FEEDSTOCK AND SHARED SERVICES AGREEMENT
Exhibit 10.28
THIS
FEEDSTOCK AND SHARED SERVICES AGREEMENT is entered into and effective as of the ___ day of
, 2007, by and between Coffeyville Resources Refining & Marketing, LLC, a Delaware
limited liability company (“Refinery Company”), and Coffeyville Resources Nitrogen Fertilizers,
LLC, a Delaware limited liability company (“Fertilizer Company”).
RECITALS
Refinery Company owns and operates the petroleum refinery located at Coffeyville, Kansas,
which refinery is more particularly described on Exhibit A hereto (including any additions
or other modifications made thereto from time to time, the “Refinery”).
Fertilizer Company owns and operates the nitrogen fertilizer complex located adjacent to the
Refinery consisting of the Gasification Unit, the UAN Plant, the Ammonia Synthesis Loop, the
Utility Facilities, storage and loading facilities, the Fertilizer Plant Water Clarifier and river
access, the Grounds and related connecting pipes and improvements, which fertilizer manufacturing
complex is connected to and associated with the BOC Facility and the Offsite Sulfur Recovery Unit,
all of which are more particularly described on Exhibit A hereto (including any additions
or other modifications made thereto from time to time, and which are collectively referred to
herein as the “Fertilizer Plant”).
Refinery Company requires access to certain property and structures located on the Fertilizer
Plant site to conduct its business, and Fertilizer Company requires access to certain structures
and property located on the Refinery site to conduct its business.
Fertilizer Company and Refinery Company desire to enter into this Agreement for the provision
of certain specified Feedstocks and Services between the Parties for use in their respective
production processes and certain other related matters, all upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations
and warranties herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the meanings set forth below, unless the context otherwise
dictates, both for purposes of this Agreement and all Exhibits hereto:
“Agreement” means this Feedstock and Shared Services Agreement and the Exhibits hereto, all as
the same may be amended, modified or supplemented from time to time.
“Ammonia Price” means the price for anhydrous ammonia determined for a particular month as
follows: The price per short ton of anhydrous ammonia shall be the average of (i) the average of
the price range published in each weekly issue of “Green Markets” under the heading of “Ammonia”
for “Southern Plains” averaged over such weekly issues published in the applicable calendar month,
and (ii) the average of the price range published in each weekly issue of “Fertilizer Week America”
under the heading of “Ammonia” for FOB Southern Plains” averaged over such weekly issues published
in the applicable calendar month. In the event that either of the aforesaid publications ceases to
be published, then the price per short ton of anhydrous ammonia shall be determined by reference to
the publication that does not cease publication, using the average price range as provided for
above. In the event that both of the aforesaid publications cease to be published, then the price
per short ton of anhydrous ammonia shall be determined by reference to such generally accepted
industry publication as Fertilizer Company may designate with the consent of the Refinery Company,
which consent shall not be unreasonably withheld or delayed.
“Ammonia Synthesis Loop” means that ammonia synthesis loop within the Fertilizer Plant
described and identified on Exhibit A hereto, including any additions or other
modifications made thereto from time to time.
“BOC” means BOC Group, Inc., a Delaware corporation.
“BOC Agreement” means that certain Amended and Restated On-Site Project Supply Agreement
between Fertilizer Company and BOC, dated as of June 1, 2005.
“BOC Facility” means the plant for the production of certain products and argon, including
metering and related facilities, together with an inter-connected liquid nitrogen product storage
vessel and vaporization equipment, as more particularly described and identified on Exhibit
A hereto, all connected to the pipelines owned by BOC, including any additions or other
modifications made thereto from time to time.
“Coke” has the meaning given such term in the Coke Supply Agreement.
“Coke Supply Agreement” means the Coke Supply Agreement dated as of the date hereof between
the Parties.
“cscf” means one hundred scf.
“Dispute” has the meaning given such term in Article 5.
“Easement Agreement” means that Cross-Easement Agreement dated as of the date hereof under
which the Fertilizer Company and the Refinery Company grant each other certain rights to enter upon
and use the real property of the other Party for the purposes described therein.
“Effective Date” means the date first above written.
“Farmland” means Farmland Industries, Inc., a Kansas cooperative corporation.
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“Feedstock” means the materials and streams described in Exhibit B, all within the
tolerances and to the specifications therein contained, that are provided by or on behalf of
Refinery Company to Fertilizer Company, or by or on behalf of Fertilizer Company to Refinery
Company, as the case may be and as otherwise may be agreed by the Parties.
“Feedstock Delivery Points” means the points at which the Feedstock is transferred from
Fertilizer Company to Refinery Company, or from Refinery Company to Fertilizer Company, as the case
may be and as more particularly identified on Plot Plan A and Piping Plans A-1 to A-9 constituting
a part of Exhibit A.
“Fertilizer Plant” has the meaning given such term in the Recitals.
“Fertilizer Company” has the meaning given such term in the introductory paragraph.
“Fertilizer Company Representative” means the plant manager of the Fertilizer Plant or such
other person as is designated in writing by Fertilizer Company.
“Fertilizer Plant Water Clarifier” means the Fertilizer Company’s water clarifier and
associated equipment as depicted in Plot Plan A constituting a part of Exhibit A.
“Fire Water” means the water and related systems to provide water for use in fire emergencies
and the like, as such Fire Water is described in Exhibit B, all within the tolerances and
in compliance with the specifications therein.
“Force Majeure” means war (whether declared or undeclared); fire, flood, lightning,
earthquake, storm, tornado, or any other act of God; strikes, lockouts or other labor difficulties;
unplanned plant outages; civil disturbances, riot, sabotage, terrorist act, accident, any official
order or directive, including with respect to condemnation, or industry-wide requirement by any
governmental authority or instrumentality thereof, which, in the reasonable judgment of the Party
affected, interferes with such Party’s performance under this Agreement; any inability to secure
necessary materials and/or services to perform under this Agreement, including, but not limited to,
inability to secure materials and/or services by reason of allocations promulgated by governmental
agencies; or any other contingency beyond the reasonable control of the affected Party, which
interferes with such Party’s performance under this Agreement.
“Gasification Unit” means that gasification unit described on Plot Plan A constituting a part
of Exhibit A hereto, including any additions or other modifications made thereto from time
to time.
“Grounds” means the realty on which the Fertilizer Plant is situated, which Grounds are more
particularly described on Plot Plan A constituting a part of Exhibit A.
“High Pressure Steam” means steam described in Exhibit B under the heading “High
Pressure Steam,” all within the tolerances and in compliance with the specifications therein
contained.
“Hydrogen” means hydrogen in its gaseous form, as described in Exhibit B hereto, all
within the tolerances and in compliance with the specifications therein contained.
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“Hydrogen Reduction Date” means the date after which the obligation of Fertilizer Company to
provide Hydrogen to Refinery Company shall be reduced. The Hydrogen Reduction Date shall be that
date selected by Fertilizer Company in its sole discretion and provided to Refinery Company upon
ninety (90) days prior written notice, provided, however, that the Hydrogen Reduction Date shall
not be earlier than December 1, 2007.
“Instrument Air” means air produced by mechanical compression as described in Exhibit
B, all within the tolerances and in compliance with the specifications therein contained.
“Laws” means all applicable laws, regulations, permits, orders and decrees, including, without
limitation, laws, regulations, permits, orders and decrees respecting health, safety and the
environment.
“Lease Agreement” means the real property lease dated as of the date hereof between the
Parties relating to the lease of certain Refinery Company premises to Fertilizer Company.
“mlbs” means one thousand pounds.
“MMBtu” means one million British thermal units.
“mmscf” means one million scf.
“mscf” means one thousand scf.
“Nitrogen” means nitrogen in its gaseous form, as described in Exhibit B hereto, all
within the tolerances and in compliance with the specifications therein contained.
“Offsite Sulfur Recovery Unit” means that sulfur processing facility owned and operated by TKI
pursuant to the TKI Phase II Agreement, which Offsite Sulfur Recovery Unit is more particularly
described on Plot Plan A constituting a part of Exhibit A hereto, including any additions
or other modifications made thereto from time to time.
“Owner” means Fertilizer Company or Refinery Company, as the context requires.
“Oxygen” means oxygen in its gaseous form, as described in Exhibit B hereto, all
within the tolerances and in compliance with the specifications therein contained.
“Party”
and “Parties” means the parties to this Agreement.
“Person” means and includes natural persons, corporations, limited partners, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities.
“PPM” means parts per million.
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“Prime Rate” means the prime interest rate as published from time to time in The Wall Street
Journal as the base lending rate on corporate loans posted by at least seventy-five percent (75%)
of the thirty (30) largest United States banks.
“psi” means pounds per square inch.
“psig” means pounds per square inch gauge.
