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Exhibit 10(4)
Third Extension and Amendment
Agreement
Act NO. 6231
Passed by the Twenty-Second Legislature of
the Virgin Islands May 18, 1998
Approved by Governor Xxxxxxxxx
May 29, 1998
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ACT NO.6231
XXXX NO 22-0259
TWENTY-SECOND LEGISLATURE OF THE VIRGIN ISLANDS
OF THE UNITED STATES
Regular Session
1998
To ratify the "Third Extension and Amendment Agreement" between the Government
of the Virgin Islands, Xxxx Oil Virgin Islands Corporation and PDVSA V.I., Inc.
and for other related purposes
--0--
BE IT ENACTED by the Legislature of the Virgin Islands:
SECTION 1. The Agreement, dated April 15, 1998, entitled "The Third
Extension and Amendment Agreement" between the Government of the Virgin Islands,
Xxxx Oil Virgin Islands Corporation, and PDVSA V.I., Inc., having been executed
by the Governor of the Virgin Islands, the Chairman of the Board of Xxxx Oil
Virgin Islands Corporation, and the Chairman of the Board of PDVSA V.I., Inc.,
respectively, is hereby ratified, and a copy thereof is appended hereto as
Appendix I and made a part hereof, and the sum of $1.2 million of the $8 million
described in Section 15 of Appendix I is hereby appropriated and shall be
utilized for territorial summer youth employment in the fiscal year ending
September 30, 1998 as follows: the Legislature of the Virgin Islands,
$400,000.00, and the Department of Labor, $800,000.00.
SECTION 2. The sum of $1 million is hereby appropriated to the Department
of Education from the $8 million received by the Government of the Virgin
Islands, pursuant to the Third Extension and Amendment Agreement between the
Government of the Virgin Islands, Xxxx Oil Virgin Islands Corporation and PDVSA
V.I., Inc. to provide equal vocational and technical education programs at all
public high schools in the Territory, including Central High School on St.
Croix, unless there is a particular public high school in a school district that
is specifically designated to provide vocational and technical education for
students in that district.
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Thus passed by the Legislature of the Virgin Islands on May 18, 1998.
Witness our Hands and the Seal of the Legislature of the Virgin Islands
this 22nd day of May, A.D., 1998.
/s/ Xxxxxxxxx X. Xxxxx
XXXXXXXXX X. XXXXX
President
/s/ Roosevelt St. C. Xxxxx
XXXXXXXXX ST. C. XXXXX
Legislative Secretary
The above xxxx is hereby approved.
Witness my hand and the Seal of the
Government of the United States Virgin
Islands at Charlotte Amalie, St. Xxxxxx,
this 29th day of May, A.D., 1998.
/s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, M.D.
Governor
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THIRD EXTENSION AND
AMENDMENT AGREEMENT
APRIL 15, 1998
THIS THIRD EXTENSION AND AMENDMENT AGREEMENT entered into by the
GOVERNMENT OF THE VIRGIN ISLANDS, herein called the "Government", and XXXX OIL
VIRGIN ISLANDS CORP., a corporation existing under the laws of the Virgin
Islands, herein called "Hess", and PDVSA V.I., INC., a corporation existing
under the laws of the Virgin Islands, herein called "PDVSA VI, Inc.", on behalf
of themselves and a company to be formed as a limited liability company (to be
taxed as a partnership) under the laws of the Virgin Islands, herein called the
"Joint Venture":
WITNESSETH:
WHEREAS, the Government and Hess are parties to an Agreement relating to
the construction and operation of the Oil Refinery and Related Facilities in St.
