CLARK REFINING & MARKETING INC, S-4/A, 1998-10-16

CLARK REFINING & MARKETING INC
S-4/A, 1998-10-16
PETROLEUM REFINING

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1998

REGISTRATION NO. 333-64387
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

DELAWARE 2911 43-1491230
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

8182 MARYLAND AVENUE
ST. LOUIS, MISSOURI 63105
(314) 854-9696
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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KATHERINE D. KNOCKE, ESQ.
CLARK REFINING & MARKETING, INC.
8182 MARYLAND AVENUE
ST. LOUIS, MISSOURI 63105
(314) 854-9696
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:
WILSON S. NEELY, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]

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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE(/1/)
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<S> <C> <C> <C> <C>
8 5/8% New Senior Notes
due 2008............... $110,000,000 100% $110,000,000 $32,450.00
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</TABLE>
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(1) Previously paid.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

LOGO

CLARK REFINING & MARKETING, INC.
OFFER TO EXCHANGE ITS
8 5/8% NEW SENIOR NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
8 5/8% SENIOR NOTES DUE 2008

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER
19, 1998, UNLESS EXTENDED.

Clark Refining & Marketing, Inc., a Delaware corporation ("Clark" or the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal") to exchange (the "Exchange Offer")
$1,000 principal amount of its 8 5/8% New Senior Notes due 2008 (the "New
Notes") which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to the Registration Statement of
which this Prospectus is a part, for each $1,000 principal amount at maturity
of its outstanding 8 5/8% Senior Notes due 2008 (the "Old Notes"). The form
and terms of the New Notes are identical in all material respects to the form
and terms of the Old Notes except that the New Notes have been registered
under the Securities Act and therefore will not bear legends restricting the
transfer thereof. The New Notes will evidence the same debt as the Old Notes
and will be entitled to the benefits under the indenture governing the Old
Notes (the "Indenture"). The offering of the Old Notes is referred to herein
as the "Debt Offering." The Old Notes and the New Notes are collectively
referred to herein as the "Notes." See "The Exchange Offer" and "Description
of the New Notes."

Clark will accept for exchange any and all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on November 19, 1998,
unless extended (the "Expiration Date"). Tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
The Exchange Offer is subject to certain customary conditions. See "The
Exchange Offer." Old Notes may be tendered only in integral multiples of
$1,000.

Interest on the New Notes will be payable on February 15 and August 15 of
each year, commencing February 15, 1999. The New Notes will mature on August
15, 2008. The New Notes will be redeemable at the option of the Company, in
whole or in part, at any time on and after August 15, 2003 at the redemption
prices set forth herein, plus accrued and unpaid interest, if any, to the date
of redemption. In addition, up to 35% in aggregate principal amount of the New
Notes originally issued are redeemable at the option of the Company out of the
net cash proceeds of one or more Equity Offerings (as defined herein) at any
time prior to August 15, 2002 at a redemption price equal to 108.625% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
redemption date.

Upon the occurrence of a Change of Control that results in a Rating Decline
(each as defined herein), the Company will be required to offer to purchase
all of the New Notes at 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase.

The New Notes will rank pari passu with all unsubordinated indebtedness of
the Company, including indebtedness under the Credit Agreement, the 8 3/8%
Notes, the 9 1/2% Notes and the Amended and Restated Term Loan Agreement (each
as defined herein). The obligations of the Company under the Credit Agreement,
however, are secured by a lien on substantially all of the Company's cash and
cash equivalents, receivables, crude oil, refined product and other
inventories and trademarks and other intellectual property and, accordingly,
such indebtedness will effectively rank senior in right of payment to the New
Notes to the extent of such assets.
(Continued)

SEE "RISK FACTORS" ON PAGES 18-25 FOR A DISCUSSION OF CERTAIN RISK FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS OF THE NOTES.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION AND OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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The date of this Prospectus is October 19, 1998.
<PAGE>

(Continuation of cover page)

Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in several no-action letters to third
parties, the Company believes that the New Notes issued in exchange for Old
Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by any Holders (as defined herein) thereof (other than
(i) a broker-dealer who purchases such New Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) any such Holder that is an "affiliate" of the Company,
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act; provided that the Holder is acquiring such New Notes in its ordinary
course of business and is not participating, and has no arrangement or
understanding with any person to participate, in any distribution of the New
Notes. Persons wishing to exchange Old Notes in the Exchange Offer must
represent to the Company that such conditions have been met. However, any
Holder who is an "affiliate" of the Company or who tenders in the Exchange
Offer with the intention to participate or for the purpose of participating,
in a distribution of the New Notes cannot rely on the interpretation by the
staff of the Commission set forth in the above-referenced no-action letters,
and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the Old Notes.
See "Risk Factors--Consequences to Non-Tendering Holders of Old Notes." In
addition, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus, meeting the requirements of the Securities Act, in connection with
any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities and not acquired directly from the Company. The Company has agreed
that for a period of up to 90 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution." EXCEPT AS DESCRIBED IN THIS
PARAGRAPH, THIS PROSPECTUS MAY NOT BE USED FOR AN OFFER TO RESELL, RESALE OR
OTHER TRANSFER OF NEW NOTES.
<PAGE>

No person has been authorized in connection with the offering made hereby to
give any information or to make any representations other than those contained
in this Prospectus and, if given or made, such information or representation
must not be relied upon as having been authorized. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
securities other than the securities to which it relates or an offer to sell
or the solicitation of an offer to buy such securities in any circumstances in
which such offer or solicitation is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any
date subsequent to the date hereof.

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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information..................................................... 4
Incorporation of Certain Documents by Reference........................... 5
Prospectus Summary........................................................ 6
Risk Factors.............................................................. 18
Use of Proceeds........................................................... 25
The Lima Acquisition...................................................... 26
The Exchange Offer........................................................ 34
Capitalization............................................................ 42
Selected Consolidated Financial and Other Data............................ 43
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 45
Quarterly Financial Information........................................... 57
Business.................................................................. 58
Management................................................................ 78
Security Ownership of Certain Owners and Management....................... 85
Certain Transactions...................................................... 85
Description of the New Notes.............................................. 87
Book Entry; Delivery and Form............................................. 112
Certain United States Federal Income Tax Consequences of the Exchange..... 115
Certain United States Federal Income Tax Considerations for Non-United
States Holders........................................................... 115
Description of Certain Debt Instruments................................... 118
Plan of Distribution...................................................... 123
Legal Matters............................................................. 123
Experts................................................................... 124
Index to Financial Statements and Schedules............................... F-1
Opinion and Summary Report of Turner, Mason & Company..................... A-1
</TABLE>

3
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AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith has filed reports and other information with the Commission. Such
reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site (http://www.sec.gov) that contains reports and
information statements and other information regarding registrants, such as
the Company, that file electronically with the Commission.

The Company has agreed that, if at any time while the New Notes are
"restricted securities" within the meaning of the Securities Act, the Company
is not subject to the informational requirements of the Exchange Act, the
Company will furnish to holders of the New Notes and to prospective purchasers
designated by such holders the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act to permit compliance with Rule
144A in connection with resales of the New Notes.

Each report attached as an Appendix is current only as of the date of the
report, and the delivery of such reports as Appendices hereto shall not create
any implication that there has been no change in the affairs of the Company
since the date thereof or that the information contained therein is current as
of any time subsequent to its date. Any statement contained herein shall be
deemed to be modified or suspended for the purpose of this Prospectus to the
extent that a subsequent statement contained herein modifies or supersedes
that statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. In addition, any statement contained in any such report attached
as an Appendix shall be deemed to be superseded for the purpose of this
Prospectus to the extent that a discussion contained herein relating to the
same subject matter omits such statement. Any such statement omitted shall not
be deemed to constitute a part of this Prospectus.

FORWARD-LOOKING STATEMENTS

THE STATEMENTS IN THIS PROSPECTUS THAT ARE NOT HISTORICAL INFORMATION ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. WORDS SUCH
AS "EXPECTS," "INTENDS," "PLANS," "PROJECTS," "BELIEVES," "ESTIMATES" AND
SIMILAR EXPRESSIONS ARE USED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. ANY
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY VARY
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS
FACTORS.

AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY ARE
CHANGES IN INDUSTRY-WIDE REFINING MARGINS, CHANGES IN CRUDE OIL AND OTHER RAW
MATERIAL COSTS, AND WORLD AND REGIONAL EVENTS THAT COULD SIGNIFICANTLY
INCREASE VOLATILITY IN THE MARKETPLACE. THE COMPANY'S CRUDE OIL SUPPLY COULD
BE AFFECTED BY FACTORS BEYOND ITS CONTROL, SUCH AS EMBARGOES, THE CONTINUED
DISCOVERY AND PRODUCTION OF LIGHT SWEET CRUDE OIL, OR MILITARY CONFLICTS
BETWEEN (OR INTERNAL INSTABILITY IN) ONE OR MORE OIL-PRODUCING COUNTRIES. THE
COMPANY'S BUSINESS IS ALSO AFFECTED BY THE CONTINUED AVAILABILITY OF DEBT AND
EQUITY FINANCING, CHANGES IN LABOR RELATIONS, GENERAL ECONOMIC CONDITIONS
(INCLUDING RECESSIONARY TRENDS, INFLATION AND INTEREST RATES), MARKET SUPPLY
AND DEMAND FOR THE COMPANY'S PRODUCTS, THE RELIABILITY AND EFFICIENCY OF THE
COMPANY'S OPERATING FACILITIES, THE LEVEL OF OPERATING EXPENSES AND HAZARDS
COMMON TO OPERATING FACILITIES (INCLUDING EQUIPMENT MALFUNCTIONS, PLANT

4
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CONSTRUCTION/REPAIR DELAYS, EXPLOSIONS, FIRES, OIL SPILLS AND SEVERE WEATHER
EFFECTS), ACTIONS TAKEN BY COMPETITORS (INCLUDING BOTH PRICING AND EXPANSION
AND RETIREMENT OF REFINERY CAPACITY IN RESPONSE TO MARKET CONDITIONS), AND
CIVIL, CRIMINAL, REGULATORY OR ADMINISTRATIVE ACTIONS, CLAIMS OR PROCEEDINGS
(INCLUDING DOMESTIC AND INTERNATIONAL POLITICAL, LEGISLATIVE, REGULATORY AND
LEGAL ACTIONS AND REGULATIONS DEALING WITH PROTECTION OF THE ENVIRONMENT,
INCLUDING GASOLINE COMPOSITION AND CHARACTERISTICS). UNPREDICTABLE OR UNKNOWN
FACTORS NOT DISCUSSED HEREIN COULD ALSO HAVE MATERIAL ADVERSE EFFECTS ON
FORWARD-LOOKING STATEMENTS.

ALTHOUGH THE COMPANY BELIEVES THAT ITS EXPECTATIONS REGARDING FUTURE EVENTS
ARE BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCE THAT THESE ARE
ALL THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS OR THAT ITS EXPECTATIONS REGARDING FUTURE
DEVELOPMENTS WILL PROVE TO BE CORRECT.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Current Report on Form 8-K filed August 21, 1998 with the
Commission is incorporated by reference in this Prospectus.

All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the date the Exchange Offer is terminated are
incorporated by reference in this Prospectus.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and the Consolidated Financial Statements, and related
notes, appearing elsewhere in this Prospectus. Unless the context otherwise
requires, prior to the Lima Acquisition (as defined herein), the term "Company"
refers to the Company and its subsidiaries and after the Lima Acquisition, the
term refers to the Company and its subsidiaries including the Lima Refinery (as
defined herein). The Lima Refinery will be operated as a part of the refining
division of the Company. Unless otherwise specified herein, or the context
otherwise requires, all information relating to the Lima Refinery and its
historical operations is based on information supplied to the Company by the
seller, which has not been independently verified. Certain other information
relating to the Lima Refinery is based on the Company's best estimates of
operating results it would have achieved at the Lima Refinery had the Company
purchased the Lima Refinery on January 1, 1997 and operated it and the related
assets in the proposed manner from January 1, 1997 through December 31, 1997.
See "Risk Factors--Company Estimates Regarding the Lima Acquisition" elsewhere
herein.

THE COMPANY

The Company is one of the five largest independent refiners and marketers of
petroleum products in the United States ("U.S."), with one Texas Gulf Coast
refinery, one Ohio refinery and two Illinois refineries representing over
540,000 barrels per day ("bpd") of rated crude oil throughput capacity. The
Company is also currently one of the ten largest direct operators of gasoline
and convenience stores in the U.S. with 692 retail outlets in six Midwestern
states (as of June 30, 1998). The Company also distributes its products through
an additional 170 independently operated Clark branded outlets. The Company's
retail network has conducted operations under the Clark brand name for over 65
years. The Company also markets gasoline, diesel fuel and other petroleum
products on a wholesale unbranded basis.

The Company has focused its business objectives with an entrepreneurial
orientation towards cost reduction, productivity improvements, selective
capital investments and growth through acquisitions. Important initiatives
include the August 1998 acquisition of British Petroleum's Lima, Ohio refinery
and certain other assets; the acquisition of Chevron U.S.A. Inc.'s ("Chevron")
Port Arthur, Texas, refinery and certain other assets; retail acquisitions and
divestitures intended to strengthen the Company's position in core markets; the
marketing division's store re-imaging program; and the refining division's
productivity enhancement programs. The Company believes it is well positioned
to benefit from improving refining industry fundamentals and to take advantage
of growth opportunities in the marketing and refining sectors.

The Company is a wholly-owned subsidiary of Clark USA, Inc. ("Clark USA"),
which is controlled by Blackstone Capital Partners III Merchant Banking Fund
L.P. and its affiliates ("Blackstone") through a 78.5% voting interest (68.0%
economic interest). Clark USA's other principal shareholder is an affiliate of
Occidental Petroleum Corporation with a 19.9% voting interest (30.7% economic
interest).

REFINING

The Company operates four refineries and 17 product terminals located in its
Midwest and Gulf Coast market areas, two crude oil terminals, an LPG terminal
and has minority equity interests in certain crude oil pipelines. See "--
Pipeline Sales." The refining division is the largest business division of the
Company in terms of total assets and has significant operating leverage to
crack spreads and crude oil differentials, which provides the potential for the
Company to significantly increase its

6
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operating cash flow if these variables continue to improve. Recent improvements
in industry conditions and productivity gains contributed to the refining
division's record contribution to operating income of $167.9 million in fiscal
1997, excluding certain inventory and other related special items ("Operating
Contribution"). For additional cash flow disclosures, see "Selected
Consolidated Financial and Other Data."

The Port Arthur refinery is located in Port Arthur, Texas. The refinery has
the ability to process 100% sour crude oil, including up to 20% heavy sour
crude oil, and has coking capabilities. Heavy sour crude oil has historically
been available at substantially lower costs when compared to light sweet crude
oil such as West Texas Intermediate ("WTI"). The Port Arthur refinery has the
ability to produce jet fuel, 100% low-sulfur diesel fuel, 55% summer
reformulated gasoline ("RFG") and 75% winter RFG. 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
Midcontinent and Eastern U.S., as well as in export markets. Since acquiring
the Port Arthur refinery in early 1995, the Company has increased crude oil
throughput capability from approximately 178,000 bpd to its current 225,000 bpd
and has lowered operating expenses by approximately 50c per barrel. From the
date of the acquisition through June 30, 1998, the Port Arthur refinery has
generated an Operating Contribution of approximately $281.0 million. For
additional cash flow disclosures, see "Selected Consolidated Financial and
Other Data."

The Company's Illinois refineries, Blue Island (near Chicago, Illinois) and
Hartford (near St. Louis, Missouri), are supplied by common carrier crude oil
pipelines and are located on inland waterways with barge access. The refineries
have access to multiple sources of foreign and domestic crude oil and benefit
from crude oil input flexibility. Recent pipeline expansions, including the new
capacity of the Express Pipeline and expanded capacity on the Interprovincial
Pipeline, have served to increase the availability of lower cost crude oil to
the Company's Illinois refineries. 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 Company believes that the Midwest location of
these refineries has provided relatively high refining margins with less
volatility than comparable operations located in other regions of the U.S.,
principally because demand for refined product has exceeded production in the
region. This excess demand has been satisfied by imports from other regions,
providing Midwest refineries with a transportation advantage.

MARKETING

The Company markets gasoline and convenience products in six Midwestern
states through a retail network of Company-operated stores and also markets
refined petroleum products through a wholesale program to distributors, chain
retailers and industrial consumers. The Company's wholesale operation markets
petroleum products in both the Midwest and Gulf Coast regions of the U.S. The
Company's retail presence is focused in the Great Lakes region of the U.S.
where Company-operated stores market value-oriented gasoline products,
cigarettes and a mix of On The Go (R) (non-tobacco) convenience products. As
noted above, the Company operates a high proportion of Clark-branded retail
locations, which the Company believes enables it to respond more quickly and
uniformly to changing market conditions than many of its competitors, including
major oil companies that generally operate their stores through dealer or
jobber networks. Of the Company-operated retail locations, approximately 75%
are located on Company-owned real estate and 25% are on leased locations. In
1997, the Company sold approximately 1 billion gallons of fuel (representing
approximately 27% of current refining production) and over $280 million of
convenience products through approximately 200 million retail transactions and
sold an additional 1.1 billion gallons of fuel to wholesale customers including
Clark-branded retailers, major transportation companies and commercial
companies.

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Over the past several years, the Company has focused on building core markets
where it believes it can maintain or develop market shares of 7.5% to 15% in
order to leverage brand recognition, promotions and other marketing and
operating activities. In part due to this focus, the Company's core market
monthly gasoline sales per store averaged 115,800 gallons in 1997, which
exceeded the 1997 national industry average of 86,400 gallons, while monthly
sales per square foot averaged approximately $50 for convenience products
versus the industry average of approximately $26. The Company believes its low
operating costs rank it in the first quartile of its industry, providing it
with an important competitive advantage. Chicago, Central Illinois, Southern
Michigan, Cleveland, Milwaukee and Toledo currently are the Company's six
highest volume core metropolitan markets, with market shares of 5% to 15%. A
current trend toward consolidation in the marketing sector is viewed positively
by the Company due to growth and other opportunities that may develop.

The Company currently sells gasoline and diesel fuel on an unbranded basis to
approximately 400 distributors and chain retailers. The Company believes these
sales offer higher profitability than spot market alternatives. Wholesale sales
are also made to the transportation and commercial sector, including airlines,
railroads, barge lines and other industrial end-users. During 1997 and 1998,
the Company has continued to expand its new branded jobber program, increasing
to 170 the number of outlets owned and operated by branded jobbers as of June
30, 1998. The Company believes that a branded distributor program, new business
franchise marketing, and further focus on the transportation and commercial
sectors offer significant opportunities for incremental sales volumes and
earnings in the future.

THE LIMA ACQUISITION

On August 10, 1998, the Company completed the purchase from BP Exploration &
Oil Inc., The Standard Oil Company, BP Oil Pipeline Company and BP Chemicals
Inc. (collectively, "BP") of BP's Lima, Ohio refinery, Buckeye Road crude oil
terminal and Vine Street products terminal (collectively, the "Lima Refinery")
for a purchase price of $175 million plus approximately $40 million for the
hydrocarbon inventory at the Lima Refinery on August 10, 1998 (the "Lima
Acquisition"). In addition, an estimated $70 million will be paid for crude oil
in transit currently owned by BP, the payment for which will occur over the two
months following August 10, 1998 as the crude oil is delivered to the Lima
Refinery. Approximately $50 million of this amount will be funded through
proceeds from the sale of finished products over the same period. The Lima
Refinery was purchased with limited representations, warranties and closing
conditions. Subject to the terms and limitations set forth in the Agreement for
the Purchase and Sale of Lima Oil Refinery, dated July 1, 1998 (the "Purchase
Agreement"), BP has agreed to indemnify the Company for all environmental and
other liabilities and obligations arising from the ownership and operation of
the Lima Refinery prior to Closing. See "The Lima Acquisition--The Purchase
Agreement." The Company believes that the Lima Refinery:

. is a high quality, profitable refinery;
. is located in the Company's existing core retail and wholesale markets;
. provides the opportunity for improved results of operations and cash
flow;
. is being acquired at an attractive acquisition price based on recent
refinery transactions;
. enhances the Company's scale and competitive position; and
. improves the Company's and Clark USA's ability to access the public
equity markets.

8
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demand for refined products has exceeded supply in the region. The Lima
Refinery complements the Company's existing assets in the region as it is
located in existing core retail and wholesale markets where the Company already
has distribution capability.

The Lima Refinery, which is located on a 650 acre site, was designed to
process light sweet crude oil and has historically run a predominantly domestic
sweet crude oil slate. In addition to over five million barrels of on-site
storage and a rail products loading and unloading system, the Lima Refinery
also has access to a system of crude oil and product pipelines and terminals.
At approximately 170,000 bpd, the Lima Refinery is large enough to realize
economies of scale and other efficiencies. According to a 1994 industry study,
the Lima Refinery ranked in the 2nd quartile in terms of fixed costs and in the
1st quartile in operational availability, turnaround index and maintenance
index.

On August 10, 1998, the Company entered into an amended and restated term
loan agreement with certain lenders and Goldman Sachs Credit Partners L.P., as
agent, pursuant to which the Company borrowed an additional $115 million (the
"Amended and Restated Term Loan Agreement"). Borrowings under the Amended and
Restated Term Loan Agreement are senior unsecured obligations of the Company.
On August 10, 1998, the Company also sold $110 million aggregate principal
amount of its Old Notes to the Initial Purchasers (as defined herein), which
then placed the Old Notes with institutional investors. The Company used the
proceeds from the additional borrowings under the Amended and Restated Term
Loan Agreement and from the sale of the Old Notes, along with available cash,
to fund the Lima Acquisition and related costs.

Also in connection with the Lima Acquisition, the Company amended its
revolving credit facility, to increase its size to the lesser of $700 million
or the amount available under a borrowing base, as defined, representing
specified percentages of cash, investments, accounts receivable, inventory and
other working capital items.

BUSINESS STRATEGY

The Company's business strategy focuses on improving productivity,
selectively adding scale through the acquisition of low-cost, quality assets,
optimizing capital investments, promoting an entrepreneurial culture where
employee incentives are aligned with performance objectives, and maintaining
strong liquidity and financial flexibility.

. Improving Productivity. The Company continues to implement relatively
low-cost projects in its refining and marketing operations designed to
increase production, sales volumes and production yields and to improve
its sales mix while reducing input costs and operating expenses.
Examples of these types of initiatives include improvements at the Port
Arthur refinery, increased yields and crude oil throughput capability at
its Illinois refineries and improved monthly fuel volumes, convenience
product sales and margins in the retail division.

. Adding Scale Through Acquisitions. The Company intends to continue to
selectively add scale to its refining and marketing operations through
the acquisition of low-cost, quality assets. Since 1994, the Company has
almost quadrupled its refining capacity by acquiring the Lima and Port
Arthur refineries and has strengthened its Northern Illinois and
Southern Michigan presence by acquiring retail stores in these core
markets.

. Optimizing Capital Investment. The Company seeks to optimize capital
investments by linking discretionary capital investment to internally
generated cash flow and minimizing investment risk while maximizing
project returns. As an example, in response to weak 1995 and 1996
industry refining market conditions, discretionary capital expenditures
were scaled back significantly from historical levels. Due to improved
results in 1997 and a more robust refining industry environment, the
Company implemented several low risk, high payback discretionary capital
projects.

. Promoting Entrepreneurial Culture. The Company emphasizes an
entrepreneurial management approach which uses employee incentives to
enhance financial performance

9
<PAGE>

and safety. All of the Company's employees participate in its
performance management, profit sharing or other incentive plans, and the
Company has a stock incentive plan for certain key employees.

. Maintaining Strong Liquidity and Financial Flexibility. The Company
and Clark USA will continue to seek to improve their capital structure.
The Company has historically maintained significant liquidity and, as of
June 30, 1998, had a cash balance of approximately $190 million. The
equity recapitalization and the debt refinancing and repayment completed
in October and November 1997 were designed to strengthen the balance
sheet of Clark USA and the Company by extending debt maturities,
increasing prepayment flexibility and lowering the overall borrowing
cost. The sale of the Offered Pipelines (as defined below) added
approximately $74 million of cash to the Company's balance sheet. The
Company believes the Lima Acquisition provides the opportunity to
increase earnings and cash flows which, in turn, better positions the
Company to access the public equity markets and further improve its
capital structure.

PIPELINE SALES

In 1997, the Company determined that its minority interests in the Southcap
Pipe Line Company, Chicap Pipe Line Company, Wolverine Pipe Line Company and
Westshore Pipe Line Company (collectively, the "Offered Pipelines") were not
strategic since the Company's shipping rights are assured due to the
pipelines' operation as common carrier pipelines and the Company's historical
throughput. During July 1998, the Company sold its interest in the Westshore
Pipe Line Company and the Wolverine Pipe Line Company for net proceeds of
approximately $17 million, resulting in an after tax book gain of
approximately $12 million. In September 1998, the Company sold its interests
in the remaining two pipeline companies for net proceeds of approximately $57
million that resulted in an estimated after tax book gain of approximately $56
million. The Offered Pipelines contributed approximately $8 million of
dividends for the fiscal year ended December 31, 1997.

PORT ARTHUR UPGRADE PROJECT

In March 1998, the Company announced that it had entered into a long-term
crude oil supply agreement with P.M.I. Comercio Internacional, S.A. de C.V.,
an affiliate of Petroleos Mexicanos, the Mexican state oil company. The terms
of the contract provide the Company with the foundation necessary to continue
developing a project to upgrade the Port Arthur refinery to process primarily
lower-cost, heavy sour crude oil. Under the agreement, the Company expects to
purchase in the range of 150,000 to 210,000 bpd of heavy, sour Maya crude oil
for use at the Port Arthur refinery. The supply contract would also assist in
stabilizing earnings and cash flows from the project. The contract period
would run for a minimum of eight years from the completion of the project,
which could be as early as January 2001. The Port Arthur refinery has several
important characteristics that make it attractive for this type of
arrangement. Its Gulf Coast location provides excellent access to waterborne
Mexican crude oil. Additionally, the refinery already has some of the
infrastructure and processing capability necessary to support an upgraded
operation.

10
<PAGE>

sour crude oil up to an estimated 80% of its capacity. The implementation of
the project is subject to certain conditions, such as final determination of
economic and technical feasibility, arrangement of suitable financing, and
securing appropriate tax abatements. The Company currently expects to begin
construction of the project in the fourth quarter of 1998 and to have the
financing in place early in 1999.

THE AMENDED AND RESTATED TERM LOAN AGREEMENT

On August 10, 1998, the Company entered into the Amended and Restated Term
Loan Agreement. The Amended and Restated Term Loan Agreement amends and
restates a credit agreement, dated as of November 21, 1997 and provides for an
additional unsecured term loan of $115 million. The proceeds of the loan were
used to fund a portion of the purchase price of the Lima Acquisition. Interest
under the term loan is based on the London Interbank Offered Rate plus 2.75%.
The new loans are scheduled to be repaid by November 15, 2004.

THE DEBT OFFERING

On August 10, 1998, the Company sold $110,000,000 aggregate principal amount
of its Old Notes to the Initial Purchasers (as defined herein), which then
placed the Old Notes with institutional investors (the "Debt Offering"). The
net proceeds of the Debt Offering were used to pay a portion of the purchase
price for the Lima Acquisition.

THE CONSENT SOLICITATION

In connection with the Debt Offering, the Amended and Restated Term Loan
Agreement and expansion of the Company's Working Capital Facility, Clark USA
solicited and received consents from the holders of its 10 7/8% Senior Notes
due 2005 (the "10 7/8% Notes") and its 11 1/2% Senior Cumulative Exchangeable
Preferred Stock (the "11 1/2% Preferred Stock") to modify the terms of certain
covenants under the instruments governing such securities to enable the Company
to incur indebtedness to finance the Lima Acquisition (the "Consent
Solicitation").

THE EXCHANGE OFFER

<TABLE>
<S> <C>
Registration Agreement........ The Old Notes were sold by the Company on August
10, 1998 to Goldman, Sachs & Co., J.P. Morgan &
Co., Salomon Smith Barney and Wasserstein Perella
Securities, Inc., as initial purchasers (the
"Initial Purchasers"), which then placed the Old
Notes with institutional investors. In connection
therewith, the Company executed and delivered for
the benefit of the Holders of the Old Notes an
exchange and registration rights agreement (the
"Registration Agreement") providing for the Ex-
change Offer.
The Exchange Offer............ $1,000 principal amount at maturity of New Notes
in exchange for each $1,000 principal amount of
Old Notes.
As of the date hereof, $110.0 million aggregate
principal amount at maturity of Old Notes are
outstanding. The Company will issue the New Notes
to holders on or promptly after the Expiration
Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that New
Notes issued in exchange for Old Notes pursuant
to the Exchange Offer may be offered for resale,
resold and otherwise trans-
</TABLE>

11
<PAGE>

<TABLE>
<S> <C>
ferred by any Holder thereof (other than (i) a
broker-dealer who purchases such New Notes di-
rectly from the Company to resell pursuant to
Rule 144A or any other available exemption under
the Securities Act or (ii) any such Holder that
is an "affiliate" of the Company within the mean-
ing of Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act; pro-
vided that the Holder is acquiring such New Notes
in its ordinary course of business and is not
participating, and has no arrangement or under-
standing with any person to participate, in any
distribution of the New Notes. Persons wishing to
exchange Old Notes in the Exchange Offer must
represent to the Company that such conditions
have been met. However, any Holder who is an
"affiliate" of the Company or who tenders in the
Exchange Offer for the purpose of distributing
the New Notes cannot rely on the interpretation
of the staff of the Commission set forth in the
above-referenced no-action letters and must com-
ply with the registration and prospectus delivery
requirements of the Securities Act in connection
with any sale or transfer of the Old Notes. See
"Risk Factors--Consequences to Non-Tendering
Holders of Old Notes."
Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospec-
tus in connection with any resale of such New
Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a broker-dealer in connection with re-
sales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activ-
ities or other trading activities and not ac-
quired directly from the Company. The Company has
agreed that for a period of up to 90 days after
the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connec-
tion with any such resale. See "Plan of Distribu-
tion."
Expiration Date.............. 5:00 p.m., New York City time, on November 19,
1998, unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer
is extended.
Conditions to the Exchange The Exchange Offer is subject to certain custom-
Offer....................... ary conditions which may be waived by the Compa-
ny. See "The Exchange Offer--Conditions."
</TABLE>

12
<PAGE>

<TABLE>
<S> <C>
Procedures for Tendering Old Each Holder of Old Notes wishing to accept the
Notes....................... Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, to-
gether with the Old Notes and any other required
documentation to the Exchange Agent (as defined
herein) at the address set forth herein. By exe-
cuting the Letter of Transmittal, each Holder
will represent to the Company that, among other
things, the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary
course of business of the person receiving such
New Notes, whether or not such person is the
Holder, that neither the Holder nor any such
other person has an arrangement or understanding
with any person to participate in the distribu-
tion of such New Notes and that neither the
Holder nor any such other person is an "affili-
ate," as defined under Rule 405 of the Securities
Act, of the Company. See "The Exchange Offer--
Procedures for Tendering." Each broker-dealer
that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result
of market-making activities or other trading ac-
tivities, must acknowledge that it will deliver a
prospectus in connection with any resale of such
New Notes. See "The Exchange Offer--Procedures
for Tendering" and "Plan of Distribution."
Special Procedures for Bene- Any beneficial owner whose Old Notes are regis-
ficial Owners............... tered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who
wishes to tender
should contact such registered Holder promptly
and instruct such registered Holder to tender on
such beneficial owner's behalf. If such benefi-
cial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and
executing the Letter of Transmittal and deliver-
ing his Old Notes, either make appropriate ar-
rangements to register ownership of the Old Notes
in such owner's name or obtain a properly com-
pleted bond power from the registered Holder. The
transfer of registered ownership may take consid-
erable time. See "The Exchange Offer--Procedures
for Tendering."
Guaranteed Delivery Proce- Holders of Old Notes who wish to tender their Old
dures....................... Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the Ex-
change Agent prior to the Expiration Date, must
tender their Old Notes according
</TABLE>

13
<PAGE>

<TABLE>
<S> <C>
to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Pro-
cedures."
Withdrawal Rights............ Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Old Notes and The Company will accept for exchange any and all
Delivery of New Notes....... Old Notes which are properly tendered in the Ex-
change Of-
fer prior to 5:00 p.m., New York City time, on
the Expiration Date. The New Notes issued pursu-
ant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Certain Federal Income Tax
Consequences................ The exchange pursuant to the Exchange Offer
should not be treated as a taxable exchange for
federal income tax purposes. See "Certain Federal
Income Tax Considerations--Consequences of the
Exchange Offer to Exchanging and Nonexchanging
Holders."
Exchange Agent
Old Notes................... Bankers Trust Company is serving as Exchange
Agent in connection with the exchange offer of
New Notes for Old Notes.
</TABLE>

SUMMARY OF TERMS OF NEW NOTES

The Exchange Offer applies to $110.0 million aggregate principal amount of
Old Notes. The form and terms of the New Notes are identical in all material
respects to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes, and will be entitled to the benefits of the Indenture. See
"Description of the New Notes."

Securities Offered........ $110 million aggregate principal amount of 8 5/8%
New Senior Notes due 2008.

Issuer.................... Clark Refining & Marketing, Inc.

Maturity Date............. August 15, 2008.

Interest Payment Dates.... February 15 and August 15 of each year, commencing
February 15, 1999.

Mandatory Redemption...... None.

Optional Redemption....... The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time on
and after August 15, 2003 at the redemption prices
set forth herein, plus accrued and unpaid interest,
if any, to the date of redemption. In addition, up
to 35% in aggregate principal amount of New Notes
originally issued are redeemable at the option of
the Company out of the net cash proceeds of one or
more Equity Offerings at any time prior to August
15, 2002 at a redemption price equal to 108.625% of
the principal amount thereof, plus accrued and
unpaid interest, if any, to the redemption date.

14
<PAGE>

Ranking................... The New Notes will rank pari passu in right of
payment with all senior indebtedness of the
Company, which at on the issue date of the New
Notes will consist solely of the Company's 9 1/2%
Senior Notes due 2004 (the "9 1/2% Notes"), the
Company's 8 3/8% Senior Notes due 2007 (the "8 3/8%
Notes") and obligations under the Credit Agreement
(as defined) and the Amended and Restated Term Loan
Agreement. Because the New Notes are unsecured,
obligations under the Credit Agreement will
effectively rank senior to the New Notes to the
extent of the security in respect of the Credit
Agreement.

Change of Control......... Following a Change of Control that results in a
Rating Decline (as defined herein), the Company
will be required to offer to purchase all of the
New Notes at 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any,
to the date of purchase. There can be no assurance,
however, that the Company will have sufficient
funds with which to purchase the New Notes at that
time, and certain provisions of the Company's other
debt agreements (including the Credit Agreement)
may further limit the Company's ability to make
such purchases. See "Risk Factors--Change of
Control Provisions in the New Notes" and
"Description of the New Notes."

Certain Covenants Prior
to an Investment Grade
Rating Event.............

The Indenture contains certain covenants that,
among other things, limit the ability of the
Company to incur or guarantee additional
indebtedness, pay dividends on and redeem capital
stock, sell assets and capital stock, enter into
transactions with affiliates, create liens, engage
in mergers and consolidations or transfer
substantially all of its assets to another person.
However, all of these covenants are subject to a
number of important qualifications and exceptions.
See "Description of the New Notes."

Certain Covenants After
an Investment Grade
Rating Event.............
After the occurrence of an Investment Grade Rating
Event (as defined herein), certain of the covenants
described in the preceding paragraph will cease to
exist or will be modified. The Indenture at such
time will contain covenants that, among other
things, limit the Company's ability to create liens
with respect to certain assets, enter into sale-
leaseback transactions and engage in mergers and
consolidations.

USE OF PROCEEDS

The Company will not receive any proceeds from the issuance of the New Notes
offered in the Exchange Offer.

RISK FACTORS

See "Risk Factors" for a discussion of certain factors that should be
considered before tendering any Old Notes.

15
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL AND OTHER INFORMATION

The summary consolidated financial data set forth below for the Company as of
December 31, 1996 and 1997 and for each of the three years in the period ended
December 31, 1997 are derived from the audited financial statements included
elsewhere herein. The summary financial data set forth below for the Company as
of December 31, 1993, 1994 and 1995 and for each of the two years in the period
ended December 31, 1994 are derived from audited financial statements not
included herein. This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes included elsewhere
herein. The summary historical data as of June 30, 1998 and for the six-month
periods ended June 30, 1997 and 1998 are derived from the unaudited financial
statements included elsewhere herein.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Net sales and operating
revenues.............. $2,263.4 $2,440.0 $4,486.1 $5,072.7 $4,335.7 $2,172.7 $1,801.1
Cost of sales.......... 1,936.6 2,092.5 4,018.3 4,560.0 3,705.7 1,874.7 1,483.8
Operating expenses(a).. 202.6 220.1 373.5 418.9 432.3 211.5 218.2
General and
administrative
expenses(a)........... 43.0 51.2 52.1 59.1 65.5 29.0 35.1
Depreciation and
amortization(b)....... 35.3 37.3 43.5 48.4 61.2 27.8 31.5
Inventory (recovery of)
write-down to market
value................. 26.5 (26.5) -- -- 19.2 -- 30.9
Recapitalization, asset
writeoffs and other
charges............... -- -- -- -- 49.0 -- --
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss)................ $ 19.4 $ 65.4 $ (1.3) $ (13.7) $ 2.8 $ 29.7 $ 1.6
Interest and financing
costs, net(c)......... 29.9 37.6 39.9 38.7 39.8 17.5 22.0
Other income
(expense)(d).......... 11.4 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before taxes,
extraordinary items
and cumulative effect
of change in
accounting
principles............ $ 0.9 $ 27.8 $ (41.2) $ (52.4) $ (37.0) $ 12.2 $ (20.4)
Income tax provision
(benefit)............. (0.5) 9.7 (15.7) (13.9) 10.5 7.0 0.2
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before extraordinary
items and cumulative
effect of change in
accounting
principles............ $ 1.4 $ 18.1 $ (25.5) $ (38.5) $ (47.5) $ 5.2 $ (20.6)
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Cash, cash equivalents
and short-term
investments........... $ 212.1 $ 134.1 $ 106.6 $ 334.3 $ 244.6 $ 271.9 $ 190.3
Total assets........... 829.1 859.5 1,188.3 1,393.3 1,260.9 1,331.6 1,205.1
Long-term debt......... 401.0 400.7 420.4 417.6 587.4 416.1 582.4
Stockholder's equity... 146.0 162.9 304.1 534.1 260.9 539.3 230.8
SELECTED FINANCIAL DATA:
Cash flows from
operating activities.. $ 68.4 $ 53.7 $ (85.6) $ 16.9 $ 94.9 $ 6.9 $ (8.0)
Cash flows from
investing activities.. (19.8) (21.2) (134.1) 212.0 (123.6) (67.7) (31.7)
Cash flows from
financing activities.. (1.1) (5.4) 174.7 30.0 (61.0) (1.5) (14.6)
Ratio of earnings to
fixed charges(e)(f)... -- 1.56x -- -- -- 1.41x --
EBITDA(g).............. $ 54.7 $ 102.7 $ 42.2 $ 34.7 $ 64.0 $ 57.5 $ 33.1
EBITDA, as adjusted(h). 81.2 76.2 42.2 34.7 132.2 57.5 64.0
Expenditures for
turnaround............ $ 20.6 $ 11.2 $ 6.5 $ 13.9 $ 47.4 $ 30.0 $ 11.1
Expenditures for
property, plant and
equipment............. 67.9 100.3 42.1 45.0 81.7 39.9 34.5
Refinery acquisition
expenditures.......... -- 13.5 71.8 -- -- -- --
OPERATING DATA:
Refining Division:
Port Arthur Refinery
(acquired February 27,
1995) Production (m
bbls/day)............. -- -- 207.7 210.8 213.5 198.5 230.2
Gross margin (per
bbl)(a)............... -- -- $ 2.28 $ 2.78 $ 3.84 $ 3.99 $ 4.00
Operating
expenses(mm)(a)....... -- -- 121.6 164.7 170.7 83.7 88.0
</TABLE>

16
<PAGE>

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------- --------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
(CONTINUED):
Refining Division
(continued):
Blue Island, Hartford
and other refining
Production (m
bbls/day)............. 134.7 140.3 136.5 134.2 135.8 141.2 120.5
Gross margin (per
bbl)(a)............... $ 3.68 $ 3.35 $ 2.51 $ 2.56 $ 3.79 $ 3.92 $ 4.08
Operating expenses
(mm)(a)............... 104.3 115.0 130.2 126.6 123.2 63.3 64.2
Refining Operating
Contribution (mm)..... 63.0 38.8 (2.3) 25.6 167.9 85.9 89.5
Retail Division(a):
Number of core market
stores (average)(i)... 547 553 595 620 666 663 670
Gasoline volume (mm
gals)................. 726.6 763.3 838.1 858.7 912.4 434.7 451.1
Gasoline volume (m gals
per month per store).. 110.7 115.0 117.4 115.4 115.8 110.6 113.7
Gasoline gross margin
(cents/gal)........... 11.4c 11.3c 11.9c 10.6c 10.5c 10.2c 10.4c
Convenience product
sales (mm)............ $143.6 $158.0 $189.9 $201.8 $244.3 $115.5 $129.8
Convenience product
sales (m pmps)........ 21.9 23.8 26.6 27.1 30.6 29.0 32.3
Convenience product
gross margin and other
income (mm)........... $ 36.4 $ 39.8 $ 46.5 $ 52.2 $ 64.6 $ 30.4 $ 34.4
Convenience product
gross margin (m
pmps)................. 5.5 6.0 6.5 7.0 8.1 7.7 8.6
Operating expenses
(mm)(a)............... $ 64.5 $ 70.6 $ 90.3 $101.8 $118.4 $ 55.1 $ 60.9
Core market store
contribution (mm)..... 35.0 35.3 38.3 20.5 19.8 8.7 8.9
Non-core stores, bus.
development & other
(mm).................. 14.6 9.1 6.9 4.7 3.1 1.4 --
Retail Operating
Contribution (mm)..... $ 49.6 $ 44.4 $ 45.2 $ 25.2 $ 22.9 $ 10.1 $ 8.9
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
(b) Amortization includes amortization of turnaround costs and organizational
costs.
(c) Interest and financing costs, net, included amortization of debt issuance
costs of $1.2 million, $1.2 million, $5.2 million, $6.5 million and $7.0
million for the years ended December 31, 1993, 1994, 1995, 1996 and 1997,
and $3.5 million and $1.0 million for the six months ended June 30, 1997
and 1998, respectively. Interest and financing costs, net, also included
interest on all indebtedness, net of capitalized interest and interest
income.
(d) Other income in 1993 included the final settlement of litigation with
Drexel Burnham Lambert Incorporated of $8.5 million and a gain from the
sale of non-core stores of $2.9 million.
(e) 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, excluding capitalized interest by (ii) fixed charges,
excluding capitalized interest. Fixed charges consisted of interest on
indebtedness, including amortization of discount and debt issuance costs
and the estimated interest components (one-third) of rental and lease
expense.
(f) As a result of the losses for the years ended December 31, 1993, 1995, 1996
and 1997, earnings were insufficient to cover fixed charges by $1.7
million, $44.0 million, $53.6 million and $29.0 million, respectively. As a
result of the losses for the six months ended June 30, 1998, earnings were
insufficient to cover fixed charges by $19.8 million.
(g) Earnings before interests, taxes, depreciation and amortization ("EBITDA")
is a commonly used non-GAAP financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles ("GAAP")).
(h) EBITDA, as adjusted, does not reflect cash necessary or available to fund
cash requirements. EBITDA, as adjusted, in 1993 and 1994 excluded the
write-down in 1993 and the recovery in 1994 of a $26.5 million inventory
valuation adjustment. EBITDA, as adjusted in 1997 and for the six months
ended June 30, 1998 excluded the write-down of $19.2 million and $30.9
million, respectively, for inventory valuation adjustments and EBITDA, as
adjusted, in 1997 also excluded recapitalization charges, asset writeoffs
and other special charges of $49.0 million.
(i) Ten stores included in 1997 and 1998 operated exclusively as convenience
stores and did not sell fuel.

17
<PAGE>

RISK FACTORS

The New Notes involve certain risks. Holders of the Old Notes should
consider the following risk factors, as well as the other information
contained in this Prospectus, before tendering any Old Notes.

CONSEQUENCES TO NON-TENDERING HOLDERS OF OLD NOTES

Upon consummation of the Exchange Offer, the Company will have no further
obligation to register the Old Notes. Thereafter, any Holder of Old Notes who
does not tender its Old Notes in the Exchange Offer, including any Holder
which is an "affiliate" (as that term is defined in Rule 405 of the Securities
Act) of the Company which cannot tender its Old Notes in the Exchange Offer,
will continue to hold restricted securities which may not be offered, sold or
otherwise transferred, pledged or hypothecated except pursuant to Rule 144 and
Rule 144A under the Securities Act or pursuant to any other exemption from
registration under the Securities Act relating to the disposition of
securities, provided that an opinion of counsel is furnished to the Company
that such an exemption is available.

SUBSTANTIAL LEVERAGE, HISTORY OF NET LOSSES AND INSUFFICIENCY OF EARNINGS TO
COVER FIXED CHARGES

The Company has consolidated indebtedness that is substantial in relation to
its stockholder's equity. As of June 30, 1998, the Company had outstanding
long-term indebtedness (including current portions) of approximately $585.7
million. As of June 30, 1998, on a pro forma basis after giving effect to the
consummation of the Offering, the Amended and Restated Term Loan Agreement (as
defined herein) and the application of the net proceeds therefrom, and the
sale of the Offered Pipelines, the Company would have had outstanding long-
term indebtedness (including current portions) of approximately $810.4 million
and stockholder's equity of approximately $298.6 million. See
"Capitalization." The Credit Agreement, the Amended and Restated Term Loan
Agreement, the indentures governing the 9 1/2% Notes, the 8 3/8% Notes and the
Company's 8 7/8% Senior Subordinated Notes due 2007 (the "8 7/8% Senior
Subordinated Notes") (collectively, the "Existing Indentures") and the
Indenture, permit the incurrence of additional indebtedness by the Company
subject to certain limitations specified therein.

The Company had net losses before extraordinary items of $25.5 million,
$38.5 million and $47.5 million for the years ended December 31, 1995,
December 31, 1996 and December 31, 1997, respectively. As a result of these
losses, earnings were insufficient to cover fixed charges by $44.0 million,
$53.6 million and $29.0 million for such periods, respectively. The Company
may experience net losses in the future.

The level of the Company's indebtedness could have several important
consequences for holders of the New Notes, including, but not limited to, the
following: (i) a significant portion of the Company's cash flow from
operations will be dedicated to debt service and will not be available for
other purposes; (ii) the Company's ability to obtain additional financing in
the future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be limited; (iii) the Company's leveraged
position and the covenants contained in the Existing Indentures, the Credit
Agreement, the Amended and Restated Term Loan Agreement and the Indenture
could limit the Company's ability to compete, as well as its ability to expand
and make capital improvements; and (iv) the Company's level of indebtedness
could make it more vulnerable to economic downturns and more sensitive to
volatility in the petroleum industry, limit its ability to withstand
competitive pressures and reduce its flexibility in responding to changing
business and economic conditions.

The Company's ability to pay interest on the New Notes and to satisfy its
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and
other factors, certain of which are beyond its control. The Company

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anticipates that available cash, together with borrowings under the Credit
Agreement and other sources of liquidity will be adequate to meet the
Company's anticipated requirements for working capital, capital expenditures,
interest payments and scheduled principal payments through at least the end of
1999. There can be no assurance, however, that the Company will continue to
generate sufficient cash flow from operations in the future to service its
debt and make necessary capital expenditures. If unable to do so, the Company
may be required to reduce or delay planned capital expenditures, seek
additional financing, dispose of certain assets and/or seek to refinance some
or all of its debt. There can be no assurance that any of these alternatives
could be effected, if at all, on satisfactory terms.

Additionally, if the Company were to sustain a decline in its operating
results or available cash, it could experience difficulty in complying with
the covenants contained in the Credit Agreement, the Amended and Restated Term
Loan Agreement, the Existing Indentures, the Indenture or any other agreements
governing future indebtedness of the Company. The failure to comply with such
covenants could result in an event of default under these agreements, thereby
permitting acceleration of such indebtedness as well as indebtedness under
other instruments that contain cross-acceleration and cross-default
provisions.

In addition, the Company's sole stockholder, Clark USA, has substantial
indebtedness. As of June 30, 1998, Clark USA had outstanding long-term
indebtedness of approximately $175.0 million and Exchangeable Preferred Stock
with an aggregate liquidation preference of $66.6 million ($68.5 million as of
June 30, 1998). Clark USA has no significant independent operations and relies
on receipt of funds from the Company to meet its debt and dividend
obligations. Failure of Clark USA to meet its debt and dividend obligations
could have a material adverse effect on the Company.

VOLATILITY OF REFINING AND MARKETING MARGINS

The Company's earnings and cash flow from operations are primarily dependent
upon processing crude oil and selling quantities of refined products at
refining and marketing margins sufficient to cover fixed and variable
expenses. Oil refining is a complex process that is subject to scheduled and
unscheduled downtime.

Crude oil costs and refined product prices depend on numerous factors beyond
the Company's 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, political affairs and
production levels, the availability of imports, the marketing of competitive
fuels, the extent of government regulation and expected and actual weather
conditions. The prices received by the Company for its refined products are
affected by regional factors such as product pipeline capacity, local market
conditions and the level of operations of competing refineries. A large, rapid
increase in crude oil prices would adversely affect the Company's operating
margins if the increased cost of raw materials could not be passed on to the
Company's customers. Alternatively, a large rapid decrease in crude oil prices
may adversely affect the Company's operating margins since feedstock costs are
fixed on average two to three weeks prior to the manufacture and sale of the
finished products. The Company currently purchases approximately 74% of its
crude oil requirements in the spot market, where prices are subject to market
fluctuations. Because of the Port Arthur refinery's U.S. Gulf Coast location
and the two Illinois refineries' and the Lima Refinery's locations on major
crude oil pipelines, the Company believes that adequate supplies of crude oil
will be available in the spot market. No assurance can be given, however, that
the Company will be able to negotiate favorable prices for crude oil in the
spot market or that adequate supplies will be available during times of
shortages. See "Business--Refining--Inventory Management." In recent years,
crude oil costs and prices of refined products have fluctuated substantially.
Accordingly, the Company's earnings are subject to substantial fluctuations,
as reflected by losses incurred in the fiscal years of 1995, 1996 and 1997.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations." On

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<PAGE>

occasion, the Company utilizes U.S. Gulf Coast based derivatives, such as
forward future and option contracts on crack spreads with respect to a portion
of the production of the Port Arthur refinery. While this hedging strategy is
intended to provide an acceptable profit margin on a portion of the Port
Arthur refinery production, the use of such a strategy could limit the
Company's ability to participate in an improvement in Gulf Coast crack
spreads. See "Business--Refining--Inventory Management."

THE LIMA ACQUISITION

The Lima Acquisition will have significant effects on all of the Company's
operations. The Lima Acquisition increased the Company's refining capacity
from 370,000 bpd to 540,000 bpd. As a result, the Company will experience
corresponding increases in (i) working capital requirements, (ii) demands on
management resources, (iii) requirements for crude oil feedstock supply and
(iv) quantities of refined product output which must be stored, transported
and marketed by the Company. There can be no assurance that the Company will
be able to successfully implement its business strategy with respect to the
Lima Refinery.

The Lima Refinery was purchased on an "as is" basis, with limited
representations, warranties and closing conditions. While BP will indemnify
the Company for all liabilities and obligations arising from the ownership and
operation of the Lima Refinery prior to August 10, 1998 subject to certain
terms and limitations contained in the Purchase Agreement (including the
requirement that certain environmental indemnity claims be made within 17
years of Closing), the ownership and operation of the facility post-August 10,
1998 may subject the Company in the future to risks of substantial liability
for environmental matters, for which the Company has agreed to indemnify BP.

The Company has offered employment to the employees of the Lima Refinery.
However, because BP had previously announced that the Lima Refinery was to be
closed, many of such employees have accepted offers of employment with other
operations of BP. While BP has agreed to assist the Company in its efforts to
retain the Lima Refinery's employees, the Company will assume the risks
associated with attracting and retaining an appropriate work force.

COMPANY ESTIMATES REGARDING THE LIMA ACQUISITION

The Company's estimates for the Lima Refinery included herein represent the
Company's best estimates of the operating results it would have achieved at
the Lima Refinery, had the Company purchased the Lima Refinery on January 1,
1997 and operated it and the related assets in the proposed manner from
January 1, 1997 through December 31, 1997. The estimates are based upon a
number of assumptions, some of which may not materialize. Other assumptions
may materialize but in a subsequent period. Unanticipated events may occur
which could affect actual results achieved by the Company after the Lima
Acquisition. The Lima Refinery's actual results after the Lima Acquisition
will vary from the estimates and these variations may be material. Prospective
investors are cautioned not to place undue reliance on the estimates. The
Company does not intend to update or otherwise revise the estimates to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The estimates were not prepared with a view toward
compliance with published guidelines of the American Institute of Certified
Public Accountants or generally accepted accounting principles. Neither the
Company's independent auditors, nor any other independent accountants, have
compiled, examined, or performed any procedures with respect to the Company's
or Turner, Mason & Company's estimates regarding the Lima Acquisition
contained herein, nor have they expressed any opinion or any form of assurance
on such information or its achievability, and assume no responsibility for,
and disclaim any association with, the aforementioned estimates. See "Summary
of Company Estimates Regarding the Lima Acquisition."

INTEREST RATES

The Credit Agreement and the Amended and Restated Term Loan Agreement
provide for interest at rates that fluctuate quarterly and could increase. An
increase in interest rates will increase the

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Company's interest expense and adversely affect the Company's income and cash
flow available to make payments on the Notes and the Company's other
indebtedness. See "Description of Certain Debt Instruments."

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 their diversity, integration of operations,
larger capitalization and greater resources, the 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. See "Business--
Competition."

LIQUIDITY

The Company's cash, cash equivalents and short-term investments as of June
30, 1998 totalled $190.3 million. In addition, the Company had $400.0 million
available (subject to customary borrowing conditions) under the Credit
Agreement for the issuance of letters of credit and short-term cash borrowings
(subject to a $50.0 million sublimit). As of June 30, 1998, on a pro forma
basis after giving effect to the Lima Acquisition, the Offering, the Amended
and Restated Term Loan Agreement, the application of the net proceeds
therefrom and the payment of fees and expenses in connection therewith, and
the sale of the Offered Pipelines, the Company's cash and short-term
investments would have been $259.3 million. As a result of the increased
indebtedness of the Company resulting from the Offering, annual interest
expense will increase. There are a number of other factors which may have a
material effect on the Company's liquidity, including the following.

The Company's short-term working capital requirements (primarily letter of
credit issuances to support crude oil requirements) fluctuate with the pricing
and sourcing of crude oil. Historically, the Company's internally generated
cash flows have been sufficient to meet its needs. The Credit Agreement is a
revolving line of credit for short-term cash borrowings and for the issuance
of letters of credit. In connection with the Lima Acquisition, the Credit
Agreement was amended on August 10, 1998 to increase the facility to the
lesser of $700.0 million or a borrowing base calculated with reference to cash
and cash equivalents, eligible investments, eligible receivables and eligible
petroleum inventories, provided that direct borrowings are limited to the
principal amount of $150 million. As of June 30, 1998 and prior to the Lima
Acquisition, the maximum commitment under the Credit Agreement was $372.0
million, of which $197.2 million was used for letters of credit; there were no
direct borrowings as of such date. The Credit Agreement is currently due to
expire December 31, 1999. To the extent the Company is unable to refinance its
working capital facility on a timely basis and on satisfactory terms, there
can be no assurance that the Company will have adequate liquidity. In
addition, the Company is required to comply with certain financial covenants
contained in the Credit Agreement. There can be no assurance that the Company
will remain in compliance with such covenants if industry conditions weaken
and continue for an extended period of time, which would have a direct impact
on the Company.

The Company also has a number of longer term needs for cash. The Company
estimates that mandatory capital and turnaround expenditures, including
environmental and regulatory expenditures and other nondiscretionary
expenditures, from 1998 through 2000 will be approximately $95.0 million per
year. While the Company expects that internally generated cash flows will be
sufficient to support such capital expenditures, there can be no assurance in
this regard. The Company links discretionary capital spending to cash flow
generated and, as of June 30, 1998, did not have any material long-term
commitments for discretionary capital expenditures. If internally generated
cash flows are insufficient to support such mandatory and discretionary
capital expenditures, the Company may be required to

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<PAGE>

seek additional financing or postpone such capital expenditures. There can be
no assurance that any such additional financing could be obtained or, if
obtained, that the terms of any such financing would be satisfactory to the
Company.