“Raw Water and Facilities Sharing Agreement” means the Raw Water and Facilities Sharing
Agreement dated as of the date hereof between the Parties.
“Refinery” has the meaning given such term in the Recitals hereto.
“Refinery Company” has the meaning given such term in the introductory paragraph.
“Refinery Water Clarifier” means the Refinery Company’s water clarifier and associated
equipment.
“Refinery Company Representative” means the plant manager of the Refinery Company or such
other person as is designated in writing by Refinery Company.
“scf” means standard cubic feet at 60°F and at atmospheric pressure equal to 29.92 inches of
mercury absolute, measured by standard sharp edge orifice plate and differential pressure
transmitters located at the Fertilizer Plant. The measured flow shall be pressure and temperature
compensated and totalized by the Fertilizer Plant’s Honeywell process control computer (TDC 3000)
or any replacement computer. All transmitter signals and computer calculations are available to
the Refinery through the existing communications bus for verification. Calibration of the
transmitters shall be done at least annually and may be done more frequently at Refinery Company’s
request.
“Security Contract” means any agreement for security services to which Refinery Company is a
party pursuant to which security services are provided on the Refinery premises and environs and on
the Fertilizer Plant premises and environs.
“Services” means the services described as such on Exhibit B.
“Sour Water” means the process stream described on Exhibit B that meets the tolerances
and specifications therein contained.
“ST” means short tons.
“STPD” means short tons per day.
“TKI” means Tessenderlo Xxxxxx, Inc.
“TKI General Plant and Labor Costs” means (i) the costs incurred and appropriately billed to
Refinery Company pursuant to the TKI Phase I Agreement and (ii) the costs incurred and
appropriately billed to Fertilizer Company pursuant to the TKI Phase II Agreement.
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“TKI Phase I Agreement” means the Sulfur Processing Agreement, dated October 2, 1996, between
Farmland and TKI, as assigned by Farmland to Refinery Company, on March 2, 2004, as amended from
time to time.
“TKI Phase I Unit” means the sulfur processing facility owned and operated by TKI pursuant to
the TKI Phase I Agreement.
“TKI Phase II Agreement” means the Phase II Sulfur Processing Agreement, dated November 13,
1998, between Farmland and TKI, as assigned by Farmland to Coffeyville Resources Nitrogen
Fertilizers, LLC, on March 2, 2004, as amended from time to time.
“Transfer” means the sale, exchange, gift or other assignment of rights or interests, whether
by specific assignment, merger, consolidation, entity conversion or other disposition, but not
including any bona fide pledge or assignment for collateral purpose in connection with any
financing.
“UAN Plant” means the urea ammonium nitrate plant described and identified on Exhibit
A hereto, including any additions or other modifications made thereto from time to time.
“UAN Price” means the price for 32% urea ammonium nitrate determined for a particular month as
follows: The price per short ton of 32% urea ammonium nitrate shall be the average of (i) the
average of the price range published in each weekly issue of “Green Markets” under the heading of
“UAN” for “Mid Cornbelt” averaged over such weekly issues published in the applicable calendar
month and then multiplied by thirty-two (32), and (ii) the average of the price range published in
each weekly issue of “Fertilizer Week America” under the heading of “UAN” for “FOB Midwest”
averaged over such weekly issues published in the applicable calendar month. In the event that
either of the aforesaid publications ceases to be published, then the price per short ton of 32%
urea ammonium nitrate shall be determined by reference to the publication that does not cease
publication, using the average price range as provided for above. In the event that both of the
aforesaid publications cease to be published, then the price per short ton of 32% urea ammonium
nitrate shall be determined by reference to such generally accepted industry publication as
Fertilizer Company may designate with the consent of the Refinery Company, which consent shall not
be unreasonably withheld or delayed.
“Utility Facilities” mean the utility facilities described and identified on Exhibit A
hereto, including any additions or other modifications made thereto from time to time.
ARTICLE 2
FEEDSTOCK AND SHARED SERVICES
Section 2.1 Steam.
2.1.1 Refinery Steam Obligations
(a) Start-up Steam. Refinery Company shall, upon reasonable request by the Fertilizer
Company, make available to Fertilizer Company High Pressure Steam at a cost to Fertilizer Company
as designated on Exhibit B hereto, at sufficient pressure and in sufficient
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amounts, to allow Fertilizer Company to commence and recommence operation of the Fertilizer
Plant from time to time at Fertilizer Company’s request. The parties anticipate that commencement
and/or recommencement of Fertilizer Plant operations will require approximately 75,000 pounds per
hour of High Pressure Steam. For purposes of this Subsection 2.1.1(a), such High Pressure Steam
shall be referred to as “Start-Up Steam.” Refinery Company shall use commercially reasonable
efforts to make available Start-Up Steam when requested by Fertilizer Company; provided that
Refinery Company shall not be obligated to make available Start-Up Steam hereunder if doing so
would have a material adverse effect on Refinery operations. Fertilizer Company shall provide
reasonable notice to Refinery Company of the approximate time and date of each of its requirements
for Start-Up Steam.
(b) BOC Steam. Refinery Company, shall make commercially reasonable efforts as its
operations permit, at a cost to Fertilizer Company as set forth in Exhibit B, to make
available High Pressure Steam produced at the Refinery to the Fertilizer Company, solely for use at
the BOC Facility. Fertilizer Company shall provide reasonable notice to Refinery Company of the
approximate time and date of each of its requirements for High Pressure Steam under this subsection
2.1.1(b); provided that Refinery Company shall not be obligated to make available High Pressure
Steam hereunder if doing so would have a material adverse effect on Refinery operations.
2.1.2 Fertilizer Plant Steam Obligations
Fertilizer Company shall make available at a cost to Refinery Company as set forth in
Exhibit B, solely for use at the Refinery, any High Pressure Steam produced by the
Fertilizer Plant that is not required for the operation of the Fertilizer Plant, following
reasonable notice from Refinery Company requesting such steam.
2.1.3 Mutual Steam Obligations
(a) Low Pressure Steam. Refinery Company and Fertilizer Company may supply each other
any steam (other than High Pressure Steam) produced by either of their respective operations, which
is not required by such operation and is required for the other Party’s operation, at no cost;
provided, however, there shall be no obligation by either Party to supply any such steam and the
Party requiring such steam shall give reasonable notice to the other Party of any request.
(b) Steam Condensate. Refinery Company shall retain all steam condensate for steam
delivered to Refinery Company hereunder and Fertilizer Company shall retain all steam condensate
for all steam delivered to Fertilizer Company hereunder.
Section 2.2 Nitrogen. Fertilizer Company shall make available to Refinery Company,
solely for use at the Refinery, any Nitrogen produced by the BOC Facility and available to
Fertilizer Company that is not required, as determined in a commercially reasonable manner by the
Fertilizer Company based on its then current or anticipated operational requirements, for the
operation of the Fertilizer Plant, following reasonable notice from Refinery Company requesting
such Nitrogen, at a cost to Refinery Company as designated on Exhibit B hereto.
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Section 2.3 Instrument Air.
(a) Fertilizer Company shall make available for purchase by Refinery Company, for use solely
at the Refinery, Instrument Air at a flow rate of not less than 3mscf/minute to the extent produced
by the BOC Facility and available to Fertilizer Company, at a cost to Refinery Company as
designated on Exhibit B hereto and following reasonable request and notice from Refinery
Company.
(b) Refinery Company shall make available for purchase by Fertilizer Company for use solely at
the Fertilizer Plant, Instrument Air to the extent that Instrument Air is not available from the
BOC Facility and is available from Refinery Company at a flow rate of not less than 3 mscf/minute
and at a cost to Fertilizer Company as designated on Exhibit B and following reasonable
request and notice from the Fertilizer Company.
(c) Either Fertilizer Company or Refinery Company may terminate its obligation to make
Instrument Air available for purchase by the other party hereunder upon not less than twelve (12)
months prior written notice to the other party.
Section 2.4 Oxygen Supply to Refinery. Fertilizer Company shall provide to Refinery
Company, solely for use at the Refinery, any Oxygen produced by the BOC Facility and made available
to Fertilizer Company, as determined in a commercially reasonable manner by the Fertilizer Company
not to exceed 29.8 STPD, based on its then current or anticipated operational requirements for the
operation of the Fertilizer Plant, which Oxygen is not required for the operation of the Fertilizer
Plant, following reasonable notice from Refinery Company requesting such Oxygen, at a cost to
Refinery Company as designated on Exhibit B hereto.
Section 2.5 Coke Supply to Fertilizer Plant. The terms and conditions governing
Refinery Company’s sales of Coke to Fertilizer Company shall be set forth in the Coke Supply
Agreement.
Section 2.6 Sulfur; TKI Agreements.