Croix, U.S. Virgin Islands, approved by the Legislature of the Virgin Islands on
September 1, 1965 and amended, supplemented and clarified at various times by
mutual agreement of the parties (the "1965 Agreement"); and
WHEREAS, pursuant to the 1965 Agreement, to induce Hess to construct and
operate the Oil Refinery and Related Facilities in St. Croix and in order to
promote the public interest by economic development of the Virgin Islands, Hess
was, among other things, exempted from payment to the Government of certain
taxes, charges, fees and duties; and
WHEREAS, the 1965 Agreement specifically extended these exemptions not
only to Hess but also to such of its Affiliates as are engaged in constructing,
owning and/or operating the Oil Refinery and Related Facilities, as hereinafter
discussed; and
WHEREAS, the 1965 Agreement was amended and extended by the Extension and
Amendment Agreement approved by the Legislature of the Virgin Islands on May 7,
1981 (the "First Extension
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Agreement"), which provided, among other things, for the extension of the 1965
Agreement and for the payment by Hess of full corporate income taxes, real
property taxes on the Oil Refinery and Related Facilities fixed at $10,000,000
per year with increases as hereinafter described, export fees of 2 cents per
barrel on refinery products, and excise taxes on building materials imported for
use in refinery maintenance, and further provided for Hess to sell fuel to the
Virgin Islands Water and Power Authority at prices below market prices; and
WHEREAS, the 1965 Agreement, as amended and extended by the First
Extension Agreement, was further amended and extended by the Restated Second
Extension and Amendment Agreement dated July 27, 1990 and approved by the
Governor and the Legislature of the Virgin Islands the "Second Extension
Agreement") which, among other things, provided for the extension of the term of
the 1965 Agreement, as amended and extended by the First Extension Agreement,
and addressed matters relating to the construction of a fluid catalytic cracking
unit and the building of a vocational school in the Virgin Islands as
contemplated in the First Extension Agreement; and
WHEREAS, the 1965 Agreement, as amended and extended by the First
Extension Agreement and the Second Extension Agreement, was further amended by a
Technical Clarifying Amendment dated November 17, 1993 and approved by the
Governor and the Legislature of the Virgin Islands, which clarified that all
materials, including crude oil, feedstocks, blendstocks and petroleum products
brought into the Virgin Islands by third parties to be consumed, processed,
manufactured, blended or stored at the Oil Refinery and Related Facilities are
deemed to be brought into the Virgin Islands by Hess regardless of whether or
when title to such material passes to Hess and that such third parties are
exempt from taxes, charges, fees and duties to the same extent as Hess (the
"Technical Clarifying Amendment", together with the 1965 Agreement, as amended
and extended by the First Extension Agreement and the Second Extension
Agreement, hereinafter the "Agreement"); and
WHEREAS, prior and subsequent to the Second Extension Agreement and
Technical Clarifying Amendment, Hess has continued to incur substantial losses
from operations of the Oil Refinery and Related Facilities due to adverse market
conditions prevailing in the refining industry generally and also due to
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certain operational and economic factors adversely affecting the Oil Refinery
and Related Facilities particularly that have resulted in the creation of a
substantial tax loss carryforward; and
WHEREAS, the Government concurs with Hess that as a consequence of the
continuing substantial losses at the Oil Refinery and Related Facilities, it is
critical to the Oil Refinery and Related Facilities' survival and to its
continued operation and employment of personnel for Hess to conclude an
agreement with a strong oil producing country partner willing and able to commit
to substantial additional investments in the Oil Refinery and Related Facilities
and to make other arrangements necessary to strengthen the economic and
competitive position of the Oil Refinery and Related Facilities and enhance its
future profitability; and
WHEREAS, to that end, Hess, its parent company, Amerada Xxxx Corporation
("AHC"), and Petroleos de Venezuela, S.A. ("PDVSA"), the national oil company of
Venezuela, acting through its subsidiary, PDVSA Petroleo y Gas, S.A. ("PDV
P&G"), which is its major operating subsidiary holding all PDVSA's Venezuelan
exploration and production, refining and marketing assets, have entered into an
agreement in principle pursuant to which PDVSA VI, Inc., a wholly owned
subsidiary of PDVSA, will acquire a 50% interest in the Oil Refinery and Related
Facilities through the Joint Venture to be formed to own and operate the Oil
Refinery and Related Facilities, and to be owned 50% by Hess and 50% by PDVSA
VI, Inc.; and
WHEREAS, this proposed Third Extension and Amendment Agreement is a
necessary prerequisite to the formation of the Joint Venture and construction of
the Xxxxx Project (as hereinafter defined) and the Government recognizes that