The Company's 1997 term loan under the Amended and Restated Term Loan
Agreement becomes due in 2004 (25% becomes due in 2003). In addition, the
Company's 9 1/2% Notes become due in 2004, with an $87.5 million sinking fund
payment required to be made in September 2003, the Company's 8 3/8% Notes
become due in 2007, and the full amount of the 1998 term loan under the
Amended and Restated Term Loan Agreement becomes due in 2004. The Company may
not have sufficient funds to repay in full the entire amount of such
obligations when they become due and would therefore be required to refinance
all or a portion of such obligations at or prior to their maturity.

In connection with the Port Arthur refinery acquisition, the Company agreed
to make contingent payments to Chevron of up to $125.0 million over a five-
year period beginning in February 1995 in the event that certain refining
industry margin indicators exceed certain escalating levels. Such contingent
payments were not payable based upon these industry margin indicators for the
first three measurement periods through September 30, 1995, 1996 and 1997. 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
financial position or results of operations since the Company would also
benefit from such increased margins.

The Lima Refinery will require maintenance capital expenditures of
approximately $20 million per year and the scheduled turnaround at the Lima
Refinery in 1999 is currently estimated to require capital expenditures of
approximately $30 million. See "Summary of Company Estimates Regarding the
Lima Acquisition."

RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS

The Existing Indentures, the Credit Agreement, the Amended and Restated Term
Loan Agreement and the Indenture contain certain covenants that restrict,
among other things, the ability of the Company to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, consummate certain asset sales or asset swaps, enter into certain
transactions with affiliates, impose restrictions on the ability of a
subsidiary to pay dividends or make certain payments, enter into sale and
leaseback transactions, conduct businesses other than their current business,
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of their assets. The
Credit Agreement also requires the Company to satisfy certain financial
condition tests. The ability of the Company to meet these financial condition
tests can be affected by events beyond its control, and there can be no
assurance that the Company will meet such tests. A breach of any of these
covenants could result in a default under the Existing Indentures, the Credit
Agreement, the Amended and Restated Term Loan Agreement or the Indenture. Upon
an occurrence of an event of default under the Existing Indentures, the Credit
Agreement, the Amended and Restated Term Loan Agreement or the Indenture, the
lenders thereunder could elect to declare all amounts outstanding thereunder,
together with accrued interest, to be immediately due and payable. In the case
of the Credit Agreement, if the Company were unable to repay such amounts, the
lenders thereunder could proceed against the collateral granted to them to
secure such indebtedness. If the Credit Agreement indebtedness were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of
the Company. See "Description of Certain Debt Instruments."

CARRYOVER TAX ATTRIBUTES--RESTRICTIONS ON AVAILABILITY

The Company files a consolidated U.S. federal income tax return with Clark
USA. A substantial portion of the carryover tax attributes of the Clark USA
consolidated tax return group (the "Group") was contributed by the Company.
The members of the Group, including the Company, have entered into a

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<PAGE>

tax sharing agreement with Clark USA which provides for cash payments in the
event carryover tax attributes are used to reduce the Group's consolidated tax
liability.

As of December 31, 1997, the Group has made net cumulative payments of $12.6
million (Company--$12.0 million) under the federal alternative minimum tax
system which are available (in the form of a minimum tax credit) to reduce
future regular income tax payments. As of December 31, 1997, the Group had a
federal net operating loss carryforward of $294.0 million (Company--$216.6
million) and federal business tax credit carryforwards in the amount of $3.3
million (Company--$3.3 million). Such net operating losses and business tax
credit carryforwards have carryover periods of 15 years and are available to
reduce future taxable income and tax liabilities through the years ending
December 31, 2012 and 2011, respectively.

Sections 382 and 383 of the Internal Revenue Code of 1986, as amended,
restrict the utilization of net operating losses and other carryover tax
attributes (including business tax credit and minimum tax credit
carryforwards) upon the occurrence of an "ownership change" for federal income
tax purposes. Blackstone's acquisition of a majority interest in Clark USA on
November 3, 1997 resulted in an ownership change of the Group for this
purpose. Accordingly, it is possible that the Company's ability to utilize
such net operating loss and business tax credit carryforwards over the
carryforward periods could be significantly limited.

CHANGE OF CONTROL PROVISIONS IN THE NEW NOTES

The Change of Control feature of the New Notes may, in certain
circumstances, make it more difficult or discourage a takeover of Clark USA
and, as a result, may make removal of incumbent management more difficult. The
Change of Control purchase feature, however, is not the result of the
Company's knowledge of any specific effort to accumulate Clark USA's stock or
to obtain control of Clark USA or the Company by means of a merger, tender
offer, solicitation or otherwise, or part of a plan by management to adopt a
series of antitakeover provisions. Instead, the Change of Control purchase
feature is a result of negotiations between the Company and the Initial
Purchasers. Clark USA has no present intention to engage in a transaction
involving a Change of Control, although it is possible that Clark USA could
decide to do so in the future.

ENVIRONMENTAL LIABILITIES AND GOVERNMENTAL REGULATIONS

The Company's operations are subject to comprehensive and frequently
changing federal, state and local environmental laws and regulations. These
laws, and the regulations promulgated thereunder, set forth stringent
environmental standards for the Company's operations and provide for civil and
criminal penalties for violations. Any new environmental initiatives, more
vigorous regulatory enforcement policies or stricter interpretation of
existing laws could have a material adverse effect on the financial condition
or results of operations of the Company. Any such development could require
significant additional expenditures to achieve compliance with such
requirements or policies. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Business--Environmental Matters" and "Business--Legal
Proceedings."

The Company's operations also are subject to liability for the investigation
and cleanup of environmental contamination at properties that it owns and
operates and at off-site locations where the Company arranged for the disposal
of hazardous substances. The Company is involved in several proceedings
relating to its liability for the investigation and cleanup of such sites.
There can be no assurance that the Company will not become involved in further
litigation or other proceedings or that, if the Company were to be held
responsible for damages in any litigation or proceedings (including existing
ones), such costs would be covered by insurance or would not be material. See
"Business--Environmental Matters" and "Business--Legal Proceedings." In
addition, the Company believes that there is extensive contamination at the
site on which the Port Arthur Refinery is located. Pursuant to

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<PAGE>

the purchase agreement governing the Port Arthur Refinery acquisition (the
"Port Arthur Purchase Agreement"), Chevron retained primary responsibility for
remediation of most pre-closing contamination and the Company retained
responsibility for the remediation under the active operating units (the
"Excluded Areas"). If Chevron should be unable to meet its obligations under
the Port Arthur Purchase Agreement regarding remediation of contamination on
the remainder of the site, on account of bankruptcy or otherwise, the Company
may become responsible for such remediation.

In addition, the Company believes that there may be contamination at the
Lima Refinery as well as liability under CERCLA (as defined herein) for the
disposal of hazardous waste generated by the Lima Refinery. In connection with
the Lima Acquisition, however, BP has agreed to indemnify the Company for all
environmental liabilities and obligations (subject to the requirement that
certain environmental claims be made within 17 years after the August 10, 1998
completion of the Lima Acquisition) arising from the ownership and operation
of the Lima Refinery prior to Closing. If BP should be unable to meet such
obligations, on account of bankruptcy or otherwise, the Company may become
responsible for such environmental liabilities and obligations. See "The Lima
Acquisition--The Purchase Agreement."

In addition to liability for the cleanup of environmental contamination, the
Company is also subject to liability for violations of environmental, health
and safety laws that regulate its current operations. The Illinois Attorney
General, the U.S. Attorney and the United States Environmental Protection
Agency (the "EPA") have filed or have threatened to file a number of
enforcement actions relating to the Blue Island refinery. The Hartford
refinery is also the subject of a Clean Air Act enforcement by the EPA. See
"Business--Environmental Matters" and "Business--Legal Proceedings."

While it is not possible at this time to estimate the ultimate amount of
liability with respect to the currently identified environmental matters
described above, the Company is of the opinion that the aggregate amount of
such liability will not have a material adverse effect on its financial
position; however, an adverse outcome of any one or more of these matters
could have a material effect on quarterly or annual operating results or cash
flows when resolved in a future period.

The Company's operations are large and complex. The numerous environmental
regulations to which the Company is subject are complicated, sometimes
ambiguous, and often changing. In addition, the Company may not have detected
certain violations of environmental laws and regulations because the
conditions that constitute such violations may not be apparent. It is
therefore possible that certain of the Company's operations are not currently
in compliance with state or federal environmental laws and regulations.
Accordingly, the Company may be required to make additional expenditures to
comply with existing environmental requirements. Such expenditures, along with
fines or other penalties for noncompliance with environmental requirements,
could have a material adverse effect on the Company's financial condition,
results of operations, cash flow or liquidity.

Cigarette sales account for approximately 56% of the Company's convenience
product sales. In recent years, governmental entities in the U.S. at all
levels have taken or have proposed actions that may have the effect of
reducing sales of cigarettes in general or sales of cigarettes through
convenience stores. A significant reduction in the consumption of cigarettes
or in the ability of convenience stores to market cigarettes, may have a
significant, adverse effect on the Company's convenience product sales.

INFLUENCE OF PRINCIPAL STOCKHOLDER

Blackstone beneficially owns approximately 78.5% of the total voting power
of all classes of Clark USA's capital stock. Currently, three of Clark USA's
six directors and three of the Company's five directors are affiliated with
Blackstone. Accordingly, Blackstone is in a position to exert a controlling
influence over Clark USA and the Company. The relationship with Blackstone
creates the potential for conflicts of interest between the Company and
Blackstone. See "Management--Security Ownership of Certain Owners and
Management" and "Certain Transactions."

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<PAGE>

LACK OF PUBLIC MARKET

The New Notes are being offered to the holders of the Old Notes. The Old
Notes were issued to a small number of institutional investors on August 10,
1998. There is no existing trading market for the New Notes, and there can be
no assurance regarding the future development of a market for the New Notes or
the ability of holders of the New Notes to sell their New Notes or the price
at which such holders may be able to sell their New Notes. If such a market
were to develop, the New Notes could trade at prices that may be higher or
lower than the principal amount of the New Notes depending on many factors,
including prevailing interest rates, the Company's operating results and the
market for similar securities. The Initial Purchasers have advised the Company
that they currently intend to make a market in the New Notes. The Initial
Purchasers are not obligated to do so, however, and any market-making with
respect to the New Notes may be discontinued at any time without notice.
Therefore, there can be no assurance as to the liquidity of any trading market
for the New Notes or that an active public market for the New Notes will
develop. The Company does not intend to apply for listing or quotation of the
New Notes on any securities exchange or stock market.

Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the Notes will not
be subject to similar disruptions. Any such disruptions may have an adverse
effect on holders of the New Notes.

USE OF PROCEEDS

The Exchange Offer is intended to satisfy certain obligations of the Company
under the Registration Agreement. The Company will not receive any proceeds
from the issuance of the New Notes offered in the Exchange Offer. In
consideration for issuing the New Notes, the Company will receive in exchange
Old Notes in like principal amount, the form and terms of which are the same
in all material respects as the form and terms of the New Notes except that
the New Notes have been registered under the Securities Act and, therefore, do
not include restrictions on transfer or rights to registration thereunder. The
Old Notes surrendered in exchange for New Notes will be retired and canceled
and cannot be reissued. Accordingly, issuance of the New Notes will not result
in any increase in the indebtedness of the Company.

The net proceeds from the Offering of Old Notes and from additional
borrowings under the Amended and Restated Term Loan Agreement were used to pay
the purchase price for the Lima Refinery and certain related assets acquired
from BP as described herein.

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THE LIMA ACQUISITION

OVERVIEW

On August 10, 1998, the Company acquired the Lima Refinery for a purchase
price of $175 million plus the market value of the hydrocarbon inventory at
the Lima Refinery at Closing, which was approximately $40 million. In
addition, an estimated $70 million will be paid for crude oil in transit
currently owned by BP, the payment for which will occur over the two months
following August 10, 1998 as the crude oil is delivered to the Lima Refinery.
Approximately $50 million of this amount will be funded through proceeds from
the sale of finished products over the same period. The Lima Refinery was
purchased with limited representations, warranties and closing conditions.
Subject to the terms and limitations set forth in the Purchase Agreement
(including the requirement that certain environmental claims be made within 17
years after Closing), BP has indemnified the Company for all environmental and
other liabilities and obligations arising from the ownership and operation of
the Lima Refinery prior to Closing. The Company believes that the Lima
Refinery:

The Lima Refinery is a single train, fully integrated coking refinery that
has a rated crude oil throughput capacity of approximately 170,000 bpd, which
increased the Company's crude oil throughput capacity from 370,000 bpd to
approximately 540,000 bpd. The Lima Refinery is a highly automated, modern oil
refinery with a Nelson complexity rating of 8.7 and an estimated replacement
cost of $1.2 billion. The Midwest location of the Lima Refinery has
historically provided it with a transportation cost advantage and less gross
margin volatility than refineries in other regions since demand for refined
products has exceeded supply in the region. The Lima Refinery complements the
Company's existing assets in the region as it is located in existing core
retail and wholesale markets where the Company already has distribution
capability.

HISTORY

Originally known as the Solar Refinery, the first refinery on the Lima
Refinery's site was constructed in 1886 by The Standard Oil Company to take
advantage of what was to become the world's greatest oil producing area until
1910. Following the break-up of Standard Oil in 1911 by U.S. anti-trust
litigation, the Standard Oil Company of Ohio (Sohio as it was known in the
Midwest) did not own the Lima Refinery. However, in 1931, Sohio acquired the
Lima Refinery and invested heavily to ensure that it would remain a
technologically modern refinery. Most of the processing units in the Lima
Refinery have been rebuilt since 1970, making the Lima Refinery relatively
young among Midwest refineries. BP gained control of the Lima Refinery when
Standard Oil merged with BP in 1987.

In 1996, BP announced its intention to sell the Lima Refinery. The Company
participated in BP's sale process at such time and performed extensive due
diligence during 1996, including the review of information provided by BP,
presentations from BP's management, interviews of key Lima Refinery personnel,
a visit to the Lima Refinery and the modification of BP's linear programming
model of the Lima Refinery. However, the Company did not make an offer to
purchase the Lima Refinery at that time. In late 1996, BP announced that it
could not locate a suitable buyer for the Lima Refinery and would close the
Lima Refinery in two years. Despite such announcement, BP continued to invest
at near historical levels for maintenance operating expenses and mandatory
capital expenditures at the Lima Refinery during 1997. In May 1998, the
Company expressed an interest to BP to purchase the Lima Refinery and was
provided with updated operating information on the Lima Refinery.

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THE LIMA REFINERY

The Lima Refinery, which is located on a 650 acre site, was designed to
process light sweet crude oil and has historically run a predominately
domestic sweet crude oil slate. In addition to over five million barrels of
on-site storage and a rail products loading and unloading system, the Lima
Refinery also has access to a system of crude oil and product pipelines and
terminals. At approximately 170,000 bpd, the Lima Refinery is large enough to
realize economies of scale and other efficiencies. According to a 1994
industry study, the Lima Refinery ranked in the 2nd quartile in terms of fixed
costs and in the 1st quartile in operational availability, turnaround index
and maintenance index.

The Lima Refinery's major processing units and associated current
capabilities are listed below:

<TABLE>
<CAPTION>
CAPACITY (BARRELS PER DAY,
PROCESSING UNIT EXCEPT AS NOTED)
--------------- --------------------------
<S> <C>
Crude unit...................................... 170,000
Vacuum unit..................................... 54,000
FCC unit........................................ 40,000
Coker unit...................................... 22,500
Reformer........................................ 56,000
HDS............................................. 60,000
Isocracker...................................... 26,000
Isomerization................................... 18,500
Aromatics....................................... 25,500
Trolumen........................................ 1,200
Hydrogen purification unit...................... 1.2 mm scfh 90% H2
Sulfur recovery unit............................ 54 long tons
</TABLE>

CRUDE OIL SUPPLY AND REFINED PRODUCT DISTRIBUTION

Crude oil for the Lima Refinery can be obtained from a variety of sources
and transported through several crude oil pipelines. The Lima Refinery
receives 100% of its crude oil supply via pipeline. Delivery routes include
the Mid-Valley, Salem-Stoy-Lima (SSL) and the Marathon pipeline systems as the
three crude pipeline systems with final delivery capability to the refinery,
with connections to Capline, Mobil, Ozark, IPL and other pipeline systems.
Historically, the Lima Refinery has been supplied by domestic crude oil moving
via the Mesa and West Texas Gulf pipeline into the Mid-Valley pipeline system.
Gulf Coast sourced foreign crude oil can be supplied to the Lima Refinery via
the LOOP/LOCAP system into Capline and then into the Lima Refinery either
through the SSL or Marathon pipeline systems. Canadian crude oil can be
supplied to the refinery through the IPL system which connects to the Marathon
pipeline system.

The Lima Refinery distributes products through several refined product
pipeline systems and by rail, truck or the adjacent Vine Street terminal. Most
refinery products are distributed by using the Buckeye or Inland Pipeline
Systems. The Buckeye Pipeline System is a publicly held, common carrier,
interstate pipeline system with connections throughout the Midwest. Through
Buckeye, the Lima Refinery has access to markets in Northern/Central Ohio,
Indiana, Michigan and Western Pennsylvania. The Inland Pipeline System is a
private intra-state system jointly owned by BP, Shell, Unocal and Sun and
available solely for their use.

THE MIDWEST MARKET

The Lima Refinery is located in the U.S. Midwest PADD II (Petroleum Area for
Defense District), where demand for light products (gasoline and distillates)
has historically exceeded refining production by approximately 800,000 bpd.
This light products shortfall has historically been even more acute in Ohio.
Ohio refining capacity is approximately 500,000 bpd. However, even with this
refining capacity, there are movements of approximately 130,000 bpd of light
products into the state. Some of this

27
<PAGE>

additional light product supply comes from refineries in adjoining states,
including Michigan and Kentucky. Historically there has been strong enough
demand in Ohio to justify the cost
of importing production from other markets. Transportation costs for refined
products from the Gulf Coast to the Ohio market have averaged approximately
$1.10 per barrel.

THE PURCHASE AGREEMENT

The Purchase Agreement provided that BP sold all of the following to the
Company: (i) the Lima Refinery, including all machinery and equipment used in
the operation of the Lima Refinery; (ii) the real property on which the Lima
Refinery is located, and certain related leased property; (iii) four crude oil
storage and blending tanks and the real property on which they are situated;
(iv) all hydrocarbon and non-hydrocarbon inventories at the Lima Refinery; (v)
a paid-up, nonexclusive, royalty-free license to use certain technology and
intellectual property of BP and its affiliates in the operation of the Lima
Refinery; and (vi) certain other assets as described in the Purchase Agreement
(collectively, the "Purchased Assets"). The purchase price for the Purchased
Assets was $175 million plus the market value of the hydrocarbon inventory at
the Lima Refinery at Closing, which was approximately $40 million. In
addition, an estimated $70 million will be paid for crude oil in transit
currently owned by BP, the payment for which will occur over the two months
following the consummation of the Lima Acquisition as the crude oil is
delivered to the Lima Refinery. Approximately $50 million of this amount will
be funded through proceeds from the sale of finished products over the same
period. The Company also agreed to assume and indemnify BP for all liabilities
arising from the ownership and operation of the Lima Refinery after the
Closing.

The Purchase Agreement provided for the Lima Refinery to be purchased with
limited representations, warranties and closing conditions. Subject to certain
terms and limitations set forth in the Purchase Agreement, BP agreed to
indemnify the Company for all environmental and other liabilities and
obligations arising from the ownership and operation of the Lima Refinery
prior to the Closing or from the breach by BP of any representation, warranty
or covenant contained in the Purchase Agreement. Indemnity claims for breaches
of representations and warranties (other than environmental matters) and
certain pre-Closing covenants must be brought within one year after the
Closing. Certain environmental indemnity claims (including for breaches of
representations and warranties) must be brought within 17 years after the
Closing. Except for environmental matters, the Company will not have a claim
against BP for breaches of representations and warranties and certain pre-
Closing covenants until the aggregate of all losses for such matters exceeds
$3.5 million and BP's aggregate liability for such losses will not exceed $25
million.

The Company agreed to offer employment to the employees of the Lima
Refinery. However, because BP had previously announced that the Lima Refinery
was to be closed, many of such employees have accepted offers of employment
with other operations of BP. While BP has agreed to assist the Company in its
efforts to retain the Lima Refinery's employees, the Company will assume the
risks associated with attracting and retaining an appropriate work force.

The Company has agreed to convey to BP Chemicals Inc. ("BP Chemicals") 15
acres of the Lima Refinery's property in order to permit BP Chemicals to
proceed with the previously announced construction of a 1:4 Butanediol Plant
("BDO Plant") at the Lima Refinery site. The specific location of the BDO
Plant will be mutually agreed upon by the Company and BP Chemicals. In
addition, the Company will assume certain agreements with BP Chemicals and BP
Oil Pipeline Company providing for the purchase and sale by the Lima Refinery
of propylene and certain other chemicals. The Company and the parties to such
agreements have agreed to negotiate in good faith to seek to enter into new
long-term agreements for the purchase and sale of propylene and such other
chemicals.

28
<PAGE>

SUMMARY OF COMPANY ESTIMATES REGARDING THE LIMA ACQUISITION

INTRODUCTION

BP has historically operated the Lima Refinery as a component of its
integrated global system and especially its Midwest refining and marketing
system. As a result, the Company believes that decisions such as those
relating to crude slate, yield, total throughput and capital expenditures were
likely made to optimize the performance of BP's entire integrated system, as
opposed to that of the Lima Refinery specifically. The Company is not
acquiring the Lima Refinery's sources of crude oil and other feedstocks, sales
force, customer base or trade names. There are no historical financial
statements covering the Lima Refinery on a stand-alone basis. Further, the
Company believes any such financial statements would not be meaningful for the
reasons set forth above.

COMPANY ESTIMATES

The Company believes that the Lima Acquisition will provide an opportunity
to improve the Company's operating results and cash flow. The Company and
Turner, Mason & Company, an independent energy consulting firm ("Turner,
Mason"), reviewed the historical and proposed operation of the Lima Refinery.
The Company's estimates represent the operating results of the Lima Refinery
as if the Company had acquired the assets on January 1, 1997 and operated them
during 1997 in accordance with the Company's proposed operation of the Lima
Refinery. The Company believes 1997 market prices are appropriate since it is
the last full year for which market prices are available.

The Company's estimates, set forth below, were developed as follows: (i)
feedstocks and refined product yields were based on BP's linear program and
modified by the Company during due diligence based on the assets being
acquired, and results of the linear program were then compared to actual
charges and yield data (which resulted in higher crude oil throughput, but
yields which were more conservative than the actual yields generated by BP in
1997), (ii) gross margin was calculated using the applicable 1997 market
prices, (iii) operating expenses were based on actual historical performance
with adjustments for higher crude oil throughput and the Company's expected
mode of operation and (iv) general and administrative costs were estimated for
those services previously provided by BP's corporate staff. As discussed above
under "The Lima Acquisition--The Purchase Agreement," because BP had
previously announced that the Lima Refinery was to be closed, many employees
have accepted offers of employment with other operations of BP. While BP has
agreed to assist the Company in its efforts to retain the Lima Refinery's
employees, the Company will assume the risks associated with attracting and
retaining an appropriate workforce and may thus incur higher employment-
related costs initially.

The Company's estimates for the Lima Refinery included herein were not
prepared with a view toward compliance with published guidelines of the
American Institute of Certified Public Accountants or generally accepted
accounting principles. Neither the Company's independent auditors, nor any
other independent accountants, have compiled, examined, or performed any
procedures with respect to the Company's or Turner, Mason's estimates
regarding the Lima Acquisition contained herein, nor have they expressed any
opinion or any form of assurance on such information or its achievability, and
assume no responsibility for, and disclaim any association with, the
aforementioned estimates. These figures represent the Company's best estimates
of the operating and financial results of the Lima Refinery had the Company
operated it and the related assets in 1997 and assuming the Company had been
successful in implementing its anticipated changes and expected mode of
operation.

The Company's estimates and underlying assumptions were independently
reviewed and confirmed by Turner, Mason. Turner, Mason was furnished with
information concerning the Lima Refinery available to the Company, conducted a
site visit and discussed the operations of the Lima Refinery with management
of BP and of the Company. The Company did not place any limitations upon
Turner, Mason with respect to procedures followed or factors considered by
Turner, Mason in

29
<PAGE>

rendering its opinion. In Turner, Mason'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. Turner, Mason's opinion
and summary report are included elsewhere herein.

The success of the Company's planned operation of the Lima Refinery is
subject to uncertainties and contingencies beyond the Company's control,
including business, economic, regulatory and competitive uncertainties and
contingencies. No assurance can be given that the planned operations and
anticipated benefits would have been realized had the Company actually
operated the Lima Refinery in 1997. The gross margin and operating expense
estimates are based on various assumptions. Some of these assumptions may not
materialize. Other assumptions may materialize but in a subsequent period.
Unanticipated events may occur subsequent to the date of this document. The
actual results achieved by the Company at the Lima 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, Turner, Mason or any other person that the estimates would
have been achieved in 1997 or will be achieved in the future. Holders are
cautioned not to place undue reliance on these estimates.

The Company does not intend to update or otherwise revise the estimates to
reflect circumstances existing after the date hereof or 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 on Form 10-Q
and Annual Reports on Form 10-K, which will be filed with the Securities and
Exchange Commission. Information contained in such financial statements will
be deemed to supersede the estimates.

ESTIMATED 1997 LIMA REFINERY CONTRIBUTION

The Company estimates that the Lima Refinery would have generated $64.6
million of cash flow from operating activities before working capital changes
and income taxes in 1997 after giving effect to the estimated processing
rates, yields and operating expenses. This estimate was based on (i) 1997 spot
market prices for crude oil and refined products adjusted for transportation
differentials, (ii) feedstocks and refined product yields based on the
modification of BP's linear programming model (which resulted in higher crude
oil throughput, but yields which were more conservative than the actual yields
generated by BP in 1997), (iii) actual historical operating expenses adjusted
for higher throughput and the Company's mode of operation and (iv) general and
administrative costs estimated for those services previously provided by BP's
corporate staff.

The Company's estimates for the Lima Refinery based on 1997 market prices
are as follows:

<TABLE>
<CAPTION>
1997 ESTIMATE
----------------
($ IN MILLIONS,
EXCEPT AS NOTED)
<S> <C>
Crude oil throughput (m bbls/day)........................ 160.5
Production (m bbls/day).................................. 165.0
Gross margin ($/bbl of production)....................... $ 2.82
Operating expenses ($/bbl of production)................. 1.73
Gross margin............................................. 170.1
Operating expenses....................................... 104.3
General and administrative costs......................... 1.2
Refinery Cash Flow from operating activities before
working capital changes and income taxes (a)............ $ 64.6
</TABLE>
- --------
(a) A $0.10 per barrel change in the realized gross margin or operating
expenses would have increased or decreased this amount by approximately $6
million.

30
<PAGE>

Refinery Feedstocks:

<TABLE>
<CAPTION>
1997 ACTUAL 1997 ESTIMATE
----------- -------------
(THOUSANDS OF BARRELS PER
DAY)
<S> <C> <C>
Light sweet crude oil............................ 140.9 153.5
Light sour crude oil............................. 12.5 7.0
Other............................................ 7.7 3.6
----- -----
Total.......................................... 161.1 164.1
===== =====
</TABLE>

Refinery Production:

<TABLE>
<CAPTION>
1997 ACTUAL 1997 ESTIMATE
----------- -------------
(THOUSANDS OF BARRELS PER
DAY)
<S> <C> <C>
Gasoline......................................... 82.6 81.7
Diesel fuel...................................... 36.9 36.4
Jet fuel......................................... 17.1 20.2
Petrochemical products........................... 7.7 7.7
Other............................................ 18.7 19.0
----- -----
Total.......................................... 163.0 165.0
===== =====
</TABLE>

SUMMARY OF COMPANY ESTIMATE ASSUMPTIONS

In connection with the execution of the Purchase Agreement, the Company
performed limited due diligence on the Lima Refinery, including the review of
information provided by BP, discussions with the Lima Refinery manager and a
preliminary visit to the Lima Refinery. The results of this limited due
diligence, together with the more extensive due diligence performed in 1996,
are the basis for the Company's assumptions. The assumptions underlying the
anticipated changes in processing rates, yields and operating expenses are
described below. The estimates assume that (i) the Lima Acquisition occurred
at January 1, 1997; (ii) the Company successfully implemented its planned
changes in processing rates, yields and operating expenses; and (iii) BP
assumed responsibility for pre-Closing environmental remediation. Pursuant to
the terms of the Purchase Agreement, the Company conducted a more extensive
due diligence review, including visits to the Lima Refinery and interviews
with key Lima Refinery personnel, between July 6 and July 10, 1998.

Feedstocks

The Company assumed that domestic and foreign crude oil would have been
purchased at market prices and transported via available pipeline routes at
published tariff rates for delivery to the Lima Refinery, which is consistent
with historical operation. The mix of foreign and domestic crude oil
feedstocks was consistent with historical throughputs. From 1995 to 1997, the
Lima Refinery averaged
approximately 152,000 bpd of crude oil throughput and approximately 159,000
bpd of total feedstocks. However, the Company believes the processing rates
were limited during this period due to the Lima Refinery's pending sale and
closure. The crude unit has a design capacity of approximately 170,000 bpd and
processed 174,000 bpd for one week in November 1995. Therefore, the Company
believes it can achieve crude oil throughput of 160,500 bpd and total
production of 165,000 bpd.

The Company believes there may be a further opportunity to improve the crude
oil inputs into the Lima Refinery by selecting more optimal crude oil types,
but such opportunity was not included in the Company's estimates.

Yields

The Lima Refinery has historically been optimized as part of an integrated
system with BP's nearby Toledo refinery, the adjacent BP chemical operation
and the BP light product marketing network. As a result, the Company believes
there is an opportunity to optimize the Lima Refinery as a

31
<PAGE>

stand-alone operation to take full advantage of the Lima Refinery's asset
capability. The Company assumed the products generated according to the linear
programming model were sold at spot market prices. The estimated product
yields are more conservative than the actual yields generated by BP in 1997.

Operating and General and Administrative Expenses

The Company adjusted historical operating expense levels of the Lima
Refinery principally for higher throughput levels and the replacement of self-
insurance with premium-based insurance. Incremental general and administrative
costs were added for functions previously provided by BP's corporate staff and
not allocated to the Lima Refinery.

Capital Investment

From 1991-1997, BP invested an aggregate of approximately $212 million in
the Lima Refinery. Based on initial due diligence, the Company expects
mandatory capital expenditures to average approximately $20 million per year
for the period from 1999 to 2002 and turnaround expenses to cost approximately
$30 million once every five years. The Lima Refinery is scheduled to have the
first such major maintenance turnaround in 1999. The Company expects cash
flows from the Lima Refinery to be adequate to cover incremental financing and
mandatory capital and turnaround costs.

32
<PAGE>

THE CONSENT SOLICITATION

In connection with the Offering, Clark USA solicited and received consents
from the holders of its 10 7/8% Notes and from the holders of its 11 1/2%
Preferred Stock, to modify the terms of certain covenants under the indentures
governing these securities in order to enable the Company to incur
indebtedness to finance the Lima Acquisition (the "Amendments"). The above
described solicitation on the part of Clark USA is hereinafter referred to as
the "Consent Solicitation."

The purpose of the Consent Solicitation was to facilitate the closing of the
Lima Acquisition. The consent payment was $20 in cash for each $1,000 in
principal amount of the 10 7/8% Notes and $20 in cash for each share ($1,000
liquidation preference) of 11 1/2% Preferred Stock. The Company reimbursed
Clark USA for the consent payments.

The Amendments amended the instruments governing the 10 7/8% Notes and the
11 1/2% Preferred Stock to, among other things, provide an express exception
for the incurrence of indebtedness in an aggregate amount not to exceed $250
million to finance the Lima Acquisition.

33
<PAGE>

THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

The Old Notes were sold by the Company on August 10, 1998 to the Initial
Purchasers, which then placed the Old Notes with institutional investors. In
connection therewith, the Company entered into the Registration Agreement,
which required that, within 90 days following the issuance of the Old Notes,
the Company file with the Commission a registration statement under the
Securities Act with respect to the issuance of New Notes, use its best efforts
to cause such registration statement to become effective under the Securities
Act and, upon the effectiveness of that registration statement, offer to the
Holders of the Old Notes the opportunity to exchange their Old Notes for a
like principal amount of New Notes, which will be issued without a restrictive
legend and may be reoffered and resold by such Holders without restrictions or
limitations under the Securities Act. A copy of the Registration Agreement has
been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The term "Holder" with respect to the Exchange Offer
means any person (i) in whose name Old Notes are registered on the books of
the Company or any other person who has obtained a properly completed bond
power from the registered holder or (ii) whose Old Notes are held of record by
DTC who desires to deliver such Old Notes by book-entry transfer at DTC.

Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any Holder thereof (other than
(i) a broker-dealer who purchases such New Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act; provided that the Holder is acquiring such New Notes in its ordinary
course of business and is not participating, and has no arrangement or
understanding with any person to participate, in the distribution of the New
Notes. Persons wishing to exchange Old Notes in the Exchange Offer must
represent to the Company that such conditions have been met. Any Holder who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes could not rely on such interpretation by the
staff of the Commission and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. In addition, any such resale transaction should be covered
by an effective registration statement containing the selling security holders
information required by Item 507 of Regulation S-K of the Securities Act.
Further, any Holder who may be deemed an "affiliate" of the Company cannot
rely on the interpretation by the staff of the Commission set forth in the
above-referenced no-action letters with respect to resales of the New Notes
without compliance with the registration and prospectus delivery requirements
of the Securities Act.

In addition, each broker-dealer that receives New Notes for its own account
in exchange for Old Notes, where such Old Notes were acquired by such broker-
dealer as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution."

The Old Notes were issued to a small number of institutional investors on
August 10, 1998 and there is no public market for them at present. To the
extent Old Notes are tendered and accepted in the exchange, the principal
amount of outstanding Old Notes will decrease with a resulting decrease in the
liquidity in the market therefor. Following the consummation of the Exchange
Offer, Holders of Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the Old
Notes could be adversely affected.

34
<PAGE>

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of New Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered
only in integral multiples of $1,000.

The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be entitled to the benefits of the Indenture (as
defined herein).

As of the date hereof, $110.0 million aggregate principal amount at maturity
of the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all such registered Holders as of October 21,
1998.

Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.

The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
for the purpose of receiving the New Notes from the Company.

If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering Holder thereof as promptly as practicable
after the Expiration Date.

Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "--Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
November 19, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.

The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth below under "--Conditions" shall not have been satisfied,
to terminate the Exchange Offer, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent or (ii) to amend the
terms of the Exchange Offer in

35
<PAGE>

any manner. Any such delay in acceptance, extension, termination or amendment
will be followed as promptly as practicable by a public announcement thereof.
If the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered Holders, and the Company will extend the Exchange Offer for a
period of five (5) to ten (10) business days, depending upon the significance
of the amendment and the manner of disclosure to the registered Holders, if
the Exchange Offer would otherwise expire during such five (5) to ten (10)
business day period.

Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.

PROCEDURES FOR TENDERING

Only a Holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a Holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, or (in the case of a
book-entry transfer) an Agent's Message in lieu of the Letter of Transmittal,
together with the Old Notes and any other required documents, to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date. To be
tendered effectively, the Old Notes, Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth
below under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. The term "Agent's Message" means a message, transmitted by
DTC to and received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal
and that the Company may enforce such Letter of Transmittal against such
participant.

Book-Entry Delivery of the Old Notes. Within two business days after the
date of this Exchange Offer, the Exchange Agent will establish an account with
respect to the Old Notes at DTC for purposes of the Exchange Offer. Any
financial institution that is a participant in the DTC system may make book-
entry delivery of Old Notes by causing DTC to transfer such Old Notes into the
Exchange Agent's account in accordance with DTC's procedure for such transfer.
Although delivery of Old Notes may be effected through book-entry at DTC, the
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or (in the case of a book-entry transfer through the DTC Automatic
Tender Offer Program ("ATOP")) an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must be transmitted to and
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of its addresses set forth in "--Exchange Agent."
DELIVERY OF SUCH DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

The tender by a Holder will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.

The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder. Instead of delivery by mail, it is recommended that Holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Old Notes should be sent to the Company. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such Holders.

36
<PAGE>

Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering
such owner's Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such owner's name or obtain a properly completed
bond power from the registered Holder. The transfer of registered ownership
may take considerable time.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").

If the Letter of Transmittal is signed by a person other than the registered
Holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
Holder as such registered Holder's name appears on such Old Notes.

If the Letter of Transmittal or any Old Notes or bond power are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify Holders of defects or irregularities with respect to tenders
of Old Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.

In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date or, as set forth below under "--Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.

37
<PAGE>

By tendering, each Holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, that neither the Holder nor
any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the Holder
nor any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company. If the Holder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
such Holder by tendering will acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, may affect a tender if:

(a) the tender is made through an Eligible Institution;

(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes to be tendered in proper form for transfer (or a
confirmation of a book-transfer into the Exchange Agent's account at DTC of
Old Notes delivered electronically) and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent; and

(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer to be tendered in proper form for
transfer (or a confirmation of a book-transfer into the Exchange Agent's
account at DTC of Old Notes delivered electronically) and all other
documents required by the Letter of Transmittal are received by the
Exchange Agent within five (5) New York Stock Exchange trading days after
the Expiration Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.

To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Old Notes), (iii)
be signed by the Holder in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Notes register the
transfer of such Old Notes into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Old Notes are to be registered, if
different from

38
<PAGE>

that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company
in its sole discretion, which determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Notes will be issued
with respect thereto unless the Old Notes so withdrawn are validly retendered.
Properly withdrawn Old Notes may be retendered by following the procedures
described above under "--Procedures for Tendering" at any time prior to the
Expiration Date.

Any Old Notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the Exchange
Offer will be returned as soon as practicable to the Holder thereof without
cost to such Holder.

CONDITIONS

Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Old Notes for, any New Notes,
and may terminate the Exchange Offer as provided herein before the acceptance
of such Old Notes, if:

(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company, or
any material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or

(b) any change, or any development involving a prospective change, in the
business or financial affairs of the Company or any of its subsidiaries has
occurred which, in the sole judgment of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer or
materially impair the contemplated benefits of the Exchange Offer to the
Company; or

(c) any law, statute, rule or regulation is proposed, adopted or enacted,
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or

(d) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.

If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering Holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of Holders to withdraw
such Old Notes (see "--Withdrawal of Tenders"), or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the
Exchange Offer for a period of five (5) to ten (10) business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered Holders, if the Exchange Offer would otherwise expire during such
five (5) to ten (10) business day period.

39
<PAGE>

EXCHANGE AGENT

Exchange Agent for New Notes. Bankers Trust Company has been appointed as
Exchange Agent for the exchange of New Notes for Old Notes, pursuant to the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:

By Registered or Certified Mail: By Overnight Courier:

BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Reorganization Unit
P.O. Box 292737 648 Grassmere Park Road
Nashville, Tennessee 37229-2737 Nashville, Tennessee 37211

By Hand:

Attn: Reorganization Department
Bankers Trust Company
Corporate Trust & Agency Group
Confirm by Telephone
(615) 835-3572
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006

By Facsimile:

(615) 835-3701

FEES AND EXPENSES

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith
and will pay the reasonable fees and expenses of one firm acting as counsel
for the Holders of Old Notes should such Holders deem it advisable to appoint
such counsel.

The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$300,000. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.

The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or
if tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if

40
<PAGE>

a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or any other persons) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.

ACCOUNTING TREATMENT

The New Notes will be recorded at the same carrying value as the Old Notes
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized upon
consummation of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the New Notes.

41
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1998, and as adjusted to give effect to the Lima Acquisition, the payment
of fees and expenses associated with the Lima Acquisition and the Consent
Solicitation, the Offering, the Amended and Restated Term Loan Agreement and
the application of a portion of the net proceeds therefrom and the sale of the
Offered Pipelines. This table should be read in conjunction with the
Consolidated Financial Statements of the Company, and the notes thereto,
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF
JUNE 30, 1998
-------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Cash, cash equivalents and short term investments(a)....... $190.3 $ 259.3
====== ========
LONG-TERM DEBT (b):
9 1/2% Notes............................................. $171.7 $ 171.7
1997 Term Loan Agreement................................. 125.0 125.0
8 3/8% Notes............................................. 99.3 99.3
8 7/8% Senior Subordinated Notes......................... 173.8 173.8
8 5/8% Senior Notes...................................... -- 109.7
Amended and Restated Term Loan Agreement................. -- 115.0
Capital leases and other................................. 12.6 12.6
------ --------
Total long-term debt................................... $582.4 $ 807.1
------ --------
STOCKHOLDER'S EQUITY:
Common, $0.01 par value (100 shares issued and
outstanding)............................................ $ -- $ --
Paid-in-capital.......................................... 239.7 239.7
Retained earnings (a).................................... (8.9) 58.9
------ --------
Total stockholder's equity............................. $230.8 $ 298.6
------ --------
Total capitalization................................... $813.2 $1,105.7
====== ========
</TABLE>
- --------
(a) Pro forma amount gives effect to the sale of the Offered Pipelines for net
proceeds of $74.0 million, which would result in an estimated after-tax
book gain of $67.8 million.
(b) Does not reflect the utilization of $197.2 million at June 30, 1998 under
the Credit Agreement to support outstanding letters of credit.

42
<PAGE>

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The selected consolidated financial data set forth below for the Company as
of December 31, 1996 and 1997 and for each of the three years in the period
ended December 31, 1997 are derived from the audited financial statements
included elsewhere herein. The selected financial data set forth below for the
Company as of December 31, 1993, 1994 and 1995 and for each of the two years
in the period ended December 31, 1994 are derived from audited financial
statements not included herein. This table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related notes
included elsewhere herein. The selected historical data as of June 30, 1998
and for the six-month periods ended June 30, 1997 and 1998 are derived from
the unaudited financial statements included elsewhere herein.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Net sales and operating
revenues.............. $2,263.4 $2,440.0 $4,486.1 $5,072.7 $4,335.7 $2,172.7 $1,801.1
Cost of sales.......... 1,936.6 2,092.5 4,018.3 4,560.0 3,705.7 1,874.7 1,483.8
Operating expenses(a).. 202.6 220.1 373.5 418.9 432.3 211.5 218.2
General and
administrative
expenses(a)........... 43.0 51.2 52.1 59.1 65.5 29.0 35.1
Depreciation and
amortization(b)....... 35.3 37.3 43.5 48.4 61.2 27.8 31.5
Inventory (recovery of)
write-down to market
value................. 26.5 (26.5) -- -- 19.2 -- 30.9
Recapitalization, asset
writeoffs and other
charges............... -- -- -- -- 49.0 -- --
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss)................ $ 19.4 $ 65.4 $ (1.3) $ (13.7) $ 2.8 $ 29.7 $ 1.6
Interest and financing
costs, net(c)......... 29.9 37.6 39.9 38.7 39.8 17.5 22.0
Other income
(expense)(d).......... 11.4 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before taxes,
extraordinary items
and cumulative effect
of change in
accounting
principles............ $ 0.9 $ 27.8 $ (41.2) $ (52.4) $ (37.0) $ 12.2 $ (20.4)
Income tax provision
(benefit)............. (0.5) 9.7 (15.7) (13.9) 10.5 7.0 0.2
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before extraordinary
items and cumulative
effect of change in
accounting
principles............ $ 1.4 $ 18.1 $ (25.5) $ (38.5) $ (47.5) $ 5.2 $ (20.6)
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Cash, cash equivalents
and short-term
investments........... $ 212.1 $ 134.1 $ 106.6 $ 334.3 $ 244.6 $ 271.9 $ 190.3
Total assets........... 829.1 859.5 1,188.3 1,393.3 1,260.9 1,331.6 1,205.1
Long-term debt......... 401.0 400.7 420.4 417.6 587.4 416.1 582.4
Stockholder's equity... 146.0 162.9 304.1 534.1 260.9 539.3 230.8
SELECTED FINANCIAL DATA:
Cash flows from
operating activities.. $ 68.4 $ 53.7 $ (85.6) $ 16.9 $ 94.9 $ 6.9 $ (8.0)
Cash flows from
investing activities.. (19.8) (21.2) (134.1) 212.0 (123.6) (67.7) (31.7)
Cash flows from
financing activities.. (1.1) (5.4) 174.7 30.0 (61.0) (1.5) (14.6)
Ratio of earnings to
fixed charges(e)(f)... -- 1.56x -- -- -- 1.41x --
EBITDA(g).............. $ 54.7 $ 102.7 $ 42.2 $ 34.7 $ 64.0 $ 57.5 $ 33.1
EBITDA, as adjusted(h). 81.2 76.2 42.2 34.7 132.2 57.5 64.0
Expenditures for
turnaround............ 20.6 11.2 6.5 13.9 47.4 30.0 11.1
Expenditures for
property, plant and
equipment............. 67.9 100.3 42.1 45.0 81.7 39.9 34.5
Refinery acquisition
expenditures.......... -- 13.5 71.8 -- -- -- --
OPERATING DATA:
Refining Division:
Port Arthur Refinery
(acquired February 27,
1995)
Production (m
bbls/day)............. -- -- 207.7 210.8 213.5 198.5 230.2
Gross margin (per
bbl)(a)............... -- -- $ 2.28 $ 2.78 $ 3.84 $ 3.99 $ 4.00
Operating expenses
(mm)(a)............... -- -- 121.6 164.7 170.7 83.7 88.0
</TABLE>

43
<PAGE>

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------- --------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
(CONTINUED):
Refining Division
(continued):
Blue Island, Hartford
and other refining
Production
(m bbls/day).......... 134.7 140.3 136.5 134.2 135.8 141.2 120.5
Gross margin (per
bbl)(a)............... $ 3.68 $ 3.35 $ 2.51 $ 2.56 $ 3.79 $ 3.92 $ 4.08
Operating expenses
(mm)(a)............... 104.3 115.0 130.2 126.6 123.2 63.3 64.2
Refining Operating
Contribution (mm)..... 63.0 38.8 (2.3) 25.6 167.9 85.9 89.5
Retail Division(a):
Number of core market
stores (average)(i)... 547 553 595 620 666 663 670
Gasoline volume (mm
gals)................. 726.6 763.3 838.1 858.7 912.4 434.7 451.1
Gasoline volume (m gals
per month per store).. 110.7 115.0 117.4 115.4 115.8 110.6 113.7
Gasoline gross margin
(cents/gal)........... 11.4c 11.3c 11.9c 10.6c 10.5c 10.2c 10.4c
Convenience product
sales (mm)............ $143.6 $158.0 $189.9 $201.8 $244.3 $115.5 $129.8
Convenience product
sales (mpmps)......... 21.9 23.8 26.6 27.1 30.6 29.0 32.3
Convenience product
gross margin and other
income (mm)........... $ 36.4 $ 39.8 $ 46.5 $ 52.2 $ 64.6 $ 30.4 $ 34.4
Convenience product
gross margin (mpmps).. 5.5 6.0 6.5 7.0 8.1 7.7 8.6
Operating expenses
(mm)(a)............... $ 64.5 $ 70.6 $ 90.3 $101.8 $118.4 $ 55.1 $ 60.9
Core market store
contribution to
operating income
(mm).................. 35.0 35.3 38.3 20.5 19.8 8.7 8.9
Non-core stores, bus.
development & other
(mm).................. 14.6 9.1 6.9 4.7 3.1 1.4 --
Retail Operating
Contribution (mm)..... $ 49.6 $ 44.4 $ 45.2 $ 25.2 $ 22.9 $ 10.1 $ 8.9
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
(b) Amortization includes amortization of turnaround costs and organizational
costs.
(c) Interest and financing costs, net, included amortization of debt issuance
costs of $1.2 million, $1.2 million, $5.2 million, $6.5 million and $7.0
million for the years ended December 31, 1993, 1994, 1995, 1996 and 1997,
and $3.5 million and $1.0 million for the six-months ended June 30, 1997
and 1998, respectively. Interest and financing costs, net, also included
interest on all indebtedness, net of capitalized interest and interest
income.
(d) Other income in 1993 included the final settlement of litigation with
Drexel Burnham Lambert Incorporated of $8.5 million and a gain from the
sale of non-core stores of $2.9 million.
(e) 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, excluding capitalized interest by (ii) fixed
charges, excluding capitalized interest. Fixed charges consisted of
interest on indebtedness, including amortization of discount and debt
issuance costs and the estimated interest components (one-third) of rental
and lease expense.
(f) As a result of the losses for the years ended December 31, 1993, 1995,
1996 and 1997, earnings were insufficient to cover fixed charges by $1.7
million, $44.0 million, $53.6 million and $29.0 million, respectively. As
a result of the losses for the six months ended June 30, 1998, earnings
were insufficient to cover fixed charges by $19.8 million.
(g) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
is a commonly used non-GAAP financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles ("GAAP")).
(h) EBITDA, as adjusted, does not reflect cash necessary or available to fund
cash requirements. EBITDA, as adjusted, in 1993 and 1994 excluded the
write-down in 1993 and the recovery in 1994 of a $26.5 million inventory
valuation adjustment. EBITDA, as adjusted, in 1997 and for the six months
ended June 30, 1998 excluded the write-down of $19.2 million and $30.9
million, respectively, for inventory valuation adjustments and EBITDA, as
adjusted, in 1997 also excluded recapitalization charges, asset writeoffs
and other special charges of $49.0 million.
(i) Ten stores included in 1997 and 1998 operated exclusively as convenience
stores and did not sell fuel.

44
<PAGE>

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

The following discussion should be read in conjunction with the Consolidated
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, weather conditions,
domestic and foreign political affairs, 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 generally have a direct long-term relationship to net earnings.
Crude oil price movements may impact net earnings in the short term because of
fixed price crude oil purchase commitments which average approximately five
million barrels. See "--Refining." 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 illustrates the potential pre-tax earnings impact based
on historical operating rates estimated by the Company resulting from changes
in several key market indicators: (i) sweet crude oil cracking margins--the
spread between gasoline and diesel fuel prices and input (e.g., a benchmark
light sweet crude oil) costs; (ii) sweet/sour differentials--the spread
between a benchmark light sour crude oil and a benchmark light sweet crude
oil; (iii) heavy/light differentials--the spread between a benchmark light
sweet crude oil and a benchmark heavy sour crude oil; and (iv) retail
margins--the spread between product prices at the retail level and wholesale
product costs.

<TABLE>
<CAPTION>
PRE-TAX EARNINGS IMPACT ON THE COMPANY
----------------------------------------------
EARNINGS SENSITIVITY CHANGE BEFORE LIMA ACQUISITION AFTER LIMA ACQUISITION
- -------------------- ---------------- ----------------------- ----------------------
<S> <C> <C> <C>
Refining margins (a)
Sweet crude cracking
margin............... $0.10 per barrel $13 million $20 million
Sweet sour
differentials........ 0.10 per barrel 9 million 9 million
Heavy light
differentials........ 0.10 per barrel 3 million 3 million
Retail margins.......... $0.01 per gallon $10 million $10 million
</TABLE>
- --------
(a) Based on an assumed production of approximately 225,000 bpd for the Port
Arthur refinery, 170,000 bpd for the Lima refinery and 145,000 bpd for the
Illinois refineries.

The following tables provide supplementary data in a format that is not
intended to represent an income statement presented in accordance with
generally accepted accounting principles. Certain reclassifications have also
been made to prior periods to conform to current period presentation. The
Company considers certain items in each of the periods discussed to be special
items. These items are discussed separately.

45
<PAGE>

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------------
1997 1998
------------ ------------
(IN MILLIONS, UNAUDITED)
<S> <C> <C>
OPERATING INCOME:
Refining contribution to operating income........... $ 85.9 $ 89.5
Retail contribution to operating income............. 10.1 8.9
Corporate general and administrative expenses....... (7.4) (9.9)
------------ ------------
Operating Contribution............................ $ 88.6 $ 88.5
Inventory timing adjustments loss(a)................ 31.1 24.5
Inventory write-down to market...................... -- 30.9
Depreciation and amortization....................... 27.8 31.5
------------ ------------
Operating income.................................. $ 29.7 $ 1.6
============ ============
</TABLE>
- --------
(a) Includes adjustments to inventory costs caused by timing differences
between when crude oil is actually purchased and refined products are
actually sold, and a daily "market in, market out" operations measurement
methodology for the refining division.

The Company recorded an Operating Contribution (earnings before interest,
taxes, depreciation, amortization and inventory-related charges) of $88.5
million for the six months ended June 30, 1998 which compared to $88.6 million
in the first six months of 1997. The Company recorded a net loss of $20.6
million in the first half of 1998 compared to net earnings of $5.2 million in
the same period of 1997.

A decrease in crude oil prices of approximately $3.50 per barrel for the
year to date resulted in a negative impact on net earnings of $55.4 million
for the first half of 1998 as compared to a negative impact of $31.1 million
in the same period a year ago. These inventory-related charges in 1998
included a non-cash accounting charge of $30.9 million to write down inventory
carrying costs to current market value. The Company believes it may recover
these charges if hydrocarbon prices increase.

Net sales and operating revenues decreased approximately 17% in the six
months ended June 30, 1998 as compared to the same period of 1997 principally
as a result of lower worldwide crude oil and product prices in the current
year which reduced both sales and cost of goods sold.

REFINING
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------
1997 1998
---------- ----------
(IN MILLIONS, EXCEPT
PER BARREL DATA)
<S> <C> <C>
REFINING DIVISION
OPERATING STATISTICS:
PORT ARTHUR REFINERY
Crude oil throughput (m
bbls/day).............. 192.6(a) 227.7
Production (m
bbls/day).............. 198.5(a) 230.2
Gross margin ($ per
barrel of production).. $ 3.99 $ 4.00
Operating expenses...... 83.7 88.0
Net margin.............. 59.7 78.5
BLUE ISLAND, HARTFORD AND
OTHER REFINING
Crude oil throughput (m
bbls/day).............. 135.3 118.8(b)
Production (m
bbls/day).............. 141.2 120.5(b)
Gross margin ($ per
barrel of production).. $ 3.92 $ 4.08
Operating expenses...... 63.3 64.2
Net margin.............. $ 36.8 $ 24.7
Divisional general and
administrative expenses.. 10.6 13.7
---------- ----------
Refining contribution to
operating income......... $ 85.9 $ 89.5
========== ==========
</TABLE>
- --------
(a) Crude oil throughput and production reflected scheduled downtime on most
processing units for approximately one month during a maintenance
turnaround in the six months ended June 30, 1997.
(b) Crude oil throughput and production reflected scheduled downtime on most
processing units at the Blue Island refinery for approximately one month
during a maintenance turnaround in the six months ended June 30, 1998.

46
<PAGE>

Refining division contribution to operating income of $89.5 million in the
first half of 1998 exceeded year-ago levels of $85.9 million principally
because there was less total scheduled downtime in 1998. In the first six
months of 1997 a maintenance turnaround at the Port Arthur refinery reduced
refining contribution by an estimated $16 million versus a total impact of
scheduled downtime of approximately $9 million during 1998. During the Blue
Island refinery turnaround, improvements were made to the Blue Island
refinery's vacuum unit that are designed to upgrade approximately 2,000
barrels per day of asphalt-type material to diesel fuel. During the second
quarter and first half of 1998, the Port Arthur refinery continued its
significant productivity improvements under Clark's ownership with record
throughput rates achieved on the crude and FCC units.

Weaker margins for gasoline and distillates in the first half of 1998 versus
the same period of 1997 were largely offset by favorable discounts for heavy
and medium sour crude oil. Industry margin indicators for the Gulf Coast and
Chicago markets were each down approximately 40 cents per barrel in the first
half of 1998 as compared to the same period of 1997. Warmer-than-normal
weather and the Asian financial crisis reduced world-wide demand, and when
combined with high industry inventory levels, resulted in ample supply and a
squeeze on light products margins.

RETAIL

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
RETAIL DIVISION OPERATING STATISTICS:
Core Market Stores
Gasoline volume (mm gals.).............................. 434.7 451.1
Gasoline gross margin (cents/gal.)...................... 10.2c 10.4c
Gasoline gross margin................................... $ 44.4 $ 46.9
Convenience product sales............................... $ 115.5 $ 129.8
Convenience product margin and other income............. 30.4 34.4
Operating expenses...................................... 55.1 60.9
Divisional general and administrative expenses.......... 11.0 11.5
--------- ---------
Core market store contribution............................ $ 8.7 $ 8.9
Non-core store contribution and other..................... 1.4 --
--------- ---------
Retail contribution to operating income................... $ 10.1 $ 8.9
========= =========
Core Market Stores--Per Month Per Store
Company operated stores (average) (a)................... 663 670
Gasoline volume (m gals.)............................... 110.6 113.7
Convenience product sales (thousands)................... $ 29.0 $ 32.3
Convenience product gross margin (thousands)............ 7.7 8.6
</TABLE>
- --------
(a) Ten stores were operated as convenience stores only.

Retail contribution to operating income from core market stores of $8.9
million for the first six months of 1998 was relatively flat with the year-ago
contribution. Improvements in retail fuel and convenience product gross
margins were offset by higher operating expenses associated with increased
advertising and labor costs. Total retail contribution was reduced principally
due to less contribution for non-core stores. The Company has sold 110 non-
core stores principally to Clark branded marketers in the first half of 1998
generating approximately $13.9 million of proceeds. As of June 30, 1998, the
Company's program to reposition its assets in non-core markets was
substantially complete.