(a) TKI Phase II Agreement. Refinery Company shall provide to TKI the utilities
described in Section 2.6 of the TKI Phase II Agreement. Fertilizer Company shall reimburse
Refinery Company for such utilities provided. Without limiting the foregoing, Fertilizer Company
shall reimburse Refinery Company for electricity used by the Offsite Sulfur Recovery Unit as
determined by the estimated electrical load of the Offsite Sulfur Recovery Unit, which estimated
electrical load is 1,051 kilowatts. The number of kilowatts provided for in the immediately
preceding sentence will be multiplied by the average rate per kilowatt hour that the Refinery
Company pays for electricity times the hours the Offsite Sulfur Recovery Unit is in operation in
the calendar month for which such electricity reimbursement is being calculated. Refinery Company
shall send a monthly invoice for such electricity cost as calculated in this Subsection along with
Fertilizer Company’s allocated share (as such allocation is reasonably agreed to by the Parties) of
such other utilities provided by Refinery Company to TKI as required by the TKI Phase II Agreement.
Fertilizer Company shall pay each such invoice within 15 days after receipt. Refinery Company
shall receive, at no cost to either Owner, all return utility streams consisting primarily of low
pressure steam (but excluding sulfur from the Offsite Sulfur
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Recovery Unit) and steam condensate under the TKI Phase II Agreement. Fertilizer Company
shall not amend or terminate the TKI Phase II Agreement without the prior written consent of
Refinery Company, which consent shall not be unreasonably withheld or delayed. Refinery Company
shall not amend or terminate the TKI Phase I Agreement without the prior written consent of
Fertilizer Company, which consent shall not be unreasonably withheld or delayed.
(b) Cost Sharing. The TKI General Plant and Labor Costs shall be shared equally by
the Parties; provided, however, that in those instances where a particular cost can be reasonably
determined to be associated with a particular Party, such Party shall bear such cost.
Section 2.7 Water.
(a) Raw Water. The allocation of raw water rights and obligations between the
Fertilizer Company and the Refinery Company is provided in the Raw Water and Facilities Sharing
Agreement.
(b) Sour Water. Refinery Company shall receive and process, at no cost to Fertilizer
Company, all of the Sour Water produced at the Fertilizer Plant which does not exceed the volume
parameters set forth on Exhibit B hereto.
(c) Refinery Supply of Fire Water. Refinery Company shall, at no cost or expense to
Fertilizer Company, use reasonable efforts to keep and maintain its Fire Water systems, tanks,
water inventory and equipment in such condition, repair and state of readiness so as to allow
uninterrupted service to Fertilizer Company for use at the Fertilizer Plant and shall grant
Fertilizer Company access to the Fire Water system for use of such system in conjunction with the
Fire Water system of the Fertilizer Plant, for use in connection with Fertilizer Company’s street
sweeper and for use in washing down the Fertilizer Plant coke pad. The Refinery’s Fire Water
system and the points of access by Fertilizer Company to the Fire Water system are designated on
Plot Plan A which constitutes part of Exhibit A hereto. Notwithstanding the foregoing,
Fertilizer Company acknowledges and agrees that Refinery Company shall not be liable for any
damages incurred resulting from its failure or inability to provide Fire Water hereunder. If the
Refinery Company should cease operations of the Refinery (including the Refinery Fire Water
system), Refinery Company shall provide advance notice of such cessation of operations to
Fertilizer Company and Fertilizer Company may, upon notice to Refinery Company, operate such
Refinery Fire Water System, at the cost and expense of the Fertilizer Company and for the benefit
of the Fertilizer Company for a period of up to two years.
Section 2.8 Security. Fertilizer Company agrees to pay its pro rata share (determined
as provided in Exhibit B) of security services provided under the Security Contract upon
receipt of an invoice from Refinery Company for such pro rata share, as provided in Exhibit
B. Refinery Company and Fertilizer Company shall also cooperate in developing and
administering a mutual security plan. Refinery Company may, upon six (6) months prior written
notice to Fertilizer Company, require Fertilizer Company to enter into a separate agreement for
security services and adopt and administer a security plan covering solely its premises.
Fertilizer Company may, upon six (6) months prior written notice to Refinery Company, terminate
taking security services from Refinery Company, whereupon at the end of such six (6) month period,
Fertilizer Company may cease paying Refinery Company for such security services and will
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adopt and administer its own security plan. Fertilizer Company acknowledges and agrees that
Refinery Company shall not be liable to Fertilizer Company for any damages, losses or other
liability arising, directly or indirectly, out of the services performed by any service provider
engaged by Refinery Company to perform security services, or arising, directly or indirectly, out
of any mutual security plan.
Section 2.9 Hydrogen Supply to Refinery.
(a) Until the Hydrogen Reduction Date, Fertilizer Company agrees to provide to Refinery
Company all of Refinery Company’s net Hydrogen requirements at the Refinery (ie. Refinery Company’s
Hydrogen requirements at the Refinery in excess of its own Hydrogen production at the Refinery)
from time to time at the flow rate and specifications, and at the price, set forth on Exhibit
B. Refinery Company shall provide Fertilizer Company no later than each August 1 prior to the
Hydrogen Reduction Date a good faith forecast setting forth Refinery Company’s estimated monthly
Hydrogen usage for the annual period starting August 1. Refinery Company shall also provide not
later than the last day of each calendar month a request to Fertilizer Company setting forth
Refinery Company’s good faith estimate of the daily quantity of Hydrogen it requires for the
succeeding calendar month. If Refinery Company decides not to take Hydrogen from Fertilizer
Company in any calendar month then Refinery Company shall so notify Fertilizer Company no later
than the fifteenth (15th) day of the calendar month immediately preceding the calendar
month for which Refinery Company does not require Hydrogen. To the extent Refinery Company
requires Hydrogen in excess of the amount set forth in any monthly notice to Fertilizer Company,
Fertilizer Company shall use commercially reasonable efforts to promptly fulfill such supplemental
request, provided that Fertilizer Company shall not be required to incur any additional costs in
fulfilling any such supplemental request. Refinery Company shall only be invoiced for Hydrogen
actually requested by and provided to Refinery Company (and shall not be liable in the event the
amount requested is less than Refinery Company’s good faith estimate).
(b) Commencing on the Hydrogen Reduction Date and continuing during the term of this Agreement
(the “Hydrogen Reduction Period”):
(i) Fertilizer Company agrees to provide to Refinery Company, upon reasonable request,
up to 30 mmscfd of Hydrogen (the “Initial Requirement”) during any ten (10) consecutive day
period (an “Initial Requirement Period”), provided that:
(A) If Fertilizer Company provides any Initial Requirement to Refinery Company
during an Initial Requirement Period, then Fertilizer Company shall have no
obligation to provide any further Initial Requirement to Refinery Company for a
period (the “Replenishment Period”) of thirty (30) days following the last day of
the most recent Initial Requirement Period during which any Initial Requirement was
provided; and
(B) Refinery Company shall pay to Fertilizer Company (in addition to the
applicable price set forth on Exhibit B for Hydrogen purchased by Refinery
Company from Fertilizer Company during the Hydrogen Reduction Period) a Monthly
Demand Charge for each month during the Hydrogen Reduction Period
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as provided in Exhibit B. Such Monthly Demand Charge shall be due and
payable in advance on the first day of each calendar month during the Hydrogen
Reduction Period (prorated with respect to any partial month occurring at the
beginning or end of the Hydrogen Reduction Period).
(ii) To the extent that Fertilizer Company has for any Initial Requirement Period
provided to Refinery Company all of the Initial Requirement that Fertilizer is required to
provide pursuant to Section 2.9(b)(i), then, in addition to such Initial Requirement,
Fertilizer Company agrees to provide, upon reasonable request, to Refinery Company during
such Initial Requirement Period and related Replenishment Period up to an additional 30
mmscfd of Hydrogen (the “Additional Requirement”), provided that Refinery Company
compensates Fertilizer Company through one of the following methods, as elected by the
Refinery Company at the time of requesting any Hydrogen that constitutes an Additional
Requirement:
(A) Refinery Company will be entitled to 67,000 scf of Hydrogen for every ST of
Ammonia purchased by Refinery Company from other sources and delivered by Refinery
Company to Fertilizer Company, via truck or rail, during the Hydrogen Reduction
Period; or
(B) Refinery Company may purchase Hydrogen from Fertilizer Plant at the
Additional Requirement Price as provided in Exhibit B.
(c) Notwithstanding the provisions of subsections (a) and (b) above, Refinery Company may also
purchase Hydrogen from Fertilizer Company upon such terms and conditions as Refinery Company and
Fertilizer Company may mutually agree upon in writing from time to time with respect to any single
purchase, any series of purchases, or otherwise.