PDVSA, VI, Inc. must become a party to this Third Extension and Amendment
Agreement; and
WHEREAS, it was the original specific intent of the Government and Hess,
expressed in the 1965 Agreement, that all the obligations and benefits of the
Agreement would be available to any entity owned 50% by Hess and engaged in
ownership and/or operation of the Oil Refinery and Related Facilities, such as
the Joint Venture, and to evidence such intent the Government and Hess defined
the term "Affiliate" in the 1965 Agreement to
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include any firm or corporation of which at least fifty percent (50%) of voting
rights or equity interest is owned directly or indirectly by Hess or AHC; and
WHEREAS, under the First Extension Agreement Hess is obligated to supply
annual bids for sales of low sulfur residual and distillate fuel oils to the
Virgin Islands Water and Power Authority ("VIWAPA") on the terms set forth
therein, an obligation which provides low sulfur fuel oils to VIWAPA at below
market prices and affords substantial savings and an assurance of supply to
VIWAPA; and
WHEREAS, without limiting the generality of the obligations and rights
which the Joint Venture will have under the Agreement, the Government has
requested, in view of the importance of this benefit to the Virgin Islands, that
the Joint Venture expressly confirm that it will continue to comply with this
obligation regarding low sulfur fuel oil sales to VIWAPA and expressly agree
that it will continue to extend this benefit to VIWAPA so long as VIWAPA is
owned 50% or more by the Government; and
WHEREAS, in connection with confirming such matters, it is appropriate to
conform the Agreement to the current agreement between Hess and VIWAPA regarding
the appropriate published reference for determining the price of low sulfur
residual and distillate fuel oils, which agreement was required due to the
cessation of publication of the original reference and is evidenced by a letter
agreement between Hess and VIWAPA dated October 21, 1988; and
WHEREAS, the Government has also requested the Joint Venture to confirm
that it will continue Hess' practice of selling to the Government of the Virgin
Islands, Department of Public Works, St. Croix Division and Department of
Property and Procurement, St. Croix Division their current requirements for
gasoline and diesel fuel f.o.b. the loading rack located at the Oil Refinery and
Related Facilities at the Joint Venture's posted rack price; and
WHEREAS, it is a condition of PDVSA VI, Inc.'s willingness and obligation
to conclude the transaction that the Joint Venture be permitted to utilize, for
the benefit of its members, the benefit of the net operating loss carryforward
of Hess as in effect immediately after giving effect to the closing of all
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transactions in connection with the formation of the Joint Venture; and
WHEREAS, such utilization of the Hess net operating loss carryforward by
the Joint Venture will afford the Joint Venture no greater Virgin Islands income
tax benefit or other Virgin Islands tax benefit than that which is available to
Hess in the absence of the Joint Venture; and
WHEREAS, Hess and PDV P&G have agreed in principle that PDV P&G or its
subsidiary or another affiliate of PDVSA (the "PDV Crude Supplier") will supply
crude oil, feedstocks, blendstocks and petroleum products to the Joint Venture
and, in connection therewith, the PDV Crude Supplier will store crude oil,
feedstocks, blendstocks, and petroleum products at the Oil Refinery and Related
Facilities and will sell and transfer title to such crude oil, feedstocks,
blendstocks, and petroleum products to the Joint Venture immediately prior to
the time such crude oil, feedstocks, blendstocks and petroleum products are used
for processing or blending, a principal effect of which will be to reduce the
Joint Venture's inventory carrying costs for crude oil, blendstocks, feedstocks
and petroleum products, which reduction in carrying costs will significantly
enhance the Joint Venture's profitability; and
WHEREAS, it was the intent of the Government and Hess, as expressed in the
Technical Clarifying Amendment, that for purposes of the Agreement all
materials, such as crude oil, feedstocks, blendstocks, and petroleum products,
brought into the Virgin Islands by a third party such as the PDV Crude Supplier
to be consumed, processed, manufactured, blended or stored at the Oil Refinery
and Related Facilities shall be deemed to have been brought into the Virgin
Islands by Hess or one of it Affiliates, regardless of which party is the
importer of record or whether or when title is transferred to Hess or such
Affiliate, and recognizing that such importation, storage and sale by the PDV
Crude Supplier is an integral part of the business plan for the Joint Venture
critically important to improving the financial results of the Oil Refinery and
Related Facilities, and recognizing further that it is a condition of PDVSA VI,
Inc.'s willingness and obligation to conclude the transaction to confirm the
foregoing intent, the Government acknowledges it is appropriate pursuant to the
terms of the Technical Clarifying Amendment and consistent with prevailing
Virgin Islands