Other Financial Highlights

Corporate general and administrative expenses increased in the first half of
1998 over the comparable period in 1997 principally because of increased
consulting services and increased information services costs related to year
2000 upgrades.

47
<PAGE>

Interest and finance costs, net for the six months ended June 30, 1998
increased over the comparable period in 1997 principally because of the
addition of the 8 7/8% Senior Subordinated Notes, due 2007 in late 1997. This
increase was only partially offset by reduced borrowing rates and reduced
deferred financing cost amortization resulting from the Company's other
financing activities in late 1997.

Depreciation and amortization expense increased in the first six months of
1998 over the comparable period in 1997 principally because of amortization
related to the Port Arthur maintenance turnaround performed in the first
quarter of 1997.

1997 COMPARED WITH 1996 AND 1995:

FINANCIAL RESULTS:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
OPERATING INCOME:
Refining contribution to operating income......... $ (2.3) $ 25.6 $ 167.9
Retail contribution to operating income........... 45.2 25.2 22.9
Corporate general and administrative expenses..... 12.8 14.6 17.4
------- -------- --------
Operating Contribution............................ $ 30.1 $ 36.2 $ 173.4
Inventory timing adjustments gain (loss).......... 12.1 (1.5) (41.2)
Inventory write-down to market.................... -- -- 19.2
Recapitalization, asset write-offs and other
costs............................................ -- -- 49.0
Depreciation and amortization..................... 43.5 48.4 61.2
------- -------- --------
Operating income (loss)........................... $ (1.3) $ (13.7) $ 2.8
======= ======== ========
</TABLE>

The Company recorded an Operating Contribution of $173.4 million in 1997
which was improved over the Operating Contribution of $36.2 million and $30.1
million in 1996 and 1995, respectively. Refining industry conditions improved
in 1997 from the previous two years and the Company had strong operations
despite two major scheduled maintenance turnarounds during the year. However,
principally due to several significant items the Company considers special, it
reported a net loss of $58.2 million in 1997 compared to net losses of $38.5
million and $25.5 million in 1996 and 1995, respectively. Net sales and
operating revenues and cost of goods sold were higher in 1996 than 1997 or
1995 principally because of higher hydrocarbon prices in that period.

Special items totaled $120.1 million in 1997 of which $109.4 million reduced
operating income and $10.7 million was recorded as an extraordinary item for
early retirement of debt. See Note 8 "Long Term Debt" and Note 14
"Recapitalization, Asset Write-offs and Other Charges" to the Consolidated
Financial Statements. The inventory timing adjustment loss of $41.2 million in
1997 was principally due to the timing impact of an over $8 per barrel
decrease in crude oil prices on crude oil purchases, and refined product sale
commitments. Gains in 1996 resulting from rising crude oil prices were offset
by the volatility of the crude oil market principally related to the
uncertainty associated with Iraq's pending reentry into the world markets.
These gains and losses resulted from the fact that feedstock acquisition costs
are fixed on average two to three weeks prior to the manufacture and sale of
the finished products. The Company does not currently hedge this price risk
because of the cost of entering into appropriate hedge-related derivatives and
the long-term nature of such risk. A non-cash accounting charge of $19.2
million was recorded in 1997 to reflect the decline in the value of petroleum
inventories below carrying value caused by the substantial drop in petroleum
prices. Recapitalization, asset write-offs and other costs totaled $49.0
million in 1997. This item included a non-cash charge of $21.8 million
principally to writedown the value of an idled refining capital project that
is being dismantled for

48
<PAGE>

more productive use. A non-cash charge of $16.5 million was also recorded in
1997 due to a change in strategic direction principally for certain legal,
environmental and other accruals related to existing actions. In addition, the
Company incurred costs of $10.7 million in connection with affiliates of
Blackstone acquiring a controlling interest in Clark USA.

REFINING

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------- ------- -------
(IN MILLIONS, EXCEPT
OPERATING DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
PORT ARTHUR REFINERY (ACQUIRED FEBRUARY 27, 1995)
Crude oil throughput (m bbls/day).................... 198.9 199.8 206.6
Production (m bbls/day).............................. 207.7 210.8 213.5
Gross margin (per barrel of production).............. $ 2.28 $ 2.78 $ 3.84
Operating expenses................................... 121.6 164.7 170.7
Net margin......................................... 24.2 49.7 128.6
BLUE ISLAND, HARTFORD AND OTHER REFINING
Crude oil throughput (m bbls/day).................... 133.6 132.7 128.5
Production (m bbls/day).............................. 136.5 134.2 135.8
Gross margin (per barrel of production).............. $ 2.51 $ 2.56 $ 3.79
Operating expenses................................... 130.2 126.6 123.2
Net margin......................................... (4.9) (0.9) 64.9
Divisional general and administrative expenses....... 21.6 23.2 25.6
------- ------- -------
Refining contribution to operating income............ $ (2.3) $ 25.6 $ 167.9
======= ======= =======
</TABLE>

Refining division contribution to operating income in 1997 was $167.9
million, significantly higher than the 1996 ($25.6 million) or 1995 (negative
$2.3 million) contribution. Contribution increased in 1997 due to improved
yields and throughput and wider crude oil quality differentials. Crude oil
quality differential market indicators for light sour crude oil improved from
$1.02 per barrel and $1.24 per barrel in 1995 and 1996, respectively, to $1.71
per barrel in 1997. Market indicators for the benefit for heavy sour crude oil
improved from $4.03 per barrel and $4.78 per barrel in 1995 and 1996,
respectively, to $5.63 per barrel in 1997. The Company believes these crude
oil quality differential indicators improved primarily due to increased
production of heavy and sour crude oil, increased availability of Canadian
light and heavy sour crude oil from the Express and Interprovincial pipelines,
higher levels of industry refinery maintenance turnarounds and milder winter
weather in the first quarter of 1997. Hartford refinery results in 1997
particularly benefited from improved access to lower-cost Canadian heavy crude
oil. Port Arthur refinery results in 1997 were also buoyed by the operational
benefits realized from a first quarter maintenance turnaround. Refining
operating contribution improved in 1996 over 1995 principally because of an
improvement in the Port Arthur refinery's gross margin resulting from
improvements in operating rates, reliability and yields. More normal winter
weather, and corresponding demand, contributed to a 2.4% increase in fuels
demand from 1995 to 1996. However, these positive market trends were more than
offset by reduced by-product margins.

The major scheduled maintenance turnarounds in 1997 at the Port Arthur
refinery and the Hartford refinery resulted in an opportunity cost from lost
production of $19.3 million. Unscheduled downtime at the Blue Island refinery
in 1995 and 1996 reduced gross margins by an estimated $5.5 million and $3.1
million, respectively, in these years.

Operating expenses increased at the Port Arthur refinery from 1995 to 1996
and 1997 principally due to the refinery being owned for a full year in the
last two years versus only 10 months in 1995.

49
<PAGE>

Refinery fuel costs were also much higher in the past two years due to higher
natural gas prices. Operating expenses for the Illinois refineries were higher
in 1995 due to expenses ($6.5 million) associated with unplanned downtime at
the Blue Island refinery. Divisional general and administrative expenses
increased in 1996 and 1997 principally because of the full year inclusion of
administrative functions located at the Port Arthur refinery and higher
incentive pay in 1997 due to a stronger Operating Contribution.

RETAIL

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------- ------- -------
(IN MILLIONS, EXCEPT
OPERATING DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
Core Market Stores
Gasoline volume (mm gals).......................... 838.1 858.7 912.4
Gasoline gross margin (cents/gal).................. 11.9c 10.6c 10.5c
Gasoline gross margin.............................. $ 99.8 $ 91.4 $ 96.1
Convenience product sales.......................... 189.9 201.8 244.3
Convenience product margin and other income........ 46.5 52.2 64.6
Operating expenses................................. 90.3 101.8 118.4
Divisional general and administrative expenses..... 17.7 21.3 22.5
------- ------- -------
Core market store contribution....................... $ 38.3 $ 20.5 $ 19.8
Non-core store contribution and other................ 6.9 4.7 3.1
------- ------- -------
Retail contribution to operating income.............. $ 45.2 $ 25.2 $ 22.9
======= ======= =======
Core Market Stores--Per Month Per Store
Company operated stores (average)(a)............... 595 620 666
Gasoline volume (m gals)........................... 117.4 115.4 115.8
Convenience product sales (thousands).............. $ 26.6 $ 27.1 $ 30.6
Convenience product gross margin (thousands)....... 6.5 7.0 8.1
</TABLE>
- --------
(a) Ten stores included in 1997 operated as convenience stores only.

The retail division contributed $22.9 million to operating income in 1997
(1996--$25.2 million; 1995--$45.2 million). The retail division Operating
Contribution in 1996 and 1997 was below 1995 levels primarily due to pressure
on retail gasoline margins. In 1996, this margin pressure resulted from an
increase in wholesale gasoline costs associated with rising and higher crude
oil prices that was not fully captured in retail selling prices due to an
extremely competitive Midwest retail market environment. Retail margins have
historically benefited when crude oil prices fall, but the benefit of the
crude oil price decline in 1997 was not fully realized because wholesale
prices did not fall as much as crude oil prices and due to highly competitive
retail markets. Gross margins on convenience product sales and monthly
convenience product sales and gross margins per store improved over the last
three years due to the addition of larger stores and an improved mix of higher
margin On The Go(R) convenience products. Operating and general and
administrative expenses have increased over the last three years principally
because of lease expenses and higher operating costs for larger stores
acquired during this period and expansion of the Company's credit card
program.

The Company continued to implement its strategy in 1997 to focus its
Company-operated retail operations on core markets. Over the past three years,
123 stores have been acquired in core markets; 49 of these stores were
acquired in 1997. These stores typically have a much larger convenience store
than the "traditional" Clark store. The Company also was actively marketing in
1997 the remaining stores in non-core markets. During 1997 and the first half
of 1998, 146 stores were sold

50
<PAGE>

to independent operators and it is expected that an additional 32 stores will
be sold or closed by year-end 1998. These stores contributed approximately $5
million to operating income in 1997. Many of these stores will be converted to
the Company's branded jobber program.

OTHER FINANCIAL MATTERS

Corporate and divisional general and administrative expenses increased in
1997 over 1996 and 1995 principally because of accruals for higher incentive
compensation resulting from the Company's stronger Operating Contribution.

Depreciation and amortization expenses increased in 1997 over 1996 and 1995
principally because of amortization of the Port Arthur refinery maintenance
turnaround performed in the first quarter of 1997. In addition, the Company
had higher capital expenditures in 1997.

Interest and financing costs, net, increased in 1997 over 1996 principally
because of incremental debt added by the Company as part of a financial
restructuring of the Company and Clark USA. The Company redeemed $225 million
of its 10 1/2% Senior Notes due 2001 ("10 1/2% Notes") and returned capital of
$215 million to Clark USA so it could repurchase substantially all of its
Senior Secured Zero Coupon Notes due 2000 ("Zero Coupon Notes"). The Company
issued $100 million of the 8 3/8% Notes and $175 million of the 8 7/8% Senior
Subordinated Notes, and entered into the $125 million 1997 Term Loan Agreement
(together, the "November Offering"). See Note 8 "Long Term Debt" and Note 14
"Recapitalization, Asset Write-offs and Other Charges" to the Consolidated
Financial Statements.

The Company operates many computer programs that use only two digits to
identify a year. If these programs are not modified or replaced by the year
2000, such applications and embedded systems could fail or create erroneous
results. Some applications and embedded systems have already been replaced or
modified. The Company has hired outside consultants to assist it in evaluating
the scope of the remaining required program conversions or replacements. The
Company has expended $0.7 million through June 30, 1998 and estimates the cost
of such remaining program conversions or replacements to be approximately $5
million to $10 million, and estimates completion by June 30, 1999. Such costs
will be expensed as incurred and funded from operations. The Company reviews
the progress of its year 2000 program weekly and if it is determined that any
item is falling behind schedule the Company has, or will, identify an
alternative remediation or replacement approach.

In addition, the Company is communicating with, and evaluating the systems
of, its customers, suppliers, financial institutions and others with which it
does business to identify any year 2000 issues. Presently, the Company does
not anticipate that the year 2000 problem will have a material adverse effect
on the operations or financial performance of the Company. There can be no
assurance, however, that the year 2000 problem will not adversely affect the
Company and its business. Likewise, there can be no assurance that the
Company's customers, suppliers, financial institutions and others will be year
2000 compliant.

ACCOUNTING STANDARDS NOT YET ADOPTED

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information." This statement
establishes net standards for reporting information about operating segments
in annual financial statements and requires selected operating segment
information to be reported in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This statement
becomes effective for the Company's financial statements beginning with the
year ended December 31, 1998 at which time restatement of prior period segment
information presented for comparative purposes is required. Interim period
information is not required until the second year of application, at which
time comparative information is required.

51
<PAGE>

In June 1998, the FASB adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. This
statement becomes effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. The Company is currently evaluating this new
standard, the impact it may have on the Company's accounting and reporting,
and planning for when to adopt the standard.

OUTLOOK

Since most of the Company's products are commodities, supply and demand for
crude oil and refined products have a significant impact on the Company's
results. Demand for fuel products has grown by an average of 2% per year since
1992, primarily as a result of increased miles driven and little improvement
in the fuel efficiency of the U.S. automobile fleet. The Company believes that
capital spending in the refining sector is highly correlated to refining
industry profitability. As a result of the high capital spending levels of the
early 1990s, the industry's ability to produce refined products exceeded
demand in recent years. Since then, industry refinery capital spending has
declined. The Company expects that there will continue to be volatility in
refining margins and the Company's earnings because of the seasonal nature of
refined product demand and the commodity nature of the Company's refined
products.

In the short term, retail margins are generally squeezed in periods of rapid
oil price increases, as was the case in 1996, and widen as prices stabilize or
fall. In late 1998, the deadline for UST compliance will be reached. The
Company believes the investment required by these regulations may cause
smaller, less competitive locations to close. In the long term, the Company
believes retail margins are driven by market share and concentration. The
Company believes that, over the last five years, the Company's Midwest market
has averaged among the lowest margins in the U.S. due to its relatively high
level of fragmentation.

LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------ -----------------
1995 1996 1997 1997 1998
------- ------- ------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION:
Cash and short-term investments...... $ 106.6 $ 334.3 $ 244.6 $ 271.9 $ 190.3
Working capital...................... 193.1 399.5 263.7 369.6 233.8
Property, plant and equipment........ 549.3 555.7 575.6 571.1 574.4
Long-term debt....................... 420.4 417.6 587.4 416.1 582.4
Stockholder's equity................. 304.1 534.1 260.9 539.3 230.8
Operating Cash Flow.................. 7.6 (4.6) 72.6 36.7 45.4
</TABLE>

Net cash provided by operating activities, excluding working capital changes
("Operating Cash Flow"), for the six months ended June 30, 1998 was $45.4
million compared to $36.7 million in the year-earlier period. Working capital
as of June 30, 1998 was $233.8 million, a 1.70-to-1 current ratio, versus
$263.7 million as of December 31, 1997, a 1.74-to-1 current ratio. Total
working capital decreased in the first half of 1998 principally due to the
non-cash inventory write-down of $30.9 million and debt reduction.

Operating Cash Flow for the year ended December 31, 1997 was $72.6 million
compared with net cash used of $4.6 million in 1996 and Operating Cash Flow of
$7.6 million in 1995. Operating Cash Flow improved in 1997 principally because
of a stronger refining margin environment and improved refining productivity.
Working capital as of December 31, 1997 was $263.7 million, a 1.74 to 1
current ratio, versus $399.5 million, a 2.00 to 1 current ratio, as of
December 31, 1996 and $193.1 million, a

52
<PAGE>

1.48 to 1 current ratio, as of December 31, 1995. Working capital decreased
during 1997 principally because of the acquisition of 48 retail stores in
Michigan, the capital cost of the Port Arthur and Hartford refinery
maintenance turnarounds, the return of capital to Clark USA, and lower
inventory carrying values caused by the decrease in hydrocarbon prices in
1997. Working capital increased in 1996 as a result of the sale of an advance
crude oil purchase receivable contributed by Clark USA for net cash proceeds
of $235.4 million.

As part of its overall inventory management and crude acquisition
strategies, the Company routinely buys and sells, in varying degrees, crude
oil in the spot market. Such ongoing activities carry various payment terms
and require the Company to maintain adequate liquidity and working capital
facilities. The Company's short-term working capital requirements fluctuate
with the pricing and sourcing of crude oil. Historically, the Company's
internally generated cash flows have been sufficient to meet its needs. The
Credit Agreement is used for the issuance of letters of credit primarily for
the purchase of crude oil and other feedstocks and refined products.

In September 1997, the Company entered the Credit Agreement which provides
for borrowings and the issuance of letters of credit. In connection with the
Lima Acquisition, the Credit Agreement was amended on August 10, 1998 to
increase the facility to the lesser of $700 million or the amount of a
borrowing base calculated with respect to the Company's cash and cash
equivalents, eligible investments, eligible receivables and eligible petroleum
inventories provided that direct borrowings are limited to the principal
amount of $150 million. Borrowings under the Credit Agreement are secured by a
lien on substantially all of the Company's cash and cash equivalents,
receivables, crude oil, refined product inventories and other inventories and
trademarks and other intellectual property. The amount available under the
borrowing base associated with such facility at June 30, 1998, and prior to
the Lima Acquisition, was $372 million and approximately $197 million of the
facility was utilized for letters of credit. As of June 30, 1998, there were
no direct borrowings under the Credit Agreement and the Company was in
compliance with all covenants of the Credit Agreement.

The Credit Agreement contains covenants and conditions which, among other
things, limit dividends, indebtedness, liens, investments, contingent
obligations and capital expenditures, and require the Company to maintain its
property and insurance, to pay all taxes and comply with all laws, and to
provide periodic information and conduct periodic audits on behalf of the
lenders. The Company is also required to comply with certain financial
covenants. The financial covenants are: (i) maintenance of working capital of
at least $150 million; (ii) maintenance of a tangible net worth (as defined)
of at least $280 million (subject to adjustment); and (iii) maintenance of
minimum levels of balance sheet cash (as defined) of $50 million. The
covenants also provide for a cumulative cash flow test, as defined in the
Credit Agreement, that, from March 31, 1997, shall not be less than or equal
to zero. The Credit Agreement also limits the amount of future additional
indebtedness that may be incurred by the Company, subject to certain
exceptions, including a general exception for up to $75 million of
indebtedness.

Cash flows used in, and from, investing activities (excluding short-term
investment activities which the Company manages similar to cash and cash
equivalents) are primarily affected by acquisitions and capital expenditures,
including refinery maintenance turnarounds. Cash flows used in investing
activities in the first six months of 1998 (excluding short-term investments)
were $31.7 million as compared to $67.7 million in the year-earlier period.
Cash flows used in investing activities in 1998 were reduced by proceeds of
$13.9 million from the sale of certain non-core retail stores. The higher
investing activities in 1997 resulted principally from the Port Arthur
refinery turnaround ($30.0 million) and the acquisition and subsequent image
conversion of 48 retail stores in Michigan ($20.1 million). Refinery capital
expenditures totaled $22.6 million in the first half of 1998 (1997--$12.5
million) principally related to a project to increase the throughput of
Canadian heavy, sour crude oil at the Hartford refinery, a project to upgrade
vacuum tower bottoms at the Blue Island refinery and various mandatory
expenditures at the Port Arthur refinery. Turnaround expenditures in the first
half of 1998

53
<PAGE>

related to the previously-mentioned Blue Island refinery turnaround and to a
Port Arthur refinery turnaround currently scheduled for early 1999. Retail
capital expenditures for the first six months of 1998 totaled $10.1 million
(1997--$6.3 million, excluding the Michigan acquisition and subsequent image
conversion) and were principally for underground storage tank-related work.

Cash flows used in investing activities (excluding short-term investments)
in 1997 were $123.6 million as compared to cash flow generated in 1996 of
$180.9 million and cash flow used in 1995 of $118.5 million. Two major
refinery maintenance turnarounds and a large retail store acquisition
increased cash flow used in investing activities in 1997. Cash flow was
generated in 1996 from the sale of an advance crude oil purchase receivable
contributed to the Company by Clark USA. Cash flow used in investing
activities in 1995 was higher principally because of the Port Arthur refinery
acquisition. Capital expenditures for property, plant and equipment totaled
$81.7 million in 1997 (1996--$45.0 million; 1995--$42.1 million) and
expenditures for refinery maintenance turnarounds totaled $47.4 million
(1996--$13.9 million; 1995--$6.5 million). Capital expenditures were reduced
in 1996 and 1995 in response to lower Operating Cash Flow. Refining division
capital expenditures were $32.0 million in 1997 (1996--$19.4 million, 1995--
$15.8 million). Approximately one-half of 1997 and 1996 expenditures were
discretionary, with the balance and most of 1995 expenditures primarily for
mandatory maintenance and environmental expenditures. Discretionary refining
capital expenditures in 1997 were principally to increase the ability of the
Hartford refinery to process heavy, sour Canadian crude oil and
debottlenecking improvements to the Port Arthur refinery's FCC unit. Retail
capital expenditures in 1997 totaled $45.7 million (1996--$24.6 million;
1995--$25.2 million). Retail capital expenditures increased in 1997 due to the
acquisition and subsequent image conversion of 48 retail stores in Michigan
($21 million). Approximately one-half of 1996 and 1995 expenditures were for
regulatory compliance, principally underground storage tank-related work and
vapor recovery.

In February 1995, the Company acquired the Port Arthur refinery from Chevron
for approximately $70 million, plus inventory and spare parts of approximately
$122 million and the assumption of certain liabilities estimated at $19.4
million. The purchase agreement also provided for contingent payments to
Chevron of up to $125 million over a five-year period from the closing date of
the Port Arthur refinery 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, they would not have a
material adverse effect on the Company since the Company would also benefit
from such increased margins. Such contingent payments were not payable for the
first three measurement periods ended September 30, 1995, 1996 and 1997, and
based on these industry margin indicators from inception through June 30,
1998, the Company had a cumulative benefit of approximately $38.2 million
applicable to future calculations.

The Company classifies its capital expenditures into two categories,
mandatory and discretionary. Mandatory maintenance capital expenditures are
required to maintain safe and reliable operations, and mandatory environmental
expenditures are required to comply with regulations pertaining to ground,
water and air contamination and occupational, safety and health issues. The
Company estimates that total mandatory capital and turnaround expenditures
through 2000 will average approximately $85.0 million per year in the refining
division and $10.0 million per year in the retail division. Costs to comply
with future regulations cannot be estimated.

Expenditures to comply with reformulated and low-sulfur fuels regulations
are primarily discretionary, subject to market conditions and economic
justification. These fuel 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. The
Company's Port Arthur, Blue Island and Hartford refineries have the capability
to produce approximately 60%, 60%, and 25%, respectively, of their gasoline

54
<PAGE>

production in RFG. Each refinery's maximum RFG production may be limited based
on the clean fuels attainment of the Company's total refining system. The Port
Arthur refinery has the capability to produce 100% low-sulfur diesel fuel.

The Company has a philosophy to link total capital expenditures to cash
generated from operations. The Company has a total capital and refinery
maintenance turnaround expenditure budget of approximately $130 million for
1998. Total capital expenditures may be under budget if cash flow is less than
expected, and higher than budget if cash flow is better than expected.

Cash flows used in financing activities for six months of 1998 increased as
compared to the same period in 1997 principally because of the return of
capital to the Company's parent, Clark USA, for its debt service requirements
and the repurchase of the Company's 9 1/2% Notes tendered under its required
change of control offer ($3.3 million).

Cash flow used by financing activities was $61.0 million in 1997 as compared
to cash flow provided by financing activities of $30.0 million and $174.7
million in 1996 and 1995, respectively. In November 1997, the Company returned
capital of $215 million to Clark USA so that it could repurchase for $206.6
million, $259.2 million (value at maturity) of its Zero Coupon Notes tendered
pursuant to a tender offer. Clark USA called the remaining outstanding Zero
Coupon Notes on February 15, 1998. Also in November 1997, the Company
completed an offering of notes, receiving net proceeds of approximately $390
million. On December 24, 1997, the Company redeemed all $225 million of the 10
1/2% Notes outstanding at a price of $1,032.96 for each $1,000.00 principal
amount of the Notes. In 1995, financing activities reflected the partial
financing of the Port Arthur refinery acquisition with the contribution of
capital by Clark USA (the balance was financed with cash on hand), fees
related to the larger working capital facility associated with the expanded
working capital needs of the Company following the Port Arthur refinery
acquisition and two capital leases associated with the sale and leaseback of
certain refinery equipment at the Hartford and Port Arthur refineries.

On November 3, 1997, Blackstone acquired the 13,500,000 shares of Common
Stock of Clark USA previously held by TrizecHahn and certain of its
subsidiaries, as a result of which Blackstone obtained a controlling interest
in Clark USA. This transaction triggered the change of control covenant in
Clark USA's Zero Coupon Notes and the Company's 9 1/2% Notes and 10 1/2% Notes
and could have triggered the Change of Control covenant in the Clark USA's 10
7/8% Notes had it resulted in a Ratings Decline (as defined) during the 90
days following the change of control. Under such covenants, noteholders had
the right to require the Company and Clark USA to repurchase their notes at
101% of face value. However, all of the 10 1/2% Notes and the Zero Coupon
Notes were redeemed or repurchased by the Company and Clark USA in late 1997
and early 1998 in connection with the November Offering, and the Company was
only required to repurchase $3.3 million of the 9 1/2% Notes during the change
of control tender period. In addition, the Blackstone Transaction did not
result in a Ratings Decline. The Company's Credit Agreement was amended to
permit the acquisition by Blackstone of the Company's Common Stock.

Funds generated from operating activities together with existing cash, cash
equivalents and short-term investments, are expected to be adequate to fund
existing requirements for working capital and capital expenditure programs for
the next year. Due to the commodity nature of its products, the Company's
operating results are subject to rapid and wide fluctuations. While the
Company believes that its maintenance of large cash, cash equivalents and
short-term investment balances and its operating philosophies will be
sufficient to provide the Company with adequate liquidity through the next
year, there can be no assurance that market conditions will not be worse than
anticipated. Future working capital, discretionary capital expenditures,
environmentally mandated spending and acquisitions may require additional debt
or equity capital.

In March 1998, the Company announced that it had entered into a long-term
crude oil supply agreement with P.M.I. Comercio Internacional, S.A. de C.V.,
an affiliate of Petroleos Mexicanos, the

55
<PAGE>

Mexican state oil company. The terms of the contract provide the Company with
the foundation necessary to continue developing a project to upgrade the Port
Arthur refinery to process primarily lower-cost, heavy sour crude oil. Under
the agreement, the Company expects to purchase in the range of 150,000 to
210,000 bpd of heavy, sour Maya crude oil for use at the Port Arthur refinery.
The supply contract would assist in stabilizing earnings and cash flows from
the project. The contract period would run for a minimum of eight years from
the completion of the project, which could be as early as January 2001. The
Port Arthur refinery has several important characteristics that make it
attractive for this type of arrangement. Its Gulf Coast location provides
excellent access to waterborne Mexican crude oil. Additionally, the refinery
already has much of the infrastructure and processing capability necessary to
support an upgraded operation.

The project, which the Company expects to generate attractive returns, is
currently projected to cost approximately $600-$700 million and is currently
expected to be financed on a non-recourse basis to the Company and Clark USA.
The project will include construction of an 80,000 bpd delayed coker and a
35,000 bpd hydrocracking unit and expansion of the crude unit capacity to
approximately 250,000 bpd. If the project is completed, the Port Arthur
refinery will have the ability to process heavy, sour crude oil up to an
estimated 80% of its capacity. The implementation of the project is subject to
certain conditions, such as final determination of economic and technical
feasibility, arrangement of suitable financing, and securing appropriate tax
abatements. The Company currently expects to begin construction of the project
in the fourth quarter of 1998 and to have the financing in place early in
1999.

On August 10, 1998, the Company acquired the Lima Refinery for $175 million
plus inventory of approximately $40 million. The Company funded the Lima
Acquisition and related costs with $5 million of cash on hand and the proceeds
from the Old Notes and from an additional $115 million term loan under the
Amended and Restated Term Loan Agreement. An additional net working capital
investment of $20 million is expected to be incurred in the two months
following the acquisition as intransit inventories are purchased and funded
from existing cash. From 1991-1997, BP invested an aggregate of approximately
$212 million in the Lima Refinery. Based on the Company's due diligence, the
Company expects mandatory capital expenditures to average approximately $20
million per year for the period from 1999 to 2002 and turnaround expenses to
cost approximately $30 million once every five years. The Lima Refinery is
scheduled to have the first such major maintenance turnaround in 1999. The
Company expects cash flows from the Lima Refinery to be adequate to cover
incremental financing and mandatory capital and turnaround costs.

In 1997, the Company determined that its minority interests in the Offered
Pipelines were not strategic since the Company's shipping rights are assured
due to the pipelines' operation as common carrier pipelines and the Company's
historical throughput on such pipelines. During July 1998, the Company sold
its interest in the Westshore Pipe Line Company and the Wolverine Pipe Line
Company for net proceeds of approximately $17 million, resulting in an after-
tax book gain of approximately $12 million. In September 1998, the Company
sold its interests in the remaining two pipeline companies for net proceeds of
approximately $57 million that resulted in an estimated after-tax book gain of
approximately $56 million. The Offered Pipelines contributed approximately $8
million of dividends for the fiscal year ended December 31, 1997.

56
<PAGE>

QUARTERLY FINANCIAL INFORMATION

The following quarterly financial information has been prepared from the
financial records of the Company without audit, and reflects all adjustments
which are, in the opinion of management, necessary for fair presentation of
the results of operations for the interim periods presented.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1998
Net sales............................. $ 823.5 $ 977.6
Gross profit.......................... 134.5 182.8
Operating income (loss)............... (31.5) 33.1
Net earnings (loss)................... (42.7) 22.1
1997
Net sales............................. $ 999.0 $1,173.7 $1,123.6 $1,039.4
Gross profit.......................... 105.4 192.7 206.9 125.0
Operating income (loss)............... (29.3) 59.0 64.6 (91.5)
Net earnings (loss)................... (37.4) 42.6 51.2 (114.6)
1996
Net sales............................. $1,140.2 $1,334.7 $1,249.5 $1,348.3
Gross profit.......................... 115.0 134.8 128.3 134.6
Operating income (loss)............... (12.1) 9.0 (4.3) (6.3)
Net earnings (loss)................... (13.6) (1.0) (9.3) (14.6)
</TABLE>

57
<PAGE>

BUSINESS

COMPANY OVERVIEW

The Company is one of the five largest independent refiners and marketers of
petroleum products in the U.S., with one Texas Gulf Coast refinery, one Ohio
refinery and two Illinois refineries representing over 540,000 bpd of rated
crude oil throughput capacity. The Company is also currently one of the ten
largest direct operators of gasoline and convenience stores in the U.S., with
692 retail outlets in six Midwestern states (as of June 30, 1998). The Company
also distributes its products through an additional 170 independently operated
Clark branded outlets. The Company's retail network has conducted operations
under the Clark brand name for over 65 years. The Company also markets
gasoline, diesel fuel and other petroleum products on a wholesale unbranded
basis.

The Company is a Delaware corporation, with its principal executive offices
located at 8182 Maryland Avenue, St. Louis, Missouri 63105, telephone number
(314) 854-9696.

COMPANY HISTORY

All of the outstanding common stock of the Company is owned by Clark USA.
Clark USA was formed in November 1988 by Trizec Hahn Corporation (formerly The
Horsham Corporation, "TrizecHahn") and a minority shareholder to acquire
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) and its subsidiaries
("Old Clark") and certain other assets and liabilities. In December 1992,
TrizecHahn and Clark USA entered into a transaction with the minority
shareholder that resulted in TrizecHahn increasing its ownership from 60% to
100% of the outstanding equity of Clark USA at that time.

On February 27, 1995, Clark USA sold $135 million of common stock to a
wholly owned subsidiary of TrizecHahn. The TrizecHahn subsidiary immediately
resold $120 million of such stock to certain affiliates (the "Tiger Funds") of
Tiger Management Corporation ("Tiger"), representing an equity ownership
interest of 40% of Clark USA at that time. As a result of these sales of
common stock, the Company received an equity contribution of $150 million from
Clark USA and used these proceeds along with existing cash to acquire from
Chevron the Port Arthur refinery for approximately $70.0 million, plus
approximately $122.0 million for inventory and spare parts, and the assumption
of certain liabilities estimated at $19.4 million. The Company is also
obligated under certain circumstances to pay to Chevron contingent payments
(the "Chevron Contingent Payments") pursuant to a formula based on refining
industry margin indicators and the volume of crude oil processed at the Port
Arthur refinery over a five-year period. The maximum total amount of the
Chevron Contingent Payments is $125 million. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." The Port Arthur refinery increased the Company's crude oil
throughput capacity by over 140% and expanded its market to the Gulf Coast of
the U.S.

In December 1995, an affiliate of Occidental C.O.B. Partners ("Oxy")
acquired approximately 19% of the equity in Clark USA in exchange for the
delivery of certain amounts of crude oil over a six-year period ending in
2001. Clark USA contributed the Oxy advance crude oil purchase receivable to
the Company in October 1996 and the Company sold the receivable for net cash
proceeds of $235.4 million. See "Business--The Oxy Advance Crude Oil Purchase
Receivable Transactions."

On October 1, 1997, Clark USA and its stockholders completed an equity
recapitalization whereby all previously issued shares of Class A Common Stock
of Clark USA held by the Tiger Funds of Tiger (then representing approximately
31% of the total voting power of all classes of Clark USA stock) were
reclassified into Class E Common Stock. TrizecHahn then purchased all of the
Class E Common Stock

58
<PAGE>

for $7.00 per share in cash, resulting in a total purchase price of $63.0
million. All of such shares of Class E Common Stock were subsequently
reclassified into 63,000 shares of the 11 1/2% Preferred Stock of Clark USA
and sold to institutional investors.

In addition, the shares of common stock of Clark USA owned by Oxy were
exchanged for an equal number of shares of Class F Common Stock having voting
rights limited as a class to the lesser of (a) the aggregate voting power of
such shares on a one-vote-per-share basis and (b) 19.9% of the total voting
power of all classes of Clark USA's voting stock. The Class F Common Stock is
convertible at any time to Common Stock of Clark USA, on a one-for-one basis,
at the option of any holder other than Oxy and its affiliates. Clark USA also
issued to Oxy an additional 545,455 shares of Class F Common Stock in full
satisfaction of Clark USA's obligation to issue shares under its then existing
Stockholders' Agreement with Oxy.

On November 3, 1997, Blackstone acquired all of the 13,500,000 shares of the
Company's common stock previously held by TrizecHahn and certain of its
subsidiaries (the "Blackstone Transaction"). As a result, Blackstone obtained
a 68.0% equity interest (78.5% voting interest) in the Company. The Company's
other principal shareholder is Occidental Petroleum Corporation with a 30.7%
equity interest (19.9% voting interest).

BUSINESS STRATEGY

. 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 its performance management, profit sharing or other
incentive plans, and the Company has a stock incentive plan for certain
key employees.

59
<PAGE>

. Maintaining Strong Liquidity and Financial Flexibility. The Company and
Clark USA will continue to seek to improve their capital structure. The
Company has historically maintained significant liquidity and, as of
June 30, 1998, had a cash balance of approximately $190 million. The
equity recapitalization and the debt refinancing and repayment completed
in October and November 1997 were designed to strengthen the balance
sheet of Clark USA and the Company by extending debt maturities,
increasing prepayment flexibility and lowering the overall borrowing
cost. The sale of the Offered Pipelines (as defined below), added
approximately $74 million of cash to the Company's balance sheet. The
Company believes the Lima Acquisition provides the opportunity to
increase earnings and cash flows which, in turn, better positions the
Company to access the public equity markets and further improve its
capital structure.

REFINING

OVERVIEW

The refining division operates one refinery in Texas, one refinery in Ohio
and two refineries in Illinois with a combined crude oil throughput capacity
of approximately 540,000 bpd. The Company also owns 17 product terminals
located in its Midwest and Gulf Coast market areas, two crude oil terminals,
an LPG terminal and crude oil pipeline interests. The Company's refining crude
oil throughput capacity ranks it as one of the five largest independent
refining and marketing companies in the U.S.

STRATEGY

Since the refining division operates in a commodity-based market environment
in which market prices for crude oil and refined products fluctuate
significantly, the refining division's business strategy focuses on those
areas it can control. The refining division's strategy includes the following
key elements:

. Improving Productivity. The refining division focuses on initiatives
requiring little or no capital investment that increase production,
improve product yields and recoveries or reduce operating costs.
Comprehensive plant-level programs focus on comparisons to industry
benchmark studies as a tool to develop strategies that improve plant
reliability.

. Adding Scale Through Acquisitions. As part of its growth strategy, the
refining division seeks attractive assets that may be acquired at
favorable valuations. The Lima Acquisition and Port Arthur Refinery
acquisition are examples of this type of strategy. The Company believes
current industry conditions may offer similar opportunities in the
future.

. Optimizing Capital Investments. Refining capital expenditures are linked
to cash flow generated from operations. The Company emphasizes an
entrepreneurial approach to discretionary expenditures, and to perceived
mandatory expenditures, such as those required to comply with
reformulated and low-sulfur fuels regulations. The Company may seek to
comply with regulations through the use of alternative markets for
existing products if adequate returns on investment are not assured.
Most discretionary capital expenditures in the past three years have had
payback periods of less than four years.

. Promoting Entrepreneurial Culture. Refining division employees are
involved in a team-based approach aimed at improving operations. All
employees participate in some form of gain-sharing program. The Company
believes this philosophy has significantly contributed to past
productivity gains.

60
<PAGE>

PORT ARTHUR REFINERY

The Port Arthur refinery is located in Port Arthur, Texas, approximately 90
miles east of Houston, and is situated on an approximately 4,000 acre site.
The refinery initially began processing oil in 1901 following the first
discovery of oil in Texas. The refinery has a rated crude oil throughput
capacity of approximately 225,000 bpd and the ability to process 100% sour
crude oil, including up to 20% heavy crude oil, and has coking capabilities.
Heavy sour crude oil has historically been available at substantially lower
cost when compared to light sweet crude oil such as WTI. The Port Arthur
refinery has the ability to produce jet fuel, 100% low-sulfur diesel fuel, 55%
summer RFG and 75% winter RFG. 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 Midcontinent and Eastern U.S.
as well as in export markets.

Since acquiring the Port Arthur refinery in early 1995, the Company has
increased crude oil throughput capability from approximately 178,000 bpd to
its current 225,000 bpd and has lowered operating expenses by approximately
50c per barrel. From the date of the acquisition through June 30, 1998, the
Port Arthur refinery has generated an Operating Contribution of approximately
$281.0 million.

In March 1998, the Company announced that it had entered into a long-term
crude oil supply agreement with P.M.I. Comercio Internacional, S.A. de C.V.,
an affiliate of Petroleos Mexicanos, the Mexican state oil company. The terms
of the contract provide the Company with the foundation necessary to continue
developing a project to upgrade the Port Arthur refinery to process primarily
lower-cost, heavy sour crude oil. Under the agreement, the Company expects to
purchase in the range of 150,000 to 210,000 bpd of heavy, sour Maya crude oil
for use at the Port Arthur refinery. The supply contract would also assist in
stabilizing earnings and cash flows from the project. The contract period
would run for a minimum of eight years from the completion of the project,
which could be as early as January 2001. The Port Arthur refinery has several
important characteristics that make it attractive for this type of
arrangement. Its Gulf Coast location provides excellent access to waterborne
Mexican crude oil. Additionally, the refinery already has much of the
infrastructure and processing capability necessary to support an upgraded
operation.

61
<PAGE>

The feedstocks and production of the Port Arthur refinery for the ten months
it was owned in 1995 and for the full years ended December 31, 1996 and 1997,
and the six months ended June 30, 1997 and 1998 were as follows:

PORT ARTHUR REFINERY FEEDSTOCKS AND PRODUCTION

<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
DECEMBER 31, -------------------------- ---------------------------
1995 1996 1997(A) 1997(A) 1998
------------ ------------ ------------ ------------- ------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(BARRELS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEEDSTOCKS
Light Sweet Crude Oil.. 22,268 35.0% 11,018 14.5% 8,395 11.1% 5,708 17.0% 3,842 9.3%
Light Sour Crude Oil... 31,518 49.5 36,855 48.3 34,815 46.2 8,262 24.6 15,307 37.0
Heavy Sweet Crude Oil.. -- -- 23,920 31.4 5,694 7.6 4,481 13.3 834 2.0
Heavy Sour Crude Oil... 7,488 11.8 1,327 1.7 26,482 35.1 16,404 48.9 21,238 51.4
Unfinished &
Blendstocks........... 2,349 3.7 3,128 4.1 -- -- (1,278) (3.8) 105 0.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 63,623 100.0% 76,248 100.0% 77,005 100.0% 33,577 100.0% 41,326 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
PRODUCTION
Gasoline
Unleaded............... 13,966 21.8 20,840 27.0 19,944 25.6 8,691 24.2 15,130 36.3
Premium Unleaded....... 13,030 20.4 12,258 15.9 11,132 14.3 4,891 13.6 3,242 7.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
26,996 42.2 33,098 42.9 31,076 39.9 13,582 37.8 18,372 44.1
Other Products
Low-Sulfur Diesel
Fuel.................. 14,739 23.1 17,443 22.6 21,760 27.9 9,301 25.9 11,047 26.5
Jet Fuel............... 9,047 14.1 11,166 14.5 8,123 10.4 4,085 11.4 4,640 11.1
Petrochemical
Products.............. 5,382 8.4 6,751 8.7 9,474 12.2 3,908 10.9 4,159 10.0
Others................. 7,794 12.2 8,703 11.3 7,506 9.6 5,050 14.0 3,444 8.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
36,962 57.8 44,063 57.1 46,863 60.1 22,344 62.2 23,290 55.9
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 63,958 100.0% 77,162 100.0% 77,939 100.0% 35,926 100.0% 41,662 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day.............. 207.7 210.8 213.5 198.5 230.2
</TABLE>
- --------
(a) Feedstocks and production in 1997 reflect maintenance turnaround downtime
of approximately one month on selected units.

LIMA REFINERY

See "The Lima Acquisition" and "Summary of Company Estimates Regarding the
Lima Acquisition."

ILLINOIS REFINERIES

The Company's Illinois refineries, Blue Island (near Chicago, Illinois) and
Hartford (near St. Louis, Missouri), are supplied by common carrier crude oil
pipelines and are located on inland waterways with barge access. The
refineries have access to multiple sources of foreign and domestic crude oil
and benefit from crude oil input flexibility. Recent pipeline expansions,
including the new capacity of the Express Pipeline and expanded capacity on
the Interprovincial Pipeline, have served to increase the availability of
lower-cost crude oil to the Company's Illinois refineries. 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 Company believes that the
Midwest location of these refineries has provided relatively high refining
margins with less volatility than comparable operations located in other
regions of the U.S., principally because demand for refined products has
exceeded production in the region. This excess demand has been satisfied by
imports from other regions, providing Midwest refineries with a transportation
advantage.

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

62
<PAGE>

Canal. The facility was initially constructed in 1945 and, through a series of
improvements and expansions, has reached a crude oil capacity of 80,000 bpd,
although actual average monthly throughput rates are sustained at levels in
excess of rated capacity during certain times of the year. 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 the flexibility to produce up to 60% RFG and some low-sulfur diesel
fuel when market prices warrant and based on the clean fuels attainment of the
Company's total refining system. During most of the year, gasoline is the most
profitable refinery product.

Since 1992, the Company has increased the crude oil throughput capability at
the Blue Island refinery by approximately 10,000 bpd, introduced light sour
crude oil as a lower-cost feedstock, improved the FCC unit operation and
introduced the capability to produce RFG.

The feedstocks and production of the Blue Island refinery for the years
ended December 31, 1995, 1996 and 1997 and the six months ended June 30, 1997
and 1998 were as follows:

BLUE ISLAND REFINERY FEEDSTOCKS AND PRODUCTION

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- --------------------------
1995(A) 1996(A) 1997 1997 1998(A)
------------ ------------ ------------ ------------ ------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(BARRELS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Feedstocks
Light Sweet Crude Oil.. 18,975 74.0% 21,203 84.2% 18,871 72.3% 9,214 67.3% 7,165 68.1%
Light Sour Crude Oil... 6,318 24.6 3,860 15.3 6,617 25.4 3,808 27.8 2,881 27.4
Unfinished &
Blendstocks .......... 347 1.4 132 0.5 606 2.3 672 4.9 468 4.5
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 25,640 100.0% 25,195 100.0% 26,094 100.0% 13,694 100.0% 10,514 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Production
Gasoline
Unleaded............... 12,737 50.1 12,497 50.9 13,753 52.5 7,284 54.9 5,810 55.4
Premium Unleaded....... 3,540 13.9 2,922 11.6 3,055 11.7 1,447 10.9 1,212 11.6
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
16,277 64.0 15,419 62.5 16,808 64.2 8,731 65.8 7,022 67.0
Other Products
Diesel Fuel............ 5,133 20.2 5,690 22.5 5,422 20.7 2,854 21.5 1,960 18.7
Others................. 4,016 15.8 3,755 15.0 3,937 15.1 1,692 12.7 1,504 14.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
9,149 36.0 9,445 37.5 9,359 35.8 4,546 34.2 3,464 33.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 25,426 100.0% 24,864 100.0% 26,167 100.0% 13,277 100.0% 10,486 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day.............. 69.7 68.0 71.7 73.4 57.9
</TABLE>
- --------
(a) Output during 1995, 1996 and the six months ended June 30, 1998 was
reduced by significant planned and unplanned downtime.

HARTFORD REFINERY

The Hartford refinery is located in Hartford, Illinois, approximately 17
miles northeast of St. Louis. 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 65,000 bpd. The Hartford refinery includes a coker unit and,
consequently, has the ability to process a variety of crude oil including
lower cost, heavy sour crude oil into higher-value products such as gasoline
and diesel fuel. The Hartford refinery has the capability to process
approximately 50% heavy sour crude oil and 25% medium sour crude oil. This
upgrading capability allows the refinery to benefit from higher margins if
heavy sour crude oil is at a significant discount to light sweet crude oil.

Since 1992, the Company has increased the crude oil throughput capability at
the Hartford refinery by approximately 10,000 bpd, improved overall liquid
recovery by approximately 3%, improved FCC

63
<PAGE>

unit yields by approximately 3%, increased higher-valued crude unit yields by
approximately 2,000 bpd and dramatically reduced combined "recordable" and
"days away from work" rates from 27 in 1990 to an average of less than 4
during the period from 1994 to 1997.

The feedstocks and production of the Hartford refinery for the years ended
December 31, 1995, 1996 and 1997 and six months ended June 30, 1997 and 1998
were as follows:

HARTFORD REFINERY FEEDSTOCKS AND PRODUCTION

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- ---------------------------
1995 1996 1997(A) 1997(A) 1998
------------ ------------ ------------ ------------ -------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(BARRELS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEEDSTOCKS
Light Sweet Crude Oil.. 5,008 20.8% 3,725 15.5% 2,579 10.9% 481 4.1% 1,366 12.5%
Light Sour Crude Oil... 13,520 56.0 19,588 81.4 13,626 57.9 5,912 50.1 3,205 29.3
Heavy Sour Crude Oil... 4,960 20.6 179 0.7 5,200 22.1 5,079 43.1 6,886 62.9
Unfinished &
Blendstocks........... 637 2.6 567 2.4 2,149 9.1 317 2.7 (511) (4.7)
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 24,125 100.0% 24,059 100.0% 23,554 100.0% 11,789 100.0% 10,946 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
PRODUCTION
Gasoline
Unleaded............... 11,497 47.2 10,882 44.9 11,481 49.0 5,578 45.4 4,967 43.8
Premium Unleaded....... 1,723 7.1 1,728 7.1 926 4.0 483 4.0 324 2.9
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
13,220 54.3 12,610 52.0 12,407 53.0 6,061 49.4 5,291 46.7
Other Products
High-Sulfur Diesel
Fuel.................. 8,090 33.2 8,950 36.9 7,149 30.5 3,763 30.6 3,091 27.3
Others................. 3,060 12.5 2,703 11.1 3,850 16.5 2,455 20.0 2,952 26.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
11,150 45.7 11,653 48.0 10,999 47.0 6,218 50.6 6,043 53.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 24,370 100.0% 24,263 100.0% 23,406 100.0% 12,279 100.0% 11,334 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day.............. 66.8 66.2 64.1 67.8 62.6
</TABLE>
- --------
(a) The 1997 results reflect maintenance turnaround downtime of approximately
one month on selected units.

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 15 product
terminals with a combined capacity of approximately 3.8 million barrels
throughout its upper Midwest market area. In addition to cost efficiencies in
supplying its retail network, the terminal distribution system allows
efficient distribution of refinery production. The Company also owns a crude
oil and refined product terminal, a refined products terminal and an LPG
terminal with a combined capacity of approximately 7.1 million barrels
associated with the Port Arthur refinery in Texas.

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

The Company's pipeline interests, as of June 30, 1998, were as follows:

<TABLE>
<CAPTION>
PIPELINE TYPE INTEREST ROUTE
- -------- ---- -------- -----
<S> <C> <C> <C>
Southcap*............... Crude oil 36.0% St. James, LA to Patoka, IL
Chicap*................. Crude oil 22.7 Patoka, IL to Mokena, IL
Clark Port Arthur....... Crude oil and products 100.0 Port Arthur and Beaumont, TX
Wolverine*+............. Products 9.5 Chicago, IL to Toledo, OH
West Shore*+............ Products 11.1 Chicago, IL to Green Bay, WI
</TABLE>
- --------
* Denotes Offered Pipelines.
+ Sold in July 1998.

64
<PAGE>

These pipelines operate as common carriers pursuant to published pipeline
tariffs, which also apply to use by the Company. The Company also owns a
proprietary refined products pipeline from the Blue Island refinery to its
terminal in Hammond, Indiana, and from the Port Arthur refinery to its LPG
terminal in Fannett, Texas.

In 1997, the Company determined that its minority interests in the Offered
Pipelines were not strategic since the Company's shipping rights are assured
due to the pipelines' operation as common carrier pipelines and the Company's
historical throughput. During July 1998, the Company sold its interest in the
Westshore Pipe Line Company and the Wolverine Pipe Line Company for net
proceeds of approximately $17 million, resulting in an after-tax book gain of
approximately $12 million. In September 1998, the Company sold its interests
in the remaining two pipeline companies for net proceeds of approximately $57
million that resulted in an estimated after tax book gain of approximately $56
million. The Offered Pipelines contributed approximately $8 million of
dividends for the fiscal year ended December 31, 1997.

SUPPLY AND DISTRIBUTION

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

The Port Arthur refinery's Texas Gulf Coast location provides access to
numerous cost-effective domestic and international crude oil sources which can
be accessed by waterborne delivery or through the West Texas Gulf pipeline.
The Company's Illinois refineries are located on major inland water
transportation routes and are connected to various local, interstate and
Canadian common carrier 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 Canadian crude oil
through the Express Pipeline and the Mobil/IPL 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.

The Company has several crude oil supply contracts that total approximately
141,000 bpd with several third-party suppliers, including P.M.I. Comercio
Internacional, S.A. de C.V., an affiliate of Petroleos Mexicanos, S.A. de
C.V.; Lagoven, an affiliate of Petroleos de Venezuela; and Gulf Canada. These
contracts are generally cancelable upon one to three months' notice by either
party, but are intended to remain in place for the foreseeable future. The
remainder of the Company's crude oil supply requirements are acquired on the
spot market from third-party foreign and domestic sources.

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 17 product terminals and is sold over the Company's terminal
truck racks or through refinery pipeline or barge movement. The Port Arthur
refinery produces jet fuel which is generally sold through pipelines. 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
Company has agreements to sell to Chevron 24,000 bpd of gasoline and 1,000 bpd
of low-sulfur diesel from the Port Arthur refinery through February 28, 1999.
This contract is cancelable upon 90 days' notice by either party. The

65
<PAGE>

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

The Company also has an agreement to exchange certain refined products and
chemicals with Chevron Chemical Company, which exchanged amounts averaged
approximately 25,000 bpd during 1995, 1996 and 1997. This contract is
cancelable upon 18 months notice by either party or by mutual agreement.

The Port Arthur refinery's products can be sold in the Midcontinent and
Eastern U.S. as well as export markets. These markets can be accessed through
the Explorer, Texas Eastern and Colonial pipelines or by ship or barge. The
Company's Illinois refineries can distribute their products through various
common carrier and proprietary pipelines which connect the 15 Midwest product
terminals or by barge.

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 generally involve the purchase and sale of exchange-
traded, energy-related futures and options with a duration of six months or
less. In addition, the Company to a lesser extent uses energy swap agreements
similar to those traded on the exchanges, such as crack spreads and crude oil
options, to better match the specific price movements in the Company's markets
as opposed to the delivery point of the exchange-traded contract. These
strategies are designed to minimize, on a short-term basis, the Company's
exposure to the risk of fluctuations in crude oil prices and refined product
margins. The number of barrels of crude oil and refined products covered by
such contracts varies from time to time. Such purchases and sales are closely
managed and subject to internally established risk standards. The results of
these hedging activities affect refining costs of sales and inventory costs.
The Company does not engage in speculative futures or derivative transactions.

The Company manages its total inventory position in a manner consistent with
a risk management policy which states that a normal operating inventory level
(base load) will not be offset using risk management techniques, while
material builds or draws from this normal level may be offset by appropriate
risk management strategies to protect against an adverse impact due to
unfavorable price moves. The Company's retail network also reduces overall
risk by providing ratable market sales which represent approximately 27% of
the refineries' gasoline production. In addition, the retail network benefits
from a reliable and cost-effective source of supply.

Due to the Port Arthur refinery's Gulf Coast location, the Company has the
opportunity to limit its exposure to price fluctuations on crude oil and
finished product production through the use of U.S. Gulf Coast-based energy
derivatives, such as forward futures and option contracts relating to Gulf
Coast crack spreads. There exists a market for Gulf Coast refinery crack
spreads based on published spot market product prices and exchange-traded
crude oil. Since the Company sells the majority of the Port Arthur refinery's
production into the Gulf Coast spot market, the Company believes that forward
future and option contracts related to crack spreads may be used effectively
to hedge refining margins. While the Company's hedging program is intended to
provide a more predictable profit margin on a portion of the Port Arthur
refinery production, the use of such a program could limit the Company's
ability to participate in an improvement in Gulf Coast crack spreads.

CLEAN AIR ACT/REFORMULATED FUELS

Under the Clean Air Act, the EPA promulgated regulations mandating low-
sulfur diesel fuel for all on-road consumers, and RFG for ozone non-attainment
areas, including Chicago, Milwaukee and Houston in the Company's direct market
area.

66
<PAGE>

The Clean Air Act requires the EPA to review national ambient air quality
standards for certain pollutants every five years. In July 1997, after such a
review, the EPA adopted more stringent national standards for ground level
ozone (smog) and particulate matter (soot). These standards, when implemented,
are likely to increase significantly the number of nonattainment areas and
thus require additional pollution controls, more extensive use of RFG, and
possibly new diesel fuel standards. Efforts are being made to influence the
legislative branch to repeal the new standards under the Congressional Review
Act. A lawsuit filed by the U.S. Chamber of Commerce, the American Trucking
Association and the National Coalition of Petroleum Retailers is challenging
the implementation of these standards. As a result, it is too early to
determine what impact this rule could have on the Company.

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. The Company's Port Arthur, Blue Island and Hartford
refineries have the capability to produce up to approximately 60%, 60%, and
25%, respectively, of their gasoline production in RFG. Each refinery's
maximum RFG production may be limited based on the clean fuels attainment of
the Company's total refining system. The Port Arthur refinery has the
capability to produce 100% low-sulfur diesel fuel.

MARKET ENVIRONMENT

The Company's feedstocks and refined products are principally commodities
and, as such, are significantly affected by a variety of factors beyond its
control, including the supply of, and demand for, crude oil, gasoline and
other refined products which, in turn, depend on, among other factors, changes
in domestic and foreign economies, weather conditions, political affairs,
crude oil production levels, the rate of industry investments, the
availability of imports, the marketing of competitive fuels and the extent of
government regulations. The Company's results are also impacted by seasonal
fluctuations with generally stronger earnings recorded during the higher
transportation-demand periods of the spring and summer and weaker earnings
recorded during the fall and winter.

The Company believes that it is well positioned to benefit from potential
long-term improvements in refining industry profitability. The Company
believes refining industry improvement may result from (i) increased demand
for gasoline and distillate fuel, (ii) domestic refinery crude oil
distillation utilization rates nearing maximum sustainable rates, (iii)
reduced growth in conversion capacity, and (iv) increased availability of
lower cost heavy sour crude oil. Conversion refers to the ability to extract
more higher valued products, such as gasoline and distillate fuel, out of the
same barrel of crude oil.