Section 2.10 Natural Gas. Refinery Company is a party to a “Sales and Transportation
Service Agreement” dated August 27, 1992 with United Cities Gas Company (now Atmos Energy), and the
City of Coffeyville (“Gas Contract”) pursuant to which natural gas is transported to the Refinery
and the Fertilizer Plant. Refinery Company will nominate and purchase natural gas transportation
and natural gas supplies for the Fertilizer Company and Fertilizer Company agrees to coordinate
with Refinery Company with respect to such nominations and to provide Refinery Company timely
information regarding Fertilizer Company’s requirements for natural gas transportation and natural
gas supplies. Refinery Company shall provide Fertilizer Company with an invoice for natural gas
supply and transportation services received by Fertilizer Company promptly following Refinery
Company’s receipt of invoices from Atmos Energy (or Refinery Company’s then-current natural gas
transportation provider(s)), any relevant interstate natural gas pipeline and the then current
natural gas supplier(s).
At the request of either Fertilizer Company or Refinery Company, the Parties agree to use
their commercially reasonable efforts to (i) add Fertilizer Company as a party to the Gas Contract
or to reach some other mutually acceptable accommodation with Atmos (including, but not limited to
separate natural gas transportation agreements) whereby both Refinery Company and Fertilizer
Company would each be able to receive, on an individual basis, natural gas
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transportation service from Atmos on similar terms and conditions as are currently set forth
in the Gas Contract; and (ii) separate natural gas purchasing so that the Refinery Company and
Fertilizer Company would each purchase for their own account the natural gas supplies to be
delivered to the Refinery and Fertilizer Plant respectively.
Section 2.11 Railroad Tracks. Refinery Company and Fertilizer Company currently share
rail services on railroad tracks that traverse the Refinery premises in part and the Fertilizer
Plant premises in part, some of which railroad tracks are owned by Union Pacific and operated by
South Kansas & Oklahoma Railroad, Inc., or their successors (“Main Tracks”), some of which railroad
tracks are owned and operated by Refinery Company (“Refinery Tracks”), and some of which railroad
tracks are owned and operated by Fertilizer Company (“Fertilizer Tracks”). The Parties agree to
coordinate and cooperate to ensure that each Party has access to the Main Tracks, the Refinery
Tracks, and the Fertilizer Tracks for the receipt of Feedstocks and delivery out of products, and
to pay a mutually agreed prorated share of the costs and expense of maintaining such railroad
tracks based upon an approximation of actual use. Each Party shall use its best commercially
reasonable efforts to move railroad cars from the Main Tracks to the Refinery Tracks or the
Fertilizer Tracks as soon as possible following arrival of such railroad cars. Each Party shall
utilize such Party’s own railroad sidings for the loading and unloading of any products or other
items by such Party. Railroad track sharing between the Parties shall also be subject to and in
accordance with the railroad trackage easements provided for in the Easement Agreement.
Section 2.12 South Administration Building, Laboratory Building, and Oil Storage Building
Use and Occupancy. The Refinery Company will allow the Fertilizer Company to occupy a portion
of the buildings known on the date hereof as the “South Administration Building,” the “Laboratory
Building,” and the Oil Storage Building for, without limitation, purposes of office space,
maintenance space, storage and laboratory space therein, as more specifically provided in the Lease
Agreement.
ARTICLE 3
TERM
Section 3.1 Term. This Agreement shall be for an initial term of twenty (20) years.
The term of this Agreement shall be automatically extended following the initial term for
additional successive five (5) year renewal periods, unless either party gives notice to the other
party, not less than three (3) years prior to the date that any such renewal period would commence,
that such party does not desire to extend and renew the term of this Agreement, in which event this
Agreement shall terminate upon the expiration of the term in which the notice of nonrenewal is
given.
Section 3.2 Termination. Notwithstanding Section 3.1, this Agreement may be
terminated by mutual agreement of the Parties. This Agreement may also be terminated as follows:
(a) This Agreement may be terminated by one Party (the “Terminating Party”) upon notice to the
other Party (the “Breaching Party”), following the occurrence of an Event of
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Breach with respect to the Breaching Party. For purposes hereof, an “Event of Breach” shall
occur when both of the following exist: (i) a breach of this Agreement by the Breaching Party has
not been cured by such Breaching Party within thirty (30) days after receipt of written notice
thereof from the Terminating Party or, in the case of a breach that is not reasonably feasible to
effect a cure within said 30-day period, within ninety (90) days after such receipt provided that
the Breaching Party diligently prosecutes the cure of such breach; and (ii) the breach materially
and adversely affects the ability of the Terminating Party to operate its Refinery or its
Fertilizer Plant, as the case may be.
(b) This Agreement may be terminated by the Refinery Company effective as of the permanent
termination of substantially all of the operations at the Refinery (with no intent by Refinery
Company or its successor to recommence operations at the Refinery); provided, however, that notice
of such permanent termination of operations shall be provided by the Refinery Company to Fertilizer
Company at least twelve (12) months prior to such permanent termination.
(c) This Agreement may be terminated by the Fertilizer Company effective as of the permanent
termination of substantially all of the fertilizer production operations at the Fertilizer Plant
(with no intent by Fertilizer Company or its successor to recommence operations at the Fertilizer
Plant); provided, however, that notice of such permanent termination of operations shall be
provided by the Fertilizer Company to Refinery Company at least twelve (12) months prior to such
permanent termination.
(d) This Agreement may be terminated by one Party upon notice to the other Party following (i)
the appointment of a receiver for such other Party or any part of its property, (ii) a general
assignment by such other Party for the benefit of creditors of such other Party, or (iii) the
commencement of a proceeding under any bankruptcy, insolvency, reorganization, arrangement or other
law relating to the relief of debtors by or against such other Party; provided, however, that if
any such appointment or proceeding is initiated without the consent or application of such other
Party, such appointment or proceeding shall not constitute a termination event under this Agreement
until the same shall have remained in effect for sixty (60) days.
Section 3.3 Effects of Expiration or Termination. Refinery Company and Fertilizer
Company agree that upon and after expiration or termination of this Agreement:
(a) Each Party will remain obligated to make any payment due to the other Party hereunder for
any Feedstock or Service delivered to or purchased by such Party prior to termination.
(b) Liabilities of any Party arising from any act, breach or occurrence prior to termination
will remain with such Party.
(c) The Parties’ rights and obligations under Section 10.6 and ARTICLES 5, 6, 7, 8, 9, 11, 12
and 15 will survive the expiration or termination of this Agreement
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ARTICLE 4
PAYMENT
Section 4.1 Payment. Any amount payable hereunder shall be represented by an invoice
therefor provided by the Party to receive said payment to the other Party. All such invoices shall
be submitted weekly (or on such other periodic basis as the Parties may agree to in writing from
time to time with respect to any particular Feedstock or Service) and set forth sufficient detail
to reflect the determination of the amount payable hereunder. Unless otherwise indicated, all such
invoices will be due net fifteen (15) days. The Parties shall make payment in full of the amount
due under each invoice in strict compliance with the payment terms as set forth in this Agreement
without any deduction for any discount or credits, contra or setoffs of any kind or amount
whatsoever unless expressly authorized in writing by each Party prior to the payment date relating
to such invoice(s), and except that each Party shall be entitled to offset, against any amount
payable by such Party to the other Party for Feedstocks or Services hereunder or for Coke under the
Coke Supply Agreement, any amounts payable from such other Party for Feedstocks or Services
hereunder.
Section 4.2 Delinquencies. To the extent any amount payable under this Agreement is
not paid when due, then in addition to the amount payable and in addition to all other available
rights and remedies, the applicable Party also shall be obligated to pay interest on such amount
payable from and after the due date for such payment until such payment is made at a rate of
interest per annum equal to three percent (3%) above the Prime Rate (the “Late Payment Rate”).
ARTICLE 5
DISPUTES
Section 5.1 Resolution of Disputes. The Parties shall in good faith attempt to
resolve promptly and amicably any dispute between the Parties arising out of or relating to this
Agreement (each a “Dispute”) pursuant to this Article 5. The Parties shall first submit the
Dispute to the Fertilizer Company Representative and the Refinery Company Representative, who shall
then meet within fifteen (15) days to resolve the Dispute. If the Dispute has not been resolved
within forty-five (45) days after the submission of the Dispute to the Fertilizer Company
Representative and the Refinery Company Representative, the Dispute shall be submitted to a
mutually agreed non-binding mediation. The costs and expenses of the mediator shall be borne
equally by the Parties, and the Parties shall pay their own respective attorneys’ fees and other
costs. If the Dispute is not resolved by mediation within ninety (90) days after the Dispute is
first submitted to the Refinery Company Representative and the Fertilizer Company Representative as
provided above, then the Parties may exercise all available remedies.