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administrative precedent that the PDV Crude Supplier shall not be subject to
Virgin Islands income taxes by reason of the importation, storage and sale of
such materials to be consumed, processed, manufactured, blended or stored at the
Oil Refinery and Related Facilities, and under the terms of the Technical
Clarifying Amendment, shall not have any liability for any Virgin Islands taxes,
excises, duties, gross receipts taxes, export fees, imposts or exactions or any
wharf age, tonnage, or ship dues by reason of such activity; and
WHEREAS, Hess and PDV P&G have agreed in principle that the Joint Venture
will construct a xxxxx with an approximate capacity of 45,000 barrels per day
and related facilities and make such improvements to the Oil Refinery and
Related Facilities as are necessary to allow the refinery to process heavy
Venezuelan crude oil in a deep conversion mode (the xxxxx, related facilities
and improvements, collectively, the "Xxxxx Project"); and
WHEREAS, pursuant to the First Extension Agreement as modified and
confirmed by the Second Extension Agreement, Hess agreed to construct a fluid
catalytic cracking facility and obtained an option to construct, at its sole
discretion, a second fluid catalytic cracking unit, and also agreed that real
property taxes on the refinery would increase to $12,000,000 per year on
commencement of commercial production from the first fluid catalytic cracking
unit and to $14,000,000 per year on commencement of commercial production from
the second fluid catalytic cracking unit, if constructed; and
WHEREAS, current economics of the refining business and modern xxxxx
technology make a xxxxx more profitable than a second catalytic cracking
facility and accordingly the Government and Hess agree that construction of a
second catalytic cracking facility would not be economic for the Oil Refinery
and Related Facilities under current business conditions and would not be
undertaken; and
WHEREAS, Hess and PDVSA VI, Inc. have therefore requested that the Xxxxx
Project replace the construction of the second catalytic cracking facility for
all purposes in the Agreement, including related provisions as to the
Government's facilitation of the granting of necessary permits and approvals and
to increased property taxes from the current $12,000,000 per year to $14,000,000
per year after commencement of commercial production
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from the unit, and the Government recognizes such request is appropriate in that
such project will be of greater economic significance to the Virgin Islands than
that envisioned for the second catalytic cracking facility and recognizes
further that the second catalytic cracking facility would not be economically
feasible; and
WHEREAS, the Government recognizes that it is a condition to PDV VI's
willingness and obligation to conclude the transaction, that the term of the
Agreement be extended to a date 20 years after commencement of commercial
production from the Xxxxx Project, a term coincident with the 20 year term of a
crude oil supply contract to be entered into between the Joint Venture and the
PDV Crude Supplier for the supply of the heavy Venezuelan crude oil to be
processed in the Xxxxx, which 20 year crude oil supply contract supports the
construction and is critical to the undertaking of the Xxxxx Project; and
WHEREAS, the Government recognizes that the Joint Venture will afford
substantial and continuing benefits to the economy of the Virgin Islands by
strengthening the economic and competitive position of the refinery and
enhancing its profitability and by substantially preserving jobs, and that the
significant investments to be made for the Xxxxx Project, which is expected to
take two to three years to build, will promote the public interest in the
economic development of the Virgin Islands, create a substantial number of
additional construction jobs and associated service-sector jobs and generate
substantial additional payrolls which will be spent in the Virgin Islands
economy and additional tax revenues for the Government of the Virgin Islands;
and
WHEREAS, it is the expressed intent of the Joint Venture that the current
managerial and operating employees of the Oil Refinery and Related Facilities
will continue to manage and operate the Oil Refinery and Related Facilities as
employees of the Joint Venture; and
WHEREAS, the Government has requested the Joint Venture to confirm, and to
cause its contractors to confirm, that each of them will continue the policy and
practice of Hess to encourage and xxxxxx, consistent with applicable law, the
employment and training of qualified Virgin Islands residents at the Oil
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Refinery and Related Facilities and particularly in connection with the
construction of the Xxxxx Project; and
WHEREAS, the Government has requested the Joint Venture to confirm that it
will continue and place increased emphasis on, consistent with applicable law,
the policy and practice of Hess to promote qualified Virgin Islands residents to
higher positions as they become available; and
WHEREAS, the Government, acting through the Virgin Islands Department of
Education and the Virgin Islands Department of Labor, wishes to encourage and