The Company believes industry improvement has occurred since 1995 and
particularly in 1997 as indicated by the Company's record 1997 Operating
Contribution and improvement in certain key industry market indicators listed
in the table below:

<TABLE>
<CAPTION>
FOR THE
FOR THE YEAR SIX MONTHS
ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------- --------------
1993 1994 1995 1996 1997 1997 1998
----- ----- ----- ----- ----- ------- -------
(IN DOLLARS PER BARREL)
<S> <C> <C> <C> <C> <C> <C> <C>
Gulf Coast 3/2/1 crack spread...... $2.85 $2.61 $2.38 $2.65 $3.24 $ 3.34 $2.96
Chicago 3/2/1 crack spread......... 3.40 3.86 3.14 4.02 4.04 4.33 3.87
Heavy sour crude oil discount...... 6.40 4.75 4.03 4.78 5.63 5.81 6.33
Light sour crude oil discount...... 1.60 0.95 1.02 1.24 1.71 1.94 1.79
</TABLE>
- --------
Source: Platt's

67
<PAGE>

According to the U.S. Department of Energy, Energy Information
Administration ("EIA"), U.S. demand for gasoline and distillate fuel grew from
9.4 million bpd in 1980 to 11.4 million bpd in 1997, averaging growth of 1.3%
per year during this period. The Company believes this growth in U.S. demand
for gasoline and distillate fuel is principally due to increased economic
activity in the U.S. This growth reflects the expansion of the U.S. vehicle
fleet miles driven, increased seat-miles flown on U.S. airlines and reduced
improvement in vehicle miles per gallon due to consumer preference for light
trucks and sport-utility vehicles as indicated by statistics from the U.S.
Department of Transportation. The Company believes U.S. gasoline and
distillate fuel demand will continue to track U.S. economic activity.

Since 1980, U.S. crude oil distillation capacity decreased from 18.1 million
bpd to 15.7 million bpd in 1997, according to the Oil & Gas Journal, as 137
refineries closed between 1980 and 1997. However, during this period,
conversion capacity increased to meet the growing demand for transportation
fuels. From the early 1990s until 1996, growth in conversion capacity exceeded
demand growth. According to the Oil and Gas Journal and the American Petroleum
Institute, since the early 1990s, industry capital spending, especially non-
environmental capital spending, much of which was for increased conversion
capacity, has decreased as indicated in the table below. The Company believes
this decrease is due to reduced industry profitability caused by overcapacity.
The Company believes "excess" conversion capacity may have reached equilibrium
with demand in 1996.

<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ----
(IN BILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total capital expenditures.............. $4.4 $6.1 $6.1 $5.4 $5.1 $4.9 $3.9 $3.9
Environmental capital expenditures...... 1.3 1.8 3.3 3.2 3.1 2.2 0.8 N/A
</TABLE>

According to the EIA, U.S. crude oil distillation utilization rates have
steadily increased from approximately 75% in 1980 to approximately 95% in
1997. The Company believes U.S. crude oil distillation utilization rates may
be approaching long-term sustainable maximums due to the requirement for
routine maintenance and the likelihood of unplanned downtime.

The Company believes that, due to the crude oil processing capabilities of
its refineries, it may benefit from increased availability of heavy sour crude
oil. Crude oil pipeline expansions into the U.S. Midwest in 1996 and 1997 have
increased the availability of Canadian heavy sour crude oil and thereby
improved competition for crude oil sales to Midwest refiners. Additionally,
industry studies indicate improved availability of heavy and light sour crude
oil over the next several years due to increased crude oil supply from several
Western Hemisphere sources, primarily Canada and Latin America.

MARKETING

The Company markets gasoline and convenience products in six Midwestern
states through a retail network of Company-operated stores and also markets
refined petroleum products through a wholesale program to distributors, chain
retailers and industrial consumers. The Company's wholesale operation markets
petroleum products in both the Midwest and Gulf Coast regions of the U.S. The
Company's retail presence is focused in the Great Lakes region of the U.S.
where Company-operated stores market value-oriented gasoline products,
cigarettes and a mix of On The Go(R) (non-tobacco) convenience products. As
noted above, the Company operates a high proportion of Clark-branded retail
locations, which the Company believes enables it to respond more quickly and
uniformly to changing market conditions than many of its competitors,
including major oil companies that generally operate their stores through
dealer or jobber networks. Of the Company-operated retail locations,
approximately 75% are located on Company-owned real estate and 25% are on
leased locations. In 1997, the Company sold approximately 1.0 billion gallons
of fuel (representing approximately 27% of current refining

68
<PAGE>

production) and over $280 million of convenience products through
approximately 200 million retail transactions and sold an additional 1.1
billion gallons of fuel to wholesale customers ranging from Clark-branded
retailers to major transportation and commercial companies.

RETAIL DIVISION

The Company's retail strategy is based on two primary objectives,
optimization and growth, and is intended to accomplish four strategic goals:
(i) optimize core market stores by achieving first quartile return on capital
employed, (ii) realize significant productivity within the current asset base,
(ii) grow earnings through acquisitions and new initiatives designed to
leverage existing expertise, product knowledge and market/brand strength, and
(iv) meet all environmental and legislative requirements.

. Optimization. The retail division operating strategy centers around
optimizing the productivity of existing assets by maximizing overall
gross margin and controlling expenses. The Company's marketing strategy
is designed to position the Company as a dominant value-oriented
marketer to customers who are in their cars and on the go. The Company
believes that continued improvements in existing processes and
initiatives such as gasoline pricing, growth of higher-margin premium
gasoline grades and On The Go(R) convenience product lines, growth of
other income/new concept initiatives (such as lottery, money orders,
fast food, car washes, etc.) together with management of controllable
expenses are the most effective ways to improve profitability.

. Growth. In order to support its retail strategic objectives, the Company
performs thorough fundamental market analyses. The Company's analytical
system evaluates each existing and potential market to identify those
that it believes will produce the highest return on investment. In
markets where the Company has a competitive strength on which to build
or where opportunities have been identified by preferred market
analysis, the Company will consider making opportunistic acquisitions to
expand its market share in existing markets as well as larger
acquisitions to enter new markets. The Company believes that continued
growth through such acquisitions as the 131 stores acquired since 1994
contributes to building the Clark brand in core markets. In markets
where the Company has experienced value deterioration in assets and the
preferred market analysis has indicated no long-term market potential
exists, the Company will consider divesting retail locations if
favorable sale opportunities arise or if the Company determines the
locations would be more profitable if converted to branded jobber
locations. The Company sold 36 stores in 1997 and 110 stores in the
first half of 1998. Most of these stores were converted to branded
jobber locations. As of June 30, 1998, the Company was in the process of
selling 32 additional stores in outlying non-core locations.

The retail division's optimization and growth strategy is consistent with
the Company's overall business strategy and includes the following key
elements:

. Improving Productivity. The retail division's goal is to achieve
significant productivity gains exclusive of external market factors.
Examples of key productivity initiatives include increasing gasoline and
convenience product sales volumes, improving gasoline pricing and
shifting product mixes to higher-margin products.

. Optimizing Capital Investments. Retail division capital expenditures are
linked to retail division earnings, with strict emphasis placed on
internally funding capital projects. Capital is primarily budgeted for
projects relating to environmental compliance plans and discretionary
productivity improvements.

. Creating Value Through People. The retail division employs a
decentralized, team-oriented culture with training programs and employee
incentives designed to deliver premier customer service. 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 workforce.

69
<PAGE>

RETAIL OPERATIONS 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 had
more than 1,800 retail stores and had established a strong market reputation
for the sale of high-octane gasoline at discount prices. In subsequent years,
Old Clark, in line with the general industry trends, rationalized its
operating stores by closing marginal locations. During the 1970s, the majority
of Old Clark's stores were dealer-operated. During the years 1973 through
1983, Old Clark assumed operation of most of its stores to ensure more direct
control of its marketing and distribution network.

As of June 30, 1998, the Company had 692 Company-operated retail locations,
nearly all of which operated under the Clark brand name. The Company believes
a high proportion of Company-operated stores enables it to respond more
quickly and uniformly to changing market conditions than many of its
competitors, including major oil companies whose focus has generally been
operating their stores through dealer or jobber networks. Of these stores, 75%
were located on Company-owned real estate and 25% were leased locations.

Over the past several years, the Company has focused on building core
markets where it believes it can maintain or develop market share of 7.5% to
15% in order to leverage brand recognition, promotions and other marketing and
operating activities. In 1997, the Company's core market monthly gasoline
sales per store averaged 115,800 gallons, which exceeded the 1997 national
industry average of 86,400 gallons, while monthly sales per square foot
averaged approximately $50 for convenience products versus the industry
average of approximately $26. The Company believes that it is in the first
quartile in terms of operating costs in its regions, which provides it with an
important competitive advantage. Chicago, Central Illinois, Southern Michigan,
Cleveland, Milwaukee and Toledo are currently the Company's six highest volume
core metropolitan markets, with market shares of 5% to 15%. A current trend
toward consolidation in the marketing sector is viewed positively by the
Company due to growth opportunities that may develop and the potential
beneficial impact that consolidation may have on longer-term pricing.

Over the past few years the Company has also grown its market share in
several of its core markets through retail store acquisitions. In October
1994, the Company acquired 25 stores in metropolitan Chicago from State Oil
and in April 1995 acquired 35 stores in Central Illinois from Illico
Independent Oil Company. In 1996, the Company acquired four additional stores
from State Oil and 10 high-volume Chicago locations from Bell Fuels, Inc. In
August 1998, the Company acquired 8 stores in Chicago from King Petroleum.
These acquisitions increased the Company's market share in Chicago to
approximately 9%. In January 1997, the Company acquired 48 stores in Southern
Michigan from Silcorp, Ltd. This transaction increased the Company's Southern
Michigan market share from approximately 5% to 7%. One additional store was
acquired in Maywood, Illinois in August 1997.

Simultaneously with growing the Company's market share in core markets
through acquisitions, the Company has divested stores in non-core markets.
Since 1993, the Company has divested approximately 280 stores.

70
<PAGE>

The geographic distribution of Company-operated retail stores by state as of
June 30, 1998, was as follows:

GEOGRAPHICAL DISTRIBUTION OF RETAIL STORES

<TABLE>
<CAPTION>
COMPANY- INDEPENDENTLY-
OPERATED OPERATED TOTAL
-------- -------------- -----
<S> <C> <C> <C>
Illinois....................................... 239 28 267
Michigan....................................... 205 34 239
Ohio........................................... 110 43 153
Indiana........................................ 78 11 89
Wisconsin...................................... 55 5 60
Other States(a)................................ 5 49 54
--- --- ---
Total.......................................... 692 170 862
=== === ===
</TABLE>
- --------
(a) Iowa, Louisiana, Missouri, and Texas.

The Company also continues to optimize its retail stores through
productivity achieved from improved operations, profit-enhancing capital
expenditures and the addition of incremental new concept and other income
initiatives. From 1993 to 1996, the Company transformed the image of its
retail network by converting it from a 1950s look to a new, vibrant color
scheme. In 1993, the Company initiated a strategy to increase the sales of On
The Go(R) products to reduce the Company's reliance on tobacco sales. This was
accomplished by remodeling store interiors and adding soda fountain machines
and interior beverage coolers. In an effort to continue to improve gasoline
volume, pricing and growth of higher-margin premium gasoline grades and On The
Go(R) convenience product lines, the Company continues to upgrade the
equipment for core-market stores including canopies and multiple product
dispensers ("MPDs"). Currently, approximately 96% of stores have canopies and
approximately 76% of stores have MPDs. It is believed that MPDs improve
volumes and margins by enabling the Company to market a more profitable
midgrade gasoline product without the large capital expenditures required for
additional underground storage tanks. The installation of canopies enhances
gasoline volumes with better lighting and shelter from adverse weather
conditions. In 1996, the Company began adding "pay-at-the-pump" credit card
technology and as of June 30, 1998, had 79 locations with this service, and
will continue to evaluate the addition of similar technology at additional
locations, as well as other income initiatives, including car washes and
branded fast food.

As a result of the above initiatives and recent acquisitions, the Company
has, from 1993 to 1997, improved core market monthly fuel volume per store by
5% to 115,800 gallons, increased monthly convenience product sales per store
by 40% to $30,600, increased the mix of On The Go(R) convenience products from
32% to 44% of total convenience product sales, and improved monthly
convenience product gross margin per store by 47% to $8,100.

The Company has implemented a number of environmental projects at its retail
stores. These projects include the ongoing response to the September 1988
regulations that provided for a ten-year transition period through 1998, and
are related to the design, construction, installation, repair and testing of
underground storage tanks ("UST") and the requirement of the Clean Air Act to
install Stage II vapor recovery systems at certain retail stores. The Company
has UST leak detection devices installed at nearly all retail locations. As of
June 30, 1998, approximately 97% of current locations met the December 1998
federal UST compliance standards. In many cases, state funds are available to
cover a portion of the cost of complying with the UST standards. The Company
estimates that mandatory retail capital expenditures for environmental and
regulatory compliance for 1998, net of costs recovered from state funds, will
be approximately $17 million. Costs for complying with future regulations
cannot be estimated.

71
<PAGE>

MARKET ENVIRONMENT

The sale of gasoline at the retail level is considered a mature industry as
consumption has historically increased at 1% to 2% per year, and industry
studies indicate that many markets have reached saturation in terms of the
number of retail outlets and fuel dispensing capability. The retail markets in
which Clark operates are highly competitive. Many well-capitalized major oil
companies and numerous independent marketers have made substantial investments
in their retail assets. Historically, this competitive environment has caused
retail gasoline margins in the Company's Midwest markets to be among the
lowest in the country.

The Company believes that the increased sale of convenience products and
fast food and the expanded offering of other services like car washes and pay-
at-the-pump technology will be the primary avenues for individual site growth
in the industry. Industry studies also indicate that the retail markets have
been characterized by several significant trends including (i) increased
rationalization of stores and consolidation of companies, (ii) changing
consumer demand to emphasize convenience and value, (iii) the impact of
governmental regulations on product offerings and services, and (iv) during
1996 and 1997, unstable gasoline unit margins due to crude oil and related
wholesale and retail price volatility.

. Rationalization/Consolidation. During the past several years, major oil
companies have rationalized their retail systems to gain efficiencies.
These companies divested nonstrategic locations to focus on areas near
strategic supply sources, which has put a higher concentration of market
share in fewer geographic regions for many of these companies. In
addition, smaller operators have closed marginal and unprofitable
locations due to the investment requirements to meet the 1998 UST
environmental compliance deadline. More recently, oil companies and
convenience store chains have sought to consolidate through mergers,
acquisitions and joint ventures. The lack of availability of favorable
new locations, the high cost of construction of new facilities and the
opportunity to achieve significant cost reduction and brand building
synergies make consolidation attractive for many companies.

. Changing Consumer Demand. Industry studies indicate that consumer buying
behavior continues to reflect the effect of increasing demands on
consumer time and money. Consumers have generally become time-
constrained, value-minded buyers who expect quality goods at reasonable
prices.

. Government Regulations. The gasoline and convenience store industry is
subject to significant governmental regulations. The environmental
requirements for Stage II vapor recovery and UST upgrades have been
partially responsible for the closing of more than 27,000 retail stores
or close to 13% of U.S. outlets over the eight-year period of 1991 to
1998. This trend is expected to continue through 1998. It is anticipated
that these regulations may also cause many companies with vehicle fleet
programs to abandon on-site fueling in favor of retail fueling. Most
recently, the Food and Drug Administration has initiated a series of
regulations intended to stop the sale of tobacco products to minors.
Such regulations, if enacted, may impact the way such tobacco products
are marketed throughout the country.

. Volatile Wholesale Costs. The volatility of crude oil and wholesale
costs can materially affect the profitability of retail gasoline
operations. Typically, there is a delay between changes in wholesale
product costs and changes in retail gasoline prices that prevents
operators from maintaining stable gasoline margins. During periods of
rapidly rising wholesale costs, margins are usually compressed.
Conversely, during periods of falling wholesale costs, margins usually
expand.

WHOLESALE DIVISION

The Company's wholesale division strategy is to leverage its strengths in
the distribution and marketing of petroleum and On The Go(R) products to
create value through commercial relationships

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<PAGE>

with minimal capital investment. The wholesale division strategy is designed
to create value by focusing on distinct channels of trade and offering
products and services that meet the unique needs of targeted customers.
Wholesale marketing can be divided into four primary functions: (i) fuel sales
to commercial and transportation end-users, (ii) fuel sales to reseller-
distributors, (iii) branded franchise marketing, and (iv) new business
franchise marketing.

The Company currently sells gasoline and diesel fuel on an unbranded basis
to approximately 400 distributors and chain retailers. The Company believes
these sales offer higher profitability than spot market alternatives.
Wholesale sales are also made to the transportation and commercial sectors,
including airlines, railroads, barge lines and other industrial end-users. In
1996, the Company continued growth of a new branded jobber program and as of
June 30, 1998, had 170 outlets owned and operated by branded jobbers. The
Company believes that a branded distributor program, new business franchise
marketing, and further focus on the transportation and commercial sector offer
significant opportunities for incremental sales volumes and earnings in the
future.

Fuel sales to all channels of trade focus on maximizing netback realizations
(revenue less all distribution and working capital investment costs). The
wholesale division continues to refine and integrate netback management tools
to identify the most attractive short-term sales opportunities as well as to
identify the most profitable markets over the long term. Channels of trade,
product, and market-specific strategies are continually refined and optimized
through this netback methodology. Efforts focus on improving returns and
optimizing the core Midwest system while expanding Gulf Coast marketing
activities around the supply of refined products available from the Port
Arthur refinery.

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 their diversity, integration of operations,
larger capitalization and greater resources, these major oil companies may be
better able to withstand volatile market conditions, more effectively compete
on the basis of price and more readily obtain crude oil in times of shortages.

The principal competitive factors affecting the Company's refining 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 and production activities. The Company obtains nearly all of its
crude oil requirements on the spot market from unaffiliated sources. The
Company believes that it will be able to obtain adequate crude oil and other
feedstocks at generally competitive prices for the foreseeable future.

The principal competitive factors affecting the Company's retail marketing
division are locations of stores, product price and quality, appearance and
cleanliness of stores, brand identification and market share. Competition from
large, integrated oil and gas companies, as well as convenience stores which
sell motor fuel, is expected 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.

THE OXY ADVANCE CRUDE OIL PURCHASE RECEIVABLE TRANSACTION

Pursuant to a merger agreement and a series of related agreements with
affiliates of Oxy in December 1995, the Company acquired the right to receive
the equivalent of 17.661 million barrels of

73
<PAGE>

WTI to be delivered over six years according to a defined schedule. In
connection with this transaction, Clark USA issued common stock valued at
approximately $120.0 million, or $20 per share (6,000,000 shares), and paid
$100.0 million in cash to Oxy. Clark USA contributed the Oxy advance crude oil
purchase receivable to the Company in October 1996 and the Company sold the
receivable for net cash proceeds of $235.4 million.

ENVIRONMENTAL MATTERS

COMPLIANCE MATTERS

Operators of refineries and gasoline stores are subject to comprehensive and
frequently changing federal, state and local environmental laws and
regulations, including those governing emissions of air pollutants, discharges
of wastewater and stormwater, and the handling and disposal of nonhazardous
and hazardous waste. Federal, state and local laws and regulations
establishing numerous requirements and providing penalties for violations
thereof affect nearly all of the operations of the Company. Included among
such laws and regulations are the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"). Also
significantly affecting the Company are the rules and regulations of the
Occupational Safety and Health Administration. Many of these laws authorize
the imposition of civil and criminal sanctions upon companies that fail to
comply with applicable statutory or regulatory requirements. As discussed
below, federal and state agencies have filed various enforcement actions
alleging that the Company has violated a number of environmental laws and
regulations. The Company nevertheless believes that, in all material respects,
its existing operations are in compliance with such laws and regulations.

The Company's operations are large and complex. The numerous environmental
regulations to which the Company is subject are complicated, sometimes
ambiguous, and often changing. In addition, the Company may not have detected
certain violations of environmental laws and regulations because the
conditions that constitute such violations may not be apparent. It is
therefore possible that certain of the Company's operations are not currently
in compliance with state or federal environmental laws and regulations.
Accordingly, the Company may be required to make additional expenditures to
comply with existing environmental requirements. Such expenditures, along with
compliance with environmental requirements, could have a material adverse
effect on the Company's financial condition, results of operations, cash flow
or liquidity.

Regulations issued by the EPA in 1988 with respect to USTs 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 USTs and piping at
its retail gasoline outlets. The regulations also require periodic tightness
testing of USTs and piping. Commencing in 1998, operators will be required
under these regulations to install continuous monitoring systems for
underground tanks. In order to bring its retail stores into compliance with
these regulations, the Company estimates that capital expenditures of
approximately $17 million, net of costs recovered from state funds, will be
required for 1998. See "--Marketing" and "--Retail Operations Overview."

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

The Company cannot predict what environmental legislation or regulations
will be enacted in the future or how existing or future laws or regulations
will be administered or interpreted with respect to products or activities to
which they have not previously been applied. Compliance with more stringent
laws or regulations, as well as more vigorous enforcement policies of the
regulatory agencies or stricter

74
<PAGE>

interpretation of existing laws which may develop in the future, could have an
adverse effect on the financial position or operations of the Company and
could require substantial additional expenditures by the Company for the
installation and operation of pollution control systems and equipment. See "--
Legal Proceedings."

REMEDIATION MATTERS

In addition to environmental laws that regulate the Company's ongoing
operations, 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 (including petroleum) into the
environment. Such persons include the current owner or operator of property
where such releases or threatened releases have occurred, any persons who
owned or operated such property during the time that hazardous substances were
released at such property, and persons who arranged for the disposal of
hazardous substances at such property. Liability under CERCLA is strict.
Courts have also determined that liability under CERCLA is, in most cases
where the government is the plaintiff, joint and several, meaning that any
responsible party could be held liable for all costs necessary for
investigating and remediating a release or threatened release of hazardous
substances. As a practical matter, liability at most CERCLA (and similar)
sites is shared among all the solvent "potentially responsible parties"
("PRPs"). The most relevant factors in determining the probable liability of a
party at a CERCLA site usually are the cost of investigation and remediation,
the relative amount of hazardous substances contributed by the party to the
site and the number of solvent PRPs. While the Company maintains property and
casualty insurance in the normal course of its business, such insurance does
not typically cover remediation and certain other environmental expenses.

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

LEGAL AND GOVERNMENTAL PROCEEDINGS

The Company is also the subject of various environmental-related legal
proceedings. See "--Legal Proceedings."

EMPLOYEES

Currently the Company employs approximately 7,500 people, approximately
1,200 of whom were covered by collective bargaining agreements at the Blue
Island, Hartford, Lima and Port Arthur refineries. The Port Arthur refinery
contract expires in January 1999, the Hartford refinery contract expires in
February 2002 and the Blue Island and Lima refinery contracts expire in August
2002. In addition, the Company has union contracts for certain employees at
its Hammond, Indiana, and St. Louis, Missouri, terminals. Relationships with
the unions have been good and neither Old Clark nor the Company has ever
experienced a work stoppage as a result of labor disagreements.

LEGAL PROCEEDINGS

As a result of its activities, the Company is the subject of a number of
legal and administrative proceedings relating to environmental matters. The
Company is required by the Commission to disclose all matters that could be
material or that involve a governmental authority and could reasonably involve
monetary sanctions of $100,000 or greater.

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<PAGE>

Hartford Federal Enforcement. In May 1997, the EPA served a Notice of
Violation on the Company alleging violations of the Clean Air Act, and
regulations promulgated thereunder, in the operation and permitting of the
Hartford refinery fluid catalytic cracking unit. No estimate can be made at
this time of the Company's potential liability, if any, as a result of this
matter.

Hartford State Enforcement. In 1996, the Company settled the matter People
of the State of Illinois v. Clark Refining & Marketing, Inc. PCB No. 95-163.
One remaining issue concerning the exempt status of the Company's wastewater
treatment system was submitted to an administrative agency on a stipulation of
facts. No estimate of any liability with respect to this remaining element of
the complaint can be made at this time.

Blue Island Federal Enforcement. The Blue Island refinery is the subject of
federal investigations concerning potential violations of certain
environmental laws and regulations. In March 1997, the EPA initiated a
multimedia investigation at the Blue Island refinery. The investigation
included an on-site visit, requests for information and meetings. In March
1997, the Company received a Grand Jury subpoena requesting certain documents
relating to wastewater discharges. In September 1998, the Company was served
with a complaint in the matter, United States v. Clark Refining & Marketing,
Inc., alleging that the Company has operated the refinery in violation of
certain federal laws relating to air pollution, water pollution and solid
waste management. No estimate can be made of the Company's potential
liability, if any, as a result of these matters.

Blue Island State Enforcement. People ex rel. Ryan v. Clark Refining &
Marketing, Inc., is currently pending in the Circuit Court of Cook County,
Illinois alleging operation of the Blue Island refinery in violation of
environmental laws. The allegations originate from a fire that occurred in the
Isomax unit in March 1995, a release of hydrogen fluoride in May 1995 from a
processing unit, other releases into the air that occurred in the past three
years, and releases of wastewater and stormwater to the Cal Sag Channel. The
Company has filed an answer denying the material allegations in the lawsuit.
No estimate of any liability with respect to this matter can be made at this
time.

St. Louis Terminal. In January 1994, a gasoline spill occurred at the
Company's St. Louis terminal. In May 1997, the Company received correspondence
from the State of Missouri seeking the payment of a penalty of less than
$200,000 related to this matter.

Sashabaw Road. In May 1993, the Company received correspondence from the
Michigan Department of Natural Resources ("MDNR") indicating that the MDNR
believes that the Company may be a potentially responsible party in connection
with groundwater contamination in the vicinity of one of its retail stores on
Sashabaw Road in Oakland County, Michigan. In July 1994, MDNR commenced suit
against the Company and is currently seeking $300,000 to resolve the matter.

Port Arthur Refinery. The original refinery on the site of the Port Arthur
refinery began operating in 1901, prior to modern environmental laws and
methods of operation. While the Company believes, as a result, that there is
extensive contamination at the site, the Company is unable to estimate the
cost of remediating such contamination. Under the purchase agreement between
the Company and Chevron, Chevron will be obligated to perform the required
remediation of more than 97% of pre-closing contamination. The Company
estimates its obligation at approximately $8 million. As a result of the
acquisition, the Company may become jointly and severally liable under CERCLA
for the costs of investigation and remediation at the site. In the event that
Chevron is unable (as a result of bankruptcy or otherwise) or unwilling to
perform the required remediation at the site, the Company may be required to
do so. The cost of any such remediation could be substantial and could be
beyond the Company's financial ability. In June 1997, the Company, Chevron and
the State of Texas entered into an Agreed Order that substantially confirmed
the relative obligations of the Company and Chevron.

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<PAGE>

As of June 30, 1998, the Company had accrued a total of $39.8 million for
legal and environmental-related obligations that may result from the matters
noted above, other legal and environmental matters and obligations associated
with certain retail sites. While it is not possible at this time to estimate
the ultimate amount of liability with respect to the legal proceedings
described above, the Company is of the opinion that the aggregate amount of
any such liability will not have a material adverse effect on its financial
position; however, an adverse outcome of any one or more of these matters
could have a material effect on quarterly or annual operating results or cash
flows when resolved in a future period.

In addition to the specific matters discussed above, the Company has also
been named in various other suits and claims. While it is not possible to
estimate with certainty the ultimate legal and financial liability with
respect to these other legal proceedings, the Company believes the outcome of
these other suits and claims will not have a material adverse effect on the
Company's financial position, operating results or cash flow.

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<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors, executive officers, Controller, Treasurer and Secretary of
the Company and their respective ages and positions are set forth in the table
below.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
William C. Rusnack.......... 54 President, Chief Executive Officer and Chief
Operating Officer; Director
Bradley D. Aldrich.......... 44 Executive Vice President--Refining
Brandon K. Barnholt......... 40 Executive Vice President--Marketing
Maura J. Clark.............. 39 Executive Vice President--Corporate Development
and Chief Financial Officer
Dennis R. Eichholz.......... 45 Controller and Treasurer
Katherine D. Knocke......... 41 Secretary
Marshall A. Cohen........... 63 Director; Chairman of the Board
David A. Stockman........... 51 Director
Glenn H. Hutchins........... 43 Director
David I. Foley.............. 31 Director
</TABLE>

The board of directors of the Company currently consists of five directors
who serve until the next annual meeting of stockholders or until a successor
is duly elected. Directors do not receive any compensation for their services
as such. Executive officers of the Company serve at the discretion of the
board of directors of the Company.

On April 15, 1998, William C. Rusnack was appointed as president, chief
operating officer, chief executive officer and a director of the Company and
Clark USA. Mr. Rusnack replaced Paul D. Melnuk who had previously announced he
was leaving the Company and Clark USA, effective May 1, 1998. Mr. Rusnack
previously served 31 years with Atlantic Richfield Corporation ("ARCO") and
was involved in all areas of its energy business, including refining
operations, retail marketing, products transportation, exploration and
production, and human resources. He most recently served as President of ARCO
Products Company from 1993 to 1997 and was President of ARCO Transportation
Company from 1990 to 1993. He currently serves as a director of Flowserve (a
$1 billion, NYSE-listed corporation).

Bradley D. Aldrich has served as Executive Vice President--Refining, since
December 1994. From August 1991 through November 1994, Mr. Aldrich served as
Vice President, Supply & Distribution for CF Industries, Inc., a chemical
fertilizer manufacturer and distributor. Mr. Aldrich previously served as
Manager, Light Oil Supply--North America of Conoco, Inc. from August 1989
through July 1991.

Brandon K. Barnholt has served as Executive Vice President--Marketing, since
February 1995, and served as Executive Vice President--Retail Marketing from
December 1993 through February 1995, as Vice President--Retail Marketing from
July 1992 through December 1993, and as Managing Director--Retail Marketing
from May 1992 through July 1992. Mr. Barnholt previously served as Retail
Marketing Manager of Conoco, Inc. from March 1991 through March 1992.

Maura J. Clark has served as Executive Vice President--Corporate Development
and Chief Financial Officer of the Company and Clark USA since August 1995.
Ms. Clark previously served as Vice President--Finance at North American Life
Assurance Company, a financial services company,

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<PAGE>

from September 1993 through July 1995. From May 1990 to September 1993, Ms.
Clark served as Vice President--Corporate Finance and Corporate Development of
North American Trust Company (formerly First City Trust Company), a subsidiary
of North American Life Assurance Company.

Dennis R. Eichholz, who joined the Company in November 1988, has served as
Vice President--Controller of the Company and Controller and Treasurer of
Clark USA since February 1995. Mr. Eichholz has served as Vice President--
Treasurer of Clark since December 1991.

Katherine D. Knocke has served as Secretary of the Company and Clark USA
since April 1995. Ms. Knocke has served as in-house counsel of the Company
since August 1994. Ms. Knocke previously was employed as an associate with the
St. Louis law firm of Armstrong, Teasdale, Schlafly & Davis from September
1989 through August 1994.

Marshall A. Cohen has served as a director of the Company since November 3,
1997 and as Chairman since January 27, 1998. Mr. Cohen has served as Counsel
at Cassels Brook & Blackwell since October 1996. Mr. Cohen previously served
as President and Chief Executive Officer of The Molson Companies Limited from
November 1988 to September 1996.

David A. Stockman has served as a director of Company since November 3,
1997. Mr. Stockman is a Senior Managing Director of The Blackstone Group L.P.,
which he joined in 1988. Mr. Stockman is also Co-Chairman of the board of
directors of Collins & Aikman Corporation and a member of the boards of
directors of American Axle Manufacturing Inc., Bar Technologies Inc., The
Imperial Home Decor Group Inc. and Haynes International Inc.

Glenn H. Hutchins has served as a director of the Company since May 18,
1998. Mr. Hutchins is a Senior Managing Director of the Blackstone Group L.P.,
which he joined in 1994. Mr. Hutchins was a Managing Director of Thomas H. Lee
Co. ("THL") from 1987 until 1994 and, while on leave from THL during parts of
1993 and 1994, was a Special Advisor in the White House. Mr. Hutchins is a
member of the boards of directors of American Axel Manufacturing Inc., CommNet
Cellular Inc., Corp. Banca (Argentina) S.A., Corp. Group. C.V., and Haynes
International Inc. In 1994, Mr. Hutchins was also appointed Chairman of the
board of directors of the Western N.I.S. Enterprise Fund by President Clinton.

David I. Foley has served as a director of the Company since November 3,
1997. Mr. Foley is an Associate at The Blackstone Group L.P., which he joined
in 1995. Prior to joining Blackstone, Mr. Foley was a member of AEA Investors,
Inc. and The Monitor Company. He currently serves on the board of directors of
The Imperial Home Decor Group, Inc., Prime Succession Inc. and Rose Hills
Company.

Except as described above, there are no arrangements or understandings
between any director or executive officer and any other person pursuant to
which such person was elected or appointed as a director or executive officer.
There are no family relationships between any director or executive officer
and any other director or executive officer.

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<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid by the Company to
its Chief Executive Officer and its other executive officers whose total
annual compensation exceeded $100,000 for each of the years in the three-year
period ended December 31, 1997.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------- OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS/OPTION COMPENSATION(A)
- --------------------------- ---- -------- -------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul D. Melnuk(b)....... 1997 $407,036 $384,050 -- -- $3,321
President and Chief
Executive Officer 1996 325,000 130,000 -- -- 6,816
1995 326,836 75,000 -- 100,000(c) 5,479
Bradley D. Aldrich...... 1997 252,611 219,600 -- -- 2,767
Executive Vice
President--Refining 1996 211,779 47,500 -- -- 6,849
1995 176,224 42,500 -- 130,000(c)(d) --
Brandon K. Barnholt..... 1997 253,003 154,600 -- -- 3,044
Executive Vice
President--Marketing 1996 211,799 87,500 -- -- 6,802
1995 176,276 75,000 -- 50,000(c) 5,329
Maura J. Clark(e)....... 1997 220,998 153,300 -- -- --
Executive Vice
President--Corporate 1996 36,779 47,500 -- -- --
Development and Chief
Financial Officer 1995 -- -- -- -- --
Edward J. Stiften(f).... 1997 159,616 81,350 -- -- --
Executive Vice
President--Chief 1996 -- -- -- -- --
Administrative Officer 1995 -- -- -- -- --
</TABLE>
- --------
(a) Represents amount accrued for the account of such individuals under the
Clark Retirement Savings Plan (the "Savings Plan").
(b) Mr. Melnuk resigned his position with the Company, effective May 1, 1998.
(c) Options issued pursuant to the Performance Plan as described below.
(d) Mr. Aldrich and Mr. Barnholt (granted in 1993) held options to acquire
TrizecHahn Subordinate Voting Shares ("TrizecHahn Shares") received as
compensation from TrizecHahn for services performed for the Company under
the TrizecHahn Amended and Restated 1987 Stock Option Plan (the
"TrizecHahn Option Plan"). These options were exercised in 1998.
(e) In 1995 and 1996, Ms. Clark was an employee of TrizecHahn and served the
Company under a management consulting arrangement. Ms. Clark earned
approximately $175,000 in 1996 and $117,000 in 1995 under such
arrangement. As of January 1, 1997, Ms. Clark became an employee of the
Company. The 1996 amounts reflected in this table are for 1996
compensation paid by the Company in 1997.
(f) Mr. Stiften resigned his position with the Company, effective March 3,
1998.

STOCK OPTIONS GRANTED DURING 1997

There were no options granted during 1997 to the named executive officers
under the Performance Plan (as defined) for services performed for the
Company.

YEAR-END OPTION VALUES

The following table sets forth information with respect to the number and
value of unexercised options to purchase common stock of Clark USA and
TrizecHahn Shares held by the executive officers named in the executive
compensation table as of December 31, 1997.

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES ACQUIRED UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS HELD
ON EXERCISE VALUE AT DECEMBER 31, 1997 AT DECEMBER 31, 1997(A)
DURING YEAR ENDED REALIZED ON ------------------------- -------------------------
NAME DECEMBER 31, 1997 EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul D. Melnuk(b) -- $ -- -- 100,000 $ -- $--
Bradley D. Aldrich -- -- 100,000 30,000 1,042,710 --
Brandon K. Barnholt -- -- 70,000 50,000 858,375 --
</TABLE>
- --------
(a) For the TrizecHahn Shares the value is based upon the closing price on the
New York Stock Exchange-Composite Transactions on December 31, 1997. For
the common stock of Clark USA the value is based on the sale price in the
Blackstone Transaction.
(b) Mr. Melnuk also holds options to acquire TrizecHahn Shares received as
compensation for services provided to TrizecHahn.

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<PAGE>

SHORT-TERM PERFORMANCE PLAN

Employees of the Company participate in an annual incentive plan which
places at risk an incremental portion of their total compensation based on
Company, business unit and/or individual performance. The targeted at-risk
compensation increases with the ability of the individual to affect business
performance, ranging from 12% for support personnel to 200% for the Chief
Executive Officer. The other executive officers have the opportunity to earn
an annual incentive equal to 150% of the individual's base salary. The actual
award is determined based on financial performance with individual and
executive team performance evaluated against pre-established operating
objectives designed to achieve planned financial results. For essentially all
other employees, annual incentives are based on specific performance
indicators utilized to operate the business, principally productivity and
profitability measures.

LONG-TERM PERFORMANCE PLAN

The Company has adopted a Long-Term Performance Plan (the "Performance
Plan"). Under the Performance Plan, designated employees, including executive
officers, of Clark USA and its subsidiaries and other related entities are
eligible to receive awards in the form of stock options, stock appreciation
rights and stock grants. The Performance Plan is intended to promote the
growth and performance of the Company by encouraging employees to acquire an
ownership interest in Clark USA and to provide incentives for employee
performance. An aggregate of 1,250,000 shares of Common Stock may be awarded
under the Performance Plan, either from authorized, unissued shares which have
been reserved for such purpose or from shares purchased on the open market,
subject to adjustment in the event of a stock split, stock dividend,
recapitalization or similar change in the outstanding common stock of Clark
USA. As of December 31, 1997, 531,500 stock options were outstanding under the
Performance Plan.

The Performance Plan is administered by the board of directors' Compensation
Committee. Subject to the provisions of the Performance Plan, the Compensation
Committee is authorized to determine who may participate in the Performance
Plan and the number and types of awards made to each participant, and the
terms, conditions and limitations applicable to each award. Awards may be
granted singularly, in combination or in tandem. Subject to certain
limitations, the board of directors is authorized to amend, modify or
terminate the Performance Plan to meet any changes in legal requirements or
for any other purpose permitted by law.

Payment of awards may be made in the form of cash, stock or combinations
thereof and may include such restrictions as the Compensation Committee shall
determine, including, in the case of stock, restrictions on transfer and
forfeiture provisions. The price at which shares of Common Stock may be
purchased under a stock option may not be less than the fair market value of
such shares on the date of grant. If permitted by the Compensation Committee,
such price may be paid by means of tendering Common Stock, or surrendering
another award, including restricted stock, valued at fair market value on the
date of exercise, or any combination thereof. Further, with Compensation
Committee approval, payments may be deferred, either in the form of
installments or as a future lump sum payment. Dividends or dividend equivalent
rights may be extended to and made part of any award denominated in stock,
subject to such terms, conditions and restrictions as the Compensation
Committee may establish. At the discretion of the Compensation Committee, a
participant may be offered an election to substitute an award for another
award or awards of the same or different type. Stock options initially have a
10-year term with a three-year vesting schedule and are not exercisable until
Clark USA's Common Stock is publicly traded.

If the employment of a participant terminates, subject to certain exceptions
for retirement, resignation, death or disability, all unexercised, deferred
and unpaid awards will be canceled immediately, unless the award agreement
provides otherwise. Subject to certain exceptions for death

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<PAGE>

or disability, or employment by a governmental, charitable or educational
institution, no award or other benefit under the Performance Plan is
assignable or transferable, or payable to or exercisable by anyone other than
the participant to whom it was granted.

In the event of a "Change of Control" of Clark USA, with respect to awards
held by Performance Plan participants who have been employed by the Company
for at least six months, (a) all stock appreciation rights which have not been
granted in tandem with stock options will become exercisable in full, (b) the
restrictions applicable to all shares of restricted stock will lapse and such
shares will be deemed fully vested, (c) all stock awards will be deemed to be
earned in full, and (d) any participant who has been granted a stock option
which is not exercisable in full will be entitled, in lieu of the exercise of
such stock options, to obtain cash payment in an amount equal to the
difference between the option price of such stock option and the offer price
(in the case of a tender offer or exchange offer) or the value of common stock
covered by such stock option, determined as provided in the Performance Plan.
The Blackstone Transaction triggered the Change of Control provision under the
Performance Plan. The Company does not expect that the Change of Control will
have a material impact on the Performance Plan.

Blackstone is implementing a management incentive program designed to in-
crease management's ownership of Clark USA's stock through direct purchases
and options tied to the financial performance of the Company.

CLARK SAVINGS PLAN

The Clark Savings Plan, which became effective in 1989, permits employees to
make before-tax and after-tax contributions and provides for employer
incentive matching contributions. Under the Savings Plan, each employee of the
Company (and such other related companies as may adopt the Savings Plan) who
has completed at least six months of service may become a participant.
Participants are permitted to make before-tax contributions to the Savings
Plan, effected through payroll deduction, of from 1% to 15% of their
compensation. The Company makes matching contributions equal to 200% of a
participant's before-tax contributions up to 3% of compensation. Participants
are also permitted to make after-tax contributions through payroll deduction,
of from 1% to 5% of compensation, which are not matched by employer
contributions; provided that before-tax contributions and after-tax
contributions, in the aggregate, may not exceed the lesser of 15% of
compensation or $10,000 in 1998. All employer contributions are vested at a
rate of 20% per year of service, becoming fully vested after five years of
service. Amounts in employees' accounts may be invested in a variety of
permitted investments, as directed by the employee, including TrizecHahn
Shares. Participants' vested accounts are distributable upon a participant's
disability, death, retirement or separation from service. Subject to certain
restrictions, employees may make loans or withdrawals of employee
contributions during the term of their employment.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Compensation of the Company's executive officers has historically been
determined by the Company's board of directors. Mr. Rusnack, the Company's
President and Chief Executive Officer, is a member of the Company's board of
directors. Other than reimbursement of their expenses, the Company's directors
do not receive any compensation for their services as directors. There are no
interlocks between the Company and other entities involving the Company's
executive officers and board members who serve as executive officers or board
members of other entities, except with respect to Clark USA and Clark USA's
principal shareholders, Blackstone and Oxy.

EMPLOYMENT AGREEMENTS

The Company entered into employment agreements with three of its senior
executives (the "Executive Employment Agreements"). The Executive Employment
Agreements have five-year terms,

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and provide for automatic extension on an annual basis unless 90 days' notice
of cancellation is given by either party. The Executive Employment Agreements
provide that if a Change of Control occurs within two years prior to the
scheduled expiration date, then the expiration date will be automatically
extended until the second anniversary of the Change of Control date. The
Blackstone Transaction constituted a Change of Control under the Executive
Employment Agreements.

During the term of the Executive Employment Agreements, the employee is
precluded from soliciting or encouraging proposals regarding the acquisition
of Clark USA or its subsidiaries (or of another material part of the business
of Clark USA), absent explicit approval of the Chief Executive Officer of the
Company.

The Executive Employment Agreements provide separation benefits to the
employee if the employee's employment is terminated by the Company without
"Cause" prior to the expiration date of the agreement. "Cause" is defined to
include the employee's failure to substantially perform his or her duties,
willful misconduct that materially injures Clark USA or its affiliates, or
conviction of a criminal offense involving dishonesty or moral turpitude. The
Executive Employment Agreements also provide that if the employee resigns for
"Good Reason" prior to the expiration date of the agreement, the employee will
receive separation benefits. "Good Reason" is defined to include certain
demotions, reductions in compensation, and relocation.

The separation benefits payable under the Executive Employment Agreements
generally include a lump sum payment of three times annual salary and bonus,
acceleration of stock option exercisability, continuation of the Company's
life, medical, accident and disability arrangements for one year after
termination of employment (subject to the employee's continuing to pay the
employee share of the premiums), payment of the cost of job relocation
counseling, and payment of legal fees in connection with termination.

The Executive Employment Agreements also provide for gross-up payments to be
made to the employee to cover certain penalty taxes in connection with a
Change of Control.

As a condition of receiving the separation benefits under the Executive
Employment Agreements, an employee is required to maintain the confidentiality
of information relating to the Company and its affiliates and to release the
Company and its affiliates from certain claims.

EMPLOYMENT AGREEMENT FOR WILLIAM C. RUSNACK

The Company has entered into a memorandum of agreement (the "Agreement")
with William C. Rusnack (the "Executive"). The Agreement has a term beginning
on the date that it was executed (the "Agreement Date") and ending on the
fourth anniversary of the Agreement Date (the "Initial Term"), provided, that
if neither the Executive nor the Company gives 30 days notice prior to the
expiration of the Initial Term then the Agreement shall be automatically
renewed for an additional one year renewal term (a "Renewal Term"). Similarly,
if neither the Executive nor the Company gives 30 days notice prior to the
expiration of any Renewal Term, then the Agreement shall be automatically
renewed for an additional one year Renewal Term. In the event of a Change in
Control (as defined therein), the Agreement shall remain in effect until at
least the second anniversary of the Change in Control.

The Agreement also provides that: (i) the Executive shall be Chief Executive
Officer and President of the Company and Clark USA, (ii) Clark USA shall use
its best efforts to have the Executive elected to its board of directors and
shall vote its shares in favor of electing the Executive to the Company's
board of directors, (iii) the Executive's base salary shall not be less than
$415,000 (the "Salary"), (iv) the Executive's target bonus (the "Target
Bonus") shall be equal to 100% of the Salary (with a minimum bonus of 50% of
Salary for 1998), (v) the Executive will be provided with welfare benefits and
other fringe benefits to the same extent and on the same terms as those
benefits are provided to

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<PAGE>

the Company's other senior management employees, (vi) the Executive shall
participate in the Company's relocation policy at level 4, and (vii) the
Executive shall receive a gross-up for any parachute excise taxes that may
result from any payment, whether under the Agreement or otherwise.

In the event that Executive's employment is (a) terminated by the Company
without Cause (as defined therein), (b) terminated by the Executive for Good
Reason (as defined therein), or (c) terminates at the end of the Initial Term
(or a Renewal Term) because the Company gave notice preventing the occurrence
of a Renewal Term, then the Executive shall receive from the Company: (i) in
addition to any other compensation and benefits accrued but unpaid, a lump sum
equal to the product of (a) three and (b) the sum of the Salary and Target
Bonus, (ii) relocation and counseling services, and (iii) continued
participation in all life insurance, medical, dental, health and accident and
disability plans, programs or arrangements in which Executive was entitled to
participate immediately prior to his termination for up to one year.

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<PAGE>

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT

All of the outstanding capital stock of the Company is owned by Clark USA.

The following table and the accompanying notes set forth certain information
concerning the beneficial ownership of the Common Stock and Class F Common
Stock of Clark USA, as of the date hereof: (i) each person who is known by the
Company to own beneficially more than 5% of the common stock of the Company,
(ii) each director and each executive officer who is the beneficial owner of
shares of common stock of Clark USA, and (iii) all directors and executive
officers as a group.

<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT OF TOTAL
NAME AND ADDRESS TITLE OF CLASS SHARES OF CLASS VOTING POWER(A)
---------------- -------------- ---------- -------- ----------------
<S> <C> <C> <C> <C>
Blackstone Management Common 13,500,000 98.1% 78.5%
Associates III L.L.C.(b)..
345 Park Avenue
New York, NY 10154
Occidental Petroleum Class F Common 6,101,010 100.0 19.9
Corporation...............
10889 Wilshire Boulevard
Los Angeles, California
90024
All directors and executive Common 13,500,000 98.1 78.5
officers as a group(b)....
</TABLE>
- --------
(a) Represents the total voting power of all shares of common stock
beneficially owned by the named stockholder.
(b) The 13,500,000 shares held by Blackstone are directly held as follows:
10,771,005.354 shares by Blackstone, 1,918,994.646 shares by Blackstone
Offshore Capital Partners III L.P. and 810,000 shares by Blackstone Family
Investment Partnership III L.P., of each of which Blackstone Management
Associates III L.L.C. is the general partner having voting and dispositive
power.

CERTAIN TRANSACTIONS

TrizecHahn and the Company had certain agreements which provided certain
management services to each other from time to time. The Company established
trade credit with various suppliers of its petroleum requirements, requiring
the guarantee of TrizecHahn. Fees related to trade credit guarantees totaled
$0.2 million and $0.2 million in 1995 and 1996, respectively. All trade credit
guarantees were terminated in August 1996.

The business relationships described above between the Company and
TrizecHahn were on terms no less favorable in any respect than those which
could have been obtained through dealings with third parties.

In connection with the Blackstone Transaction, affiliates of Blackstone
received fees of $7.0 million, and the Company reimbursed Blackstone for $1.7
million of out-of-pocket expenses incurred in connection with the Blackstone
Transaction and the November Offering. In addition, an affiliate of Blackstone
receives a monitoring fee equal to $2.0 million per annum. Affiliates of
Blackstone may in the future receive customary fees for advisory services
rendered to the Company. Such fees will be negotiated from time to time with
the independent members of the Company's board of directors on an arm's-length
basis and will be based on the services performed and the prevailing fees then
charged by third parties for comparable services.

In connection with the October 1997 transaction with Tiger, the shares of
common stock of Clark USA owned by Oxy were exchanged for an equal number of
shares of Class F Common Stock having voting rights limited as a class to the
lesser of (a) the aggregate voting power of such shares on a one-vote-per-
share basis and (b) 19.9% of the total voting power of all classes of Clark
USA's voting stock. The Class F Common Stock is convertible at any time to
Common Stock of Clark USA, on a one-for-one basis, at the option of any holder
other than Oxy and its affiliates. Clark USA also issued to Oxy an additional
545,455 shares of Class F Common Stock in full satisfaction of Clark USA's
obligation to issue shares under its then existing Stockholders' Agreement
with Oxy.

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<PAGE>

In early 1998, Clark USA engaged Oxy to provide certain advisory and
consulting services in connection with ongoing crude oil supplier decisions
and related purchase and hedging strategies. In consideration for these
services, Clark USA issued and delivered to Oxy an additional 101,010 shares
of its Class F Common Stock.

In March 1998, Clark USA settled certain obligations outstanding between
Clark USA and Gulf arising out of the December 1995 advance crude oil purchase
receivable transactions. Clark USA paid Gulf $4 million, released 213,654
escrowed shares of Common Stock to Gulf, and released Gulf from its obligation
to deliver certain amounts of crude oil through 2001. In exchange, Gulf agreed
to release Clark USA from obligations to pay further commissions related to
the Oxy Transaction and agreed to allow Clark USA to cancel 1,008,619 shares
of its Common Stock. In October 1998, Gulf's 213,654 shares were transferred
to Barrick Gold Corporation.

Clark USA contributed $268.6 million of capital to the Company during 1996.
Clark USA contributed $33.6 million from the proceeds of debt issued in the
Oxy/Gulf transactions in January of 1996. In addition, $235.0 million was
contributed to the Company from the contribution and subsequent sale of the
Oxy advance crude oil purchase receivable and the associated hedge contracts
in October of 1996. During 1995, Clark USA contributed $165.6 million to the
Company. Upon the issuance of stock in the first quarter of 1995, Clark USA
contributed $150.0 million for the purchase of the Port Arthur facility and
also contributed $9.2 million for operating purposes. In addition, from the
proceeds of debt issued in the Oxy/Gulf transactions, Clark USA contributed
$6.4 million in December 1995 to the Company. In November 1997, the Company
returned capital to Clark USA in an amount equal to approximately $215.0
million (the "Special Dividend").

It is expected that Blackstone will receive a fee for financial advisory
services rendered to the Company in connection with the Lima Acquisition, the
Debt Offering, additional borrowings under the Amended and Restated Term Loan
Agreement and the Consent Solicitation. The fee, which is expected to be $2.5
million, will be paid at a future date to be determined.

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<PAGE>

DESCRIPTION OF THE NOTES

GENERAL

The New Notes will be issued pursuant to an Indenture (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee"), as
supplemented and amended from time to time. The New Notes are subject to all
provisions of the Indenture under which it is issued, and holders of New Notes
are referred to the Indenture for a complete statement thereof. The following
summary of certain provisions of the Indenture and the Registration Agreement
does not purport to be complete and is qualified in its entirety by reference
to the Indenture and the Registration Agreement, including the definitions
therein of certain terms used below. A copy of the proposed form of Indenture
and the Registration Agreement is available from the Company upon request. The
definitions of certain terms used in the following summary are set forth below
under "--Certain Definitions." For purposes of this section, the term the
"Company" refers to Clark only and does not include its subsidiaries.

As of the date of the Indenture, each of the Company's Subsidiaries will be
a Restricted Subsidiary and the Notes will not be assigned an investment grade
rating. However, under certain circumstances, the Company will be able to
designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture. In addition, upon the assignment by S&P
and Moody's of an Investment Grade Rating to the New Notes, the Company will
not be subject to certain restrictive covenants set forth in the Indenture.

The New Notes will be senior unsecured obligations of the Company limited in
aggregate principal amount to $110.0 million and will mature on August 15,
2008. Interest on the New Notes will accrue at the rate of 8 5/8% per annum
and will be payable semiannually in arrears on February 15 and August 15,
commencing on February 15, 1999, to holders of record on the immediately
preceding February 1 and August 1, respectively.

INTEREST AND SETTLEMENT

Interest on the New Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. The New Notes will be payable both as to principal and interest
at the office or agency of the Company maintained for such purpose within the
City and State of New York or, at the option of the Company, payment of
interest may be made by check mailed to the holders of the New Notes at their
addresses set forth in the register of holders of New Notes. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Trustee maintained for such purpose. The New Notes will be
issued in registered form, without coupons, and in minimum denominations of
$1,000.

Settlement for the New Notes will be made in immediately available funds.
Payments by the Company in respect of the New Notes (including principal,
premium, if any, and interest and Additional Interest, if any) will be made in
immediately available funds. Secondary trading in long-term notes and
debentures of corporate issuers is generally settled in clearing-house or
next-day funds. In contrast, the New Notes are expected to trade in the
Depository's Same-Day Funds Settlement System, and any secondary market
trading activity in the New Notes will, therefore, be required by the
Depository to be settled in immediately available funds. No assurance can be
given as to the effect, if any, of such settlement arrangements on trading
activity in the New Notes.

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<PAGE>

RANKING

The New Notes will rank senior in right of payment to all subordinated
Indebtedness of the Company. The New Notes will rank pari passu in right of
payment with all current and future senior Indebtedness of the Company,
including borrowings under the Credit Agreement, the 9 1/2% Notes, the 8 3/8%
Notes and the term loans under the Amended and Restated Term Loan Agreements.
The Credit Agreement, however, and all borrowings thereunder, are secured by a
lien on substantially all of the Company's cash and cash equivalents,
receivables, crude oil, refined product and other inventories and trademarks
and other intellectual property. As of June 30, 1998, there was approximately
$197.2 million outstanding under the Credit Agreement in the form of letter of
credit issuances and there were no outstanding borrowings.

MANDATORY REDEMPTION

The New Notes are not subject to any mandatory redemption.

OPTIONAL REDEMPTION

The New Notes will be redeemable, at the Company's option, in whole or in
part, at any time on and after August 15, 2003, upon not less than 30 nor more
than 60 days' notice mailed to each holder of New Notes to be redeemed at such
holder's address appearing in the Company's Security Register, in principal
amounts of $1,000 or an integral multiple of $1,000, at the following
redemption prices (expressed as percentages of the principal amount) if
redeemed during the 12-month period commencing on August 15 of each of the
years set forth below, plus, in each case, accrued interest thereon to, but
excluding, the date of redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.............................................................. 104.312%
2004.............................................................. 102.156%
2005 and thereafter............................................... 100.000%
</TABLE>

In addition, the Company may, at its option, use the net cash proceeds of
one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35%
in aggregate principal amount of the New Notes originally issued under the
Indenture at any time prior to August 15, 2002, at a redemption price equal to
108.625% of the aggregate principal amount so redeemed, plus accrued interest;
provided that at least 65% of the principal amount of New Notes originally
issued remains outstanding immediately after such redemption. Any such
redemption will be required to occur on or prior to 120 days after the receipt
by the Company of the net cash proceeds of such Equity Offering and upon not
less than 30 nor more than 60 days' notice mailed to each holder of New Notes
to be redeemed at such holder's address appearing in the Company's Security
Register, in principal amounts of $1,000 or an integral multiple of $1,000.

CHANGE OF CONTROL

In the event that there shall occur a Change of Control resulting in a
Rating Decline, then the Company shall make an Offer (as described under "--
Procedures for Offers" below) to purchase all or any part (equal to $1,000 or
an integral multiple thereof) of each holder's New Notes at a purchase price
equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest, including Additional Interest, to the date of purchase. Such
right to require the repurchase of New Notes shall not continue after a
discharge of the Company from its obligations with respect to the New Notes
(see "Defeasance").

