following is a brief summary of the expected material U.S. federal income tax
consequences to holders of Notes if the Proposed Amendments are approved and
the Company pays the Consent Payment to holders entitled thereto. This summary
is based on the Internal Revenue Code of 1986, as amended, final and proposed
regulations promulgated thereunder, court decisions and Internal Revenue
Service ("IRS") rulings and positions in effect on the date of this Consent
Solicitation Statement. All of the foregoing are subject to change, possibly
with retroactive effect. In particular, this summary is based in part on
certain proposed regulations regarding the treatment of modifications of debt
instruments (the "Proposed Regulations"). The Proposed Regulations are proposed
to be effective for modifications occurring after their issuance in final form.
Accordingly, the Proposed Regulations by their terms will not apply to the
Consent Solicitation, although they are indicative of the position of the IRS
with regard to their subject matter.

This summary is for general information only and does not constitute legal
advice. The discussion does not address aspects of federal taxation other than
income taxation, nor does it address all aspects of federal income taxation
that may be applicable to special categories of taxpayers (e.g., foreign
persons, insurance companies, tax exempt organizations and dealers in
securities). This summary does not discuss state, local or foreign taxes.
ACCORDINGLY, HOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE AND FOREIGN TAX CONSEQUENCES TO THEM OF THE SOLICITATION.

DEEMED EXCHANGE OF NOTES

The changes in the terms of the Indentures and the payment of the Consent
Payment should not result in a significant modification of the terms of the
Notes and therefore should not result in a deemed exchange of the Notes for
federal income tax purposes. Accordingly, except as described below with
respect to the receipt of the Consent Payment, holders of Notes should not be
required to recognize taxable gain or loss as a result of the Solicitation.

RECEIPT OF CONSENT PAYMENT

Although there is no authority on point, holders of Notes should be required
to recognize ordinary income for federal income tax purposes in an amount equal
to the Consent Payment to which they are entitled, when the Consent Payment is
received or accrued, in accordance with their method of accounting. An argument
can be made, however, that holders of Notes should be treated as transferring a
portion of their rights under the Notes in exchange for the Consent Payment, in
which case a holder should be permitted to reduce its adjusted tax basis in
their Notes (to the extent thereof) by the amount of the Consent Payment. If
such alternate characterization were to apply, holders of Notes would recognize
gain in the amount of the Consent Payment when their Notes were retired or
would have additional gain or a reduced loss when such Notes were disposed of.

BACKUP WITHHOLDING

The Company will be required to backup withhold in an amount equal to 31
percent of the Consent Payment payable to a particular holder of a Note unless
(i) the holder is a corporation or comes within certain other exempt categories
and, when required, demonstrates this fact, or (ii) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules.

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INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Clark Refining & Marketing, Inc.:
Annual Financial Statements
Report of Independent Accountants..................................... F-2
Balance Sheets as of December 31, 1992 and 1993....................... F-3
Statements of Earnings for the years ended December 31, 1991, 1992 and
1993................................................................. F-4
Statements of Cash Flows for the years ended December 31, 1991, 1992
and 1993............................................................. F-5
Statement of Stockholder's Equity for the years ended December 31,
1991, 1992 and 1993.................................................. F-6
Notes to Financial Statements......................................... F-7
Interim Financial Statements
Report of Independent Accountants..................................... F-16
Balance Sheet as of June 30, 1994..................................... F-17
Statements of Earnings for the six months ended June 30, 1993 and
1994................................................................. F-18
Statements of Cash Flows for the six months ended June 30, 1993 and
1994................................................................. F-19
Notes to Financial Statements......................................... F-20
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Clark Refining & Marketing, Inc.:

We have audited the accompanying balance sheets of Clark Refining &
Marketing, Inc. (formerly Clark Oil & Refining Corporation) (a Delaware
corporation and wholly owned subsidiary of Clark USA, Inc., formerly Clark R &
M Holdings, Inc.) as of December 31, 1992 and 1993 and the related statements
of earnings, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1993. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Clark Refining & Marketing,
Inc. as of December 31, 1992 and 1993 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.

As discussed in notes 12 and 13 to the financial statements, in 1993 the
Company changed its method of accounting for postretirement benefits other than
pensions and its method of accounting for income taxes.

Coopers & Lybrand L.L.P.

St. Louis, Missouri,
January 28, 1994, except for Note 15 for which the date is September 19, 1994.

F-2
<PAGE>

CLARK REFINING & MARKETING, INC.

BALANCE SHEETS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
REFERENCE DECEMBER 31, DECEMBER 31,
ASSETS NOTE 1992 1993
------ --------- ------------ ------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents................ $ 18,643 $ 60,771
Short-term investments................... 3 187,487 133,752
Accounts receivable...................... 52,150 58,103
Inventories.............................. 2, 4 151,083 147,961
Prepaid expenses and other............... 23,178 15,573
-------- --------
Total current assets................... 432,541 416,160
Property, Plant and Equipment.............. 2, 5 320,870 360,945
Other Assets............................... 2, 6 34,384 34,349
-------- --------
$787,795 $811,454
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable......................... 7 $107,211 $138,321
Accrued expenses and other............... 8 45,902 43,151
Accrued taxes other than income.......... 34,370 30,860
-------- --------
Total current liabilities.............. 187,483 212,332
Long-Term Debt............................. 3, 8, 9 401,514 401,038
Deferred Taxes............................. 2, 13 44,593 35,248
Liability for Postretirement Benefits...... 12 -- 16,858
Contingencies.............................. 14 -- --
Stockholder's Equity:
Common stock ($.01 par value per share;
1,000 shares authorized and 100 shares
issued and outstanding)
Paid-in capital.......................... 30,000 30,000
Retained earnings........................ 7 124,205 115,978
-------- --------
Total stockholder's equity............. 154,205 145,978
-------- --------
$787,795 $811,454
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>

CLARK REFINING & MARKETING, INC.

STATEMENTS OF EARNINGS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
REFERENCE ----------------------------------
NOTE 1991 1992 1993
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales and Operating Revenues. $2,426,059 $2,252,964 $2,263,410
Expenses:
Cost of sales.................. (2,092,738) (1,952,360) (1,936,563)
Operating expenses............. (199,686) (224,368) (218,087)
General and administrative ex-
penses........................ (20,758) (31,164) (27,533)
Depreciation................... 2 (19,263) (21,122) (23,402)
Amortization................... 2, 6 (7,131) (9,290) (11,907)
Inventory write-down to market. 4 -- -- (26,500)
---------- ---------- ----------
(2,339,576) (2,238,304) (2,243,992)
---------- ---------- ----------
Operating Income................. 86,483 14,660 19,418
Interest and financing costs,
net........................... 8 (27,196) (26,373) (29,933)
Other income................... 11 -- 14,662 11,370
---------- ---------- ----------
Earnings Before Income Taxes, Ex-
traordinary Item and Cumulative
Effect of Change in Accounting
Principle....................... 59,287 2,949 855
Income tax (provision) benefit. 2, 13 (21,972) 344 513
---------- ---------- ----------
Earnings Before Extraordinary
Item and Change in Accounting
Principle....................... 37,315 3,293 1,368
Extinguishment of debt (net of
taxes of $7,192).............. 8 -- (11,538) --
Cumulative effect of change in
accounting principle (net of
taxes of $5,992).............. 12 -- -- (9,595)
---------- ---------- ----------
Net Earnings (Loss).............. $ 37,315 $ (8,245) $ (8,227)
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