promote the development and improvement of vocational and technical skills among
the St. Croix and Virgin Islands workforce and to increase the level of reading
comprehension skills among the St. Croix and Virgin Islands workforce in order
to meet testing requirements for certain jobs and the Joint Venture has agreed
to assist in this regard; and
WHEREAS, the Joint Venture anticipates that in connection with the
construction of the Xxxxx Project there may be a shortage of Virgin Islands
residents having the requisite skills to qualify for jobs on the construction of
the Xxxxx Project as welders, electricians and instrument fitters and will
establish training programs to upgrade skills so that Virgin Islands residents
may qualify for such jobs, and also desires to establish an education program
for the reading comprehension skills required to pass the safety comprehension
test for employment in the construction of the Xxxxx Project; and
WHEREAS, the St. Croix Vocational Technical Center currently does not have
the specialized classroom equipment required to conduct training classes for
Virgin Islands residents designed to upgrade skills in the craft classifications
for welders, electricians and instrument fitters and does not have the classroom
equipment and staff required to conduct an education program in reading
comprehension skills, and the Joint Venture will provide and install in
classrooms at the St. Croix Vocational Technical Center the equipment required
to conduct such classes, and to donate such equipment and the installation
thereof free of cost to the Government for continued use at the St. Croix
Vocational Technical Center and availability for the training and education of
future generations of Virgin Islands residents in such skills and
qualifications; and
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WHEREAS, the Joint Venture shall, in cooperation with and under the
auspices of the Virgin Islands Department of Education and the Virgin Islands
Department of Labor, establish at the St. Croix Vocational Training Center
training programs using classrooms so equipped by the Joint Venture, to upgrade
skills of welders, electricians and instrument fitters and a reading
comprehension program for the safety comprehension test, to recruit and hire the
four teachers required to conduct such classes and to pay salaries of such four
teachers for the period from the Effective Date to the date employment peaks on
the construction of the Xxxxx Project; and
WHEREAS, the Government further recognizes that PDVSA VI, Inc. is
unwilling to proceed with the Joint Venture or the Xxxxx Project without the
extension and amendment of the Agreement on terms set forth herein; and
WHEREAS, the Government, with the assistance and advice of competent
counsel, consultant Xxxxxx X. Xxxxxx, an independent financial consulting firm
engaged by the Government to complete an economic analysis, and whose report has
been received and transmitted to the Virgin Islands Legislature, and other
advisors, and after having the opportunity to discuss with Hess the current
conditions affecting the St. Croix refinery, the benefits of the proposed Joint
Venture and the requested modifications to the Agreement and the reasons
therefor, has conducted negotiations with the objective of facilitating the
construction of the Xxxxx Project and sustaining the continued operation of the
Oil Refinery and Related Facilities in St. Croix on terms mutually beneficial to
and in the best interests of the Government and People of the Virgin Islands and
the Joint Venture;
NOW THEREFORE, in order to accomplish the foregoing, the Government, Hess,
PDVSA VI, Inc. and the Joint Venture mutually commit and agree to extend and
amend the Agreement as follows effective as provided in Section 16 below:
1. The Agreement and the effective period thereof, which is currently
scheduled to expire on June 1, 2010, is hereby extended to a date
twenty years after commencement of the manufacture of commercial
quantities of marketable products
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from the Xxxxx Project, as certified in writing by the Joint
Venture.
2. The term "Hess" as used in the Agreement shall be deemed to mean and
refer to the Joint Venture, and the term "Affiliate" shall be deemed
to mean and refer to Hess, AHC, PDVSA, PDVSA VI, Inc. and any other
firm or corporation of which at least fifty percent (50%) of the
voting rights or equity interest is owned, directly or indirectly,
by any or all of them. In order further to confirm the amendments
effected by the foregoing, the parties hereto understand and agree
that from and after the Effective Date, the Joint Venture shall bear
the same obligations and shall enjoy the same rights under the
Agreement, as amended herein, as Hess prior to the Effective Date.
Promptly after the formation of the Joint Venture, PDVSA VI, Inc.
and Hess shall cause the Joint Venture to execute this Third
Extension and Amendment Agreement to add the Joint Venture as a
party hereto, whereupon the Joint Venture shall become and be a
party to this Third Extension and Amendment Agreement as fully and
to the same extent as if it were originally a party hereto and shall
have all the rights and obligations of the Joint Venture hereunder,
without the necessity of any further act or deed.