Section 5.2 Multi-Party Disputes. The Parties acknowledge that they or their
respective affiliates contemplate entering or have entered into various additional agreements with
third parties that relate to the subject matter of this Agreement and that, as a consequence,
Disputes may arise hereunder that involve such third parties (each a “Multi-Party Dispute”).
Accordingly, the Parties agree, with the consent of such third parties, that any such Multi-Party
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Dispute, to the extent feasible, shall be resolved by and among all the interested parties
consistent with the provisions of this Article 5.
ARTICLE 6
INDEMNIFICATION
Section 6.1
Indemnification Obligations. Each of the Parties (each, an “Indemnitor”)
shall indemnify, defend and hold the other Party and its respective officers, directors, members,
managers and employees (each, an “Indemnitee”) harmless from and against all liabilities,
obligations, claims, losses, damages, penalties, deficiencies, causes of action, costs and
expenses, including, without limitation, attorneys’ fees and
expenses (collectively, “Losses”)
imposed upon, incurred by or asserted against the person seeking indemnification that are caused
by, are attributable to, result from or arise out of the breach of this Agreement by the Indemnitor
or the negligence or willful misconduct of the Indemnitor, or of any officers, directors, members,
managers, employees, agents, contractors and/or subcontractors acting for or on behalf of the
Indemnitor. Any indemnification obligation pursuant to this Article 6 with respect to any
particular Losses shall be reduced by all amounts actually recovered by the Indemnitee from third
parties, or from applicable insurance coverage, with respect to such Losses. Upon making any
payment to any Indemnitee, the Indemnitor shall be subrogated to all rights of the Indemnitee
against any third party in respect of the Losses to which such payment relates, and such Indemnitee
shall execute upon request all instruments reasonably necessary to evidence and perfect such
subrogation rights. If the Indemnitee receives any amounts from any third party or under
applicable insurance coverage subsequent to an indemnification payment by the Indemnitor, then such
Indemnitee shall promptly reimburse the Indemnitor for any payment made or expense incurred by such
Indemnitor in connection with providing such indemnification payment up to the amount received by
the Indemnitee, net of any expenses incurred by such Indemnitee in collecting such amount.
Section 6.2 Indemnification Procedures.
(a) Promptly after receipt by an Indemnitee of notice of the commencement of any action that
may result in a claim for indemnification pursuant to this Article 6, the Indemnitee shall notify
the Indemnitor in writing within 30 days thereafter; provided, however, that any omission to so
notify the Indemnitor will not relieve it of any liability for indemnification hereunder as to the
particular item for which indemnification may then be sought (except to the extent that the failure
to give notice shall have been materially prejudicial to the Indemnitor) nor from any other
liability that it may have to any Indemnitee. The Indemnitor shall have the right to assume sole
and exclusive control of the defense of any claim for indemnification pursuant to this Article 6,
including the choice and direction of any legal counsel.
(b) An Indemnitee shall have the right to engage separate legal counsel in any action as to
which indemnification may be sought under any provision of this Agreement and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the expense of such
Indemnitee unless (i) the Indemnitor has agreed in writing to pay such fees and expenses, (ii) the
Indemnitor has failed to assume the defense thereof and engage legal counsel within a reasonable
period of time after being given the notice required above, or (iii) the
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Indemnitee shall have been advised by its legal counsel that representation of such Indemnitee
and other parties by the same legal counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same legal counsel has been
proposed) due to actual or potential conflicts of interests between them. It is understood,
however, that to the extent more than one Indemnitee is entitled to engage separate legal counsel
at the Indemnitor’s expense pursuant to clause (iii) above, the Indemnitor shall, in connection
with any one such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys at any time for all such
Indemnitees having the same or substantially similar claims against the Indemnitor, unless but only
to the extent the Indemnitees have actual or potential conflicting interests with each other.
(c) The Indemnitor shall not be liable for any settlement of any action effected without its
written consent, but if settled with such written consent, or if there is a final judgment against
the Indemnitee in any such action, the Indemnitor agrees to indemnify and hold harmless the
Indemnitee to the extent provided above from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
ARTICLE 7
ASSIGNMENT
This Agreement shall extend to and be binding upon the Parties hereto, their successors and
permitted assigns. Either Party may assign its rights and obligations hereunder solely (i) to an
affiliate under common control with the assigning Party, provided that any such assignment shall
require the prior written consent of the other Party hereto (such consent not to be unreasonably
withheld or delayed), and provided that the applicable assignee agrees, in a written instrument
delivered to (and reasonably acceptable to) such other Party, to be fully bound hereby, or (ii) to
a Party’s lenders for collateral security purposes, provided that in the case of any such
assignment each Party agrees (x) to cooperate with the lenders in connection with the execution and
delivery of a customary form of lender consent to assignment of contract rights and (y) any delay
or other inability of a Party to timely perform hereunder due to a restriction imposed under the
applicable credit agreement or any collateral document in connection therewith shall not constitute
a breach hereunder. In addition, each Party agrees that it will assign its rights and obligations
hereunder to a transferee acquiring all or substantially all of the equity in or assets of the
assigning Party related to the Refinery or Fertilizer Plant (as applicable), which transferee must
be approved in writing by the non-assigning Party (such approval not to be unreasonably withheld or
delayed) and must agree in writing (with the non-assigning Party) to be fully bound hereby.
ARTICLE 8
GOVERNING LAW AND VENUE
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
KANSAS WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SAID STATE. THE PARTIES AGREE THAT
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ANY ACTION BROUGHT IN CONNECTION WITH THIS AGREEMENT MAY BE MAINTAINED IN ANY COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE OF KANSAS, AND EACH PARTY AGREES TO SUBMIT PERSONALLY
TO THE JURISDICTION OF ANY SUCH COURT AND HEREBY WAIVES THE DEFENSES OF FORUM NON-CONVENIENS OR
IMPROPER VENUE WITH RESPECT TO ANY ACTION BROUGHT IN ANY SUCH COURT IN CONNECTION WITH THIS
AGREEMENT.
ARTICLE 9
LIMITATION OF LIABILITY
In no event, whether based on contract, indemnity, warranty, tort (including negligence),
strict liability or otherwise, shall either Party, its employees, suppliers or subcontractors, be
liable for loss of profits or revenue or special, incidental, exemplary, punitive or consequential
damages; provided, however, that the foregoing limitation shall not preclude recourse to any
insurance coverage maintained by the Parties pursuant to the requirements of this Agreement or
otherwise.
ARTICLE 10
OPERATION OF FERTILIZER PLANT AND REFINERY
Section 10.1 Cooperation. Refinery Company and Fertilizer Company shall cause their
respective personnel located at the Refinery and the Fertilizer Plant to fully cooperate with, and
comply with the reasonable requests of, the other Party and its employees, agents and contractors
to support such other Party’s operations in a safe and efficient manner; provided, however, that
nothing in this Section 10.1 shall require the expenditure of any monies other than may otherwise
be required elsewhere in this Agreement. In addition, the Parties agree to (i) meet promptly
following the request by either Party to develop a long term plan for the bifurcation of those
properties and services that one Party or the other deems appropriate to bifurcate and (ii)
cooperate fully with each other to implement such plan in an expeditious and cost effective manner.
The costs of implementing any such program, such as costs and expense of negotiating with contract
counterparties and legal fees, shall be borne equally unless otherwise agreed.
Section 10.2 Fertilizer Plant Operations. Subject to the express obligations of the
Parties under this Agreement, no provision of this Agreement is intended as, or shall be construed
to be, any agreement on the part of Fertilizer Company to operate the Fertilizer Plant in any
particular manner or to continue operations at the Fertilizer Plant, all in its sole discretion;
provided, however, that prior notice of any permanent termination of operations shall be provided
by Fertilizer Company to the Refinery Company pursuant to Section 3.2(c).
Section 10.3 Refinery Operations. Subject to the express obligations of the Parties
under this Agreement, no provision of this Agreement is intended as, or shall be construed to be,
any agreement on the part of Refinery Company to operate the Refinery in any particular manner or
to continue operations at the Refinery, all in its sole discretion; provided, however, that prior
notice of any permanent termination of operations shall be provided by Refinery Company to the
Fertilizer Company pursuant to Section 3.2(b).
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Section 10.4 Suspension of Services.