The Change of Control purchase feature of the New Notes may, in certain
circumstances, make it more difficult or discourage a takeover of the Company
and, as a result, may make removal of incumbent management more difficult. The
Change of Control purchase feature, however, is not the result of the
Company's knowledge of any specific effort to accumulate the Company's stock
or to obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series
of anti-takeover provisions. Instead, the Change of Control

88
<PAGE>

purchase feature is a result of negotiations between the Company and the
Initial Purchasers. The Company has no present intention to engage in a
transaction involving a Change of Control, although it is possible that the
Company could decide to do so in the future.

The Amended and Restated Term Loan Agreement and the Existing Indentures
contain "change of control" provisions similar to the Change of Control
provision in the Indenture. If a Change of Control were to occur, it is likely
that the Company would not have sufficient assets to satisfy its obligation to
purchase all of the Notes that might be delivered by holders seeking to
exercise the purchase right and any repurchase obligations pursuant to the
Amended and Restated Term Loan Agreement, the 9 1/2% Notes and the 8 3/8%
Notes, all of which will rank pari passu with the Notes.

In addition, pursuant to the terms of the Indenture, the Company is only
required to offer to repurchase the Notes in the event that a Change of
Control results in a Rating Decline. The Change of Control provisions
contained in the 9 1/2% Notes do not require that a Rating Decline occur as a
condition for the Company to offer to repurchase such notes upon the
occurrence of a Change of Control. Consequently, if a Change of Control were
to occur which does not result in a Rating Decline, the Company would be
required to offer to repurchase the 9 1/2% Notes, but would not be required to
offer to repurchase the New Notes offered hereby, the 8 3/8% Notes or the
obligations under the Amended and Restated Term Loan Agreement. A "change of
control" under the Credit Agreement is an event of default under the Credit
Agreement.

The provisions of the Indenture would not necessarily afford holders of the
New Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect such holders.

PROVISION OF FINANCIAL INFORMATION

So long as any of the New Notes are outstanding, the Company will file with
the Commission the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Sections 13(a) and 15(d) of the Exchange Act if the Company were subject to
such Sections, and the Company will provide to all holders copies of such
reports and documents.

COVENANTS

Upon the occurrence of an Investment Grade Rating Event with respect to the
New Notes, the covenants imposed on the Company by the Indenture governing
such series of New Notes will change. See "--Certain Investment Grade
Covenants." An "Investment Grade Rating Event" shall occur on the first day on
which the New Notes are assigned an Investment Grade Rating. An "Investment
Grade Rating" means (i) a Moody's Rating of Baa3 or higher and an S&P Rating
of at least BB+ or (ii) a Moody's Rating of Ba1 or higher and an S&P Rating of
at least BBB- or, in each case, if Moody's or S&P shall change their rating
system, equivalent ratings.

Certain Non-Investment Grade Covenants

The Indenture contains, among others, the following covenants, each of which
shall apply to the Company from the Issue Date until the occurrence of an
Investment Grade Rating Event:

LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, make any
Restricted Payment, unless (i) at the time of and immediately after giving
effect to the proposed Restricted Payment, no Default or Event of Default
shall have occurred and be continuing, or would occur as a consequence
thereof, (ii) either the Company would (a) at the time of such Restricted
Payment and after giving pro forma effect thereto, have a Consolidated
Adjusted Net Worth exceeding $200.0 million or (b) be permitted to incur at
least

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<PAGE>

$1.00 of additional Indebtedness pursuant to the Consolidated Operating Cash
Flow Ratio test set forth in the first paragraph of the covenant described
under "--Limitation on Indebtedness," and (iii) at the time of and immediately
after giving effect to the proposed Restricted Payment (the value of any such
payment if other than cash, as determined in good faith by the board of
directors of the Company and evidenced by a Board Resolution), the aggregate
amount of all Restricted Payments (including Restricted Payments permitted by
clauses (b), (j), (l) and (m) of the next succeeding paragraph and excluding
the other Restricted Payments permitted by such paragraph) declared or made
subsequent to the Issue Date shall not exceed the sum of (a) 50% of the
aggregate Consolidated Net Operating Income (or, if such aggregate
Consolidated Net Operating Income is a deficit, minus 100% of such deficit) of
the Company for the period (taken as one accounting period) from April 1, 1998
to the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment plus (b) 100% of the aggregate net proceeds, including cash and the
fair market value of property other than cash (as determined in good faith by
the board of directors of the Company and evidenced by a Board Resolution),
received by the Company since April 1, 1998, from any Person other than a
Subsidiary of the Company as a result of the issuance of Capital Stock (other
than any Disqualified Capital Stock) of the Company including such Capital
Stock issued upon conversion of Indebtedness or upon exercise of warrants and
any contributions to the capital of the Company (other than Excluded
Contributions) received by the Company from any such Person plus (c) to the
extent that any Restricted Investment that was made after April 1, 1998, is
sold for cash or otherwise liquidated or repaid for cash, the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any). For purposes of any calculation pursuant to the
preceding sentence which is required to be made within 60 days after the
declaration of a dividend by the Company, such dividend shall be deemed to be
paid at the date of declaration.

The foregoing provisions of this covenant will not be violated by reason of
(a) the payment of any dividends or distributions payable solely in shares of
the Company's Capital Stock (other than Disqualified Capital Stock) or in
options, warrants or other rights to acquire the Company's Capital Stock
(other than Disqualified Capital Stock), (b) the payment of any dividend
within 60 days after the date of declaration thereof if, at such date of
declaration, such payment complied with the provisions described above, (c)
the payment of cash dividends or the making of loans or advances to Clark USA
after October 1, 2002, in an amount sufficient to enable Clark USA to make
cash payments of interest or dividends required to be made in respect of the
11 1/2% Preferred Stock or the Exchange Debentures in accordance with the
terms thereof in effect on the Issue Date, (d) the payment of cash dividends
or the making of loans or advances in an amount sufficient to enable Clark USA
to make payments required to be made in respect of the 10 7/8% Notes in
accordance with the terms thereof in effect on the Issue Date, (e) the
retirement of any shares of the Company's Capital Stock in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of its Capital Stock (other than
Disqualified Capital Stock) or options, warrants or other rights to purchase
the Company's Capital Stock (other than Disqualified Capital Stock) and the
declaration and payment of dividends on such new Capital Stock in an aggregate
amount no greater than the amount of dividends declarable and payable on such
retired Capital Stock immediately prior to such retirement, (f) the Chevron
Payment, (g) the AOC Payment, (h) the Gulf Payments, (i) other Restricted
Payments in an aggregate amount not to exceed $50 million, (j) the making of
any payment in redemption of Capital Stock of the Company or Clark USA or
options to purchase such Capital Stock granted to officers or employees of the
Company or Clark USA pursuant to any stock option, stock purchase or other
stock plan approved by the board of directors of the Company or Clark USA in
connection with the severance or termination of officers or employees not to
exceed $8.0 million per annum or the payment of cash dividends or the making
of loans or advances to Clark USA to permit it to make such payments, (k) the
declaration and payment of dividends to holders of any class or series of
preferred stock of the Company and its Restricted Subsidiaries issued in
accordance with the covenant "Limitation on Indebtedness," (l) the payment of
dividends on the Company's common stock,

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<PAGE>

following the first public offering of the Company's or Clark USA's common
stock after the Issue Date, of up to 6% per annum of the net proceeds received
by the Company in such public offering or the payment of funds to Clark USA in
amounts necessary to permit Clark USA to make such payments to the extent the
proceeds of such offering were contributed to the equity capital of the
Company, (m) so long as no Default or Event of Default shall have occurred and
be continuing (or would result therefrom), the payment to Clark USA (in the
form of dividends, loans, advances or otherwise) of 100% of the proceeds of
Indebtedness incurred pursuant to clause (xv) of the definition of "Permitted
Indebtedness" to redeem, repurchase, defease or otherwise acquire or retire
for value the 10 7/8% Notes; provided, however, that at the time of such
redemption, repurchase, defeasance or other acquisition or retirement for
value, the Consolidated Operating Cash Flow Ratio of the Company, after giving
effect to the incurrence of Indebtedness in connection therewith, would be
greater than 1.75-to-1.0, (n) the payment of dividends or the making of loans
or advances by the Company to Clark USA in an amount not to exceed $2.0
million in any fiscal year for costs and expenses incurred by Clark USA in its
capacity as a holding company or for services rendered to the Company, (o)
Restricted Investments not to exceed at any one time an aggregate of $75.0
million, and (p) Restricted Investments made with Excluded Contributions.

The board of directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not
cause a Default or Event of Default. For purposes of making such
determination, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this "Limitation on Restricted Payments" covenant. All
such outstanding Investments shall be deemed to constitute Investments in an
amount equal to the greatest of (x) the net book value of such Investments at
the time of such designation, (y) the fair market value of such Investments at
the time of such designation, and (z) the original fair market value of such
Investments at the time they were made. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.

LIMITATION ON INDEBTEDNESS. The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, incur any Indebtedness (including
Acquired Debt) other than (i) the New Notes and the obligations outstanding or
incurred on the Issue Date under the Amended and Restated Term Loan Agreement
and (ii) 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-to-1. Notwithstanding the foregoing, the Company's Unrestricted
Subsidiaries may incur Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary,
such event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company.

Other than the limitations on incurrence of Indebtedness contained in this
covenant, there are no provisions in the Indenture that would protect the
holders of the New Notes in the event of a highly leveraged transaction.

LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES OF THE COMPANY. The Company will not, and will not permit any
Restricted Subsidiary of the Company (other than a Securitization Special
Purpose Entity) to, create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction which, by its terms,
restricts the ability of any Restricted Subsidiary of the Company (other than
a Securitization Special Purpose Entity) to (i) pay dividends or make any
other distributions on any such Restricted Subsidiary's Capital Stock or pay
any Indebtedness owed to the Company or any Restricted Subsidiary of the
Company, (ii) make any loans or advances to the Company or any Restricted
Subsidiary of the Company, or (iii) transfer any of its property or assets to
the Company or any Restricted Subsidiary of the Company, except for, in

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the case of clauses (i), (ii) and (iii) above, any restrictions (a) existing
under the Indenture and any restrictions existing on the Issue Date pursuant
to any agreement relating to Existing Indebtedness of the Company or any
Restricted Subsidiary, (b) pursuant to an agreement relating to Indebtedness
incurred by such Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company and outstanding on such date
and not incurred in anticipation of becoming a Restricted Subsidiary, (c)
imposed by virtue of applicable corporate law or regulation and relating
solely to the payment of dividends or distributions to stockholders, (d) with
respect to restrictions of the nature described in clause (iii) above,
included in a contract entered into in the ordinary course of business and
consistent with past practices that contains provisions restricting the
assignment of such contract, (e) pursuant to an agreement effecting a renewal,
extension, refinancing, refunding or replacement of Indebtedness referred to
in (a) or (b) above; provided, however, that the provisions contained in such
renewal, extension, refinancing, refunding or replacement agreement relating
to such encumbrance or restriction, taken as a whole, are not materially more
restrictive than the provisions contained in the agreement the subject
thereof, as determined in good faith by the board of directors, or (f) which
will not in the aggregate cause the Company not to have the funds necessary to
pay the principal of, premium, if any, or interest, including Additional
Interest, on the New Notes at their Stated Maturity.

LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. The Company
will not, and will not permit any Restricted Subsidiary of the Company to,
directly or indirectly, conduct any business or enter into any transaction or
series of similar transactions (including, without limitation, the purchase,
sale, transfer, lease or exchange of any property or the rendering of any
service) with (i) any direct or indirect holder of more than 5% of any class
of Capital Stock of the Company or of any Restricted Subsidiary of the Company
(other than transactions between or among the Company and/or its Restricted
Subsidiaries except for Restricted Subsidiaries owned in any part by the
Principal Shareholders) or (ii) any Affiliate of the Company (other than
transactions between or among the Company and/or its Restricted Subsidiaries
except for Restricted Subsidiaries owned in any part by the Principal
Shareholders) (each of the foregoing, a "Shareholder/Affiliate Transaction")
unless the terms of such business, transaction or series of transactions are
as favorable to the Company or such Restricted Subsidiary in all material
respects as terms that would be obtainable at the time for a comparable
transaction or series of similar transactions in arm's-length dealings with a
Person which is not such a stockholder or Affiliate and, if such transaction
or series of transactions involves payment for services of such a stockholder
or Affiliate, (x) for amounts greater than $10.0 million and less than $25.0
million per annum, the Company shall deliver an Officers' Certificate to the
Trustee certifying that such Shareholder/Affiliate Transaction complies with
clause (b) above or (y) for amounts equal to or greater than $25.0 million per
annum, then (A) a majority of the disinterested members of the board of
directors shall in good faith determine that such payments are fair
consideration for the services performed or to be performed (evidenced by a
Board Resolution) or (B) the Company must receive a favorable opinion from a
nationally recognized investment banking firm chosen by the Company or, if no
such investment banking firm is in a position to provide such opinion, a
similar firm chosen by the Company (having expertise in the specific area
which is the subject of the opinion), that such payments are fair
consideration for the services performed or to be performed (a copy of which
shall be delivered to the Trustee); provided that the foregoing requirements
shall not apply to (i) Shareholder/Affiliate Transactions involving the
purchase or sale of crude oil, vacuum tower bottoms, refined products or other
inventory, so long as (y) in the case of such transactions involving crude
oil, such transactions are priced in line with the market price of a crude
benchmark and (z) the pricing of each of such transactions are equivalent to
the pricing of comparable transactions with unrelated third parties; and
provided further that the Gulf Payments shall not be deemed a
Shareholder/Affiliate Transaction, (ii) Restricted Payments permitted by the
provisions of the Indenture described under "Limitation on Restricted
Payments", (iii) payments made in connection with the Blackstone Transaction,
including fees to Blackstone, (iv) payment of annual management, consulting,
monitoring and advisory fees and related expenses to Blackstone and its
affiliates and (v) payment of reasonable and customary fees

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paid to, and indemnity provided on behalf of, officers, directors, employees
or consultants of the Company or any Restricted Subsidiary, (vi) payments by
the Company or any of its Restricted Subsidiaries to Blackstone and its
Affiliates made for any financial advisory, financing, underwriting or
placement services or in respect of other investment banking activities,
including, without limitation, in connection with acquisitions or divestitures
which payments are approved by a majority of the board of directors of the
Company in good faith, (vii) payments or loans to employees or consultants
which are approved by a majority of the board of directors of the Company in
good faith, (viii) any agreement in effect on the Issue Date and any amendment
thereto (so long as any such amendment is not disadvantageous to the holders
of the New Notes in any material respect) or any transaction contemplated
thereby, or (ix) any stockholder agreement or registration rights agreement to
which the Company is a party on the Issue Date and any similar agreements
which it may enter into thereafter; provided that the performance by the
Company or any of its Restricted Subsidiaries of obligations under any future
amendment or under such a similar agreement entered into after the Issue Date
shall only be permitted by this clause (ix) to the extent that the terms of
any such amendment or new agreement are not disadvantageous to the holders of
the New Notes in any material respect.

LIMITATION ON CERTAIN ASSET DISPOSITIONS. The Company will not, and will not
permit any Restricted Subsidiary of the Company to, make any Asset Disposition
unless (i) the Company or such Restricted Subsidiary receives consideration at
the time of such disposition (or in the case of a lease, over the term of such
lease) at least equal to the fair market value of the shares or assets
disposed of (which shall be as determined in good faith by the Company), and
(ii) at least 75% of the consideration for such disposition consists of cash
or Cash Equivalents; provided that the following will be deemed to be cash for
purposes of this covenant: (1) the amount of any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto) of the Company or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the New Notes) that are
assumed by the transferee of any such assets and (2) any notes or other
obligations received by the Company or such Restricted Subsidiary from a
transferee that are converted by the Company or such Restricted Subsidiary
into cash within 180 days after such Asset Disposition; provided, further,
that the 75% limitation referred to above in clause (ii) will not apply to (x)
any disposition of assets in which the cash portion of such consideration
received therefor on an after-tax basis, determined in accordance with the
foregoing proviso, is equal to or greater than what the after-tax net proceeds
would have been had such transaction complied with the aforementioned 75%
limitation, (y) any disposition of assets (other than the Port Arthur
Refinery) in exchange for assets of comparable fair market value related to
the Principal Business of the Company, provided that in any such exchange of
assets of the Company or a Restricted Subsidiary with a fair market value in
excess of $20.0 million occurring when Blackstone fails to hold, directly or
indirectly, 30% or more of the total voting power of all classes of stock of
the Company, the Company shall obtain an opinion or report from a nationally
recognized investment banking firm, valuation expert or accounting firm
confirming that the assets received by the Company and such Restricted
Subsidiary in such exchange have a fair market value at least equal to the
assets so exchanged, or (z) any disposition of Securitization Program Assets
to any Securitization Special Purpose Entity in exchange for Indebtedness of,
procurement of letters of credit and similar instruments by, or equity or
other interests in, such Securitization Special Purpose Entity.

Within 360 days of the later of (a) the receipt of the Net Available
Proceeds and (b) the date of such applicable Asset Disposition, the Company
may elect to (i) apply the Net Available Proceeds from such Asset Disposition
to permanently redeem or repay Indebtedness of the Company or any Restricted
Subsidiary, other than Indebtedness of the Company which is subordinated to
the Notes or (ii) apply the Net Available Proceeds from such Asset Disposition
to invest in assets related to the Principal Business of the Company or
Capital Stock of any Person primarily engaged in the Principal Business if, as
a result of such acquisition, such Person becomes a Restricted Subsidiary.
Pending the final application of any such Net Available Proceeds, the Company
may temporarily invest such

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Net Available Proceeds in any manner permitted by the Indentures. Any Net
Available Proceeds from an Asset Disposition not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds."

As soon as practical, but in no event later than ten (10) Business Days
after any date (an "Asset Disposition Trigger Date") that the aggregate amount
of Excess Proceeds exceeds $25.0 million, the Company will commence an Offer
(as described below under "Procedures for Offers") to purchase the maximum
principal amount of New Notes that may be purchased out of the Excess Proceeds
and to purchase the maximum amount of other Indebtedness of Clark USA or the
Company having similar rights to be purchased out of such Excess Proceeds, in
each case at an Offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, including
Additional Interest, to the date of purchase. To the extent that any Excess
Proceeds remain after completion of an Offer, the Company may use the
remaining amount for general corporate purposes. Upon completion of such
Offer, the amount of Excess Proceeds will be reset to zero.

LIMITATION ON LIENS. The Company will not, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted Liens) on any
asset now owned or hereafter acquired, or on any income or profits therefrom,
or assign or convey any right to receive income therefrom to secure any
Indebtedness which is pari passu with or subordinate in right of payment to
the New Notes, unless the New Notes are secured equally and ratably
simultaneously with or prior to the creation, incurrence or assumption of such
Lien for so long as such Lien exists; provided, that in any case involving a
Lien securing Indebtedness which is subordinated in right of payment to the
New Notes, such Lien is subordinated to the Lien securing the New Notes to the
same extent that such subordinated debt is subordinated to the New Notes.

LIMITATION ON MERGER, CONSOLIDATION AND SALE OF ASSETS. The Company shall
not consolidate or merge with or into (whether or not the Company is the
Surviving Person), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to another Person unless (i) the Surviving Person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia, (ii) the Surviving Person (if other
than the Company) assumes all of the obligations of the Company under the
Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustees, (iii) at the time of and immediately
after such transaction, no Default or Event of Default shall have occurred and
be continuing, and (iv) except with respect to a merger with or into Clark USA
that does not result in a Rating Decline, after giving pro forma effect to the
transaction, either (a) the Surviving Person would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated Operating
Cash Flow Ratio test set forth in the first paragraph of the covenant
described under "--Limitations on Indebtedness" or (b) the Consolidated
Operating Cash Flow Ratio of the Surviving Person would be no less than such
ratio for the Company immediately prior to such transaction.

LIMITATION ON ISSUANCE OF GUARANTEES OF INDEBTEDNESS. The Company will not
permit any Restricted Subsidiary, directly or indirectly, to guarantee or
secure the payment of any Indebtedness of the Company unless such Restricted
Subsidiary simultaneously executes and delivers a supplemental indenture to
the Indenture providing for the guarantee or security of the payment of the
New Notes by such Restricted Subsidiary (other than the grant of security
interests in cash and cash equivalents, receivables and product inventories to
secure obligations under the Credit Agreement). If the Indebtedness to be
guaranteed is subordinated to the New Notes, the guarantee or security of such
Indebtedness shall be subordinated to the guarantee or security of the New
Notes to the same extent as the Indebtedness to be guaranteed is subordinated
to the New Notes under the Indenture. Notwithstanding the foregoing, any such
guarantee or security by a Restricted Subsidiary of the New Notes shall
provide by its terms that it shall be automatically and unconditionally
released and discharged upon either (i) the release or discharge of such
guarantee or security of payment of such

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other Indebtedness, except a discharge by or as a result of payment under such
guarantee or security or (ii) any sale, exchange or transfer, to any Person
not an Affiliate of the Company, of all of the Company's Capital Stock in, or
all or substantially all the assets of, such Restricted Subsidiary, which
sale, exchange or transfer is made in compliance with the applicable provision
of the Indenture.

Certain Investment Grade Covenants

Upon the occurrence of an Investment Grade Rating Event with respect to the
New Notes, each of the covenants (except for "--Limitation on Issuance of
Guarantees of Indebtedness" and clauses (i), (ii) and (iii) of "--Limitation
on Merger, Consolidation and Sale of Assets") described above under "--Certain
Non-Investment Grade Covenants" shall be of no further force and effect and
shall cease to apply to the Company and its Restricted Subsidiaries. In
addition, the Indenture contains, among other things, the following covenants,
each of which will apply to the Company upon and after the occurrence of an
Investment Grade Rating Event with respect to the New Notes issued thereunder.

RESTRICTIONS ON SECURED INDEBTEDNESS. If the Company shall incur, issue,
assume or guarantee any Indebtedness secured by a Lien on any Principal
Property of the Company or on any share of stock or Indebtedness of any
Restricted Subsidiary (other than a Securitization Special Purpose Entity),
the Company will secure the New Notes equally and ratably with (or, at the
Company's option, prior to) such secured Indebtedness so long as such
Indebtedness shall be so secured, unless the aggregate amount of all such
secured Indebtedness, together with all Attributable Indebtedness of the
Company with respect to any sale and leaseback transactions involving
Principal Properties (with the exception of such transactions which are
excluded as described in clauses (i) through (v) under "--Restrictions on
Sales and Leasebacks" below), would not exceed 10% of Consolidated Net
Tangible Assets. The above restriction does not apply to, and there will be
excluded from secured Indebtedness in any computation under such restriction,
Indebtedness secured by: (i) Liens on property of, or on any share of stock or
Indebtedness of, any corporation existing at the time such corporation becomes
a Restricted Subsidiary and Liens on any property acquired from a corporation
which is merged with or into the Company or a Subsidiary, (ii) Liens in favor
of the Company, (iii) Liens in favor of governmental bodies to secure
progress, advance or other payments, (iv) Liens upon any property acquired
after the date of the Indenture, securing the purchase price thereof or
created or incurred simultaneously with (or within 270 days after) such
acquisition to finance the acquisition of such property or existing on such
property at the time of such acquisition, or Liens on improvements after such
date, in each case subject to certain conditions and provided that the
principal amount of the obligation or indebtedness secured by such Lien shall
not exceed 100% of the cost or fair value (as determined in good faith by the
Company), whichever shall be lower, of the property at the time of the
acquisition, construction or improvement thereof, (v) Liens securing
industrial revenue or pollution control bonds, (vi) Liens arising out of any
final judgment for the payment of money aggregating not in excess of $25.0
million which remains unstayed, in effect and unpaid for a period of 60
consecutive days or Liens arising out of any judgments which are being
contested in good faith, (vii) Permitted Liens in existence on the date of the
Investment Grade Rating Event, (viii) Liens to secure obligations arising from
time to time under the Credit Agreement including Guaranties thereof, or (ix)
any extension, renewal, or replacement of any Lien referred to in the
foregoing clauses (i) through (viii) inclusive.

RESTRICTIONS ON SALES AND LEASEBACKS. The Company may not enter into any
sale and leaseback transaction involving any Principal Property, unless the
aggregate amount of all Attributable Indebtedness of the Company with respect
to such transaction plus all secured Indebtedness (with the exception of
secured Indebtedness which is excluded as described in clauses (i) through
(ix) under "--Restrictions on Secured Indebtedness" above) would not exceed
10% of Consolidated Net Tangible Assets. This restriction does not apply to,
and there shall be excluded from Attributable Indebtedness in any computation
under such restriction, any sale and leaseback transaction if: (i) the lease
is for a period, including renewal rights, not in excess of three years; (ii)
the sale of the Principal

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Property is made within 270 days after its acquisition, construction or
improvements; (iii) the lease secures or relates to industrial revenue or
pollution control bonds; (iv) the transaction is between the Company and a
Restricted Subsidiary; or (v) the Company, within 270 days after the sale is
completed, applies to the retirement of Indebtedness of the Company or a
Restricted Subsidiary, or to the purchase of other property which will
constitute a Principal Property, an amount not less than the greater of (1)
the net proceeds of the sale of the Principal Property leased or (2) the fair
market value (as determined by the Company in good faith) of the Principal
Property leased. The amount to be applied to the retirement of Indebtedness
shall be reduced by (x) the principal amount of any debentures or notes
(including the New Notes) of the Company or a Restricted Subsidiary
surrendered within 270 days after such sale to the applicable trustee for
retirement and cancellation, (y) the principal amount of Indebtedness, other
than the items referred to in the preceding clause (x), voluntarily retired by
the Company or a Restricted Subsidiary within 270 days after such sale and (z)
associated transaction expenses.

Procedures for Offers

Within 30 days following a Change of Control resulting in a Rating Decline
and on any Asset Disposition Trigger Date, the Company will mail to each
holder of New Notes, at such holder's registered address, a notice stating:
(i) the Offer is being made as a result of a Change of Control or one or more
Asset Dispositions, the length of time the Offer shall remain open, and the
maximum aggregate principal amount of New Notes that will be accepted for
payment pursuant to such Offer, (ii) the purchase price, the amount of accrued
and unpaid interest, including Additional Interest, as of the Purchase Date,
and the Purchase Date, (iii) in the case of a Change of Control, the
circumstances and material facts regarding such Change of Control, to the
extent known to the Company (including, but not limited to, information with
respect to pro forma and historical financial information after giving effect
to such Change of Control, and information regarding the Person or Persons
acquiring control), and (iv) such other information required by the Indenture
and applicable laws and regulations.

On the Purchase Date for any Offer, the Company will (1) in the case of an
Offer resulting from a Change of Control, accept for payment all New Notes
tendered pursuant to such Offer and, in the case of an Offer resulting from
one or more Asset Dispositions, accept for payment the maximum principal
amount of New Notes tendered pursuant to such Offer that can be purchased out
of Excess Proceeds from such Asset Dispositions, which amount shall equal the
product of (a) the amount of such Excess Proceeds and (b) a fraction whose
numerator is the aggregate amount of all obligations owing under New Notes
tendered pursuant to such offering and whose denominator is the sum of the
aggregate amount of all obligations owing under New Notes tendered pursuant to
such offering and the aggregate amount of all obligations owing under other
Indebtedness of Clark USA or the Company tendered pursuant to similar rights
to repayment or repurchase, (2) deposit with the Paying Agent the aggregate
purchase price of all New Notes accepted for payment and any accrued and
unpaid interest, including Additional Interest, on such New Notes as of the
Purchase Date, and (3) deliver or cause to be delivered to the Trustee all New
Notes tendered pursuant to the Offer. If less than all New Notes tendered
pursuant to any Offer are accepted for payment by the Company for any reason,
selection of the New Notes to be purchased will be in compliance with the
requirements of the principal national securities exchange, if any, on which
the New Notes are listed or, if the New Notes are not so listed, by lot or by
such method as the Trustee shall deem fair and appropriate; provided that New
Notes accepted for payment in part shall only be purchased in integral
multiples of $1,000. The Paying Agent will promptly mail to each holder of New
Notes accepted for payment an amount equal to the Purchase price for such
Notes plus any accrued and unpaid interest, including Additional Interest
thereon. The Trustee will promptly authenticate and mail to such holder of New
Notes accepted for payment in part new New Notes equal in principal amount to
any unpurchased portion of the New Notes, and any New Notes not accepted for
payment in whole or in part shall be promptly returned to the holder thereof.
On and after a Purchase Date, interest will cease to accrue on the New Notes
accepted for payment. The Company will announce the results of the Offer to
holders of the New Notes on or as soon as practicable after the Purchase Date.

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The Company will comply with all applicable requirements of Rule 14e-1 under
the Exchange Act and all other applicable securities laws and regulations
thereunder, to the extent applicable, in connection with any Offer.

Events of Default

The following will be Events of Default under the Indenture: (a) failure to
pay any interest on any Note issued under the Indenture when due, continued
for 30 days; (b) failure to pay principal of (or premium, if any, on) any Note
issued under the Indenture when due; (c) failure to perform or comply with the
provisions described under "--Certain Covenants--Limitation on Merger,
Consolidation and Sale of Assets;" (d) failure to perform any other covenant
or warranty of the Company in the Indenture, continued for 30 days after
written notice as provided in the Indenture; (e) failure to pay, at final
maturity, in excess of $25.0 million principal amount of any indebtedness of
the Company or any Restricted Subsidiary of the Company, or acceleration of
any indebtedness of the Company or any Restricted Subsidiary of the Company in
an aggregate principal amount in excess of $25.0 million; (f) the rendering of
a final judgment or judgments (not subject to appeal and not covered by
insurance) against the Company or any of its Restricted Subsidiaries in an
aggregate principal amount in excess of $50.0 million which remains unstayed,
in effect and unpaid for a period of 60 consecutive days thereafter; and (g)
certain events in bankruptcy, insolvency or reorganization affecting the
Company or any Significant Subsidiary of the Company.

If an Event of Default shall occur and be continuing, either the Trustee or
the holders of at least 25% in aggregate principal amount of the outstanding
Notes issued under the Indenture may accelerate the maturity of all Notes
issued under the Indenture; provided, however, that after such acceleration,
but before a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount of outstanding Notes issued under the
Indenture may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the nonpayment of
accelerated principal, have been cured or waived as provided in the Indenture.
For information as to waiver of defaults, see "--Modification and Waiver."

No holder of any New Note will have any right to institute any proceeding
with respect to an Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless the holders of at least 25% in aggregate principal
amount of the outstanding Notes issued under such Indenture shall have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as Trustee, and the Trustee shall not have received from the
holders of a majority in aggregate principal amount of the outstanding Notes
issued under such Indenture a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a holder of a Note for
enforcement of payment of the principal of (and premium, if any) or interest
on such Note on or after the respective due dates expressed in such Note.

Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under such
Indenture at the request or direction of any of the holders, unless such
holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the holders of a
majority in aggregate principal amount of the outstanding Notes issued under
an Indenture will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.

The Company will be required to furnish to each Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.

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Defeasance

The Indenture provides that, at the option of the Company, (A) if
applicable, the Company will be discharged from any and all obligations in
respect of the outstanding New Notes issued under such Indenture or (B) if
applicable, the Company may omit to comply with certain restrictive covenants,
and that such omission shall not be deemed to be an Event of Default under the
Indenture and the New Notes issued thereunder in the case of either (A) or
(B), upon irrevocable deposit with the Trustee, in trust, of money and/or U.S.
government obligations which will provide money in an amount sufficient in the
opinion of a nationally recognized accounting firm to pay the principal of and
premium, if any, and each installment of interest, if any, on the outstanding
New Notes issued under such Indenture. With respect to clause (B), the
obligations under the Indenture other than with respect to such covenants and
the Events of Default other than the Event of Default relating to such
covenants above shall remain in full force and effect. Such trust may only be
established if, among other things (i) with respect to clause (A), the Company
has received from, or there has been published by, the Internal Revenue
Service (the "Service") a ruling or there has been a change in law, which in
the Opinion of Counsel provides that holders of the New Notes will not
recognize gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred; or, with
respect to clause (B), the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the holders of the New Notes will not recognize
gain or loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred; (ii) no Event of Default or event
that, with the passing of time or the giving of notice, or both, shall
constitute an Event of Default shall have occurred or be continuing; (iii) the
Company has delivered to the Trustee an Opinion of Counsel to the effect that
such deposit shall not cause the Trustee or the trust so created to be subject
to the Investment Company Act of 1940; and (iv) certain other customary
conditions precedent.

Modification and Waiver

Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in aggregate
principal amount of the outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of (or the premium), or interest on, any Notes, (c) change
the place or currency of payment of principal of (or premium), or interest on,
any New Notes, (d) impair the right to institute suit for the enforcement of
any payment on or with respect to any Notes, (e) reduce the above-stated
percentage of outstanding Notes necessary to modify or amend the Indenture,
(f) reduce the percentage of aggregate principal amount of outstanding Notes
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults, or (g) modify any provisions of the Indenture
relating to the modification and amendment of the Indenture or the waiver of
past defaults or covenants, except as otherwise specified.

The holders of a majority in aggregate principal amount of the outstanding
Notes may waive compliance by the Company with certain restrictive provisions
of the Indenture. The holders of a majority in aggregate principal amount of
the outstanding Notes may waive any past default under the Indenture.

The Trustee

The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it under the Indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.

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The Indenture and the provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim
as security or otherwise. The Trustee is permitted to engage in other
transactions with the Company or any Affiliate; provided, however, that if it
acquires any conflicting interest (as defined in the Indenture or in the Trust
Indenture Act), it must eliminate such conflict or resign.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.

"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Amended and Restated Term Loan Agreement" means the amended and restated
term loan agreement, dated as of August 10, 1998, among the Company, certain
lenders and Goldman Sachs Credit Partners L.P., as agent, as amended from time
to time.

"AOC Payment" means all payments made to AOC Limited Partnership, a limited
partnership organized under the laws of the State of Missouri, constituting
"Additional Redemption Consideration" required to be paid by Clark USA
pursuant to Section 2.4 of the Stock Purchase and Redemption Agreement.

"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Restricted
Subsidiaries (including a consolidation or merger or other sale of any such
Restricted Subsidiaries with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary, but
excluding a disposition by a Restricted Subsidiary of such Person to such
Person or a Restricted Subsidiary of such Person) of (i) shares of Capital
Stock (other than directors' qualifying shares) or other ownership interests
of a Restricted Subsidiary of such Person, (ii) substantially all of the
assets of such Person or any of its Restricted Subsidiaries representing a
division or line of business, or (iii) other assets or rights of such Person
or any of its Restricted Subsidiaries outside of the ordinary course of
business, which in the case of either clause (i), (ii) or (iii), whether in a
single transaction or a series of related transactions, result in Net
Available Proceeds in excess of $10.0 million; provided that (x) any transfer,
conveyance, sale, lease or other disposition of assets securing the Credit
Agreement in connection with the enforcement of the security interests therein
and (y) any sale of crude oil, vacuum tower bottoms, refined products, or
other inventory shall not be deemed an Asset Disposition hereunder.

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"Attributable Indebtedness" means the total net amount of rent required to
be paid during the remaining primary term of any particular lease under which
any person is at the time liable, discounted at the rate per annum equal to
the weighted average interest rate borne by the Notes.

"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its affiliates.

"Blackstone Transaction" means the acquisition of 13,500,000 shares of
common stock of Clark USA previously held by Trizec Hahn Corporation and
certain of its subsidiaries.

"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
95% of the accounts receivable owned by the Company and its Restricted
Subsidiaries (excluding any accounts receivable from Restricted Subsidiaries
and any accounts receivable that are more than 90 days past due) as of such
date, plus (ii) 90% of the market value of inventory owned by the Company and
its Restricted Subsidiaries as of such date, plus (iii) 100% of the cash and
Cash Equivalents owned by the Company and its Restricted 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.

"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal or mixed, in respect of which the
present value of the minimum rental commitment would be capitalized on a
balance sheet of the lessee in accordance with GAAP.

"Capitalized Lease Obligation" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which, in
conformity with GAAP, is required to be accounted for as a Capital Lease on
the balance sheet of that Person.

"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of any association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, and (iii) in the case of a partnership, partnership interests
(whether general or limited).

"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses
(ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper having
the highest rating obtainable from Moody's or S&P and, in each case, maturing
within six months after the date of acquisition.

"Change of Control" means any transaction the result of which is that any
Person (an "Acquiring Person") other than Blackstone, or a Person, a majority
of whose voting equity is owned by Blackstone, becomes the Beneficial Owner,
directly or indirectly, of shares of stock of the Company or Clark USA
entitling such Acquiring Person to exercise 50% or more of the total voting
power of all classes of stock of the Company or Clark USA, as the case may be,
entitled to vote in elections of directors. The term "Beneficial Owner" shall
be determined in accordance with Rule 13d-3 under the Exchange Act.

"Chevron Payment" means that certain contingent payment obligation of Clark
USA to Chevron U.S.A. Inc. based on industry refining margins and the volume
of refined oil products produced at the Port Arthur Refinery over a five-year
period, pursuant to Section 3.1(d) of the Asset Purchase Agreement, dated as
of August 18, 1994, between Clark USA and Chevron U.S.A. Inc., as amended.

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"Clark USA" means Clark USA, Inc., a Delaware corporation and the direct
parent of the Company.

"Consolidated Adjusted Net Worth" of any Person means the total amount of
consolidated stockholder's equity (par value plus additional paid-in capital
(including all Capital Stock except as excluded below) plus retained earnings
or minus accumulated deficit) of such Person as reflected on the consolidated
balance sheet of such Person and its Restricted Subsidiaries for the most
recent Quarter prior to the event requiring such determination to be made,
after excluding (to the extent otherwise included therein and without
duplication) the following (the amount of such stockholder's equity and
deductions therefrom to be computed, except as noted below, in accordance with
GAAP consistently applied): (i) any amount receivable but not paid from sales
of Capital Stock of such Person or its Restricted Subsidiaries determined on a
consolidated basis; (ii) any revaluation or other write-up in book value of
assets subsequent to the date hereof (other than write-ups of oil inventory
previously written down and other than reevaluations or write-ups upon the
acquisition of assets acquired in a transaction to be accounted for by
purchase accounting under GAAP); (iii) treasury stock; (iv) an amount equal to
the excess, if any, of the amount reflected on the books and records of such
Person or its Restricted Subsidiaries for the securities of any Person which
is not a Restricted Subsidiary of such Person over the lesser of cost or
market value (as determined in good faith by the board of directors of such
Person or such Restricted Subsidiary); (v) Disqualified Capital Stock; (vi)
equity securities of such Person or its Restricted Subsidiaries which are not
Disqualified Capital Stock but which are exchangeable for or convertible into
debt securities of such Person or such Restricted Subsidiary, as the case may
be, other than at the option of such Person or such Restricted Subsidiary
except to the extent that the exchange or conversion rights in such other
equity securities cannot, under any circumstances, be exercised prior to
Maturity; (vii) the cumulative foreign currency translation adjustment, if
any; and (viii) write-offs of non-cash items in an amount not to exceed $80.0
million.

"Consolidated Net Operating Income" means, when used with reference to any
Person, for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined
in accordance with GAAP, provided that (i) the Net Income of any Person which
is not a Subsidiary of such Person or is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to such Person or its Restricted Subsidiaries, (ii) the Net
Income of any Unrestricted Subsidiary shall be excluded (except to the extent
distributed to the Company or one of its Subsidiaries), (iii) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded, (iv) extraordinary
gains and losses and gains and losses from the sale of assets outside the
ordinary course of such Person's business shall be excluded, (v) the
cumulative effect of changes in accounting principles in the year of adoption
of such changes shall be excluded, and (vi) the tax effect of any of the items
described in clauses (i) through (v) above shall be excluded.

"Consolidated Net Tangible Assets" of a Person means the consolidated total
assets of such Person and its Restricted Subsidiaries determined in accordance
with GAAP, less the sum of (i) all current liabilities and current liability
items and (ii) all goodwill, trade names, trademarks, patents, organization
expense, unamortized debt discount and expense and other similar intangibles
properly classified as intangibles in accordance with GAAP.

"Consolidated Operating Cash Flow" means with respect to any Person,
Consolidated Net Operating Income of such Person and its Restricted
Subsidiaries without giving effect to gains and losses on securities
transactions (net of related taxes) for the period described below, increased
by the sum of (i) Consolidated Fixed Charges of such Person and its Restricted
Subsidiaries which reduced Consolidated Net Operating Income for such period,
(ii) consolidated income tax expense (net of taxes relating to gains and
losses on securities transactions) of such Person and its Restricted

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Subsidiaries which reduced Consolidated Net Operating Income for such period,
(iii) consolidated depreciation and amortization expense (including
amortization of purchase accounting adjustments) of such Person and its
Restricted Subsidiaries and other noncash items to the extent any of which
reduced Consolidated Net Operating Income for such period, (iv) expenses
incurred in connection with the Blackstone Transaction in an amount not to
exceed $9.0 million, and (v) any annual management monitoring, consulting and
advisory fees and related expenses paid to Blackstone and its affiliates in an
amount not to exceed $2.0 million, less noncash items which increased
Consolidated Net Operating Income for such period, all as determined for such
Person and its consolidated Restricted Subsidiaries in accordance with GAAP
for the four full Quarters for which financial information in respect thereof
is available immediately prior to the Transaction Date.

"Consolidated Operating Cash Flow Ratio" means, with respect to any Person,
the ratio of (i) Consolidated Operating Cash Flow of such Person and its
Restricted Subsidiaries for the four Quarters for which financial information
in respect thereof is available immediately prior to the Transaction Date to
(ii) the aggregate Fixed Charges of such Person and its Restricted
Subsidiaries for such four Quarters, such Fixed Charges and Preferred Stock
Dividends to be calculated on the basis of the amount of the Indebtedness,
Capitalized Lease Obligations and Preferred Stock of such Person and its
Restricted Subsidiaries outstanding on the Transaction Date and assuming the
continuation of market interest rate levels prevailing on the Transaction Date
in any calculation of interest rates in respect of floating interest rate
obligations; provided, however, that if such Person or any Restricted
Subsidiary of such Person shall have acquired, sold or otherwise disposed of
any Material Asset or engaged in an Equity Offering during the four full
Quarters for which financial information in respect thereof is available
immediately prior to the Transaction Date or during the period from the end of
such fourth full Quarter to and including the Transaction Date, the
calculation required in clause (i) above will be made giving effect to such
acquisition, sale or disposition or the other investment of the Net Available
Proceeds of such Equity Offering on a pro forma basis as if such acquisition,
sale, disposition or investment had occurred at the beginning of such four
full Quarter period without giving effect to clause (iii) of the definition of
"Consolidated Net Operating Income" (that is, including in such calculation
the Net Income for the relevant prior period of any Person acquired in a
pooling of interests transaction, notwithstanding the provisions of said
clause (iii)); provided, further, that Fixed Charges of such Person during the
applicable period shall not include the amount of consolidated interest
expense which is directly attributable to Indebtedness to the extent such
Indebtedness is reduced by the proceeds of the incurrence of such Indebtedness
which gave rise to the need to calculate the Consolidated Operating Cash Flow
Ratio. Any such pro forma calculation may include adjustments appropriate, in
the reasonable determination of the Company as set forth in an Officer's
Certificate, to (i) reflect operating expense reductions reasonably expected
to result from the acquisition by the Company of such Material Asset or (ii)
eliminate the effect of any extraordinary accounting event with respect to any
acquired Person on Consolidated Net Operating Income.

"Credit Agreement" means that certain Credit Agreement, dated as of
September 25, 1997, by and among the Company and the financial institutions
party thereto, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith), and in each case
as amended, modified, extended, renewed, refunded, replaced or refinanced from
time to time.

"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such
Person is the Surviving Person) or the sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of such Person's
assets.

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"Disqualified Capital Stock" means any Capital Stock of the Company that,
either by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of any event or passage
of time would be, required to be redeemed or purchased (other than pursuant to
an offer to repurchase such Capital Stock following a change of control, which
offer may not be completed until 45 days after completion of the Offer
described under "--Change of Control"), including at the option of the holder,
in whole or in part, or has, or upon the happening of an event or passage of
time would have, a redemption, sinking fund or similar payment due, on or
prior to August 15, 2008.

"Equity Offering" means any public or private sale of Capital Stock
(including options, warrants or rights with respect thereto) of the Company or
of Clark USA.

"Excluded Contribution" means the net cash proceeds received by the Company
after the Issue Date from (a) contributions to its common equity capital and
(b) the sale (other than to a Subsidiary or to any Company or Subsidiary
management equity plan or stock option plan or any other management or
employee benefit plan or agreement) of Capital Stock of the Company (other
than Disqualified Stock), in each case, designated as Excluded Contributions
pursuant to an Officers' Certificate.

"Existing Indebtedness" means any Indebtedness of the Company and its
Subsidiaries incurred on or outstanding as of the Issue Date and in any event
Indebtedness evidenced by the Credit Agreement, the 1997 Term Loan Agreement,
the 9 1/2% Notes, the 8 3/8% Notes and the 8 7/8% Senior Subordinated Notes
whether or not outstanding on the Issue Date.

"Fixed Charges" of any Person means, for any period, the sum of (i)
consolidated Interest Expense of such Person and its Restricted Subsidiaries,
plus (ii) all but the principal component of rentals in respect of
consolidated Capitalized Lease Obligations of such Person and its Restricted
Subsidiaries paid, accrued or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period, and determined in
accordance with GAAP, plus (iii) all cash dividend payments (excluding items
eliminated in consolidation) on any series of preferred stock of such Person.
For purposes of this definition, (a) interest on Indebtedness which accrues on
a fluctuating basis for periods succeeding the date of determination shall be
deemed to accrue at a rate equal to the average daily rate of interest in
effect during such immediately preceding Quarter and (b) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined in good faith by the chief financial officer, treasurer
or controller of such Person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP (including Statement of
Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board).

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the
accounting profession, which were in effect on November 21, 1997.

"Guaranty" means a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

"Gulf Payments" means all payments (other than the initial purchase price of
$26.9 million under the Gulf Oil Purchase Contract) to Gulf Resources
Corporation, a Panamanian corporation, and/or any of its Affiliates, in each
case, pursuant to the Gulf Merger Agreement, the Gulf Oil Purchase Contract,
the Gulf Stockholders' Agreement and the Gulf Pledge Agreement, as each is in
effect on the date hereof.

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"Indebtedness" with respect to any Person, means any indebtedness,
including, in the case of the Company, the indebtedness evidenced by the
Notes, 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 (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 upon a
balance sheet of such Person prepared on a consolidated basis in accordance
with GAAP, and shall also include, to the extent not otherwise included, the
Guaranty of Indebtedness of other Persons not included in the financial
statements of the Company, the maximum fixed redemption or repurchase price of
Disqualified Capital Stock (or if not redeemable or subject to repurchase, the
issue price) and the maximum fixed redemption or repurchase price (or if not
redeemable or subject to repurchase, the issue price) of Preferred Stock
issued by any Restricted Subsidiary of the Company to any Person other than to
the Company or a Restricted Subsidiary.

"Interest Expense" of any Person means, for any period, the aggregate amount
of interest expense in respect of Indebtedness (excluding (a) the Chevron
Payment, (b) the AOC Payment, (c) the Gulf Payments and (d) the amortization
of debt issuance expense relating to the Notes, the 8 3/8% Notes, the 8 7/8%
Senior Subordinated Notes, and the Indebtedness under the Amended and Restated
Term Loan Agreement, but including without limitation or duplication (i)
amortization of debt issuance expense with respect to other Indebtedness, (ii)
amortization of original issue discount on any Indebtedness, and (iii) the
interest portion of any deferred payment obligation, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financings and the net cost associated with Interest
Swap Obligations) paid, accrued or scheduled to be paid or accrued by such
Person during such period, determined in accordance with GAAP.

"Interest Swap Obligations" means, when used with reference to any Person,
the obligations of such person under (i) interest rate swap agreements,
interest rate exchange agreements, interest rate cap agreements, and interest
rate collar agreements, (ii) currency swap agreements and currency exchange
agreements, and (iii) other similar agreements or arrangements, which are, in
each such case, designed solely to protect such Person against fluctuations in
interest rates or currency exchange rates.

"Investment" means, when used with reference to any Person, any direct or
indirect advances, loans or other extensions of credit or capital
contributions by such Person to (by means of transfers of property to others
or payments for property or services for the account or use of others, or
otherwise), or purchases or acquisitions by such Person of Capital Stock,
bonds, notes, debentures or other securities issued by, any other Person or
any Guaranty or assumption of any liability (contingent or otherwise) by such
Person of any Indebtedness or Obligations of any other Person and all other
items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.

"Investment Grade Rating" means (i) a Moody's Rating of Baa3 or higher and
an S&P Rating of at least BB+ or (ii) a Moody's Rating of Ba1 or higher and an
S&P Rating of at least BBB- or, in each case, if Moody's or S&P shall change
their rating system, equivalent ratings.

"Investment Grade Rating Event" means the first day on which the Notes are
assigned an Investment Grade Rating.

"Issue Date" means August 10, 1998.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind (except for taxes not yet owing)
in respect of such asset, whether or not filed,

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retention agreement, any lease in the nature thereof, any option or other
agreement to sell and, with respect to which, any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).

"Material Asset" means, with respect to the Company or any Restricted
Subsidiary, any asset, related group of assets, business or division of the
Company or any Restricted Subsidiary (including any capital stock of any
Restricted Subsidiary) which (i) for the most recent fiscal year of the
Company, accounted or would have accounted for more than 3% of the
consolidated revenues of the Company or (ii) as at the end of such fiscal
year, represented or would have represented more than 3% of the consolidated
assets of the Company or had a fair market value in excess of $10 million, all
as shown (x) with respect to any sale or disposition, on the consolidated
financial statements of the Company for such fiscal year or such shorter
period as such assets, business or division were owned by the Company or any
Restricted Subsidiary and (y) with respect to any acquisition, on consolidated
pro forma financial statements of the Company for the four full Quarters for
which financial information in respect thereof is available immediately prior
to such acquisition, giving effect thereto on a pro forma basis as if such
acquisition had occurred at the beginning of such four full Quarters.

"Maturity" means, with respect to the Notes, the date on which the principal
of such Notes becomes due and payable as provided in the Indenture, whether at
the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.

"Moody's" means Moody's Investors Service, Inc. and its successors.

"Net Available Proceeds" means cash or readily marketable cash equivalents
received (including by way of sale or discounting of a note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiree of Indebtedness or other obligations
relating to such properties or assets or received in any other noncash form)
net of (i) all legal and accounting expenses, commissions and other fees and
expenses incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such issuance and
(ii) all payments made by such Person or its Subsidiaries on any Indebtedness
which must, in order to obtain a necessary consent to such issuance or by
applicable law, be repaid out of the proceeds from such issuance.

"Net Income" of any Person for any period means the net income (loss) from
continuing operations of such Person for such period, determined in accordance
with GAAP.

"Non-Recourse Debt" means Indebtedness as to which neither the Company nor
any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender.

"Obligations" means any principal (and premium, if any), interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.

"Permitted Indebtedness" means Indebtedness incurred by the Company or its
Restricted Subsidiaries (i) to renew, extend, refinance or refund Indebtedness
that is permitted to be incurred pursuant to the Consolidated Operating Cash
Flow Ratio test set forth in the covenant described under "--Limitation on
Indebtedness" and clauses (ii) through (iv) and (xi) below; provided, however,
that such Indebtedness does not exceed the principal amount of the
Indebtedness so renewed, extended, refinanced or refunded plus the amount of
any premium required to be paid in connection with such refinancing pursuant
to the terms of the Indebtedness refinanced or the amount of any premium
reasonably determined by the Company or such Restricted Subsidiary as
necessary to accomplish

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such refinancing by means of a tender offer or privately negotiated
repurchase, plus the expenses of the Company or such Restricted Subsidiary
incurred in connection with such refinancing; and provided, however, that
Indebtedness the proceeds of which are used to refinance or refund such
Indebtedness shall only be permitted if (A) in the case of any refinancing or
refunding of Indebtedness that is pari passu with the Notes the refinancing or
refunding Indebtedness is made pari passu with the New Notes or subordinated
to the New Notes, (B) in the case of any refinancing or refunding of
Indebtedness that is subordinated to the New Notes the refinancing or
refunding Indebtedness is made subordinated to the New Notes at least to the
same extent as such Indebtedness being refinanced or refunded was subordinated
to the New Notes and (C) in the case of the refinancing or refunding of
Indebtedness that is subordinated to the New Notes, the refinancing or
refunding Indebtedness by its terms, or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, (x) does not provide
for payments of principal of such Indebtedness at the stated maturity thereof
or by way of a sinking fund applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase thereof by the Company or
such Restricted Subsidiary (including any redemption, retirement or repurchase
which is contingent upon events or circumstances, but excluding any retirement
required by virtue of acceleration of such Indebtedness upon an event of
default thereunder), in each case prior to the final stated maturity of the
Indebtedness being refinanced or refunded and (y) does not permit redemption
or other retirement (including pursuant to an offer to purchase made by the
Company or such Restricted Subsidiary) of such Indebtedness at the option of
the holder thereof prior to the final stated maturity of the Indebtedness
being refinanced or refunded, other than a redemption or other retirement at
the option of the holder of such Indebtedness (including pursuant to an offer
to purchase made by the Company or such Restricted Subsidiary), which is
conditioned upon the change of control of the Company or such Restricted
Subsidiary; (ii) arising from time to time under the Credit Agreement in an
aggregate principal amount which, together with any obligations under clause
(xi) below, do not exceed the greater of (a) $700.0 million at any one time
outstanding less the aggregate amount of all proceeds of all Asset
Dispositions that have been applied since the Issue Date to permanently reduce
the outstanding amount of such Indebtedness and (b) the amount of the
Borrowing Base as of such date (calculated on a pro forma basis after giving
effect to such borrowing and the application of the proceeds therefrom); (iii)
outstanding or incurred on the Issue Date; (iv) evidenced by trade letters of
credit incurred in the ordinary course of business not to exceed $20 million
in the aggregate at any time; (v) between or among the Company and/or its
Restricted Subsidiaries other than Restricted Subsidiaries owned in any part
by the Principal Shareholders; (vi) which is Subordinated Indebtedness; (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; (viii) the proceeds of which are used to make the
Chevron Payment, the AOC Payment and the Gulf Payments; (ix) arising out of
Interest Swap Obligations; (x) in connection with capital projects qualifying
under Section 142(a) (or any successor provision) of the Internal Revenue Code
of 1986, as amended, in an amount not to exceed $75.0 million in the aggregate
at any time; (xi) obligations of the Company or any Restricted Subsidiary in
connection with any Qualified Securitization Transaction in an amount which,
together with any amount under clause (ii) above, does not exceed the greater
of (a) $700.0 million at any one time outstanding less the aggregate amount of
all proceeds of all Asset Dispositions that have been applied since the Issue
Date to permanently reduce the outstanding amount of such Indebtedness and (b)
the amount of the Borrowing Base as of such date (calculated on a pro forma
basis after giving effect to such borrowing and the application of the
proceeds therefrom); (xii) any guarantee by the Company of Indebtedness of any
of its Restricted Subsidiaries so long as the incurrence of such Indebtedness
is permitted to be incurred under the covenant "Limitation on Indebtedness;"
(xiii) Indebtedness or preferred stock of Persons that are acquired by the
Company or any of its Restricted Subsidiaries or merged into the Company or a
Restricted Subsidiary in accordance with the terms of the applicable
Indenture; provided that such Indebtedness or preferred stock is not incurred
in contemplation of such acquisition or merger; and provided further that
after giving effect to such acquisition or merger either (A) the Company would
be

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permitted to incur at least $1.00 of additional Indebtedness under the
Consolidated Operating Cash Flow Ratio test set forth in the first paragraph
of "--Limitation on Indebtedness" or (B) the Company's Consolidated Operating
Cash Flow Ratio is equal to or greater than such ratio immediately prior to
such acquisition or merger; (xiv) in an amount not greater than twice the
aggregate amount of cash contributions made to the capital of the Company;
(xv) in exchange for, or the proceeds of which are used to refund or refinance
the 10 7/8% Notes; provided, however, that after giving effect to such
exchange, refunding or refinancing, the Consolidating Operating Cash Flow
Ratio exceeds 1.75-to-1.0 and such Indebtedness shall be subordinated to the
New Notes to at least the same extent as the 8 7/8% Senior Subordinated Notes
are subordinated to the New Notes; and (xvi) in addition to Indebtedness
permitted by clauses (i) through (xv) above, Indebtedness not to exceed on a
consolidated basis for the Company and its Restricted Subsidiaries at any time
$75.0 million.