CLARK REFINING & MARKETING, INC.
STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER
31,
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss)......................... $ 37,315 $ (8,245) $ (8,227)
Extraordinary item.......................... -- 11,538 --
Cumulative effect of change in accounting
principle.................................. -- -- 9,595
Adjustments:
Depreciation.............................. 19,263 21,122 23,402
Amortization.............................. 13,126 12,217 13,025
Share of earnings of affiliates, net of
dividends................................ 1,254 182 197
Deferred taxes............................ 19,124 267 (3,536)
Inventory write-down to market............ -- -- 26,500
Other..................................... (156) (206) 1,271
Cash provided by (reinvested in) working
capital--
Accounts receivable, prepaid expenses and
other.................................... (32,692) 13,171 2,328
Inventories............................... (9,094) (31,334) (23,378)
Accounts payable, accrued expenses, taxes
other than income, and other............. (4,200) 20,418 22,288
--------- --------- ---------
Net cash provided by operating activi-
ties................................... 43,940 39,130 63,465
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of short-term investments......... (202,306) (987,883) (114,534)
Sales of short-term investments............. -- 1,027,053 168,470
Expenditures for property, plant and equip-
ment....................................... (58,042) (59,518) (67,938)
Expenditures for turnaround................. (17,237) (2,729) (20,577)
Payment received on CMAT, Inc. note......... -- -- 10,000
Proceeds from disposals of property, plant
and equipment.............................. 5,129 995 4,582
Other investing activity.................... -- (5,006) (201)
--------- --------- ---------
Net cash used in investing activities... (272,456) (27,088) (20,198)
--------- --------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt.... 225,000 175,000 --
Long-term debt payments..................... (100,288) (207,396) (775)
Deferred financing costs.................... (5,591) (6,458) (663)
Other....................................... -- 135 299
--------- --------- ---------
Net cash provided by (used in) financing
activities............................. 119,121 (38,719) (1,139)
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents.................................. (109,395) (26,677) 42,128
Cash and Cash Equivalents, beginning of peri-
od........................................... 154,715 45,320 18,643
--------- --------- ---------
Cash and Cash Equivalents, end of period...... $ 45,320 $ 18,643 $ 60,771
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

CLARK REFINING & MARKETING, INC.

STATEMENT OF STOCKHOLDER'S EQUITY

DECEMBER 31, 1993

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ------- -------- --------
<S> <C> <C> <C> <C>
Balance--December 31, 1990
As previously reported.................... $ -- $30,000 $109,522 $139,522
Cumulative effect of change in accounting
principle................................. -- -- (4,204) (4,204)
---- ------- -------- --------
Balance--December 31, 1990 as restated...... -- 30,000 105,318 135,318
Net Earnings.............................. -- -- 37,315 37,315
---- ------- -------- --------
Balance--December 31, 1991.................. -- 30,000 142,633 172,633
Net Loss.................................. -- -- (8,245) (8,245)
Dividend Paid ............................ -- -- (10,183) (10,183)
---- ------- -------- --------
Balance--December 31, 1992.................. -- 30,000 124,205 154,205
Net Loss.................................. -- -- (8,227) (8,227)
---- ------- -------- --------
Balance--December 31, 1993.................. $ -- $30,000 $115,978 $145,978
==== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1991, 1992, AND 1993

(TABULAR DOLLAR AMOUNTS IN THOUSANDS OF US DOLLARS)

1. GENERAL

Clark Refining & Marketing, Inc., formerly Clark Oil & Refining Corporation,
a Delaware corporation ("Clark") was organized in 1988 for the purpose of
acquiring the principal assets of OC Oil & Refining Corporation (formerly Clark
Oil & Refining Corporation, a Wisconsin Corporation) ("Old Clark"), a wholly-
owned subsidiary of Apex Oil Company, Inc. (formerly Apex Oil Company) ("Apex")
and certain other assets of Apex. Clark is wholly-owned by Clark USA, Inc.
(formerly Clark R & M Holdings, Inc.), a Delaware corporation ("Clark USA"),
and Clark USA is indirectly, wholly-owned by The Horsham Corporation, a Quebec
corporation ("Horsham"). During December 1992, the 40% ownership interest of
Clark USA that was held by AOC Limited Partnership, a Missouri limited
partnership and affiliate of Apex ("AOC, LP"), was acquired by Clark USA and
Horsham.

Clark's principal operations include crude oil refining, wholesale and retail
marketing of refined petroleum products and the retail marketing of convenience
store items in the Midwestern United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents; Short-term Investments

Clark considers all highly liquid investments, such as time deposits, money
market instruments, commercial paper and United States and foreign government
securities, purchased with a maturity of three months or less, to be cash
equivalents. Short-term investments consist of similar investments, as well as
United States government security funds, maturing more than three months from
date of purchase and are carried at the lower of cost or market. Clark invests
only in AA rated or better fixed income marketable securities or the short-term
rated equivalent.

Inventories

Inventories are stated at the lower of cost, predominantly using the last-in,
first-out "LIFO" method, adjusted for realized hedging gains or losses on
petroleum products, or market on an aggregate basis. To limit risk related to
price fluctuations, Clark purchases and sells crude oil and refined products
futures contracts as hedges of its production requirements and physical
inventories. Gains and losses on futures contracts are recognized in earnings
as a product cost component and as an adjustment to the carrying amount of
petroleum inventories and are reflected when such inventories are consumed or
sold.

Property, Plant and Equipment

Depreciation of property, plant and equipment is computed using the straight-
line method over the estimated useful lives of the assets or group 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. Clark 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 included in current 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.

F-7
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Environmental Costs

Environmental expenditures are expensed or capitalized depending upon their
future economic benefit. Costs which improve a property as compared with the
condition of the property when originally constructed or acquired and costs
which prevent future environmental contamination are capitalized. Costs which
return a property to its condition at the time of acquisition are expensed.

Deferred Turnaround and Financing Costs

A turnaround is a periodically required standard procedure for maintenance of
a refinery that involves the shutdown and inspection of major processing units
and occurs approximately every three years. Turnaround costs, which are
included in "Other assets", are amortized over three years beginning the month
following completion.

Financing costs related to obtaining or refinancing of debt are deferred and
amortized over the expected life of the debt.

Income Taxes

Clark files a consolidated US federal income tax return with Clark USA but
computes its provision on a separate company basis. On January 1, 1993, Clark
adopted Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109") (see Note 13, "Income Taxes").

Deferred taxes are classified as current and included in prepaid or accrued
expenses 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 depending on the periods in
which the temporary differences are expected to reverse.

Employee Benefit Plans

The Clark Refining & Marketing, Inc. Savings Plan and separate Trust (the
"Plan"), a defined contribution plan covers substantially all employees of
Clark. Under terms of the Plan, Clark matches the amount of employee
contributions, subject to specified limits. Contributions to the Plan during
1991, 1992 and 1993 were $2.7 million for each year.

Clark provides certain benefits for retirees once they have reached specified
years of service. These benefits include health insurance in excess of social
security and an employee paid deductible amount, and life insurance equal to
one and one-half times the employee's annual salary. On January 1, 1993, Clark
adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106") which
changed the method of accounting for such benefits from a cash to an accrual
basis (see Note 12, "Postretirement Benefits Other Than Pensions").

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of Clark's financial instruments as of December 31,
1993 was as follows:

<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- --------
<S> <C> <C>
Short-term investments................................. $133,752 $134,000
Long-term debt......................................... 401,038 423,000
</TABLE>

The estimated fair value amounts were determined using quoted market prices
for the same or similar issues.

F-8
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Financial Accounting Standards Board has issued SFAS No. 115 "Accounting
for Certain Investments in Debt and Equity Securities". The standard generally
replaces the historical cost accounting approach to debt securities with one
based on fair value. All affected debt and equity securities must be classified
as held-to-maturity, trading, or available-for-sale. Classification is critical
as it effects the carrying amount of the security, as well as the timing of
gain or loss recognition. Clark will adopt this standard beginning January 1,
1994 and expects most securities to be classified as available-for-sale with no
material impact on the carrying values of the securities or earnings.

4. INVENTORIES

The carrying value of inventories consisted of the following:

<TABLE>
<CAPTION>
1992 1993
-------- --------
<S> <C> <C>
Crude oil.............................................. $ 46,120 $ 53,860
Refined and blendstocks................................ 89,064 102,604
Convenience products................................... 10,480 12,044
Warehouse stock and other.............................. 5,419 5,953
Inventory write-down to market......................... -- (26,500)
-------- --------
$151,083 $147,961
======== ========
</TABLE>

The market value of inventories at December 31, 1992, was approximately $13.2
million higher than the carrying value. Inventories at December 31, 1993 were
written down to market value which was $26.5 million lower than LIFO cost.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
1992 1993
-------- --------
<S> <C> <C>
Land.................................................. $ 17,916 $ 17,206
Refineries............................................ 217,829 255,218
Retail stores......................................... 111,044 132,542
Product terminals and pipelines....................... 38,780 40,731
Other................................................. 8,004 9,677
-------- --------
393,573 455,374
Accumulated depreciation and amortization............. (72,703) (94,429)
-------- --------
$320,870 $360,945
======== ========
</TABLE>

At December 31, 1992 and 1993, property, plant & equipment included $57.1
million and $48.2 million of construction in progress, respectively.