(a) Temporary Suspension of Feedstock or Services for Repairs/Maintenance. The
provision of one or more of the Feedstocks or Services by the Parties may be temporarily suspended
for such periods of time as are necessary to carry out scheduled or unscheduled maintenance or
necessary repairs or improvements to the Refinery or the Fertilizer Plant, as the case may be
(each, a “Temporary Service Suspension"). In connection with any such Temporary Service
Suspension, Refinery Company or Fertilizer Company (as applicable) may elect to reduce, interrupt,
allocate, alter or change the Feedstock or Services that it is required to provide hereunder,
provided that, except in the case of emergencies, the applicable Party shall deliver not less than
thirty (30) days prior written notice to the other Party of any planned Temporary Service
Suspension, including relevant details relating to the proposed reduction, interruption,
allocation, alteration or change in the Feedstock or Services as a result of the Temporary Service
Suspension. Upon the occurrence and during the continuation of Temporary Service Suspension, the
parties shall cooperate to attempt to arrange for Feedstock or Services to be furnished to the
other Party in an alternate manner or by a third party acceptable to affected Party, to minimize or
reduce the effect of such Temporary Service Suspension on the applicable Party’s operations.
(b) Emergency Repairs. The Parties shall provide notice to the other as soon as
reasonably possible (and in any event within twenty-four (24) hours) in the event of any emergency
repair or unplanned required maintenance that is affecting or will affect provision of the
Services. Each Party shall use commercially reasonable efforts to complete any such emergency
repairs in a timely manner and to resume the provision of such Service as soon as practicable.
Section 10.5 Priority Supply. Refinery Company and Fertilizer Company shall each have
priority over third parties with respect to any Feedstocks and Services to be made available to
such Party (the “Receiving Party”) by the other Party (the “Supplying Party”) under this Agreement,
provided that, to the extent that purchase of any particular Feedstock or Service by a Receiving
Party is discretionary on the part of the Receiving Party and the Receiving Party has not purchased
from the Supplying Party the quantity of the Feedstock or Service that is presently available from
the Supplying Party, then the Supplying Party may offer and sell such available Feedstock or
Service to a third party so long as the Supplying Party first gives to the Receiving Party written
notice of such prospective offer and sale and the option to purchase such Feedstock or Service on
the terms provided in this Agreement with respect to such available Feedstock or Service, provided
that the Receiving Party exercises such option by written notice to the Supplying Party within five
(5) days following the date Supplying Party gives its written notice to Receiving Party with
respect to the available Feedstock or Service.
Section 10.6 Audit and Inspection Rights. Refinery Company and Fertilizer Company
shall each (“Requesting Party”) have the right, upon reasonable written notice to the other Party
(“Other Party”), to audit, examine and inspect, at reasonable times and locations, all
documentation, records, equipment, facilities, and other items owned or under the control of the
Other Party that are reasonably related to the Feedstocks and Services provided for under this
Agreement, solely for the purpose of confirming the measurement or pricing of, or tolerances or
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specifications of, any Feedstocks or Services, confirming compliance and performance by the
Other Party, or exercising any rights of the Requesting Party, under this Agreement.
Section 10.7 Upgrade Costs. In the event that either Refinery Company or Fertilizer
Company (“Requiring Company”) requires that any capital or other upgrades be made by the other
Party (“Upgrading Party”) to any of the Upgrading Party’s equipment or other facilities in
connection with the provision of any Feedstock or Services under this Agreement, the Upgrading
Party shall cooperate in implementing any such upgrades, provided that: (a) such upgrade does not
adversely affect in a material respect the Upgrading Party’s facilities or operations, and (b) the
Requiring Party pays (on terms and conditions acceptable to the Upgrading Party) any and all costs
of implementing such upgrade, and any increase in ongoing costs to the Upgrading Party (including
without limitation the costs of insurance, licenses, maintenance, permits, repairs, replacements,
and taxes).
Section 10.8 Successor Third Party Agreements. In the event that any of the BOC
Agreement, TKI Phase I Agreement, TKI Phase II Agreement, Gas Contract, or any other agreement with
or between any third parties that relates to any Feedstock or Services referred to in this
Agreement, terminates prior to the termination of this Agreement, the parties shall in good faith
cooperate to replace any such agreements with successor agreements with commercially similar terms,
in which case reference herein to the terminated third party agreement shall be deemed a reference
to the applicable successor agreement. In the event that such a successor agreement is not entered
into or is entered into on terms that are not commercially similar, then the parties will negotiate
in good faith to determine the terms and conditions, if any, that are commercially practicable for
the applicable Feedstock or Services to be furnished by one party to the other.
ARTICLE 11
NOTICES
Any notice, request, correspondence, information, consent or other communication to any of the
Parties required or permitted under this Agreement shall be in writing (including telex, telecopy,
or facsimile), shall be given by personal service or by telex, telecopy, facsimile, overnight
courier service, or certified mail with postage prepaid, return receipt requested, and properly
addressed to such Party and shall be effective upon receipt. For purposes hereof the proper
address of the Parties shall be the address stated beneath the corresponding Party’s name below, or
at the most recent address given to the other Parties hereto by notice in accordance with this
Article:
If to Refinery Company, to:
Coffeyville Resources
Refining & Marketing, LLC
Attention: Chief Executive Officer
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If to Fertilizer Company, to:
Coffeyville Resources
Nitrogen Fertilizers, LLC
or such other address(es) as either Party designates by registered or certified mail addressed to
the other Party.
ARTICLE 12
EXHIBITS
All of the Exhibits attached hereto are incorporated herein and made a part of this Agreement
by reference thereto.
ARTICLE 13
FORCE MAJEURE
Neither Party shall be liable to the other for failure of or delay in performance hereunder
(except for the payment of amounts due for Feedstocks or Services hereunder) to the extent that the
failure or delay is due to Force Majeure. Performance under this Agreement shall be suspended
(except for the payment of amounts due for Feedstocks or Services hereunder) during the period of
Force Majeure to the extent made necessary by the Force Majeure. No failure of or delay in
performance pursuant to this Article 13 shall operate to extend the term of this Agreement.
Performance under this Agreement shall resume to the extent made possible by the end or
amelioration of the Force Majeure event.
Upon the occurrence of any event of Force Majeure, the Party claiming Force Majeure shall
notify the other Party promptly in writing of such event and, to the extent possible, inform the
other Party of the expected duration of the Force Majeure event and the performance to be affected
by the event of Force Majeure under this Agreement. Each Party shall designate a person with the
power to represent such Party with respect to the event of Force Majeure. The Party claiming Force
Majeure shall use commercially reasonable efforts, in cooperation with the other Party and such
Party’s designee, to diligently and expeditiously end or ameliorate the Force Majeure event. In
this regard, the Parties shall confer and cooperate with one another in determining the most
cost-effective and appropriate action to be taken. If the Parties are unable to agree upon such
determination, the matter shall be determined by dispute resolution in accordance with Article 5.
ARTICLE 14
INSURANCE
Section 14.1 Minimum Insurance. During the term of this Agreement, Refinery Company
and Fertilizer Company shall each carry the minimum insurance described below.
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(a) Workers’ compensation with no less than the minimum limits as required by applicable law.
(b) Employer’s liability insurance with not less than the following minimum limits:
(i) Bodily injury by accident — $1,000,000 each accident;
(ii) Bodily injury by disease — $1,000,000 each employee; and
(iii) Bodily injury by disease — $1,000,000 policy limit.
(c) Commercial general liability insurance on ISO form CG 00 01 10 93 or an equivalent form
covering liability from premises, operations, independent contractor, property damage, bodily
injury, personal injury, products, completed operations and liability assumed under an insured
contract, all on an occurrence basis, with limits of liability of not less than $1,000,000 combined
single limits.
(d) Automobile liability insurance, on each and every unit of automobile equipment, whether
owned, non-owned, hired, operated, or used by Refinery Company or Fertilizer Company or their
employees, agents, contractors and/or their subcontractors covering injury, including death, and
property damage, in an amount of not less than $1,000,000 per accident.
(e) Excess liability insurance in the amount of $10,000,000 covering the risks and in excess
of the limits set for in subsections 14(b), (c) and (d) above.
Section 14.2 Additional Insurance Requirements. Refinery Company and Fertilizer
Company shall each abide by the following additional insurance requirements with respect to all
insurance policies required by Section 14.1, as follows:
(a) All insurance policies purchased and maintained in compliance with subsection 14.1(c), (d)
and (e) above by one party (the “Insuring Party”), as well as any other excess and/or umbrella
insurance policies maintained by the Insuring Party, shall name the other party and their
collective directors, officers, partners, members, managers, general partners, agents, and
employees as additional insureds, with respect to any claims related to losses caused by the
Insuring Party’s business activities or premises. Those policies referred to in subsection 14.1(c)
shall be endorsed to provide that the coverage provided by the Insuring Party’s insurance carriers
shall always be primary coverage and non-contributing with respect to any insurance carried by the
other Party with respect to any claims related to liability or losses caused by the Insuring
Party’s business activities or premises.
(b) Those policies referred to in Section 14.1, and in subsection 14.2(e), shall be endorsed
to provide that underwriters and insurance companies of each of Refinery Company and Fertilizer
Company shall not have any right of subrogation against the other Party or any of such other
Party’s directors, officers, members, managers, general partners, agents, employees, contractors,
subcontractors, or insurers.