3. Without limiting the generality of the foregoing, in order to
confirm for the benefit of the Virgin Islands an obligation which
provides VIWAPA low sulfur fuel oils at prices below market prices
and affords substantial savings and an assurance of supply, it is
expressly agreed that on and after the Effective Date the Joint
Venture shall fulfill its obligation under the First Extension
Agreement to submit bids on an annual basis for sales of low sulfur
residual fuel oils and low sulfur distillate fuel oils f.o.b. the
Oil Refinery and Related Facilities to VIWAPA or its successors for
use as fuel in its St. Xxxxxx and St. Croix generating stations. It
is expressly agreed that the Joint Venture will continue to provide
such benefits to VIWAPA on and after the Effective Date during the
term of this Agreement so long as VIWAPA shall be owned 50% or more
by the Government. The Joint Venture's f.o.b. maximum price per
barrel for low sulfur residual and distillate fuel oils pursuant to
such bids shall not exceed the lower of:
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(a) The Joint Venture's average landed monthly low sulfur crude
oil costs per barrel of low sulfur crude oil charged to the
processing units of the Oil Refinery and Related Facilities,
without adding thereto any refining costs, for the month of
any sales pursuant thereto, or
(b) For low sulfur No. 2 fuel oil, the average New York Reseller
Contract Barges Prices and for low sulfur residual fuel oils
the average Estimated New York Contract Cargo Prices, for the
same grades of low sulfur residual or distillate fuel oils, as
the case may be, as last published in the Oil Buyers' Guide on
date of loading, less Two Dollars ($2.00) per barrel (42
gallons per barrel).
The Oil Buyers' Guide is a weekly publication, which the Joint
Venture will maintain at its office. Should the Oil Buyers' Guide
cease publication, the parties will agree on a successor
publication. For the period of any such sales after the Effective
Date, the Joint Venture shall furnish appropriate certification on a
monthly basis as to the Joint Venture's average landed low sulfur
crude oil costs per barrel of low sulfur crude oil charged to the
processing units of the Oil Refinery and Related Facilities. After
the Effective Date, the Joint Venture shall operate oil barges and
bid on an annual basis for the transportation of low sulfur residual
and low sulfur distillate fuel oils from the Oil Refinery and
Related Facilities to the St. Xxxxxx and St. Croix generating
stations of VIWAPA. The foregoing shall modify and replace Section 9
of the First Extension Agreement in its entirety.
4. The Joint Venture shall continue Xxxx'x practice to supply the
Virgin Islands Department of Public Works, St. Croix Division's and
the Virgin Islands Department of Property and Procurement, St. Croix
Division's requirements for gasoline and diesel fuel by selling
gasoline and diesel fuel to the Government for the account of the
Virgin Islands, Department of Public Works, St. Croix Division and
the Virgin Islands Department of Property and Procurement, St. Croix
Division in tank trailer quantities f.o.b. the loading rack located
at the Oil Refinery and Related Facilities at the Joint Venture's
posted rack price on the date of such sale and
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such sales shall be exempt from the payment of gross receipts tax on
sales in the Virgin Islands.
5. For income tax purposes, each Joint Venture member's distributive
share of the Joint Venture's taxable income, up to but not exceeding
an aggregate amount, for all tax years, that is equal to HOVIC's
Available NOL (as hereinafter defined), shall not be subject to tax
and, solely for purposes of determining each such member's adjusted
tax basis in its interest in the Joint Venture, shall be treated as
income exempt from income tax. "HOVIC's Available NOL" shall mean
the amount of the net operating loss ("NOL") carryforwards available
to HOVIC on the first full day of operation of the Joint Venture,
determined as if such day was the last day of HOVIC's taxable year,
reduced to the extent that, in future years, such NOL carryforwards
expire unused. HOVIC's Available NOL shall be used exclusively as
described above, shall be reduced to the extent that it is so used
and shall not be subject to other limitations. Each member shall
determine its alternative minimum taxable income with regard to its
utilization of HOVIC's Available NOL.
6. In order to clarify and confirm the intent of the Technical
Clarifying Amendment, the PDV Crude Supplier shall not be subject to
U.S. Virgin Islands income taxation by reason of the bringing of
materials, including crude oil, feedstocks, blendstocks, or refined
petroleum products into the Virgin Islands to be consumed,
processed, manufactured, blended or stored at the Oil Refinery and
Related Facilities, nor by reason of the storage in the U.S. Virgin
Islands of such materials or the sale thereof to the Joint Venture.