6. OTHER ASSETS

Other assets consisted of the following:

<TABLE>
<CAPTION>
1992 1993
------- -------
<S> <C> <C>
Deferred financing costs................................. $ 8,799 $ 8,287
Deferred turnaround costs................................ 10,591 19,324
Notes receivable......................................... 9,897 2,161
Investment in non-consolidated affiliates................ 4,607 4,410
Other.................................................... 490 167
------- -------
$34,384 $34,349
======= =======
</TABLE>

F-9
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Amortization of deferred financing costs for the years ended December 31,
1991, 1992 and 1993, was $6.0 million, $2.9 million and $1.2 million,
respectively. Amortization of turnaround costs during 1991, 1992 and 1993 were
$7.0 million, $9.2 million and $11.8 million, respectively.
7. WORKING CAPITAL FACILITY

Clark has in place a working capital facility which provides a revolving line
of credit for cash borrowings and for the issuance of letters of credit
primarily for securing purchases of crude oil, other feedstocks and refined
products. The facility is for $100 million and expires December 31, 1994. There
are restrictive limitations on inventory positions, and certain financial
ratios are required to be maintained, including a net worth requirement of at
least $130.0 million in 1993 and $140.0 million effective January 1, 1994. At
December 31, 1992 and 1993, $57.4 million and $51.5 million, respectively, of
the line of credit was utilized for letters of credit, of which $31.8 million
and $8.7 million, respectively, supports commitments for future deliveries of
petroleum products. There were no direct borrowings outstanding under the
facility at December 31, 1992 or 1993.

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
1992 1993
-------- --------
<S> <C> <C>
10 1/2% Senior Notes due December 1, 2001
("10 1/2% Senior Notes").............................. $225,000 $225,000
9 1/2% Senior Notes due September 15, 2004
("9 1/2% Senior Notes")............................... 175,000 175,000
Obligations under capital leases and other notes....... 1,753 1,355
-------- --------
401,753 401,355
Less current portion............................... 239 317
-------- --------
$401,514 $401,038
======== ========
</TABLE>

The 10 1/2% and 9 1/2% Senior Notes were issued in December 1991 and
September 1992 , respectively and are both unsecured. The 10 1/2% Senior Notes
and 9 1/2% Senior Notes are redeemable by Clark beginning December 1996 and
September 1997, respectively at a redemption price which starts at 105% and
decreases to 100% of principal two years later. The indentures for the Notes
contain certain restrictive covenants including limitations on the payment of
dividends, the payment of amounts to related parties, the level of debt, change
in control and incurrence of liens. In addition, Clark must maintain a minimum
net worth of $100 million.

The scheduled maturities of long-term debt during the next five years are (in
thousands): 1994--$317 (included in "Accrued expenses and other"); 1995--$106;
1996--$99; 1997--$82; 1998--$121; 1999 and thereafter $400,630.

Interest and financing costs

Interest and financing costs, net consisted of the following:

<TABLE>
<CAPTION>
1991 1992 1993
-------- -------- -------
<S> <C> <C> <C>
Interest expense............................. $ 34,509 $ 45,736 $40,479
Financing costs.............................. 7,072 3,541 1,593
Interest income.............................. (12,264) (17,796) (9,363)
-------- -------- -------
29,317 31,481 32,709
Capitalized interest......................... (2,121) (5,108) (2,776)
-------- -------- -------
Interest and financing costs, net........ $ 27,196 $ 26,373 $29,933
======== ======== =======
</TABLE>

F-10
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash paid for interest in 1991, 1992 and 1993 was $35.1 million, $52.1
million and $40.1 million, respectively.

Interest income in 1991, 1992 and 1993 includes $(0.2) million, $2.0 million
and $0.2 million, respectively from CMAT (see Note 10 "Related Party
Transactions").

Accrued interest payable at December 31, 1992 and 1993, of $6.7 million and
$6.9 million, respectively, is included in "Accrued expenses and other".

Early Extinguishment of Debt

In 1992 Clark repurchased $95.9 million of its First Mortgage Notes on the
open market for $103.0 million and redeemed the remaining $104.1 million at
106% of principal amount, or $110.4 million. Available cash was used to
extinguish the debt. The costs of the early extinguishment of debt of $11.5
million (net of taxes of $7.2 million) included the premium amount, deferred
financing costs, and defeasance-related interest expense.

9. LEASE COMMITMENTS

Clark leases premises and equipment under lease arrangements, many of which
are non-cancelable. Clark leases store property and equipment with lease terms
extending to 2013, some of which have escalation clauses based on a set amount
or increases in the Consumer Price Index. Clark also has operating lease
agreements for certain pieces of equipment at the refineries, retail stores,
and the general office. These lease terms range from 3 to 9 years with the
option to purchase the equipment at the end of the lease term at fair market
value. The leases generally provide that Clark pay taxes, insurance, and
maintenance expenses related to the leased assets. At December 31, 1993, future
minimum lease payments under capital leases and non-cancelable operating leases
were as follows (in millions): 1994--$4.9; 1995--$4.2; 1996--$4.0; 1997--$1.6;
1998--$1.6 and $4.6 thereafter. Rental expense during 1991, 1992 and 1993 was
$3.4 million, $3.7 million and $3.4 million, respectively.

10. RELATED PARTY TRANSACTIONS

Transactions of significance with related parties not disclosed elsewhere in
the footnotes are detailed below:

Apex Oil Company, Inc. and Subsidiaries

Clark had various agreements with Apex related to the sale of products
(slurry oil, vacuum tower bottoms, asphalt) produced by the refineries. These
agreements were terminated or expired in 1991 or 1992. The purchase and sale of
products and services between the parties were made at market terms and prices.
During 1991 and 1992, Clark purchased $51.0 million and $1.6 million,
respectively, of its crude oil and other petroleum requirements from Apex and
sold $119.6 million and $0.7 million, respectively, of refined product to Apex.
There were no purchases from or sales to Apex in 1993.

Clark Executive Trust

Clark established a deferred compensation plan called the Clark Refining &
Marketing, Inc. Corporation Stock Option Plan (the "Stock Option Plan") which
became effective May 1, 1991. Under the Stock Option Plan, as amended, options
to purchase up to 600,000 subordinate voting shares of Horsham could be granted
to certain employees and non-employee directors. Exercise prices reflect the
market value of Horsham stock on the date of issuance. As of December 31, 1993,
there were 363,737 options outstanding to purchase shares of Horsham at prices
ranging from $7.19 to $11.88 per share. The trust held 253,738 Horsham shares
at December 31, 1993.

F-11
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

CMAT, Inc.

On December 30, 1992 the stock of CMAT Inc. ("CMAT") was transferred to an
affiliate of Apex as part of the consideration for the acquisition by Clark USA
for most of Clark USA's shares held by AOC, LP, an affiliate of Apex. As part
of this transaction, Clark held a $10.0 million note due from CMAT December 31,
1997. This note was paid in full in early 1993.

11. OTHER INCOME

Other income consisted of the following:

<TABLE>
<CAPTION>
1991 1992 1993
---- ------- -------
<S> <C> <C> <C>
Drexel litigation................................... $-- $ 5,530 $ 8,468
Apex litigation..................................... -- 9,132 --
Sale of "non-core" retail stores.................... -- -- 2,902
--- ------- -------
$-- $14,662 $11,370
=== ======= =======
</TABLE>

Litigation Settlements

In 1992 and 1993, Clark settled litigation and recovered all previous losses
incurred relating to a line of credit with a lending syndicate (led by Drexel
Trade Finance) that had filed bankruptcy in 1990. Also in 1992, Clark settled
litigation against Apex related to a dispute arising out of the November 1988
acquisition of Clark's assets from Apex.

Retail Stores

In June 1993, Clark sold 21 "non-core" retail stores in Kentucky and
Minnesota, which resulted in the recognition of other income of $2.9 million.

12. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

On January 1, 1993, Clark adopted SFAS 106. This standard requires that Clark
accrue the actuarially determined costs of postretirement benefits during the
employees' active service periods. Previously, Clark had accounted for these
benefits on a "pay as you go" basis, recognizing an expense when an obligation
was paid. The cost of such benefits in 1991 and 1992 was not significant and
these years have not been restated. In accordance with SFAS 106, Clark elected
to recognize the cumulative liability, a non-cash "Transition Obligation" of
$9.6 million, net of the tax benefit of $6.0 million, as of January 1, 1993.
The current year effect of adopting SFAS 106 was $1.9 million ($1.2 million,
net of taxes).

The following table sets forth the unfunded status for the post retirement
health and life insurance plans as of December 31, 1993:

<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees..................................................... $10,536
Fully eligible plan participants............................. 1,189
Other plan participants...................................... 6,465
-------
Total...................................................... 18,190
Accrued postretirement benefit cost............................ --
Less: Plan assets at fair value................................ --
Less: Unrecognized net loss.................................... (1,332)
-------
Accrued postretirement benefit liability..................... $16,858
=======
The components of net periodic postretirement benefit costs
were as follows:
Service costs................................................ $ 620
Interest costs............................................... 1,270
-------
Net periodic postretirement benefit cost................... $ 1,890
=======
</TABLE>

F-12
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
A discount rate of 7.25% was assumed as well as a 4.5% rate of increase in
the compensation level. For measuring the expected postretirement benefit
obligation, the health care cost trend rate ranged from 9.8% to 14.0% in 1993,
grading down to an ultimate rate in 2001 of 5.25%. 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, 1993, by $2.2
million and increase the annual aggregate service and interest costs by $0.3
million.

13. INCOME TAXES

On January 1, 1993, Clark adopted SFAS 109 retroactive to December 31, 1990.
The adoption of this standard changes the method of accounting for income taxes
from the deferred method to an asset and liability approach. Previously, Clark
deferred the past tax effects of timing differences between financial reporting
and taxable income. The asset and liability approach 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 1991 and 1992 financial statements have been restated to give retroactive
effect to the adoption of SFAS 109. As a result of the restatement, deferred
income tax liabilities have increased and retained earnings have decreased as
of December 31, 1990, 1991 and 1992 by $4.2 million, $5.2 million and $8.4
million, respectively. Before retroactive application of SFAS 109, the 1991 net
income was $38.3 million and the 1992 net loss was $5.1 million. The respective
effect of the retroactive application of SFAS 109 on these years' earnings was
a $1.0 million and $3.1 million increase in the tax provision, resulting in a
net earnings for 1991 of $37.3 million and a net loss for 1992 of $8.2 million.

The income tax provision (benefit) including the impact of the accounting
change in 1993 and the extraordinary item in 1992 is summarized as follows:

<TABLE>
<CAPTION>
1991 1992 1993
------- -------- --------
<S> <C> <C> <C>
Earnings (loss) before provision for income
taxes...................................... $59,287 $(15,781) $(14,732)
======= ======== ========
Current provision (benefit)--Federal........ $ 1,360 $ (5,796) $ 1,204
--State..................................... 1,488 (2,007) 1,819
------- -------- --------
2,848 (7,803) 3,023
------- -------- --------
Deferred provision (benefit)--Federal....... 16,740 (697) (6,866)
--State..................................... 2,384 964 (2,662)
------- -------- --------
19,124 267 (9,528)
------- -------- --------
$21,972 $ (7,536) $ (6,505)
======= ======== ========
</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>
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Federal taxes computed at 34%.................. $20,158 $(5,366) $(5,009)
State income taxes, net of federal benefits.... 2,556 (689) (556)
Nontaxable dividend income..................... (1,322) (1,208) (1,276)
Other items, net............................... 580 (273) 336
------- ------- -------
Income tax provision (benefit)............. $21,972 $(7,536) $(6,505)
======= ======= =======
</TABLE>

F-13
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following represents the approximate tax effect of each significant
temporary difference giving rise to deferred tax liabilities and assets.

<TABLE>
<CAPTION>
1992 1993
------- -------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment.......................... $42,183 $52,590
Other.................................................. 23,978 11,667
------- -------
66,161 64,257
------- -------
Deferred tax assets:
Alternative minimum tax credit......................... 9,458 14,286
Other.................................................. 18,391 21,186
------- -------
27,849 35,472
------- -------
Net deferred tax liability............................... 38,312 28,785
Current portion--included in "Prepaid expenses and oth-
er"..................................................... 6,281 6,463
------- -------
Deferred taxes......................................... $44,593 $35,248
======= =======
</TABLE>

As of December 31, 1993, Clark has made payments of $14.3 million under the
Federal alternative minimum tax system which are available to reduce future
regular income tax payments. Net cash paid for income taxes in 1991 was $3.2
million and $2.2 million in 1992. Net cash tax refunds of $6.6 million were
received during 1993.

Federal income taxes receivable at December 31, 1992, of $5.9 million (1993--
$2.7 million payable) are due from Clark USA, an affiliate, in accordance with
a tax-sharing agreement between Clark and Clark USA and are included in
"Accounts payable".

14. CONTINGENCIES

Forty-one civil suits by residents of Hartford, Illinois have been filed
against Clark in Madison County Illinois, alleging damage from ground water
contamination. The relief sought in each of these cases is an unspecified
dollar amount. The litigation proceedings are in the initial stages. Discovery,
which could be lengthy and complex, is only just beginning. Clark moved to
dismiss thirty-four cases filed in December 1991 on the ground that Clark is
not liable for alleged activities of Old Clark. On September 4, 1992, the trial
court granted Clark's motions to dismiss. The plaintiffs were given leave to
re-file their complaints but based only on alleged activity of Clark occurring
since November 8, 1988, the date on which the bankruptcy court with
jurisdiction over Old Clark's bankruptcy proceedings issued its "free and
clear" order. In November 1992, the plaintiffs filed thirty-three amended
complaints. In addition, one new complaint involving nine plaintiffs was filed.
It is too early to predict whether any of these cases will go to trial on the
merits and if so, what the risk of exposure to Clark would be at trial. It is
also not possible to determine whether or to what extent Clark will have any
liability to other individuals arising from the ground water contamination.

Clark 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, Clark 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 its financial position.

F-14
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

15. SUBSEQUENT EVENTS

On August 18, 1994, Clark entered into an asset purchase agreement (the
"Purchase Agreement") for the purchase of Chevron's Port Arthur, Texas refinery
and certain related terminals, pipelines, and other assets for $74 million,
plus approximately $140 million for inventory and spare parts (depending upon
prevailing market prices for inventory at closing). The Purchase Agreement also
provides for contingent payments to Chevron of up to $125 million over a five
year period from the closing date of the acquisition in the event refining
industry margin indicators exceed certain escalating levels. Chevron will
retain primary responsibility for required remediation of most pre-closing
environmental contamination with Clark retaining responsibility for the soil
under the active operating units.

The closing is subject to the completion of certain environmental assessments
and agreements with certain collective bargaining units. A late 1994 closing is
expected for the transaction.

In order to finance a portion of the Port Arthur refinery acquisition, Clark
anticipates receiving a capital contribution from Clark USA as a result of
their public offering of 7,500,000 shares of common stock and a $100 million
note offering. The closing of the common stock offering and the note offering
are conditional upon the closing of each other and upon the closing of the Port
Arthur acquisition.

In anticipation of an initial public offering by Clark USA and prior to its
effective date, Clark is seeking consents from the holders of its 9 1/2% Notes
and its 10 1/2% Notes, to waive or modify the terms of certain covenants under
the indentures governing these securities.

The purpose of the consent solicitation is, among other things, to permit
Clark to increase the amount of its authorized working capital facility in
connection with the Port Arthur acquisition and to incur additional tax-exempt
indebtedness for capital expenditures.

In the event the consents are effected, Clark will make a payment to each
holder whose duly executed consent is received and not revoked. A consent
payment, in an amount to be determined, will be made in cash for each $1,000 in
principal amount of the 9 1/2% Notes and 10 1/2% Notes.