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(c) Those policies referred to in subsection 14.1 shall be endorsed to provide that 30 days
prior written notice shall be given to the other Party in the event of cancellation, no-payment of
premium, or material change in the policies.
(d) Each of Refinery Company and Fertilizer Company shall furnish the other, prior to the
commencement of any operations under this Agreement, with a certificate or certificates, properly
executed by its insurance carrier(s), showing all the insurance described in subsection 14.1 to be
in full force and effect.
(e) The Refinery Company and Fertilizer Company shall each be responsible for its own property
and business interruption insurance.
ARTICLE 15
MISCELLANEOUS
Section 15.1 Confidentiality.
(a) During the course of the Parties’ performance hereunder, the Parties acknowledge and agree
that each of them may receive or have access to confidential information of the other Party
(“Confidential Information”). “Confidential Information” of a Party (“First Party”) shall include
any and all information relating to its business, including, but not limited to, inventions,
concepts, designs, processes, specifications, schematics, equipment, reaction mechanisms,
processing techniques, formulations, chemical compositions, technical information, drawings,
diagrams, software (including source code), hardware, control systems, research, test results,
plant layout, feasibility studies, procedures or standards, know-how, manuals, patent information,
the identity of or information concerning current and prospective customers, suppliers,
consultants, licensors, licensees, contractors, subcontractors and/or other agents, financial and
sales information, current or planned commercial activities, business strategies, records,
marketing plans, or other information relating to its business activities or operations and those
of its affiliates, customers, suppliers, consultants, licensors, contractors, subcontractors,
agents and/or any others to whom such First Party owes a duty of confidentiality, which (i) is
identified in writing as “Confidential,” “Restricted,” “Proprietary Information” or other similar
marking, or (ii) is known by the other Party (the “Second Party”) to be considered confidential or
proprietary, or (iii) should be known or understood to be confidential or proprietary by an
individual exercising reasonable commercial judgment in the circumstances.
(b) Confidential Information of a First Party does not include information to the extent such
information: (i) is or becomes generally available to and/or known by the public through no fault
of the Second Party, or (ii) is or becomes generally available to the Second Party on a
non-confidential basis from a source other than the First Party or its representatives,
provided that such source was not known to the Second Party to be bound by a confidentiality
agreement with the First Party, or (iii) was previously known to the Second Party or its affiliates
as evidenced by written records, or (iv) is or was independently developed, as evidenced by written
records, by or on behalf of the Second Party or its affiliates by individuals who did not directly
or indirectly receive relevant Confidential Information of the First Party. Specific disclosures
shall not be deemed to be within the foregoing exceptions merely because they are
22
embraced by more
general information within the exceptions. In addition, any combination of features disclosed
shall not be deemed to be within the foregoing exceptions merely because individual features may be
within the exceptions.
(c) The Parties agree that: (i) as between the Parties, a First Party’s Confidential
Information shall remain the exclusive property of such First Party, and (ii) the Second Party
shall use the First Party’s Confidential Information solely for purposes of performing such Second
Party’s obligations under this Agreement (the “Purpose”), and for no other reason, and (iii) the
Second Party shall limit its disclosure of the First Party’s Confidential Information to those of
its affiliates, employees, agents and other third parties with a “need-to-know” such information
for the Purpose and shall not disclose the Confidential Information (in whole or in part) to any
other party, and (iv) the Second Party shall ensure that any affiliates, employees, agents or other
third parties to whom the First Party’s Confidential Information is disclosed are obligated in
writing to abide by confidentiality and non-use restrictions at least as stringent as those set
forth in this Agreement, and (v) the Second Party shall protect the Confidential Information of the
First Party to the same extent the Second Party protects its own like trade secrets and
confidential information, but in no event less than commercially reasonable care.
(d) In the event a Second Party receives a request or is required by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or similar process or
legal requirement to disclose all or any part of the First Party’s Confidential Information, the
Second Party agrees to (i) immediately notify the First Party in writing of the existence, terms
and circumstances surrounding such a request or requirement, and (ii) assist the First Party in
seeking a protective order or other appropriate remedy satisfactory to the First Party (at the
expense of the First Party). In the event that such protective order or other remedy is not
obtained (or the First Party waives compliance with the provisions hereof), (x) the Second Party
may disclose that portion of the First Party’s Confidential Information which it is legally
required to disclose, and (y) the Second Party shall exercise reasonable efforts to obtain
assurance that confidential treatment will be accorded the Confidential Information to be
disclosed, and (z) the Second Party shall give written notice to First Party of the information to
be so disclosed as far in advance of its disclosure as practicable. In addition, a Second Party
may disclose all or any part of the First Party’s Confidential Information to the Second Party’s
funding sources and their representatives, provided that Second Party shall exercise reasonable
efforts to obtain assurance that confidential treatment will be accorded the Confidential
Information to be disclosed, and the Second Party shall give written notice to First Party of the
information to be so disclosed as far in advance of its disclosure as practicable.
(e) The parties agree that any violation of this Section 15.1 by a Second Party or any
affiliates, employees, agents or other third parties to whom the Confidential Information of First
Party is disclosed may be enforced by the First Party by obtaining injunctive or specific relief
from a court of competent jurisdiction. Such relief shall be cumulative and not exclusive of any
other remedies available to the First Party at law or in equity, including, but not limited
to, damages and reasonable attorneys’ fees.
Section 15.2 Headings. The headings used in this Agreement are for convenience only
and shall not constitute a part of this Agreement.
23
Section 15.3 Independent Contractors. The Parties acknowledge and agree that neither
Party, by reason of this Agreement, shall be an agent, employee or representative of the other with
respect to any matters relating to this Agreement, unless specifically provided to the contrary in
writing by the other Party. This Agreement shall not be deemed to create a partnership or joint
venture of any kind between Refinery Company and Fertilizer Company.
Section 15.4 Ancillary Documentation, Amendments and Waiver. The Parties may, from
time to time, use purchase orders, acknowledgments or other instruments to order, acknowledge or
specify delivery times, suspensions, quantities or other similar specific matters concerning the
Feedstocks or relating to performance hereunder, but the same are intended for convenience and
record purposes only and any provisions which may be contained therein are not intended to (nor
shall they serve to) add to or otherwise amend or modify any provision of this Agreement, even if
signed or accepted on behalf of either Party with or without qualification. This Agreement may not
be amended, modified or waived except by a writing signed by all parties to this Agreement that
specifically references this Agreement and specifically provides for an amendment, modification or
waiver of this Agreement. No waiver of or failure or omission to enforce any provision of this
Agreement or any claim or right arising hereunder shall be deemed to be a waiver of any other
provision of this Agreement or any other claim or right arising hereunder.
Section 15.5 Construction and Severability. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and in accordance with industry
standards and not strictly for or against either Party. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement.
Section 15.6 Waiver. The waiver by either Party of any breach of any term, covenant
or condition contained in this Agreement shall not be deemed to be a waiver of such term, covenant
or condition or of any subsequent breach of the same or of any other term, covenant or condition
contained in this Agreement. No term, covenant or condition of this Agreement will be deemed to
have been waived unless such waiver is in writing.
Section 15.7 No Third Party Beneficiaries. The Parties each acknowledge and agree
that there are no third party beneficiaries having rights under or with respect to this Agreement,
including without limitation, under the BOC Agreement, TKI I Phase I Agreement, TKI Phase II
Agreement, or Gas Contract.
Section 15.8 Entire Agreement. This Agreement, including all Exhibits hereto,
constitutes the entire, integrated agreement between the Parties regarding the subject matter
hereof and supersedes any and all prior and contemporaneous agreements, representations and
understandings of the Parties, whether written or oral.
24
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date
first above set forth.
COFFEYVILLE RESOURCES | COFFEYVILLE RESOURCES NITROGEN | |||||
REFINING & MARKETING, LLC | FERTILIZERS, LLC | |||||
By:
|
By: | |||||
25
EXHIBIT A
FACILITIES DESCRIPTION
The Fertilizer Plant is identified as such on Plot Plan A attached hereto.
The Gasification Unit is identified as such on Plot Plan A attached hereto.
The Ammonia Synthesis Loop is identified as such on Plot Plan A attached hereto.
The UAN Plant is identified as such on Plot Plan A attached hereto.
The BOC Facility is identified as such on Plot Plan A attached hereto.
The Administrative and Warehouse Building is identified as such on Plot Plan A attached
hereto.
The Feedstock Delivery Points are identified as such on Plot Plan A and Piping Plans A-I to
A-9 attached hereto. The coke Feedstock Delivery Point is the south side of the Refinery’s
coke pit.