"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company, provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend
to any assets other than those of the Person merged into or consolidated with
the Company; (iii) Liens on property existing at the time of acquisition
thereof by the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (iv) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the Issue Date; (vi) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(vii) Liens imposed by law, such as mechanics', carriers', warehousemen's,
materialmen's, and vendors' Liens, incurred in good faith in the ordinary
course of business with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made therefor; (viii) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor irregularities
of title incident thereto that do not, in the aggregate, materially detract
from the value of the property or the assets of the Company or impair the use
of such property in the operation of the Company's business; (ix) judgment
Liens to the extent that such judgments do not cause or constitute a Default
or an Event of Default; (x) Liens to secure the payment of all or a part of
the purchase price of property or assets acquired or the construction costs of
property or assets constructed in the ordinary course of business on or after
the Issue Date, provided that (a) such property or assets are used in the
Principal Business of the Company, (b) at the time of incurrence of any such
Lien, the aggregate principal amount of the obligations secured by such Lien
shall not exceed the lesser of the cost or fair market value of the assets or
property (or portions thereof) so acquired or constructed, (c) each such Lien
shall encumber only the assets or property (or portions thereof) so acquired
or constructed and shall attach to such assets or property within 180 days of
the purchase or construction thereof and (d) any Indebtedness secured by such
Lien shall have been permitted to be incurred under the covenant entitled
"Limitation on Indebtedness"; (xi) Liens incurred in the ordinary course of
business of the Company with respect to obligations that do not exceed 5% of
Consolidated Net Tangible Assets at any one time outstanding; (xii) Liens
incurred in connection with Interest Swap Obligations; (xiii) Liens on any
Securitization Program Assets in connection with any Qualified Securitization
Transaction; and (xiv) Liens to secure obligations owing from time to time
under the Credit Agreement and Guaranties thereof.

"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, unincorporated organization
or government or any agency or political subdivision thereof.

"Port Arthur Refinery" means the refinery in Port Arthur, Texas and certain
other assets acquired from Chevron U.S.A., Inc.

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"Principal Business" means, with respect to the Company and its Restricted
Subsidiaries, (i) the business of the acquisition, processing, marketing,
refining, storage and/or transportation of hydrocarbons and/or royalty or
other interests in crude oil or associated products related thereto, (ii) the
acquisition, operation, improvement, leasing and other use of convenience
stores, retail service stations, truck stops and other public accommodations
in connection therewith, (iii) any business currently engaged in by the
Company or its Restricted Subsidiaries on the Issue Date, and (iv) any
activity or business that is a reasonable extension, development or expansion
of, or reasonably related to, any of the foregoing.

"Principal Property" means (i) any refinery and related pipelines,
terminalling and processing equipment or (ii) any other real property or
marketing assets or related group of such assets of the Company having a fair
market value in excess of $20.0 million.

"Principal Shareholders" means (i) Blackstone, (ii) Occidental Petroleum
Corporation and (iii) Affiliates of the Persons described in the foregoing
clauses (i) and (ii), other than the Company and its Subsidiaries.

"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary
pursuant to which the Company or any Subsidiary may sell, convey, grant a
security interest in or otherwise transfer to a Securitization Special Purpose
Entity, and such Securitization Special Purpose Entity may sell, convey, grant
a security interest in, or otherwise transfer to any other Person, any
Securitization Program Assets (whether now existing or arising in the future).

"Quarter" means a fiscal quarterly period of the Company.

"Rating Agencies" means (i) S&P and Moody's or (ii) if S&P or Moody's or
both of them are not making ratings of the New Notes publicly available, a
nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company, which will be substituted for S&P or Moody's or both,
as the case may be.

"Rating Category" means (i) with respect to S&P, any of the following
categories (any of which may include a "+" or "-"); AAA, AA, A, BBB, BB, B,
CCC, CC, C and D (or equivalent successor categories); (ii) with respect to
Moody's, any of the following categories (any of which may include a "1," "2"
or "3"); Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor
categories), and (iii) the equivalent of any such categories of S&P or Moody's
used by another Rating Agency, if applicable.

"Rating Decline" means that at any time within 90 days (which period shall
be extended so long as the rating of the Notes is under publicly announced
consideration for possible down grade by any Rating Agency) after the date of
public notice of a Change of Control, or of the intention of the Company or of
any Person to effect a Change of Control, the rating of the Notes is decreased
by both Rating Agencies by one or more categories and the ratings on the Notes
following such downgrade is below Investment Grade.

"Receivables" means all rights of the Company or any Subsidiary of the
Company to payments (whether constituting accounts, chattel paper,
instruments, general intangibles or otherwise, and including the right to
payment of any interest or finance charges), which rights are identified in
the accounting records of the Company or such Subsidiary as accounts
receivable.

"Redemption Date," when used with respect to any New Note to be redeemed,
means the date fixed for such redemption by or pursuant to the Indenture.

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"Redemption Price," when used with respect to any New Note to be redeemed,
means the price at which it is to be redeemed pursuant to the Indenture.

"Restricted Debt Prepayment" means any purchase, redemption, defeasance
(including, but not limited to, in-substance or legal defeasance) or other
acquisition or retirement for value (collectively a "prepayment") (other than
in connection with a concurrent issuance of pari passu or Subordinated
Indebtedness) directly or indirectly, by the Company or a Restricted
Subsidiary, prior to the scheduled maturity on or prior to any scheduled
repayment of principal (and premium, if any) or sinking fund payment, in
respect of Indebtedness of the Company (other than the New Notes) which is
subordinate in right of payment to the New Notes.

"Restricted Investment" means any direct or indirect Investment by the
Company or any Restricted Subsidiary of the Company in (i) any Affiliate of
the Company which is not a Restricted Subsidiary of the Company and (ii) any
Unrestricted Subsidiary of the Company, other than direct or indirect
investments in (a) Polymer Asphalt L.L.C., a Missouri limited liability
company, (b) Bagel Street Holdings, Inc., and (c) any pipeline company in
which the Company or any of its Restricted Subsidiaries now owns or hereafter
acquires any interest; provided that the aggregate amount of Investments made
by the Company or any of its Restricted Subsidiaries pursuant to clauses (a),
(b) and (c) above shall not exceed $25.0 million in the aggregate at any one
time outstanding provided, that no Investment in a Securitization Special
Purpose Entity in connection with a Qualified Securitization Transaction shall
be a Restricted Investment.

"Restricted Payment" means (i) any Stock Payment, (ii) any Restricted
Investment or (iii) any Restricted Debt Prepayment. Notwithstanding the
foregoing, Restricted Payments shall not include (a) payments by the Company
to any Restricted Subsidiary of the Company, (b) payments by any Restricted
Subsidiary of the Company to the Company or any other Restricted Subsidiary of
the Company, (c) the Chevron Payment, (d) the AOC Payment, and (e) the Gulf
Payments.

"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary.

"S&P" means Standard & Poor's Rating Services and its successors.

"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which
has been or is being sold or transferred by such Person more than 365 days
after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any Person
to whom funds have been or are to be advanced by such lender or investor on
the security of such property or asset. The stated maturity of such
arrangement shall be the date of the last payment of rent or any other amount
due under such arrangement prior to the first date on which such arrangement
may be terminated by the lessee without payment of a penalty.

"Securitization Program Assets" means (a) all Receivables and inventory
which are described as being transferred by the Company or any Subsidiary of
the Company pursuant to documents relating to any Qualified Securitization
Transaction, (b) all Securitization Related Assets, and (c) all collections
(including recoveries) and other proceeds of the assets described in the
foregoing clauses.

"Securitization Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in
respect of Liens securing such Receivables and other credit support in respect
of such Receivables) or to inventory, (ii) any proceeds of such Receivables or
inventory and any lockboxes or accounts in which such proceeds are deposited,
(iii) spread accounts and other similar accounts (and any amounts on deposit
therein) established in connection

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with a Qualified Securitization Transaction, (iv) any warranty, indemnity,
dilution and other intercompany claim arising out of the documents relating to
such Qualified Securitization Transaction, and (v) other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable or inventory.

"Securitization Special Purpose Entity" means a Person (including, without
limitation, a Subsidiary of the Company) created in connection with the
transactions contemplated by a Qualified Securitization Transaction, which
Person engages in no activities other than those incidental to such Qualified
Securitization Transaction.

"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.

"Stated Maturity" means August 15, 2008.

"Stock Payment" means, with respect to the Company, any dividend, either in
cash or in property (except dividends payable in Capital Stock of the Company
which is not convertible into Indebtedness), on, or the making by the Company
of any other distribution in respect of, its Capital Stock, now or hereafter
outstanding, or the redemption, repurchase, retirement, defeasance or any
acquisition for value by the Company, directly or indirectly, of its Capital
Stock or any warrants, rights or options to purchase or acquire shares of any
class of its Capital Stock, now or hereafter outstanding (other than in
exchange for the Company's Capital Stock (other than Disqualified Capital
Stock) or options, warrants or other rights to purchase the Company's Capital
Stock (other than Disqualified Capital Stock)).

"Stock Purchase and Redemption Agreement" means that certain Stock Purchase
and Redemption Agreement dated as of December 30, 1992, by and among AOC
Limited Partnership, P. Anthony Novelly, Samuel R. Goldstein, G&N Investments,
Inc., The Horsham Corporation, the Company and Clark USA.

"Subordinated Indebtedness" means, with respect to the New Notes, any
Indebtedness of the Company which is subordinated in right of payment to the
New Notes and with respect to which no payments of principal (by way of
sinking fund, mandatory redemption, maturity or otherwise) including, without
limitation, at the option of the holder thereof (other than pursuant to an
offer to repurchase such Subordinated Indebtedness following a change of
control, which offer may not be completed until 45 days after completion of
the Offer described under "--Change of Control") are required to be made by
the Company at any time prior to the Stated Maturity of the New Notes.

"Subsidiary" of any Person means (i) a corporation more than 50% of the
total voting power of all classes of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and
one or more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and the power to direct the policies, management and
affairs thereof.

"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.

"Transaction Date" means the date on which the Indebtedness giving rise to
the need to calculate the Consolidated Operating Cash Flow Ratio was incurred
or the date on which, pursuant to the terms of this Indenture, the transaction
giving rise to the need to calculate the Consolidated Operating Cash Flow
Ratio occurred.

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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the Issue Date; provided, however, that in the event the Trust Indenture Act
of 1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.

"Unrestricted Subsidiary" means any Subsidiary that is designated by the
board of directors of the Company as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; and (b) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect obligation (x) to subscribe for additional Capital Stock
(including options, warrants or other rights to acquire Capital Stock) or (y)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results. The board of
directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed
to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company
of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted
under "--Certain Covenants--Limitation on Indebtedness," and (ii) no Default
or Event of Default would be in existence following such designation.

"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.

"Wholly Owned U.S. Restricted Subsidiary" of any Person means a Wholly Owned
Restricted Subsidiary of such Person which is organized under the laws of any
state in the United States or of the District of Columbia.

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BOOK ENTRY; DELIVERY AND FORM

GENERAL

The New Notes are being offered to existing Holders of the Old Notes. The
New Notes will be issued only in fully registered form, without interest
coupons. The New Notes will not be issued in bearer form.

The New Notes will initially be represented by a single permanent global
certificate (collectively the "Global Notes"). The Global Notes will be
deposited with the Trustee, as custodian for DTC in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.

Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee.

In addition, transfer of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants, which may change from time to time. Beneficial
interests in the Global Notes may not be exchanged for New Notes in certified
form except in the limited circumstances described below. See "--Exchange of
Interests in Global Notes for Certificated Notes."

EXCHANGE OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES

As long as DTC, or its nominee, is the registered holder of the Global
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner and holder of the New Notes represented by such Global Notes for all
purposes under the Indenture and the New Notes. Unless DTC notifies the
Company that it is unwilling or unable to continue as depository for the
Global Notes, or ceases to be a "Clearing Agency" registered under the
Exchange Act, or announces an intention permanently to cease doing business or
does in fact do so, or an Event of Default has occurred and is continuing with
respect to a Global Note, owners of beneficial interests in a Global Note will
not be entitled to have any portions of such Global Note registered in their
names, will not receive or be entitled to receive a physical delivery of New
Notes in definitive form and will not be considered the owners or holders of
the Global Notes (or any New Notes represented thereby) under the Indenture or
the New Notes. In addition, no beneficial owner of an interest in a Global
Note will be able to transfer that interest except in accordance with DTC's
applicable procedures (in addition to those under the applicable Indenture
referred to herein). In the event that owners of beneficial interests in a
Global Note become entitled to receive New Notes in certificated form, such
New Notes will be issued only as New Notes in certificated form in
denominations of $1,000 and integral multiples thereof.

DEPOSITORY PROCEDURES WITH RESPECT TO GLOBAL NOTES

The following description of the operations and procedures of DTC is
provided solely as a matter of convenience. These operations and procedures
are solely within the control of the respective settlement systems and are
subject to changes by them from time to time. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.

Upon the issuance of the Global Notes, DTC will credit, on its internal
system, the respective principal amount of the individual beneficial interests
represented by such Global Notes to the accounts with DTC ("Participants") or
persons who hold interests through Participants. Ownership of beneficial
interests in the Global Notes will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interest of persons other than Participants).

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AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF THE GLOBAL
NOTES, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE SOLE
OWNER AND HOLDER OF THE NEW NOTES REPRESENTED BY SUCH GLOBAL NOTES FOR ALL
PURPOSES UNDER THE INDENTURES AND THE NEW NOTES. Unless DTC notifies the
Company that it is unwilling or unable to continue as depository for the
Global Notes, or ceases to be a "Clearing Agency" registered under the
Exchange Act, or announces an intention permanently to cease business or does
in fact do so, or an Event of Default has occurred and is continuing with
respect to the Global Notes, owners of beneficial interests in a Global Note
will not be entitled to have any portions of such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of
such applicable New Notes in definitive form and will not be considered the
owners or holders of such Global Notes (or any applicable New Notes presented
thereby) under the applicable Indenture or series of New Notes. In addition,
no beneficial owner of an interest in the Global Notes will be able to
transfer that interest except in accordance with DTC's applicable procedures
(in addition to those under the Indenture referred to herein). In the event
that owners of beneficial interests in a Global Note become entitled to
receive such applicable New Notes in definitive form, such New Notes will be
issued only in registered form in denominations of $1,000 and integral
multiples thereof.

Payments of the principal of, premium, if any, and interest on Global Notes
will be made to DTC or its nominee as the registered owner thereof. Neither
the Company, the Trustee nor any of their respective agents will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

All payments with respect to the New Notes will be made by the Company in
immediately available funds. Subject to the following considerations,
beneficial interests in the Global Notes will trade in DTC's Settlement System
unit maturity, and secondary market trading activity in such interests will
therefore settle in immediately available funds. The Company expects that DTC
or its nominee, upon receipt of any payment of principal or interest in
respect of a Global Note representing any New Notes held by it or its nominee,
will immediately credit participants' accounts with payment in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Note representing such New Notes as shown on the records of DTC
or its nominee. The Company also expects the payments by Participants to
owners of beneficial interest in such Global Notes held through such
Participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers registered in "street name." Such payments will be the
responsibility of such Participants.

Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.

DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more Participants
to whose account with DTC interests in the Global Notes are credited and only
in respect of such portion of the aggregate principal amount of the New Notes
as to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the New Notes, DTC reserves the
right to exchange the Global Notes for legended New Notes in certificated
form, and to distribute such New Notes to its Participants.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and a "Clearing Agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entry changes in accounts of its

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Participants, thereby eliminating the need for physical transfer and delivery
of certificates. Direct Participants of the Depository ("Direct Participants")
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. The Depository is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Indirect access to the DTC system is
available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to the DTC and its Participants are on file with the
Commission.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial ownership interests in the Global Notes among
Participants of DTC it is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
None of the Company, the Trustees nor any of their respective agents will have
any responsibility for the performance by DTC, its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations, including maintaining, supervising or reviewing
the records relating to, or payments made on account of, beneficial ownership
interests in Global Notes.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE

The exchange of Old Notes for New Notes in the Exchange Offer will not
constitute a taxable event to holders. Consequently, no gain or loss will be
recognized by a holder upon receipt of a New Note, the holding period of the
New Note will include the holding period the Old Note and the basis of the New
Note will be the same as the basis of the Old Note immediately before the
exchange.

IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES FOR NEW NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES FOR NON-UNITED STATES HOLDERS

The following summary describes the material United States federal income
tax consequences of the ownership of Notes as of the date hereof by a Non-U.S.
Holder (as defined below). Except where noted, this discussion assumes that
the Notes are held as capital assets (generally, property held for
investment). As used herein the term "Non-U.S. Holder" means any person or
entity that is not a United States Holder ("U.S. Holder"). A U.S. Holder is
any beneficial owner of a Note that is (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an
estate the income of which is subject to U.S. federal income taxation
regardless of its source or (iv) a trust which is subject to the supervision
of a court within the United States and the control of one or more United
States persons as described in section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended (the "Code").

The discussion below is based upon the provisions of the Code, and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
United States federal income tax consequences different from those discussed
below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:

(a) no withholding of United States federal income tax will be required
with respect to the payment by the Company or any paying agent of principal
or interest on a Note owned by a Non-U.S. Holder, provided (i) that the
beneficial owner does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled
to vote within the meaning of section 871(h)(3) of the Code and the
regulations thereunder, (ii) the beneficial owner is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the beneficial owner is not a bank whose receipt of interest on a
Note is described in section 881(c)(3)(A) of the Code and (iv) the
beneficial owner satisfies the statement requirement (described generally
below) set forth in section 871(h) and section 881(c) of the Code and the
regulations thereunder;

(b) no withholding of United States federal income tax will be required
with respect to any gain or income realized by a Non-U.S. Holder upon the
sale, exchange, retirement or other disposition of a Note; and

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(c) a Note beneficially owned by an individual who at the time of death
is a Non-U.S. Holder will not be subject to United States federal estate
tax as a result of such individual's death, provided that such individual
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the company entitled to vote within
the meaning of section 871(h)(3) of the Code and provided that the interest
payments with respect to such Note would not have been, if received at the
time of such individual's death, effectively connected with the conduct of
a United States trade or business by such individual.

To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, a paying
agent of the Company with a statement to the effect that the beneficial owner
is not a United States Holder. Currently, these requirements will be met if
(1) the beneficial owner provides his name and address, and certifies, under
penalties of perjury, that he is not a United States Holder (which
certification may be made on an Internal Revenue Service ("IRS") Form W-8 (or
successor form)) or (2) a financial institution holding the Note on behalf of
the beneficial owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes a paying agent with a copy
thereof. Under recently finalized Treasury regulations (the "Final
Regulations"), the statement requirement referred to in (a)(iv) above may also
be satisfied with other documentary evidence for interest paid after December
31, 1999 with respect to an offshore account or through certain foreign
intermediaries.

If a Non-U.S. Holder cannot satisfy the requirements of the "portfolio
interest" exception described in (a) above, payments of interest made to such
Non-U.S. Holder will be subject to a 30% withholding tax unless the beneficial
owner of the Note provides the Company or its paying agent, as the case may
be, with a properly executed (1) IRS Form 1001 (or successor form) claiming an
exemption from (or a reduction in) withholding under the benefit of an
applicable tax treaty or (2) IRS Form 4224 (or successor form) stating that
interest paid on the Note is not subject to withholding tax because it is
effectively connected with the beneficial owner's conduct of a trade or
business in the United States. Under the Final Regulations, Non-U.S. Holders
will generally be required to provide IRS Form W-8 in lieu of IRS Form 1001
and IRS Form 4224, although alternative documentation may be applicable in
certain situations. Moreover, under the Final Regulations, the benefit of an
applicable tax treaty may, in certain circumstances, and subject to
significant limitations under the Code, be claimed by the foreign partners of
a foreign partnership that holds the Notes. Foreign partners are urged to
consult their own tax advisors to determine whether they are eligible to claim
such benefits.

If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the Note is effectively connected with the conduct of such
trade or business, the Non-U.S. Holder, although exempt from the withholding
tax discussed above, will be subject to United States federal income tax on
such interest on a net income basis in the same manner as if it were a United
States Holder. In addition, if such holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% (or lower applicable treaty rate)
of its effectively connected earnings and profits for the taxable year,
subject to adjustments. For this purpose, interest on a Note will be included
in such foreign corporation's earnings and profits.

Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Note generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with the
conduct of a trade or business in the United States by the Non-U.S. Holder, or
(ii) in the case of a Non-U.S. Holder who is an individual, such individual is
present in the United States for 183 days or more in the taxable year of such
sale, exchange, retirement or other disposition, and certain other conditions
are met. A Non-U.S. Holder that is a foreign corporation may also be subject
to a branch profits tax equal to 30% (or lower applicable treaty rate) on any
gain or income realized upon the sale, exchange, retirement or other
disposition of a Note that is effectively connected with the conduct of a
trade or business in the United States by such Non-U.S. Holder.

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Special rules may apply to certain Non-U.S. Holders, such as "controlled
foreign corporations", "passive foreign investment companies" and "foreign
personal holding companies", that are subject to special treatment under the
Code. Such entities should consult their own tax advisors to determine the
U.S. federal, state, local and other tax consequences that may be relevant to
them.

INFORMATION REPORTING AND BACKUP WITHHOLDING

In general, no information reporting or backup withholding will be required
with respect to payments made by the Company or any paying agent to Non-U.S.
Holders if a statement described in (a)(iv) above has been received (and the
payor does not have actual knowledge that the beneficial owner is a United
States Holder).

In addition, backup withholding and information reporting may apply to the
proceeds of the sale of a Note within the United States or conducted through
certain U.S. related financial intermediaries
unless the statement described in (a)(iv) above has been received (and the
payor does not have actual knowledge that the beneficial owner is a United
States Holder) or the holder otherwise establishes an exemption.

Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.

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DESCRIPTION OF CERTAIN DEBT INSTRUMENTS

Set forth below is a summary of certain debt instruments to which the
Company is a party. The summary does not purport to be complete, and where
reference is made to particular provisions of a debt instrument, such
provisions, including the definition of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference. Copies of such agreements are available from the
Company.

CREDIT AGREEMENT

The Company's Credit Agreement provides for revolving loan borrowings and
letter of credit issuances of up to the lesser of $700.0 million or the amount
of a borrowing base, calculated with respect to the Company's cash and cash
equivalents, eligible investments, eligible receivables and certain eligible
hydrocarbon inventories, provided that revolving loans are limited to the
principal amount of $150.0 million. The proceeds of revolving loans may be
used for working capital and other general corporate purposes.

Borrowings under the Credit Agreement are secured by a lien on substantially
all of the Company's cash and cash equivalents, receivables, crude oil and
refined product inventories of the Company located at its refineries and
terminals and in transit via pipelines and trademarks.

Outstanding principal balances under the Credit Agreement bear interest at
annual floating rates equal to the LIBOR Rate plus marginal rates between
0.625% and 2.250% or the agent bank's prime rate plus marginal rates between
0% and 1.250%. The marginal rates are subject to adjustment under the Credit
Agreement, based upon changes in the Company's ratio of cash, cash equivalents
and eligible investments to the undrawn amount of outstanding letters of
credit and the Company's ratio of indebtedness to twelve-month-trailing
EBITDA. The Credit Agreement terminates, and all amounts outstanding
thereunder are due and payable, on December 31, 1999. The Credit Agreement
contains representations and warranties, funding and yield protection
provisions, borrowing conditions precedent, financial and other covenants and
restrictions, events of default and other provisions customary for bank credit
agreements of this type.

Covenants and provisions contained in the Credit Agreement restrict (with
certain exceptions), among other things, the Company's and its subsidiaries'
ability: (i) to create or incur liens, (ii) to engage in certain asset sales,
(iii) to engage in mergers, consolidations, and sales of substantially all
assets, (iv) to make loans and investments, (v) to incur additional
indebtedness, (vi) to engage in certain transactions with affiliates, (vii) to
use loan proceeds to acquire or carry margin stock, or to acquire securities
in violation of certain sections of the Exchange Act, (viii) to create or
become or remain liable with respect to certain contingent liabilities, (ix)
to enter into certain joint ventures, (x) to enter into certain lease
obligations, (xi) to make certain dividend and other restricted payments,
(xii) to change the nature of its principal business, (xiii) to make any
significant change in its accounting practices, (xiv) to incur certain
liabilities or engage in certain prohibited transactions under ERISA, (xv) to
maintain deposit accounts not under the control of the banks that are parties
to the Credit Agreement, or to take certain other action with respect to its
bank accounts, (xvi) to engage in speculative trading, and (xvii) to amend,
modify or terminate certain material agreements. The Company is also required
to comply with certain financial covenants. The current financial covenants
are: (i) maintenance of working capital (as defined) of at least $150.0
million at all times; (ii) maintenance of a tangible net worth (as defined) of
at least $280.0 million (subject to adjustment); and (iii) maintenance of
minimum levels of balance sheet cash (as defined) of $50 million at all times.
The covenants also provide for a cumulative cash flow test, as defined in the
Credit Agreement, that, from March 31, 1997, shall not be

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less than or equal to zero. The Credit Agreement also limits the amount of
future additional indebtedness that may be incurred by the Company, subject to
certain exceptions, including a general exception for up to $75 million of
indebtedness.

Events of default under the Credit Agreement include, among other things:
(i) any failure of the Company to pay principal thereunder when due, or to pay
interest or any other amount due within three days after the date due; (ii)
material inaccuracy of any representation or warranty given by the Company
therein; (iii) breach by the Company of certain covenants contained therein;
(iv) the continuance of a default by the Company in the performance of or the
compliance with other covenants and agreements for 20 days after the
occurrence thereof; (v) breach of or default under any indebtedness in excess
of $5.0 million and continuance beyond any applicable grace period; (vi)
certain acts of bankruptcy or insolvency; (vii) the occurrence of certain
events under ERISA; (viii) certain judgments, writs or warrants of attachment
of similar process remaining undischarged, unvacated, unbonded, or unstayed
for a period of 10 days; (ix) the occurrence of a change of control; (x) the
loss of material licenses of permits; (xi) the failure of the liens of the
banks to be first priority perfected liens, subject to certain permitted
liens; or (xii) Clark USA incurs any indebtedness in the aggregate in excess
of $25.0 million (subject to certain exceptions) or enters into certain
material amendments of certain of its debt.

AMENDED AND RESTATED TERM LOAN AGREEMENT

On November 21, 1997, the Company entered into a Loan Agreement with certain
lenders and Goldman Sachs Credit Partners L.P., as Agent, pursuant to which
the Company borrowed $125.0 million (the "1997 Term Loan"). The proceeds of
the 1997 Term Loan were used, together with the other net proceeds from the
November Offering, to redeem the Company's outstanding 10 1/2% Notes. The
remaining net proceeds were used to replenish the Company's cash reserves.
Concurrently with the Debt Offering, the Company amended and restated the 1997
Term Loan, pursuant to which the Company borrowed an additional $115.0 million
(the "Amended and Restated Term Loan Agreement"). The proceeds from the new
$115 million term loan were used, together with the proceeds from the Debt
Offering and available cash, to pay the purchase price for the Lima Refinery
and certain related inventory acquired from BP and to pay certain fees and
expenses.

Borrowings under the Amended and Restated Term Loan Agreement are senior
unsecured obligations of the Company. One quarter of the borrowings under the
1997 Term Loan will mature on November 15, 2003, and the remaining three
quarters plus all other amounts outstanding thereunder mature on November 15,
2004. The full amount of borrowings under the 1998 Term Loan are expected to
become due in 2004. Under the Amended and Restated Term Loan Agreement, the
Company is able to prepay the borrowings in whole or in part in an amount
equal to 102.50% of the aggregate principal amount so prepaid prior to
November 15, 1998, 101.25% of the aggregate principal amount so prepaid after
November 15, 1998, and prior to November 15, 1999, and 100% of the aggregate
principal amount so prepaid after November 15, 1999 plus, in each case,
accrued interest thereon through but excluding the date of such prepayment.

In the event that there shall occur a Change of Control resulting in a
Rating Decline, the Company shall make an offer to prepay the outstanding
balance under the Term Loan Agreements in an amount equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest to the
date of prepayment.

Outstanding principal balances under the Amended and Restated Term Loan
Agreement bear interest at the LIBOR Rate (as defined in the Amended and
Restated Term Loan Agreement) plus a margin of 275 basis points.

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The Amended and Restated Term Loan Agreement contains customary
representations and warranties. Covenants and events of default under the
Amended and Restated Term Loan Agreement are substantially similar to those of
the 8 5/8% Notes.

Lenders under the Amended and Restated Term Loan Agreement have customary
voting, participation, indemnification and assignment rights.

9 1/2% NOTES

The 9 1/2% Notes are governed by an Indenture dated as of September 15,
1992, between the Company and the Bank of New York, as successor trustee to
NationsBank of Virginia, N.A., (the "9 1/2% Note Indenture").

Interest on the 9 1/2% Notes is payable in cash semi-annually on March 15
and September 15 of each year. The 9 1/2% Notes are not convertible or
exchangeable into any other security.

A sinking fund payment with respect to the 9 1/2% Notes, in the amount of
$87.5 million, is required to be made prior to September 15, 2003.

The 9 1/2% Notes are senior obligations of the Company, ranking pari passu
in right of payment with all other senior debt of the Company.

The 9 1/2% Notes are redeemable at the option of the Company at any time on
or after September 15, 1997, in whole or in part from time to time, at
104.750% of principal amount thereof, plus accrued interest, reducing to
102.375% of principal amount thereof, plus accrued interest on September 15,
1998, and to 100% of the principal amount thereof, plus accrued interest, on
or after September 15, 1999.

The Company is required to offer to purchase all outstanding 9 1/2% Notes at
101% of their principal amount, plus accrued interest, in the event of a
Change of Control (as defined in the 9 1/2% Note Indenture, which definition
is substantially similar to that contained in the Indentures, except that the
Change of Control need not be accompanied by a rating decline).

The Company is required to make an offer to purchase up to 10% of the
principal amount of the 9 1/2% Notes originally issued at 100% of their
principal amount, plus accrued interest, if the Company's Consolidated
Adjusted Net Worth (as defined) as of the end of any two consecutive fiscal
quarters is less than $100 million.

The Company is required to make an offer to purchase outstanding 9 1/2%
Notes at the applicable redemption price if the Company or a subsidiary makes
an Asset Disposition (as defined in the 9 1/2% Note Indenture) and the sale
proceeds are not reinvested. The offer to purchase is limited to the net
proceeds from such Asset Disposition.

The 9 1/2% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to pay cash
dividends on or repurchase capital stock, enter into agreements restricting
the ability of a subsidiary to pay money or transfer assets to the Company,
enter into certain transactions with their affiliates, engage in speculative
trading, incur additional indebtedness, create liens, engage in sale and
leaseback transactions, dispose of certain assets and engage in mergers and
consolidations.

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Events of Default under the 9 1/2% Note Indenture include: (i) failure to
pay any interest on any 9 1/2% Notes when due, continued for 30 days; (ii)
failure to pay principal of or premium, if any, on the 9 1/2% Notes when due
at maturity (upon acceleration, redemption or otherwise); (iii) failure to
comply with the covenant regarding mergers and consolidations; (iv) failure to
perform any other covenant or agreement of the Company in the 9 1/2% Note
Indenture, continued for 30 days after written notice as provided in the 9
1/2% Note Indenture; (v) failure to pay at final maturity in excess of $5.0
million principal amount of any indebtedness of the Company or any subsidiary
of the Company, or acceleration of any indebtedness of the Company or any
subsidiary of the Company in an aggregate principal amount in excess of $5.0
million; (vi) the entry of a final judgment or judgments against the Company
or any subsidiary in an amount in excess of $5.0 million, that are not paid,
discharged or stayed within 60 days; and (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or any significant subsidiary.

8 3/8% NOTES

The 8 3/8% Notes are governed by an Indenture, dated as of November 21,
1997, between the Company and Bankers Trust Company, as trustee (the "8 3/8%
Note Indenture").

Interest on the 8 3/8% Notes is payable in cash semi-annually on May 15 and
November 15 of each year. The 8 3/8% Notes are not convertible or exchangeable
into any other security.

The 8 3/8% Notes are senior obligations of the Company, ranking pari passu
in right of payment with all other senior debt of the Company.

The 8 3/8% Notes are redeemable at the option of the Company at any time on
or after November 15, 2002, in whole or in part from time to time, at 104.187%
of principal amount thereof, plus accrued interest, reducing to 102.094% of
principal amount thereof, plus accrued interest on November 15, 2003, and to
100% of the principal amount thereof, plus accrued interest, on or after
November 15, 2004. In addition, up to 35% in aggregate principal amount of the
8 3/8% Notes originally issued are redeemable at the option of the Company out
of the net cash proceeds of one or more Equity Offerings at any time prior to
November 15, 2001, at a redemption price equal to 108.375% of the principal
amount thereof, plus accrued and unpaid interest, if any, at the redemption
date.

The Company is required to offer to purchase all outstanding 8 3/8% Notes at
101% of their principal amount, plus accrued interest, in the event of a
Change of Control (as defined in the 8 3/8% Note Indenture, which definition
is substantially similar to that contained in the Indentures).

The Company is required to make an offer to purchase outstanding 8 3/8%
Notes at the applicable redemption price if the Company or a subsidiary makes
an Asset Disposition (as defined in the 8 3/8% Note Indenture) and the sale
proceeds are not reinvested or used to refinance other indebtedness. The offer
to purchase is limited to the net proceeds from such Asset Disposition.

The 8 3/8% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company to incur or guarantee additional
indebtedness, pay dividends on and redeem capital stock, sell assets and
capital stock, enter into transactions with affiliates, create liens, engage
in mergers and consolidations or transfer substantially all of its assets to
another person. After the occurrence of an Investment Grade Rating Event (as
defined in the 8 3/8% Note Indenture), certain of the covenants described in
the preceding sentence will cease to exist or will be modified. The 8 3/8%
Note Indenture at such time will contain covenants that, among other things,
limit the Company's ability to create liens with respect to certain assets,
enter into sale-leaseback transactions and engage in mergers and
consolidations.

Events of Default under the 8 3/8% Note Indenture include: (i) failure to
pay any interest on any 8 3/8% Notes when due, continued for 30 days; (ii)
failure to pay principal of or premium, if any, on the 8 3/8% Notes when due
at maturity (upon acceleration, redemption or otherwise); (iii) failure to
comply

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with the covenant regarding mergers and consolidations; (iv) failure to
perform any other covenant or agreement of the Company in the 8 3/8% Note
Indenture, continued for 30 days after written notice as provided in the 8
3/8% Note Indenture; (v) failure to pay at final maturity in excess of $25.0
million principal amount of any indebtedness of the Company or any subsidiary
of the Company, or acceleration of any indebtedness of the Company or any
subsidiary of the Company in an aggregate principal amount in excess of $25.0
million; (vi) the entry of a final judgment or judgments against the Company
or any subsidiary in an amount in excess of $50.0 million, that are not paid,
discharged or stayed within 60 days; and (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or any significant subsidiary.

8 7/8% SENIOR SUBORDINATED NOTES

The 8 7/8% Senior Subordinated Notes are governed by an Indenture, dated as
of November 21, 1997, between the Company and Marine Midland Bank, as trustee
(the "8 7/8% Note Indenture").

Interest on the 8 7/8% Senior Subordinated Notes is payable in cash semi-
annually on May 15 and November 15 of each year. The 8 7/8% Senior
Subordinated Notes are not convertible or exchangeable into any other
security.

The 8 7/8% Senior Subordinated Notes are senior subordinated obligations of
the Company, subordinated in right of payment to all senior debt of the
Company.

The 8 7/8% Senior Subordinated Notes are redeemable at the option of the
Company at any time on or after November 15, 1992, in whole or in part from
time to time, at 104.437% of principal amount thereof, plus accrued interest,
reducing to 102.958% of principal amount thereof, plus accrued interest on
November 15, 2003, reducing to 101.479% of principal amount thereof, plus
accrued interest on November 15, 2004 and to 100% of the principal amount
thereof, plus accrued interest, on or after November 15, 2005.

The 8 7/8% Senior Subordinated Notes will be redeemable at the option of the
Company, in whole or in part, at any time on and after November 15, 2002 at
the redemption prices set forth herein, plus accrued and unpaid interest, if
any, to the date of redemption. In addition, up to 35% in aggregate principal
amount of 8 7/8% Senior Subordinated Notes originally issued are redeemable at
the option of the Company out of the net cash proceeds of one or more Equity
Offerings at any time prior to November 15, 2001 at a redemption price equal
to 108.875% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the redemption date.

The Company is required to offer to purchase all outstanding 8 7/8% Senior
Subordinated Notes at 101% of their principal amount, plus accrued interest,
in the event of a Change of Control (as defined in the 8 7/8% Note Indenture,
which definition is substantially similar to that contained in the
Indentures).

The Company is required to make an offer to purchase outstanding 8 7/8%
Notes at the applicable redemption price if the Company or a subsidiary makes
an Asset Disposition (as defined in the 8 7/8% Note Indenture) and the sale
proceeds are not reinvested or used to refinance other indebtedness. The offer
to purchase is limited to the net proceeds from such Asset Disposition.

The 8 7/8% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company to incur or guarantee additional
indebtedness, pay dividends on and redeem capital stock, sell assets and
capital stock, enter into transactions with affiliates, create liens, engage
in mergers and consolidations or transfer substantially all of its assets to
another person. After the occurrence of an Investment Grade Rating Event (as
defined in the 8 7/8% Note Indenture), certain of the covenants described in
the preceding sentence will cease to exist or will be modified. The 8 7/8%
Note Indenture at such time will contain covenants that, among other things,
limit the Company's ability to create liens with respect to certain assets,
enter into sale-leaseback transactions and engage in mergers and
consolidations.

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Events of Default under the 8 7/8% Note Indenture include: (i) failure to
pay any interest on any 8 7/8% Senior Subordinated Notes when due, continued
for 30 days; (ii) failure to pay principal of or premium, if any, on the 8
7/8% Senior Subordinated Notes when due at maturity (upon acceleration,
redemption or otherwise); (iii) failure to comply with the covenant regarding
mergers and consolidations; (iv) failure to perform any other covenant or
agreement of the Company in the 8 7/8% Note Indenture, continued for 30 days
after written notice as provided in the 8 7/8% Note Indenture; (v) failure to
pay at final maturity in excess of $25 million principal amount of any
indebtedness of the Company or any subsidiary of the Company, or acceleration
of any indebtedness of the Company or any subsidiary of the Company in an
aggregate principal amount in excess of $25 million; (vi) the entry of a final
judgment or judgments against the Company or any subsidiary in an amount in
excess of $50 million, that are not paid, discharged or stayed within 60 days;
and (vii) certain events of bankruptcy, insolvency or reorganization of the
Company or any significant subsidiary.

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities and not acquired directly from the Company. The Company has
agreed that for a period of up to 90 days after the Expiration Date, it will
make this Prospectus, as amended or supplemented, available to any broker-
dealer for use in connection with any such resale.

The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer and/or purchasers of any such New Notes. Any broker-
dealer that resells New Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.

For a period of up to 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay the
expenses incident to the Exchange Offer and will indemnify the Holders of the
Old Notes against certain liabilities, including liabilities under the
Securities Act, in connection with the Exchange Offer.

LEGAL MATTERS

The validity of and other matters related to the New Notes will be passed
upon for the Company by Simpson Thacher & Bartlett.

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EXPERTS

The financial statements as of and for the year ended December 31, 1997
included in this registration statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is included
elsewhere herein, and have been so included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.

With respect to the unaudited interim financial information for the six
month period ended June 30, 1998 which is included in this Prospectus,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included elsewhere herein, they did not audit and they do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their reports on such information should be restricted
in light of the limited nature of the review procedures applied. Deloitte &
Touche LLP are not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for their reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.

The consolidated balance sheet as of December 31, 1996, and the consolidated
statements of earnings, stockholder's equity, and cash flows for each of the
two years in the period ended December 31, 1996, included in this Prospectus,
have been included herein in reliance on the report of PricewaterhouseCoopers
LLP (on July 1, 1998, Coopers & Lybrand L.L.P. merged with Price Waterhouse
LLP to form PricewaterhouseCoopers LLP), independent accountants, given on the
authority of that firm as experts in accounting and auditing.

Neither the Company's independent auditors, nor any other independent
accountants, have compiled, examined, or performed any procedures with respect
to the Company's or Turner, Mason's estimates regarding the Lima Acquisition
contained herein, nor have they expressed any opinion or any form of assurance
on such information or its achievability, and assume no responsibility for,
and disclaim any association with, the aforementioned estimates.

124
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Clark Refining & Marketing, Inc. and Subsidiary:
Annual Financial Statements
Report of Independent Accountants..................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997.......... F-4
Consolidated Statements of Earnings for the years ended December 31,
1995, 1996 and 1997.................................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997.................................................. F-6
Consolidated Statement of Stockholder's Equity for the years ended
December 31, 1995, 1996 and 1997..................................... F-7
Notes to Consolidated Financial Statements............................ F-8
Interim Financial Statements
Report of Independent Accountants..................................... F-20
Consolidated Balance Sheet as of June 30, 1998........................ F-21
Consolidated Statements of Earnings for the six months ended June 30,
1997 and 1998........................................................ F-22
Consolidated Statements of Cash Flows for the six months ended June
30, 1997 and 1998.................................................... F-23
Notes to Consolidated Financial Statements............................ F-24
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheet of Clark
Refining & Marketing, Inc. and Subsidiary (the "Company") as of December 31,
1997 and the related consolidated statement of earnings, stockholder's equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such 1997 consolidated financial statements present fairly,
in all material respects, the financial position of the Company at December
31, 1997, and the results of their operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

St. Louis, Missouri
February 6, 1998

F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheet of Clark
Refining & Marketing, Inc. and Subsidiary (a Delaware corporation), as of
December 31, 1996 and the consolidated statements of earnings, stockholder's
equity and cash flows for the years ended December 31, 1995 and 1996. 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 consolidated financial position of Clark
Refining & Marketing, Inc. and Subsidiary as of December 31, 1996 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1995 and 1996 in conformity with generally accepted
accounting principles.

PricewaterhouseCoopers LLP

St. Louis, Missouri
February 4, 1997

F-3
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
REFERENCE DECEMBER 31, DECEMBER 31,
NOTE 1996 1997
--------- ------------ ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................ 2 $ 319.4 $ 229.7
Short-term investments................... 2, 3 14.9 14.9
Accounts receivable...................... 2 170.6 92.9
Receivable from affiliates............... 1.1 2.2
Inventories.............................. 2, 4 277.1 261.4
Prepaid expenses and other............... 15.4 18.2
-------- --------
Total current assets................... 798.5 619.3
PROPERTY, PLANT AND EQUIPMENT.............. 2, 5 555.7 575.6
OTHER ASSETS............................... 2, 6 39.1 66.0
-------- --------
$1,393.3 $1,260.9
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable......................... 7 $ 294.3 $ 219.0
Payable to affiliates.................... 8.8 14.8
Accrued expenses and other............... 8, 9 49.4 69.7
Accrued taxes other than income.......... 46.5 52.1
-------- --------
Total current liabilities.............. 399.0 355.6
LONG-TERM DEBT............................. 8, 9 417.6 587.4
DEFERRED INCOME TAXES...................... 2, 12 0.8 --
OTHER LONG-TERM LIABILITIES................ 11 41.8 57.0
CONTINGENCIES.............................. 16 -- --
STOCKHOLDER'S EQUITY:
Common stock ($.01 par value per share;
1,000 shares authorized and 100 shares
issued and outstanding)................. -- --
Paid-in capital.......................... 10 464.2 249.2
Retained earnings........................ 3, 7 69.9 11.7
-------- --------
Total stockholder's equity............. 534.1 260.9
-------- --------
$1,393.3 $1,260.9
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF EARNINGS

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
REFERENCE ----------------------------------
NOTE 1995 1996 1997
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES AND OPERATING
REVENUES........................ $ 4,486.1 $ 5,072.7 $ 4,335.7
EXPENSES:
Cost of sales.................. (4,018.3) (4,560.0) (3,705.7)
Operating expenses............. (373.5) (418.9) (432.3)
General and administrative
expenses...................... (52.1) (59.1) (65.5)
Depreciation................... 2 (31.5) (37.3) (40.7)
Amortization................... 2, 6 (12.0) (11.1) (20.5)
Inventory write-down to
market........................ 4 -- -- (19.2)
Recapitalization, asset write-
offs and other charges........ 14 -- -- (49.0)
---------- ---------- ----------
(4,487.4) (5,086.4) (4,332.9)
---------- ---------- ----------
OPERATING INCOME (LOSS).......... (1.3) (13.7) 2.8
Interest expense and finance
income, net................... 8 (39.9) (38.7) (39.8)
---------- ---------- ----------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM.............. (41.2) (52.4) (37.0)
Income tax (provision)
benefit....................... 2, 12 15.7 13.9 (10.5)
---------- ---------- ----------
LOSS BEFORE EXTRAORDINARY ITEM... (25.5) (38.5) (47.5)
Extinguishment of debt......... 8 -- -- (10.7)
---------- ---------- ----------
NET LOSS......................... $ (25.5) $ (38.5) $ (58.2)
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................... $ (25.5) $ (38.5) $ (58.2)
Extraordinary item.......................... -- -- 10.7
Adjustments:
Depreciation............................... 31.4 37.3 40.7
Amortization............................... 17.4 17.8 27.5
Share of earnings of affiliates, net of
dividends................................. (1.4) (0.1) (1.3)
Deferred income taxes...................... (15.7) (22.1) (0.8)
Inventory write-down to market............. -- -- 19.2
Recapitalization, asset write-offs and
other charges............................. -- -- 31.5
Other...................................... 1.4 1.0 3.3
Cash provided by (reinvested in) working
capital--Accounts receivable, prepaid
expenses and other......................... (111.0) 12.8 81.3
Inventories................................ (139.0) 13.3 (3.1)
Accounts payable, accrued expenses, taxes
other than income and other............... 156.8 (4.6) (55.9)
---------- --------- ----------
Net cash provided by (used in) operating
activities............................... (85.6) 16.9 94.9
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments......... (41.5) -- (3.0)
Sales of short-term investments............. 25.9 31.1 --
Maturities of short-term investments........ -- -- 3.0
Expenditures for property, plant and
equipment.................................. (42.1) (45.0) (81.7)
Expenditures for turnaround................. (6.5) (13.9) (47.4)
Refinery acquisition expenditures........... (71.8) -- --
Proceeds from disposals of property, plant
and equipment.............................. 1.9 4.4 5.5
Advance crude oil purchase receivable....... -- 235.4 --
---------- --------- ----------
Net cash provided by (used in) investing
activities............................... (134.1) 212.0 (123.6)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt payments..................... (1.6) (2.8) (234.2)
Proceeds from issuance of long-term debt.... -- -- 398.0
Proceeds from capital lease transactions.... 24.3 -- --
Capital contribution received (returned).... 165.6 33.6 (215.0)
Deferred financing costs.................... (13.6) (0.8) (9.8)
---------- --------- ----------
Net cash provided by (used in) financing
activities............................... 174.7 30.0 (61.0)
---------- --------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................. (45.0) 258.9 (89.7)
CASH AND CASH EQUIVALENTS, beginning of
period...................................... 105.5 60.5 319.4
---------- --------- ----------
CASH AND CASH EQUIVALENTS, end of period..... $ 60.5 $ 319.4 $ 229.7
========== ========= ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ------- -------- -------
<S> <C> <C> <C> <C>
Balance--January 1, 1995..................... $ -- $ 30.0 $132.9 $ 162.9
Change in unrealized short-term investment
gains and losses, net of taxes ........... -- -- 1.1 1.1
Capital contributions...................... -- 165.6 -- 165.6
Net loss................................... -- -- (25.5) (25.5)
----- ------- ------ -------
Balance--December 31, 1995................... -- 195.6 108.5 304.1
Change in unrealized short-term investment
gains and losses, net of taxes............ -- -- (0.1) (0.1)
Capital contribution....................... -- 268.6 -- 268.6
Net loss................................... -- -- (38.5) (38.5)
----- ------- ------ -------
Balance--December 31, 1996................... -- 464.2 69.9 534.1
Capital contribution returned.............. -- (215.0) -- (215.0)
Net loss................................... -- -- (58.2) (58.2)
----- ------- ------ -------
Balance--December 31, 1997................... $ -- $ 249.2 $ 11.7 $ 260.9
===== ======= ====== =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-7
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

(TABULAR DOLLAR AMOUNTS IN MILLIONS OF US DOLLARS)

1. GENERAL

Clark Refining & Marketing, Inc., a Delaware corporation ("Clark" or "the
Company"), is wholly owned by Clark USA, Inc., a Delaware corporation ("Clark
USA"). Clark's principal operations include crude oil refining, wholesale and
retail marketing of refined petroleum products and retail marketing of
convenience store items in the Central United States.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

The Company's earnings and cash flow from operations are primarily dependent
upon processing crude oil and selling quantities of refined petroleum products
at margins sufficient to cover operating expenses. Crude oil and refined
petroleum products are commodities, and factors largely out of the Company's
control can cause prices to vary, in a wide range, over a short period of
time. This potential margin volatility can have a material effect on financial
position, current period earnings and cash flow.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 an original 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 fair value (see Note 3 "Short-
term Investments"). Clark invests only in AA rated or better fixed income
marketable securities or the short-term rated equivalent.

The Company classifies checks issued which have not yet cleared the bank
account as accounts payable. Such balances included in "Accounts payable" were
$17.1 million and $12.9 million as of December 31, 1997 and 1996,
respectively.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of trade receivables. Credit risk on trade
receivables is minimized as a result of the credit quality of the Company's
customer base and industry collateralization practices. As of December 31,
1997, the Company had $20.6 million (1996--$36.4 million) due from Chevron USA
Products Co. ("Chevron"). Sales to Chevron in 1997 totaled $455.7 million
(1996--$455.8 million; 1995--$448.8 million).

INVENTORIES

Inventories are stated at the lower of cost, predominantly using the last-
in, first-out "LIFO" method, or market on an aggregate basis. During the year
ended December 31, 1997, total petroleum inventory quantities were reduced,
resulting in a LIFO liquidation, the effect of which increased pretax earnings
by $0.3 million (1996--$2.4 million). There was no such effect in the year
ended December 31, 1995.

F-8
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

To limit risk related to price fluctuations, Clark employs risk strategies
using crude oil and refined products futures and options contracts to manage
potentially volatile market movements on aggregate physical and contracted
inventory positions. As of December 31, 1997, Clark's open contracts
represented 2.3 million barrels of crude oil and refined products, and had
terms extending into July 1998. As of December 31, 1996, Clark's open
contracts represented 0.7 million barrels of crude oil and refined products,
and had terms extending into February 1997.

The Company considers all futures and options contracts to be part of its
risk management strategy. Unrealized gains and losses on open contracts are
recognized as a product cost component unless the contract can be identified
as a price risk hedge of specific inventory positions or open commitments, in
which case the unrealized gain or loss is deferred and recognized as an
adjustment to the carrying amount of petroleum inventories or accounts payable
if related to open commitments. Deferred gains and losses on these contracts
are recognized as an adjustment to product cost when such inventories are sold
or consumed. As of December 31, 1997, the Company had net unrealized losses on
open futures and options contracts of $1.9 million (1996--net unrealized gains
of $1.2 million) all of which have been recognized in operations.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment additions are recorded at cost. Depreciation
of property, plant and equipment is computed using the straight-line method
over the estimated useful lives of the assets or 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. The Company capitalizes the interest cost
associated with major construction projects based on the effective interest
rate on aggregate borrowings.

Expenditures for maintenance and repairs are expensed. Major replacements
and additions are capitalized. Gains and losses on assets depreciated on an
individual basis are 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.

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 or original
construction 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 generally occurs approximately every two to three years. Turnaround
costs, which are included in "Other assets", are amortized over the period to
the next scheduled turnaround, 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 U.S. federal income tax return with Clark USA but
computes its provision on a separate company basis. Deferred taxes are
classified as current, included in prepaid or accrued

F-9
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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. The Company records a
valuation allowance when necessary to reduce the net deferred tax asset to an
amount expected to be realized.

EMPLOYEE BENEFIT PLANS

The Clark Refining & Marketing, Inc. Retirement Savings Plan and separate
Trust (the "Plan"), a defined contribution plan, covers substantially all
employees of Clark. Under terms of the Plan, Clark matches the amount of
employee contributions, subject to specified limits. Contributions to the Plan
during 1997 were $6.5 million (1996--$6.4 million; 1995--$5.5 million).

Clark provides certain benefits for most retirees once they have reached a
specified age and 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 the employee's annual salary.

3. SHORT-TERM INVESTMENTS

The Company's short-term investments are all considered Available-for-Sale
and are carried at fair value with the resulting unrealized gain or loss (net
of applicable taxes) shown as a component of retained earnings.

Short-term investments consisted of the following:

<TABLE>
<CAPTION>
1996 1997
-------------------------------- --------------------------------
AMORTIZED UNREALIZED AGGREGATE AMORTIZED UNREALIZED AGGREGATE
MAJOR SECURITY TYPE COST GAIN/(LOSS) FAIR VALUE COST GAIN/(LOSS) FAIR VALUE
- ------------------- --------- ----------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Debt Securities.... $15.0 $(0.1) $14.9 $14.9 $ -- $14.9
</TABLE>

The net unrealized position as of December 31, 1997 included no gains or
losses (1996--gains of $0.0 million and losses of $0.1 million).

The contractual maturities of the short-term investments as of December 31,
1997 were:

<TABLE>
<CAPTION>
AMORTIZED AGGREGATE
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less................................. $ 4.9 $ 4.9
Due after one year through five years................... 10.0 10.0
----- -----
$14.9 $14.9
===== =====
</TABLE>

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 year ended December 31, 1997, there were no proceeds from sales of
short-term investments. For the same period in 1996 and 1995, the proceeds
from the sale of short-term investments were $31.1 million and $25.9 million,
respectively, with no realized gains or losses in either period. Realized
gains and losses are presented in "Interest and finance costs, net" and are
computed using the specific identification method.

F-10
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The change in the net unrealized holding gains or losses on Available-for-
Sale securities for the year ended December 31, 1997, was a gain of $0.1
million. For the same period in 1996, there was a net unrealized holding loss
of $0.1 million.

Cash and cash equivalents include $20.8 million of debt securities whose
cost approximated market value as of December 31, 1997 (1996--$20.0 million)
and for which there were no realized gains or losses recorded in the period.

4. INVENTORIES

The carrying value of inventories consisted of the following:

<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Crude oil..................................................... $105.8 $ 80.2
Refined products and blendstocks.............................. 136.8 143.4
Convenience products.......................................... 17.6 22.4
Warehouse stock and other..................................... 16.9 15.4
------ ------
$277.1 $261.4
====== ======
</TABLE>

As of December 31, 1997, crude oil and refined product inventories' LIFO
cost exceeded market value by $19.2 million, resulting in a valuation write-
down. As of December 31, 1996, the market value of crude oil and refined
product inventories was approximately $81.7 million above the carrying value.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Land....................................................... $ 19.7 $ 26.7
Refineries................................................. 434.6 443.7
Retail stores.............................................. 210.0 244.0
Product terminals and pipelines............................ 62.5 65.3
Other...................................................... 12.1 10.0
------- -------
738.9 789.7
Accumulated depreciation and amortization.................. (183.2) (214.1)
------- -------
$ 555.7 $ 575.6
======= =======
</TABLE>

As of December 31, 1997 property, plant and equipment included $48.7 million
(1996--$43.8 million) of construction in progress. Capital lease assets at
cost of $24.6 million (1996--$25.3 million) were included in property, plant
and equipment as of December 31, 1997.

6. OTHER ASSETS

Other assets consisted of the following:

<TABLE>
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Deferred financing costs........................................ $14.4 $13.4
Deferred turnaround costs....................................... 17.0 43.9
Investment in non-consolidated affiliates....................... 6.4 7.7
Other........................................................... 1.3 1.0
----- -----
$39.1 $66.0
===== =====
</TABLE>

F-11
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Amortization of deferred financing costs for the year ended December 31,
1997, was $7.0 million (1996--$6.5 million; 1995--$5.2 million). Amortization
of turnaround costs for the year ended December 31, 1997 was $20.5 million
(1996--$11.1 million; 1995--$12.0 million).

7. WORKING CAPITAL FACILITY

On September 25, 1997, the Company entered into a $400 million revolving
credit facility. The credit facility, which expires on December 31, 1999,
provides for borrowings and letter of credit issuances of up to the lesser of
$400 million or the amount available under a defined borrowing base calculated
with respect to the Company's cash and cash equivalents, eligible investments,
eligible receivables and eligible petroleum inventories ($486.0 million as of
December 31, 1997). Direct borrowings under the credit facility are limited to
$50 million. The Company uses the facility primarily for the issuance of
letters of credit to secure purchases of crude oil. The Company is required to
comply with certain financial covenants including maintaining defined levels
of working capital, cash, cash equivalents and qualifying investments,
tangible net worth, and cumulative cash flow, as defined. As of December 31,
1997, $272.1 million of the line of credit was utilized for letters of credit,
of which $121.0 million supported commitments for future deliveries of
petroleum products. As of December 31, 1996, under the previous facility,
$298.5 million of the line of credit was utilized for letters of credit, of
which $78.4 supported commitments for future deliveries of petroleum products.
There were no direct cash borrowings under any revolving credit facility as of
December 31, 1997 and 1996.