The PDV Crude Supplier shall not be subject to any other Virgin
Islands taxes, excises, gross receipts taxes, franchise taxes and
similar fees, export fees, duties, imposts or exactions or any
wharfage, tonnage or ships dues by reason of such activity. The
provisions of this Section 6 shall be for the benefit of, and be
enforceable by, the PDV Crude Supplier.
7. Section 8(B) of the First Extension Agreement shall remain in full
force and effect except that the words "xxxxx with an approximate
capacity of 45,000 barrels per day and related facilities and such
improvements as are necessary to
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allow the Oil Refinery and Related Facilities to process heavy crude
oil in a deep conversion mode" shall be substituted for the words
"second Fluid Catalytic Cracking Facility with supporting facilities
or a Hydro Cracking facility with supporting facilities and/or
petrochemical facilities." Section 5(B) of the First Extension
Agreement shall remain in full force and effect except that the
words "xxxxx, related facilities and improvements" shall be
substituted for the words "catalytic or hydro cracking and
supporting facilities and/or petrochemical facilities." In order
further to confirm the amendments effected by the foregoing, it is
agreed that upon commencement of the manufacture of commercial
quantities of marketable products from the Xxxxx Project, the date
of which shall be certified in writing to the Government by the
Joint Venture, the Joint Venture shall pay to the Government on a
prorated monthly basis real property taxes on the Oil Refinery and
Related Facilities owned by the Joint Venture and its Affiliates
including all improvements now or hereafter located thereon in the
fixed amount of $14,000,000.00 per calendar year. The Xxxxx Project
shall, when constructed, and during the period of construction and
expansion contemplated thereby, be included in the term "Oil
Refinery and Related Facilities."
8. Recognizing that the Joint Venture will employ competent
professional architects and engineers to design and supervise the
construction and operation of the Xxxxx Project, and that such
design, engineering, construction and operation shall be in
accordance with the highest standards for construction, operation
and safety, the Government will, consistent with applicable law,
issue on an expedited basis all permits, licenses and certificates,
and modifications thereof, and take such other action, required
under local laws, rules and regulations, relating to construction,
operation, safety and the protection of the environment, to enable
construction and operation of the Xxxxx Project. The Government will
also support applications by the Joint Venture for approval of all
permits, licenses and certificates required from any agency or
department of the Federal Government.
9. The Joint Venture shall employ on the Effective Date employees of
HOVIC for the conduct of the business of the
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Oil Refinery and Related Facilities on terms substantially similar
to, and no less favorable than, current employment arrangements,
including employee benefits.
10. The Joint Venture shall, consistent with applicable law, continue
Xxxx'x policy of employing and training qualified Virgin Islands
residents, regardless of age, race, creed, color, sex, national
origin or ancestry, for technical, supervisory, managerial and
professional positions relating to the Oil Refinery and Related
Facilities and, in particular, will place increased emphasis on
promoting to higher positions, as such positions become available,
Virgin Islands residents who are qualified for such positions.
11. In connection with the Xxxxx Project, it shall be the policy of the
Joint Venture to encourage and xxxxxx to the fullest extent
practicable and consistent with applicable law, the employment of
qualified Virgin Islands residents regardless of age, race, creed,
color, sex, national origin or ancestry, and the Joint Venture shall
require all independent contractors used in the Xxxxx Project to
adhere to this policy in its hiring practices and to comply with all
applicable labor and employment laws of the Virgin Islands.
12. The Joint Venture shall provide and install in existing classroom
space at the St. Croix Vocational Technical Center, the specialized,
state-of-the-art equipment required to equip classrooms for the
conduct of training programs to upgrade the skills of Virgin Islands
residents for employment in each of the following job skill
classifications: welders, electricians and instrument fitters, one
classroom for each such skill training program, and shall also
provide and install in existing classroom space at the St. Croix
Vocational Technical Center the equipment required to equip one
classroom for the conduct of a reading comprehension education
program for the preparation of the safety comprehension test
required for employment in certain jobs, being a total of four
classrooms to be equipped as aforesaid for such skill upgrading and
reading comprehension programs. Such equipment and the cost of
installation thereof shall be donated by the Joint Venture to the
Government for the St. Croix Vocational Technical Center.