The Utility Facilities are identified as such on Plot Plan A attached hereto.
The Grounds are identified as such on Plot Plan A attached hereto.
The Offsite Sulfur Recovery Unit is identified as such on Plot Plan A attached hereto.
The Refinery is identified as such on Plot Plan A attached hereto.
A-1
EXHIBIT B
ANALYSIS, SPECIFICATIONS AND PRICING FOR FEEDSTOCK AND SERVICES
FEEDSTOCKS:
Hydrogen |
||
- Gaseous |
||
- Purity
|
not less than 99.9 mol.% | |
- Flow
|
21 mmscf/day maximum | |
- Pressure
|
450 psig ± 30 psi | |
- Carbon Monoxide
|
less than 50 ppm | |
- Carbon Dioxide
|
less than 10 ppm | |
- Price
|
The Hydrogen price shall be $0.46 per 100scf based on an Ammonia Price of $300.00 per short ton. The Hydrogen price per 100scf shall adjust as of the first day of each calendar month up or down in the same percentage as the Ammonia Price for the immediately preceding calendar month adjusts up or down from $300.00 per short ton. Until the Hydrogen Reduction Date, the Hydrogen price shall be discounted to seventy percent (70%) of the Hydrogen price otherwise calculated pursuant to the foregoing provisions. | |
- Monthly Demand Charge
|
(4,478) X (Ammonia Price adjusted as of each monthly due date for the Monthly Demand Charge) X (1/12 of the Prime Rate as of such monthly due date) | |
- Additional Requirement Price
|
The Hydrogen price for any Additional Requirement shall be $0.55 per 100scf based on an UAN Price of $150.00 per short ton. The Hydrogen price per 100scf of any Additional Requirement shall adjust as of the first day of each calendar month up or down in the same percentage as the UAN Price for the immediately preceding calendar month adjusts up or down from $150.00 per short ton. | |
- Flow measurement
|
All Hydrogen flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be pressure and temperature compensated and totalized by the Fertilizer Plant’s Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Company’s request. |
B-1
Nitrogen |
||
- Gaseous |
||
- Purity
|
99.99 mol. % (minimum) (5 ppm oxygen maximum) | |
- Pressure
|
180 psig (+ 10 psig) | |
- Flow
|
20,000 scfh (normal); 40,000 scfh (maximum) | |
- Temperature
|
Ambient | |
- Price
|
$0.25 per cscf based on a total electric energy cost of $0.035 per KWH; provided, however, that this price will increase or decrease in the same percentage as the Fertilizer Company’s electric xxxx from the City of Coffeyville (or from such other electric utility provider as the Fertilizer Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any gaseous nitrogen sold by Fertilizer Company after the date of such adjustment to the date of the next adjustment. | |
- Flow measurement
|
All Nitrogen flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be pressure and temperature compensated and totalized by the Fertilizer Plant’s Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Company’s request. |
B-2
Oxygen |
||
-Gaseous |
||
-Purity
|
99.6 mol. % (minimum) | |
-Pressure
|
65 psig (± 5 psig) | |
-Flow
|
29.8 STPD (maximum) | |
-Temperature
|
Ambient | |
- Price
|
$0 per short ton for daily tons up to 10 STPD $70 per short ton for daily tons from 10 STPD to 29.8 STPD Such prices per short ton are based on a total electric cost of $0.035 per KWH; provided, however, that these prices per short ton will increase or decrease in the same percentage as the Fertilizer Company’s electric xxxx from the City of Coffeyville (or from such other electric utility provider as the Fertilizer Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any gaseous Oxygen sold by Fertilizer Company after the date of such adjustment to the date of the next adjustment. |
B-3
- Flow measurement
|
All Oxygen flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be pressure and temperature compensated and totalized by the Fertilizer Plant’s Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Company’s request. | |
Sour water |
||
- Composition
|
.80% ammonia (maximum) 0.05 mol. % H2S (maximum) |
|
-Pressure
|
90 psig (maximum) | |
35 psig (minimum) | ||
-Temperature
|
125°F (normal) | |
-Flow
|
20 gpm (maximum) | |
12 gpm (normal) | ||
-Price
|
zero dollars ($0) | |
High Pressure Steam |
||
- Pressure
|
600 psig ± 10 psi (normal) | |
- Flow (Gasifier Startup)
|
As available, up to 75,000 pounds per hour (to Fertilizer Company) | |
(normal)
|
As available, 50,000 + 20,000 pounds per hour (to Refinery Company) | |
-Price
|
The price is dependent upon the natural gas price (symbolized by “NGP” in the formulae below) and “steam flow” in the formulae below is determined by the Fertilizer Plant’s process control computer: | |
To Fertilizer Company:
|
Price = (1.22)(NGP)(steam flow)/1000 | |
To Refinery Company:
|
Price = (1.10)(NGP)(steam flow)/1000 |
B-4
For purposes of determining the price of High Pressure Steam hereunder,
NGP means the price for natural gas measured in dollars per MMBtu
($/MMBtu) determined for a particular calendar month as follows: The
price per MMBtu (dry) of natural gas shall be the index posting
published in “Inside F.E.R.C.’s Gas Market Report,” (the “Report”) under
the heading “Prices of Spot Gas delivered to Pipelines,” for the
applicable calendar month, for Southern Star Central Gas Pipeline, Inc.
(formerly known as Xxxxxxxx Gas Pipelines Central, Inc.) for Texas,
Oklahoma, Kansas (the “Southern Star Index Price”). In the event the
Report ceases to be published or, for a particular month, the Report
does not list the Southern Star Index Price, the Parties agree that the
applicable NGP shall be the price published in the monthly edition of
“Gas Daily Price Guide,” in the table labeled “Monthly Contract Index”
under Southern Star Central Gas Pipeline, Inc. (Texas, Oklahoma, Kansas)
(“Gas Daily Index Price”) for the applicable calendar month. In the
event Gas Daily ceases to publish the Gas Daily Index Price, the
applicable NGP shall be the monthly bidweek price published in the first
issue of “Natural Gas Week,” in the table labeled “Gas Price Report,”
under the heading “Delivered to Pipeline,” for the applicable calendar
month for Southern Star Central Gas Pipeline, Inc. The NGP shall also
include the price of pipeline transportation of natural gas to the
Refinery. Notwithstanding anything to the contrary set forth herein,
Refinery Company shall have no obligation to pay for High Pressure Steam
during periods when Refinery Company is flaring fuel gas.
- Flow measurement
|
All High Pressure Steam flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be totalized by the Fertilizer Plant’s Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Company’s request. | |
Low Pressure Steam |
||
-Flow
|
Variable | |
-Pressure
|
Approximately 120-170 psi | |
-Price
|
zero dollars ($0) | |
SERVICES: |
||
Firewater |
||
- Pressure
|
185 psig (maximum) | |
100 psig (minimum) |
B-5
- Temperature
|
70°F (normal) | |
- Flow
|
2,000 gpm (maximum) | |
0 gpm (normal) | ||
-Price
|
zero dollars ($0) | |
Instrument Air |
||
- Purity
|
-40°F dew point (normal operating) | |
- Pressure
|
125 psig + 10 psi (normal operating) | |
- Flow
|
4000 scfm maximum (normal operating) | |
- Temperature
|
ambient | |
- Price |
||
To the Refinery Company:
|
$18,000 per month (prorated on a per diem basis to reflect the number of days, including partial days, in the applicable month that Instrument Air is provided) based on $.035 total laid in cost per KWH; provided, that this price will increase or decrease in the same percentage as the Fertilizer Company’s total laid in cost for electricity from the City of Coffeyville (or from such other electric utility provider as the Fertilizer Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any Instrument Air sold by Fertilizer Company after the date of such adjustment until the date of the next adjustment; provided, however, that such cost shall be reduced on a pro-rata basis for each day that such Instrument Air is not available from the BOC Facility. | |
To the Fertilizer Company:
|
$18,000 per month (prorated on a per diem basis to reflect the number of days, including partial days, in the applicable month that Instrument Air is provided) based on $.039 total laid in cost per KWH; provided, that this price will increase or decrease in the same percentage as the Refinery Company’s total cost for electricity from Kansas Gas and Electric Company (or from such other electric utility provider as the Refinery Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any Instrument Air sold by Refinery Company after the date of such adjustment until the date of the next adjustment. | |
B-6
- Flow measurement
|
All Instrument Air flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be totalized by the Fertilizer Plant’s Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Company’s request. |
Security
Fertilizer Company shall pay Refinery Company a pro rata share of Refinery Company’s direct costs
of providing security services for the entire Fertilizer Plant/Refinery complex, which pro rata
share shall be mutually agreed upon by the Parties based upon a commercially reasonable allocation
of such costs in relation to the security services as provided to the Fertilizer Plant and the
Refinery.
B-7