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
8 3/8% Senior Notes due November 15, 2007 ("8 3/8% Senior
Notes")...................................................... $ -- $ 99.3
8 7/8% Senior Subordinated Notes due November 15, 2007 ("8
7/8% Senior Subordinated Notes")............................. -- 173.8
Floating Rate Term Loan due November 15, 2003 and 2004
("Floating Rate Loan")....................................... -- 125.0
10 1/2% Senior Notes due December 1, 2001 ("10 1/2% Senior
Notes")...................................................... 225.0 --
9 1/2% Senior Notes due September 15, 2004 ("9 1/2% Senior
Notes")...................................................... 175.0 175.0
Obligations under capital leases and other notes.............. 20.6 17.6
------ ------
420.6 590.7
Less current portion........................................ 3.0 3.3
------ ------
$417.6 $587.4
====== ======
</TABLE>

The estimated fair value of long-term debt as of December 31, 1997 was
$602.8 million (1996--$431.8 million), determined using quoted market prices
for these issues. The obligations under capital leases have a market value
which approximates cost.

The 9 1/2% Senior Notes and 10 1/2% Senior Notes were issued by Clark in
September 1992 and December 1991, respectively, and are unsecured. The 9 1/2%
Senior Notes are redeemable at the Company's option at a redemption price
beginning September 1997 at 104.75% and decreasing to 100% of principal two
years later. The 10 1/2% Senior Notes were redeemed in December 1997 at
102.625% with a portion of the proceeds from the new offerings described below
and available cash.

The 8 3/8% Senior Notes and 8 7/8% Senior Subordinated Notes were issued by
Clark in November 1997 at a discount of 0.734% and 0.719%, respectively. These
notes are unsecured, with the 8 7/8% Senior Subordinated Notes subordinated in
right of payment to all unsubordinated indebtedness of the

F-12
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Company. The 8 3/8% Senior Notes and 8 7/8% Senior Subordinated Notes are
redeemable at the option of the Company beginning November 2002, at a
redemption price of 104.187% and 104.437% of principal, respectively, which
decreases to 100% of principal amount in 2004 and 2005, respectively. Up to
35% in aggregate principal amount of the notes originally issued are
redeemable at the option of the Company out of the net cash proceeds of one or
more equity offerings at any time prior to November 15, 2001, at a redemption
price equal to 108.875% of principal.

Clark also borrowed $125.0 million under a floating rate term loan agreement
expiring in 2004. Of the principal outstanding, 25% must be repaid in 2003.
The Floating Rate Loan is a senior unsecured obligation of Clark and bears
interest at the London Interbank Offer Rate (LIBOR) plus a margin of 275 basis
points, 8.625% for the current quarter. The loan may be repaid in whole or in
part at any time at the redemption price of 102.5% of principal in the first
year, 101.25% of principal in the second year and at 100% of principal
thereafter.

The Clark note indentures contain certain restrictive covenants including
limitations on the payment of dividends, limitations on the payment of amounts
to related parties, limitations on the incurrence of debt, redemption
provisions related to change of control and incurrence of liens, maintenance
of a minimum net worth.

During 1995, Clark entered into two sale/leaseback lease transactions for a
total of $24.3 million. Each capital lease has a term of five years. One lease
has a fixed rate of 8.36% and the other lease rate floats at a spread of 2.25%
over LIBOR.

The scheduled maturities of long-term debt during the next five years are
(in millions): 1998--$3.3 (included in "Accrued expenses and other"); 1999--
$3.3; 2000--$10.8; 2001--$0.0; 2002--$0.0; 2003 and thereafter--$575.1.

EXTINGUISHMENT OF DEBT

In 1997, the Company redeemed the 10 1/2% Senior Notes. As a result, the
Company recorded an extraordinary item of $10.7 million for the redemption
premium ($5.9 million), the write-off of deferred financing costs ($3.7
million), and other related costs ($1.1 million).

INTEREST AND FINANCE COSTS

Interest and finance costs, net, included in the statements of earnings,
consisted of the following:

<TABLE>
<CAPTION>
1995 1996 1997
----- ----- ------
<S> <C> <C> <C>
Interest expense....................................... $42.2 $42.9 $ 44.7
Finance costs.......................................... 5.2 6.5 11.0
Interest and finance income............................ (6.1) (9.7) (14.5)
----- ----- ------
41.3 39.7 41.2
Capitalized interest................................... (1.4) (1.0) (1.4)
----- ----- ------
Interest and finance costs, net........................ $39.9 $38.7 $ 39.8
===== ===== ======
</TABLE>

Cash paid for interest expense in 1997 was $44.8 million (1996--$42.9
million; 1995--$42.2 million). Accrued interest payable as of December 31,
1997 of $8.7 million (December 31, 1996--$6.8 million) is included in "Accrued
expenses and other."

F-13
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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 2017, 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 equipment at the refineries, retail stores, and the
general office. These lease terms range from 1 to 8 years with the option to
purchase some of the equipment at the end of the lease term at fair market
value. The leases generally provide that Clark pay taxes, insurance, and
maintenance expenses related to the leased assets. As of December 31, 1997,
net future minimum lease payments under capital leases and non-cancelable
operating leases were as follows (in millions): 1998--$17.3; 1999--$17.2;
2000--$22.9; 2001--$9.6; 2002--$8.4; and $106.2 in the aggregate thereafter.
Rental expense during 1997 was $16.9 million (1996--$16.5 million; 1995--$9.1
million).

10. RELATED PARTY TRANSACTIONS

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

CLARK USA, INC.

During 1997, the Company returned $215.0 million of capital to Clark USA for
its repurchase of the Zero Coupon Notes.

Clark USA contributed $268.6 million of capital to its subsidiary, Clark,
during 1996. Clark USA contributed $33.6 million from the proceeds of debt
issued in the Occidental/Gulf transactions in January of 1996. In addition,
$235.0 million was contributed to Clark from the contribution and subsequent
sale of the Occidental advance crude oil purchase receivable and the
associated hedge contracts in October of 1996. During 1995, Clark USA
contributed $165.6 million to Clark. Upon the issuance of stock in the first
quarter of 1995, Clark USA contributed $150.0 million for the purchase of the
Port Arthur refinery and also contributed $9.2 million for operating purposes.
In addition, from the proceeds of debt issued in the Occidental/Gulf
transactions, Clark USA contributed $6.4 million in December of 1995 to Clark.

MANAGEMENT SERVICES AND TRADE CREDIT GUARANTEES

TrizecHahn Corporation ("TrizecHahn") and Clark had agreements to provide
certain management services to each other from time to time. Clark established
trade credit with various suppliers of its petroleum requirements,
occasionally requiring the guarantee of TrizecHahn. Fees related to trade
credit guarantees totaled $0.2 million and $0.2 million in 1995 and 1996,
respectively. The last trade credit guarantee was terminated in August, 1996.

On November 3, 1997, Blackstone Capital Partners III Merchant Banking Fund
L.P. and its affiliates ("Blackstone") acquired a controlling interest in
Clark USA (the "Blackstone Transaction"). In connection with the Blackstone
Transaction, affiliates of Blackstone received fees of $7.0 million, and the
Company reimbursed Blackstone for $1.7 million of out-of-pocket expenses
related to the Blackstone Transaction, and the issuance of the 8 3/8% Senior
Notes and 8 7/8% Senior Subordinated Notes and entering into the Floating Rate
Loan (the "Offering"). In addition, the Company is negotiating a monitoring
agreement with an affiliate of Blackstone under which Blackstone would receive
a monitoring fee equal to $2.0 million per annum As of December 31, 1997, the
Company had a payable to Blackstone of $2.0 million for annual monitoring
fees. Affiliates of Blackstone may in the

F-14
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

future receive customary fees for advisory services rendered to the Company.
Such fees will be negotiated from time to time with the independent members of
the Company's board of directors on an arm's-length basis and will be based on
the services performed and the prevailing fees then charged by third parties
for comparable services.

FINANCE COST REIMBURSEMENT

As of December 31, 1997, Clark is due $1.3 million from TrizecHahn for
reimbursable costs associated with the transactions for equity
recapitalization (see Note 13 "Equity Recapitalization and Change in
Control").

11. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The following table sets forth the unfunded status for the post retirement
health and life insurance plans:

<TABLE>
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees..................................................... $11.9 $10.7
Fully eligible plan participants............................. 0.9 1.2
Other plan participants...................................... 16.7 15.3
----- -----
Total...................................................... 29.5 27.2
Unrecognized net (gain)/loss................................... (0.2) 3.7
Unrecognized prior service cost................................ 0.6 0.6
----- -----
Accrued postretirement benefit liability....................... $29.9 $31.5
===== =====
</TABLE>

The components of net periodic postretirement benefit costs are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service Costs.............................................. $1.0 $1.1 $1.1
Interest Costs............................................. 2.2 2.1 1.7
---- ---- ----
Net periodic postretirement benefit cost................... $3.2 $3.2 $2.8
==== ==== ====
</TABLE>

A discount rate of 7.50% (1996--7.50%) was assumed as well as a 4.00%
(1996--4.25%) rate of increase in the compensation level. For measuring the
expected postretirement benefit obligation, the health care cost trend rate
ranged from 6.50% to 9.25% in 1997, grading down to an ultimate rate in 2003
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, 1997, by $4.1 million and increase the annual
aggregate service and interest costs by $0.5 million.

F-15
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. INCOME TAXES

Clark provides for deferred taxes under the asset and liability approach
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.

The income tax provision (benefit) is summarized as follows:

<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Earnings (loss) before provision for income taxes
Continuing operations............................ $(41.2) $(52.4) $(37.0)
Extraordinary item............................... -- -- (10.7)
------ ------ ------
$(41.2) $(52.4) $(47.7)
====== ====== ======
Income tax provision (benefit):
Continuing operations............................ $(15.7) $(13.9) $ 10.5
Extraordinary item............................... -- -- --
------ ------ ------
$(15.7) $(13.9) $ 10.5
====== ====== ======
Current provision (benefit)--Federal............... $ -- $ 3.3 $ 9.6
--State............................................ -- 4.8 1.7
------ ------ ------
-- 8.1 11.3
------ ------ ------
Deferred provision (benefit)--Federal.............. (15.7) (15.2) (0.9)
--State............................................ -- (6.8) 0.1
------ ------ ------
(15.7) (22.0) (0.8)
------ ------ ------
Income tax provision (benefit)..................... $(15.7) $(13.9) $ 10.5
====== ====== ======
</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>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Federal taxes computed at 35%..................... $(14.4) $(18.3) $(16.7)
State taxes, net of federal effect................ (1.6) (1.3) 1.2
Nontaxable dividend income........................ (2.2) (2.4) (1.9)
Valuation allowance............................... -- 6.1 28.4
Other items, net.................................. 2.5 2.0 (0.5)
------ ------ ------
Income tax provision (benefit).................... $(15.7) $(13.9) $ 10.5
====== ====== ======
</TABLE>

F-16
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following represents the approximate tax effect of each significant
temporary difference giving rise to deferred tax liabilities and assets as of
December 31, 1996 and 1997.

<TABLE>
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment.............................. $85.4 $96.3
Turnaround costs........................................... 4.9 13.1
Inventory.................................................. 18.0 --
Other...................................................... 0.1 0.8
----- -----
108.4 110.2
----- -----
Deferred tax assets:
Alternative minimum tax credit............................. 15.4 12.0
Trademarks................................................. 4.4 4.5
Environmental and other future costs....................... 19.0 20.3
Tax loss carryforwards..................................... 69.0 87.4
Inventory.................................................. -- 3.1
Other...................................................... 5.9 17.4
----- -----
113.7 144.7
----- -----
Valuation allowance.......................................... (6.1) (34.5)
----- -----
Net deferred tax liability................................... $ 0.8 $ --
===== =====
</TABLE>

As of December 31, 1997, Clark has made net cumulative payments of $12.0
million under the Federal alternative minimum tax system which are available
to reduce future regular income tax payments. As of December 31, 1997, Clark
had a Federal net operating loss carryforward of $216.6 million and Federal
business tax credit carryforwards in the amount of $3.3 million. Such
operating losses and tax credit carryforwards have carryover periods of 15
years and are available to reduce future tax liabilities through the years
ending December 31, 2012 and 2011, respectively.

The valuation allowance as of December 31, 1997 was $34.5 million (1996--
$6.1 million). In calculating the increase in the valuation allowance, Clark
assumed as future taxable income only future reversals of existing taxable
temporary differences and available tax planning strategies.

During 1997, Clark USA made a Federal tax payment of $5.0 million in
settlement of an Internal Revenue Service examination for tax years ended
December 31, 1993 and December 31, 1994. The Company provides for its portion
of such consolidated liability under its tax sharing agreement with Clark USA.
Clark made net 1997 cash state tax payments of $2.6 million. (1996--$0.6
million; 1995--$0.7 million).

Section 382 of the Internal Revenue Code restricts the utilization of net
operating losses and other carryover tax attributes upon the occurrence of an
ownership change, as defined. Such an ownership change occurred during 1997 as
a result of the purchase of a majority interest in Clark USA by an affiliate
of Blackstone (see Note 13 "Equity Recapitalization and Change in Control".
However, based upon the existence of future taxable income from reversals of
existing taxable temporary differences and available tax planning strategies,
management believes such limitation will not restrict Clark's ability to
significantly utilize the net operating losses over the 15 year carryforward
period.

F-17
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. EQUITY RECAPITALIZATION AND CHANGE IN CONTROL

The Blackstone Transaction triggered the Change of Control covenant in the
Company's 9 1/2% Senior Notes and 10 1/2% Senior Notes. Under such covenants,
noteholders would have the right to require the Company to repurchase their
notes at 101% of face value. However, all of the 10 1/2% Senior Notes were
redeemed in late 1997 in connection with the Offering, and the Company was
only required to repurchase $3.3 million of the 9 1/2% Senior Notes during the
Change of Control tender period. The Company's credit facility was amended to
permit the acquisition by Blackstone of Clark USA's Common Stock.

14. RECAPITALIZATION, ASSET WRITE-OFF'S AND OTHER CHARGES

In 1997, the Company recorded a charge to operations in the amount of $49.0
million for recapitalization expenses, asset write-offs and other charges
incurred in connection with the Company's equity recapitalization and change
in control.

The total charge includes $21.8 million of asset write-offs principally
related to an investment in a project initiated to produce low-sulfur diesel
fuel at the Hartford refinery (the "DHDS Project"). In 1992, this project was
delayed based on internal and third party analysis that indicated an
oversupply of low-sulfur diesel fuel capacity in the Company's market. Based
on the analysis, the Company projected relatively narrow price differentials
between low and high sulfur products. In December 1997, subsequent to the
Blackstone Transaction, the Company determined that certain equipment
purchased for the DHDS Project would yield a higher value being utilized at
the Hartford and Port Arthur refineries, rather than remaining idle until the
diesel fuel differentials widened sufficiently to justify completing the DHDS
Project. As a result of this decision, the equipment was written down to its
fair market value.

In connection with the Blackstone Transaction, the Company incurred costs of
$10.7 million which included transaction, advisory, and monitoring fees. The
Company also recorded a charge of $16.5 million, resulting from a change in
strategic direction, primarily for certain environmental, legal and other
accruals related to existing actions.

15. STOCK OPTION PLANS

The Company has adopted a compensatory Long-Term Performance Plan (the
"Performance Plan"). Under the Performance Plan, designated employees,
including executive officers, of the Company and its subsidiaries and other
related entities are eligible to receive awards in the form of stock options,
stock appreciation rights and stock grants.

An aggregate of 1,250,000 shares of Clark USA Inc., Common Stock may be
awarded under the Performance Plan, either from authorized, unissued shares
which have been reserved for such purpose or from shares purchased on the open
market, subject to adjustment in the event of a stock split, stock dividend,
recapitalization or similar change in the outstanding Common Stock of the
Company. The options normally extend for 10 years and become exercisable
within 3 years of the grant date. Additionally, under this plan the stock
options granted may not be sold or otherwise transferred, and are not
exercisable until after a public offering of stock is completed by the Company
or change of control (as defined in the Plan). The Blackstone Transaction
constituted a change in control under the Plan. Stock granted under this plan
is priced at the fair market value at the date of grant.

F-18
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

During 1997 and 1996, no additional shares were granted under this Plan. In
1995, 549,000 shares were granted under this Plan and priced at the fair
market value at the date of grant. As of December 31, 1997, 531,500 stock
options were outstanding (1996--549,000) at an exercise price of $15 per
share.

16. CONTINGENCIES

Clark USA and the Company are subject to various legal proceedings related
to governmental regulations and other actions arising out of the normal course
of business, including legal proceedings related to environmental matters.
Among those actions and proceedings are the following:

The Equal Employment Opportunity Commission ("EEOC") alleged that Clark had
engaged in age discrimination in violation of the Age Discrimination in
Employment Act. The action involves 38 former managers believed to have been
affected by an alleged pattern and practice. The relief sought by the EEOC
includes reinstatement or reassignment of the individuals allegedly affected,
payment of back wages and benefits, an injunction prohibiting employment
practices which discriminate on the basis of age, and institution of practices
to eradicate the effects of any past discriminatory practices.

Clark is the subject of a purported class action lawsuit related to an on-
site electrical malfunction at Clark's Blue Island Refinery on October 7,
1994, which resulted in the release to the atmosphere of used catalyst
containing low levels of heavy metals, including antimony, nickel and
vanadium. This release resulted in the temporary evacuation of certain areas
near the refinery, including a high school, and approximately fifty people
were taken to area hospitals. Clark offered to reimburse the medical expenses
incurred by persons receiving treatment. The purported class action lawsuit
was filed on behalf of various named individuals and purported plaintiff
classes, including residents of Blue Island, Illinois and Eisenhower High
School students, alleging claims based on common law nuisance, negligence,
willful and wanton negligence and the Illinois Family Expense Act as a result
of this incident. Plaintiffs seek to recover damages in an unspecified amount
for alleged medical expenses, diminished property values, pain and suffering
and other damages. Plaintiffs also seek punitive damages in an unspecified
amount.

While it is not possible at this time to establish the ultimate amount of
liability with respect to the Company's contingent liabilities, Clark USA and
the Company are of the opinion that the aggregate amount of any such
liabilities, for which provision has not been made, will not have a material
adverse effect on their financial position; however, an adverse outcome of any
one or more of these matters could have a material effect on quarterly or
annual operating results or cash flows when resolved in a future period.

F-19
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have reviewed the accompanying consolidated balance sheet of Clark
Refining & Marketing, Inc. and Subsidiaries (the "Company") as of June 30,
1998, and the related consolidated statements of earnings and of cash flows
for the six-month period then ended. These financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1997, and the related consolidated statements of earnings, stockholder's
equity, and cash flows for the year then ended (not presented herein); and in
our report dated February 6, 1998, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of December 31, 1997
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP

St. Louis, Missouri July 31, 1998
(except for Note 6 as to which the date is August 10, 1998)

F-20
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
REFERENCE JUNE 30,
NOTE 1998
--------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 175.4
Short-term investments................................. 14.9
Accounts receivable.................................... 2 88.5
Receivable from affiliates............................. 5.2
Inventories............................................ 267.5
Prepaid expenses and other............................. 16.1
--------
Total current assets................................. 567.6
PROPERTY, PLANT AND EQUIPMENT............................ 574.4
OTHER ASSETS............................................. 3 63.1
--------
$1,205.1
========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable....................................... $ 213.4
Payable to affiliates.................................. 15.5
Accrued expenses and other............................. 4 56.9
Accrued taxes other than income........................ 48.0
--------
Total current liabilities............................ 333.8
LONG-TERM DEBT........................................... 582.4
OTHER LONG-TERM LIABILITIES.............................. 58.1
CONTINGENCIES............................................ 8 --
STOCKHOLDER'S EQUITY:
Common stock ($.01 par value per share; 1,000 shares
authorized and 100 shares issued and outstanding)..... --
Paid-in capital........................................ 239.7
Retained earnings (deficit)............................ (8.9)
--------
Total stockholder's equity........................... 230.8
--------
$1,205.1
========
</TABLE>

The accompanying notes are an integral part of these statements.

F-21
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
REFERENCE -----------------------
NOTE 1997 1998
--------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
NET SALES AND OPERATING REVENUES.............. $ 2,168.6 $ 1,797.8
EXPENSES:
Cost of sales............................... (1,874.7) (1,483.8)
Operating expenses.......................... (211.5) (218.2)
General and administrative expenses......... (29.0) (35.1)
Depreciation................................ (19.2) (19.7)
Amortization................................ 3 (8.6) (11.8)
Inventory write-down to market.............. 2 -- (30.9)
Equity pipelines............................ 4.1 3.3
--------- ---------
(2,138.9) (1,796.2)
--------- ---------
OPERATING INCOME.............................. 29.7 1.6
Interest expense and finance income, net.... 3, 4 (17.5) (22.0)
--------- ---------
EARNINGS (LOSS) BEFORE INCOME TAXES........... 12.2 (20.4)
Income tax provision........................ 5 (7.0) (0.2)
--------- ---------
NET EARNINGS (LOSS)........................... $ 5.2 $ (20.6)
========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-22
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).................................. $ 5.2 $(20.6)
Adjustments:
Depreciation....................................... 19.2 19.7
Amortization....................................... 12.1 12.9
Share of earnings of affiliates, net of dividends.. (0.1) 1.5
Inventory write-down to market..................... -- 30.9
Other.............................................. 0.3 1.0
Cash reinvested in working capital--
Accounts receivable, prepaid expenses and other.... 50.8 4.1
Inventories........................................ (12.2) (36.4)
Accounts payable, accrued expenses, taxes other
than income and other............................. (68.4) (21.1)
------ ------
Net cash used in operating activities............ 6.9 (8.0)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment....... (39.9) (34.5)
Expenditures for turnaround.......................... (30.0) (11.1)
Proceeds from disposals of property, plant and
equipment........................................... 2.2 13.9
------ ------
Net cash used in investing activities............ (67.7) (31.7)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt payments.............................. (1.5) (5.1)
Capital contribution received (returned)............. -- (9.5)
------ ------
Net cash used in financing activities............ (1.5) (14.6)
------ ------
NET DECREASE IN CASH AND CASH EQUIVALENTS.............. (62.3) (54.3)
CASH AND CASH EQUIVALENTS, beginning of period......... 319.4 229.7
------ ------
CASH AND CASH EQUIVALENTS, end of period............... $257.1 $175.4
====== ======
</TABLE>

The accompanying notes are an integral part of these statements.

F-23
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 1998
(TABULAR DOLLAR AMOUNTS IN MILLIONS OF US DOLLARS)

1. BASIS OF PREPARATION

The unaudited consolidated balance sheet of Clark Refining & Marketing, Inc.
and Subsidiaries (the "Company") as of June 30, 1998, and the related
consolidated statements of earnings and cash flows for the six-month periods
ended June 30, 1997 and 1998, have been reviewed by independent accountants.
Clark Port Arthur Pipeline Company and Clark Investments, Inc. are included in
the consolidated results of the Company. 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 annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. These
unaudited financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31, 1997.

The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," effective January 1, 1998, with no
effect on the Company's financial statements for the six-month period ending
June 30, 1997 and 1998.

2. INVENTORIES

The carrying value of inventories consisted of the following:

<TABLE>
<CAPTION>
JUNE 30,
1998
--------
<S> <C>
Crude oil........................................................ $122.9
Refined and blendstocks.......................................... 158.2
LIFO inventory value excess over market.......................... (50.1)
Convenience products............................................. 19.9
Warehouse stock and other........................................ 16.6
------
$267.5
======
</TABLE>

The write-down of inventory carrying value to market for the six-month
period ended June 30, 1998 was $30.9 million (1997--nil), respectively.

3. OTHER ASSETS

Amortization of deferred financing costs for the six-month period ended June
30, 1998 was $1.0 million (1997--$3.5 million) and was included in "Interest
and finance costs, net".

F-24
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)

Amortization of refinery maintenance turnaround costs for the six-month
period ended June 30, 1998 was $11.8 million (1997--$8.6 million).

4. INTEREST AND FINANCE COSTS, NET

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

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
Interest expense.................................... $ 21.3 $ 27.0
Financing costs..................................... 3.5 0.8
Interest and finance income......................... (6.7) (4.8)
--------- ---------
18.1 23.0
Capitalized interest................................ (0.6) (1.0)
--------- ---------
Interest and finance costs, net................... $ 17.5 $ 22.0
========= =========
</TABLE>

Cash paid for interest expense for the six-month period ended June 30, 1998
was $26.7 million (1997--$21.4 million). Accrued interest payable at June 30,
1998 of $8.9 million was included in "Accrued expenses and other".

5. INCOME TAXES

The Company made net cash tax payments for the six-month period ended June
30, 1998 of $0.9 million (1997--$0.9 million).

6. LIMA REFINERY ACQUISITION

On August 10, 1998, the Company acquired British Petroleum's ("BP") 170,000
barrel per day refinery and related terminals located in Lima, Ohio (the "Lima
Acquisition") for $175 million plus inventory currently estimated at
approximately $40 million. The Company funded the Lima Acquisition and related
costs with $5 million of cash on hand and the proceeds of a private placement
to institutional investors of $110 million 8 5/8% Senior Notes due 2008 and
$115 million floating rate term loan due 2004.

In connection with the financing of the Lima Acquisition, the Company's
parent, Clark USA, Inc., received consents from the holders of its 10 7/8%
Senior Notes and its 11 1/2% Cumulative Exchangeable Preferred Stock to permit
the Company to increase the amount of its authorized working capital and
letter of credit facility to the greater of $700 million or the amount
available under a defined borrowing base and to allow the incurrence of up to
$250 million of additional indebtedness to fund the Lima Acquisition.

7. EQUITY PIPELINES

During July 1998, the Company sold its interests in Westshore Pipeline
Company and Wolverine Pipeline Company for net proceeds of approximately $17
million, resulting in an after-tax book gain of

F-25
<PAGE>

CLARK REFINING & MARKETING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)

approximately $12 million. The Company has signed definitive agreements to
sell its interests in Chicap Pipeline Company and Southcap Pipeline Company,
subject to regulatory approval, for net proceeds of approximately $57 million
which would result in an after-tax book gain of approximately $56 million.
Although the Company expects to close the remaining two transactions by
September 1998, there can be no assurance that it will be able to do so by
such time or at all.

8. CONTINGENCIES

The Company is subject to various legal proceedings related to governmental
regulations and other actions arising out of the normal course of business,
including legal proceedings related to environmental matters. While it is not
possible at this time to establish the ultimate amount of liability with
respect to such contingent liabilities, the Company is of the opinion that the
aggregate amount of any such liabilities, for which provision has not been
made, will not have a material adverse effect on their financial position,
however, an adverse outcome of any one or more of these matters could have a
material effect on quarterly or annual operating results or cash flows when
resolved in a future period.

9. ACCOUNTING STANDARDS NOT YET ADOPTED

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information." This statement
establishes new standards for reporting information about operating segments
in annual financial statements and requires selected operating segment
information to be reported in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This statement
becomes effective for the Company's financial statements beginning with the
year ended December 31, 1998 at which time restatement of prior period segment
information presented for comparative purposes is required. Interim period
information is not required until the second year of application, at which
time comparative information is required.

F-26
<PAGE>

OPINION AND SUMMARY REPORT OF TURNER, MASON & COMPANY

ACQUISITION OF
BP'S LIMA REFINERY
BY CLARK

John R. Auers
George B. Grey, IV
Joseph A. Loftus
Malcolm M. Turner
June 27, 1998

A-1
<PAGE>

TURNER, MASON & COMPANY
Consulting Engineers

June 27, 1998

Clark Refining & Marketing, Inc.

Turner, Mason & Company (TM&C) is retained by Clark Refining & Marketing,
Inc. ("Clark") to review the proposed acquisition of BP's 168,000 barrel per
day (B/D) petroleum refinery located at Lima, Ohio by Clark and develop
certain opinions related to this transaction. The Lima refinery is a large
single-train, high conversion plant utilizing relatively modern process units
and ancillary facilities. Noticeable deficiencies include the lack of diesel
desulfurization and alkylation process units. Most industry observers were
surprised two years ago when BP was unsuccessful in a well publicized effort
to sell the Lima refinery to a third party and announced in December 1996 that
operations would cease in late 1998. If this were to happen, a strong
consensus would conclude that the Lima refinery would probably be the best
non-operating refinery in the U.S. Thus, Clark's efforts to reverse BP's plans
(which are tied to a decision to implement a major capital improvement program
at its Toledo refinery and become a net product purchaser in Ohio) is viewed
by TM&C as opportunistic. TM&C estimates the replacement cost of the Lima
refinery at about $1.2 billion. The $175 million purchase price for the fixed
assets equates to just under 15% of replacement cost, and this level is toward
the lower range of recent U.S. refinery transactions.

The time frame for TM&C work has been exceptionally shortened for this
engagement. Both BP and Clark staff personnel have provided extensive historic
financial and operating data for our study, and we have relied on this
information exclusively without independent verification. TM&C staff did have
the opportunity to make a short visit to inspect the Lima refinery, and we are
satisfied with the level of our due diligence efforts for the purposes at
hand. It should be understood that TM&C opinions regarding the mechanical
condition of the refinery and BP's environmental compliance and potential
liabilities and costs related thereto are outside the scope of our engagement.

To construct estimates of Clark's ability to operate the Lima refinery in a
manner to generate acceptable cash flows, TM&C has independently developed
refinery yield estimates and operating costs for such a scenario. Although
BP's past performance at Lima is relevant, Clark is inherently a much
different company with varying capabilities and operating philosophies. At
Port Arthur, Clark has proven its ability to make major improvements in the
financial performance and refinery operations of its predecessor, Chevron. In
our opinion, however, it is not reasonable to expect a duplication of these
productivity improvements at Lima. We do anticipate relative improvements
through Clark's "leaner and meaner" refining and marketing concepts, but we
recognize that the BP management at Lima, in fact, was successful in reducing
manpower, lowering overall operating costs and achieving almost 100% saleable
product yields. BP's profitability has been respectable in a cyclical
competitive industry with a basic refinery charging relatively expensive high
quality crude oils. Nonetheless, we expect Clark management will be successful
to a degree in its efforts to increase crude throughput and reduce operating
costs, compared to BP. Also, we expect Clark to benefit from improved future
margins prevailing in the refining industry.

Using tests and methodologies employed by our firm for many years in
numerous refinery transactions, we have developed the opinion that it is
reasonable to expect Clark to operate the Lima refinery competitively and
achieve financial performance corresponding with an annual average earnings
before interest, taxes and depreciation ("EBITD") of approximately $60
million. (Turnaround maintenance amortization is estimated at $7 million;
therefore, the corresponding EBITDA is $67 million.) This estimate is based on
the calculations, assumptions and methodologies contained in this report.

A-2
<PAGE>

The Lima refinery is well served by both crude and products pipelines. It is
our opinion that Clark will not be handicapped by limited crude supply
sources. In contrast, Clark will have the opportunity to utilize optimum
domestic and foreign sources for its Lima refinery operations. The situation
may be somewhat different concerning products, depending on the future supply
arrangements Clark is able to achieve with BP and other area competitors, such
as Sun and Marathon/Ashland. It is TM&C's opinion that there could be some
initial competitive disruptions in the first few years following the
acquisition, but ultimately the product supply balances will normalize, and
Clark should be able to realize fair market values for its products, even at
increased throughputs. Currently, there is a plentiful supply of products in
Ohio. With the expectation of the Lima refinery closing, others are generating
plans to fill this void. It is TM&C's opinion that there could be some early
refinery margin repercussions if competitors, particularly Marathon/Ashland,
react aggressively to the Lima purchase. It is our understanding that
Marathon/Ashland has plans to deliver significant volumes from its
Catlettsburg refinery to the Columbus area with the construction of a new
pipeline. Ultimately, this will simply change the balance of imports/exports
in the Ohio region, but overall supply/demand relationships will not be
greatly altered. We do not expect any major pipeline projects to bring
products from Gulf Coast refineries to this region, as contemplated earlier
following BP's announcement of the Lima refinery closing.

It should be noted that TM&C's gross margin projections are based on Clark's
operating the Lima refinery as a wholesale refiner with virtually no end-user
marketing efforts. We assume that the primary products--gasoline, diesel, jet
fuel and LPG products--will be sold on a bulk basis, essentially at the
refinery gate or into product pipelines. Eventually, Clark is expected to
expand its marketing strengths into this area and achieve relatively higher-
than-assumed product prices, but that is a future eventuality and not relevant
for our assignment. Along with our bulk wholesale product disposition approach
is the assumption that there are virtually no selling and marketing expenses
with this venture. Because BP has been so dominant in this area, we believe
that Clark's near-term success will depend on its ability to work out
beneficial commercial arrangements with BP (or other refiner/marketers).

We have noted that there should be natural concern that BP has possibly
neglected routine maintenance at the Lima refinery in order to avoid
unnecessary expenses prior to closure. A major turnaround (which will cost
approximately $30 million) will be required in 1999. During our brief visit to
the Lima refinery, senior BP management assured us that routine maintenance
has been continued during the past two years, essentially on a "business as
usual" basis without regard to the imminent closure. In any case, it will be
prudent for Clark to anticipate in its planning some "catch up" maintenance
expenses for a couple of years. However, TM&C did not include any
extraordinary maintenance expenses in our estimates because the limited scope
of our assignment and time availability prevented establishing any reasonable
basis to do so.

With respect to capital expenditures, Clark estimates that it will face
annual average expenditures of approximately $20 million for sustaining
(defensive) capital. TM&C believes that this estimate may be conservative, as
it exceeds industry averages for refineries of this size, complexity and
apparent mechanical condition. On the other hand, there will undoubtedly be
several capital projects undertaken that provide economic payout. It appears
to us that a new alkylation unit will be readily justified unless BP or some
other nearby refinery offers a very attractive purchase arrangement for
Clark's alky feed production (which is now being processed at BP's Toledo
refinery). Similarly, we expect that Clark will be able to justify a diesel
HDS unit to make low sulfur diesel and avoid dumping surplus high sulfur
diesel and No. 2 fuel production. We are aware of available shut-down process
units--both alkylation and HDS--that could be considered by Clark if economics
point this direction. Capital requirements for these units might be reduced to
the $20 million range with such an approach.

Finally, it is TM&C's opinion that the Lima refinery will be faced with a
sulfur in gasoline issue in about 2004, or perhaps sooner. Both API and NPRA
have recommended to EPA that Ohio and surrounding states be required to market
gasoline with maximum sulfur content of 150 ppm. EPA and

A-3
<PAGE>

others are considering even lower sulfur levels, in some cases as low as 50
ppm sulfur. It seems highly likely that the Lima refinery's current capability
of about 230 ppm sulfur in gasoline will be inadequate. We have not undertaken
a specific assessment of this problem but believe that hydrotreating heavy cat
gasoline will be the likely solution. Capital costs might be in the range of
$10 million if this route is required.

The following report and tables provide details of our analysis in each of
the key areas considered in this engagement.

TURNER, MASON & COMPANY

A-4
<PAGE>

REFINERY PROFILE

HISTORY

A petroleum refinery was built on the current location in Lima, Ohio around
the turn of the century by the Standard Oil Company, and was known as the
Solar refinery. Standard Oil was forced to break up in 1911 by U.S. anti-trust
legislation, creating several smaller companies, among them Standard Oil of
Ohio (SOHIO). SOHIO acquired the Lima refinery in 1931. Previously, SOHIO had
built a refinery in Toledo (1919), about 75 miles north of Lima. These two
refineries have historically operated as a system, with several intermediate
streams being exchanged.

In 1987, SOHIO was purchased by British Petroleum (BP), a U.K.-based major
integrated oil company with worldwide operations, and it has operated the Lima
refinery since that time. In 1996, BP attempted to sell the refinery but was
unsuccessful in securing a satisfactory offer. As a result, plans were made to
cease operations at the plant as of year-end 1998.

PROCESS UNITS

Over the years, significant expansions and modifications have taken place at
the Lima refinery. As a result, most of the operating units at the refinery
are relatively modern and technologically up-to-date. The crude unit was
constructed in 1969-70 with an original design capacity of 150,000 barrels per
day (B/D). Since then, it has been expanded to a current capability of 168,000
B/D. A gas oil hydrocracker (24,000 B/D capacity), naphtha hydrotreater
(60,000 B/D capacity) and reformer (54,000 B/D capacity) were also built at
the same time as the crude unit, and together with the crude unit, are
collectively referred to as the Lima Integrated Unit (LIU).

The FCC (cat cracker) and delayed coker units were both built in 1949 during
an earlier expansion of the refinery. However, they have been significantly
modified since that time. The FCC was expanded and modernized most recently in
1994 and has a current capacity of 36,000 B/D. The coker was converted from a
crude coker to a delayed coker in 1970 and has been steadily upgraded and
expanded from the 1970 design capacity of 13,000 B/D to a current capacity of
about 22,500 B/D. The most recent upgrade (in 1994) included the addition of a
new, state-of-the-art feed furnace.

Other major units at the refinery include an 18,500 B/D C5/C6 isomerization
unit, a 25,500 B/D aromatics extraction unit, a 5,500 B/D toluene
hydrodealkylation unit (THDA), a 1.2 million SCFH hydrogen purification unit
(HPU), a 54 tons per day sulfur recovery unit (SRU) and a 1,200 B/D Trolumen
unit. The isomerization, aromatics, THDA and HPU units were all built during a
major petrochemical expansion in 1984.

Table 1 summarizes all the major process units at the refinery. TM&C has
estimated total replacement cost of the refinery to be about $1.2 billion,
with an estimated complexity rating of 8.9.

ASSETS FOR SALE

The assets included for sale are:

. 650 acres of a 900-acre industrial site at Lima, Ohio;

. All the oil refining related structures, equipment and machinery at the
site;

. An adjacent product terminal (Vine Street terminal);

. Four crude oil tanks located just south of the refinery;

. On-site and in-transit crude oil inventories;

. On-site refined and intermediate products inventories; and

. All assignable contracts and permits.

BP intends to accept all existing environmental liabilities at the refinery
as of the sale date.

A-5
<PAGE>

HISTORIC FINANCIAL AND OPERATING PERFORMANCE

Because Lima is just one of several refineries operated by BP Oil US,
audited financial statements for Lima as a standalone refinery are not
prepared as a normal course of business. However, as part of the effort by BP
to sell the refinery in 1996, certain financial and operating data were
prepared for Lima for the years 1991-95. In addition, Clark prepared estimates
for refinery net margins for the years 1996 and 1997 using actual refinery
yield and operating cost data and the same pricing methodology used by BP in
generating the 1991-95 estimates. Tables 2 through 8 show the estimated
refinery gross margins for those years.

CRUDE SUPPLY

Table 9 summarizes the crude slate processed at the refinery during the
1991-97 time period. The refinery is limited to running mostly light to medium
gravity, low sulfur crude oils. West Texas Intermediate (WTI) has been the
mainstay of the crude slate, averaging about 70% of the total. WTI typically
has a gravity of 38-40 API with a sulfur content of 0.3%. The only other crude
oil that has been run in significant volumes is Cabinda from Angola, which
averaged about 8% of the total for the whole period. In recent years, the
refinery has processed upwards of 15% Cabinda. Like WTI, Cabinda is also very
low in sulfur but is heavier at 32 API. Most of the remaining crudes that have
been processed at the refinery have been light sweet crudes such as LLS, North
Sea, Nigerian and Cusiana. The refinery has run up to about 10,000 B/D of
medium sour crudes such as ANS, Eugene Island and WTS.

The refinery receives all its crude oil supply via pipeline. There is an
extensive network of crude oil pipelines that can deliver crude from Texas,
Louisiana and the mid-continent. Most of the WTI is shipped from Longview,
Texas via the Mid-Valley Pipeline. Foreign crude oil can be accessed through
the LOOP/LOCAP system and then into Capline to Patoka, Illinois. A Marathon
pipeline makes deliveries from this point to Lima. Canadian crude oil can be
brought into the refinery via the Interprovincial Pipeline to Chicago and then
to Patoka via a Mobil pipeline. Given this configuration of pipeline options,
it is our opinion that crude oil supply logistics are unlikely to limit the
refinery's future ability to run crude oil.

PRODUCTS

The refinery produces a full range of products. Distribution to market or to
subsequent processing facilities is accomplished via several pipelines, by
rail, by truck, or through the adjacent product terminal (Vine Street).

Products shipped by rail include:

<TABLE>
<S> <C>
. Petroleum coke .Benzene
.Propylene .Butanes
.Caustic .Decanted oil

Products shipped by truck include:

.LPG .Trolumen
.Vacuum bottoms and decanted oil .Sulfur
</TABLE>

CRUDE UNIT OPERATING RATES

As stated earlier, the refinery has a nameplate crude capacity of 168,000
B/D. Over the three-year period 1995-97, the crude unit utilization has
averaged about 152,000 B/D, or about 91%. Most downstream units have had
relatively low operating rates, with the exception of the FCC, which has
averaged about 95% of capacity. A summary of historic utilization rates at the
refinery process units is shown in Table 10.

A-6
<PAGE>

OPERATING EXPENSES

BP has supplied operating cost information for the 1991-97 time period which
has been summarized in Table 11. Variable operating costs (including fuel,
power, catalyst and other costs) have averaged $33.7 million per year. Non-
turnaround fixed costs have ranged from about $61 million to $68 million per
year during this time period. In addition, turnaround costs have averaged $7.1
million per year. Total operating costs (including turnaround expenses) have
averaged almost $106 million per year, or $1.99 per barrel of crude processed.

CHEMICAL PLANT NEIGHBORS

An acrylonitrile plant, owned and operated by BP Chemicals is adjacent to
the refinery, as well as a nitrogen based chemical plant owned by Arcadian
Chemical and operated by BP Chemicals. In addition, the Hampshire Chemical
plant processes by-products from the BP Chemical plant.

The refinery interfaces with this chemicals complex through shared
infrastructure and through feedstock supply arrangements. A significant aspect
of infrastructure sharing is an electric utility substation that services the
complex. Also, propylene produced by the refinery is sold exclusively to BP
Chemical, and BP Chemical distributes and markets all benzene and surplus
toluene produced by the refinery. Arcadian Corporation purchases pipeline
natural gas on behalf of the complex.

BP provides numerous shared support services to the Lima and Toledo
refineries such as commercial operations and planning, technical support,
accounting and control, procurement, human resources, etc. Such services are
not individually allocated to each refinery, but are accounted for in a
general overhead charge allocated to each site. Thus, meaningful historical
costs for these services are not available.

TOLEDO/LIMA REFINERY TIES

Even though BP's refinery in Toledo is located about 75 miles away from
Lima, the two refineries have been operated as a system, with economic
optimization based on the system rather than the individual sites. The
integration includes exchanges of intermediates and unfinished products
including alky feed, gas oil, and distillate blendstocks.

The recent and continuing upgrade of the Toledo refinery (the Repositioning
Project) is altering levels of transfers. Agreements covering the continuation
of transfers are not known to TM&C and would need to be renegotiated at the
completion of the Repositioning Project, which is expected in April/May 1999.
However, this does not apply to the exchange of propylene. All propylene
produced by the Toledo refinery must be sent to the Lima Refinery for either
processing, storage or sale, and an agreement for the continuation of this
arrangement is expected to be negotiated subsequent to the signing of the
Purchase Agreement.

CAPITAL EXPENDITURES

Over the past several years, annual capital expenditures have been in the
range of $20-$40 million. Expenditures for basic care and maintenance have
ranged from $1-$5 million per year, while health, safety and environment (HSE)
expenditures were in the range of $5-$18 million per year. The last full
maintenance turnaround occurred in 1994, at a cost of approximately $30
million. Another plant-wide turnaround is scheduled for 1999, and Clark's
operating plan estimates the cost of this turnaround to be approximately $30
million. Sustaining capital during this period has included significant
expenditures on benzene National Emissions Standards for Hazardous Air
Pollutants (NESHAP) and the wastewater system. Clark has estimated overall
sustaining capital requirements to average approximately $20 million per year
from 1999 through 2001, including $4 million per year for refinery maximum
achievable control technology (MACT) II compliance. These estimates appear to
be

A-7
<PAGE>

conservative relative to industry averages for refineries of this size and
complexity. The following is a summary (in millions of dollars) of historic
and projected capital expenditures:

<TABLE>
<CAPTION>
DISCRETIONARY SUSTAINING TOTAL
------------- ---------- -----
<S> <C> <C> <C>
1991.......................................... $ 8.9 $22.8 $31.7
1992.......................................... 13.3 14.3 27.6
1993.......................................... 11.7 11.4 23.1
1994.......................................... 24.5 14.0 38.5
1995.......................................... 8.9 7.7 16.6
1996.......................................... 1.3 8.3 9.6
1997.......................................... -- 10.9 10.9
Average....................................... 10.0 12.8 22.8
Projected..................................... 20.7
</TABLE>

A more detailed summary for the 1991-95 period is contained in Table 12.

PROJECTED OPERATIONS UNDER CLARK OWNERSHIP

In preparing an independent forecast of expected EBITD generated by the
refinery under the ownership of Clark, TM&C completed the following tasks:

. A price forecast for the Lima refinery was generated, covering all expected
product sales and feedstock purchases.

. A set of operating assumptions and limitations were prepared that are
consistent with our view of how the refinery would be operated by Clark.

. The operating assumptions and prices were used to generate a set of refinery
yields, through use of a linear programming (LP) model.

. Refinery operating costs were projected consistent with the LP results and
with Lima's historical experience.

PRICING BASIS

The feedstock and product pricing assumptions which we developed are
summarized in Table 13. Refined product prices are based on the United States
Gulf Coast (USGC). The USGC represents a large percentage of the U.S. refining
capacity, and it is the incremental product supplier to much of the U.S.,
including the Midwest and the East Coast. Consequently, the USGC establishes
price trends and relationships which are reflected throughout the country and
include the markets where the Lima refinery competes.

The USGC price forecast used is one that TM&C has developed for use in
refining studies in which we are currently involved. A key piece of this
forecast is the $3 WTI crack spread which we used. It is about the same as the
average 1991-97 crack of $3.03. Figure 1 summarizes the actual WTI crack
spread from 1991 through 1997.

In our price forecast, the Lima location differential for light clean
products (gasolines, jet fuel and No. 2 diesel) above the USGC is 2.5c per
gallon. This is somewhat less than the pipeline tariff of about 3.0c per
gallon and also less than local rack differentials to the USGC, which
generally have been about 4.0c per gallon.

NO ALKYLATION UNIT

Two other key product price assumptions which we made involve alky feed and
incremental No. 2 HS diesel. The Lima refinery is somewhat unusual in that it
has an FCC unit which produces alkylation unit feedstock but lacks an
alkylation unit. The BP refinery in Toledo has an oversized alkylation unit

A-8
<PAGE>

and has historically processed the alky feed produced at Lima. Upon completion
of the Repositioning Project at the Toledo refinery, its appetite for alky
feed is expected to go down. Lima's alternative for alky feed sales would
include other refiners with alkylation units or as a gasoline blendstock in
its own gasoline pool. In the latter disposition, alky feed essentially
displaces normal butane. Therefore, we have valued this stream at a normal
butane price.

NO DIESEL HDS UNIT

Because of Lima's lack of a diesel HDS unit and Toledo's excess capacity,
significant volumes of No. 2 diesel blending components produced at Lima have
been processed at Toledo since the advent of low sulfur diesel regulations in
late 1993. Under Clark's ownership, the Lima refinery will have to blend all
of these components into HS No. 2 diesel and produce higher volumes of this
product into a market which is already over-supplied. Our price assumption
penalizes the production of this incremental (above historical levels) HS No.
2 diesel by 4.0c per gallon.

The crude prices shown in Table 13 are also consistent with recent TM&C
studies. The base price for WTI crude of $18 per barrel (Cushing Spot) is
above current levels, but reflects a reasonable future outlook for analyses.
In any case, the absolute WTI level is not as important as the price
relationship to other crudes and products. The transportation charge of $1 per
barrel for WTI from Midland reflects transit to Longview on the Mesa and West
Texas Gulf pipeline systems and transit to Lima from Longview on the Mid-
Valley Pipeline. Cabinda and Eugene Island are both assumed to move on Capline
from St. James to Patoka and on the Marathon pipeline to Lima.

FEEDSTOCK AND PRODUCT ASSUMPTIONS

Table 14 summarizes the feedstock and product volume limitations assumed in
our projection. As shown, we have fixed the crude slate to only three crudes:
WTI, Cabinda and Eugene Island. This slate is consistent quality-wise with
what has been historically run at the Lima refinery. The availabilities of the
crude in the stated volumes are not a problem, and although not "optimized",
the selected slate fits in well with the refinery's capabilities and unit
limitations. The only other feedstocks made available are normal butane (which
is supplied as desired for gasoline blending purposes) and low purity
propylene produced at the BP Toledo refinery (which is subject to negotiation
for Lima receiving approximately 3,900 B/D). Most products were limited to
historically demonstrated volumes.

PROJECTED YIELDS

To estimate future refinery yields, TM&C used a version of the LP planning
model for the Lima refinery which BP has provided to Clark. Clark conducted a
validation process to test the ability of the LP to match actual refinery
yields. We reviewed Clark's validation methodology and conclude that the LP is
adequate for our work.

Applying the price set and assumptions summarized in Tables 13 and 14, we
generated an LP case which represents annualized refinery operation in a non-
turnaround year. The resultant yields and estimated gross margin of $168.2
million are shown in Table 15.

Table 16 summarizes the process unit operating rates for this case. Although
somewhat higher than recent actual throughputs for some units (such as the
coker, reformer, hydrocracker and isomerization units), the projected rates
are below stream day capacities and are very achievable, in our opinion. It
should be noted that BP has been operating over the last two years with a view
that the refinery would be shutting down at the end of 1998. Therefore, BP has
not attempted to maximize rates to the extent we would expect Clark to do so.

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<PAGE>

Product yields and some other key parameters are compared to historical
operations in Table 17. The projected case results are reasonably consistent
with history. Although overall product yield is slightly above the seven-year
average, it is below the 101.0% that the Lima refinery has achieved since
1995. We discussed this issue with refinery management and learned that the
refinery staff has focused on and made significant progress in reducing oil
losses from various sources (flaring, oil to the sewer, etc.). In light of
this, the projected product yield should be conservative.

OPERATING COSTS

Table 18 summarizes the operating cost estimate for the projected case. As
shown, we have estimated total cash operating costs of $106.2 million
annually, or $1.88 per barrel of crude oil processed. This compares with the
seven-year historic average of $105.7 million and $1.99, respectively (which
was shown in Table 11).

The fuel balance was derived from our estimate of the required fuel produced
and consumed by the refinery, taking into account process unit operating rates
and severities and the historic overall energy efficiency of the plant. The
fuel balance is very similar to 1995 performance, during which refinery
operations were most similar to the projected operation. Estimates for other
variable costs were also made based on historic operational results provided
by BP, adjusted to reflect the refinery operating rates in the future case.

The fixed cost estimate is slightly less than the seven-year average of $72
million which BP has incurred. With recent manpower cutbacks and increased
maintenance efficiencies, fixed costs have been running at a level
significantly below our estimate. Although it is very possible that these
lower costs can be sustained by Clark in its operation of the refinery, we
have not given full credit for this in our projections.

EBITD OUTLOOK

TM&C's EBITD projections that result from combining gross margin and
operating costs estimates developed as stated are presented in Table 19. As
shown, we have projected a five-year average EBITD of $58.8 million per year
(and, assuming an average turnaround amortization of $7.0 million, an EBITDA
of $65.8 million per year). A 30-day plant-wide turnaround is assumed for
1999, resulting in lower EBITD for that year. Note that we used Clark's
estimate of $1.2 million per year for G&A expenses, a figure based on its
expectation to absorb the Lima refinery operation readily into the existing
St. Louis organization.

TM&C BACKCAST

TM&C has traditionally tested forecasts of refinery cash-generating
performances with simple backcast comparisons. This differs from a typical
review of a company's financials in that past deficiencies in operating
capabilities are eliminated by using current proved unit capacities, yields
and operating costs. Simply put, this backcast methodology assesses what the
current refinery could have hypothetically been expected to do under prior
years' margins and price relationships.

For the period 1991-97, TM&C has estimated product revenues, cost of sales
and resulting gross margins using this backcast methodology. These results are
summarized in Table 20, with the backcast period average gross margin being
about $164 million. Backcast gross margins range from $137.4 million in 1996
to $218.6 million in 1991. This compares with BP's estimated actual gross
margin during the same period of about $159 million and the TM&C projected
gross margin of about $168 million. Accordingly, this analysis indicates that
even though there have been numerous changes in the Lima refinery's processing
capabilities and prevailing industry competitive factors, the projected
results are reasonable by this test.

A-10
<PAGE>

MARGIN SENSITIVITIES

Of general interest is an approximation of expected impacts resulting from
both controllable and noncontrollable changes in the industry and at the
refinery. TM&C has developed the estimated gross margin sensitivities shown in
Table 21 for several such events. Because the Lima refinery is a "remotely
located Gulf Coast refinery", it is necessarily dependent on Gulf Coast crack
spreads. This conclusion is emphasized by noting that a change of 25c per
barrel in the Gulf Coast crack spread affects TM&C's estimated gross margin
about $12 million annually. In addition, we conclude that the Lima refinery
economics are quite sensitive to throughput rates, with a 10,000 B/D increase
producing a gross margin improvement of about $10 million annually. Several
other sensitivity measurements shown in Table 21 are significantly less
important.

A-11
<PAGE>

TABLE 1

LIMA REFINERY

PROCESS UNIT SUMMARY

<TABLE>
<CAPTION>
DATE ORIGINAL CURRENT
BUILT/ CAPACITY CAPACITY
UPGRADED MB/D* MB/D* COMMENTS
--------- -------- -------- --------
<S> <C> <C> <C> <C>
PROCESS UNIT
Crude................... 1969/1994 150.0 168.0 Winter capacity is 173 MB/D
Vacuum.................. 1969/1994 42.0 54.0
Naphtha HDS............. 1969 47.8 60.0
Reformer................ 1969 47.0 54.0
Gas Oil Hydrocracker.... 1969/1996 20.7 24.0 24 MB/D on gasoline; 26 MB/D
on kerosene
Aromatics............... 1984 24.4 25.5
THDA.................... 1984 5.5 5.5
Isomerization........... 1984/1986 16.7 18.5
FCC..................... 1949/1994 16.0 36.0 36 MB/D at 79% conversion; 40 MB/D
at 75% conversion
Coker**................. 1949/1995 30.0 22.5 22.5 MB/D at 18-hour cycle
HPU..................... 1984 1.2 MMSCF/H 90% H2
SRU..................... 1974/1996 33 ltpd 54 ltpd
Trolumen................ 1964/1995 1.1 1.2 Decanted oil feed
</TABLE>
- --------
* Thousand barrels per day.
** Originally a 30 MB/D Kellogg crude coker. Modified in 1970 to Foster Wheeler
delayed coker @ 13 MB/D with subsequent upgrades to 22.5 MB/D.

A-12
<PAGE>

TABLE 2

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1991 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD** $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline................. 65.7 27.59 47,000 473.1
Conventional Midgrade 89...................... 67.3 28.26 8,900 91.6
Conventional Premium 92....................... 69.2 29.05 14,800 156.7
Blend Components.............................. 67.8 28.48 (500) (5.3)
Jet A......................................... 62.8 26.38 17,900 172.0
Kerosene...................................... 64.2 26.96 600 5.8
No. 2 HS Diesel............................... 60.7 25.50 13,600 126.3
No. 2 Diesel Supreme.......................... 61.5 25.85 13,300 125.3
Benzene....................................... 106.8 44.84 4,400 71.8
Toluene....................................... 83.2 34.95 1,000 12.7
Net Butane.................................... (39.8) (16.72) 200 (1.2)
Isobutane..................................... 47.2 19.82 4,000 28.9
Alky Feed..................................... 39.4 16.54 4,200 25.3
Mixed LPG..................................... 35.8 15.04 4,600 25.3
Propylene (Chemical Grade).................... 49.0 20.59 4,400 33.0
FCC Feed (LS)................................. 58.9 24.75 4,000 36.1
FCC Slurry Oil................................ 12.18 1,100 4.9
Trolumen...................................... 45.88 200 3.3
Coke (Anode Grade), FOEB...................... 14.16 3,100 16.0
Sulfur, LT.................................... 25.00 40 0.4
------- -------
Total Products.............................. 146,840 1,402.0
FEEDSTOCKS
Crude Oil..................................... 22.33 141,400 1,152.9
Toledo Vacuum Bottoms......................... 12.96 400 1.9
Toledo Low Purity C3=......................... 16.97 3,100 19.2
Purchased Reformate/Other..................... 25.38 1,300 12.0
------- -------
Total Feedstocks............................ 146,200 1,186.0
Gross Margin.................................. 4.05 216.0
</TABLE>
- --------
*Data source: BP
** Barrels per calendar day.