In connection with the above transactions, Clark proposes to enter into a new
three year revolving credit facility, collateralized by all of Clark's current
assets and certain intangibles. The amount of the facility will initially be
the lesser of $220 million or the amount available under a borrowing base, as
defined, representing specified percentages of cash, investments, receivables,
inventory and other working capital items. Upon consummation of the common
stock offering, the note offering and the Port Arthur acquisition, the facility
will increase to the lesser of $450 million or the amount available under the
borrowing base.

F-15
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Clark Refining & Marketing, Inc.:

We have reviewed the accompanying balance sheet of Clark Refining &
Marketing, Inc. (a Delaware corporation and wholly-owned subsidiary of Clark
USA, Inc. (formerly Clark R & M Holdings, Inc.)) as of June 30, 1994, and the
related statements of earnings and cash flows for the six-month periods ended
June 30, 1993 and 1994. 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 obtaining an understanding of the
system for the preparation of interim financial information, applying
analytical review procedures to the financial data and making inquiries of
persons responsible for financial and accounting matters. It is substantially
less in scope than an audit 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 the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

St. Louis, Missouri,
August 10, 1994 except for
Note 7 for which the date
is September 19, 1994.

F-16
<PAGE>

CLARK REFINING & MARKETING, INC.

BALANCE SHEET

(UNAUDITED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
REFERENCE JUNE 30,
ASSETS NOTE 1994
------ --------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $ 50,593
Short-term investments.................................... 2 130,210
Accounts receivable....................................... 88,530
Inventories............................................... 3 141,703
Prepaid expenses and other................................ 11,908
--------
Total current assets.................................... 422,944
Property, Plant and Equipment............................... 374,073
Other Assets................................................ 4 30,725
--------
$827,742
========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C>
Current Liabilities:
Accounts payable.......................................... $124,374
Accrued expenses and other................................ 5 42,545
Accrued taxes other than income........................... 41,799
--------
Total current liabilities............................... 208,718
Long-Term Debt.............................................. 400,531
Deferred Taxes.............................................. 36,263
Liability for Postretirement Benefits....................... 17,494
Contingencies............................................... 6 --
Stockholder's Equity:.......................................
Common stock ($.01 par value per share; 1,000 shares au-
thorized and 100 shares issued and outstanding)
Paid-in capital........................................... 30,000
Retained earnings......................................... 2 134,736
--------
Total stockholder's equity.............................. 164,736
--------
$827,742
========
</TABLE>

The accompanying notes are an integral part of these statements.

F-17
<PAGE>

CLARK REFINING & MARKETING, INC.

STATEMENTS OF EARNINGS

(UNAUDITED)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
REFERENCE ------------------------
NOTE 1993 1994
--------- ----------- -----------
<S> <C> <C> <C>
Net Sales and Operating Revenues........... $ 1,170,043 $ 1,152,944
Expenses:
Cost of sales............................ (1,026,133) (977,395)
Operating expenses....................... (105,790) (115,781)
General and administrative expenses...... (12,683) (15,361)
Depreciation............................. (11,380) (13,127)
Amortization............................. 4 (5,511) (5,733)
Reversal of inventory write-down to mar-
ket..................................... 3 -- 26,500
----------- -----------
(1,161,497) (1,100,897)
----------- -----------
Operating Income........................... 8,546 52,047
Interest and financing costs, net........ 4, 5 (13,107) (16,966)
Other income............................. 11,370 --
----------- -----------
Earnings Before Taxes and Cumulative Effect
of Change in Accounting Principle......... 6,809 35,081
Income tax provision..................... (2,597) (13,123)
----------- -----------
Earnings Before Cumulative Effect of Change
in Accounting Principle................... 4,212 21,958
Cumulative effect of change in accounting
principle
(net of taxes of $5,992)................ (9,595) --
----------- -----------
Net Earnings (Loss)........................ $ (5,383) $ 21,958
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-18
<PAGE>

CLARK REFINING & MARKETING, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss)..................................... $ (5,383) $ 21,958
Cumulative effect of change in accounting principle..... 9,595 --
Adjustments:
Depreciation.......................................... 11,380 13,127
Amortization.......................................... 6,104 6,321
Share of earnings of affiliates, net of dividends..... (93) (457)
Deferred taxes........................................ 2,770 17,522
Reversal of inventory write-down to market............ -- (26,500)
Other................................................. 636 636
Cash provided by (reinvested in) working capital--
Accounts receivable, prepaid expenses and other....... (20,172) (39,772)
Inventories........................................... (19,941) 32,758
Accounts payable, accrued expenses, taxes other than
income, and other.................................... 29,078 (8,758)
--------- --------
Net cash provided by operating activities........... 13,974 16,835
--------- --------
Cash Flows from Investing Activities:
Purchases of short-term investments..................... (44,956) (50,584)
Sales of short-term investments......................... 96,873 49,126
Expenditures for property, plant and equipment.......... (42,851) (28,059)
Expenditures for refinery turnaround.................... (18,325) (1,617)
Proceeds from disposals of property, plant and equip-
ment................................................... 4,473 4,628
Payment received on note receivable..................... 10,000 --
Other investing activity................................ (201) --
--------- --------
Net cash provided by (used in) investing activities. 5,013 (26,506)
--------- --------
Cash Flows from Financing Activities:
Long-term debt payments................................. (186) (507)
Deferred financing costs................................ (579) --
Other................................................... 241 --
--------- --------
Net cash used in financing activities............... (524) (507)
--------- --------
Net Increase (Decrease) in Cash and Cash Equivalents...... 18,463 (10,178)
Cash and Cash Equivalents, beginning of period............ 18,643 60,771
--------- --------
Cash and Cash Equivalents, end of period.................. $ 37,106 $ 50,593
========= ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-19
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 1994

(TABULAR DOLLAR AMOUNTS IN THOUSANDS OF US DOLLARS)

1. BASIS OF PREPARATION

The unaudited balance sheet of Clark Refining & Marketing, Inc. (the
"Company" or "Clark"), a Delaware corporation, as of June 30, 1994, and the
related statements of earnings and cash flows for the six month periods ended
June 30, 1993 and 1994, 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 results of this interim
period are not necessarily indicative of results for the entire year.

The financial statements have been prepared in accordance with the
instructions to Form 10-Q. Accordingly, certain information and disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. These unaudited
statements should be read in conjunction with the audited financial statements
and notes thereto for the year ended December 31, 1993.

2. SHORT-TERM INVESTMENTS

On January 1, 1994, Clark adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("SFAS 115"). This standard requires the classification of short-term
investments into three categories and many debt securities to be shown at fair
value on the balance sheet. Clark's short-term investments are all considered
"Available-for-Sale" and are carried at fair value with the resulting
unrealized gain or loss shown as a component of retained earnings.

Short-term investments consisted of the following:

<TABLE>
<CAPTION>
JUNE 30, 1994
-------------------------------
AMORTIZED UNREALIZED AGGREGATE
MAJOR SECURITY TYPE COST LOSS FAIR VALUE
- - - ------------------- --------- ---------- ----------
<S> <C> <C> <C>
U.S. Debt Securities............................ $ 35,518 $(1,682) $ 33,836
Variable Rate Government Funds.................. 59,190 (2,630) 56,560
Corporate Debt Securities....................... 31,057 (385) 30,672
Mortgage Backed Debt Securities................. 9,445 (303) 9,142
-------- ------- --------
$135,210 $(5,000) $130,210
======== ======= ========
</TABLE>

The contractual maturities of the short-term investments at June 30, 1994
were:

<TABLE>
<CAPTION>
AGGREGATE
AMORTIZED FAIR
COST VALUE
--------- ---------
<S> <C> <C>
Due in one year or less*.............................. $112,317 $108,024
Due after one year through five years................. 10,689 10,441
Due after five years.................................. 12,204 11,745
-------- --------
$135,210 $130,210
======== ========
</TABLE>
- - - --------
*Includes the Variable Rate Government Funds for which the underlying
investments may have contractual maturities greater than one year.

F-20
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Although some of the contractual maturities of these short-term investments
are over one year, management's intent is to use the funds for current
operations and not hold the investments to maturity.

For the six month period ended June 30, 1993, the proceeds from the sale of
Available-for-Sale securities was $96.9 million with immaterial realized gains.
For the same period in 1994, the proceeds from sales of Available-for-Sale
securities was $48.3 million with $0.8 million of realized losses. Realized
gains and losses are computed using the specific identification method.