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13. It is further agreed in connection with the Xxxxx Project and in
cooperation with the Virgin Islands Department of Labor and the
Virgin Islands Department of Education, that the Joint Venture will
establish training programs to upgrade the skills of Virgin Islands
residents for employment in construction on the Xxxxx Project,
whether by the Joint Venture or independent contractors, in the
following positions where a shortage of Virgin Islands residents
having the requisite skills is anticipated: welders, electricians
and instrument fitters, and to establish an appropriate reading
comprehension education program for the safety comprehension test in
connection with the hiring of employees in construction on the Xxxxx
Project, whether by Joint Venture or independent contractors. Such
training and education programs will be conducted in the classrooms
at the St. Croix Vocational School equipped for such programs as
provided in Section 12. The Joint Venture shall recruit and hire and
pay reasonable and comparable salaries for teachers for such
programs, being one teacher for each of the three skill training
classes for welders, electricians and instrument fitters and one
teacher for the reading comprehension education class, for the
period from the Effective Date to the date employment peaks on the
construction of the Xxxxx Project, as certified in writing by the
Joint Venture. As used in Sections 10 through 12 and this Section
13, the term "Virgin Islands resident" shall mean any person who, at
the time he or she is considered for employment, is, and for a
continuous period of one year prior thereto has been, domiciled in
the U.S. Virgin Islands.
14. Capitalized terms not otherwise defined herein have the meanings
ascribed to them in the Agreement. Except as set forth above, all
terms and conditions of the Agreement shall continue in full force
and effect.
15. The Joint Venture shall, within ten (10) days of the Effective Date
of this Third Extension and Amendment Agreement, contribute
$8,000,000.00 to the Government of the Virgin Islands to be used for
grants to vocational education programs and Youth Summer Programs
and to assist in environmental studies and research at the
University of the Virgin Islands. Except for the payment stated
herein, no
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stamp, transfer or other tax, fee, or payment shall be required to
be made to the Government of the Virgin Islands or any
instrumentality thereof by the Joint Venture, Hess, PDVSA VI, Inc.,
AHC, PDVSA or any affiliate of any of them in connection with the
consummation of all transactions relating to the formation of the
Joint Venture.
16. This Third Extension and Amendment Agreement shall have operative
effect commencing on the first date (the "Effective Date") upon
which both of the following shall have occurred: (i) the
ratification of this Third Extension and Amendment Agreement by the
Legislature of the Virgin Islands and (ii) the date of consummation
of all transactions in connection with the formation of the Joint
Venture, which date shall be certified in writing to the Government
by each of Hess and PDVSA VI, Inc.
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WITNESS our signatures below the 15th day of April 1998.
GOVERNMENT OF THE
VIRGIN ISLANDS
By: /s/ Xxx X. Xxxxxxxxx
------------------------------
Xxx X. Xxxxxxxxx, M.D.
Governor
Attest:
/s/ [ILLEGIBLE]
------------------------------------
TERRITORY OF THE VIRGIN ISLANDS )
JUDICIAL DISTRICT OF ST. XXXXXX & ST. XXXX ) ss.:
The foregoing instrument was acknowledged before me this 15th day of April
l998, by XXX X. XXXXXXXXX, Governor of the Virgin Islands.
/s/ [ILLEGIBLE]
----------------------------------------
Notary Public
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XXXX OIL VIRGIN ISLANDS CORP.
By: /s/ Xxxx Xxxx
---------------------------------
Xxxx Xxxx
Chairman of the Board and
President
Attest:
/s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx
Assistant Secretary
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 15th day of April 1998,
by XXXX XXXX, as Chairman of the Board and resident of XXXX OIL VIRGIN ISLANDS
CORP. on behalf of the Corporation.
/s/ J. Xxxxxxx Xxxxxxx XX
----------------------------------------
Notary Public
J. XXXXXXX XXXXXXX XX
Notary Public, State of New York
No. 00-0000000
Qualified in New York County
Commission Expires February 15, 1999
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PDVSA VI, Inc.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx
President
Attest:
/s/ [ILLEGIBLE]
-------------------------------------------
TERRITORY OF THE VIRGIN ISLANDS )
JUDICIAL DISTRICT OF ST. XXXXXX & ST. XXXX ) ss.:
The foregoing instrument was acknowledged before me this 12th day of May 1998,
by Xxxx Xxxxxxxx as President of PDVSA VI, Inc. on behalf of the corporation.
/s/ [ILLEGIBLE]
----------------------------------------
Notary Public
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