A-13
<PAGE>

TABLE 3

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1992 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline..................... 59.2 24.87 43,000 391.4
Conventional Midgrade 89.......................... 61.3 25.74 9,400 88.6
Conventional Premium 92........................... 63.6 26.71 8,600 84.1
Conventional Premium 93........................... 63.5 26.65 6,300 61.5
Conventional Regular 84 (Subgrade)................ 59.6 25.03 900 8.2
Blend Components.................................. 66.1 27.77 700 7.1
Jet A............................................. 59.2 24.88 17,900 163.1
Kerosene.......................................... 54.7 22.98 600 5.0
No. 2 HS Diesel................................... 57.3 24.05 13,700 120.6
No. 2 Diesel Supreme.............................. 56.8 23.84 13,700 119.5
Benzene........................................... 91.1 38.26 4,600 64.4
Toluene........................................... 75.2 31.59 700 8.1
Net Butane........................................ 4.9 2.05 500 0.4
Isobutane......................................... 46.6 19.57 3,900 27.9
Alky Feed......................................... 34.2 14.35 4,000 21.0
Mixed LPG......................................... 34.0 14.29 4,600 24.1
Propylene (Chemical Grade)........................ 33.8 14.20 4,500 23.4
FCC Feed (LS)..................................... 52.7 22.13 5,000 40.5
FCC Slurry Oil.................................... 11.48 1,100 4.6
Trolumen.......................................... 40.17 200 2.9
Coke (Anode Grade), FOEB.......................... 11.80 3,200 13.8
Sulfur, LT........................................ 25.00 40 0.4
------- -------
Total Products.................................. 147,140 1,280.6
FEEDSTOCKS
Crude Oil......................................... 21.27 140,500 1,094.1
Toledo Vacuum Bottoms............................. 12.08 600 2.6
Toledo Low Purity C3=............................. 12.32 3,100 14.0
Purchased Reformate/Other......................... 22.01 2,800 22.6
------- -------
Total Feedstocks................................ 147,040 1,133.3
Gross Margin...................................... 2.74 147.3
</TABLE>
- --------
*Data source: BP

A-14
<PAGE>

TABLE 4

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1993 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline................... 53.7 22.55 44,100 363.0
Conventional Midgrade 89........................ 54.5 22.88 6,600 55.3
Conventional Premium 92......................... 55.7 23.40 2,400 20.5
Conventional Premium 93......................... 57.1 23.97 14,500 126.6
Conventional Regular 84 (Subgrade).............. 42.6 17.88 1,700 11.1
Blend Components................................ 48.5 20.35 1,700 12.6
Jet A........................................... 55.5 23.31 18,500 157.4
Kerosene........................................ 56.4 23.69 800 6.9
No. 2 HS Diesel................................. 52.0 21.83 15,000 119.8
No. 2 Diesel Supreme............................ 54.0 22.69 10,600 88.1
Light Cycle Oil................................. 47.6 19.98 5,100 37.2
Benzene......................................... 80.0 33.58 3,800 46.7
Toluene......................................... 61.0 25.62 100 0.9
Net Butane...................................... 20.7 8.69 400 1.3
Isobutane....................................... 40.3 16.94 3,600 22.5
Alky Feed....................................... 32.0 13.43 3,700 18.3
Mixed LPG....................................... 33.1 13.90 4,500 23.0
Propylene (Chemical Grade)...................... 28.8 12.10 4,300 19.2
FCC Feed (LS)................................... 49.1 20.64 2,500 18.8
FCC Slurry Oil.................................. 10.04 1,240 4.5
Trolumen........................................ 32.20 300 3.5
Coke (Anode Grade), FOEB........................ 11.41 3,100 13.1
Sulfur, LT...................................... 25.00 40 0.4
------- -------
Total Products................................ 148,540 1,170.7
FEEDSTOCKS
Crude Oil....................................... 19.14 143,800 1,004.3
Toledo Vacuum Bottoms........................... 11.27 (200) (0.8)
Toledo Low Purity C3=........................... 10.86 2,900 11.5
Purchased Reformate/Other....................... 19.53 2,800 20.0
------- -------
Total Feedstocks.............................. 149,300 1,035.0
Gross Margin.................................... 2.49 135.7
</TABLE>
- --------
*Data Source: BP

A-15
<PAGE>

TABLE 5

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1994 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline..................... 51.4 21.58 32,400 255.2
Conventional Midgrade 89.......................... 48.4 20.31 1,100 8.1
Conventional Premium 92........................... 58.6 24.60 3,600 32.3
Conventional Premium 93........................... 56.5 23.74 16,800 145.6
Reformulated Regular.............................. 52.7 22.14 600 4.8
Reformulated Premium 93........................... 58.0 24.34 300 2.7
Conventional Regular 84 (Subgrade)................ 49.4 20.76 9,400 71.2
Blend Components.................................. 57.3 24.08 900 7.9
Jet A............................................. 56.9 23.90 13,000 113.4
Kerosene.......................................... 52.4 22.00 1,200 9.6
Water White (Kerosene)............................ 47.1 19.77 4,900 35.4
No. 2 HS Diesel................................... 49.0 20.59 13,100 98.5
No. 2 Diesel Supreme.............................. 50.3 21.14 5,600 43.2
Light Cycle Oil + Unfinished Diesel............... 45.9 19.29 6,800 47.9
Benzene........................................... 90.8 38.14 3,500 48.7
Toluene........................................... 73.2 30.76 500 5.6
Net Butane........................................ 22.8 9.58 1,100 3.8
Isobutane......................................... 36.3 15.26 3,000 16.7
Alky Feed......................................... 27.4 11.51 3,400 14.3
Mixed LPG......................................... 31.7 13.32 4,100 19.9
Propylene (Chemical Grade)........................ 39.3 16.50 4,600 27.7
FCC Feed (LS)..................................... 46.7 19.62 5,000 35.8
FCC Slurry Oil.................................... 9.28 1,200 4.0
Trolumen.......................................... 30.13 500 5.5
Coke (Anode Grade), FOEB.......................... 7.28 3,000 8.0
Sulfur, LT........................................ 25.00 40 0.4
------- -------
Total Products.................................. 139,640 1,066.2
FEEDSTOCKS
Crude Oil......................................... 17.83 135,100 879.2
Toledo Low Purity C3=............................. 14.12 3,200 16.5
Purchased Reformate/Other......................... 20.30 3,000 22.2
------- -------
Total Feedstocks................................ 141,300 917.9
Gross Margin...................................... 2.88 148.3
</TABLE>
- --------
*Data source: BP

A-16
<PAGE>

TABLE 6

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1995 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline................... 52.9 22.23 44,000 357.0
Conventional Premium 92......................... 57.5 24.17 5,900 52.0
Conventional Premium 93......................... 58.8 24.71 13,800 124.5
Reformulated Regular............................ 59.0 24.76 800 7.2
Reformulated Premium 93......................... 64.5 27.08 600 5.9
Conventional Regular 84 (Subgrade).............. 50.5 21.19 14,100 109.1
Blend Components................................ 35.0 14.70 (400) (2.1)
Jet A........................................... 52.7 22.14 16,600 134.1
Kerosene........................................ 53.9 22.62 900 7.4
Water White (Kerosene).......................... 47.6 19.98 5,900 43.0
No. 2 HS Diesel................................. 49.3 20.71 14,600 110.4
No. 2 Diesel Supreme............................ 50.7 21.29 5,200 40.4
Unfinished Diesel + Light Cycle Oil............. 46.4 19.49 7,700 54.8
Benzene......................................... 80.8 33.92 3,200 39.6
Toluene......................................... 72.0 30.23 600 6.6
Net Butane...................................... 24.8 10.40 900 3.4
Isobutane....................................... 40.3 16.94 3,500 21.6
Alky Feed....................................... 30.9 12.98 4,700 22.3
Mixed LPG....................................... 34.0 14.26 5,000 26.0
Propylene (Chemical Grade)...................... 69.3 29.10 5,900 62.7
FCC Feed (LS)................................... 47.0 19.72 4,400 31.7
FCC Slurry Oil.................................. 10.16 1,000 3.7
Trolumen........................................ 28.39 400 4.1
Coke (Anode Grade), FOEB........................ 8.99 3,000 9.8
Sulfur, LT...................................... 25.00 40 0.4
------- -------
Total Products................................ 162,340 1,275.6
FEEDSTOCKS
Crude Oil....................................... 19.22 154,600 1,084.7
Toledo Vac Bottoms.............................. 9.91 (200) (0.7)
Toledo Low Purity C3=........................... 22.51 4,000 32.9
Purchased Reformate/Other....................... 21.33 2,500 19.5
------- -------
Total Feedstocks.............................. 160,900 1,136.4
Gross Margin.................................... 2.37 139.2
</TABLE>
- --------
*Data Source: BP

A-17
<PAGE>

TABLE 7

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1996 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline................... 63.3 26.57 54,000 525.1
Conventional Premium 92......................... 66.0 27.72 2,100 21.3
Conventional Premium 93......................... 66.1 27.76 13,600 138.1
Reformulated Regular............................ 67.0 28.12 1,300 13.4
Reformulated Premium 93......................... 69.6 29.25 500 5.4
Conventional Regular 84 (Subgrade).............. 62.3 26.15 5,000 47.8
Blend Components................................ 61.6 25.88 (1,400) (13.3)
Jet A........................................... 65.2 27.38 17,200 172.4
Kerosene........................................ 65.2 27.38 600 6.0
Water White (Kerosene).......................... 59.2 24.86 3,800 34.6
No. 2 HS Diesel................................. 61.6 25.86 16,800 159.0
No. 2 Diesel Supreme............................ 62.6 26.29 5,600 53.9
Light Gas Oil (Unfinished Diesel)............... 57.8 24.27 5,000 44.4
Light Cycle Oil................................. 57.8 24.27 2,700 24.0
Benzene......................................... 86.7 36.41 2,000 26.6
Toluene......................................... 71.0 29.84 1,000 10.9
Net Butane...................................... 40.7 17.11 400 2.5
Isobutane....................................... 44.4 18.64 2,800 19.1
Alky Feed....................................... 41.5 17.45 4,000 25.5
Mixed LPG....................................... 43.9 18.43 4,400 29.7
Propylene (Chemical Grade)...................... 48.0 20.14 5,800 42.8
FCC Feed (LS)................................... 57.4 24.10 4,500 39.7
FCC Slurry Oil.................................. 13.48 1,300 6.4
Trolumen........................................ 35.35 400 5.2
Coke (Anode Grade), FOEB........................ 12.88 3,200 15.1
Sulfur, LT...................................... 25.00 40 0.4
------- -------
Total Products................................ 156,640 1,456.0
FEEDSTOCKS
Crude Oil....................................... 22.96 149,000 1,252.2
Toledo Vacuum Bottoms........................... 13.41 300 1.5
Toledo Low Purity C3=........................... 16.74 3,900 23.9
Purchased Reformate/Other....................... 28.15 2,100 21.6
------- -------
Total Feedstocks.............................. 155,300 1,299.2
Gross Margin.................................... 2.76 156.8
</TABLE>
- --------
* Data source: Clark

A-18
<PAGE>

TABLE 8

LIMA REFINERY

CALCULATED REFINERY GROSS MARGIN*

1997 OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline................... 60.7 25.49 55,000 511.7
Conventional Premium 92......................... 63.9 26.84 1,100 10.8
Conventional Premium 93......................... 64.0 26.89 13,400 131.5
Reformulated Regular............................ 64.4 27.03 2,000 19.7
Reformulated Premium 93......................... 67.6 28.38 600 6.2
Conventional Regular 84 (Subgrade).............. 59.7 25.07 11,400 104.3
Blend Components................................ 59.0 24.80 (900) (8.1)
Jet A........................................... 59.3 24.89 16,800 152.6
Kerosene........................................ 59.3 24.89 300 2.7
Water White (Kerosene).......................... 53.7 22.55 3,700 30.5
No. 2 HS Diesel................................. 56.0 23.53 20,100 172.6
No. 2 Diesel Supreme............................ 57.0 23.96 5,400 47.2
Light Gas Oil (Unfinished Diesel)............... 51.6 21.68 3,700 29.3
Light Cycle Oil................................. 51.6 21.68 4,000 31.7
Benzene......................................... 92.8 38.96 1,500 21.3
Toluene......................................... 76.0 31.90 200 2.3
Isobutane....................................... 40.3 16.91 3,300 20.4
Alky Feed....................................... 37.4 15.72 4,200 24.1
Mixed LPG....................................... 39.2 16.48 4,500 27.1
Propylene (Chemical Grade)...................... 43.3 18.19 6,000 39.8
FCC Feed (LS)................................... 53.9 22.65 2,000 16.5
FCC Slurry Oil.................................. 12.31 1,100 4.9
Trolumen........................................ 35.35 400 5.2
Coke (Anode Grade coke), FOEB................... 11.71 3,100 13.2
Sulfur, LT...................................... 25.00 40 0.4
------- -------
Total Products................................ 162,940 1,417.9
FEEDSTOCKS
Crude Oil....................................... 21.37 153,400 1,196.6
Toledo Vacuum Bottoms........................... 12.42 200 0.9
Toledo Low Purity C3=........................... 14.78 3,900 21.0
Purchased Butane................................ 15.38 1,100 6.2
Purchased Reformate/Other....................... 24.19 2,500 22.1
------- -------
Total Feedstocks.............................. 161,100 1,246.8
Gross Margin.................................... 2.91 171.1
</TABLE>
- --------
* Data source: Clark

A-19
<PAGE>

TABLE 9

LIMA REFINERY

HISTORIC CRUDE SLATE
(THOUSANDS OF BARRELS PER DAY)

<TABLE>
<CAPTION>
WT. %
(degrees)API SULFUR 1991 1992 1993 1994 1995 1996 1997 AVERAGE
------------ ------ ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WTI..................... 39.0 0.3 110.6 100.5 105.0 96.5 107.8 91.1 98.3 101.4
ANS..................... 27.6 1.1 5.4 5.2 5.6 8.0 5.3 7.1 4.6 5.9
LLS..................... 38.7 0.1 7.0 4.8 5.5 10.8 7.5 5.7 5.7 6.7
Eugene Island........... 34.1 0.7 0.0 0.5 0.8 1.8 1.5 2.4 3.5 1.5
West Texas Sour......... 34.2 1.3 0.0 0.0 0.0 0.2 0.6 0.2 0.3 0.2
Other Domestic.......... 37.5 0.3 5.8 0.5 1.2 0.1 2.2 1.8 2.9 2.1
Cusiana................. 36.3 0.3 0.0 3.9 6.6 6.6 1.1 1.8 4.0 3.4
Bonito Sour............. 30.0 1.0 0.0 0.0 0.0 0.2 0.0 0.6 2.4 0.5
Cabinda................. 32.0 0.2 0.6 3.6 6.7 6.3 15.4 24.5 22.6 11.4
Rabi.................... 34.3 0.1 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.1
Zaire................... 31.3 0.1 0.0 0.0 0.0 0.0 0.0 0.9 0.9 0.3
North Sea............... 38.2 0.4 9.4 12.4 7.8 2.6 4.6 2.4 1.0 5.7
Nigerian................ 30.4 0.2 2.6 9.1 5.2 2.4 8.6 10.0 7.2 6.4
----- ----- ----- ----- ----- ----- ----- -----
Total................. 141.3 140.5 143.8 135.1 154.6 149.0 153.4 145.5
API Gravity, (degrees).. 37.9 38.1 37.3 37.1 37.3 36.4 36.8 37.3
Sulfur, Wt. %........... 0.3 0.3 0.3 0.4 0.3 0.3 0.3 0.3
</TABLE>

A-20
<PAGE>

TABLE 10

LIMA REFINERY

HISTORIC UNIT OPERATING RATES

<TABLE>
<CAPTION>
AVERAGE
CAPACITY -------------------
MB/D 1995 1996 1997 MB/D % UTILIZATION
-------- ----- ----- ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C>
Crude Distillation............... 168.0 154.6 149.0 153.4 152.3 90.7
Coking........................... 22.5 15.5 17.0 18.5 17.0 75.6
FCC.............................. 36.0 34.6 32.9 35.4 34.3 95.3
Hydrocracking.................... 24.0 21.9 18.3 19.4 19.9 82.8
Naphtha HDS...................... 60.0 49.9 48.5 52.1 50.2 83.6
Catalytic Reforming.............. 54.0 48.4 38.9 45.0 44.1 81.7
Aromatics Extraction............. 25.5 21.3 17.6 18.6 19.2 76.7
C5/C6 Isomerization.............. 18.5 13.9 10.3 12.2 12.1 65.6
</TABLE>

A-21
<PAGE>

TABLE 11

LIMA REFINERY

HISTORIC CASH OPERATING COSTS
(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 AVERAGE
------ ------- ------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VARIABLE
Fuel.................... 6,337 10,064 8,393 6,678 8,372 17,300 16,735 10,554
Power................... 15,051 15,194 14,880 14,705 15,201 15,500 14,180 14,959
Catalyst................ 1,362 1,545 1,780 1,585 2,081 2,000 1,796 1,736
Other Variable.......... 5,735 6,057 6,192 6,602 7,505 6,500 6,470 6,437
------ ------- ------- ------- ------ ------- ------- -------
Total Variable........ 28,485 32,860 31,245 29,570 33,159 41,300 39,181 33,686
$/Barrel of Crude....... 0.55 0.64 0.59 0.60 0.59 0.76 0.70 0.63
FIXED
Turnaround Maintenance.. 2,082 3,508 5,814 30,094 908 5,900 1,653 7,137
Other Fixed............. 61,671 64,133 64,058 66,491 65,436 68,100 64,339 64,890
------ ------- ------- ------- ------ ------- ------- -------
Total Fixed........... 63,753 67,641 69,872 96,585 66,344 74,000 65,992 72,027
$/Barrel of Crude....... 1.24 1.32 1.33 1.96 1.18 1.36 1.18 1.36
TOTAL OPERATING COSTS 92,238 100,501 101,117 126,155 99,503 115,300 105,173 105,712
$/Barrel of Crude....... 1.79 1.95 1.93 2.56 1.76 2.12 1.88 1.99
</TABLE>

A-22
<PAGE>

TABLE 12

BP LIMA REFINERY

HISTORIC CAPITAL EXPENDITURES
(MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>
1991-95
-------------
1991 1992 1993 1994 1995 TOTAL AVERAGE
---- ---- ---- ---- ---- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
MAJOR PAYOUT PROJECTS
Refinery Automation..................... 2.0 8.4 2.7 0.1 13.2 2.6
Vacuum Tower Revamp..................... 0.2 5.0 1.1 6.3 1.3
Coke Drum Overhead Piping............... 1.1 1.1 0.2
Refinery Information System............. 0.1 0.1 0.0
Light Ends Optimization................. 0.5 0.5 0.1
Coker Unit Improvements................. 0.7 0.7 0.1
Conversion Unit Optimization............ 0.5 0.5 0.1
DHT Project............................. 0.8 0.8 0.2
Coker Furnace........................... 1.5 5.0 6.5 1.3
Multivariable Control................... 0.5 0.5 0.1
HPU C3 Recovery......................... 0.1 0.1 0.0
FCC Unsaturates Gas Plant............... 3.0 3.0 0.6
Gasoline Blender Upgrade................ 1.3 0.3 1.6 0.3
Low Pressure Reformer................... 0.1 0.1 0.0
Reformer Recycle Gas Dryer.............. 0.1 0.1 0.0
Crude Unit Debottleneck................. 0.8 0.8 0.2
FCC Reactor Cyclone Revisions........... 11.5 0.1 11.6 2.3
Trolumen Instrumentation Upgrade........ 1.1 1.1 0.2
Total Other Payout Projects............. 6.9 2.9 2.1 4.4 2.4 18.7 3.7
---- ---- ---- ---- ---- ----- ----
Subtotal Payout Projects.............. 8.9 13.3 11.7 24.5 8.9 67.3 13.5
NON-PAYOUT AND RELIABILITY PROJECTS
Tank Rationalizations................... 0.6 0.8 1.4 0.2 1.9 4.9 1.0
Power Boiler............................ 2.2 2.5 4.7 0.9
Coker Gas Compressor.................... 1.7 1.3 3.0 0.6
Total Other Projects.................... 0.8 0.4 0.1 0.6 1.5 3.4 0.7
---- ---- ---- ---- ---- ----- ----
Subtotal Reliability Projects......... 5.3 5.0 1.5 0.8 3.4 16.0 3.2
ENVIRONMENTAL PROJECTS
Benzene NESHAPs......................... 8.4 6.8 2.8 3.2 21.2 4.2
Oily Wastewater......................... 3.4 0.3 6.4 2.5 12.6 2.5
Firewater System........................ 1.8 0.8 2.6 0.5
Process Safety Management............... 0.2 0.1 0.3 0.1
East Area Flare Rectification........... 4.5 1.8 6.3 1.3
CO Boiler Seal Pot...................... 1.6 1.5 0.3
L5 Landfill Rectification............... 0.4 1.4 1.8 0.4
Total Other Projects.................... 3.7 1.3 0.7 1.1 1.1 7.9 1.6
---- ---- ---- ---- ---- ----- ----
Subtotal Environmental Projects....... 17.5 9.3 9.9 13.3 4.3 54.2 10.8
Total Capital Spending.............. 31.7 27.6 23.1 38.6 16.6 137.5 27.5
</TABLE>

A-23
<PAGE>

TABLE 13

TM&C PRICING BASIS

WTI AT $18/BARREL AND GULF COAST CRACK SPREAD AT $3/BARREL

<TABLE>
<CAPTION>
LIMA REFINERY
---------------------------------
TRANSPORTATION/ REFINERY
MARKET(1) FEES PRICE
------------- ------------------ -------------
c/GAL. $/BBL. c/GAL. $/BBL. c/GAL. $/BBL. REMARKS
------ ------ ------- -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
CRUDES
WTI (Midland)........... 17.85 1.00 18.85 WTI (Cushing)--$0.15/bbl.
LLS (St. James)......... 18.20 0.91 19.11 WTI (Cushing) + $0.20/bbl.
Eugene Island
(St. James)............ 17.00 0.91 17.91 WTI (Cushing)--$1.00/bbl.
Angola Cabinda (FOB).... 15.50 2.70 18.20 WTI (Cushing)--$2.50/bbl.
OTHER FEEDSTOCKS
Normal Butane........... 37.3 15.68 5.5 2.31 42.8 17.99 Mont Belvieu + 5.5c/gal.
Toledo Low Purity
Propylene.............. 34.8 14.63 Formula (per proposed BP agreement)
Natural Gas ($/FOEB).... 12.60 4.00 16.60 Gulf Coast + $4.00/FOEB
PRODUCTS
Conventional
Regular 87............. 51.3 21.56 2.5 1.05 53.8 22.61 Gulf Coast + 2.5c/gal.
Conventional Regular 84
(Subgrade)............. 51.8 21.77 Conventional regular--2.0c/gal.
Conv. Premium 93........ 55.3 23.24 2.5 1.05 57.8 24.29 Conventional regular + 4.0c/gal.
Jet A-54................ 49.6 20.83 2.5 1.05 52.1 21.88 Gulf Coast + 2.5c/gal.
Kerosene................ 53.1 22.30 Jet A-54 + 1.0c/gal.
No. 2 HS Diesel......... 47.3 19.88 2.5 1.05 49.8 20.93 Gulf Coast + 2.5c/gal.
No. 2 HS Diesel
Incremental............ 45.8 19.25 No. 2 diesel HS--4.0c/gal.
No. 2 HS Diesel
Supreme................ 50.8 21.35 No. 2 diesel HS + 1.0c/gal.
Benzene................. 93.3 39.20 (10.0) (4.20) 83.3 35.00 Gulf Coast--10.0c/gal. (transportation)
Toluene................. 77.3 32.48 (10.0) (4.20) 67.3 28.28 Gulf Coast--10.0c/gal. (transportation)
Normal Butane........... 37.3 15.68 37.3 15.68 Mont Belvieu
Isobutane............... 40.3 16.94 40.3 16.94 Mont Belvieu
Alky Feed............... 37.3 15.68 37.3 15.68 Mont Belvieu normal butane
Mixed LPG............... 31.3 13.16 3.0 1.26 34.3 14.42 Mont Belvieu propane + 3.0c/gal.
(based on Ferrelgas contract)
Propylene (Chemical Gulf Coast--27.4c/gal. (per proposed
Grade);................ 70.0 29.40 (27.4) (11.51) 42.6 17.89 BP agreement)
FCCU Slurry Oil......... 9.00 Gulf Coast No. 6 (3%)--$2.00/bbl.
(historical relationship)
Trolumen................ 31.00 Gulf Coast No. 6 (3%) + $20.00/bbl.
(historical relationship)
Coke (Anode Grade),
$/FOEB................. 12.00 Equivalent to $60 per ton
Sulfur, $/T............. 28.50 Historical average
</TABLE>
- -------
(1) Product and other feedstock market prices are Gulf Coast spot lows.

A-24
<PAGE>

TABLE 14

LIMA REFINERY PROJECTED OPERATION

FEEDSTOCK AND PRODUCT LIMITATIONS

<TABLE>
<CAPTION>
TYPE OF
MB/D LIMIT
----- -------
<S> <C> <C>
CRUDES
WTI............................................................... 115.0 Fixed
Eugene Island..................................................... 10.0 Fixed
Angola Cabinda.................................................... 30.0 Fixed
OTHER FEEDSTOCKS
Normal Butane..................................................... -- Open
Toledo Low Purity Propylene....................................... 3.9 Fixed
Natural Gas....................................................... -- Open
PRODUCTS
Conventional Regular 87........................................... -- Open
Conventional Regular 84 (Subgrade)................................ 12.0 Fixed
Conventional Premium 93........................................... 17.0 Maximum
Jet A-54.......................................................... 20.0 Maximum
Kerosene.......................................................... 0.8 Maximum
No. 2 HS Diesel................................................... 18.0 Maximum
No. 2 HS Diesel Incremental....................................... -- Open
No. 2 HS Diesel Supreme........................................... 5.0 Maximum
Benzene........................................................... -- Open
Toluene........................................................... 1.0 Maximum
Normal Butane..................................................... -- Open
Isobutane......................................................... -- Open
Alky Feed......................................................... -- Open
Mixed LPG......................................................... -- Open
Propylene (Chemical Grade)........................................ -- Open
FCCU Slurry Oil................................................... -- Open
Trolumen.......................................................... 0.5 Maximum
Coke (Anode Grade)................................................ -- Open
Sulfur............................................................ -- Open
</TABLE>

A-25
<PAGE>

TABLE 15

LIMA REFINERY

ESTIMATED REFINERY GROSS MARGIN
TM&C PROJECTED OPERATIONS

<TABLE>
<CAPTION>
c/GAL. $/BBL. BPCD $MM
------ ------ ------- -------
<S> <C> <C> <C> <C>
PRODUCTS
Conventional Regular Gasoline..................... 53.8 22.61 53,967 445.4
Conventional Premium 93........................... 57.8 24.29 17,000 150.7
Conventional Regular Subgrade (84)................ 51.8 21.77 12,000 95.4
Jet A............................................. 52.1 21.88 20,000 159.7
Kerosene.......................................... 53.1 22.30 800 6.5
No. 2 HS Diesel................................... 49.8 20.93 18,000 137.5
No. 2 HS Diesel Incremental....................... 45.8 19.25 5,166 36.3
No. 2 Diesel Supreme.............................. 50.8 21.35 5,000 39.0
Benzene........................................... 70.3 35.00 1,635 20.9
Toluene........................................... 67.3 28.28 1,000 10.3
Normal Butane..................................... 37.3 15.68 638 3.7
Isobutane......................................... 40.3 16.94 4,742 29.3
Alky Feed......................................... 37.3 15.68 4,059 23.2
Mixed LPG......................................... 34.3 14.42 5,157 27.1
Propylene (Chemical Grade)........................ 42.6 17.89 5,433 35.5
FCC Slurry Oil.................................... 9.00 1,064 3.5
Trolumen.......................................... 31.00 500 5.7
Coke (Anode Grade), FOEB.......................... 12.00 3,394 14.9
Sulfur, LT........................................ 28.50 39 0.4
------- -------
Total Liquid Products........................... 159,555 1,244.9
FEEDSTOCKS
WTI............................................... 18.85 115,000 791.2
Eugene Island..................................... 17.91 10,000 65.4
Angola Cabinda.................................... 18.20 30,000 199.3
Toledo Low Purity C3=............................. 14.63 3,900 20.8
------- -------
Total Feedstocks................................ 158,900 1,076.7
Gross Margin...................................... 2.84 168.2
</TABLE>

A-26
<PAGE>

TABLE 16

LIMA REFINERY

TM&C PROJECTED UNIT OPERATING RATES

<TABLE>
<CAPTION>
%
MB/D UTILIZATION
----- -----------
<S> <C> <C>
Crude Distillation............................................ 155.0 90.7
Coking........................................................ 20.3 88.7
FCC........................................................... 35.0 95.6
Hydrocracking................................................. 22.5 92.2
Naphtha HDS................................................... 51.7 84.8
Catalytic Reforming........................................... 52.0 94.7
Aromatics Extraction.......................................... 16.6 65.3
C5/C6 Isomerization........................................... 18.0 95.7
</TABLE>

A-27
<PAGE>

TABLE 17

LIMA REFINERY

FEEDSTOCK AND PRODUCT VOLUMES
HISTORIC VS. TM&C PROJECTED CASE OPERATIONS

<TABLE>
<CAPTION>
VOL. % OF
FEEDSTOCKS
------------------
AVERAGE TM&C
HISTORIC PROJECTED
1991-97 CASE
-------- ---------
<S> <C> <C>
PRODUCT YIELDS
Gasolines.................................................... 48.2 52.2
Middle Distillates........................................... 32.4 30.8
LPGs......................................................... 11.3 12.6
Benzene/Toluene.............................................. 2.6 1.7
Coke......................................................... 2.0 2.1
FCC Feed/Other............................................... 3.6 1.0
----- -----
Total...................................................... 100.1 100.4
OTHER PARAMETERS
% Premium Gasoline........................................... 23.3 20.5
% WTI in Crude Slate......................................... 69.7 74.2
Crude API gravity............................................ 37.3 37.3
Crude Sulfur, Wt. %.......................................... 0.3 0.3
</TABLE>

A-28
<PAGE>

TABLE 18

LIMA REFINERY PROJECTED OPERATION

OPERATING COSTS SUMMARY

<TABLE>
<CAPTION>
$/BBL.
FOEB/D $MM/YEAR CRUDE
------ -------- ------
<S> <C> <C> <C>
VARIABLE COSTS
Fuel
Consumed............................................... 11,700 -- --
Produced............................................... 9,700 -- --
Net Purchase........................................... 2,000 12.2 0.22
Power.................................................... 15.0 0.26
Catalyst................................................. -- 2.0 0.04
Other Variable........................................... -- 7.0 0.12
----- ----
Total................................................ -- 36.2 0.64
FIXED COSTS.............................................. -- 70.0 1.24
----- ----
TOTAL OPERATING COSTS.................................... -- 106.2 1.88
</TABLE>
- --------
Notes:
Fuel cost assumed @ $16.70 per FOEB ($2.65 per MMBTU).
Power cost assumed @ $0.03 per KWH.
Fixed Costs estimate includes turnaround maintenance amortization of $7
million.

A-29
<PAGE>

TABLE 19

LIMA REFINERY PROJECTED OPERATION

ESTIMATED EBITD
(MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>
1999(1) 2000 2001 2002 2003
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Product Revenues....................... 1,142.6 1,244.9 1,244.9 1,244.9 1,244.9
Cost of Sales.......................... 988.2 1,076.7 1,076.7 1,076.7 1,076.7
Refinery Gross Margin.................. 154.4 168.2 168.2 168.2 168.2
Refinery Operating Expenses(2)......... 103.2 106.2 106.2 106.2 106.2
Refinery Net Margin.................... 51.2 62.0 62.0 62.0 62.0
Refinery G&A(3)........................ 1.2 1.2 1.2 1.2 1.2
EBITD.................................. 50.0 60.8 60.8 60.8 60.8
</TABLE>
- --------
(1) 1999 includes a 30-day plant-wide turnaround.
(2)See Table 18.
(3)Estimate by Clark.

A-30
<PAGE>

TABLE 20

LIMA REFINERY

BACKCAST COMPARISONS(1)
(MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>
REFINERY
ACKCASTB PRODUCT COST OF GROSS
PERIOD REVENUES SALES MARGIN
- -------- -------- ------- --------
<S> <C> <C> <C>
1991................................................. 1,482.8 1,264.2 218.6
1992................................................. 1,384.4 1,216.5 167.9
1993................................................. 1,245.0 1,092.6 152.4
1994................................................. 1,183.2 1,035.3 147.9
1995................................................. 1,253.9 1,113.6 140.3
1996................................................. 1,453.5 1,316.1 137.4
1997................................................. 1,403.8 1,218.0 185.8
Average.............................................. 1,343.8 1,179.5 164.3
BP Actual Gross Margin (1991-97 Average)............. 159.2
TM&C Projected Gross Margin.......................... 168.2
</TABLE>
- --------
(1) TM&C projected refinery yields with actual historical prices and
relationships.

A-31
<PAGE>

TABLE 21

LIMA REFINERY

ESTIMATED GROSS MARGIN SENSITIVITIES
(MILLION OF DOLLARS PER YEAR)

<TABLE>
<CAPTION>
DELTA GROSS MARGIN
------------------
<S> <C>
. Change 3:2:1 Crack Spread By $0.25 Per Barrel.............. +/-12.1
. Increase Crude Throughput By 10,000 BPCD................... +10.4
. Do Not Make Trolumen....................................... -3.9
. Change Premium Spread By 1.0c Per Gallon................... +/-2.6
. Change Anode Coke Price By $10/Ton......................... +/-2.5
. Change Alky Feed Price by $1.00 Per Barrel................. +/-1.5
. Change Gasoline/Diesel Spread By 1.0c Per Gallon........... +/-0.6
</TABLE>

A-32
<PAGE>

FIGURE 1
WTI 3:2:1 GULF COAST CRACK SPREAD
(DOLLARS PER BARREL)

91 4.15

92 3.25

93 2.90

94 2.59

95 2.38

96 2.71

97 3.24

TM&C 3.00

A-33
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Section 145 of the Delaware General Corporation Law and Article Six of the
Registrant's Bylaws provide for indemnification of the Registrant's directors
and officers in a variety of circumstances, which may include liabilities
under the Securities Act of 1933, as amended.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

A list of exhibits is set forth in the Exhibit Index appearing elsewhere
in this Registration Statement and is incorporated herein by reference.

(b) FINANCIAL STATEMENT SCHEDULES*

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Clark Refining & Marketing, Inc.
Report of Independent Accountants...................................... F-2
</TABLE>

- --------
*Schedules other than those listed above have been omitted because of the
absence of the conditions under which they are required or because the
required information is presented in the financial statements or the notes
thereto.

ITEM 22. UNDERTAKINGS.

(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-1
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to the Registration Statement
on Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Clayton, State of Missouri on October 16, 1998.

Clark Refining & Marketing, Inc.

/s/ Maura J. Clark
By: _________________________________

Executive Vice President--
Corporate Development and Chief
Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the
following persons in the capacities indicated and on October 16, 1998.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
*
- -------------------------------------------
William C. Rusnack President, Chief Executive Officer and
Chief Operating Officer; Director
(Principal Executive Officer)
/s/ Maura J. Clark
- -------------------------------------------
Maura J. Clark Executive Vice President--Corporate
Development and Chief Financial Officer
(Principal Financial Officer)
*
- -------------------------------------------
Dennis R. Eichholz Controller and Treasurer
(Principal Accounting Officer)
*
- -------------------------------------------
Marshall A. Cohen Director; Chairman of the Board
*
- -------------------------------------------
David A. Stockman Director
*
- -------------------------------------------
Glenn H. Hutchins Director
*
- -------------------------------------------
David I. Foley Director
</TABLE>

/s/ Maura J. Clark

*By:____________________________

Attorney-in-fact

II-2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ----------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of Clark Refining &
Marketing, Inc. (Incorporated by reference to Exhibit
3.1 filed with Clark Oil & Refining Corporation
Registration Statement on Form S-1 (Registration No. 33-
28146))
3.2 Certificate of Amendment to Certificate of Incorporation
of Clark Refining & Marketing, Inc. (Incorporated by
reference to Exhibit 3.2 filed with Clark Oil & Refining
Corporation Annual Report on Form 10-K (Registration No.
1-11392))
3.3 By-laws of Clark Refining & Marketing, Inc. (Incorporated
by reference to Exhibit 3.2 filed with Clark Oil &
Refining Corporation Registration Statement on Form S-1
(Registration No. 33-28146))
*4.1 Indenture dated as of August 10, 1998 between Clark
Refining & Marketing, Inc. and Bankers Trust Company, as
Trustee, including the form of the 8 5/8% Senior Notes
due 2008
4.2 Indenture between Clark Refining & Marketing, Inc.
(formerly Clark Oil & Refining Corporation) and
NationsBank of Virginia, N.A. including the form of 9
1/2% Senior Notes due 2004 (Incorporated by reference to
Exhibit 4.1 filed with Clark Oil & Refining Corporation
Registration Statement on Form S-1 (File No. 33-50748))
4.3 Supplemental Indenture between Clark Refining &
Marketing, Inc. and NationsBank of Virginia, N.A., dated
February 17, 1995 (Incorporated by reference to Exhibit
4.6 filed with Clark USA, Inc. Annual Report on Form 10-
K for the year ended December 31, 1994 (File No. 33-
59144))
4.4 Indenture between Clark Refining & Marketing, Inc. and
Bankers Trust Company, dated as of November 21, 1997,
including the form of 8 3/8% Senior Notes due 2007
(Incorporated by reference to Exhibit 4.5 filed with
Clark Refining & Marketing, Inc. Registration Statement
on Form S-4 (Registration No. 333-42431))
4.5 Indenture between Clark Refining & Marketing, Inc. and
Marine Midland Bank, dated as of November 21, 1997,
including the form of 8 7/8% Senior Subordinated Notes
due 2007 (Incorporated by reference to Exhibit 4.6 filed
with Clark Refining & Marketing, Inc. Registration
Statement on Form S-4 (Registration No. 333-42431))
4.6 Supplemental Indenture between Clark Refining &
Marketing, Inc. and Marine Midland Bank, dated as of
November 21, 1997 (Incorporated by reference to Exhibit
6.1 filed with Clark Refining & Marketing, Inc.
Registration Statement on Form S-4 (Registration No.
333-42431))
*4.7 Exchange and Registration Rights Agreement, dated August
10, 1998, between Clark Refining & Marketing, Inc. and
Goldman, Sachs & Co., J.P. Morgan Securities, Inc.,
Salomon Brothers Inc and Wasserstein Perella Securities,
Inc.
*4.8 Form of 8 5/8% New Senior Notes due 2008 (included in
Exhibit 4.1)
*5.1 Opinion of Simpson Thacher & Bartlett as to the legality
of the notes
*8.1 Opinion of Simpson Thacher & Bartlett as to certain tax
matters
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ----------
<C> <S> <C>
10.10 Credit Agreement, dated as of September 25, 1997, among
Clark Refining & Marketing, Inc., Bankers Trust
Company, as Administrative Agent, The Toronto-Dominion
Bank, as Syndication Agent, BankBoston, N.A., as
Documentation Agent, and the other financial
institutions party thereto. (Incorporated by reference
to Exhibit 10.10 filed with Clark Refining & Marketing,
Inc. Current Report on Form 8-K, dated October 1, 1997
(File No. 1-11392))
10.11 Amendment No. 1 to Credit Agreement, dated as of October
29, 1997, among Clark Refining & Marketing, Inc.,
Bankers Trust Company, as Administrative Agent and
Collateral Agent, The Toronto-Dominion Bank, as
Syndication Agent, and BankBoston, N.A., as
Documentation Agent, and the other financial
institutions party thereto (incorporated by reference
to Exhibit 10.11 filed with Clark Refining & Marketing,
Inc. Registration Statement on Form S-4 (Registration
No. 333-42431))
10.12 Amendment No. 2 to Credit Agreement, dated as of
November 7, 1997, among Clark Refining & Marketing,
Inc., Bankers Trust Company, as Administrative Agent
and Collateral Agent, The Toronto-Dominion Bank, as
Syndication Agent, and BankBoston, N.A., as
Documentation Agent, and the other financial
institutions party thereto (incorporated by reference
to Exhibit 10.12 filed with Clark Refining & Marketing,
Inc. Registration Statement on Form S-4 (Registration
No. 333-42431))
*10.13 Amendment No. 3 to Credit Agreement, dated as of July
24, 1998, among Clark Refining & Marketing, Inc.,
Bankers Trust Company, as Administrative Agent and
Collateral Agent, The Toronto-Dominion Bank, as
Syndication Agent, and BankBoston, N.A., as
Documentation Agent, and the other financial
institutions party thereto.
**10.131 Amendment No. 4 to Credit Agreement, dated as of October
2, 1998, among Clark Refining & Marketing, Inc.,
Bankers Trust Company, as Administrative Agent and
Collateral Agent, The Toronto-Dominion Bank, as
Syndication Agent, and BankBoston, N.A., as
Documentation Agent, and the other financial
institutions party thereto.
10.14 Credit Agreement, dated as of November 21, 1997, among
Clark Refining & Marketing, Inc., Goldman, Sachs Credit
Partners L.P., as Arranger and Syndication Agent, and
State Street Bank and Trust Company of Missouri, N.A.,
as Payment Agent, the financial institutions listed on
the signature pages thereof, and Goldman Sachs Credit
Partners, as Administrative Agent (Incorporated by
reference to Exhibit 10.13 filed with Clark Refining &
Marketing, Inc. Registration Statement on Form S-4
(Registration No. 333-42431))
*10.15 First Amended and Restated Credit Agreement, dated as of
August 10, 1998, among Clark Refining & Marketing,
Inc., as Borrower, Goldman Sachs Credit Partners L.P.,
as Arranger, Syndication Agent and Administrative
Agent, and State Street Bank & Trust Company of
Missouri, N.A., as Paying Agent
10.20 Clark Refining & Marketing, Inc. Stock Option Plan
(Incorporated by reference to Exhibit 10.5 filed with
Clark Registration Statement on Form S-1 (Registration
No. 33-43358))
10.21 Clark Refining & Marketing, Inc. Savings Plan, as
amended and restated effective as of October 1, 1989
(Incorporated by reference to Exhibit 10.6 filed with
Clark Oil & Refining Corporation Annual Report on Form
10-K for the year ended December 31, 1989 (Commission
File No. 1-11392))
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ----------
<C> <S> <C>
10.22 Employment Agreement of Paul D. Melnuk (Incorporated by
reference to Exhibit 10.2 filed with Clark Refining &
Marketing, Inc. Current Report on Form 8-K, dated
October 1, 1997 (File No. 1-11392))
**10.23 Employment Agreement of William C. Rusnack
10.24 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Bradley D.
Aldrich (Incorporated by reference to Exhibit 10.23
filed with Clark Refining & Marketing, Inc. Registration
Statement on Form S-4 (Registration No. 333-42431))
10.25 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Brandon K.
Barnholt (Incorporated by reference to Exhibit 10.24
filed with Clark Refining & Marketing, Inc. Registration
Statement on Form S-4 (Registration No. 333-42431))
10.26 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Maura J.
Clark (Incorporated by reference to Exhibit 10.25 filed
with Clark Refining & Marketing, Inc. Registration
Statement on Form S-4 (Registration No. 333-42431))
10.27 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Edward J.
Stiften (Incorporated by reference to Exhibit 10.26
filed with Clark Refining & Marketing, Inc. Registration
Statement on Form S-4 (Registration No. 333-42431))
10.30 Amended and Restated Asset Sale Agreement, dated as of
August 16, 1994 between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.3 filed with Clark USA, Inc. Current
Report on Form 8-K, dated February 27, 1995
(Registration No. 33-59144))
10.31 Chemical Facility Lease with Option to Purchase, dated as
of August 17, 1994 between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.2 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.32 Sublease of Chemical Facility Lease, dated as of August
16, 1994, between Chevron U.S.A. Inc. and Clark Refining
& Marketing, Inc., (Incorporated by reference to Exhibit
10.9.3 filed with Clark USA, Inc. Registration Statement
on Form S-1 (Registration No. 33-84192))
10.33 PADC Facility Lease with Option to Purchase, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.4 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.34 Supply Agreement for the Chemical Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.5 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.35 Services Agreement for the Chemical Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.6 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.36 Supply Agreement for the PADC Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.7 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ----------
<C> <S> <C>
10.37 Services Agreement for the PADC Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc. (Incorporated by reference to
Exhibit 10.9.8 filed with Clark USA, Inc. Registration
Statement on Form S-1 (Registration No. 33-84192))
10.60 Clark Refining & Marketing, Inc. Stock Option Plan
(Incorporated by reference to Exhibit 10.5 filed with
Clark Registration Statement on Form S-1 (Registration
No. 33-43358))
10.61 Clark Refining & Marketing, Inc. Savings Plan, as amended
and restated effective as of October 1, 1989
(Incorporated by reference to Exhibit 10.6 filed with
Clark Oil & Refining Corporation Annual Report on Form
10-K for the year ended December 31, 1989 (Commission
File No. 1-11392))
10.70 Stock Purchase and Redemption Agreement, dated as of
December 30, 1992, among AOC Limited Partnership, P.
Anthony Novelly, Samuel R. Goldstein, G & N Investments,
Inc., TrizecHahn Corporation, AOC Holdings, Inc. and
Clark Oil & Refining Corporation (Incorporated by
reference to Exhibit 10.11 filed with Clark R & M
Holdings, Inc. Registration Statement on Form S-4 (File
No. 33-59144))
10.80 Agreement for the Purchase and Sale of Lima Oil Refinery,
dated as of July 1, 1998 between BP Exploration & Oil
Inc., The Standard Oil Company, BP Oil Pipeline Company,
BP Chemicals Inc. and Clark Refining & Marketing, Inc.
(Incorporated by reference to Exhibit 2.1 filed with
Clark Refining & Marketing, Inc. Current Report on Form
8-K, dated August 21, 1998 (File No. 1-11392))
10.81 Letter Amendment No. 1, dated August 10, 1998, to
Agreement for Purchase and Sale of Lima Oil Refinery
dated July 1, 1998 (Incorporated by reference to Exhibit
2.2 filed with Clark Refining & Marketing, Inc. Current
Report on Form 8-K, dated August 21, 1998 (File No. 1-
11392))
*12.1 Computation of Ratio of Earnings to Fixed Charges
*15.1 Awareness Letter of Deloitte & Touche LLP
*21.1 Subsidiaries of the Company
**23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Simpson Thacher & Bartlett (included in
Exhibit 5.1)
**23.3 Consent of Deloitte & Touche LLP
**23.4 Consent of Turner, Mason & Company
24.1 Power of Attorney (included on signature page)
*25.1 Statement of Eligibility and Qualification on Form T-1 of
Bankers Trust Company
*99.1 Form of Letter of Transmittal from Clark Refining &
Marketing, Inc. to its noteholders relating to the
exchange offer
*99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- --------

*Previously filed

**Filed herewith

II-6

<PAGE>

CLARK REFINING & MARKETING, INC.

AMENDMENT NO. 4
TO CREDIT AGREEMENT

This AMENDMENT NO. 4 (the "Amendment") is dated as of October 2, 1998
and entered into by and among Clark Refining & Marketing, Inc., a Delaware
corporation (the "Company"), Bankers Trust Company, a New York Banking
corporation, as Administrative Agent and Collateral Agent, The Toronto-Dominion
Bank, a Canadian chartered bank, as Syndication Agent, and BankBoston, N.A., a
national banking association, as Documentation Agent, and the other financial
institutions party hereto (the "Banks"). This Amendment amends the Credit
Agreement (as amended, amended and restated, supplemented or otherwise
modified, the "Credit Agreement") dated as of September 25, 1997 by and among
the parties hereto. Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Credit Agreement.

RECITALS

WHEREAS, the parties hereto entered into the Credit Agreement, which
provides for a loan facility to the Company;

WHEREAS, the parties hereto desire to make certain amendments to the
Credit Agreement as set forth below.

NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows;

Article I

AMENDMENTS TO THE CREDIT AGREEMENT

1.01 Amendments to Section 1.01 of the Credit Agreement.

(a) The definition of "Borrowing Base" shall be amended by deleting
clauses (e) and (f) in their entirety and the following clauses (e) and (f)
shall be inserted in lieu thereof:

"(e) 80% of Eligible Petroleum Inventory,

(f) 80% of Eligible Petroleum Inventory-Not-Received, and".

(b) The definition of "Facility Expiry Date" shall be amended by deleting
the date "December 31, 1999" and inserting the date "December 31, 2000" in lieu
thereof.

"Year 2000 Compliant" means, with respect to all Information Systems
and Equipment, that all such systems and equipment accurately
process, in all material respects date data (including, but not
limited to, calculating, comparing and sequencing), before, during
and after the year 2000, as well as same and multi-century dates, or
between the years 1999 and 2000, taking into account all leap years,
including the fact that the year 2000 is a leap year, and further,
that when used in combination with, or interfacing with, other
Information Systems and Equipment, shall accurately accept, release
and exchange date data, and shall in all material respects continue
to function in the same manner as it performs today and shall not
otherwise impair the accuracy or functionality of Information Systems
and Equipment.

"Information Systems and Equipment" means all computer hardware,
firmware and software, as well as other information processing
systems, or any equipment containing embedded microchips, whether
directly owned, licensed, leased, operated or otherwise controlled by
the Company or any of its Subsidiaries, including through third-party
service providers, and which, in whole or in part, are used,
operated, relied upon, or integral to, the Company's or any of its
Subsidiaries' conduct of their business.

1.02 Amendment to Section 2.01 of the Credit Agreement.

(a) Section 2.01. shall be amended by inserting the following sentence at
the end of the first paragraph thereof:

"Notwithstanding anything herein to the contrary, the maximum
Effective Amount of loans permitted to be outstanding at any time
hereunder may not be increased to an amount greater than $200,000,000
without the written consent of all Banks and the Company, and acknowledged
by the Administrative Agent."

1.03 Amendment to Section 6.24 of the Credit Agreement.

(a) Section 6.24 shall be amended by deleting it in its entirety and
inserting the following in lieu thereof:

6.24. Holdings Note Indenture, 9-1/2% Note Indenture and Floating
and Fixed Rate Note Indentures and 1998 Floating and Fixed Rate Note
Indentures. The Indebtedness to be incurred by the Company under
this Agreement is (i) "Permitted Indebtedness" under the Floating and
Fixed Rate Note Indentures pursuant to the definition of such term
contained therein and "Senior Debt"under the Floating and Fixed Rate
Note Indenture described in clause (ii) of the definition of Floating
and Fixed Rate Note Indentures pursuant to the definition of such
term contained therein, (ii) "Permitted Indebtedness" under the 1998
Floating and Fixed Rate Note Indentures pursuant to the definition of
such term contained therein, and (iii) "Permitted Indebtedness" under
the 9-1/2% Note Indenture pursuant to clause (ii) of the definition
of such term contained in the 9-1/2% Note Indenture as this Agreement
constitutes a refinancing, renewal, extension, refunding or
replacement of the Existing Credit Agreement (which constitutes the
"Credit Agreement" as defined in the 9-1/2% Note Indenture). The
Loan Documents, when executed and delivered by the parties thereto,
are the "Credit Agreement" as such term is used in clause (b) of
Section 1016 of the 9-1/2% Note Indenture. The execution, delivery
and performance of the Loan Documents and the provisions contained
herein and therein do not contravene or conflict with,

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<PAGE>

result in a breach or violation of, or constitute a default under any
of the terms, conditions or provisions of the Holdings Note
Indenture, the Holdings Notes, the 9-1/2% Note Indenture, the 9-1/2%
Notes, the Floating and Fixed Rate Note Indentures, the Floating and
Fixed Rate Notes, the 1998 Floating and Fixed Rate Note Indentures or
the 1998 Floating and Fixed Rate Notes.

1.04 Amendment to Article VI of the Credit Agreement. Article VI of
the Credit Agreement shall be amended by inserting the following Section 6.26
at the end thereof:

6.26 Year 2000 Compliance. All Information Systems and Equipment
are either Year 2000 Compliant, or any reprogramming, remediation, or any
other corrective action, including the internal testing of all such
Information Systems and Equipment, will be completed by September 30, 1999
except where the failure to be so completed would not have a Material
Adverse Effect. Further, to the extent that such reprogramming/remediation
and testing action is required, the cost thereof, as well as the cost of
the reasonably foreseeable consequences of failure to become Year 2000
Compliant, to the Borrower and its Subsidiaries (including, without
limitation, reprogramming errors and the failure of other systems or
equipment) will not result in an Event of Default or a Material Adverse
Effect.

1.05 Amendment to Article VII of the Credit Agreement. Article VII
of the Credit Agreement shall be amended by inserting the following Section
7.16 at the end thereof:

7.16 Year 2000 Compliance. The Company shall ensure that its
Information Systems and Equipment are, at all times after January 1,
1999, Year 2000 Compliant, except insofar as the failure to do so
will not result in a Material Adverse Effect, and shall notify the
Administrative Agent and the Banks promptly upon detecting any
failure of the Information Systems and Equipment to be Year 2000
Compliant if such failure would reasonably be expected to have a
Material Adverse Effect.

1.06 Amendments to Section 11.01 of the Credit Agreement.

(a) Section 11.01 shall be amended by deleting clause (a) in its entirety
and substituting "(a) intentionally omitted" in lieu thereof.

(b) Section 11.01 shall be further amended by inserting, at the beginning
of the second proviso thereto, the following clause (i) and by re-lettering
clauses (i) through (iv) thereto accordingly:

"(i) no amendment, waiver or consent shall increase or extend the
Commitment of any Bank (or reinstate any Commitment terminated
pursuant to Section 9.02(a)) unless such amendment, waiver or consent
is in writing and signed by such Bank"

1.07 Replacement of Schedule 1.01(a). Schedule 1.01(a) attached
hereto shall be attached to the Credit Agreement as Schedule 1.01(a)
(Commitments) to the Credit Agreement and shall replace the existing Schedule
1.01(a).

1.08 Adjustments of Commitments. Each Bank's participation in
letters of credit under the Credit Agreement shall be automatically adjusted
such that their participation shall be in accordance with their pro rata
commitments as reflected on Schedule 1.01(a) (as amended hereby) to the Credit
Agreement.

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<PAGE>

Article II

EFFECTIVENESS OF AMENDMENTS

This Amendment shall become effective on the opening of business in
New York on the Business Day (the "Effective Date") on which the Administrative
Agent has notified the Company and the Banks that the Administrative Agent has
executed a counterpart signature page of this Amendment, has received executed
counterpart signature pages of this Amendment from the Company and the Majority
Banks, and upon the satisfaction of the following conditions precedent and the
prior receipt by the Administrative Agent of all of the following (and in the
case of any agreements, documents, opinions and certificates, in sufficient
copies for the Administrative Agent and each Bank) dated the Effective Date or
such other date satisfactory to the Administrative Agent in form and substance
satisfactory to the Administrative Agent:

(a) Amendment and Notes. This Amendment and Notes drawn to the order of
each requesting Bank in an amount of such requesting Bank's new Commitment as
set forth in Schedule 1.01(a) hereto, executed by each party thereto;

(b) Payment of Fees and Expenses. Evidence of payment by the Company of
all accrued and unpaid Fees and Expenses to the extent then due and payable on
the Effective Date and invoiced, together with any reasonable estimate of
reasonable fees and expenses of outside counsel incurred or to be incurred by
it through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and such
counsel);

(i) an opinion of Simpson Thacher & Bartlett, counsel to the
Company, addressed to the Administrative Agent and the Banks, in form and
substance satisfactory to the Administrative Agent; and

(ii) a reliance letter by Simpson Thacher & Bartlett, counsel to
the Company, addressed to the Administrative Agent and certain Banks,
permitting such Banks to rely on the opinion of Simpson Thacher & Bartlett
given in connection with Amendment No. 3 to the Credit Agreement, dated as
of July 24, 1998.

Notwithstanding the foregoing, Sections 1.01 and 1.04 of this
Amendment shall not be effective until the opening of business in New York on
the Business Day on which the Administrative Agent has notified the Company and
the Banks that the Administrative Agent has received executed counterpart
signature pages of this Amendment from each of the then participating Banks and
upon satisfaction of all other conditions set forth in this Section 2.

Article III

MISCELLANEOUS

3.1 Reference to and Effect on the Credit Agreement and the Other
Loan Documents.

(a) This Amendment modifies the Credit Agreement to the extent set forth
herein, is hereby incorporated by reference into the Credit Agreement and is
made a part thereof. On and after the effective date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in

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<PAGE>

the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by this Amendment.

(b) Except as specifically amended by this Amendment, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

(c) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of,
or operate as a waiver of any right, power or remedy of the Administrative
Agent, any Bank or any Issuing Bank under, the Credit Agreement or any of the
other Loan Documents.

3.2 Representations and Warranties; No Default or Event of Default.
On the date of effectiveness of any of the amendments herein (after giving
effect to the consummation of the transactions contemplated by this Amendment
to have occurred on or prior to such date), the Company shall be deemed to have
certified to the Banks that, after giving effect to the amendments contained
herein that become effective on such date all of the representations and
warranties contained in the Credit Agreement are true and correct on and as of
the date thereof with the same effect as if made on and as of such date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date and
except to the extent (x) the representations and warranties set forth in
Section 6.05 of the Credit Agreement relate to any litigation which has been
specifically disclosed to the Banks and which has been added to Schedule 6.05
to the Credit Agreement with the written approval of the Majority Banks and (y)
the representation and warranty set forth in Section 6.25 of the Credit
Agreement relates to any event or condition which has been specifically
disclosed to the Banks and which has been added to Schedule 6.25 to the Credit
Agreement with the written approval of the Majority Banks).

3.3 Headings. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose or be given any substantive
effect.

3.4 Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

3.5 Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

CLARK REFINING & MARKETING, INC.