The change in the unrealized holding gains or losses on Available-for-Sale
securities for the six month period ended June 30, 1994, was $5.0 million ($3.2
million after taxes). This net unrealized loss is included as a component of
retained earnings.

3. INVENTORIES

The carrying value of inventories consisted of the following:

<TABLE>
<CAPTION>
JUNE 30,
1994
--------
<S> <C>
Crude oil....................................................... $ 44,436
Refined and blendstocks......................................... 78,891
Convenience products............................................ 12,849
Warehouse stock and other....................................... 5,527
--------
$141,703
========
</TABLE>

The market value of these inventories at June 30, 1994, was approximately
$8.4 million above the carrying value.

After the end of the second quarter, Clark increased its line of credit, used
primarily for the issuance of letters of credit for securing purchases of crude
oil, from $100 million to $120 million principally due to rising crude oil
costs and a change in crude oil supply.

4. OTHER ASSETS

Amortization of deferred financing costs for the six month periods ended June
30, 1993 and 1994, was $0.6 million and $0.6 million, respectively, and is
included in "Interest and financing costs, net".

Amortization of turnaround costs for the six month periods ended June 30,
1993 and 1994, was $5.5 million and $5.7 million, respectively.

F-21
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. INTEREST AND FINANCING COSTS, NET

Interest and financing costs, net, consisted of the following:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED JUNE 30,
----------------
1993 1994
------- -------
<S> <C> <C>
Interest expense........................................ $20,195 $20,348
Financing costs......................................... 771 673
Interest income......................................... (5,094) (3,350)
------- -------
15,872 17,671
Capitalized interest.................................... (2,765) (705)
------- -------
$13,107 $16,966
======= =======
</TABLE>

Accrued interest payable at June 30, 1994, of $6.9 million is included in
"Accrued expenses and other".

6. CONTINGENCIES

Forty-one civil suits by residents of Hartford, Illinois have been filed
against Clark in Madison County Illinois, alleging damage from groundwater
contamination. The relief sought in each of these cases is an unspecified
dollar amount. The litigation proceedings are in the initial stages. Discovery,
which could be lengthy and complex, is still in the early stages. Clark moved
to dismiss thirty-four cases filed in December 1991 on the ground that Clark is
not liable for alleged activities of Old Clark. On September 4, 1992, the trial
court granted Clark's motions to dismiss. The plaintiffs were given leave to
re-file their complaints but based only on alleged activities of Clark
occurring since November 8, 1988, the date on which the bankruptcy court with
jurisdiction over Old Clark's bankruptcy proceedings issued its "free and
clear" order. In November 1992, the plaintiffs filed thirty-three amended
complaints. In addition, one new complaint involving nine plaintiffs was filed.
It is too early to predict whether any of these cases will go to trial on the
merits and if so, what the risk of exposure to Clark would be at trial. It is
also not possible to determine whether or to what extent Clark will have any
liability to other individuals arising from the groundwater contamination.

7. SUBSEQUENT EVENTS

On August 18, 1994, Clark entered into an asset purchase agreement (the
"Purchase Agreement") for the purchase of Chevron's Port Arthur, Texas refinery
and certain related terminals, pipelines, and other assets for $74 million,
plus approximately $140 million for inventory and spare parts (depending upon
prevailing market prices for inventory at closing). The Purchase Agreement also
provides for contingent payments to Chevron of up to $125 million over a five
year period from the closing date of the acquisition in the event refining
industry margin indicators exceed certain escalating levels. Chevron will
retain primary responsibility for required remediation of most pre-closing
environmental contamination with Clark retaining responsibility for the soil
under the active operating units.

The closing is subject to the completion of certain environmental assessments
and agreements with certain collective bargaining units. A late 1994 closing is
expected for the transaction.

F-22
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

F-23
<PAGE>

ANNEX A

FORM OF SUPPLEMENTAL INDENTURE

Additions have been double underscored.
Deletions have been
interlineated.

This SUPPLEMENTAL INDENTURE, dated as of , 1994, is entered into
among CLARK REFINING & MARKETING, INC. (FORMERLY CLARK OIL & REFINING
CORPORATION), a Delaware corporation (the "Company") and NATIONSBANK OF
VIRGINIA, N.A., a national banking association, as Trustee (the "Trustee").

WITNESSETH:

WHEREAS, the Company and the Trustee have entered into an indenture dated as
of [December 1, 1991] [September 15, 1992] (the "Indenture");

WHEREAS, the Company and the Trustee desire to supplement the Indenture as
provided in this Supplemental Indenture;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties hereto hereby agree as follows:

Section 1. Amendment to the Indenture

(a) The definition of "Credit Agreement" in Section 101 of the Indenture is
hereby deleted in its entirety and replaced by the following:

"Credit Agreement" means the Credit Agreement, dated as of November 30,
1990, as amended, December , 1994 between the Company, the Banks listed
therein, Bankers Trust Company as issuing bank, and BT Commercial
Corporation, as a Bank (as defined therein), as Swingline Lender (as
defined therein), and as Agent (as defined therein), including the Overline
Line of Credit Agreement, dated as of November 30, 1990, between the
Company, BT Commercial Corporation, as Agent (as defined therein), and the
Banks (as defined therein) party thereto, and all related security
agreements, mortgages, deeds of trust, financing statements, lease
assignments, Guaranties and other agreements, instruments, documents and
written indicia of contractual obligations between the Company and BT
Commercial Corporation, as Agent (as defined therein), the Banks listed
therein, and Bank of America NT & SA as Agent (as defined therein), and all
related security agreements, mortgages, deeds of trust, financing
statements, lease assignments, guarantees and other agreements,
instruments, documents and written indicia of contractual obligations, and
any renewals, extensions, refinancings and refundings thereof as each such
document may be amended or supplemented from time to time.

(b) The definition of "Indebtedness" in Section 101 of the Indenture is
hereby supplemented so as to read as follows:

"Indebtedness" with respect to any Person, means any indebtedness,
including the indebtedness evidenced by the Indentures, whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balanced deferred and
unpaid of the purchase price of any property (including pursuant to Capital
Leases), except any such balance that constitutes a trade payable in the
ordinary course of business that is not overdue by more than 90 days from
the invoice date or is being contested in good faith, if and to the extent
any of the foregoing indebtedness would appear as a liability
- - - --------
* With respect to the 10 1/2% Senior Notes due 2001.
**With respect to the 9 1/2% Senior Notes due 2004.
<PAGE>

upon a balance sheet of such Person prepared on a consolidated basis in
accordance with generally accepted accounting principles, and shall also
include, to the extent not otherwise included, the Guaranty of items which
would be included within this definition; provided, that the payments to be
made by the Company pursuant to Section 3.1(d) of the Asset Sale Agreement,
dated as of August 16, 1994, between the Company and Chevron U.S.A. Inc.
shall not be deemed to be "Indebtedness" within the foregoing definition.

(c) The definition of "Permitted Indebtedness" in Section 101 of the
Indenture is hereby deleted in its entirety and replaced by the following:

"Permitted Indebtedness" means Indebtedness incurred by the Company or its
Subsidiaries (i) to refinance then existing Indebtedness of such entity but
only to the extent of the amount of outstanding Indebtedness of such entity
being refinanced; (ii) arising from time to time under the Credit Agreement
or any refinancings, renewals, extensions, refundings or replacements
thereof or extensions of credit to finance working capital requirements in
an amount not to exceed the maximum amount available for borrowings and
letters of credit under the Credit Agreement (as of the date hereof) plus
$70 million the greater of (x) $450 million less the aggregate amount of
all Net Available Proceeds of all Asset Dispositions that have been applied
since the Issue Date to permanently reduce the outstanding amount of such
Indebtedness pursuant to the covenant described above under the caption
"Limitations on Certain Sales of Capital Stock of Subsidiaries of the
Company and Certain Assets", and (y) an amount equal to the sum of (1) 95%
of the accounts receivable owned by the Company and its Subsidiaries
(excluding any accounts receivable from Subsidiaries and any accounts
receivable that are more than 90 days past due) as of such date, plus (2)
90% of the inventory owned by the Company and its Subsidiaries as of such
date, plus (3) 100% of the cash and cash equivalents owned by the Company
and its Subsidiaries as of such date that are as of such date held in one
or more separate accounts under the direct control of the agent bank under
the Credit Agreement and that are as of such date pledged to secure working
capital borrowings under the Credit Agreement, minus (4) the principal
amount of borrowings outstanding as of such date under the Credit Agreement
to the extent that the amount of such borrowings exceeds the sum of clauses
(1) and (2) above, all of the foregoing calculated on a consolidated basis
in accordance with generally accepted accounting principles; (iii)
outstanding on the date of the Indenture; (iv) evidenced by trade letters
of credit incurred in the ordinary course of business not to exceed $5
million in the aggregate at any time; (v) between the Company and any of
its 80% or more owned Subsidiaries; (vi) which is Junior Subordinated Debt;
(vii) arising out of Sale and Leaseback Transactions or Capitalized Lease
Obligations relating to computers and other office equipment and elements,
catalysts or other chemicals used in connection with the refining of
petroleum or petroleum by-products; and (viii) Indebtedness not to exceed
$75 million in connection with capital projects qualifying under Section
142(a) (or any successor provision) of the Internal Revenue Code of 1984,
as amended; and (ix) in addition to Indebtedness permitted by clauses (i)
through (vii) (viii) above, Indebtedness not to exceed at any time the
greater of (a) $25 million and (b) the dollar amount represented by the
product of 1.25 million and the settlement price on the New York Mercantile
Exchange of the spot month for a barrel of West Texas Intermediate crude
oil (or, if such price cannot be obtained, the applicable price shown in
the then most recently published Platt's Oilgram Price Report or, if such
publication is not published at any time, or if it does not include such
prices, then in any comparable industry publication including such prices),
which amount shall be calculated by the Company as of the last day of each
calendar quarter using the price per barrel as determined under (b) above
as of such date and shall be in effect for the next succeeding calendar
quarter.

(d) Clause (iii) of Section 801(6) is hereby deleted in its entirety and
replaced by the following:

(iii) immediately prior to consummation of such transaction, (x) existing
Indebtedness of the other party in the transaction plus (y) existing
Indebtedness of the Company that constitutes Permitted Indebtedness
pursuant to clause (ii) of the definition of Permitted Indebtedness is less
than $220 million the greater of (x) $450 million less the aggregate amount
of all Net Available Proceeds of all Asset Dispositions that have been
applied since the Issue Date to permanently reduce the outstanding amount
of such

A-2
<PAGE>

Indebtedness pursuant to the covenant described above under the caption
"Limitations on Certain Sales of Capital Stock of Subsidiaries of the
Company and Certain Assets," and (y) an amount equal to the sum of (1) 95%
of the accounts receivable owned by the Company and its Subsidiaries
(excluding any accounts receivable from Subsidiaries and any accounts
receivable that are more than 90 days past due) as of such date, plus (2)
90% of the inventory owned by the Company and its Subsidiaries as of such
date, plus (3) 100% of the cash and cash equivalents owned by the Company
and its Subsidiaries as of such date that are as of such date held in one
or more separate accounts under the direct control of the agent bank under
the Credit Agreement and that are as of such date pledged to secure working
capital borrowings under the Credit Agreement, minus (4) the principal
amount of borrowings outstanding as of such date under the Credit Agreement
to the extent that the amount of such borrowings exceeds the sum of clauses
(1) and (2) above, all of the foregoing calculated on a consolidated basis
in accordance with generally accepted accounting principles; and

(e) Clause (iii) of Section 1018(a) is hereby deleted in its entirety and
replaced by the following:

(iii) 100% of the Net Available Proceeds, less any amounts invested within
one year of such disposition in assets related to the business of the
Company from such disposition (including from the sale of any marketable
cash equivalents received therein) are applied by the Company (or the
Subsidiary, as the case may be) to either (A) within 90 days of such
disposition, repayment (in whole or in part) of secured Indebtedness then
outstanding under any agreements or instruments; or (B) purchases of
Outstanding Securities pursuant to an Offer at a purchase price equal to
the Redemption Price in effect at the time of such Offer.

Section 2. Effectiveness; Termination.

(a) This Supplemental Indenture shall become effective and binding upon the
Company, the Trustee and the Holders of the Securities upon the occurrence of
the following events:

(i) receipt by the Company and the Trustee of the consent of the Holders
of not less than a majority in principal amount of the Outstanding
Securities;

(ii) the execution and delivery hereof by the Company and the Trustee;

(iii) the execution and delivery by Clark USA, Inc. ("Parent") and
Bankers Trust Company of a supplemental indenture to the indenture, dated
May 15, 1993 (the "Parent Indenture"), governing the Parent's Senior
Secured Zero Coupon Notes due 2000, Series A providing for amendments to
the Parent Indenture substantially similar to the amendments provided
herein;

(iv) the consummation by the Company of the acquisition of Chevron U.S.A.
Inc.'s Port Arthur, Texas refinery pursuant to the Asset Sale Agreement,
dated as of August 16, 1994, between the Company and Chevron U.S.A Inc.;

(iv) the consummation of (i) an initial public offering by the Parent of
at least shares of its common stock, (ii) the public offering by
the Parent of at least million aggregate principal amount of its
Senior Subordinated Notes due 2004 and (iii) the subsequent contribution by
the Parent to the capital of the Company of an amount not less than
; and

(v) subject to waiver by the Company, the absence of any law or
regulation which would, and the absence of any injunction or action or
other proceeding (pending or threatened) which (in the case of any action
or proceeding, if adversely determined) would, make unlawful or invalid or
enjoin the implementation of the amendments to the Indenture as contained
herein, the entering into of this Supplemental Indenture or the making of
payments to registered holders of Securities in exchange for their consents
to this Supplemental Indenture or question the legality or validity thereof
or otherwise adversely affect the transactions referred to in clauses (iii)
and (v) above.

Section 3. Reference to and Effect on the Indenture

(a) On and after the date of this Supplemental Indenture, each reference in
the Indenture to "this Indenture," "hereunder," "hereof," or "herein" shall
mean and be a reference to the Indenture as supplemented by this Supplemental
Indenture.

A-3
<PAGE>

(b) Except as specifically amended above, the Indenture shall remain in full
force and effect and is hereby ratified and confirmed.

Section 4. Governing Law

This Supplemental Indenture shall be construed and enforced in accordance
with the laws of the State of New York.

Section 5. Defined Terms.

Capitalized terms used herein and not defined shall have the respective
meanings given such terms in the Indenture.

Section 6. Counterparts and Method of Execution

This Supplemental Indenture may be executed in several counterparts, all of
which together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.

Section 7. Titles

Section titles are for descriptive purposes only and shall not control or
alter the meaning of this Supplemental Indenture as set forth in the text.

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be executed as of the day and year first above written.

CLARK REFINING & MARKETING, INC.
(formerly Clark Oil & Refining
Corporation)

By:__________________________________
Its:

NATIONSBANK OF VIRGINIA, N.A.,
Trustee

By:__________________________________
Its:

A-4
<PAGE>

CLARK REFINING & MARKETING, INC.
(Formerly Clark Oil & Refining Corporation)

Solicitation of Consents to Amendment of
the Indentures Governing its
9 1/2% Senior Notes due 2004
and
10 1/2% Senior Notes due 2001

Deliveries of Consents should be made to the Trustee at the address or
facsimile number set forth below (facsimile transmissions should be confirmed
by physical delivery):

NATIONSBANK OF VIRGINIA, N.A., TRUSTEE

By Mail: By Facsimile: By Hand:

NationsBank of Virginia, (804) 344-1346 NationsBank of Virginia,
N.A. N.A.

600 East Main Street Confirmation Only c/o Midwest Clearing
17th Floor Corp.

Richmond, Virginia 23219 (804) 344-1315 40 Broad Street
Attention: Bob 22nd Floor
Richardson New York, New York 10004

Holders of Notes who require information about procedures for consenting, who
require additional copies of this Consent Solicitation Statement or the forms
of consent or who have questions concerning the terms of the Solicitation
should contact the Information Agent at the address and telephone number set
forth below:

Morrow & Co., Inc.
909 Third Avenue
New York, NY
1-800-662-5200

A-5
<PAGE>

CLARK REFINING & MARKETING, INC.
(Formerly Clark Oil & Refining Corporation)

SOLICITATION OF CONSENTS TO AMENDMENT OF
THE INDENTURE GOVERNING ITS
9 1/2% SENIOR NOTES DUE 2004

The undersigned is a Registered Holder referred to below (as defined in the
Consent Solicitation Statement) of 9 1/2% Senior Notes due 2004 (the "Notes")
of Clark Refining & Marketing, Inc. (the "Company") issued under an indenture
dated as of September 15, 1992 (the "Indenture") between the Company and
NationsBank of Virginia, N.A. (the "Trustee").

As a Registered Holder of such Notes, the undersigned hereby:

CONSENTS [_]DOES NOT CONSENT [_]

with respect to the proposed amendments (the "Proposed Amendments") to be made
to the Indenture, which Proposed Amendments are described in the Company's
Consent Solicitation Statement dated [MONTH] [DAY], 1994 (the "Consent
Solicitation Statement"). If no election is specified, any otherwise properly
completed and signed consent form will be deemed a consent to the Proposed
Amendments. By execution hereof, the undersigned acknowledges receipt of the
Consent Solicitation Statement.

Upon receipt by the Company of consents to the Proposed Amendments from the
Registered Holders of at least a majority of the principal amount of the
outstanding Notes not owned by the Company or any of its affiliates, and
subsequent presentation of such consents to the Trustee, the Company and the
Trustee will execute an amendment to the Indenture (the "Supplemental
Indenture") evidencing the Proposed Amendments. The Proposed Amendments will
not become operative, however, until the time described in the Consent
Solicitation Statement.

Unless otherwise specified by the undersigned, this consent form relates to
all Notes of which the undersigned is the Registered Holder. If this form
relates to less than all of the Notes to which the undersigned is a Registered
Holder, the specific Notes to which this consent relates shall be identified on
the list attached hereto as Exhibit A.

A consent hereby given, if effective, will be binding upon the Registered
Holder of the Notes who gives such consent and upon any subsequent transferee
or transferees of such Notes, subject only to revocation by the delivery of a
written notice of revocation by the Registered Holder, executed and filed in
the manner described in the Consent Solicitation Statement.

This fully completed and executed consent form should be hand delivered, sent
by overnight courier, or telecopied, to the Trustee, as follows:

If delivered by mail: If delivered by If delivered by Hand:
Facsimile:

NationsBank of Georgia, NationsBank of
N.A. 600 East Main (804) 344-1346 Virginia, N.A.
Street 17th Floor
Richmond, Virginia
23219 Attention: Bob
Richardson

c/o Midwest Clearing
Confirmation Only Corp. 40 Broad Street
22nd Floor New York, NY
10004

(804) 344-1315
<PAGE>

Consents must be received by the Trustee, as specified above, before 5:00
p.m., New York City Time, on [MONTH] [DAY], 1994, unless such date is extended
by the Company.

Date:

SIGNATURE(S) GUARANTEED BY:

- - - ------------------------------------ ------------------------------------
Signature(s) of Registered Name of Institution
Holder(s)

- - - ------------------------------------ ------------------------------------
Signature(s) of Registered Authorized Signature
Holder(s)

- - - ------------------------------------ ------------------------------------
Signature(s) of Registered Title
Holder(s)

(PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR ON THE RECORDS OF THE
TRUSTEE. WHEN SIGNING AS AN ATTORNEY, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR
FULL TITLE AS SUCH)

IMPORTANT--READ CAREFULLY

This Consent Form must be executed by the Registered Holder(s) in exactly the
same manner as the name(s) appear(s) on the Notes. Joint owners must all sign.
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, such person should so indicate when signing and should
submit to the Information Agent appropriate evidence (satisfactory to the
Company) of such person's authority so to act. Signatures need not be
guaranteed if the person executing the Consent Form is a bank, broker, dealer,
credit union, savings association or other entity that is a member in good
standing of a Medallion Program approved by the Securities Transfer
Association, Inc. (each being hereinafter referred to as an "Eligible
Institution") or if the person executing the Consent Form is the Registered
Holder of the Notes. In all other cases, all signatures must be guaranteed by
an Eligible Institution. If Notes owned by a Registered Holder are registered
in different names, separate Consent Forms must be executed covering each form
of registration.

IMPORTANT TAX INFORMATION

Under the federal tax law, payments that are made to a Registered Holder with
respect to his consent may be subject to backup withholding. A Registered
Holder whose consent is accepted is required by law to provide the [Company]
with his correct taxpayer identification number on Substitute Form W-9 below in
order to avoid backup withholding. If such Registered Holder is an individual,
the taxpayer identification number is his social security number. In addition,
if the [Company] is not provided with the correct taxpayer identification
number, the Registered Holder may be subject to a $50 penalty imposed by the
Internal Revenue Service.

Exempt Registered Holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Registered Holder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.

If backup withholding applies, the [Company] is required to withhold 31% of
any such payments made to the Registered Holder. Backup withholding is not an
additional tax. Rather, the tax withheld pursuant to the backup withholding
rule will be available as a credit against such person's overall tax liability.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service.
<PAGE>

WHAT NUMBER TO GIVE THE [COMPANY]

The Registered Holder is required to give the [Company] the taxpayer
identification number of the Registered Holder of the Notes. If the Notes are
registered in more than one name or are not registered in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 to determine which number to
report.

PAYER'S NAME: NATIONSBANK OF GEORGIA, N.A.

SUBSTITUTE Business name:

FORM W-9
----------------------------------------------------------
Please check appropriate box:

PART 1--PLEASE PROVIDE YOUR TIN --------------------
IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND DATING BELOW.
[_] Individual/Sole
Proprietor[_] Corporation[_] Partnership[_] Other ______
DEPARTMENT OF THE TREASURY Social Security
Number

INTERNAL REVENUE SERVICE OR _________________

Employer
Identification
Number
----------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN")

----------------------------------------------------------
PART 2--Certification--Under
Penalties of Perjury, I certify
that:
(1) The number shown on this form
is my correct Taxpayer
Identification Number (or I
am waiting for a number to be
issued to me) and

PART 3--
Awaiting TIN
(2) I am not subject to backup [_]
withholding either because
(a) I am exempt from backup
withholding, or (b) I have
not been notified by the
Internal Revenue Service
("IRS") that I am subject to
backup withholding as a
result of failure to report
all interests or dividends,
or (c) the IRS has notified
me that I am no longer
subject to backup
withholding.

----------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2)
in Part 2 above if you have been notified by the IRS
that you are subject to backup withholding because of
underreporting 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 stating that
you are no longer subject to backup withholding, do not
cross out item (2).

SIGNATURE ____________________ Date ____________ , 1994

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 PERCENT OF ANY CONSENT PAYMENTS MADE TO YOU. 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 SUBSTITUTE FORM W-9.

- - - ------------------------------------------------------------------------
CERTIFICATE OF PERSON (AWAITING) TAXPAYER IDENTIFICATION NUMBER
I certify that under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) 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 (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31 percent of all reportable
payments made to me thereafter will be withheld until I provide a number.

--------------------------------- ___________________________, 1994
Signature Date

<PAGE>

EXHIBIT A

DESCRIPTION OF NOTES

- - - --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) OF CEDE & CO. CERTIFICATE(S) AS TO WHICH CONSENT IS
PARTICIPANT(S) GIVEN (ATTACH ADDITIONAL LIST, IF
NECESSARY)
- - - --------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES
REPRESENTED
BY
CERTIFICATE(S)
OR HELD IN
ACCOUNT(S)

PRINCIPAL
CERTIFICATE AMOUNT OF
OR CEDE & NOTES AS TO
CO. ACCOUNT WHICH
NUMBER(S) CONSENT IS
GIVEN*
-----------------------------------------

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

- - - --------------------------------------------------------------------------------
*If this consent form relates to less than the aggregate principal amount of
Notes registered in the name of the Registered Holder(s), or held by Cede &
Co. for the account of the Participant(s), named above, list the certificate
or account numbers and principal amounts of Notes to which this consent form
relates. Otherwise, this consent form will be deemed to relate to the
aggregate principal amount of Notes registered in the name of, or held by
Cede & Co. for the account of, such Registered Holder(s) or Participant(s).